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SECURITY AGREEMENT <br />(PLEDGE OF REVENUES <br />DATE: NOVEMBER 19, 2008 <br />DEBTOR: REPUBLICAN RIVER WATER CONSERVATION DISTRICT, ACTING <br />BY AND THROUGH ITS WATER ACTIVITY ENTERPRISE <br />SECURED PARTY: COLORADO WATER CONSERVATION BOARD <br />PROMISSORY NOTE: $4,545,000, DATED NOVEMBER 19, 2008 <br />TERMS OF REPAYMENT: 2.25% PER ANNUM FOR 20 YEARS <br />LOAN CONTRACT: C150275, DATED NOVEMBER 19, 2008 <br />COLLATERAL: All Water Activity Enterprise revenues pledged to repay the <br />loan as further described in Debtor's resolution dated <br />November 13, 2008, and the provisions of the LOAN <br />CONTRACT. <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 charges, <br />if any, are paid in full, the DEBTOR grants to SECURED PARTY a security interest in the above <br />described COLLATERAL. <br />DEBTOR EXPRESSLY WARRANTS AND COVENANTS: <br />1. That except for the security interest granted hereby ay other security interests <br />described in Section 5 of the Loan Contract Project Bumf , DEBTOR is the owner of <br />the COLLATERAL free from any adverse lien, security Interei or.pri rnbrances; and that <br />DEBTOR will defend the COLLATERAL against all; claims an- del?Wd of all persons at <br />any time claiming the same or any interest thereih <br />2. That the execution and delivery of this agreement. by dF-BTOR 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 and <br />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 />DEBTOR SHALL BE IN DEFAULT under this agreement upon any of the <br />following events or conditions: <br />Appendix 4 to Loan Contract C150275 <br />Page 1 of 2 <br />