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<br />SECURITY AGREEMENT <br /> <br />(PLEDGE OF REVENUES) <br /> <br />DATE: JUNE1S,200S <br /> <br />DEBTOR: TOWN OF HILLROSE. ACTING BY AND THROUGH ITS WATER <br />ACTIVITY ENTERPRISE <br /> <br />SECURED PARTY: COLORADO WATER CONSERVATION BOARD <br />1313 SHERMAN STREET. ROOM 721 <br />DENVER, CO 80203 <br /> <br />PROMISSORY NOTE: $69.311 DATED JUNE 15. 2005 <br /> <br />TERMS OF REPAYMENT: 3.S0% PER ANNUM FOR 30 YEARS <br /> <br />LOAN CONTRACT: C1S0178. DATED JUNE 1S, 200S <br /> <br />COLLATERAL: All revenues pledged to repay the loan as described in <br />Pledge of Revenues provisions of the LOAN CONTRACT. and <br />as described in the Resolution of the Town Council of the <br />Town of Hillrose. acting by and through its Water Activity <br />Enterprise, dated January 3. 200S (attached as LOAN <br />CONTRACT Appendix 3). <br /> <br />To secure payment of the loan evidenced by the PROMISSORY NOTE payable in <br />accordance with the TERMS OF REPAYMENT, or until all principal. interest. and late <br />charges, if any, are paid in full. the DEBTOR grants to SECURED PARTY a security interest in <br />the above described COLLATERAL. <br />DEBTOR EXPRESSLY WARRANTS AND COVENANTS: <br />1. That except for the security interest granted hereby and any other security interests <br />described in Section S of the Loan Contract Project Summary. DEBTOR is the owner of <br />the COLLATERAL free from any adverse lien, security interest or encumbrances; and <br />that DEBTOR will defend the COLLATERAL against all claims and demands of all persons <br />at any time claiming the same or any interest therein. <br />2. That the execution and delivery of this agreement by DEBTOR will not violate any law or <br />agreement governing DEBTOR or to which DEBTOR is a party. <br />3. To not permit or allow any adverse lien. security interest or encumbrance whatsoever <br />upon the COLLATERAL and not to permit the same to be attached or replevined. <br />4. That by its acceptance of the loan money pursuant to the terms of the CONTRACT and <br />by its representations herein. DEBTOR shall be estopped from asserting for any reason <br />that it is not authorized to grant a security interest in the COLLATERAL pursuant to the <br />terms of this agreement. <br />UNTIL DEFAULT DEBTOR may have possession of the COLLATERAL, provided that <br />DEBTOR keeps the COLLATERAL in an account separate from other revenues of DEBTOR <br />and does not use the COLLATERAL for any purpose not permitted by the CONTRACT. Upon <br />default, SECURED PARTY shall have the immediate right to the possession of the <br />COLLATERAL. <br /> <br />Appendix 4 to Loan Contract C150178 <br />