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-!rt. I from binding the BORROWER; and that the contract will be valid and binding against the BORROWER if entered into by the STATE. 9. Promissory Note Provisions. The Promissory Note setting forth the terms of repayment and evidencing this loan in the amount of $22,250 at an interest rate of 3.5% per annum for a term of ten years is attached as Appendix 2 and incorporated herein. a. Revision Of Promissory Note. In the event the Borrower does not use all of the loan funds for construction of the Project, the Promissory Note may be adjusted in accordance with the Changes Provisions of this contract. b. Interest During Construction. As the loan funds are disbursed by the STATE to the BORROWER during construction, interest shall accrue at the rate of 3.5%. The STATE shall calculate the amount of the interest accrued during construction 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, said interest shat( be deducted from the final disbursement of loan funds that the STATE makes to the BORROWER. 10. Changes. The parties may decrease the amount of the loan under this contract or extend the time for completion of the PROJECT through a REVISION LETTER, approved by the State Controller or his designee and the BORROWER, in the form attached hereto as Appendix 3. The REVISION LETTER shall not be valid until approved by the State Controller or such assistant as he may designate. Upon proper execution and approval, the R ER shall become an amendment to this contract and, except for the Special Provision the REVISION LETTER shall supersede the contract in the event of a conflict en the tw . parties understand and agree that the REVISION LETTER may be used only fo d as al loan amount or to extend the time for completion of the PROJECT. In the eve h th~ Ie a the REVISION LETTER to decrease the amount of the loan, the parties shall amend the P to and all documents executed by the BORROWER to convey security interests to the STATE as required by this contract to reflect the decreased loan amount. 71. Warranties. a. The BORROWER warrants that, by acceptance of the loan money pursuant to the terms of this contract and by the BORROWER'S representation herein, the BORROWER shall be estopped from asserting for any reason that it is not authorized or obligated to repay the loan money to the STATE as required by this contract. b. The BORROWER warrants that it has full power and authority to enter into this contract. The execution and delivery of this contract and the performance and observation of its terms, conditions and obligations have been duly authorized by all necessary actions of the BORROWER. c. The BORROWER warrants that it has not employed or retained any company or person, other than a bona fide employee working solely for the BORROWER, to solicit or secure this contract and has not paid or agreed to pay any person, company, corporation, individual, or firm, other than a bona fide employee, any fee, commission, percentage, gift, or other consideration contingent upon or resulting from the award or the making of this contract. d. The BORROWER warrants that the property identified in the Collateral Provisions of this contract is not encumbered by any liens of any party other than the STATE or in any other manner. Farmers Pawnee Canal Company Page 5 of 13 Loan Contract