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<br />/ <br /> <br />~ ~'" <br /> <br />4. BORROWER'S authority to contract. The BoRROWER shall, pursuant to its statutory authority, <br />articles of incorporation, and bylaws, have its rYlembers and board of directors adopt resolutions, <br />irrepealable during the life of this loan, authorizing the President and Secretary, on behalf of the <br />BORROWER, to do the following: <br /> <br />a. Enter into and comply with the terms of this contract and the Promissory Note, and <br /> <br />b. Levy water charges and assessments in an amount sufficient to pay the annual amounts due <br />under this contract and to establish a reserve debt service fund equivalent to an annual <br />payment within a period of ten (10) years, and <br /> <br />c. Place money collected from water charges and assessments each year in a special account <br />separate and apart from other BORROWER revenues to assure repayment of this loan to the <br />STATE,and <br /> <br />d. Execute a deed of trust and security agreement to provide the security as specified in the <br />Collateral Provisions of this contract, and <br /> <br />e. Execute a security agreement to secure the revenues pledged herein in accordance with the <br />Pledge of Revenues Provisions of this contract. <br /> <br />Such resolutions are attached hereto as Apper1dix A and incorporated herein. The Borrower's <br />members also authorized the above actions by <3n election held on February 2, 1996, at a special <br />meeting of the members as evidenced by the minutes of said meeting, incorporated herein by <br />reference. <br /> <br />5. Attorney's opinion letter. Prior to the execution of this contract by the STATE, the BORROWER <br />shall submit to the STATE a letter from its attomey stating that it is the attorney's opinion that the <br />person signing for the BORROWER was duly elected or appointed and has authority to sign such <br />documents on behalf of the BORROWER and to bi(ld the BORROWER; that the BORROWER'S members <br />and board of directors have validly adopted resolutions approving this contract; that there are no <br />provisions in the BORROWER'S articles of incorporation or bylaws or any state or local law that <br />prevent this contract from binding the BORROWER; and that the contract will be valid and binding <br />against the BORROWER if entered into by the STATE. <br /> <br />6. Promissory Note Provisions. The Promissory Note setting forth the terms of repayment and <br />evidencing this debt is attached as Appendix B and incorporated herein. <br /> <br />a. Revision Of Promissory Note. In the event tI1e 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 Changes <br />Provisions of this contract. <br /> <br />b. Interest During Project Completion. As the loan funds are disbursed by the STATE to the <br />BORROWER during PROJECT completion, interest shall accrue at the rate of 4 '/.%. The amount of <br />the interest accrued during completion shall be calculated by the STATE and the BORROWER shall <br />repay 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 be <br />deducted from the final disbursement of loan funds that the STATE makes to the BORROWER. <br /> <br />7. Changes. The STATE may decrease the amount of the loan under this contract or extend the time for <br />completion of the PROJECT through a REVISION LETIER, approved by the State Controller or his <br /> <br />Aristocrat Ranchette Water Project, Inc. <br /> <br />Page 3 of 11 <br /> <br />Loan Contract <br />