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<br />- <br /> <br /> <br /> <br />SECURITY AGREEMENT <br /> <br />(PLEDGE OF REVENUES) <br /> <br />DATE: JANUARY 1, 2003 <br /> <br />DEBTOR: THE DELTA CANAL COMPANY <br /> <br />SECURED PARTY: COLORADO WATER eONSERVATION BOARD <br />1313 SHERMAN STREET, ROOM 721 <br />DENVER, CO 80203 <br /> <br />PROMISSORY NOTE: $75,000, DATED JANUARY 1,2003 <br /> <br />TERMS: REPAYMENT PERIOD OF 30 YEARS, INTEREST AT THE RATE OF <br />2.75% PER ANNUM <br /> <br />LOAN CONTRACT: C150108, DATED JANUARY 1,2003 <br /> <br />COLLATERAL: All revenues derived from assessments on stock and all of <br />Debtor's right to receive said assessment revenues to repay <br />the loan as described in Pledge of Property provisions of the <br />LOAN CONTRACT. <br /> <br />To secure payment of the loan evidenced by the PROMISSORY NOTE payable in <br />accordance with the TERMS, or until all principal, interest, and late charges, if any, are paid <br />in full, the DEBTOR grants to SECURED PARTY a security interest in the above described <br />COLLATERAL. <br />DEBTOR EXPRESSLY WARRANTS AND COVENANTS: <br />1. That except for the security interest granted hereby and any other security interests <br />described in Section 5 of the Loan Contract Project Summary, DEBTOR is the owner of <br />the 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 -annIs-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 the COLLATERAL, provided that <br />DEBTOR keeps the COLLATERAL in an account separate from other revenues of DEBTOR and <br />does not use the COLLATERAL for any purpose not permitted by the CONTRACT. Upon <br /> <br />Appendix 4 to Loan Contract C1501 08 <br />