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<br />revenues from its members for repayment of this loan, in accordance with the Pledge of <br />Property Provisions herein, and <br /> <br />c. To place the Pledged Revenues in a special account separate and apart from other BORROWER. <br />revenues, and <br /> <br />d. To make annual payments in accordance with the promissory note, and <br /> <br />e. To execute an Assignment of Deposit Account as Security and a Security Agreement to secure <br />the Pledged Revenues and the BORROWER'S right to receive those revenues in accordance with <br />the Pledge of Property Provisions of this contract; and <br /> <br />f. To obtain a certificate of deposit to serve as collateral in the amount of one annual loan <br />payment ($35,691.46) as security for the loan, and to execute an assignment of certificate of <br />deposit as described in the Collateral Provisions of this contract; and <br /> <br />g. To execute a deed of trust to convey a security interest to the STATE in the water rights <br />purchased with the proceeds of this loan; and <br /> <br />h. To execute a security agreement and an Assignment of Escrow Account as Security to convey <br />a security interest to the STATE in the loan funds contained in the escrow account prior to <br />closing on the water rights. <br /> <br />Said resolutions are attached hereto as AppendilC 1 and incorporated herein. <br /> <br />4. Attorney's Opinion Letter, Prior to the execution of this contract by the STATE, the BORROWER <br />,shall submit to the STATE a letter from its allomey stating that it is the attomey's opinion that the <br />person signing for the BORROWER was duly elected or appointed and has authority to sign such <br />documents on behalf of the BORROWER and to bind the BORROWER; that the BORROWER'S board of <br />directors has validly adopted a resolution approving this contract; that there are no provisions in the <br />BORROWER'S articles of incorporation or by-laws or any state or local law that prevent this contract <br />from binding the BORROWER; and that the contract will be valid and binding against the BORROWER <br />if entered into by the STATE. <br /> <br />5. Promissory Note Provisions. The Promissory Note setting forth the terms of repayment and <br />evidencing this debt 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 funds for <br />the Project, the Promissory Note may be adjusted in accordance with the Changes Provisions <br />of this contract. <br /> <br />b. Interest During Completion of PROJECT. As the loan funds are disbursed by the STATE to the <br />BORROWER during PROJECT completion, interest shall accrue at the rate of 3% per annum. The <br />amount of the interest accrued during PROJECT completion on the funds that have been <br />disbursed shall be calculated by the STArE, and the BORROWER shall repay that amount to the <br />STATE within ten (10) days after the date the STATE determines that the PROJECT has been <br />substantially completed. Under this contract, substantial completion of the PROJECT means <br />acquisition of the Box Springs Water Rights by the BORROWER, and full payments by the <br />BORROWER to Reid Cattle Company and to Smith Cattle, Inc. pursuant to the Settlement <br />Agreement. <br /> <br />c. The Amortization Schedule, attached hereto as Appendix 3 and incorporated herein, sets forth <br />how the annual payments will be allocated to the payment of accrued interest and to the <br />reduction of principal. <br /> <br />6. Changes. The STATE may decrease the amount of the loan under this contract or extend the time <br />for completion of the PROJECT through a REVISION LETTER, approved by the State Controller or his <br />designee, in the form attached hereto as Appendix 4. The REVISION LETTER shall not be valid until <br /> <br />The Horse Creek Water Users Association <br /> <br />P~ge 3 of 11 <br /> <br />Loan Contrad <br />