PROJ02087

• Contract/PO #: C150129
• Contractor Name: South Side Ditch Company
• Contract Type: Loan
• Water District: 4
• County: Larimer
• Loan Projects - Doc Type: Feasibility Study

SECURITY AGREEMENT

(PLEDGE OF REVENUES)

DATE: FEBRUARV1,2003

DEBTOR: SOUTH SIDE DITCH COMPANY
SECURED PARTY: COLORADO WATER CONSERVATION BOARD
1313 SHERMAN STREET, ROOM 721
DENVER, CO 80203

PROMISSORY NOTE: $72,720, DATED FEBRUARY 1, 2003

TERMS: REPAYMENT PERIOD OF 30 YEARS, INTEREST AT THE RATE OF
3.1 % PER ANNUM
LOAN CONTRACT: C150129, DATED FEBRUARY 1,2003

COLLATERAL: All revenues derived from assessments on stock and all of
Debtor's right to receive said assessment revenues to repay the
loan as described in Pledge of Property provisions of the
LOAN CONTRACT.

To secure payment of the loan evidenced by the PROMISSORY NOTE payable in accordance
with the TERMS, or until alt 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.
5. To pay all taxes and assessments of every nature which may be levied or assessed
against the COLLATERAL
6. That the DEBTOR'S articles of incorporation and by-laws do not prohibit any term or
condition 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