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9. Promissory note provisions. The BORROWER understands that this contract is also a promissory <br /> note for the repayment of funds loaned according to the terms set forth herein. <br /> a. Principal amount. The principal amount of the loan shall be the total amount of funds <br /> advanced and actually paid out by the STATE to the BORROWER under the terms of this <br /> contract, not to exceed $750,000. <br /> b. Interest rate. The interest on the principal shall accrue at the rate of three and one-half <br /> percent (31/2%) per annum on all funds advanced to BORROWER. <br /> c. Duration. The repayment period of this loan shall be thirty (30) years. <br /> d. Loan payment. The payments shall be 30 annual installments of $40,778.50, which <br /> amount includes principal and interest. The first installment shall be due and payable one year <br /> after the STATE determines that the PROJECT has been substantially completed, and annually <br /> thereafter until the entire principal sum and any accrued interest shall have been paid. <br /> -Installment payments are to be made payable to the CWCB at the address given below. <br /> e. Interest during construction. Interest shall accrue at the rate of 31/2% on the funds that <br /> are advanced by the STATE to the BORROWER during construction. The amount of the interest <br /> accrued during construction shall be calculated by the STATE and the BORROWER shall repay <br /> that amount to the STATE either within ten (10) days after the date the STATE determines that <br /> the PROJECT has been substantially completed, or, at the STATE'S discretion, the amount shall <br /> be deducted from the final disbursement of loan funds that the STATE makes to the <br /> BORROWER. <br /> f. Prepayment conditions. The BORROWER may prepay all or any of the loan at any time, <br /> without penalty. These payments will be applied first to any accrued interest and then to <br /> reduce the principal amount. <br /> g. Collection costs. If the principal or acc ed interest under this contract is not paid when r <br /> due, the BORROWER agrees to pay all rea b : cE is of collection, including reasonable <br /> attorney fees. In the event of any bankru yjot .m :r 1r eedings, costs of collection shall <br /> include all costs and attorney fees incurred in . • • ct n ith such proceedings, including <br /> the fees of counsel for attendance e `n s of creditors committees or other committees. <br /> _ <br /> 10. Warranties. <br /> a. The BORROWER warrants that by acceptance of thelon money pursuant to the terms of <br /> this 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 <br /> to the STATE as required by this contract. <br /> b. The BORROWER warrants that it has full power and authority to enter into this contract. <br /> The execution and delivery of this contract and the performance and observation of its terms, <br /> conditions and obligations have been duly authorized by all necessary actions of the <br /> BORROWER. <br /> c. The BORROWER warrants that it has not employed or retained any company or person, <br /> other than a bona fide employee working solely for the BORROWER, to solicit or secure this <br /> contract and has not paid or agreed to pay any person, company, corporation, individual, or <br /> Beaver Park Water, Inc. Page 5 of 12 Loan Contract <br />