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<br />-.-..., <br />" <br /> <br />shareholders and board of directors have validly adopted resolutions approving this contract; that <br />there are no provisions in the BORROWER'S articles of incorporation or by-laws or any state or <br />local law that prevent this contract from binding the BORROWER; and that the contract will be valid <br />and binding against the BORROWER if entered into by the STATE. <br /> <br />9. Promissory Note Provisions. The PromiSSOry Note setting forth the terms of repayment and <br />evidencing this loan in the amount of $734,000 at an interest rate of 4.00 % per annum for a term <br />of 30 years is attached as Appendix 2 and incorporated herein, <br /> <br />a, Revision Of Promissory Note. In the event the Borrower uses less than 90% of the loan <br />funds for construction of the Project, the Promissory Note may be adjusted in accordance <br />with the Changes Provisions of this contract. <br /> <br />b. 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 4.00%. 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 <br />determines that the PROJECT has been substantially completed, or, at the STATE'S discretion, <br />said interest shall be deducted from the final disbursement of loan funds that the STATE <br />makes to the BORROWER. <br /> <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 <br />funds to prepayment of the loan with the BORROWER'S consent, or the parties may execute <br />a REVISION LETTER as described below to document the final loan amount and reamortize <br />the annual payment. When such remaining loan funds are applied to prepayment of the <br />loan, the annual loan payment amount shall remain the same, resulting in a reduced term <br />of repayment, <br /> <br />10. Changes. The parties may decrease the amount of the loan under this contract or extend the <br />time for completion of the PROJECT through a REVISION LETTER, approved by the State Controller <br />or his designee and the BORROWER, in the form attached hereto as Appendix 3, The REVISION <br />LETTER shall not be valid until approved by the State Controller or such assistant as he may <br />designate. Upon proper execution and approval, the REVISION LETTER shall become an <br />amendment to this contract and, except for the Special Provisions of the contract, the REVISION <br />LETTER shall supersede the contract in the event of a conflict between the two. The parties <br />understand and agree that the REVISION LETTER may be used only for decreasing the final loan <br />amount or to extend the time for completion of the PROJECT, In the event that the parties execute <br />the REVISION LETTER to decrease the amount of the loan, the parties shall amend the Promissory <br />Note and all documents executed by the BORROWER to convey security interests to the STATE as <br />required by this contract to reflect the decreased loan amount. <br /> <br />11, Warranties. <br /> <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 /> <br />DeWeese-Dye Ditch & Reservoir Company <br /> <br />Page 5 of 13 <br /> <br />Loan Contract <br />