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<br />d. Assessments for operations, maintenance and reserves. The BORROWER shall, pursuant <br />to its statutory authority, articles of incorporation, by-laws, and resolutions, levy assessments <br />from time to time as necessary to provide sufficient funds for adequate operation and <br />maintenance, emergency repair services, obsolescence reserves and debt reserves. BORROWER <br />shall deposit an amount equal to one-tenth of an annual payment into its reserve debt service <br />fund on an annual basis for the first ten years of this loan. <br /> <br />17. Progress reports. The BORROWER shall, with the assistance of the CONSULTANT, prepare a <br />periodic progress report which contains a statement of the PROJECT costs expended for that period <br />and shall forward said statement to the STATE. <br /> <br />18. Periodic inspections. Throughout the term of this contract, the BORROWER shall permit a <br />designated representative of the STATE to make periodic inspections of the PROJECT. Such inspections <br />are solely for the purpose of verifying compliance with the terms and conditions of this contract. <br />Furthermore, such inspections shall cover the condition of the PROJECT, operating records, <br />maintenance records, and financial records, and shall not be construed nor interpreted as an approval <br />of the actual design and/or construction of any element of the PROJECT facilities. <br /> <br />19. Adhere to applicable laws. The BORROWER shall strictly adhere to all applicable federal, state, <br />and local laws and regulations that are in effect or may hereafter be established throughout the term <br />of this contract. <br /> <br />B. The STATE agrees as follows: <br /> <br />1. Agreement to loan money. ~~ ~ee I .. n to the BORROWER an amount not to <br />exceed that specIfIed In the promlss~~~~ .1:h,s contract. <br /> <br />2. Disbursements. After receiPt~4:1...'~~~rcigress report from the BORROWER, and review <br />and acceptance of the items therein . ~~penses as described below, the STATE will pay to <br />the BORROWER the amount set forth t report or such portion that has been approved by the <br />STATE. Such payment shall be made ithin thirty (30) days from the STATE'S approval of each <br />progress report. <br /> <br />3. Release after loan is repaid. Upon complete repayment to the STATE of the entire principal and <br />any accrued interest as specified in the promissory note provisions of this contract, the STATE agrees <br />to execute releases of deeds of trust to convey to the BORROWER and to Remy labrouche and Ruth <br />A. Labrouche all of the STATE'S right, title, and interest in and to the property described in the deeds <br />of trust, and to file a UCC-3 form with the Secretary of State to terminate all of the STATE'S rights <br />in and to the revenues pledged to repay this loan. <br /> <br />C. The STATE and the BORROWER mutually agree as follows: <br /> <br />1. Obligations of signatories. The STATE, the BORROWER, and the signatories to this contract, <br />Remy Labrouche and Ruth A. Labrouche, acknowledge and agree that all obligations of the BORROWER <br />under this contract shall apply as well to Remy labrouche and Ruth Labrouche as individuals. <br /> <br />2. Designated agent of the STATE. The CWCB, which includes its agents and employees, IS <br />hereby designated as the agent of the STATE for the purpose of this contract. <br /> <br />3. Contract is not assignable. This contract is not assignable by the BORROWER except with the <br />prior written approval of the STATE. <br /> <br />Vouga Reservoir Association <br /> <br />Page 8 of 1 2 <br /> <br />Loan Contract <br />