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APPENDIX 5, SECURITY AGREEMENT <br /> Date: April 5,2019 <br /> Borrower: The Tunnel Water Company <br /> Secured Party: Colorado Water Conservation Board <br /> Promissory Note: $9,090,000.00 <br /> Terms of Repayment: 2.85%per annum interest for thirty(30)years <br /> Loan Contract Number: CT2019-3706 <br /> Pledged Revenues: All revenues derived from assessment revenues and all of Borrower's right to <br /> receive said revenues to repay the loan as described in Pledged Revenues provisions of the Contract and Borrower's <br /> Resolutions adopted March 21,2019. <br /> To secure payment of the loan evidenced by the Promissory Note payable in accordance with the terms of <br /> repayment, or until all principal, interest, and late charges, if any, are paid in full, the Borrower grants to Secured <br /> Party a security interest in the above described Pledged Revenues. <br /> BORROWER EXPRESSLY WARRANTS AND COVENANTS: <br /> i. That except for the security interest granted hereby and any other security interests described in Appendix 1, <br /> Project Summary, Section 5, the Borrower is the owner of the Pledged Revenues free from any adverse lien, <br /> security interest or encumbrances; and that the Borrower will defend the Pledged Revenues against all claims <br /> and demands of all persons at any time claiming the same or any interest therein. <br /> 2. That the execution and delivery of this agreement by the Borrower will not violate any law or agreement <br /> governing the Borrower or to which the Borrower is a party. <br /> 3. Except in accordance with Section 11.E.,of the Loan Contract,to not permit or allow any adverse lien,security <br /> interest or encumbrance whatsoever upon the Pledged Revenues and not to permit the same to be attached or <br /> replevined. <br /> 4. That by its acceptance of the loan money pursuant to the terms of the Contract and by its representations herein, <br /> the Borrower shall be estopped from asserting for any reason that it is not authorized to grant a security interest <br /> in the Pledged Revenues pursuant to the terms of this agreement. <br /> 5. To pay all taxes and assessments of every nature that may be levied or assessed against the Pledged Revenues. <br /> 6. That the Borrower's articles of incorporation and by-laws do not prohibit any term or condition of this <br /> agreement. <br /> UNTIL DEFAULT Borrower may have possession of the Pledged Revenues,providd that Borrower keeps the <br /> Pledged Revenues in an account separate from other revenues of Borrower and does not use Pledged Revenues for <br /> any purpose not permitted by the Contract. Upon default, Secured Party shall have t e immediate right to the <br /> possession of the Pledged Revenues. <br /> BORROWER SHALL BE IN DEFAULT under this agreement upon any the following events or <br /> conditions: <br /> a. default in the payment or performance of any obligation contained herein or in the Promissory Note or <br /> Contract;or <br /> b. dissolution,termination of existence,insolvency,business failure,appointment of a receiver of any part of <br /> the property of,assignment for the benefit of creditors by,or the commencement of any proceeding under <br /> any bankruptcy or insolvency law of,by or against the Borrower;or <br /> c. the making or furnishing of any warranty,representation or statement to Secured Party by or on behalf of <br /> the Borrower which proves to have been false in any material respect when made or furnished. <br /> Upon such default and at any time thereafter,Secured Party shall have the remedies of a s6cured party under Article <br /> Page 1 of 2 <br /> Contract Number:CT2019-3706 <br /> Appendix 5 <br />