C153808 Contract

• Contract/PO #: C153808
• Contractor Name: Arkansas Groundwater Users Association
• Contract Type: Loan
• Water District: 14
• County: Pueblo
• Bill Number: ARA
• Loan Projects - Doc Type: Contract Documents

SECURITY AGREEMENT

DEBTOR: Arkansas Groundwater Users Association
100 West 1" Street
Manzanola, CO 81058

FEDERAL TAX NUMBER: 84-1268595

COUNTY: Pueblo (CODE: 02)

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 SECURE:D 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 fees and assessments and all of DEBTOR'S right to
received said fees and assessment revenues, as described in the Pledge of Property provisions in
contract No. C153808 (CONTRACT).

To secure payment of the indebtedness evidenced by certain Promissory Note Provisions of CONTRACT
between the above named parties herewith, payable to the SECURED PARTY, the loan amount of $590,590
for a period of 40 years in accordance 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, 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; and that DEBTOR will defend the
COLLATERAL 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 DEBTOR will not violate any law or agreement
goveming DEBTOR or to which DEBTOR is a party,

3. That, if DEBTOR is a corporation, its certificate aM 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 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 permit or allow any adverse lien, security interest or encumbrance whatsoever upon the
COLLATERAL and not to permit 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.

UNTIL DEFAULT DEBTOR may have possession of the COLLATERAL, provided that DEBTOR keeps the
COLLATERAL in an account separate from other revenues of DEBTOR and does not use the COLLATERAL for
any purpose not permitted by the CONTRACT. Upon default, SECURED PARTY shall have the immediate right

Appendix 7 to Loan Contract No. C153808