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<br />calcuiate 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 ioan 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 appiy 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, Deed of <br />Trust, 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 Collateral Provisions of this <br />contract is not encumbered by any other deeds of trust to or liens of any party other than the <br />STATE or in any other manner. <br /> <br />11. Collateral. Part of the security provided for this ioan, as evidenced by the executed Deed of <br />Trust attached as Appendix 3 and incorporated herein, shall be an undivided fifty percent (50%) <br />interest in the Foothills Reservoir, as more particularly described in the attached Deed of Trust, <br />hereinafter referred to as "collaterai." <br /> <br />12. Pledge Of Property. The BORROWER hereby irrevocably pledges to the STATE for purposes of <br />repayment of this loan revenues from assessments levied for that purpose as authorized by the <br />BORROWER'S resolution and all of the BORROWER'S rights to receive said assessment revenues <br />from its members (hereinafter collectively referred to as the "pledged property"). Furthermore, <br />BORROWER agrees that <br /> <br />a. Revenues For This Loan Are To Be Kept Separate. The BORROWER hereby agrees to set <br />aside and keep the pledged revenues in an account separate from other BORROWER <br />revenues, and warrants that it shall not use the pledged revenues for any other purpose. <br /> <br />Highland Ditch Company <br /> <br />Page 5 of 12 <br /> <br />Loan Contract <br />