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SECURITY AGREEMENT (PLEDGE OF REVENUES) DATE: January 31,2005 DEBTOR: Colorado River Water Conservation District, acting through its Colorado River Water Projects Enterprise SECURED PARTY: COLORADO WATER CONSERVATION BOARD 1313 SHERMAN STREET, ROOM 721 DENVER, CO 80203 PROMISSORY NOTE: $11,110,000, January 31,2005 TERMS OF REPAYMENT: 3.75% PER ANNUM FOR 14 YEARS LOAN CONTRACT: C150164, DATED January 31, 2005 COLLATERAL: The revenues' pledged to repay the loan are the Colorado River Water Projects Enterprise's revenues, as described in Pledge of Revenues provisions of the LOAN CONTRACT and in DEBTOR'S Resolution dated January 19, 2005, (attached to the Loan Contract as Appendix 3). To secure payment of the loan evidenced by the PROMISSORY NOTE payable in accordance with the TERMS OF REPAYMENT, or until all principal. interest, and late charges, if any, are paid in full, the DEBTOR grants to SECURED PARTY a security interest in the above described COLLATERAL. DEBTOR EXPRESSLY WARRANTS AND COVENANTS: 1. That except for the security interest granted hereby and any other security interests described in Section 5 of the Loan Contract Project Summary, DEBTOR is 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 any time 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. To not permit or allow any adverse lien, security interest or encumbrance whatsoever upon the COLLATERAL and not to permit the same to be attached or replevined. 4. That by its acceptance of the loan money pursuant to the terms 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 the terms of this agreement. UNTIL DEFAULT DEBTOR may have possession of the COLLATERAL, provided that 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. Appendix 4 to Loan ContractC150164