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<br />J. At its March 1996 meeting, the CWCB approved a Small Project Loan to the BORROWER to <br />be used to refinance the costs of the PROJECT in an amount not to exceed $27,000, at an interest <br />rate of 30/..% per annum for a duration of 10 years, <br /> <br />J. During the course of PROJECT construction, the BORROWER discovered that the PROJECT <br />costs were higher than originally anticipated and requested an additional $13,000 from the STATE. <br />The CWCB staff has reviewed the situation and concluded that the PROJECT still is financially feasible, <br /> <br />K, At its May 1996 meeting, the CWCB approved increasing the loan to $45,000, which <br />amount is not to excced 75% of the total project cost, at 4% interest for a term of 20 years, <br /> <br />L. The BORROWER, the Snyder-Smith Ditch Company ("Snyder-Smith") and Pioneer Water and <br />Irrigation Inc, ("Pioneer") entered into an agreement on May 11, 1987 (" 1987 Agreement"), under <br />which Pioneer may run and deliver water through the BORROWER'S and Snyder-Smith's facilities for <br />a handling fee determined by the number of acre-feet run through the facilities, which is paid on an <br />annual basis. The 1987 Agreement was recorded on March 14, 1987, in the Office of the Clerk and <br />Recorder of Morgan County in Book 891 at Page 338. The handling fee was raised in March 1993, <br /> <br />M. The STATE now desires, by this contract, to loan money to the BORROWER for this PROJECT <br />upon mutually agreeable terms and conditions. <br /> <br />NOW THEREFORE, in consideration of the mutual and dependent covenants contained, the <br />parties agree as follows: <br /> <br />A. The BORROWER agrees as follows: <br /> <br />1, BORROWER'S indemnification of the STATE. The BORROWER shall, without expense or legal <br />liability to the STATE, manage, operate, and maiMain the PROJECT continuously in an efficient and <br />economical manner. The BORROWER agrees to indemnify and hold the STATE harmless from any <br />liability incurred by the STATE as a result of the STATE'S interest in the PROJECT facilities, <br /> <br />2. BORROWER'S liability insurance. Upon execution of this contract and continuing until <br />complete repayment of the loan is made to the STATE, the BORROWER shall maintain commercial <br />general liability insurance with a company that is satisfactory to the STATE covering the management, <br />operation, and maintenance of the PROJECT with minimum limits of $1 ,000,000 combined single limit <br />for each occurrence and $2,000,000 general aggregate, including products/completed operations and <br />personal injury, <br /> <br />Said general liability insurance shall name the STATE as additional insured, A copy of a <br />certificate of said insurance and an additional insured endorsement must be filed with the STATE, <br />Evidence of current insurance coverage is to be provided as renewals occur. No loan funds shall be <br />advanced by the STATE without evidence of said current coverage. Throughout the life of this <br />contract, the STATE reserves the right to increase the above amount of insurance so that said <br />amounts at a minimum correspond to the amounts established by the Colorado Governmental <br />Immunity Act, now and as hereafter amended, <br /> <br />3, BORROWER'S authority to contract. The BORROWER shall, pursuant to its statutory authority, <br />articles of incorporation, and by-laws, have its shareholders and board of directors adopt resolutions, <br />irrepealable during the life of this loan, authorizing the President and Secretary, on behalf of the <br />BORROWER, to do the following: <br /> <br />a. Contract for this loan with the STATE, and to pay the indebtedness, and <br /> <br />Tremont Mutual Ditch Company <br /> <br />Page 2 of 10 <br /> <br />Loan Contract <br />