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<br />16. Progress Reports. The BORROWER shall, with the assistance of the CONSULTANT, prepare a' <br />periodic progress report which contains a statement of the PROJECT costs expended for that <br />period and submit said statement to the STATE. <br /> <br />17. Periodic Inspections. Throughout the term of this contract, the BORROWER shall permit a <br />designated representative of the STATE to make periodic inspections of the PROJECT. Such <br />inspections are solely for the purpose of verifying compliance with the terms and conditions of this <br />contract. Furthermore, such inspections shall cover the condition of the PROJECT, operating <br />records, maintenance records, and financial records, and shall not be construed nor interpreted as <br />an approval of the actual design and/or construction of any element of the PROJECT facilities, <br /> <br />18. Adhere To Applicable Laws. The BORROWER shall strictly adhere to all applicable federal. state, <br />and local laws and regulations that are in effect or may hereafter be established throughout the <br />term of this contract. <br /> <br />19. No Discrimination Of Services. The services of said PROJECT shall be made available within its <br />capacity and in accordance with all pertinent statutes, rules and regulations, and operational <br />guidelines to all persons in the BORROWER'S service area without discrimination as to race, color, <br />religion, or national origin at reasonable charges (including assessments or fees), whether for one <br />or more classes of service, in accordance with a schedule of such charges formally adopted by <br />the BORROWER, as may be modified from time to time. <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 periodic progress report from the BORROWER, and review <br />and acceptance of the items therein as eligible expenses as described below, the STATE will pay <br />to the BORROWER the amount set forth in the report or such portion that has been approved by the <br />STATE. Such payment shall be made within thirty (30) days from the STATE'S approval of each <br />progress report. <br /> <br />3. Release After Loan Is Repaid. Upon complete repayment to the STATE of the entire principal, all <br />accrued interest, and late charges, if any, as specified in the promissory note, the STATE agrees to <br />execute a release of deed of trust to convey to the BORROWER all of the STATE'S right, title, and <br />interest in and to the property described in the deed of trust, to file a UCC-3 form with the <br />Secretary of State to terminate all of the STATE'S rights in and to the BORROWER'S right to receive <br />assessment revenues pledged to repay this loan, and to execute releases of the Assignment of <br />Certificate of Deposit and the Assignment of Deposit Account as Security, <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 <br />hereby 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 <br />prior 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, <br />employee, or servant of the BORROWER shall be. or shall be deemed to be, an employee, agent, <br /> <br />Otero Ditch Company <br /> <br />Page 8 of 13 <br /> <br />Loan Contract <br />