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<br />adjusting additional assessments to raise sufficient revenue to assure repayment of the loan <br />to the STATE. <br /> <br />e. Levy assessments for operations, maintenance, reserves, and debt reserves. The <br />BORROWER shall, pursuant to the statutes, its articles of incorporation, by-laws, and <br />resolutions, levy assessments from time to time as necessary to provide sufficient funds for <br />adequate operation and maintenance, emergency repair services, obsolescence reserves, and <br />debt reserves. <br /> <br />11. Progress reports. hall, with the assistance of the CONSULTANT, prepare a <br />progress report which contal t of the actual PROJECT construction costs expended for <br />that month ~n~ s~all fms~tatrment to the STA~E. . .. . <br /> <br />12. Periodic inspections. ~ l~all permit the STATE to make penodlc inspections of <br />its operations and accounts by a designated representative of the STATE. Any such inspections by <br />the STATE are solely for the purpose of verifying compliance with the terms and conditions of the <br />contract and shall not be construed nor interpreted as an approval of the actual design and/or <br />construction of any element of the PROJECT. <br /> <br /> <br />13. Adhere to applicable laws. The BORROWER shall strictly adhere to all applicable federal, state, <br />and local laws and regulations that have been or may hereafter be established. <br /> <br />B. The STATE agrees as follows: <br /> <br />1. Agreement to loan money. The STATE agrees to loan to the BORROWER an amount not to <br />exceed that specified in the promissory note provisions of this contract. <br /> <br />2. Disbursements. After receipt of the monthly progress report from the BORROWER, and review <br />and acceptance of the items therein as eligible expenses as described below, the STATE will pay to <br />the BORROWER the amount of the report or such portion that has been approved by the STATE. Such <br />payment shall be made within thirty (30) days from the approval of each monthly progress report. <br /> <br />3. Release after loan is repaid. Upon completion of repayment to the STATE of the entire principal <br />and any accrued interest as specified in the promissory note provisions of this contract, the STATE <br />agrees to execute a release of deed of trust to convey to the BORROWER all of the STATE'S right, title, <br />and interest in and to the PROJECT and any other property described in Appendix B. <br /> <br />C. The STATE and the BORROWER mutually agree as follows: <br /> <br />1. Designated agent of the STATE. The CWCB, which includes its agents and employees, is hereby <br />designated as the agent of the STATE for the purpose of this contract. <br /> <br />2. Contract is not assignable. This contract is not assignable by the BORROWER except with the prior <br />written approval of the STATE. <br /> <br />3. Contract relationship. The parties to this contract intend that the relationship between them <br />contemplated by this contract is that of lender-borrower, not employer-employee. No agent, employee, or <br />servant of the BORROWER shall be, or shall be deemed to be, an employee, agent, or servant of the STATE. The <br />BORROWER will be solely and entirely responsible for its acts and the acts of its agents, employees, servants, <br />engineering firms, construction firms, and subcontractors during the performance of this contract. <br /> <br />ELMWOOD LATERAL DITCH COMPANY <br /> <br />Page 7 of 11 <br /> <br />LOAN CONTRACT <br />