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t SECTION 6-COLLATERAL The collateral provided for this loan, as amended shall be the WATER RIGHTS purchased consisting of seventy-two (72) Fulton Irrigating Ditch Company shares more particularly described in the attached DEED OF TRUST ("Collateral"), valued at an amount equal to or greater than 110% of the LOAN AMOUNT. The WATER RIGHTS are evidenced by the certificate number in the DEED OF TRUST and the STOCK ASSIGNMENTS and by execution of the SECURITY AGREEMENT, DEED OF TRUST and STOCK ASSIGNMENTS in the form attached hereto as Appendices B, C, and D1, D2 and D3 respectively and incorporated herein, encumbering all the shares. This is in accordance with CWCB Financial Policy#5 (Collateral). The Stock Assignments shall become effective solely in the event of an issuance by a Colorado District Court of an order authorizing a foreclosure sale of said shares of stock pursuant to Rule 120 of the Colorado Rules of Civil Procedure. a. The BORROWER shall have the certificate(s) for the shares issued in the name of "Petrocco Family Limited Partnership, LLLP, a Colorado Limited Liability Limited Partnership ("LLLP"), equity owner, and Colorado Water Conservation Board, lienholder", and shall give physical custody of the stock certificate(s)to the CWCB, which shall deposit the certificate(s) at the State Treasurer's Office for safekeeping. b. The BORROWER shall retain both the responsibility for paying assessments on and the privilege of voting said shares. SECTION 7—ADDITIONAL CONDITIONS&CONTRACT REQUIREMENTS No Construction. CWCB and BORROWER hereby acknowledge and agree that the PROJECT does not include a construction component and that the distribution of loan proceeds will occur at or after a closing for the purchase of the WATER RIGHTS. Use of WATER RIGHTS. The Corporation must use the WATER RIGHTS purchased with the CWCB loan funds for irrigation of crops. If the water cannot be used for crop irrigation, the remaining balance of the loan may be called due within one year by the CWCB. The stock certificate numbers will be filled in on the Security Agreement, Deed(s) of Trust, and Stock Assignment(s) which will be recorded with the appropriate county and with the Office of the Secretary of State, respectively. SECTION 8 - CONSTRUCTION FUND PROGRAM PROCEDURES FOR WATER PURCHASE PROJECTS The BORROWER shall submit, in writing, copies of the sales agreement and the appraisal for the water rights including, but not limited to, the name of the seller, cost, closing date, appraisal value and support documentation prior to disbursal of loan funds. The BORROWER shall pay all of the expenses related to the PROJECT when such bills are due. Appendix A, Amendment No. 1 to Loan Contract C150363 Page 2 of 3