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<br />its articles of incorporation, bylaws and resolution, including, but not limited to, levying
<br />additional assessments to raise sufficient revenue to assure repayment of the loan to the
<br />STATE.
<br />
<br />d. Assessments For Operations, Maintenance And Reserves. Pursuant to its statutory
<br />authority, a'rticles of ir1corporation, by-laws, ar1d resolutior1s, the BORROWER shall levy
<br />assessmer1ts from time to time as necessary to provide sufficient funds for adequate operation
<br />and maintenance, emergency repair services, obsolescence reserves and debt service
<br />reserves. BORROWER shall deposit an amount equal to one-tenth of an annual payment into
<br />its debt service reserve fund one year from the first loan disbursement, and annually thereafter
<br />for the first ten years of this loan. In the ever1t that the Borrower applies funds from this
<br />account to repayment of the 10ar1, the Borrower shall replenish the account within ninety (90)
<br />days of withdrawal of the funds.
<br />
<br />13. Change of Use of Water Shares During Term of Contract. The BORROWER agrees to notify
<br />the STATE of any change of the use of the water rights represented by its shares from irrigation
<br />to municipal or commercial use, at which time the STATE, at its discretion, may adjust the
<br />interest rate on that portion of the outstanding loan amount corresponding to the percentage of
<br />shares for which the use has been changed to the CWCB's municipal or commercial rate in
<br />effect at the time of the change of use of the water rights. The parties shall execute a contract
<br />amendment to effect said change in interest rate. This provision shall not apply to the
<br />application by the City of Trinidad in Case No. 88CW61, Water Division 2, to change a portion
<br />of the water rights owned by the BORROWER to municipal use.
<br />
<br />14. Collateral During Repayment. The BORROWER shall not sell, convey, assign, grant, transfer,
<br />mortgage, pledge, encumber, or otherwise dispose of the COLLATERAL or other property
<br />provided as security for this loan, so long as any of the principal, all accrued interest, and
<br />late charges, if any, on this loan remain unpaid, without the prior written concurrence of
<br />the STATE. In the event of any such sale, transfer or encumbrance without the STATE'S
<br />written concurrence, the STATE may at any time thereafter declare all outstanding principal
<br />and 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, the
<br />STATE, at its option, may:
<br />
<br />a. declare the entire principal amount and accrued interest then outstanding immediately due
<br />and payable;
<br />
<br />b. incur and pay reasonable expenses for repair, maintenance, and operation of the PROJECT
<br />facilities herein described and such expenses as may be necessary to cure the cause of
<br />default, and add the amount of such expenditures to the principal of the loan amount;
<br />
<br />c. take posseSSion of the PROJECT facilities, repair, maintain, and operate or lease them;
<br />
<br />d. exercise its rights under the Promissory Note, Security Agreement, Assignment Of Deposit
<br />Account As Security, and Deed Of Trust,
<br />
<br />e. take any other appropriate action.
<br />
<br />All remedies described herein may be simultaneously or selectively and successively enforced.
<br />The provisions of this contract may be enforced by the STATE at its option without regard to prior
<br />waivers of previous defaults by the BORROWER, through jUdicial proceedings to require specific
<br />
<br />The Model Land & Irrigation Company
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<br />Page 7 of 13
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<br />Loan Contract
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