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<br />. <br /> <br />ttsECURITY AGREEMENT . <br /> <br />DEBTOR: Lower Arkansas Water Management Association <br />P. O. Box 1161 <br />Lamar, CO 81052 <br /> <br />FEDERAL TAX NUMBER: 84-0637532 <br />COUNTY: PROWERS (CODE: 17) <br /> <br />SECURED PARTY: STATE OF COLORADO for the use and benefit of the <br />Dept of Natural Resources, Colorado Water Conservation Board <br />1313 Sherman Street, Room 721 <br />Denver, CO 80203 <br /> <br />COLLATERAL: ALL WATER RIGHTS AND DITCH SHARES (Code 560) <br /> <br />DEBTOR, for consideration, hereby grants to SECURED PARTY a security interest in the following property <br />and any and all additions, accessions and substitutions thereto or therefor, hereinafter called the <br />COLLATERAL: 2,241.6 shares of capital stock of the Highland Irrigation Company, evidenced by the <br />following stock certificates in the number of shares given: <br /> <br />No. 258, 260 shares; No. 253, 60 shares; No. 275, 200 shares; No. 278,10 shares; <br /> <br />No. 289, 21.2 shares; No. 307, 21.2 shares; No. 311, 30 shares, No. 312, 600 shares; <br /> <br />No. 318, 152 shares; No. 319, 21.2 shares; No. 320, 33 shares; No. 323, 3 shares; <br /> <br />No. 325, 143 shares; No. 326, 300 shares; No. 327, 350 shares; No. 308, 37 shares. <br /> <br />To secure payment of the indebtedness evidenced by the Promissory Note which is a part of Loan Contract <br />#C153768 ("CONTRACT"), between the above named parties herewith, payable to the SECURED PARTY, or <br />order, as follows: 2,300,000 payable in 40 annual i .. with the Promissory Note~ <br />until all principa and interest are aid. . bf\.. iiu' eLm a~ tn. <br /> <br />DEBTOR EXPRESSLY WARRANTS AND COVENANTS: U <br /> <br />1. That except for the security interest granted her~, DEBTOR is, or to the extent that this agreement <br />states that the COLLATERAL is to be acquired after the date,hereof, will be, the owner of the COLLATERAL <br />free from any adverse lien, security interest or encumbrances; and that DEBTOR will defend the <br />COLLATERAL against all claims and demands of all persons at anytime claiming the same or any interest <br />therein by, through or under DEBTOR. <br /> <br />2. That the execution and delivery of this agreement by DEBTOR will not violate any law or agreement <br />governing DEBTOR or to which DEBTOR is a party. - <br /> <br />3. That, if DEBTOR is a corporation, its certificate or articles of incorporation and by-laws do !1?t prohibit any <br />term or condition of this agreement. - <br /> <br />4. That, by its acceptance of the loan money pursuant to the terms of the CONTRACT and by its <br />representations herein, DEBTOR shall be estopped from asserting for any reason that it is not authorized <br />to grant a security interest in the COLLATERAL pursuant to the terms of this agreement. <br /> <br />5. To pay all taxes and assessments of every nature which may be levied or assessed against the <br />COLLATERAL. <br /> <br />6. To not permit or allow any adverse lien, security interest or encumbrance whatsoever upon the <br />COLLATERAL and not to permit the same to be attached or replevined. <br /> <br />Appendix 7 to Loan Contract #C153768 <br />