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<br />water service rates charged by the BORROWER become insufficient to assure such repayment
<br />to the STATE, the BORRQWER shall immediately take all necessary action consistent with its,
<br />statutory authority, itsarticies of incorporation, by-laws and resolution, including, but not
<br />limited to, charging higher rates to raise sufficient revenue to assure repayment of the loan to
<br />the STATE.
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<br />d. Water Service Rates For Operations, Maintenance And Reserves. Pursuant to its statutory
<br />authority, articles of incorporation, by-laws, and resolution, the BORROWER shall charge water
<br />service rates from time to time as necessary to provide sufficient funds for adequate operation
<br />and maintenance, emergency repair services, obsolescence reserves and debt service
<br />reserves, BORROWER shall deposit an amount equal to one-twentieth of an annual payment
<br />into its debt service reserve fund one year from the first loan disbursement, and annually
<br />thereafter for the first ten years of this loan. In the event that the Borrower applies funds from
<br />this account to repayment of the loan, the Borrower shall replenish the account within ninety
<br />(90) days of withdrawal of the funds.
<br />
<br />13. Collateral During Repayment. The BORROWER shall not sell, convey, assign, grant, transfer,
<br />mortgage, pledge, encumber, or othenwise dispose 01 the COLLATERAL or other property
<br />provided as security for this loan, so long as any of the principal, all accrued interest, and late
<br />charges, if any, on this loan remain unpaid, without the prior written concurrence of the STATE.
<br />In the event of any such sale, transfer or encumbrance without the STATE'S written concurrence,
<br />the STATE may at any time thereafter declare all outstanding principal and interest on this loan
<br />immediately due and payable.
<br />
<br />14. Remedies For, Default. Upon default in the aye
<br />, r e au In t e 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
<br />and 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
<br />default, 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 Deed Of Trust,
<br />
<br />d. take any other appropriate action,
<br />
<br />All remedies described herein may be simultaneously or selectively and successively enforced.
<br />The provisions of this contract may be enforced by the STATE at its option without regard to prior
<br />waivers of previous defaults by the BORROWER, through judicial proceedings to require specific
<br />performance of this contract, or by such other proceedings in law or equity as may be deemed
<br />necessary by the STATE to ensure compliance with provisions of this contract and the laws and
<br />regulations under which this contract is executed. The STATE'S exercise of any or all of the
<br />remedies described herein shall not relieve the BORROWER of any of its duties and obligations
<br />under this contract.
<br />
<br />15. 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 />16. 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 of this
<br />
<br />The Consolidated Mutual Water Company
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<br />Page'S 0111
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<br />Loan Contract
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