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(C.~,~\ (rounded down to the nearest whole number), and an undivided interest in the Water Rights, the aggregate value of which is proportional to such Owner's allocated portion of the payment, as determined pursuant to the formula set forth below, so long as the Borrower is in substantial compliance with all of the obligations of this Contract, including, but not limited to, being current on the annual payments due under this Contract and in accordance with the terms of the Promissory Note, Upon payment in full of an Owner's allocated portion of the Loan, the STATE shall release all remaining Shares and Water Rights of that Owner then subject to the Security Documents. In each case, the STATE shall execute all documents necessary to evidence such releases, Notwithstanding anything to the contrary in this Contract, the Promissory Note or the Security Documents, an Event of Default (as defined in Paragraph D below) with respect to any Owner's allocable portion of the Loan shall not affect the rights of all other Owners whose proportionate Loan payments arid other assessment payments under Paragraph below have been made to releases of their Shares pursuant to this paragraph. b, The Collateral, in the following amounts, shall be released when each Owner satisfies the following cumulative percentage of repayment of its portion of the principal loan amount: 7% (7% of the collateral would be released), 17% (17%-7%=10% more of the collateral would be release), 31% (31%-17%=14% more of the collateral would be released) 48% (48%-31%= 17% more of the collateral would be released), 70% (70%- 48%=22% more of the collateral would be released) and 100% (100%-70%=30%, the remainder of the collateral would be released), If each Owner makes the loan payment in accordance with the terms of the promissory note with no prepayments or unpaid late charges on its portion of the loan and if the collateral value to loan balance is 1,3, these releases will take place after the receipt of every fifth annual payment. c. The Borrower shall issue stock certificates to each Owner reflecting the above stated percentages (rounded down to the nearest whole number), 3. Pledge Of Property. The Borrower hereby irrevocably pledges to the State for purposes of repayment of this loan revenues from assessments levied and collected from the Owners in the amount necessary for each annual loan payment as authorized by the Borrower's resolution, and the Borrower's rights to receive said assessment revenues from said Owners (hereinafter collectively referred to as the 'pledged property"). The State and the Borrower acknowledge and agree that this pledge in no way imposes joint and several liability on the Owners for any obligation under this Contract. a. Revenues For This Loan Are To Be Kept Separate. The Borrower hereby agrees that upon receipt of the assessments from the Owners, to set aside and keep the pledged revenues in an account separate from other Borrower revenues, and warrants that it shall not use the pledged revenues for any other purpose. b. Establish Security Interest. The Borrower agrees that, in order to provide a security interest for the State in the pledged property so that the State shall have priority over all other competing claims for said property, it shall execute a Security Agreement, attached hereto as Appendix F and incorporated herein, and an Assignment of Deposit Account as Security, attached as Appendix G and incorporated herein, prior to the disbursement of any loan funds. The Borrower acknowledges that the State Eagle Park Reservoir Company Page 4 of 13 Loan Contract