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9. That the DEBTOR will not use the COLLATERAL in violation of any applicable statutes, regulations or ordinances. $ 10. The DEBTOR will keep the COLLATERAL at all times insured against risks of loss or damage by fire (including so-called extended coverage), theft and such other casualties as the SECURED PARTY may reasonably require, including collision in the case of any motor vehicle, all in such amounts, under such forms of policies, upon such terms, for such periods, and written by such companies or underwriters as the SECURED PARTY may approve, losses in all cases to be payable to the SECURED PARTY and the DEBTOR as their interest may appear. All policies of insurance shall provide for at least ten days' prior written notice of cancellation to the SECURED PARTY; and the DEBTOR shall furnish the SECURED PARTY with certificates of such insurance or other evidence satisfactory to the SECURED PARTY as to compliance with the provisions of this paragraph. The SECURED PARTY may act as attorney for the DEBTOR in making, adjusting and settling claims under or canceling such insurance and endorsing the DEBTOR'S name on any drafts drawn by insurers of the COLLATERAL. UNTIL DEFAULT DEBTOR may have possession of the COLLATERAL and use it in any lawful manner, and 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; (b) the making or furnishing of any warranty, representation or statement to SECURED PARTY by or on behalf of DEBTOR which proves to have been false in any material respect when made or furnished; (c) loss, theft, damage, destruction, sale or encumbrance to or of any of the COLLATERAL, or the making of any levy seizure or attachment thereof or thereon; (d) death, dissolution, termination or existence, insolvency, business failure, appointment of a receiver of any part of the property of, assignment for the benefit of creditors by, or the commencement of any proceeding under any bankruptcy or insolvency law of, by or against DEBTOR or any guarantor or surety for DEBTOR. UPON SUCH DEFAULT and at any time thereafter, or if it deems itself insecure, SECURED PARTY may declare all Obligations secured hereby immediately due and payable and shall have the remedies of a secured party under Article 9 of the Colorado Uniform Commercial Code. SECURED PARTY may require DEBTOR to assemble the collateral and deliver or make it available to SECURED PARTY at a place to be designated by SECURED PARTY which is reasonably convenient to both parties. Expenses of retaking, holding, preparing for sale, selling or the like shall include SECURED PARTY'S reasonable attorney's fees and legal expenses. No waiver by SECURED PARTY of any default shall operate as a waiver of any other default or of the same default on a future occasion. The taking of this security agreement shall not waive or impair any other security said SECURED PARTY may have or hereafter acquire for the payment of the above indebtedness, nor shall the taking of any such additional security waive or impair this security agreement; but said SECURED PARTY shall retain its rights of set-off against DEBTOR. All rights of SECURED PARTY hereunder shall inure to the benefit of its successors and assigns; and all promises and duties of DEBTOR shall bind its heirs, executors or administrators or its successors or assigns. If there be more than one DEBTOR, their liabilities hereunder shall be joint and several. Dated this J.-3 tLday of ~~~996. DEBTOR: WINDSOR RESERVOIR AND CANAL COMPANY SECURED PARTY: STATE OF COLORADO for the use and benefit of the Department of Natural Resources, Colorado Water Cons vation Board By: ~~tR Jj{/n~ Elmer R. Gustafso , President (SEAL) ATTEST ~/~-<<