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APPENDIX 5, SECURITY AGREEMENT Date: February 5,2018 Borrower: Lupton Bottom Ditch Company Secured Party: Colorado Water Conservation Board Promissory Note: $606,000.00 Terms of Repayment: 1.60%interest for 10 years Loan Contract Number: CT2018-2829 Pledged Revenues: All revenues derived from assessment revenues and all of Borrower's right to receive said revenues to repay the loan as described in Pledged Revenues provisions of the Contract and Borrower's Resolutions adopted 01/23/2018. 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. BORROWER EXPRESSLY WARRANTS AND COVENANTS: 1. That except for the security interest granted hereby and any other security interests described in Appendix 1, Project Summary, Section 5, the Borrower is the owner of the Pledged Revenues free from any adverse lien, security interest or encumbrances; and that the Borrower will defend the Pledged Revenues 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 the Borrower will not violate any law or agreement governing the Borrower or to which the Borrower is a party. 3. Except in accordance with Section 14.E., to not permit or allow any adverse lien, security interest or encumbrance whatsoever upon the Pledged Revenues 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, the Borrower shall be estopped from asserting for any reason that it is not authorized to grant a security interest in the Pledged Revenues pursuant to the terms of this agreement. 5. To pay all taxes and assessments of every nature that may be levied or assessed against the Pledged Revenues. 6. That the Borrower's articles of incorporation and by-laws do not prohibit any term or condition of this agreement. UNTIL DEFAULT Borrower may have possession of the Pledged Revenues,provided that Borrower keeps the Pledged Revenues in an account separate from other revenues of Borrower and does not use Pledged Revenues for any purpose not permitted by the Contract. Upon default, Secured Party shall have the immediate right to the possession of the Pledged Revenues. 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 Contract;or 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 against the Borrower;or c. the making or furnishing of any warranty,representation or statement to Secured Party by or on behalf of the Borrower which proves to have been false in any material respect when made or furnished. Upon such default and at any time thereafter,Secured Party shall have the remedies of a secured party under Article 9 of the Colorado Uniform Commercial Code. Secured Party may require the Borrower to deliver or make the Pledged Revenues available to Secured Party at a place to be designated by Secured Party, which is reasonably Page 1 of 2 Contract Number:CT2018-2829