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-, , .. ..., a. Principal amount. The principal amount of the loan shall be the total amountcif funds advanced by the STATE to the BORROWER under the terms of this contract, not to exceed the MAXIMUM LOAN AMOUNT of $80,000. b. Interest rate. The interest on the principal shall accrue at the rate of two percent (2%) per annum on all funds advanced to BORROWER during PROJECT construction. c. Duration. The repayment period of this loan shall be twenty (20) years, d, Loan payment. If the amount borrowed is the MAXIMUM LOAN AMOUNT, payments would be made in twenty (20) annual installments of Five Thousand Three Hundred Seventy-Seven Dollars and twenty-six Cents ($5,377.26), which is principal and interest, The first installment shall be due and payable on the first day of the month, one year after the month that the STATE declares that the PROJECT has been substantially completed, and yearly thereafter until the entire principal sum and any accrued interest shall have been paid, Installment payments are to be made payable to the CWCB at the address given below. e. Interest during construction. The BORROWER shall repay to the STATE interest during construction which will be calculated monthly at an equivalent rate of two percent (2%) per annum on each loan advance disbursed to the BORROWER during construction. Said accumulated interest shall be paid to the STATE as a single lump sum on the first day of the month following the month that the STATE declares that the PROJECT has been substantially completed. The actual interest which will accumulate during construction is unknown and cannot be calculated until the conclusion of construction, f. Prepayment conditions, The BORROWER may prepay all or any of the loan at any time, without penalty, These payments will be applied first to any accrued interest and then to reduce the principal amount. 9, Deed of trust, The security provided for this loan and as evidenced by the executed deed of trust as shown in Appendix B shall be an undivided one hundred percent (100%) interest in the following: All portions of the Elmwood Lateral Ditch beginning near 12340 17 1/2 Road, Section 5, T1S, R1W, Ute Principal Meridian, Mesa County, State of Colorado, and all appurtenant structures thereto. a, Remedies for default, Upon default in the payments herein set forth to be made by the BORROWER, or default in the performance of any covenant or agreement contained herein, the STATE, at its option, may: (i) declare the entire principal amount and accrued interest then outstanding immediately due and payable; (ii) for the account of the BORROWER, incur and pay reasonable expenses for repair, maintenance, and operation of the PROJECT herein described and such expenses as may be necessary to cure the cause of default; (iii) take possession of the PROJECT, repair, maintain, and operate or lease it; (iv) act upon the deed of trust, security interest, and promissory note; ELMWOOD LATERAL DITCH COMPANY Page 5 of 11 LOAN CONTRACT