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SECTION 6 -COLLATERAL <br /> The collateral provided for this loan shall be the WATER RIGHTS purchased consisting <br /> of Certificate No. 1191 for eight and one half (8-1/2) shares, Certificate Number 1193 <br /> for five (5) shares, and Certificate No. 1194 for two and seventeen-thirtieths (2- <br /> 17/30) shares, all for Farmer's Independent Ditch Company and Certificate No. 832 <br /> for two (2) shares of Western Mutual Ditch Company. The total value amount is <br /> equal to or greater than 110% of the LOAN AMOUNT and more particularly described <br /> in the attached AMENDMENTS TO DEEDS OF TRUST (APPENDIX Cl AND C2) and <br /> AMENDMENTS TO STOCK ASSIGNMENTS (APPENDIX D1 AND D2), incorporated herein <br /> encumbering all the shares. This is in accordance with CWCB Financial Policy #5 <br /> (Collateral). <br /> The Stock Assignments shall become effective solely in the event of an issuance by a <br /> Colorado District Court of an order authorizing a foreclosure sale of said shares of <br /> stock pursuant to Rule 120 of the Colorado Rules of Civil Procedure. <br /> a. The BORROWER shall have the certificates for the shares issued in both the <br /> BORROWER'S and the CWCB's names, and shall give physical custody of the stock <br /> certificates to the CWCB, which shall deposit the certificates at the State <br /> Treasurer's Office for safekeeping. <br /> b. The BORROWER shall retain both the responsibility for paying assessments on and <br /> the privilege of voting said shares. <br /> SECTION 7—ADDITIONAL CONDITIONS&CONTRACT REQUIREMENTS <br /> No Construction. CWCB and BORROWER hereby acknowledge and agree that the <br /> PROJECT does not include a construction component and that the distribution of loan <br /> proceeds will incur at a closing for the purchase of the WATER RIGHTS. <br /> Use of WATER RIGHTS. The Corporation must use the WATER RIGHTS purchased with <br /> the CWCB loan funds for irrigation of crops. If the water cannot be used for crop irrigation, <br /> the remaining balance of the loan may be called due within one year by the CWCB. <br /> SECTION 8—PROCEDURE FOR WATER PURCHASE PROJECTS <br /> The BORROWER shall submit, in writing, copies of the sales agreement and the appraisal <br /> for the WATER RIGHTS including, but not limited to, the name of the seller, cost, closing <br /> date, appraisal value and support documentation prior to disbursal of loan funds. The <br /> BORROWER shall pay all of the expenses related to the PROJECT when such bills are due. <br /> SECTION 9—ELIGIBLE EXPENSES FOR WATER PURCHASE PROJECTS. <br /> A. Engineering associated with the feasibility report prepared as a requirement for <br /> this loan and associated with evaluating the suitability of the WATER RIGHTS for <br /> purchase by the BORROWER. <br /> B. Interest during completion of the PROJECT pursuant to Paragraph A.4 of the <br /> ORIGINAL LOAN CONTRACT. <br /> C. Legal services for review of engineering services contracts and the LOAN <br /> CONTRACT. <br /> Page 2 of 3 <br />