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in � + SECURtTY AGREEMENT DEeTOR: The Consolidated Mutual Water Company P.O. Box 150068 Lakewood, Colorado 80215 FEDERAL TAX NUMBER: 84-0177040 CAUh1TY: JEFFEASON (CODE: 11) SECURED PqR'n': State of Colorado - Colorado Water Conservation Board 1313 Sherman Street, Room 721 Denver, CO 80203 Cot�aTERA�: Contract Rights (Code: 030) DEBTOR for consideration, hereby grants to SECURED PARrv a security interest in the following property and any and all additions, accessions and substitutions thereto or therefor, hereinafter called the Co�V+TE�u�: (1) All revenues derived from water service revenues and all of Desroa's right to receive said revenues to repay the indebtedness o� the amount loaned to debtor by secured party, as described in Pledge of Property provisions in Contract No. C150011 and (2) an undivided one hundred percent (100%) interest in 2;641140 shares in The Agricultural Ditch and Reservoir Company evidenced by Certificate No. 5803. The shares represent the Debtors pro rata share of water rights described in attached Exhibit A. To secure payment ot the indebtedness evidenced by certain Promissory Note between the above named paRies herewith, payable to the SEC , , eno 0 n years in accor ance with said Promissory Note or until all principal and interest are paid in full. DEBTOR EXPRESSLY WARRANTS AND COVENANTS: 1. That except for the security interest granted hereby, DESroR is, or to the extent that this agreement states that the COLLATERAL iS t0 be acquired after the date hereof, will be, the owner of the Coua,rERn� free from any adverse lien, security interest or encumbrances; and that DEaroR will defend the COt�4TEaa� against all claims and demands of all persons at anytime claiming the same or any interest therein. 2. That the execution and delivery of this agreement by DESTOR will not violate any law or agreement governing DEBTOa or to which DEBTOa is a parry. 3. That, if DEeTOR is a corporation, its certificate and articles of incorporation and by-laws do not prohibit any term or condition of this agreement. 4. That by its acceptance of the loan money pursuant to the terms of the CONTRACT 3fid by its representations herein, DEaTOR shali be estopped from asserting for any reason that it is not authorized to grant a security interest in the C�uJa�ERAt 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 permit or allow any adverse lien, security interest or encumbrance whatsoever upon the Cou.a,TERA� and not to permft the same to be attached or replevined. 7. That the DEa'rOR will not use the Cot�.4TEaa� in violation of any applicable statutes, regulations, ordinances, articles of incorporation or by-laws. UNTIL DEFAULT DEB7oR may have possession of the revenue portion of the COLLATERAL provided that DEBfoa keeps those revenues in an account separate from other revenues of DEBTOa and does not use the Co��a,rEaA� for any purpose not permitted by the CoNTRqC'r. Upon default, Appendix F to Loan Contract �^ c+{nny � —