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<br />, <br /> <br />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 /> <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 /> <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 /> <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 /> <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. act upon the Promissory Note, Deed of Trust, Security Agreement, and/or Assignment Of <br />Deposit Account As Security, <br /> <br />d. apply the funds contained in the CD ACCOUNT to the repayment of the loan; <br /> <br />e. 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 /> <br />Smith Irrigation Ditch <br /> <br />Page 7 of 13 <br /> <br />Loan Contract <br />