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SECURITY AGREEMENT <br /> (PLEDGE OF REVENUES) <br /> DATE: AUGUST 13, 2010 <br /> DEBTOR: SWAN'S NEST METROPOLITAN DISTRICT, ACTING BY AND <br /> THROUGH ITS WATER ACTIVITY ENTERPRISE <br /> SECURED PARTY: COLORADO WATER CONSERVATION BOARD <br /> 1313 SHERMAN STREET, ROOM 721 <br /> DENVER, CO 80203 <br /> PROMISSORY NOTE: $151,500, DATED AUGUST 13, 2010 <br /> TERMS OF REPAYMENT: 4.75% PER ANNUM FOR 20 YEARS <br /> LOAN CONTRACT: C150312, DATED AUGUST 13, 2010 <br /> COLLATERAL: All water activity enterprise revenues pledged to repay the <br /> loan as described in Pledge of Revenues provisions of the <br /> LOAN CONTRACT and DEBTOR'S resolution dated July 27, <br /> 2010. <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 <br /> charges, if any, are paid in full, the DEBTOR grants to SECURED PARTY a security interest in <br /> the above described COLLATERAL. <br /> DEBTOR EXPRESSLY WARRANTS AND COVENANTS: <br /> 1. 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 COLLATERAL free from any adverse lien, security interest or encumbrances; and <br /> that DEBTOR will defend the COLLATERAL against all claims and demands of all persons <br /> at any time claiming the same or any interest therein. <br /> 2. That the execution and delivery of this agreement by DEBTOR 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 en lip e;;Y .t-:,ever <br /> upon the COLLATERAL and not to permit the same to be a ached or rep - ' - .1 <br /> 4. That by its acceptance of the loan money pursuant to tht oft NTRACT and <br /> by its representations herein, DEBTOR shall be estopped `fro . se . V r n re5n <br /> that it Is not authorized to grant a security Interest in the COLLATE4L p}r- a t to fie <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 <br /> and 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 /> Appendix 4 to Loan Contract C150312 <br /> Page 1 of 2 <br />