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Linda J. Bassi, Esq. September 27, 1999 Page 2 District's approval for Model to grant the CWCB a security interest in Model's rights under the Contracts. Although Article 9 of the DCC contains a provision (C.R.S. ~ 4-9-318(4)) which appears to make anti-assignment clauses ineffective, that DCC provision appears to apply only to the assignment of rights to "money due or to become due," not rights to the performance of . services such as the rights Model has to the performance of services by the District under the Contracts. As a result, granting a security interest would be equivalent to an assignment of a contract right under the Contracts, which would require the consent of the District pursuant to paragraph 16. Bob Trout previously provided you with a list of the water rights which he believed Model to own and which could be encumbered by the CWCB. After subsequently reviewing various agreements entered into by Model and the City of Trinidad in 1981, Bob concluded that the list needs to be modified. In 1981, Model conveyed to Trinidad a) its rights in the Leitensdorfer Ditch, b) the prior right to 500 acre feet of water per year out of the first 1,200 acre feet stored or storable in the Model account in Trinidad Reservoir, and c) the right to reserve an amount of water in the Model account or the Trinidad Project account, no greater than 1,200 acre feet in any calendar year, for emergency use by trinidad. Only the Leitensdorfer Ditch was on the list that Bob previously provided to you, since the other rights conveyed to Trinidad derive from the Contracts. These other items should ne considered as added to that list. We apologize for any confusion. We are still sorting out some corporate matters, to which Bob alluded in his prior correspondence, and should. have that completed soon. cc: R.F. Harbaugh, Jr., Esq. R. B. Jowell Tom Tefertiller Terry Arnold Anthony van Westrum, Esq.