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<br />service reserves. BORROWER shall deposit an amount equal to one-tenth of an annual <br />payment into its debt service reserve fund one year from the first loan disbursement, and <br />annually thereafter for the first ten years of this loan. In the event that the Borrower <br />applies funds from this account to repayment of the loan, the Borrower shall replenish the <br />account within ninety (90) days of withdrawal of the funds, <br /> <br />14. Change of Use of Water Shares During Term of Contract. The BORROWER <br />agrees to notify the STATE of any change of the use of the water rights represented by <br />its shares from irrigation to municipal or commercial use, at which time the STATE, at its <br />discretion, may 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 <br />water rights. The parties shall execute a contract amendment to effect said change in <br />interest rate. <br /> <br />15. Collateral During Repayment. The BORROWER shall not sell, convey, assign, <br />grant, transfer, mortgage, pledge, encumber, or otherwise dispose of the property <br />provided as security for this loan, so long as any of the principal, all accrued <br />interest, and late charges, if any, on this loan remain unpaid, without the prior <br />written concurrence of the STATE. In the event of any such sale, transfer or <br />encumbrance without the STATE'S written concurrence, the STATE may at any time <br />thereafter declare all outstanding principal and interest on this loan immediately due <br />and payable. <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, <br />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. exercise its rights under the Promissory Note, Security Agreement, Assignment of <br />Deposit 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 <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 proceedings <br />in law or equity as may be deemed necessary by the STATE to ensure compliance with <br />provisions of this contract and the laws and regulations under which this contract is <br />executed. The STATE'S exercise of any or all of the remedies described herein shall not <br />relieve the BORROWER of any of its duties and obligations under this contract. <br /> <br />Slerling Irrigation Company <br /> <br />Page 7 of 13 <br /> <br />Loan Contract <br />