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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 the amount of $100,000 at an interest rate of 3.75% per annum for a term of <br /> twenty years is attached as Appendix 2 and incorporated herein. <br /> a. Revision Of Promissory Note. In the event the Borrower does not use all of the loan funds for <br /> construction of the Project, the Promissory Note may be adjusted in accordance with the <br /> Changes Provisions of this contract. <br /> b. Interest During Construction. As the loan funds are disbursed by the STATE to the BORROWER <br /> during construction, interest shall accrue at the rate of 3.75%. The STATE shall calculate the <br /> amount of the interest accrued during construction and the BORROWER shall repay that amount to <br /> the STATE either within ten (10) days after the date the STATE determines that the PROJECT has <br /> been substantially completed, or, at the STATE'S discretion, said interest shall be deducted from <br /> the final disbursement of loan funds that the STATE makes to the BORROWER. <br /> C. Final loan amount. In the event that the final loan amount is less than the authorized loan <br /> amount, the STATE shall apply the remaining loan funds to prepayment of the loan if the <br /> remaining funds equal less than 10% of the authorized loan amount. If the remaining loan <br /> funds equal more than 10% of the authorized loan amount, the STATE may apply those funds <br /> to prepayment of the loan with the BORROWER'S consent, or the parties may execute a <br /> REVISION LETTER as described below to document the final loan amount and reamortize the <br /> annual payment. When such remaining loan funds are applied to prepayment of the loan, the <br /> annual loan payment amount shall remain the same, resulting in a reduced term of repayment. <br /> 10. Changes. The parties may decrease the amount of the loan under this contract or extend the time <br /> for completion of the PROJECT through a REVISION LETTER, approved by the State Controller or his <br /> designee and the BORROWER, in the form attached hereto- as Appendix 3. The REVISION LETTER <br /> shall not be valid until approved by the State Controller or such assistant as he may designate. <br /> Upon proper execution and approval, the REVISION LETTER shall become an amendment to this <br /> contract and, except for the Special Provisions of the contract, the REVISION LETTER shall supersede <br /> the contract in the event of a conflict between the two. The parties understand and agree that the <br /> REVISION LETTER may be used only for decreasing the final loan amount or to extend the time for <br /> completion of the PROJECT. In the event that the parties execute the REVISION LETTER to decrease <br /> the amount of the loan, the parties shall amend the Promissory Note and all documents executed by <br /> the BORROWER to convey security interests to the STATE as required by this contract to reflect the <br /> decreased loan amount. <br /> PAID <br /> IN <br /> 11. Warranties. FULL <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 from <br /> asserting for any reason that it is not authorized or obligated to repay the loan money to the <br /> 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 authorized by all necessary actions of the <br /> BORROWER. <br /> Western Mutual Ditch Company Page 5 of 13 Loan Contract <br />