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<br />UNTIL DEFAULT DEBTOR may have possession of the COLLATERAL, provided that DEBTOR keeps the <br />COLLATERAL in an account separate from other revenues of DEBTOR and does not use the COLLATERAL for any <br />purpose not permitted by the CONTRACT. Upon default, SECURED PARTY shall have the immediate right to the <br />possession of the COLLATERAL. <br /> <br />DEBTOR SHALL BE IN DEFAULT under this agreement upon the happening of al1Y of the following events <br />or conditions: <br /> <br />(a) default in the payment or performance of any obligation, covenant or liability contained or referred <br />to herein or in any note evidencing the same; <br /> <br />(bl the making or furnishing of any warranty, representation or statement to SECURED PARTY by or on <br />behalf of DEBTOR which proves to have been false in any material respect when made or furnished; <br /> <br />(c) loss, theft, damage, destruction, sale or encumbrance to or of any of the COLLATERAL, or the making <br />of any levy seizure or attachment thereof or thereon; <br /> <br />Id) death, dissolution, termination or existence, insolvency, business failure, appointment of a receiver <br />- of any part of the property of, assignment for the benefit of creditors by, or the commencement of <br />any proceeding under any bankruptcy or insolvency law of, by or against DEBTOR or any guarantor <br />or surety for DEBTOR. <br /> <br />UPON SUCH DEFAULT and at any time thereafter, or if it deems itself insecure, SECURED PARTY may <br />declare all Obligations secured hereby immediately due and payable and shall have the remedies of a secured <br />party under Article 9 of the Colorado Uniform Commercial Code. SECURED PARTY may require DEBTOR to deliver <br />or make the COLLATERAL available to SECURED PARTY at a place to be designated by SECURED PARTY which is <br />reasonably convenient to both parties. Expenses of retaking, holding, preparing for sale, selling or the like shall <br />include SECURED PARTY'S reasonable attorney's fees and legal expenses. In the event court action is deemed <br />necessary to enforce the terms and conditions set forth herein, said action shall only be brought in the District <br />Court for the City and County of Denver, State of Colorado, and DEBTOR consents to venue and personal <br />jurisdiction in said Court. <br /> <br />No default shall be waived by SECURED PARTY except in writing, and no waiver by SECURED PARTY of any <br />default shall operate as a waiver of any other default or of the same default on a future occasion. The taking <br />of this security agreement shall not waive or impair anY other security said SECURED PARTY may have or <br />hereafter acquire for the payment of the above indebtedness, nor shall the taking of any such additional <br />security waive or impair this security agreement; but said SECURED PARTY shall retain its rights of set-off against <br />DEBTOR. <br /> <br />All rights of SECURED PARTY hereunder shall inure to the benefit of its successors and assigns; and all <br />promises and duties of DEBTOR shall bind its heirs, execLltors or administrators or its successors or assigns. <br />If there be more than one DEBTOR, their liabilities hereunder shall be joint and several. <br /> <br />Dated this 20 day of OG-+nher <br /> <br />,1996. <br /> <br />DEBTOR: Mutual Mesa Lateral Enterprise <br /> <br />By: <br /> <br />R~ <br /> <br />(SEAl) <br /> <br />James Rooks, Manager <br /> <br />ATTEST <br /> <br />BLN 0 O~ -I'i ) .-<'iU>'--1-n<J---- <br />Della Grams, Secretary <br />