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'-', 8. Attorney's Opinion Letter. Prior to the execution of this contract by the STATE, the BORROWER shall submit to the STAT~ a letter from its attorney stating that it is the attorney's opinion that the person signing for the BORROWER was duly elected or appointed and has authority to sign such documents on behalf of the BORROWER and to. bind the BORROWER; that the BORROWER'S shareholders. and board of directors have validly adopted resolutions approving this contract; that there are no provisions in the BORROWER'S articles of incorporation or by-laws or any state or local law that prevent this contract from binding the BORROWER; and that the contract will be valid and binding against the BORROWER if entered into by the STATE. 9. Promissory Note Provisions. The Promissory Note setting forth the terms of repayment and evidencing this debt in the amount of $206,000 at an interest rate of 3.75% per annum for a term of thirty years is attached as Appendix B and incorporated herein. a. Revision Of Promissory Note, In the event the Borrower does not use all of the loan funds for construction of the Project, the Promissory Note may be adjusted in accordance with the Changes Provisions ofthis contract. b. Interest During Construction. As the loan funds are disbursed by the STATE to the BORROWER during construction, interest shall accrue at the rate of 3.75%. The amount of the interest accrued during construction shall be calculated by the STATE and the BORROWER shall repay that amount to the STATE either within ten (10) days after the date the STATE determines that the PROJECT has been substantially completed, or, at the STATE'S discretion, the amount shall be deducted from the final disbursement of loan funds that the STATE makes to the BORROWER. 10. Changes. The STATE may decrease the amount of the loan under this contract or extend the time for completion of the PROJECT through a REVISION LETTER, approved by the State Controller or his designee, in the form attached hereto as Appendix C. The REVISION LETTER shall not be valid until approved by the State Controller or such assistant as he may designate. Upon proper execution and approval, the REVISION LETTER shall become an amendment to this contract and, except for the Special Provisions of the contract, the REVISION LETTER shall supersede the contract in the event of a conflict between the two. The parties understand and agree that the REVISION LETTER may be used only for decreasing the final loan amount or to extend the time for completion of the PROJECT. 11. Warranties. a. The BORROWER warrants that by acceptance of the loan money pursuant to the terms of this contract and by the BORROWER'S representation herein, the BORROWER shall be estopped from asserting for any reason that it is not authorized or obligated to repay the loan money to the STATE as required by this contract. b. The BORROWER warrants that it has full power and authority to enter into this contract. The execution and delivery of this contract and the performance and observation of its terms, conditions and obligations have been duly authorized by all necessary actions of the BORROWER. c. The BORROWER warrants that it has not employed or retained any company or person, other than a bona fide employee working solely for the BORROWER, to solicit or secure this contract and has not paid or agreed to pay any person, company, corporation, individual, or firm, other than a bona fide employee, any fee, Pinon Mesa Ranches Community Association Page 5 of 13 Loan Contract