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SECURITY AGREEMENT DEBTOR: The Consolidated Extension Canal Company c/o Public Service Company of Colorado attn: Don Halffield or Virginia Trujillo 550 15th Street, Suite 900 Denver, CO 80202-4256 FED TAX ID # 84-0176965 SECURED PARTY: STATE OF COLORADO for the use and benefit of the Department of Natural Resources, Col.orado Water Conservation 1313 Sherman Street, Room 721 Denver, CO 80203 COLLATERAL CLASSIFICATION: CONTRACT RIGHTS & OTHER DEBTOR, for consideration, hereby grants to SECURED PARTY a security interest in the following property and any and all additions, accessions and substitutions thereto or therefor, hereinafter called the COUA TERAL: All revenues derived from special stockholder assessments, as described in Pledge of Revenues Provisions in Contract #C153747. To secure payment of the indebtedness evidenced by certain Promissory Note Provisions of Loan Contract #C153747 ("COmRAC1") between !tie above named parties herewith, payable to the SECURED PARTY, or order, as follows: $300,000 in accordance with the terms specified in the Promissory Note Provisions of said Contract, or until all principal and interest are paid in full. DEBTOR EXPRESSLY WARRANTS AND COVENANTS: 1. That except for the security interest granted hereby DEBTOR is, or to the extent that this agreement states that the COUATERAL is to be acquired after the date hereof, will be, the owner of the COUATERAL free from any adverse lien, security interest or encumbrances; and that DEBTOR will defend the COUA TERAL against all claims and demands of all persons at anytime claiming the same or any interest therein. 2. That the execution and delivery of this agreement by DEBTOR will not violate any law or agreement governing DEBTOR or to which DEBTOR is a party. 3. That, if DEBTOR is a corporation, its certificate and articles of incorporation and by-laws do not prohibit any term or condition of this agreement. 4. That by its acceptance of the loan money pursuant to the terms of the CONTRACT and by its representations herein, DEBTOR shall be estopped from asserting for any reason that it is not authorized to grant a security interest in the COLLATERAL pursuant to the terms of this agreement. 5. To pay all taxes and assessments of every nature which may be levied or assessed against the COLLATERAL. 6. To not permit or allow any adverse lien, security interest or encumbrance whatsoever upon the COLLATERAL and not to permit the same to be attached or replevined. 7. That the DEBTOR will not use the COUATERAL in violation of any applicable statutes, regulations, ordinances, articles of incorporation or by-laws. UNTIL DEFAULT DEBTOR may have possession of the COLLATERAL, provided that DEBTOR keeps the ^ "''''''n,Hv C +.... f'nn+r,....+ :Hf'1 "0':\7/17