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ASSIGNMENT OF DEPOSIT ACCOUNT AS SECURITY In ccnsideration of and as security for a loan from the Colorado Water Conservation Board ("Secured Party") to the Horse Creek Water Users Association ("Debtor") in the amount of $825,000.00 ("Loan") pursuant to Contract Encumbrance Number C153771 ("Loan Contract"), Debtor hereby assigns, transfers and grants to Secured Party a security interest in the funds deposited into Deposit Account No. C;b 7 -'if -, (the "Acccunr) at the First National Bank of Limon ("Bank"), hereinafter referred to 3S the Account or the Collateral. Debtor warrants that the Account has been established as a special jeposit with the funds deposited therein to be used solely for repayment of the Loan to Secured Party. The Collateral secures the payment and performance of all of Debtor's present and future, direct or ndirect, absolute and ccntingent, express and implied, indebtedness, liabilities, obligations and covenants cumulatively "Obligations") under the Loan Contract described above and any amendments thereto. This \ssignment is made solely to secure performance of the Obligations and is made subject to the following erms, ccvenants and ccnditions: This Assignment is effective upon signing and will remain in full force and effect until Secured Party specifically terminates the security interest in the Collateral in writing. Secured Party is not requirec; to release this Assignment until the Loan is paid in full. Neither the Debtor nor anyone else (except Secured PartY) has any right to wiltldmw any funds from the principal of the Account listed above until the Secured Party releases this Assignment in writing, except that, at Debtor's request, the Bank shall allow the transfer of an amount equal to the interest accruing on the principal loan amount prior to Project completion under the Loan Contract, annual Loan payment in the amount of $30,158.49 for the first ~ve annual payments and the remaining 35 annual payments in the amount of $37,058.57 to Secured Party. The Debtor may withdraw interest eamed by the Account. Debtor shall be in default under the Loan Contract for purposes of this Assignment upon the occurrence of any of the following events or ccnditions: (a) failure or omission to make any payment under the Loan Contract when due; (b) default in the payment or performance of any obligation, ccvenant, agreement or liability ccntained or referred to in the Loan Contract; (c) the making of any levy, seizure, or attachment on the Collateral; (d) the Debtor beccming insolvent or unable to pay debts as they mature. Secured Party shall give the Debtor written notice of any alleged default and an opportunity to cure within thirty (30) days of receipt of such notice before Debtor shall be ccnsidered in default for purposes of this Assignment. Upon or at any time after a default under the Loan Contract as described in Paragraph 3 above, Secured Party shall be entitled to notify the Bank to pay Secured Party the funds contained in the Acccunt, including interest if the principal of the Acccunt is less than the annual amount owed to Secured Party'. Secured Party shall apply such moneys first to ccsts associated with collection, including, but not limited to, reasonable attomey's fees, next to outstanding interest, and then to the principal sum of the Loan. Debtor shall not sell, transfer, assign, give, or otherwise dispose of any of the Collateral or any interest therein as long as this Assignment is in effect. The modification or waiver of any of Debtor's obligations or Secured Party's rights under this Assignment must be contained in a writing signed by Secured Party. A waiver on one occasion shall not constitute a waiver on any other occasion. Appendix 9 to Loan Contract C153771