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<br />, <br /> <br />SlECUR1[TY AGRlElEM1ENT <br /> <br />DEBTOR: <br /> <br />ARISTOCRAT RANCHEITE WATER PROJECT, INC. <br />P. O. Box 247 <br />Fort Lupton, CO 80621 <br /> <br />FEDERAL TAXID NUMBER: <br />COUNTY: <br /> <br />84-0690646 <br />Weld (Code 03) <br /> <br />SECURED PARTY: <br /> <br />State of Colorado - Colorado Water Conservation Board <br />1313 Shennan Street, Room 721 <br />Denver, CO 80203 <br /> <br />COLLATERAL: <br /> <br />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 and any and all <br />additions, accessions and substitutions thereto or therefor, pursuant to Loan Contract No. Cl53J39, Cf,Sntract), 30 acre- <br />foot units of Colorado-Big Thompson Project water, approved by the Board of the Northe;'~~atfr"Conservancy <br />District on November 13, 1998, hereinafter referred to as the COLLATERAL, <br /> <br />To secure payment of the indebtedness evidenced by certain Promissory Note which is a part of the Contract between the <br />above named parties herewith, payable to the SECURED PARTY, the loan amount of $600,000 with interest at 4V.% for 30 <br />years payable in accordance with said Promissory Note until all principal and interest are paid in full. <br /> <br />DEBTOR EXPRESSL Y WARRANTS AND COVENANTS: <br /> <br />1. Tbat except for the security interest granted hereby DEBTOR is, or to the extent that this agreement states that the <br />COLLATERAL is to be acquired after the date hereof, will be, the owner of the COLLATERAL free from any adverse <br />lien, security interest or encumbrances; and that DEBTOR will defend the COLLATERAL against all claims and <br />demands of all persons at anytime claiming the same or any interest therein. <br /> <br />2. Promptly to notify SECURED PARTY of any changes in the location of the COLLATERAL. <br /> <br />3. To pay all taxes and assessments of every nature which may be levied or assessed against the COLLATERAL. <br /> <br />4. To not permit or allow any adverse lien, security interest or encumbrance whatsoever upon the COLLATERAL and not <br />to permit the same to be. attached or replevined. <br /> <br />5. Tbat the COLLATERAL is in good condition, and that the DEBTOR will, at its own expense, keep the same in good <br />condition and from time to time, forthwith, replace and repair all such parts of the collateral as may be broken, worn <br />out, or damiged without allowing any lien to be created upon the COLLATERAL on account of such replacement or <br />repairs, and that the SECURED PARTY may examine and inspect the COLLATERAL at any time, wherever located. <br /> <br />6. That the DEBTOR will not use the COLLATERAL in violation of any applicable statutes, regulations or ordinances. <br /> <br />7. The DEBTOR will keep the COLLATERAL at all times insured against risks of loss or damage by fire (including so- <br />called extended coverage), theft and such other casualties as the SECURED PARTY may reasonably"require, including <br />collision in the case of any motor vehicle, all in such amounts, under such forms of policies, upon such terms, for <br />such periods, and written by such companies or underwriters as the SECURED PARTY may approve, losses in all cases <br />to be payable to the SECURED PARTY and the DEBTOR as their interest may appear. All policies of insurance shall <br />provide for at least ten days' prior written notice of cancellation to the SECURED PARTY; and the DEBTOR shall <br />. furnish the SECURED PARTY with certificates of such insurance or other evidence satisfactory to the SECURED PARTY <br />