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<br />the STATE, the BORROWER shall immediately take all necessary action consistent with its <br />statutory authority, its articles of incorporation, bylaws and resolution, including, but not <br />limited to, levying additional assessments to raise sufficient revenue to assure <br />repayment of the loan to the STATE. <br /> <br />d. Assessments For Operations, Maintenance And Reserves. Pursuant to its statutory <br />authority, articles of incorporation, by-laws, and resolutions, the BORROWER shall levy <br />assessments from time to time as necessary to provide sufficient funds for adequate <br />operation and maintenance, emergency repair services, obsolescence reserves and <br />debt service reserves. BORROWER shall deposit an amount equal to one-tenth of an <br />annual payment into its debt service reserve fund one year from the first loan <br />disbursement, and annually thereafter for the first ten years of this loan. <br /> <br />13. Change of Use of Water Shares During Term of Contract. The BORROWER agrees to <br />notify the STATE of any change of the use of the water rights represented by its shares <br />from irrigation to municipal or commercial use, at which time the STATE shall adjust the <br />interest rate on that portion of the outstanding loan amount corresponding to the <br />percentage of shares for which the use has been changed to the CWCB's municipal or <br />commercial rate in effect at the time of the change of use of the water rights. The parties <br />shall execute a contract amendment to effect said change in interest rate. <br /> <br />14. Collateral During Repayment. The BORROWER shall not sell, convey, assign, grant, <br />transfer, mortgage, pledge, encumber, or otherwise dispose of the property provided as <br />security for this loan, so long as any of the principal, all accrued interest, and late charges, <br />if any, on this loan remain unpaid, without the prior written concurrence of the STATE. In <br />the event of any such sale, transfer or encumbrance without the STATE'S written <br />concurrence, the STATE may at any time thereafter declare all outstanding principal and <br />interest on this loan immediately due and payable. <br /> <br />15. Remedies For Default. Upon default in the payments herein set forth to be made by the <br />BORROWER, or default in the performance of any covenant or agreement contained herein, <br />the STATE, at its option, may: <br /> <br />a. declare the entire principal amount and accrued interest then outstanding immediately <br />due and payable; <br /> <br />b. incur and pay reasonable expenses for repair, maintenance, and operation of the <br />PROJECT facilities herein described and such expenses as may be necessary to cure the <br />cause of default, and add the amount of such expenditures to the principal of the loan <br />amount; <br /> <br />C. exercise its rights under the Promissory Note, Security Agreement, Assignment Of <br />Deposit Account As Security, and Deed Of Trust, <br /> <br />d, take any other appropriate action. <br /> <br />All remedies described herein may be simultaneously or selectively and successively <br />enforced. The provisions of this contract may be enforced by the STATE at its option <br /> <br />Ryan Gulch Reservoir Company <br /> <br />Page 7 of 13 <br /> <br />Loan Contract <br />