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<br />e, To make annual deposits to a debt service reserve fund in accordance with the Pledge of <br />Property Provisions of this contract, and <br /> <br />f. To execute and deliver a deed of trust to ccnvey a security interest to the STATE in certain <br />property as described in the Collateral Provisions of this contract, and <br /> <br />g, To execute a Security Agreement and (in Assignment of Deposit Acccunt as Security to <br />secure the revenues pledged herein in accordance with the Pledge of Property Provisions of <br />this contract. <br /> <br />Said resolutions are attached hereto as Appendix A and inccrporated herein, <br /> <br />8. Attorney's Opinion Letter. Prior to the execution of this ccntract by the STATE, the BORROWER <br />shall submit to the STATIO a letter from its attomey stating that it is the attomey'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 bind the BORROWER; that the BORROWER'S <br />stockholders and board of directors have validly adopted resolutionS approving this ccntract; that <br />there are no provisions in the BORROWER'S articles of incorporation or by-laws or any state or local <br />law that prevent this ccntract from binding the BORROWER; and that the ccntract will be valid and <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 an amount up to $335,000 at an interest rate of 3,75% per annum for a <br />repayment term of 30 years is attached as Appendix B and incorporated herein, <br /> <br />a. Interest During Construction. As the loan funds are disbursed by the STATE to the <br />BORROWER during ccnstruction, interest shall accrue at the rate of 3.75%, The STATE shall <br />calculate the amount of the interest accrued during ccnstruction 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 <br />of the loan, which will result in the annual loan payment remaining the same, and the time <br />for 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 amendmentlhat <br />will establish the final loan amount and amend or replace the loan documents that reflect <br />the final loan amount, including the Promissory Note, Security Agreement, Deed of Trust, <br />and Assignment of Deposit Account as Security, <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 />executiori and delivery of this ccntract and the performance and observation of its terms, <br /> <br />The Model Land & Irrigation Company <br /> <br />Page 5 of 13 <br /> <br />Loan Contract <br />