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") ~- , 2. Payments, Each Loan payment shall be accompanied by a certificate executed by an officer of the Borrower reflecting the allocation of credit therefor among the Owners. The State shall notify the Borrower within thirty (30) days if the State does not agree with the Borrower's allocation of credit. 3. Revision Of Promissory Note. In the event the Borrower does not use all of the Loan funds allocated for the Project, the Promissory Note may be adjusted in accordance with the Changes Provisions of this Contract set forth at Paragraph D below. C. Security. 1. Collateral. a. Repayment of portions of this nonreCOurse Loan shall be secured severally (not jointly or collectively) by an undivided one hundred percent (100%) interest in certain Shares of the common stock of Borrower and the Water Rights owned by Vail Associates, Inc., the Upper Eagle Regional Water Authority and the Eagle River Water and Sanitation District (the "Collateral"). Each Owner's respective Shares and Water Rights shall secure only a portion of the Loan as is set forth on Appendix A hereto. plus interest thereon, and late charges, if any. The State shall periodically make partial releases of the Collateral as set forth in Paragrap/l C.2. below, b, Security Documents. Each Owner $hall convey a security interest to the State in its respective Shares by executing and delivering a deed of trust ("Deed of Trust"), security agreement ("Security Agreement") and stock assignment ("Stock Assignment") (collectively, the "Security Documents") encumbering said Shares, and the Deed of Trust shall also encumber the Water Rights, substantially in the forms attached hereto and incorporated herein as Appendic:es C, D, and E, respectively. Each Owner shall execute the Security Documents and record the Deed of Trust concurrently with the Borrower's closing on the Project purchase, and promptly deliver the original Security Documents to the State, c. Issuance of Shares. The Shares shall be issued in both the Owner's and the CWCB's names, reflecting the CWCB's status as secured party, and physical custody of the stock certificates shall be given to the CWCB, which shall deposit the certificates at the State Treasurer's Office for safekeeping until the release thereof, d, AssessmentsNoting Rights. The Owners shall retain both the responsibility for paying assessments on and the privilege of voting said Shares. 2. Partial Releases of Collateral. a. Provided that, after release, the ratio of the value of the remaining Collateral to the loan balance remains the same as on the effective date of this contract (1.33), the State shall release a portion of each Owner's Collateral when each Owner satisfies certain percentages of repayment of the principal loan amount, with said percentages rounded down to the nearest whole number. Said value of the Collateral shall be the current market value as agreed to by the parties or as established by an appraisal, provided by the Borrower, conducted by a qualified water resource engineer licensed in the State of Colorado, For each such release, the State shall deliver to each Owner credited with a portion of such payment and release from the Security Documents a number of Shares Eagle Park Reservoir Company Page 3 of 13 Loan Contract