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<br />\ <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 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 event that the Borrower applies funds from this <br />account to repayment of the loan, 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. <br /> <br />14.Collateral/Security During Repayment. The BORROWER shall not sell, convey, assign, grant, <br />transfer, mortgage, pledge, encumber, or otherwise dispose of any of the property provided <br />as security for this loan, so long as any of the principal, all accrued interest, and late <br />charges, if any, on this loan remain unpaid, without the prior written concurrence of the <br />STATE. In 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, 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, exercise its rights under the Promissory Note, Security Agreement, Assignment Of Deposit <br />Account As Security, Assignment Of Certificate Of Deposit, and/or Deed Of Trust, <br /> <br />d, apply the funds contained in the CD ACCOUNT to the repayment of the loan; and/or <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 />performance of this contract, or by such other proceedings in law or equity as may be deemed <br />necessary by the STATE to ensure compliance with provisions of this contract and the laws and <br />regulations under which this contract is executed. The STATE'S exercise of any or all of the <br />remedies described herein shall not relieve the BORROWER of any of its duties and obligations <br />under this contract. <br /> <br />Otero Ditch Company <br /> <br />Page 7 of 13 <br /> <br />Loan Contract <br />