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'. . -! f ... 1.(, . . ~. " and Power Company ("Redlands"). 2.1 Notification of Redlands. Within 10 days of the execution of this Agreement, Ridges shall notify the secre- tary or transfer agent of the Redlands of this transaction. Ridges shall request that the secretary or transfer agent notify the State of any default in payment by Ridges of assessments due or payable on behalf of the 20 water shares subject of this Agreement. 2.2 Payment of Assessments. Ridges shall pay all assessments due or payable on behalf of the 20 water shares sub- ject of this Agreement in a timely manner. In the event that Ridges fails to timely pay the assessments due or payable on be- half of the 20 water shares subject of this Agreement, the State shall have the option but not the duty to pay the assessments on behalf of Ridges. In the event that the Etate elects to pay as- sessments due or payable on behalf of Ridges' 20 water shares subject of this Agreement, Ridges shall immediately convey the 20 water shares to the State notwithstanding the provisions of para- graph 2.1 above. In the event that the State does not elect to pay assessments due or payable on behalf of Ridges 20 water shares subject of this Agreement and Ridges forfeits the shares (all or part of the 20 shares) or the shares become encumbered by the amount of the unpaid assessments, Ridges shall pay the State in addition to the amounts set forth in paragraph 1 above an amount equal to the fair market value of the forfeited shares or the amount of the encumbrance. 3. Discharge and Satisfaction of Indebtedness. Upon payment in full of all obligations set forth in paragraphs 1, 1.1, 1.2, 2, and 2.2, the State will discharge and deem satisfied all obligations owed the State pursuant to Exhibit A. Within 10 days of the discharge and satisfaction of the Exhibit A obli- gations, the State shall re-convey to Ridges, all real properties and water right interests held by the State as security for the obligations owed the State in Exhibit A, including without limitation the following: a. Reservoir No. 3 darn, including spill- way, outlet works, other appurtenances, and all utilities within the darn, and the real property and other interests described in the warranty deed recorded in Book 1500 at Page 139 of the records of Mesa County. b. Reservoir No. 3 pump station, including four pumps, mechanical and electrical sys- tems, all instrumentation and controls, and other appurtenances. -3-