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<br />SECURITY AGREEMENT <br /> <br />DEBTOR: <br /> <br />The Town of Morrison <br />P.O. Box 95 <br />Morrison, Colorado 80465 <br /> <br />FEDERAL 10 No: <br /> <br />84-6002971 <br /> <br />SECURED PARTY: <br /> <br />STATE OF COLORADO for the use and benefit of <br />The Department of Natural Resources, Colorado Water Conservation Board <br />1313 Sherman Street, Room 721 <br />Denver, CO 80203 <br /> <br />COLLATERAL: <br />COUNTY: <br /> <br />Contract Rights (Code: 030) <br />Jefferson (Code: 11) <br /> <br />DEBTOR, for consideration, hereby grants to SECURED PARTY a security interest in the following property and <br />any and all additions, accessions and substitutions thereto or therefor, hereinafter called the COLLATERAL: <br />Revenues pledged to repay the amount loaned to Debtor by Secured Party, as described in the Pledge of <br />Revenues Provisions contained in Loan Contract No. C153773 (CONTRACT). <br /> <br />To secure payment of the indebtedness evidenced by certain Promissory Note which is a part of CONTRACT <br />between the above named parties herewith, payable to the SECURED PARTY as follows: the loan amount of <br />$504,000 with interest at a rate of 5% per annum, payable in 30 annual installments or until all principal and <br />interest are paid in full, in accordance with said Promissory Note. <br /> <br />DEBTOR EXPRESSLY WARRANTS AND COVENANTS: <br /> <br />1. That except for the security interest granted hereby DEBTOR is, or to the extent that this agreement states <br />that the COLLATERAL is to be acquired after the date hereof, will be, the owner of the COLLATERAL free from <br />any adverse lien, security interest or encumbrances; and that DEBTOR will defend the COLLATERAL against <br />all claims and demands of all persons at anytime claiming the same or any interest therein. <br /> <br />2. That the execution and delivery of this agreement by DEBTOR will not violate any law or agreement <br />governing DEBTOR or to which DEBTOR is a party. <br /> <br />3. That, if DEBTOR is a corporation, its certificate and articles of incorporation and by-laws do not prohibit any <br />term or condition of this agreement. <br /> <br />4. That by its acceptance of the loan money pursuant to the terms of the CONTRACT and by its representations <br />herein, DEBTOR shall be estopped from asserting for any reason that it is not authorized to grant a security <br />interest in the COLLATERAL pursuant to the terms of this agreement. <br /> <br />5. To pay all taxes and assessments of every nature which may be levied or assessed against the <br />COLLATERAL. <br /> <br />6. To not permit or allow any adverse lien, security interest or encumbrance whatsoever upon the <br />COLLATERAL and not to permit the same to be attached or replevined. <br /> <br />7. That the DEBTOR will not use the COLLATERAL in violation of any applicable statutes, regulations, <br />ordinances, articles of incorporation or by-laws. <br /> <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 />Appendix 4 to Loan Contract #C153773 <br />