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<br />statutory authority, articles of incorporation, by-laws, and resolutions, the BORROWER <br />shall levy assessments from time to time as necessary to provide sufficient funds for <br />adequate operation and maintenance, emergency repair services, obsolescence <br />reserves and debt service reserves. BORROWER shall deposit an amount equal to <br />one-tenth of an annual payment into its debt service reserve fund on an annual basis <br />for the first ten years of this loan. <br /> <br />11. Collateral During Repayment. The BORROWER shall not sell, convey, assign, grant, <br />transfer, mortgage, pledge, encumber, or otherwise dispose of the CD ACCOUNT provided <br />as security for this loan, or any of the water charge or assessment revenues pledged to <br />repay the loan herein, so long as any of the principal and any accrued interest on this <br />loan which remain unpaid, without the prior written concurrence of the STATE. <br /> <br />12. In Event Of A Conflict. In the event of conflict between the terms of this contract and <br />conditions as set forth in any of the appendices, the provisions of this contract shall <br />control. <br /> <br />13. 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 <br />herein,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 <br />the cause of default, and add the amount of such expenditures to the principal of the <br />loan amount; <br /> <br />c. act upon the promissory note, security agreement, and/or Assignment of Deposit <br />Account as Security, <br /> <br />d. apply the funds contained in the CD ACCOUNT to the repayment of the loan pursuant <br />to the Assignment of Certificate of Deposit; <br /> <br />e. 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 />without regard to prior waivers of previous defaults by the BORROWER, through judicial <br />proceedings to require specific performance of this contract, or by such other <br />proceedings in law or equity as may be deemed necessary by the STATE to ensure <br />compliance with provisions of this contract and the laws and regulations under which this <br />contract is executed. The STATE'S exercise of any or all of the remedies described <br />herein shall not relieve the BORROWER of any of its duties and obligations under this <br />contract. <br /> <br />17. Progress Reports. The BORROWER shall, with the assistance of the CONSULTANT, <br />prepare a periodic progress report which contains a statement of the PROJECT costs <br />expended for that period and shall forward said statement to the STATE. <br /> <br />18. Periodic Inspections. Throughout the term of this contract, the BORROWER shall permit <br />a designated representative of the STATE to make periodic inspections of the PROJECT. <br /> <br />Pinon Mesa Ranches Community Association <br /> <br />Page 7 of 13 <br /> <br />Loan Contract <br />