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<br />diversion structure as described in the Collateral Provisions herein, and <br /> <br />h. To execute a Security Agreement and an Assignment of Deposit Account as Security to <br />secure the revenues pledged herein in accordance with the Pledge of Property Provisions <br />herein. <br /> <br />Said resolutions are attached hereto as Appendix 1 and incorporated herein. <br /> <br />8. 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 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 />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 local <br />law that prevent this contract from binding the BORROWER; and that the contract 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 debt in the amount of $50,000 at the interest rate of 3,5% 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 <br />for 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 loan funds are disbursed by the STATE to the <br />BORROWER during construction, interest shall accrue at the rate of 3.5% per annum, The <br />amount of the interest accrued during construction shall be calculated by the STATE and the <br />BORROWER shall repay that amount to the STATE either within ten (10) days after the date the <br />STATE determines that the PROJECT has been substantially completed, or, at the STATE'S <br />discretion, the amount shall be deducted from the final disbursement of loan funds that the <br />STATE makes to the BORROWER. <br /> <br />10. Changes. The STATE 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, in the form attached hereto as Appendix 3, The REVISION LETTER shall not be <br />valid until approved by the State Controller or such assistant as he may designate, Upon proper <br />execution and approval, the REVISION LETTER shall become an amendment to this contract and, <br />except for the Special Provisions of the contract, the REVISION LETTER shall supersede the <br />contract in the event of a conflict between the two, The parties understand and agree that the <br />REVISION LETTER 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 LETTER to decrease <br />the amount of the loan, the parties shall amend the Promissory Note and all documents executed <br />by the BORROWER to convey security interests to the STATE as required by this contract to reflect <br />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 /> <br />Smith Irrigation Ditch <br /> <br />Page 5 of 13 <br /> <br />Loan Contract <br />