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<br />,~., <br /> <br />as necessary to provide sufficient funds for adequate operation and maintenance, <br />emergency repair services, obsolescence reserves and debt reserves. The BORROWER <br />shall deposit an amount equal to one-tenth of an annual payment into its reserve debt <br />service fund on an annual basis for the first ten years of this loan. <br /> <br />8. Collateral. Part of the security provided for this loan, as evidenced by the executed <br />Assignment of Certificate of Deposit attached as APPENDIX C and incorporated herein, shall be <br />an undivided one hundred percent interest in a certificate of deposit account established by the <br />BORROWER in the amount of one annual loan payment ($4,397.57), hereinafter referred to as CD <br />ACCOUNT. The STATE shall use the funds contained in the CD ACCOUNT for the purpose of <br />paying principal and interest due under this contract not otherwise paid by the BORROWER. Any <br />amount withdrawn by the STATE for this purpose shall be replenished by the BORROWER within <br />sixty days after such withdrawal. The STATE shall not disburse any loan funds under this <br />contract until the BORROWER has established the CD ACCOUNT. <br /> <br />9. Collateral during repayment. The DISTRICT and the BORROWER shall not sell, convey, <br />assign, grant, transfer, mortgage, pledge, encumber, or otherwise dispose of any collateral for <br />this loan, including the revenues pledged herein, except for the use of water revenues to repay <br />the BORROWER'S 1996 SWCD loan, so long as any of the principal and any accrued interest <br />required by the Promissory Note Provisions of the contract remain unpaid, without the prior <br />written concurrence of the STATE. <br /> <br />10. Remedies for default. Upon default in the payments herein set forth to be made by <br />the 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 the <br />cause of default, and add the amount of such expenditures to the principal of the loan <br />amount; <br /> <br />c. apply the funds contained in the CD ACCOUNT to repayment of the loan; <br /> <br />d. act upon the promissory note and security interest; <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 without <br />regard to prior waivers of previous defaults by the DISTRICT and/or the BORROWER, through <br />judicial proceedings to require specific performance of this contract, or by such other <br />proceedings in law or equity as may be deemed necessary by the STATE to ensure compliance <br />with 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 relieve <br />the DISTRICT or the BORROWER of any of its duties and obligations under this contract. <br /> <br />11. In event of a conflict. In the event of conflict between the terms of this contract and <br />conditions as set forth in any of the appendices, the provisions of this contract shall control. <br /> <br />Page 6 of 1 2 <br />