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<br /> <br />(,') <br /> <br />foregoing requirements by the BORROWER, the approval of the STATE will not be <br />unreasonably withheld and that the BORROWER may issue subordinate debt without the <br />approval olthe STATE. <br /> <br />f. Annual Statement of Debt Coverage. Each year during the term of this contract, the <br />BORROWER shall submit to the STATE an annual audit report and a certificate of debt <br />seNice coverage from a Certified Public Accountant. <br /> <br />12. Collateral During Repayment. Except as otherwise provided herein, the BORROWER shall <br />not sell, convey, assign, grant, transfer, mortgage, pledge, encumber, or otherwise dispose <br />of the Project or any system revenues pledged herein to repay the loan, so long as any of <br />the principal, all accrued interest, and late charges, if any, on this loan remain unpaid, <br />without the prior written concurrence of the STATE. In the event of any such sale, transfer <br />or 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 and <br />payable. <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 by the BORROWER of any covenant or agreement <br />contained 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 the <br />cause of default, and add the amount of such expenditures to the principal of the loan <br />amount; <br /> <br />c. exercise its rights under the Promissory Note and the Security Agreement; <br /> <br />d. 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 without <br />regard to prior waivers of previous defaults by the BORROWER, through judicial proceedings <br />to require speCific performance of this contract, or by such other proceedings in law or equity <br />as may be deemed necessary by the STATE to ensure compliance with provisions of this <br />contract and the laws and regulations under which this contract is executed. The STATE'S <br />exercise of any or all of the remedies described herein shall not relieve the BORROWER of <br />any of its duties and obligations under this contract. <br /> <br />14. 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 <br />period and submit said statement to the STATE. <br /> <br />15. 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 />inspections are solely for the purpose of verifying compliance with the terms and conditions <br />of this contract. Furthermore, such inspections shall cover the condition of the PROJECT, <br />operating records, maintenance records, and financial records, and shall not be construed <br />nor interpreted as an approval of the actual design and/or construction of any element of the <br /> <br />Page 8 of 14 <br />