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s necessary to provide sufficient funds for adequate operation and maintenance, <br />mergency repair services, obsolescence reserves and debt reserves. The BORROWER <br />hall deposit an amount equal to one -tenth of an annual payment into its reserve debt <br />ervice fund on an annual basis for the first ten years of this loan. <br />8. Collateral. Part of the security provided for this loan, as evidenced by the executed <br />Assignme it of Certificate of Deposit attached as APPENDIX C and incorporated herein, shall be <br />an undivic ed one hundred percent interest in a certificate of deposit account established by the <br />BORROWER in the amount of one annual loan payment ($4,397.57), hereinafter referred to as CD <br />ACCOUNT. The STATE shall use the funds contained in the CD ACCOUNT for the purpose of <br />paying pri icipal and interest due under this contract not otherwise paid by the BORROWER. Any <br />amount ithdrawn by the STATE for this purpose shall be replenished by the BORROWER within <br />sixty days after such withdrawal. The STATE shall not disburse any loan funds under this <br />contract L ntil the BORROWER has established the CD ACCOUNT. <br />9. Collateral during repayment. The DI CT and the BORROWER shall not sell, convey, <br />assign, grEint, transfer, mortgage, pledgAhece r,4therwise dispose of any collateral for <br />this loan, including the revenues pledgefor'tfie use of wa ter revenues to repay <br />the BORR WER'S 1996 SWCD loan, so principal and any accrued interest <br />required y the Promissory Note Provi tract remain unpaid, without the prior <br />written cc ncurrence of the STATE. <br />'Y <br />10 Remedies for default. Upon de f he payments herein set forth to be made by <br />the BORR WER, or default in the performa any covenant or agreement contained herein, <br />the STATE at its option, may: <br />a. declare the entire principal amount and accrued interest then outstanding immediately <br />du and payable; <br />b. incur and pay reasonable expenses for repair, maintenance, and operation of the <br />PR SECT facilities herein described and such expenses as may be necessary to cure the <br />ca se of default, and add the amount of such expenditures to the principal of the loan <br />C. <br />d. <br />e. <br />All r <br />enforced <br />regard t <br />judicial <br />proceedi <br />with pro <br />executed <br />the DIST <br />11. 4 conditio <br />apply the funds contained in the CD ACCOUNT to repayment of the loan; <br />act upon the promissory note and security interest; <br />take any other appropriate action. <br />medies described herein may be simultaneously or selectively and successively <br />The provisions of this contract may be enforced by the STATE at its option without <br />prior waivers of previous defaults by the DISTRICT and /or the BORROWER, through <br />roceedings to require specific performance of this contract, or by such other <br />gs in law or equity as may be deemed necessary by the STATE to ensure compliance <br />,isions of this contract and the laws and regulations under which this contract is <br />The STATE'S exercise of any or all of the remedies described herein shall not relieve <br />CT or the BORROWER of any of its duties and obligations under this contract. <br />event of a conflict. In the event of conflict between the terms of this contract and <br />as set forth in any of the appendices, the provisions of this contract shall control. <br />Page 6 of 12 <br />