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<br />ASSIGNMENT OF ESCROW ACCOUNT AS SECURITY <br /> <br />Debtor: The Horse Creek Water Users Association <br />Secured Party: Colorado Water Conservation Board <br />Depository: First National Bank of Limon <br /> <br />Account No.: J;( 4L{ ':J <br /> <br />In consideration of 8 loan from the Colorado Water Conservation Board rSecured <br />Party") in the amount of $825,000 ("Loan") pursuant to Contract Encumbranoe Number <br />C153771 ("Loan Contract"), the Horse Cr,ek Water Users Association ("Debtor") hereby <br />assigns, transfers end grants to the Secured Party a security Interest in the prinCipal contained <br />in tha aboVe-described escrow account, in the amount of $504,000, ("Collateral"), at the First <br />National Bank of Limon ("Escrow Agent'). Said escrow account was established pursuant to <br />an Escrow Agreement entered Into on . 1997 by Debtor, the Escrow <br />Agent, and the Box Springs Canal and Resllrvolr Company and certain sharehOlders of that <br />Company ('Escrow Agreemenl"), which is Int:Orporated herein by reference. This assignment <br />is made to secure paymGnt of the Loan. Debtor hereby warrants and agrees that: <br /> <br />1. This cgrecment Is effective upon Signing and will remain In full force and effect until <br />Secured Party releases It In writing. The Secured Party shall provide release/!. i1) writing with <br />respect to the funds in the Escrow Account under the circumstances described in Paragraph <br />A.B.c of the Loan Contract. <br /> <br />2. Neither the Debtor nor anyone else (except Secured Party) has any right to wl\hdraw any <br />funds from the principal of the account liSUld above until the Secured Pl:lrty releases thi!} <br />agreement in writing or approves. In writing, the disbursement by the Eti:-,TOwAgant of a <br />pOl1ion of the funds from the principal of the account as provided for 'nt.ne !'::>.:;row <br />Agreement.Ths Debtor may withdraw Interest earned by the account. <br /> <br />3. The Debtor shall be considered in default under the Loan Contract for purposes of this <br />agreement upon the occurrence of any of the following events or conditions: (a) failure or <br />omission to make any payment under the Lo~n Contract when due; (b) default In the payment <br />or performOlnce of any obligation, covenant, Qr agreement contained in the Loan Contract: (c) <br />the making of any levy, nlzure, or attachment on the Collateral by any third party; (d) the <br />Debtor becoming Insolvent or unable to pay debts as they mature. The Secured Party shall <br />give the Debtor written notlce of any alleged default and an opportunity to cure within thirty <br />(30) days of receipt of such notice before Debtor shall be considered in default for purposes of <br />this agreement. <br /> <br />4. Upon or at any hine aRer default under the Loan Contract as described above, the Secured <br />Party shall have the right to withdraw all or any part of the funds from tne Collatersl Bnd apply <br />the withdrawal toward the payment of the Losn, even if the withdrawal causes Il penalty. The <br />Secured Pal1y shall apply such monies first to costs associated with colleotion. including <br />ressonable attomey'll feell, next to outstanding interest, and then to the principal sum of the <br />Loan. <br /> <br />5. The rights and remedies of the Secured Party stated in this agreement are in addition to <br />any other rights the Secured Party may have under the Loan Contract or any law. <br /> <br />Appendix 7(2) to Loan Contract C153771 <br />