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SECURITY AGREEMENT DATE: NOVEMBER 12, 2015 BORROWER: PARKVILLE WATER DISTRICT, A COLORADO SPECIAL DISTRICT SECURED PARTY: COLORADO WATER CONSERVATION BOARD PROMISSORY NOTE: $181,800.00 TERMS OF REPAYMENT: 1.95% PER ANNUM FOR 10 YEARS CONTRACT NUMBER: CT2016-2004 COLLATERAL: The Pledged Revenues, as such term is defined in the PLEDGE OF REVENUES provisions of the LOAN CONTRACT and BORROWER'S Loan Resolution adopted by the BORROWER on NOVEMBER 12, 2015. 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 BORROWER grants to SECURED PARTY a security interest in the above described Pledged Revenues hereinafter"COLLATERAL". BORROWER 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, BORROWER is the owner of the COLLATERAL free from any adverse lien, security interest or encumbrances; and that BORROWER 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 BORROWER will not violate any law or agreement governing BORROWER or to which BORROWER 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, BORROWER 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 BORROWER may have possession of the COLLATERAL, provided that BORROWER keeps the COLLATERAL in an account separate from other revenues of BORROWER 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. BORROWER SHALL BE IN DEFAULT under this agreement upon any of the following events or conditions: a. default in the payment or performance of any obligation contained herein or in the PROMISSORY NOTE or Loan CONTRACT; b. dissolution, termination of 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 Appendix 4 Page 1 of 2