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determined the PROJECT to be technically and financially feasible. I. At its January 24-25,1996 meeting, the CWCB approved a loan to the TOWN and the BORROWER in the amount of Two Hundred Six Thousand Two Hundred Fifty Dollars ($206,250), which amount shall not exceed 75% of actual total PROJECT costs, at an interest rate of 5.25% per annum for a temn of thirty (30) years, to finance PROJECT costs. J. Pursuant to 1996 Colo. Sess. Laws, Ch. 195, Section 1(1)(f), the Colorado General Assembly authorized CWCB to loan to the TOWN and the BORROWER Two Hundred Six Thousand Two Hundred Fifty Dollars ($206,250) for a term of thirty (30) years for financing PROJECT costs. K. The TOWN has entered into an Agreement dated November 5, 1998, as modified by written amendments dated November 23, 1998 and November 25, 1998, which are incorporated herein by reference, for the purchase of the FHL Shares. L. The STATE understands that the repayment of the funds loaned, including interest thereon, will come from revenues pledged for the repayment thereof from water system revenues and that this obligation does not constitute a debt of the TOWN within the meaning of any constitutional or statutory limitations. M. The STATE now desires, by this contract, to loan money to the BORROWER for this PROJECT upon mutually agreeable terms and conditions, subject to the availability of funding for that purpose. NOW THEREFORE, .in consideration of the mutual and dependent covenants contained herein, the parties agree as follows: A. The TOWN and the BORROWER agree as follows: 1. Time for PROJECT completion. The BORROWER recognizes that time is of the essence in the performance of all of its obligations under this contract. Therefore, the BORROWER shall complete its purchase of the FHL Shares within one (1) year of the date of this contract. The time for completion of the PROJECT may be extended subject to the approval of the STATE. The BORROWER must provide, in writing, documented justification for any request for an extension within sixty (60) days prior to the end of the period for completion. 2. BORROWER'S liability insurance. To the extent permitted by law, the BORROWER agrees to indemnify and hold the STATE harmless from any liability incurred by the STATE as a result of the STATE'S interest in the property identified in the Collateral Provisions of this contract. Upon execution of this contract and continuing until complete repayment of the loan is made to the STATE, the BORROWER shall maintain commercial general liability insurance with a company that is satisfactory to the STATE covering the management, operation, and maintenance of the PROJECT with minimum limits of $1,000,000 combined single limit for each occurrence and $2,000,000 general aggregate, including products/completed operations and personal injury. The Borrower shall provide evidence of current insurance coverage as renewals occur. No loan funds shall be advanced by the STATE without evidence of said current coverage. Throughout the life of this contract, the STATE reserves the right to increase the above amount of insurance so that said amounts at a minimum correspond to the amounts established by the Colorado Governmental Immunity Act, now and as hereafter amended. If the TOWN and/or the BORROWER is a "public entity" within the meaning of the Colorado Governmental Immunity Act, CRS 24-10-101, et sea., as amended ("Act"), the TOWN and/or the BORROWER shall at all times maintain such liability insurance, by commercial policy or self- insurance, as is necessary to meet its liabilities under the Act. The TOWN and/or the BORROWER shall provide proof of such insurance prior to the advance of any loan funds. Town of Georgetown & Town of Georgetown Water and Sewer Activity Enterprise Page 2 of 11