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f. The BORROWER to establish a debt service reserve account by making a deposit . equivalent to one annual payment within one year from the date of substantial completion of the PROJECT, and to replenish that fund anytime it is depleted; Said ordinances are attached hereto as Appendix 1 and incorporated herein. The actions of the CITY and the BORROWER adopting said ordinances and executing the necessary documents to convey the security interests required by this contract are conditions precedent to performance by the STATE under this contract. 7. Attorney's opinion letter. Prior to.the execution of this contract by the STATE, the CITY and the BORROWER shall submit to the STATE an opinion from the CITY and the BORROWER'S Red Book bond counsel that the contract has been duly executed by officers of the CITY and the BORROWER who are duly elected or appointed and are authorized to execute the contract and to bind the CITY and the BORROWER; that the ordinances of the CITY and the BORROWER authorizing the execution and delivery of the contract were duly adopted by the City Council of the CITY and the governing body of the BORROWER; that there are no provisions in the Colorado Constitution or any other state or local law that prevent this contract from ,binding the ~and the BORROWER; and that the contract will be valid and binding against the C~'~, e B, ORROWER if entered into by the STATE. . .~' "\> 8. Promissory Note Provisions. The P~iSS5~1x"\ietting forth the terms of repayment and evidencing this debt in the,~,;t ~ ~5,OOO,OOO at an interest rate of 4.45% per annum for a term of 10 years,' ch a as Appendix 2 and incorporated herein. " a. Interest During Project Completion. As the loan funds are disbursed by the STATE to the BORROWER during PROJECT completion, interest shall accrue at the rate of 4.45%. The amount of the interest accrued during PROJECT completion shall be calculated by the STATE and the BORROWER shall repay that amount to the STATE either within ten (10) days after the date the STATE determines that the PROJECT has been substantially completed, or, at the STATE'S discretion, the amount shall be deducted from the final disbursement of loan funds that the STATE makes to the BORROWER. b. Final loan amount. In the event that the final loan amount is at least 90% of the AUTHORIZED LOAN AMOUNT, the STATE shall apply the remaining loan funds to reduce the final loan amount and the annual loan payment shall remain the same. If the final loan amount is less than 90% of the AUTHORIZED LOAN AMOUNT, the STATE may-apply those funds to reduce the final loan amount, with the BORROWER'S consent, or the parties may execute a REVISION LETTER, attached hereto as Appendix 3 and incorporated herein, which will establish the final loan amount and shall amend or replace the loan documents that reflect the final loan amount, including the Promissory Note and the Security Agreement. 9. Warranties. The CITY and the BORROWER warrant the following: a. By the BORROWER'S acceptance of the loan money pursuant to the terms of this City of Loveland and City of Loveland, Colorado, Water Enterprise Page 6 of 15