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b. Establish Security Interest. The BORROWER agrees that, in order to provide a security <br /> interest for the STATE in the pledged property so that the STATE shall have priority over all <br /> other competing claims for said property, it shall execute a Security Agreement, attached <br /> hereto as Appendix 6 incorporated herein, and an Assignment of Deposit Account as <br /> Security, attached as Appendix 7 and incorporated herein, prior to the disbursement of any <br /> loan funds. The BORROWER acknowledges that the STATE shall perfect its security interest in <br /> the BORROWER'S right to receive assessment revenues by filing a UCC-1 Form with the <br /> Colorado Secretary of State. <br /> c. Assessments For Repayment Of The Loan. Pursuant to its statutory authority, articles of <br /> incorporation and by-laws, and as authorized by its resolution, the BORROWER shall take all <br /> necessary actions consistent therewith to levy assessments sufficient to pay this loan as <br /> required by the terms of this contract and the promissory note. In the event the assessments <br /> levied by the BORROWER become insufficient to assure such repayment to the STATE, the <br /> BORROWER shall immediately take all necessary action consistent with its statutory authority, <br /> its articles of incorporation, bylaws and resolution, including, but not limited to, levying <br /> additional assessments to raise sufficient revenue to assure repayment of the loan to the <br /> STATE. <br /> d. Assessments For Operations, Maintenance And Reserves. Pursuant to its statutory <br /> authority, articles of incorporation, by-laws, and resolutions, the BORROWER shall levy <br /> assessments from time to time as necessary to provide sufficient funds for adequate <br /> operation and maintenance, emergency repair services, obsolescence reserves and debt <br /> service reserves. BORROWER shall deposit an amount equal to one-tenth of an annual <br /> payment into its debt service reserve fund on an annual basis for the first ten years of this <br /> loan. <br /> 15. 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 /> a. declare the entire principal amount and accrued interest then outstanding immediately due <br /> and payable; <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'y es' ar i <br /> jrie the cause of <br /> default, and add the amount of such expenditures to the pri&Ap4Lo h tount; <br /> C. act upon the Promissory Note, Deed of Trust, Secturity Agreement, and/or Assignment Of <br /> Deposit Account As Security, < < y � - <br /> , s �r , <br /> d. apply the funds contained in the CD ACCOUNT to the repayment of the'I a i-. -, <br /> e. take any other appropriate action. <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 /> Smith Irrigation Ditch Page 7 of 13 Loan Contract <br />