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<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 /> <br />14. Collateral During Repayment. The BORROWER shall not sell, convey, assign, grant, transfer, <br />mortgage, pledge, encumber, or othelWise 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 /> <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 /> <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 /> <br />a. declare the entire principal amount and accrued interest then outstanding immediately due and <br />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 default, <br />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, and Assignment Of Certificate Of Deposit; <br /> <br />d, apply the funds contained in the CD AccOUNT to the repayment of the loan; <br /> <br />e. take any other appropriate action, <br /> <br />All remedies described herein may be simultaneously or selectively and successively enforced, 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 /> <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 fOlWard said statement to the STATE, <br /> <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 /> <br />Western Mutual Ditch Company <br /> <br />Page 7 of 13 <br /> <br />Loan Contract <br />