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<br />..'-\ <br />, <br /> <br />otherwise adversely affect the Enterprise's ability to perform <br />during the term of this Contract. <br /> <br />4. The Borrower warrants that both the Town of Hudson <br />and the Hudson Water Fund Enterprise have complied with all <br />statutory and other requirements and duly passed a resolution by <br />their respective governing Board of Trustees, authorizing the <br />Borrower to enter into this Contract with the State to borrow the <br />principal sum of the loan amount set forth in paragraph A.1; to fix <br />and collect water user charges and fees sufficient to payoff the <br />loan made under this Contract; to set aside sufficient revenues <br />each year to pay the annual installment in a special fund separate <br />and apart from other revenues of the Borrower; to sign a security <br />interest in the revenues pledged herein and in the Borrower's <br />interest in the Allotment Contract in favor of the State to secure <br />repayment; and to repay this loan to the State. The Borrower's <br />Resolution is attached hereto as Appendix E and incorporated herein <br />by this reference. The actions of the Borrower adopting the <br />Resolution and executing the security agreements are conditions <br />precedent to performance by the State under this Contract. <br /> <br />5. The Borrower agrees and understands that !l!l37-60-119 <br />through 37-60-122, C.R.S., require that the loan of money by the <br />State to the Borrower for this project be conditioned upon the <br />repayment of the loan to the State. The Borrower hereby agrees to <br />take any and all actions necessary to secure such repayment as <br />provided herein. <br /> <br />The Borrower understands that this Contract is a <br />promissory note for the repayment of funds loaned by the State to <br />the Borrower according to the terms set forth herein. <br /> <br />6, The Borrower agrees to repay to the State the sum of <br />One Million Two Hundred Seventy-Three Thousand Dollars <br />($1,273,000), as the principal amount of the construction loan, <br />together with interest on the construction loan calculated in <br />accordance with the interest rate and term of paragraph A.2 and to <br />pay interest during construction. <br /> <br />Payment of interest during construction will be <br />calculated monthly at an equivalent of Two percent (2%) per annum <br />on each loan advance disbursed to the Borrower during construction. <br />The interest accumulated during construction may be paid, at the <br />discretion of the Borrower, as a single lump sum at the time the <br />first installment for the construction loan is due or it may be <br />capitalized under the same terms as the construction loan. The <br />actual interest which will accumulate during construction is <br />unknown and cannot be calculated until the conclusion of <br />construction. The Contractor and the Borrower shall identify the <br />amount and the method of payment of interest accumulated during <br />construction through an amendment to this contract to be finalized <br />within three (3) months after first delivery of Project water to <br />the Borrower. <br /> <br />Page 5 of 12 pages <br />