PROJC01460

• Contract/PO #: C150006
• Contractor Name: Palisade, Town of
• Contract Type: Loan
• Water District: 72
• County: Mesa
• Bill Number: HB 95-1155
• Loan Projects - Doc Type: Contract Documents

SECURITY AGREEMENT

DEBTOR: Town of Palisade
P.O. Box 128
Palisade, CO 81526-0128

FEDERAL TAX NUMBER: 84-6000708

COUNTY: MESA

SECURED PARTY: State of Colorado - Colorado Water Conservation Board
1313 Shenman Street, Room 721
Denver, CO 80203

DEBTOR, for consideration, hereby grants to SECURED PARTY a security interest in the following property
and any and all additions, accessions and substitutions thereto or therefor, hereinafter called the
COLLATERAL: Revenues from DEBTOR'S Utility Fund pledged to repay the indebtedness on the amount
loaned to DEBTOR by SECURED PARTY, as described in pledge of revenues provisions in contract No.
C150006 (CONTRACT).

To secure payment of the indebtedness evidenced by a certain Promissory Note between the above named
parties in the amount of $922,000.00 at an interest rate of 4% per annum for a tenm of 30 years, payable by
DEBTOR to the SECURED PARTY until all principal, interest, and late charges, if any, are paid in full in
accordance with said Promissory Note.

DEBTOR EXPRESSLY WARRANTS AND COVENANTS:

1. That except for the security interest granted hereby, DEBTOR is, or to the extent that this agreement
states that the COLLATERAL is to be acquired after the date hereof, will be, the owner of the COLLATERAL
free from any adverse lien, security interest or encumbrances; and that DEBTOR will defend the
COLLATERAL against all claims and demands of all persons at anytime claiming the same or any interest
therein.

2. That the execution and delivery of this agreement by DEBTOR will not violate any law or agreement
governing DEBTOR or to which DEBTOR is a party.

3. That by its acceptance of the loan money pursuant to the tenms of the CONTRACT and by its
representations herein, DEBTOR shall be estopped from asserting for any reason that it is not
authorized to grant a security interest in the COLLATERAL pursuant to t~rm~ ofthis agreement.
./~~S~
4. To not penmit or allow any adverse lien, security interest or encumbrance whatsoever upon the
COLLATERAL and not to penmit the same to be attached or replevined, without the prior written consent
of SECURED PARTY.

5. That the DEBTOR will not use the COLLATERAL in violation of any applicable statutes, regulations,
ordinances, articles of incorporation or by-laws. . '
"" '-. 'P:',........
UNTIL DEFAULT DEBTOR may have possession of the COLLATERAL: prol!~Al1at DEBTOR keeps the
COLLATERAL in an account separate from other revenues of DEBTOR and does not use the COLLATERAL for
any purpose not permitted by the CONTRACT. Upon default, SECURED PARTY shall have the immediate right
to the possession of the COLLATERAL.

DEBTOR SHALL BE IN DEFAULT under this agreement upon the happening of any of the following
events or conditions:

a. default in the payment or performance of any obligation, covenant or liability contained or referred
to herein or in any note evidencing the same;

Appendix D to Loan Contract C150006