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purpose of repaying its obligations under this contract pursuant to 9 7-42-104(2), CRS (1986). In addition, in the event the assessments levied by the BORROWER become insufficient to assure repayment to the STATE as required by the terms and conditions of this contract, then the BORROWER shall immediately take all necessary action consistent with its statutory authority, its articles of incorporation, by-laws and resolutions, including but not limited to, levying additional assessments to raise sufficient revenue to assure repayment of the loan to the STATE. d. Assessments for operations, maintenance and reserves. The BORROWER shall, pursuant to its statutory authority, articles of incorporation, by-laws, and resolutions, levy assessments from time to time as necessary to provide sufficient funds for adequate operation and maintenance, emergency repair services, obsolescence reserves and debt reserves. BORROWER shall deposit an amount equal to one-tenth of an annual payment into its reserve debt service fund on an annual basis for the first ten years of this loan. 16. Progress reports. The BORROWER shall, with the assistance of the CONSULTANT, prepare a periodi~ progress report which contains a statement of the PROJECT construction costs expended for that period and shall forward said statement to the STATE. 1 7. Periodic inspections. Throughout the term of this contract, the BORROWER shall permit a designated representative of the STATE to make periodic inspections of the PROJECT. Such inspections are solely forthe purpose of verifying ,compliance with the terms and conditions of this contract. Furthermore", such inspections shall cover the condition of the PROJECT, operating records, maintenance fecords, and financial rdcords, and shall not be construed nor interpreted as an approval of the actual~eSign an"d/or construction of any e.lement of the PROJECT facilitiep ~ -r 18. Adhere to applicable laws.<TheBoRRowER shall strictly adhere tOJ a~licabGtlDtat.e, and local laws and regulations that are in effect or may hereafter be establ" r~~ the term of this contract. .., uL T 19. No discrimination of services. The services of said PROJECT shall be made available w1tmtn its capacity and in accordance with all pertinent statutes, rules and regulations, and operational guidelines to all persons in the BORROWER'S service area without discrimination as to race, color, religion, or national origin at reasonable charges (including assessments or fees). whether for one or more classes of service, in accordance with a schedule of such charges formally adopted by the BORROWER, as may be modified from time to time. B. The STATE agrees as follows: 1. Agreement to loan money. The STATE agrees to loan to the BORROWER an amount not to exceed that specified in the Promissory Note Provisions of this contract. 2. Disbursements. After receipt of the periodic progress report from the BORROWER, and review and acceptance of the items therein as eligible expenses as described below, the STATE will pay to the BORROWER the amount set forth in the report or such portion that has been approved by the STATE. Such payment shall be made within thirty (30) days from the STATE'S approval of each progress report. 3. Release after loan is repaid. Upon complete repayment to the STATE of the entire principal and any accrued interest as specified in the promissory note provisions of this contract, the STATE agrees to execute a release of deed of trust to convey to the BORROWER all of the STATE'S right, title, and interest in and to the property described in Appendix B, and to execute a UCC-3 form to terminate all of the STATE'S rights in and to the revenues pledged to repay this loan. Windsor Reservoir and Canal Company Page 7 of 1 2 Loan Contract