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SECURITY AGREEMENT DEBTOR: Arkansas Groundwater Users Association 100 West First Manzanola, CO 81058 FEDERAL TAX NUMBER: 84-1268595 COUNTY: OTERO (CODE: 09 ) SECURED PARTY: State Of Colorado Colorado Water Conservation Board 1313 Sherman Street, Room 721 Denver, CO 80203 COLLATERAL: Contract Rights (Code: 030) 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 COLLATERAL: All revenues derived from membership dues and from ilssessments levied to repay the indebtedness on the amount loaned to DEBTOR by SECURED PARTY, and all rights of DEBTOR to receive said dues and assessment revenues from its members, as described in pledge of property provisions in Loan Contract #C153800. To secure payment of the indebtedness evidenced by certain Promissory Note between the above named parties herewith, in the amount of $25,000.00 at an interest rate of 4% per annum for a tenn of 10 years, payable by DEBTOR to the SECURED PARTY until all principal and interest are paid in full in accordance with said Promissory Note. DEBTOR EXPRESSLY WARRANTS AND COVENANTS: 1. That except for the security interest grant hereby, DEBTOR is, or to the extent that this agreement states that the COLLATERAL is to be acquired after the date hereof, will be, the owner of the COLLATERAL free from any adverse lien, security interest or encumbrances. 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 tenn or condition of this agreement. 4. That by its acceptance of the loan money pursuant to the tenns 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 pennit or allow any adverse lien, security interest or encumbrance whatsoever upon the COLLATERAL and not to pennit the same to be attached or replevined. 7. That the DEBTOR will not use the COLLATERAL in violation of any applicable statutes, regulations, ordinances, articles of incorporation or by-laws. UNLESS IT DEFAULTS DEBTOR may have possession of the COLLATERAL, provided that DEBTOR keeps all revenues derived from membership assessments in the amount of the annual loan payments due under the contract, as amended, in an account separate from other revenues of DEBTOR and does not use said revenues. for any purpose not permitted by the CONTAACT. If DEBTOR defaults, SECURED PARTY shall have APPENDIX F TO LOAN CONTRACT C153800