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<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 $143,000 at the interest rate of 3.75% per annum for a term <br />of thirty 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 <br />funds for construction of the PROJECT, the Promissory Note may be adjusted in accordance <br />with the 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 3.75% 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 confiict 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 decreas3 <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 />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 /> <br />The Hawkeye Lateral Ditch Company <br /> <br />Page 5 of 13 <br /> <br />Loan Contract <br />