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i I <br /> emergency repair services, obsolescence reserves and debt service reserves. BORROWER shall <br /> deposit an amount equal to one-tenth of an annual payment into its debt service reserve fund on <br /> an annual basis for the first ten years of this loan. <br /> 14. Collateral During Repayment. The BORROWER shall not sell, convey, assign, grant, transfer, <br /> mortgage, pledge, encumber, or otherwise dispose of the CD ACCOUNT provided as security for this <br /> loan, or any of the assessment revenues pledged to repay the loan herein, so long as any of the <br /> principal, all accrued interest, and late charges, if any, on this loan which remain unpaid, without the <br /> prior written concurrence of the STATE. In the event of any such sale, transfer or encumbrance <br /> without the STATE'S written concurrence, the STATE may at any time thereafter declare all <br /> outstanding principal and interest on this loan immediately due and payable. <br /> 15. Change of Use of Water Shares During Term of Contract. The BORROWER agrees to <br /> immediately notify the STATE if any of the BORROWER'S stockholders changes the use of the <br /> water rights represented by its shares from irrigation to municipal or commercial use, at which <br /> time the STATE shall adjust the interest rate on that portion of the outstanding loan amount <br /> corresponding to the percentage of shares for which the use has been changed to the <br /> CWCB's municipal or commercial rate in effect at the time of the change of use of the water <br /> rights. The parties shall execute a contract amendment to effect said change in interest rate. <br /> 16. 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 /> a. declare the entire principal amount and accrued interest then outstanding immediately due and <br /> payable; <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 default, <br /> and add the amount of such expenditures to the principal of the loan amount; <br /> c. exercise its rights under the Promissory Note, Security Agreement, Assignment Of Deposit <br /> Account As Security, and Assignment Of Certificate Of Deposit; <br /> d. apply the funds contained in the CD ACCOUNT to the repayment of the loan; <br /> e. take any other appropriate action. <br /> All remedies described herein may be simultaneously or selectively andx suc s c i . •1 The <br /> provisions of this contract may be enforced by the STATE at its option without regard to prior waivers <br /> of previous defaults by the BORROWER, through judicial proceedings to require specific performance <br /> of this contract, or by such other proceedings in law or equity as may be deemed necessary by the <br /> STATE to ensure compliance with provisions of this contract and the laws and regulations under <br /> which this contract is executed. The STATE'S exercise of any or all of the remedies described herein <br /> shall not relieve the BORROWER of any of its duties and obligations under this contract. <br /> 17. 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 period <br /> and shall forward said statement to the STATE. <br /> 18. 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 /> Western Mutual Ditch Company Page 7 of 13 Loan Contract <br />