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<br />of 20 years is attached as Appendix 2 and incorporated herein. <br /> <br />a. 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 3,75%, 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 determines <br />that the PROJECT has been substantially completed, or, at the STATE'S discretion, said interest <br />shall be deducted from the final disbursement of loan funds that the STATE makes to the <br />BORROWER. <br /> <br />b. Final loan amount. In the event that the final loan amount is at least 90% of the <br />AUTHORIZED LOAN AMOUNT, the STATE shall apply the remaining loan funds to prepayment of <br />the loan, which will result in the annual loan payment remaining the same, and the time for <br />repayment of the loan will be reduced. If the final loan amount is less than 90% of the <br />AUTHORIZED LOAN AMOUNT, the STATE may apply those funds to prepayment of the loan with <br />the BORROWER'S consent, or the State and the BORROWER shall execute an amendment <br />that will establish the final loan amount and amend or replace the loan documents that <br />reflect the final loan amount, including the Promissory Note, Security Agreement, <br />Assignment of Deposit Account as Security, and Assignment of Certificate of Deposit. <br /> <br />10. 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 />the 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 />c. The BORROWER warrants that it has not employed or retained any company or person, other <br />than a bona fide employee working solely for the BORROWER, to solicit or secure this contract <br />and has not paid or agreed to pay any person, company, corporation, individual, or firm, other <br />than a bona fide employee, any fee, commission, percentage, gift, or other consideration <br />contingent upon or resulting from the award or the making of this contract. <br /> <br />d. The BORROWER warrants that the property identified in the Collaterai Provisions of this <br />contract is not encumbered by any deeds of trust to or liens of any party or in any other <br />manner, <br /> <br />11. Collateral. Part of the security provided for this loan, as evidenced by the executed Assignment <br />of Certificate of Deposit attached as Appendix 3 and incorporated herein, shall be an undivided <br />one hundred percent (100%) interest in a certificate of deposit account established by the <br />BORROWER in the amount of one annual loan payment ($3,022.41), hereinafter referred to as CD <br />ACCOUNT, The STATE shall use the funds contained in the CD ACCOUNT for the purpose of paying <br />principal and interest due under this contract not otherwise paid by the BORROWER, Any amount <br />withdrawn by the STATE for this purpose shall be replenished by the BORROWER within sixty days <br />after such withdrawal. The STATE shall not disburse any loan funds under this contract until the <br />BORROWER has established the CD ACCOUNT, <br /> <br />12. Pledge Of Property. The BORROWER hereby irrevocably pledges to the STATE for purposes of <br /> <br />Plumb and Dailey Ditch Company <br /> <br />Page 5 of 12 <br /> <br />Loan Contract <br />