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<br />secure the revenues pledged herein in accordance with the Pledge of Property <br />Provisions of this contract. <br /> <br />Said resolutions are attached hereto as Appendix A 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 attorney'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; <br />that 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 <br />and evidencing this loan in the amount of LiP to $1,250,000 at an interest rate of 3.75% per <br />annum for a term of 30 years is attached as ApPE1ndix B and incorporated herein. <br /> <br />a. Interest During Construction. As thp loan funds are disbursed by the STATE to the <br />BORROWER during construction, interest shall accrue at the rate of 3.75%. The STATE <br />shall calculate the amount of the interest accrued during construction and the BORROWER <br />shall repay that amount to the STATE either within ten (10) days after the date the STATE <br />determines that the PROJECT has bepn substantially completed, or, at the STATE'S <br />discretion, said interest shall be deduct@d from the final disbursement of loan funds that <br />the STATE makes to the BORROWER. <br /> <br />b. Final loan amount. In the event that the final loan amount is less than the authorized <br />loan amount, the STATE shall apply the remaining loan funds to prepayment of the loan <br />if the remaining funds equal less thar1 10% of the authorized loan amount. If the <br />remaining loan funds equal more than 10% of the authorized loan amount, the STATE <br />may apply those funds to prepayment Of the loan with the BORROWER'S consent, or the <br />parties may execute a REVISION LETTER- as described below to document the final loan <br />amount and reamortize the annual payment. When such remaining loan funds are <br />applied to prepayment of the loan, the annual loan payment amount shall remain the <br />same, resulting in a reduced term of repayment. <br /> <br />10. Warranties. <br /> <br />a. The BORROWER warrants that, by acceptance of the loan money pursuant to the terms <br />of 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 contract. <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 actions of <br />the BORROWER. <br /> <br />Leroux Creek Water Users' Association <br /> <br />Page 5 of 13 <br /> <br />Loan Contract <br />