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<br />, " <br /> <br />described in the Collateral Provisions of this contract, and <br /> <br />g, To execute and deliver a deed of trust to convey a security interest to the STATE in certain <br />property as described in the Collateral Provisions of this contract, and <br /> <br />h, To execute a Security Agreement and an Assignment of DepDsit Account as Security to <br />secure the revenues pledged herein in accordance with the Pledge of Property Provisions <br />of this contract. <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 <br />BORROWER shall submit to the STATE a letter from its attomey stating that it is the attomey's <br />opinion that the person signing for the BORROWER was duly elected or appointed and has <br />authority to sign such documents on behalf of the BORROWER and to bind the BORROWER; that <br />the BORROWER'S shareholders and board of directors have validly adopted resolutions <br />approving this contract; that there are no provisions in the BORROWER'S articles of <br />incorporation or by-laws or any state or local law ,that prevent this contract from binding the <br />BORROWER; and that the contract will be valid and binding against the BORROWER if entered <br />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 $250,000 at an interest rate of 4% per annum for a term <br />of 30 years is attached as Appendix 2 and incorporated herein, <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 4%. The STATE shall <br />calculate the amount of the interest accrued during PROJECT completion and shall bill <br />the BORROWER upon completion of the PROJECT. The BORROWER shall pay the interest <br />during construction within ten (10) days after receipt of said bill. <br /> <br />b. Final loan amount. In the event that the amount of the loan funds disbursed to the <br />BORROWER is at least 90% of the AUTHORIZED LOAN AMOUNT, the STATE shall apply the <br />remaining loan funds to reduce the final loan amDunt. If the amount of the loan funds <br />disbursed to the BORROWER is less than 90% of the AUTHORIZED LOAN AMOUNT, the <br />STATE may apply those funds to prepayment of the loan with the BORROWER'S consent, <br />or the State and the BORROWER shall execute a REVISION LETTER, attached hereto as <br />Appendix 3 and incorporated herein, which will establish the final loan amount and <br />amend or replace the loan documents that reflect the final loan amount, including the <br />Promissory Note, Security Agreement, Deed of Trust, and Assignment of Certificate of <br />Deposit. When the remaining loan funds are applied to reduce the final loan amount, <br />the annual loan payment shall remain the same as specified in the Promissory Note, <br />however the time for repayment will be reduced. <br /> <br />10. Warranties. <br /> <br />a, The BORROWER warrants that, by acceptance of the loan money pursuant to the terms of <br />this contract and by the BORROWER'S representation herein, the BORROWER shall be <br />estopped from asserting for any reason that it is not authorized or obligated to repay the <br />loan money to the STATE as required by this cDntract. <br /> <br />b, The BORROWER warrants that it has full power and authority to enter into this contract. <br />The execution and delivery of this contract and the performance and observation of its <br />terms, conditions and obligations have been duly authorized by all necessary actionc ,,' <br /> <br />Chilcott Ditch Company <br /> <br />Page 5 oi ; 3 <br />