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<br />,.. <br /> <br />3. Return of Unused Loan Funds. Any loan funds disbursed but not expended for the <br />PROJECT in accordance with the terms of this contract shall be remitted to the CWCB <br />within 30 calendar days from notification from the CWCB of either (1) completion of the <br />PROJECT or (2) upon the determination by the CWCB that the PROJECT will not be <br />completed. <br /> <br />4. BORROWER'S Authority To Contract. The BORROWER warrants that it has full power <br />and authority to enter into this contract. The execution and delivery of this contract and <br />the performance and observation of its terms, conditions and obligations have been <br />duly authorized by all necessary actions of the BORROWER. The BORROWER held an <br />election on May 7, 2002, whereby its electors approved increasing the BORROWER'S <br />debt by up to $2,550,000 for the purpose of purchasing water rights and wells, as <br />shown on the Judges' Certificate of Election Returns for the BORROWER'S election, <br />which is incorporated herein by reference. The BORROWER'S authorizing resolution(s) <br />are attached as Appendix 3 and incorporated herein. <br /> <br />5. Attorney's Opinion Letter. Prior to the execution of this contract by the CWCB, the <br />BORROWER shall submit to the CWCB a letter from its bond counsel stating that it is the <br />attomey's opinion that <br /> <br />a. the contract will be duly executed by officers of the BORROWER who are duly elected <br />or appointed and are authorized to execute the contract and to bind the BORROWER; <br /> <br />b. the resolutions or ordinances of the BORROWER authorizing the execution and <br />delivery of the contract were duly adopted by the goveming bodies of. the <br />BORROWER; <br />c. there are no provisions in the Colorado Constitution or any other state or local law <br />that prevent this contract from binding the BORROWER; and <br /> <br />d. the contract will be valid and binding against the BORROWER if entered into by the <br />CWCB. <br /> <br />6. Pledge of revenues. The BORROWER irrevocably pledges to the CWCB, for purposes <br />of repayment of this loan, general revenues received from taxes received each year as <br />authorized by the BORROWER'S May 7, 2002 election and resolution attached as <br />Appendix 3 and any other funds legally available to the BORROWER, in an amount <br />sufficient to pay the annual payment due under this contract ("Pledged Revenues"). <br />Further, the BORROWER agrees to: <br /> <br />a. Segregation of Pledged Revenues. The BORROWER shall set aside and keep the <br />Pledged Revenues in an account separate from other BORROWER revenues, and <br />warrants that these revenues will not be used for any other purpose. <br /> <br />b. Establish Security Interest, The BORROWER has duly executed a Security <br />Agreement, attached hereto as Appendix 4 and incorporated herein, to provide a <br />security interest to the CWCB in the Pledged Revenues. The CWCB shall have <br />priority over all other competing claims for said revenues, except for the liens of <br />the BORROWER'S existing loans as listed in Section 5 (Schedule of Existing Debt), of <br />the Project Summary, which sets forth the position of the lien created by this <br />contract in relation to any pre-existing lien(s). <br /> <br />Page 2 of 9 <br />