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<br />SECURITY AGREEMENT
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<br />DEBTOR: Julesburg Irrigation District
<br />315 Cedar Street
<br />Julesburg, CO 80737
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<br />FEDEPIII TAX NUMBER: 84-6000185
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<br />COUNTY: SEDGWICK (CODE: 39)
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<br />SECURED PARTY: State of Colorado - Colorado Water Conservation Board
<br />1313 Sherman Street, Room 721
<br />Denver, CO 80203
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<br />COLLATERAL: Contract Rights (Code: 030)
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<br />DEBTOR, for consideration, hereby grants to SECURED PARTY a security interest in the following
<br />property and any and all additions, accessions and substitutions thereto or therefor, hereinafter
<br />called the COLLATERAL: Revenues from taxes and assessments pledged to repay the amount loaned to
<br />Debtor by Secured Party, as described in the Pledge of Revenues Provisions contained in Loan Contract
<br />No, C150060 dated March 1, 2001 (CONTRACT).
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<br />To secure payment of the indebtedness evidenced by the Promissory Note dated March 1, 2001,
<br />between the above named parties herewith, payable to the SECURED PARTY, the loan amount of
<br />$100,000 at an interest rate of 3,5% per annum for a period of 30 years in accordance with said
<br />Promissory Note or until all principal, interest, and late charges, if any, are paid in full.
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<br />DEBTOR EXPRESSLY WARRANTS AND COVENANTS:
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<br />1, That except for the security interest granted hereby, 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
<br />COLLATERAL free from any adverse lien, security interest or encumbrances; and that DEBTOR will
<br />defend the COLLATERAL against all claims and demands of all persons at anytime Claiming the same
<br />or any interest therein,
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<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.
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<br />3. That, if DEBTOR is a corporation, its certificate and articles of incorporation and by-laws do not
<br />prohibit any term or condition of this agreement.
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<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
<br />authorized to grant a security interest in the COLLATERAL pursuant to the terms of this agreement.
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<br />5, To pay all taxes and assessments of every nature which may be levied or assessed against the
<br />COLLATERAL.
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<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.
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<br />7, That the DEBTOR will not use the COLLATERAL in violation of any applicable statutes, regulations,
<br />ordinances, articles of incorporation or by-laws.
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<br />UNTIL DEFAULT DEBTOR may have possession of the COLLATERAL, provided that DEBTOR
<br />keeps the COLLATERAL in an account separate from other revenues of DEBTOR and does not use the
<br />COLLATERAL for any purpose not permitted by the CONTRACT, Upon default, SECURED PARTY shall have
<br />the immediate right to the possession of the COLLATERAL,
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<br />DEBTOR SHALL BE IN DEFAULT under this agreement upon the happening of any of the
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<br />Appendix 4 to Loan Contract No. C150060
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