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<br />c. To place the dues and assessment revel'1ues pledged to make annual loan payments in a <br />special account separate and apart from other BORROWER revenues, in accordance with <br />the Pledge of Property Provisions of this contract and <br /> <br />d. To make annual payments in accordance with the promissory note, and <br /> <br />e. To make annual deposits to a debt service reserve fund in accordance with the Pledge of <br />Property Provisions of this contract, and <br /> <br />f. To obtain a certificate of deposit to serve as collateral in the amount of one annual loan <br />payment ($3,365.26) as security for the loan, and execute an assignment of certificate of <br />.deposit as described in the Collateral Provisions of this contract, and <br /> <br />g. To execute a Security Agreement and an Assignment of Deposit Account as Security to <br />secure the revenues pledged herein in accordance with the Pledge of Property Provisions <br />of this contract. <br /> <br />Said resolutions are attached hereto as Appendix 1 and incorporated herein. <br /> <br />8. Attorney's Opinion Letter. Prior to the execution of this contract by the STATE, the <br />BORROWER shall submit to the STATE a letter from its attorney stating that it is the attomey's <br />opinion that the person signing for the BORROWER was duly elected or appointed and has <br />authority to sign such documents on behalf of the BORROWER and to bind the BORROWER; <br />that the BORROWER'S shareholders and board of directors have validly adopted resolutions <br />approving this contract; that there are no provisions in the BORROWER'S articles of <br />incorporation or by-laws or any state or loc:allaw that prevent this contract from binding the <br />BORROWER; and that the contract will be valid and binding against the BORROWER if entered <br />into by the STATE. <br /> <br />9. Promissory Note Provisions. The Promissory Note setting forth the terms of repayment <br />and evidencing this debt in the amount of $60,000 at the interest rate of 3.75% per annum for <br />a term of thirty years is attached as Appendix 2 and incorporated herein. <br /> <br />a. Revision Of Promissory Note. In the event the Borrower does not use all of the loan <br />funds for construction of the Project, the Promissory Note may be adjusted in accordance <br />with the Changes Provisions of this contract. <br /> <br />b. Interest During Construction. As the loan funds are disbursed by the STATE to the <br />BORROWER during construction, interest shall accrue at the rate of 3.75%. The amount of <br />the interest accrued during construction shall be calculated by the STATE and the <br />BORROWER shall repay that amount to the STATE either within ten (10) days after the date <br />the STATE determines that the PROJECT has been substantially completed, or, at the <br />STATE'S discretion, the amount shall be deducted from the final disbursement of loan <br />funds that the STATE makes to the BOR~OWER. <br /> <br />c. Adjustment of interest rate. The BORROWER agrees that, in the event that any land in <br />the BORROWER'S service area (described in Art. 1, Section 2 of the BORROWER'S bylaws) is <br />subdivided for residential use, the STATE shall adjust the interest rate on that portion of the <br />outstanding 10Eln amount corresponding to the percentage of the water delivered by the <br /> <br />Chipperfield Lane Ditch, Inc. <br /> <br />Page 5 of 14 <br /> <br />Loan Contract <br />