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ASSIGNMENT OF INVESTMENT FUND AND INTEREST In consideration of and as security for a loan ("Loan") from the Colorado Water Conservation Board ("Secured Party") to The Dolores Water Conservancy District, acting by and through the Dolores Water Conservancy District Water Activity Enterprise ("Debtor") pursuant to Contract Encumbrance Number C150058A dated December 10, 2002 and amended September 1, 2005 and December 28, 2006 ("LoanContractfl), Debtor hereby assigns, transfers and grants to Secured Party a security interest in the fund established by the Investment Agreement between Debtor and MBIA Inc. dated August 4,2006, in the principal amount of $2,077,914.16 and the interest earned thereon, hereinafter referred to as the Fund. Said Investment Agreement is incorporated herein by reference. Debtor warrants that the Fund has been established as a special deposit to be used solely for repayment of the Loan to Secured Party under the Loan Contract as amended. The Fund secures the payment and performance of all of Debtor's present and future, direct or indirect, absolute and contingent, express and implied, indebtedness, liabilities, obligations and covenants (cumulatively "Obligations") urider the Loan Contract described above and any amendments thereto. This Assignment is made solely to secure performance of the Obligations and is made subject to the following terms, covenants and conditions: 1. This Assignment is effective upon signing and will remain in full force and effect until Secured Party specifically terminates the security interest in the Fund in writing. Secured Party shall release this Assignment when the Loan is paid in full. 2. Neither the Debtor nor anyone else (except Secured Party) has any right to withdraw any fu'nds from the Fund until the Secured Party releases this Assignment in writing, except that, at Debtor's request, MBIA Inc. shall allow transfers of funds from the Fund to the Secured Party. 3. Debtor shall be in default under the Loan Contract for purposes of this Assignment upon the occurrence of any of the following events or conditions: (a) failure or omission to make any payment under the Loan Contract when due; (b) default in the payment or performance of any obligation, covenant, agreement or liability contained or referred to in the Loan Contract; (c) the making of any levy, seizure, or attachment on the Fund; (d) the Debtor becoming insolvent or unable to pay debts as they mature. Secured Party shall give the Debtor written notice of any alleged default and an opportunity to cure within thirty (30) days of receipt of such notice before Debtor shall be considered in default for purposes of this Assignment. 4. Upon or at any time after a default under the Loan Contract as described in Paragraph 3 above, Secured Party shall be entitled to notify MBIA Inc. to pay Secured Party the funds contained in the Fund. Secured Party shall apply such moneys first to costs associated with collection, including, but not limited to, reasonable attorney's fees, next to late charges, if any, then to outstanding interest, and then to the principal sum Appendix C to Loan Contract C150058A Amendment No.2