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<br />SECURITY AGREEMENT <br /> <br />DATE: NOVEMBER 1,2003 <br />, <br />DEBTOR: ARKANSAS GROUNDWATER USERS ASSOCIATION <br /> <br />SECURED PARTY: COLORADO WATER CONSERVATION BOARD <br />1313 SHERMAN STREET, ROOM 721 <br />DENVER, CO 80203 <br /> <br />PROMISSORY NOTE: $970,448, DATED NOVEMBER 1, 2003 <br /> <br />TERMS OF REPAYMENT: 2.5% PER ANNUM FOR 30 YEARS <br /> <br />LOAN CONTRACT: C150156, DATED NOVEMBER 1,2003 <br /> <br />COLLATERAL: All revenues derived from membership fees and assessments <br />and all of Debtor's right to receive said revenues as described in <br />Pledge of Property provisions of the LOAN CONTRACT and 785 <br />shares of stock in the Excelsior Irrigating Company evidenced by <br />Certificate No. 10. <br /> <br />To secure payment of the loan evidenced by the PROMISSORY NOTE payable in <br />accordance with the REPAYMENT TERMS, or until all principal, interest, and late charges, if <br />any, are paid in full, the DEBTOR grants to SECURED PARTY a security interest in the above <br />described COLLATERAL. <br />DEBTOR EXPRESSLY WARRANTS AND COVENANTS: <br />1. That except for the security interest granted hereby, DEBTOR is the owner of the <br />COLLATERAL free from any adverse lien, security interest or encumbrances; and that <br />DEBTOR will defend the COLLATERAL against all claims and demands of all persons at <br />any time claiming the same or any interest therein. <br />2. That the execution and delivery of this agreement by DEBTOR will not violate any law or <br />agreement governing DEBTOR or to which DEBTOR is a party. <br />3. To not permit or allow any adverse lien, security interest or encumbrance whatsoever <br />upon the COLLATERAL and not to permit the same to be attached or replevined. <br />4. That by its acceptance of the loan money pursuant to the terms of the CONTRACT and <br />by its representations herein, DEBTOR shall be estopped from asserting for any reason <br />that it is not authorized to grant a security interest in the COLLATERAL pursuant to the <br />terms of this agreement. <br />5. To pay all taxes and assessments of every nature which may be levied or assessed <br />against the COLLATERAL. <br />6. That the DEBTOR'S articles of incorporation and by-laws do not prohibit any term or <br />condition of this agreement. <br />UNTIL DEFAULT DEBTOR may have possession of that portion of the COLLATERAL, <br />consisting of revenues derived from membership fees and assessments, provided that <br />DEBTOR keeps that portion of the COLLATERAL in an account separate from other revenues <br />of DEBTOR and does not use that portion of the COLLATERAL for any purpose not permitted <br /> <br />Appendix 4 to Loan Contract C150156 <br />