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<br />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 $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 /> <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 /> <br />b. Interest During Construction. As the 10ar1 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 /> <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 authori;z:ed loan amount, the STATE may apply those funds <br />to prepayment of the loan with the BO!'1ROWER'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 /> <br />10, Changes. The parties may decrease the amotJnt of the loan under this contrClct or extend the time <br />for completion of the PROJECT through a REVISION LEITER, approved by the State Controller or his <br />designee and the BORROWER, in the form attached hereto- as Appendix 3, The REVISION LEITER <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 LEITER 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 LEITER 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 LEITER 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 /> <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 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 /> <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 /> <br />Western Mutual Ditch Company <br /> <br />Page 5 of 13 <br /> <br />Loan Contract <br />