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<br />8. That the COLLATERAL is in good condition, and that the DEBTOR will, at its own expense. keep the same in good condition <br />and from time to time. forthwith, replace and repair all such parts of the collateral as may l?e broken, worn out, or damaged without <br />allowing any lien to be created upon the COLLATERAL on account of such replacement or repairs. and that the SECURED PARTY may <br />examine and inspect the COLLATERAL at any time, wherever located. <br /> <br />9. That the DEBTOR will not use the COLLATERAL in violation of any applicable statutes. regulations or ordinances. <br /> <br />, O. The DEBTOR will keep the COLLATERAL at all times insured against risks of loss or damage by fire {including so-called <br />extended coveragel. theft and such other casualties as the SECU!:\ED PARTY may reasonably require, including collision in the case <br />of any motor vehicle. all in such amounts, under such forms of flolicies. upon such terms, for such periods. and written by such <br />companies or underwriters as the SECURED PARTY may approve. losses in all cases to be payable to the SECURED PARTY and the <br />DEBTOR as their interest may appear. All policies of insurance shall provide for at least ten days' prior written notice of cancellation <br />to the SECURED PARTY; and the DEBTOR shall furnish the 5ECUR!:O PARTY with certificates of such insurance or other evidence <br />satisfactory to the SECURED PARTY as to compliance with the provisions of this paragraph. The SECURED PARTY may act as attorney <br />for the DEBTOf:1 in making. adjusting and settling claims under or canceling such insurance and endorsing the DEBTOR'S name on any <br />drafts drawn by insurers of the COLLATERAl. <br /> <br />UNTIL DEFAULT DEBTOR may have possession of the COLlA.TERAL and use it in any lawful manner. and upon default SECURED <br />PARTY shall have the immediate right to the possession of the COLLATERAl. <br /> <br />DEBTOR SHALL BE IN DEFAULT under this agreement UPon the happening of any of the following events or conditions: <br /> <br />(a) default in the payment or performance of any obligation, covenant or liability contained or referred to herein or in any <br />note evidencing the same; <br /> <br />(b) the making or furnishing of any warranty, representatiC)n or statement to SECURED PARTY by or on behalf of DEBTOR which <br />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 of any levy seizure <br />or attachment thereof or thereon; <br /> <br />(d) death, dissolution, termination -;)r existence. insolvency, business failure. appointment of a receiver of any part of the <br />property of. assignment for the benefit of creditors b'y. or the commencement of any proceeding under any bankruptcy <br />or insolvency law of, by or against DEBTOR or any guarantor or surety for DEBTOR. <br /> <br />UPON SUCH DEFAULT and at any time thereafter, or if it deems itself insecure, SECURED PARTY may declare all Obligations <br />secured hereby immediately due and payable and shall have the remedies of a secured party under Article 9 of the Colorado <br />Uniform Commercial Code. SECURED PARTY may require DEBTOR to assemble the collateral and deliver or make it available to <br />SECURED PARTY at a place to be designated by SECURED PARTY which is reasonably convenient to both parties. Expenses of retak.ing. <br />holding, preparing for sale. selling or the like shall include SECURED PARTY'S reasonable attorney's fees and legal expenses. <br /> <br />No waiver by SECURED PARTY of any default shall operate as a waiver of any other default or of the same default on a future <br />occasion. The taking 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 security waive or impair <br />this security agreement; but said SECURED PARTY shall retain its rights of set-off against DEBTOR. <br /> <br />All rights of SECURED PARTY hereunder shall inure to t.he benefit of its successors and assigns; and all promises and duties <br />of DEBTOR shall bind its heirs. executors or administrators or itt successors or assigns. If there be more than one DEBTOR. their <br />liabilities hereunder shall be joint and several. <br /> <br />Dated this g # day of '71/? a;;: , 1996. <br />DEBTOR: ApPLETON ML350 DITCH COMPANY, INC. <br /> <br />By: {J,d ~lJf}>>~ ~~ <br />Janie uller, President ' <br /> <br />SECUREO PARTY: STATE OF COLORAOO for the use <br />and benefit of the Depart n of Natural <br />Resources, Colorado Water C rvation Board <br /> <br /> <br />~. <br /> <br />~/~ <br /> <br />Daries C. Lile, Director <br /> <br />{SE~ ~ <br />ATTEST 6- . - ':(k,L;'~~ <br />