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law that prevent this contract from binding the BORROWER; and that the contract will be valid and <br /> binding against the BORROWER if entered into by the STATE. <br /> 9. Promissory Note Provisions. The Promissory Note setting forth the terms of repayment and <br /> evidencing this loan in an amount up to $30,000 at an interest rate of 3.75% per annum for a <br /> repayment term of 20 years is attached as Appendix 2 and incorporated herein. <br /> a. Interest During Construction. As the loan funds are disbursed by the STATE to the <br /> BORROWER during construction, interest-shall accrue at the rate of 3.75%. The STATE shall <br /> calculate the amount of the interest accrued during construction and the BORROWER shall <br /> repay that amount to the STATE either within ten (10) days after the date the STATE determines <br /> that the PROJECT has been substantially completed, or, at the STATE'S discretion, said interest <br /> shall be deducted from the final disbursement of loan funds that the STATE makes to the <br /> BORROWER. <br /> b. Final loan amount. In the event that the final loan amount is at least 90% of the <br /> AUTHORIZED LOAN AMOUNT, the STATE shall apply the remaining loan funds to prepayment of <br /> the loan, which will result in the annual loan payment remaining the same, and the time for <br /> repayment of the loan will be reduced. If the final loan amount is less than 90% of the <br /> AUTHORIZED LOAN AMOUNT, the STATE may apply those funds to prepayment of the loan with <br /> the BORROWER'S consent, or the State and the BORROWER shall amend this contract to <br /> establish the final loan amount and amend or replace the loan documents that reflect the <br /> final loan amount, including the Promissory Note, Security Agreement, Deed of Trust, and <br /> Assignment of Certificate of Deposit. <br /> 10. Warranties. <br /> a. The BORROWER warrants that, by acceptance of the loan money pursuant to the terms of this <br /> contract and by the BORROWER'S representation herein, the BORROWER shall be estopped <br /> from asserting for any reason that it is not authorized or obligated to repay the loan money to <br /> the STATE as required by this contract. <br /> b. The BORROWER warrants that it has full power and authority to enter into this contract. The <br /> execution and delivery of this contract and the performance and observation of its terms, <br /> conditions and obligations have been duly authp b. all necessary actions of the <br /> BORROWER. <br /> c. The BORROWER warrants that it has not employed or r t. y any or person, other <br /> than a bona fide employee working solely fo - 70,.-0 ER, to solicit or secure this contract <br /> and has not paid or agreed to pay any perso • ' ny : a d. al, or firm, other <br /> than a bona fide employee, any fee, corn - .per a -, .•if or her consideration <br /> contingent upon or resulting from the award or the making .f ' <br /> d. The BORROWER warrants that the property identified in the Collateral Provisions of this <br /> contract is not encumbered by any other deeds of trust to or liens of any party other than the <br /> STATE or in any other manner. <br /> 11. Collateral. Part of the security provided for this loan, as evidenced by the executed Assignment <br /> of Certificate of Deposit attached as Appendix 3 and incorporated herein, shall be an undivided <br /> one hundred percent (100%) interest in a certificate of deposit account established by the <br /> BORROWER in the amount of one annual loan payment ($2,878.48), hereinafter referred to as CD <br /> ACCOUNT. The STATE shall use the funds contained in the CD ACCOUNT for the purpose of paying <br /> principal and interest due under this contract not otherwise paid by the BORROWER. Any amount <br /> Woodchuck Ditch Company Page 5 of 13 Loan Contract <br />