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<br />c. Assessments For Repayment Of The Loan. Pursuant to its statutory authority, articles
<br />of incorporation and bylaws, and as authorized by its resolution, the BORROWER shall take
<br />all necessary actions consistent therewith to levy assessments sufficient to pay this loan
<br />as required by the terms of this contract and the promissory note. In the event the
<br />assessments levied by the BORROWER become insufficient to assure such repayment to
<br />the STATE, the BORROWER shall immediately take all necessary action consistent with its
<br />statutory authority, its articles of incorporation, bylaws and resolution, including, but not
<br />limited to, levying additional assessments to raise sufficient revenue to assure repayment
<br />of the loan to the STATE.
<br />
<br />d. Assessments For Operations, Maintenance And Reserves. Pursuant to its statutory
<br />authority, articles of incorporation, byl&lws, 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 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 />10. Collateral. Part of the security provided for this loan shall be an undivided one hundred
<br />percent (100%) interest in the following, hereinafter referred to as COLLATERAL: augmentation
<br />water rights, as more fully described in the Deed of Trust, Security Agreement and Stock
<br />Assignment, using the same forms attached hereto as Appendix F, to be provided after
<br />the BORROWER'S purchas~ of said water rights. To protect the STATE'S and the BORROWER'S
<br />interests in the COLLATERAL, the BORROWER shall meet the following conditions:
<br />
<br />a. The BORROWER shall have the certifiC<3tes issued in the BORROWER'S name, with the
<br />CWCB identified on the certificates as a lienholder and shall give physical custody of
<br />the certificates to the CWCB, which shall deposit the certificates at the State Treasurer's
<br />Office for safekeeping.
<br />
<br />b. The BORROWER shall retain both the responsibility for paying assessments on and the
<br />privilege of voting the shares.
<br />
<br />c. The BORROWER shall record the Deeds of Trust contemporaneously with the BORROWER'S
<br />deeds as it acquires the water rights, shall deliver the original deeds of trust to the State,
<br />and shall execute and deliver to the STATE the original Security Agreements and original
<br />Assignments of Certificates upon closing on each purchase of the water rights.
<br />
<br />11. Collateral during repayment. The BORROWER shall not sell, convey, assign, grant, transfer,
<br />mortgage, pledge, encumber, or otherwise dispose of the COLLATERAL for this loan, including
<br />the revenues pledged to repay the loan herein, so long as any of the principal, accrued
<br />interest, and late charges, if any, on this loan remain unpaid, without the prior written consent
<br />of the STATE. In the event of any such sale, transfer or encumbrance without the STATE'S
<br />written consent, the STATE may at any time thereafter declare all outstanding principal and
<br />interest on this loan immediately due and payable.
<br />
<br />12. 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 covenants or agreements
<br />contained herein, the STATE, at its option, may:
<br />
<br />Columbine Ranches Property Owner's Association
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<br />Page 5 of 11
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