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<br />", <br />\ <br /> <br />h. To execute a Security Agreement and an Assignment of Deposit Account as Security to <br />secure the revenues pledged herein in accordance with the Pledge of Property Provisions of <br />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 BORROWER <br />shall submit to the STATE a letter from its attorney stating that it is the attorney'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 <br />shareholders and board of directors have validly adopted resolutions approving this contract; that <br />there are no provisions in the BORROWER'S articles of incorporation or by-laws or any state or local <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 loan in an amount up to $155,000 at an interest rate of 4% per annum for a <br />repayment term of thirty (30) years is attached as Appendix B and incorporated herein. <br /> <br />a. 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% per annum. The State <br />shall calculate the amount of interest accrued during PROJECT completion and shall bill the <br />BORROWER annually from the date of first disbursement and upon completion of the project. <br />The BORROWER shall pay the interest during construction within ten (10) days after receipt <br />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 amount. If the amount of the loan funds <br />disbursed to the BORROWER is less than 90% 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 />State and the BORROWER shall execute a contract amendment that will establish the final <br />ioan amount and amend or replace the loan documents that reflect the final loan amount, <br />including the Promissory Note, Security Agreement, Deed of Trust, and Assignment of <br />Certificate of Deposit. When the remaining loan funds are applied to reduce the final loan <br />amount, the annual loan payment shall remain the same as specified in the Promissory <br />Note, 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 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 /> <br />Otero Ditch Company <br /> <br />Page 5 of 13 <br /> <br />Loan Contract <br />