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�r�J <br />� <br />SECURITY AGREEMENT <br />(PLEDGE OF REVENUES) <br />DATE JutvE 1 , 2003 <br />DEBTOR: KERN RESERVOIR AND DITCH COMPANY <br />SECURED PARTY: COLORADO WATER CONSERVATION BOARD <br />1313 SHERMAN STREET, ROOM 721 <br />DENVER, CO 80203 <br />PROMISSORY NOTE: $3,620,000, DATED .IUNE 1, 2003 <br />REPAYMENT TERMS: 5.1 O% INTEREST PER ANNUM FOR 30 YEARS <br />LOAN CONTRACT C150118 DATED.IUNE 1, 2003 <br />COLLATERAL All revenues derived frc <br />Debtor's right to receive <br />the loan as described in <br />LOAN CONTRACT. <br />n assessments on stock and all of <br />said assessment revenues to repay <br />Pledge of Property provisions of the <br />To secure payment of the loan evidenced by the PROMISSORY NOTE payable in <br />aCCO�dat1C2 Wlth th@ REPAYMENT TERMS or until all principal, interest, and late charges, if <br />any, are paid in full, the DEaTOR grants to SECURE� PaRrr a security interest in the above <br />described Co��aTEt�a�. <br />DEBTOR EXPRESSLY WARRANTS AND COVENANTS: <br />1. <br />2. <br />3. <br />4. <br />That except for the security interest granted hereby and any other security interests <br />described in Section 5 of the Loan Contract Project Summary, DEBTOR is the owner of <br />the Co�v�,TEwa,� free from any adverse lien, security interest or encumbrances; and that <br />DEBTOR will defend the Co��aTERa� against all claims and demands of all persons at <br />any time claiming the same or any interest therein. <br />That the execution and delivery of this agreement by DEaTOR will not violate any law or <br />agreement governing DEBTOR or to which DEBroR is a party. . <br />To not permit or allow any adverse lien, security interest or encumbrance whatsoever <br />upon the Co��aTERa� and not to permit the same to be attached or replevined. <br />That by its acceptance of the loan money pursuant to the terms of the Cotvr�cT and <br />by its representations herein, DEaTOR shall be estopped from asserting for any reason <br />that it is not authorized to grant a security interest in the Co��a,TERa� pursuant to the <br />terms of this agreement. <br />5. To pay all taxes and assessments ot every nature wrncn may pe �ev�ea �r a5s���C� <br />against the Co��a,TERa,�. <br />6. That the DEaTOR's articles of incorporation and by-laws do not prohibit any term or <br />condition of this agreement. <br />UNTIL DEFAULT DEBTOR may have possession of the Co��a,rERa�, provided that <br />DEBTOR keeps the Co��aTERa� in an account separate from other revenues of DEBTOR and <br />does not use the Co�u�TERa,� for any purpose not permitted by the CotvTRacT. Upon <br />default SECURED PARTY shall have the immediate right to the possession of the <br />Appendix 4 to Loan Contract C150118 <br />