Document:

exh107-033103

Exhibit 10.7

RECORDATION REQUESTED BY:
    Bank of the West Secondary Marketing
    10181 Truckee Airport
    Road P. 0. Box 61000
    Truckee, CA 96160

WHEN RECORDED MAIL TO:
    Bank of the West SBA Division
    10181 Truckee Airport Road
    Truckee, CA 96160
                                                         FOR RECORDER'S USE ONLY

                                  DEED OF TRUST

THIS DEED OF TRUST is dated August 21, 2001,  among Eldorado  Artesian  Springs,
Inc., a Colorado  corporation,  whose address is P.O. Box 445, Eldorado Springs,
CO 80025 ("Grantor");  Bank of the West , whose address is Secondary  Marketing,
10181  Truckee  Airport Road, P. 0. Box 61000,  Truckee,  CA 96160  (referred to
below  sometimes as "Lender" and  sometimes  as  "Beneficiary");  and the Public
Trustee of-Boulder County, Colorado (referred to below as "Trustee").

CONVEYANCE AND GRANT.  For valuable  consideration,  Grantor hereby  irrevocably
grants,  transfers  and  assigns  to  Trustee  for  the  benefit  of  Lender  as
Beneficiary all of Grantor's right,  title, and interest in and to the following
described real property,  together with all existing or subsequently  erected or
affixed buildings,  improvements and fixtures; all easements, rights of way, and
appurtenances;  all water,  water  rights and ditch rights  (including  stock in
utilities with ditch or irrigation rights); and all other rights, royalties, and
profits  relating  to  the  real  property,  including  without  limitation  all
minerals,  oil,  gas,  geothermal  and similar  matters,  (the "Real  Property")
located in Boulder County, State of Colorado:

Lot 2A,  Block 1, THE PARK AT C.T.C.,  REPLAT B, City of  Louisville,  County of
Boulder, State of Colorado

The  Real  Property  or its  address  is  commonly  known as 1783  Dogwood  St.,
Louisville,  CO 80027. The Real Property tax  identification  number is 0144358,
0144359.

Grantor  presently  assigns to Lender (also known as Beneficiary in this Deed of
Trust) all of  Grantor's  right,  title,  and interest in and to all present and
future  leases of the  Property  and all Rents from the  Property.  In addition,
Grantor  grants to Lender a Uniform  Commercial  Code  security  interest in the
Personal Property and Rents.

THIS DEED OF TRUST,  INCLUDING THE ASSIGNMENT OF RENTS AND THE SECURITY INTEREST
IN THE RENTS  AND  PERSONAL  PROPERTY,  IS GIVEN TO SECURE  (A)  PAYMENT  OF THE
INDEBTEDNESS AND (B) PERFORMANCE OF ANY AND ALL OBLIGATIONS  UNDER THE NOTE, THE
RELATED  DOCUMENTS,  AND THIS  DEED OF  TRUST.  THIS  DEED OF TRUST IS GIVEN AND
ACCEPTED ON THE FOLLOWING TERMS:

PAYMENT AND  PERFORMANCE.  Except as  otherwise  provided in this Deed of Trust,
Grantor  shall pay to Lender all  amounts  secured by this Deed of Trust as they
become due, and shall  strictly and in a timely manner  perform all of Grantor's
obligations under the Note, this Deed of Trust, and the Related Documents.

POSSESSION  AND  MAINTENANCE  OF THE  PROPERTY.  Grantor  agrees that  Grantor's
possession  and  use  of  the  Property  shall  be  governed  by  the  following
provisions:

Possession and Use. Until the occurrence of an Event of Default, Grantor may (1)
remain in possession and control of the Property; (2) use, operate or manage the
Property; and (3) collect the Rents from the Property.

Duty to Maintain.  Grantor shall  maintain the Property in tenantable  condition
and promptly  perform all repairs,  replacements,  and maintenance  necessary to
preserve its value.

Compliance With  Environmental  Laws.  Grantor represents and warrants to Lender
that:  (1) During the period of Grantor's  ownership of the Property,  there has
been no use, generation,  manufacture,  storage, treatment, disposal, release or
threatened release of any Hazardous  Substance by any person on, under, about or
from the  Property;  (2) Grantor has no knowledge  of, or reason to believe that
there has been, except as previously  disclosed to and acknowledged by Lender in
writing,  (a) any breach or violation of any  Environmental  Laws,  (b) any use,
generation,  manufacture,  storage,  treatment,  disposal, release or threatened
release of any Hazardous  Substance on, under, about or from the Property by any
prior  owners or  occupants  of the  Property,  or (c) any actual or  threatened
litigation or claims of any kind by any person relating to such matters; and (3)
Except as previously  disclosed to and  acknowledged  by Lender in writing,  (a)
neither Grantor nor any tenant,  contractor,  agent or other  authorized user of
the Property  shall use,  generate,  manufacture,  store,  treat,  dispose of or
release any Hazardous  Substance on, under, about or from the Property;  and (b)
any such activity shall be conducted in compliance with all applicable  federal,
state, and local laws, regulations and ordinances,  including without limitation
all Environmental  Laws.  Grantor authorizes Lender and its agents to enter upon
the Property to make such inspections and tests, at Grantor's expense, as Lender
may deem  appropriate to determine  compliance of the Property with this section
of the Deed of Trust.  Any  inspections  or tests  made by  Lender  shall be for
Lender's  purposes only and shall not be construed to create any  responsibility
or  liability  on the part of Lender to  Grantor  or to any  other  person.  The
representations  and  warranties  contained  herein are based on  Grantor's  due
diligence in investigating the Property for Hazardous Substances. Grantor hereby
(1)  releases  and waives any future  claims  against  Lender for  indemnity  or
contribution  in the event  Grantor  becomes  liable for  cleanup or other costs
under any such  laws;  and (2)  agrees to  indemnify  and hold  harmless  Lender
against  any  and all  claims,  losses,  liabilities,  damages,  penalties,  and
expenses  which Lender may directly or  indirectly  sustain or suffer  resulting
from a breach of this  section of the Deed of Trust or as a  consequence  of any
use, generation,  manufacture,  storage, disposal, release or threatened release
occurring prior to Grantor's  ownership or interest in the Property,  whether or
not the same was or should have been known to Grantor.  The  provisions  of this
section of the Deed of Trust,  including  the  obligation  to  indemnify,  shall
survive the payment of the Indebtedness and the satisfaction and reconveyance of
the lien of this Deed of Trust and shall not be affected by Lender's acquisition
of any interest in the Property, whether by foreclosure or otherwise.

Nuisance,  Waste.  Grantor  shall not cause,  conduct or permit any nuisance nor
commit, permit, or suffer any stripping of or waste on or to the Property or any
portion of the  Property.  Without  limiting the  generality  of the  foregoing,
Grantor  will not remove,  or grant to any other party the right to remove,  any
timber,  minerals  (including oil and gas), coal, clay, scoria,  soil, gravel or
rock products without Lender's prior written consent.

Removal of  Improvements.  Grantor shall not demolish or remove any Improvements
from the Real Property without Lender's prior written consent. As a condition to
the removal of any Improvements, Lender may require Grantor to make arrangements
satisfactory  to Lender to replace such  Improvements  with  Improvements  of at
least equal value.

Lender's  Right to Enter.  Lender and Lender's  agents and  representatives  may
enter  upon the Real  Property  at all  reasonable  times to attend to  Lender's
interests and to inspect the Real Property for purposes of Grantor's  compliance
with the terms and conditions of this Deed of Trust.

Compliance with  Governmental  Requirements.  Grantor shall promptly comply with
all laws,  ordinances,  and  regulations,  now or  hereafter  in effect,  of all
governmental  authorities  applicable  to the use or occupancy of the  Property,
including without  limitation,  the Americans With Disabilities Act. Grantor may
contest  in good  faith any such law,  ordinance,  or  regulation  and  withhold
compliance  during any proceeding,  including  appropriate  appeals,  so long as
Grantor  has  notified  Lender in  writing  prior to doing so and so long as, in
Lender's sole opinion,  Lender's  interests in the Property are not jeopardized.
Lender  may  require  Grantor  to  post  adequate  security  or a  surety  bond,
reasonably satisfactory to Lender, to protect Lender's interest.

Duty to Protect.  Grantor  agrees  neither to abandon nor leave  unattended  the
Property.  Grantor  shall do all other acts, in addition to those acts set forth
above in this  section,  which from the  character  and use of the  Property are
reasonably necessary to protect and preserve the Property.

DUE ON SALE - CONSENT  BY  LENDER.  Lender  may,  at  Lender's  option,  declare
immediately due and payable all sums secured by this Deed of Trust upon the sale
or transfer,  without Lender's prior written consent,  of all or any part of the
Real Property,  or any interest in the Real Property. A "sale or transfer" means
the  conveyance  of Real  Property  or any right,  title or interest in the Real
Property;   whether  legal,  beneficial  or  equitable;   whether  voluntary  or
involuntary;  whether by outright sale, deed,  installment  sale contract,  land
contract,  contract for deed,  leasehold interest with a term greater than three
(3) years,  lease-option  contract, or by sale,  assignment,  or transfer of any
beneficial  interest in or to any land trust holding title to the Real Property,
or by any other method of conveyance of an interest in the Real Property. If any
Grantor is a corporation,  partnership or limited  liability  company,  transfer
also includes any change in ownership of more than twenty-five  percent (25%) of
the voting stock,  partnership interests or limited liability company interests,
as the case may be, of such Grantor. However, this option shall not be exercised
by Lender if such exercise is prohibited by federal law or by Colorado law.

TAXES AND LIENS. The following provisions relating to the taxes and liens on the
Property are part of this Deed of Trust:

Payment. Grantor shall pay when due (and in all events prior to delinquency) all
taxes,  special taxes,  assessments,  charges (including water and sewer), fines
and  impositions  levied  against or on account of the  Property,  and shall pay
whiten due all  claims for work done on or for  services  rendered  or  material
furnished to the Property. Grantor shall maintain the Property free of all liens
having  priority  over or equal to the  interest  of Lender  under  this Deed of
Trust,  except  for the lien of taxes  and  assessments  not due and  except  as
otherwise provided in this Deed of Trust.

Right to Contest. Grantor may withhold payment of any tax, assessment,  or claim
in connection  with a good faith dispute over the  obligation to pay, so long as
Lender's  interest in the  Property is not  jeopardized.  If a lien arises or is
filed as a result of  nonpayment,  Grantor shall within  fifteen (15) days after
the lien arises or, if a lien is filed,  within  fifteen (15) days after Grantor
has notice of the filing,  secure the  discharge of the lien, or if requested by
Lender, deposit with Lender cash, or a sufficient corporate surety bond or other
security  satisfactory  to Lender in an amount  sufficient to discharge the lien
plus any costs and  attorneys'  fees,  or other  charges  that could accrue as a
result of a foreclosure  or sale under the lien.  In any contest,  Grantor shall
defend  itself  and  Lender  and  shall  satisfy  any  adverse  judgment  before
enforcement  against the  Property.  Grantor  shall name Lender as an additional
obligee under any surety bond furnished in the contest proceedings.'

Evidence of Payment.  Grantor shall upon demand  furnish to Lender  satisfactory
evidence  of  payment  of the  taxes or  assessments  and  shall  authorize  the
appropriate  governmental  official  to  deliver to Lender at any time a written
statement of the taxes and assessments against the Property.

Notice of  Construction.  Grantor shall notify Lender at least fifteen (15) days
before any work is commenced,  any services are furnished,  or any materials are
supplied to the Property,  if any mechanic's lien,  materialmen's lien, or other
lien could be asserted on account of the work,  services,  or materials  and the
cost exceeds  $5,000.00.  Grantor will upon request of Lender  furnish to Lender
advance assurances satisfactory to Lender that Grantor can and will pay the cost
of such improvements.

PROPERTY DAMAGE  INSURANCE.  The following  provisions  relating to insuring the
Property are a part of this Deed of Trust.

Maintenance  of Insurance.  Grantor shall procure and maintain  policies of fire
insurance with standard  extended  coverage  endorsements on a replacement basis
for the full insurable  value covering all  Improvements on the Real Property in
an amount sufficient to avoid application of any coinsurance  clause, and with a
standard  mortgagee  clause in favor of Lender.  Grantor  shall also procure and
maintain  comprehensive  general liability insurance in such coverage amounts as
Lender may request with Trustee and Lender being named as additional insureds in
such liability  insurance  policies.  Additionally,  Grantor shall maintain such
other insurance, including but not limited to hazard, business interruption, and
boiler insurance, as Lender may reasonably require. Policies shall be written in
form, amounts, coverages and basis reasonably acceptable to Lender and issued by
a company or companies reasonably acceptable to Lender. Grantor, upon request of
Lender, will deliver to Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender,  including stipulations that coverages
will not be cancelled or diminished without at least ten (10) days prior written
notice to  Lender.  Each  insurance  policy  also shall  include an  endorsement
providing  that  coverage  in favor of Lender will not be impaired in any way by
any act,  omission  or default of Grantor or any other  person.  Should the Real
Property  be  located  in an area  designated  by the  Director  of the  Federal
Emergency  Management  Agency as a special flood hazard area,  Grantor agrees to
obtain and maintain Federal Flood Insurance, if available,  within 45 days after
notice is given by Lender that the Property is located in a special flood hazard
area, for the full unpaid  principal  balance of the loan and any prior liens on
the property  securing the loan,  up to the maximum  policy limits set under the
National Flood Insurance  Program,  or as otherwise  required by Lender,  and to
maintain such insurance for the term of the loan.

Application  of Proceeds.  Grantor shall  promptly  notify Lender of any loss or
damage to the Property if the estimated  cost of repair or  replacement  exceeds
$5,000.00.  Lender  may make  proof  of loss if  Grantor  fails to do so  within
fifteen (15) days of the casualty. Whether or not Lender's security is impaired,
Lender  may,  at  Lender's  election,  receive  and retain the  proceeds  of any
insurance and apply the proceeds to the reduction of the  Indebtedness,  payment
of any lien  affecting  the  Property,  or the  restoration  and  repair  of the
Property.  If Lender  elects to apply the  proceeds to  restoration  and repair,
Grantor  shall  repair or replace the  damaged or  destroyed  Improvements  in a
manner  satisfactory to Lender.  Lender shall, upon  satisfactory  proof of such
expenditure,  pay or reimburse Grantor from the proceeds for the reasonable cost
of repair or  restoration if Grantor is not in default under this Deed of Trust.
Any proceeds which have not been  disbursed  within 180 days after their receipt
and which Lender has not committed to the repair or  restoration of the Property
shall be used first to pay any amount  owing to Lender under this Deed of Trust,
then to pay accrued interest, and the remainder, if any, shall be applied to the
principal  balance  of the  Indebtedness.  If Lender  holds any  proceeds  after
payment in full of the  Indebtedness,  such proceeds shall be paid to Grantor as
Grantor's interests may appear.

Unexpired  Insurance at Sale. Any unexpired insurance shall inure to the benefit
of, and pass to, the purchaser of the Property  covered by this Deed of Trust at
any  trustee's  sale or other  sale held  under the  provisions  of this Deed of
Trust, or at any foreclosure sale of such Property.

Grantor's  Report on  Insurance.  Upon request of Lender,  however not more than
once a year, Grantor shall furnish to Lender a report on each existing policy of
insurance showing:  (1) the name of the insurer;  (2) the risks insured; (3) the
amount of the policy;  (4) the property  insured,  the then current  replacement
value of such property,  and the manner of determining  that value;  and (5) the
expiration date of the policy.  Grantor shall,  upon request of Lender,  have an
independent   appraiser   satisfactory  to  Lender   determine  the  cash  value
replacement cost of the Property.

LENDER'S  EXPENDITURES.  If any action or  proceeding  is  commenced  that would
materially  affect  Lender's  interest in the  Property  or if Grantor  fails to
comply  with any  provision  of this  Deed of Trust  or any  Related  Documents,
including but not limited to Grantor's  failure to discharge or pay when due any
amounts  Grantor is required to discharge or pay under this Deed of Trust or any
Related  Documents,  Lender on Grantor's  behalf may (but shall not be obligated
to) take any action that Lender deems appropriate,  including but not limited to
discharging or paying all taxes,  liens,  security  interests,  encumbrances and
other claims,  at any time levied or placed on the Property and paying all costs
for insuring,  maintaining  and preserving the Property.  All such  expenditures
incurred or paid by Lender for such purposes will then bear interest at the rate
charged  under the Note from the date  incurred or paid by Lender to the date of
repayment by Grantor.  All such expenses will become a part of the  Indebtedness
and,  at  Lender's  option,  will (A) be payable on demand;  (B) be added to the
balance of the Note and be apportioned among and be payable with any installment
payments to become due during  either (1) the term of any  applicable  insurance
policy;  or (21 the  remaining  term of the Note; or (C) be treated as a balloon
payment which will be due and payable at the Note's maturity.  The Deed of Trust
also will secure  payment of these  amounts.  Such right shall be in addition to
all other rights and remedies to which Lender may be entitled upon Default.

WARRANTY;  DEFENSE OF TITLE. The following  provisions  relating to ownership of
the Property are a part of this Deed of Trust:

Title.  Grantor  warrants that:  (a) Grantor holds good and marketable  title of
record  to the  Property  in fee  simple,  free  and  clear  of  all  liens  and
encumbrances  other than those set forth in the Real Property  description or in
any title insurance policy, title report, or final title opinion issued in favor
of, and  accepted  by,  Lender in  connection  with this Deed of Trust,  and (b)
Grantor has the full right,  power,  and  authority  to execute and deliver this
Deed of Trust to Lender.

Defense of Title.  Subject to the  exception  in the  paragraph  above,  Grantor
warrants  and will forever  defend the title to the Property  against the lawful
claims of all persons.  In the event any action or proceeding is commenced  that
questions  Grantor's  title or the interest of Trustee or Lender under this Deed
of Trust,  Grantor shall defend the action at Grantor's expense.  Grantor may be
the  nominal  party  in  such  proceeding,  but  Lender  shall  be  entitled  to
participate in the proceeding and to be represented in the proceeding by counsel
of Lender's own choice, and Grantor will deliver,  or cause to be delivered,  to
Lender such  instruments  as Lender may request from time to time to permit such
participation.

Compliance  With Laws.  Grantor  warrants that the Property and Grantor's use of
the  Property  complies  with all  existing  applicable  laws,  ordinances,  and
regulations of governmental authorities.

Survival of Representations and Warranties. All representations, warranties, and
agreements made by Grantor in this Deed of Trust shall survive the execution and
delivery of this Deed of Trust,  shall be continuing in nature, and shall remain
in full force and effect until such time as Grantor's Indebtedness shall be paid
in full.

CONDEMNATION.  The following provisions relating to condemnation proceedings are
a part of this Deed of Trust:

Proceedings.  If any proceeding in condemnation is filed, Grantor shall promptly
notify Lender in writing,  and Grantor shall  promptly take such steps as may be
necessary to defend the action and obtain the award.  Grantor may be the nominal
party in such  proceeding,  but Lender shall be entitled to  participate  in the
proceeding and to be represented in the proceeding by counsel of its own choice,
and Grantor will deliver or cause to be delivered to Lender such instruments and
documentation  as may be  requested  by Lender  from time to time to permit such
participation.

Application of Net Proceeds.  If all or any part of the Property is condemned by
eminent  domain  proceedings  or by  any  proceeding  or  purchase  in  lieu  of
condemnation,  Lender may at its election require that all or any portion of the
net  proceeds  of the award be  applied  to the  Indebtedness  or the  repair or
restoration of the Property.  The net proceeds of the award shall mean the award
after payment of all reasonable costs, expenses, and attorneys' fees incurred by
Trustee or Lender in connection with the condemnation.

IMPOSITION OF TAXES, FEES AND CHARGES BY GOVERNMENTAL AUTHORITIES. The following
provisions  relating to governmental  taxes, fees and charges are a part of this
Deed of Trust:

Current Taxes, Fees and Charges.  Upon request by Lender,  Grantor shall execute
such  documents in addition to this Deed of Trust and take whatever other action
is  requested  by Lender  to  perfect  and  continue  Lender's  lien on the Real
Property.  Grantor shall  reimburse  Lender for all taxes,  as described  below,
together with all expenses incurred in recording,  perfecting or continuing this
Deed of Trust, including without limitation all taxes, fees, documentary stamps,
and other charges for recording or registering this Deed of Trust.

Taxes. The following shall constitute taxes to which this section applies: (1) a
specific  tax  upon  this  type of Deed of  Trust or upon all or any part of the
Indebtedness  secured by this Deed of Trust; (2) a specific tax on Grantor which
Grantor is authorized  or required to deduct from  payments on the  Indebtedness
secured  by this type of Deed of Trust;  (3) a tax on this type of Deed of Trust
chargeable  against the Lender or the holder of the Note; and (4) a specific tax
on all or any  portion of the  Indebtedness  or on  payments  of  principal  and
interest made by Grantor.

Subsequent Taxes. If any tax to which this section applies is enacted subsequent
to the date of this Deed of Trust,  this event  shall have the same effect as an
Event of Default,  and Lender may exercise any or all of its available  remedies
for an Event of Default as provided below unless Grantor either (1) pays the tax
before it becomes  delinquent,  or (2) contests the tax as provided above in the
Taxes and Liens section and deposits with Lender cash or a sufficient  corporate
surety bond or other security satisfactory to Lender.

SECURITY AGREEMENT;  FINANCING STATEMENTS.  The following provisions relating to
this Deed of Trust as a security agreement are a part of this Deed of Trust:

Security Agreement. This instrument shall constitute a Security Agreement to the
extent any of the Property  constitutes  fixtures,  and Lender shall have all of
the rights of a secured party under the Uniform  Commercial Code as amended from
time to time. Security Interest.  Upon request by Lender,  Grantor shall execute
financing  statements  and take whatever  other action is requested by Lender to
perfect  and  continue  Lender's  security  interest  in the Rents and  Personal
Property.  In  addition  to  recording  this Deed of Trust in the real  property
records, Lender may, at any time and without further authorization from Grantor,
file executed  counterparts,  copies or reproductions of this Deed of Trust as a
financing statement. Grantor shall reimburse Lender for all expenses incurred in
perfecting or continuing this security interest. Upon default, Grantor shall not
remove,  sever or detach the Personal Property from the Property.  Upon default,
Grantor  shall  assemble any Personal  Property not affixed to the Property in a
manner and at a place  reasonably  convenient  to Grantor and Lender and make it
available to Lender within three (3) days after  receipt of written  demand from
Lender to the  extent  permitted  by  applicable  law.  Addresses.  The  mailing
addresses of Grantor (debtor) and Lender (secured party) from which  information
concerning the security  interest  granted by this Deed of Trust may be obtained
(each as  required by the  Uniform  Commercial  Code) are as stated on the first
page of this Deed of Trust.

FURTHER  ASSURANCES;  ATTORNEY-IN-FACT.  The  following  provisions  relating to
further assurances and attorney-in-fact are a part of this Deed of Trust:

Further Assurances.  At any time, and from time to time, upon request of Lender,
Grantor will make,  execute and deliver,  or will cause to be made,  executed or
delivered,  to Lender or to Lender's  designee,  and when  requested  by Lender,
cause to be filed, recorded, refiled, or rerecorded, as the case may be, at such
times and in such offices and places as Lender may deem appropriate, any and all
such mortgages,  deeds of trust, security deeds, security agreements,  financing
statements,   continuation   statements,   instruments  of  further   assurance,
certificates,  and other  documents  as may, in the sole  opinion of Lender,  be
necessary or desirable in order to effectuate,  complete,  perfect, continue, or
preserve (t) Grantor's  obligations  under the Note, this Deed of Trust, and the
Related Documents, and (2) the liens and security interests created by this Deed
of  Trust  as first  and  prior  liens on the  Property,  whether  now  owned or
hereafter acquired by Grantor.  Unless prohibited by law or Lender agrees to the
contrary in writing,  Grantor shall reimburse  Lender for all costs and expenses
incurred in connection with the matters referred to in this paragraph.

Attorney-in-Fact.  If Grantor  fails to do any of the things  referred to in the
preceding  paragraph,  Lender  may do so for and in the name of  Grantor  and at
Grantor's expense. For such purposes, Grantor hereby irrevocably appoints Lender
as Grantor's attorney-in-fact for the purpose of making, executing,  delivering,
filing,  recording, and doing all other things as may be necessary or desirable,
in Lender's sole opinion, to accomplish the matters referred to in the preceding
paragraph.

FULL  PERFORMANCE.  Grantor may,  upon  production  of the Note duly  cancelled,
release this Deed of Trust,  and such release shall  constitute a release of the
lien for all such additional sums and expenditures made pursuant to this Deed of
Trust.  Lender  agrees to cooperate  with Grantor in obtaining  such release and
releasing  the other  collateral  securing  the  Indebtedness.  Any release fees
required by law shall be paid by Grantor, if permitted by applicable law.

EVENTS OF DEFAULT.  Each of the following,  at Lender's option, shall constitute
an Event of Default under this Deed of Trust:

Payment  Default.  Grantor  fails  to  make  any  payment  when  due  under  the
Indebtedness.

Other  Defaults.  Grantor  fails to comply  with or to perform  any other  term,
obligation,  covenant or condition  contained in this Deed of Trust or in any of
the Related  Documents  or to comply  with or to perform  any term,  obligation,
covenant  or  condition  contained  in any other  agreement  between  Lender and
Grantor.

Compliance Default. Failure to comply with any other term, obligation,  covenant
or condition  contained in this Deed of Trust, the Note or in any of the Related
Documents.  If such a failure  is curable  and if  Grantor  has not been given a
notice  of a breach  of the same  provision  of this  Deed of Trust  within  the
preceding twelve (12) months, it may be cured (and no Event of Default will have
occurred) if Grantor,  after Lender sends written notice  demanding cure of such
failure:  (a) cures the  failure  within  twenty  (20) days;  or (b) if the cure
requires more than twenty (20) days,  immediately  initiates steps sufficient to
cure the failure and  thereafter  continues  and completes  all  reasonable  and
necessary  steps  sufficient  to  produce   compliance  as  soon  as  reasonably
practical.

Default on Other  Payments.  Failure of Grantor within the time required by this
Deed of Trust to make any payment for taxes or  insurance,  or any other payment
necessary to prevent filing of or to effect discharge of any lien.

Environmental  Default.  Failure of any party to comply with or perform when due
any term,  obligation,  covenant or  condition  contained  in any  environmental
agreement executed in connection with the Property.

False Statements. Any warranty, representation or statement made or furnished to
Lender by Grantor or on Grantor's behalf under this Deed of Trust or the Related
Documents is false or misleading in any material  respect,  either now or at the
time made or furnished or becomes false or misleading at any time thereafter.

Defective Collateralization.  This Deed of Trust or any of the Related Documents
ceases to be in full  force and  effect  (including  failure  of any  collateral
document to create a valid and perfected  security interest or lien) at any time
and for any reason.

Insolvency.  The  dissolution or  termination of Grantor's  existence as a going
business,  the insolvency of Grantor, the appointment of a receiver for any part
of Grantor's property, any assignment for the benefit of creditors,  any type of
creditor workout,  or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Grantor.

Creditor or Forfeiture  Proceedings.  Commencement  of foreclosure or forfeiture
proceedings,  whether by judicial  proceeding,  self-help,  repossession  or any
other method,  by any creditor of Grantor or by any governmental  agency against
any property  securing the  Indebtedness.  This includes a garnishment of any of
Grantor's accounts, including deposit accounts, with Lender. However, this Event
of Default shall not apply if there is a good faith dispute by Grantor as to the
validity or  reasonableness  of the claim which is the basis of the  creditor or
forfeiture proceeding and if Grantor gives Lender written notice of the creditor
or  forfeiture  proceeding  and deposits with Lender monies or a surety bond for
the creditor or forfeiture proceeding, in an amount determined by Lender, in its
sole discretion, as being an adequate reserve or bond for the dispute.

Breach of Other  Agreement.  Any breach by Grantor  under the terms of any other
agreement  between  Grantor  and Lender  that is not  remedied  within any grace
period provided therein,  including without limitation any agreement  concerning
any indebtedness or other obligation of Grantor to Lender,  whether existing now
or later.

Events Affecting  Guarantor.  Any of the preceding events occurs with respect to
any  Guarantor  of any of the  Indebtedness  or any  Guarantor  dies or  becomes
incompetent,  or revokes or disputes the validity  of, or liability  under,  any
Guaranty of the  Indebtedness.  In the event of a death,  Lender, at its option,
may,  but shall not be  required  to,  permit the  Guarantor's  estate to assume
unconditionally   the  obligations  arising  under  the  guaranty  in  a  manner
satisfactory to Lender, and, in doing so, cure any Event of Default.

Adverse  Change.  A  material  adverse  change  occurs  in  Grantor's  financial
condition,  or Lender  believes  the prospect of payment or  performance  of the
Indebtedness  is  impaired.  Insecurity.  Lender in good faith  believes  itself
insecure.

Right to Cure.  If such a failure is curable and if Grantor has not been given a
notice  of a breach  of the same  provision  of this  Deed of Trust  within  the
preceding twelve (12) months, it may be cured (and no Event of Default will have
occurred) if Grantor,  after Lender sends written notice  demanding cure of such
failure:  (a) cures the  failure  within  twenty  (20) days;  or (b) if the cure
requires more than twenty (20) days,  immediately  initiates steps sufficient to
cure the failure and  thereafter  continues  and completes  all  reasonable  and
necessary  steps  sufficient  to  produce   compliance  as  soon  as  reasonably
practical.

RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this Deed of
Trust, at any time thereafter, Trustee or Lender may exercise any one or more of
the following rights and remedies:

Election of Remedies.  Election by Lender to pursue any remedy shall not exclude
pursuit of any other  remedy,  and an election to make  expenditures  or to take
action to  perform an  obligation  of  Grantor  under this Deed of Trust,  after
Grantor's  failure  to  perform,  shall not affect  Lender's  right to declare a
default and exercise its remedies.

Accelerate  Indebtedness.  Lender  shall  have the right at its  option  without
notice to  Grantor  to  declare  the  entire  Indebtedness  immediately  due and
payable,  including any prepayment  penalty,  which Grantor would be required to
pay.  Foreclosure.  Lender  shall have the right to cause all or any part of the
Real Property, and Personal Property, if Lender decides to proceed against it as
if it were real property, to be sold by the Trustee according to the laws of the
State of Colorado as respects  foreclosures  against real property.  The Trustee
shall give notice in  accordance  with the laws of Colorado.  The Trustee  shall
apply the  proceeds  of the sale in the  following  order:  (a) to all costs and
expenses of the sale,  including but not limited to Trustee's  fees,  attorneys'
fees,  and the cost of title  evidence;  (b) to all sums secured by this Deed of
Trust; and (c) the excess,  if any, to the person or persons legally entitled to
the excess.

UCC Remedies.  With respect to all or any part of the Personal Property,  Lender
shall have all the rights and  remedies  of a secured  party  under the  Uniform
Commercial Code.

Collect  Rents.  Lender shall have the right,  without notice to Grantor to take
possession of and manage the Property and collect the Rents,  including  amounts
past due and unpaid, and apply the net proceeds,  over and above Lender's costs,
against the Indebtedness.  In furtherance of this right,  Lender may require any
tenant  or  other  user of the  Property  to make  payments  of rent or use fees
directly  to  Lender.  If the  Rents  are  collected  by  Lender,  then  Grantor
irrevocably   designates  Lender  as  Grantor's   attorney-in-fact   to  endorse
instruments  received in payment thereof in the name of Grantor and to negotiate
the same and collect the proceeds.  Payments by tenants or other users to Lender
in response to  Lender's  demand  shall  satisfy the  obligations  for which the
payments  are made,  whether or not any proper  grounds for the demand  existed.
Lender may  exercise  its rights under this  subparagraph  either in person,  by
agent, or through a receiver.

Appoint  Receiver.  Lender shall have the right to have a receiver  appointed to
take  possession of all or any part of the  Property,  with the power to protect
and preserve the  Property,  to operate the Property  preceding  foreclosure  or
sale,  and to collect the Rents from the Property and apply the  proceeds,  over
and above the cost of the receivership,  against the Indebtedness.  The receiver
may serve without bond if permitted by law. Lender's right to the appointment of
a receiver shall exist whether or not the apparent value of the Property exceeds
the  Indebtedness  by a  substantial  amount.  Employment  by  Lender  shall not
disqualify a person from  serving as a receiver.  Receiver may be appointed by a
court of competent  jurisdiction  upon ex parte  application and without notice,
notice being expressly waived.

Tenancy at  Sufferance.  If Grantor  remains in possession of the Property after
the Property is sold as provided above or Lender  otherwise  becomes entitled to
possession  of the  Property  upon  default of Grantor,  Grantor  shall become a
tenant at sufferance  of Lender or the  purchaser of the Property and shall,  at
Lender's option, either (1) pay a reasonable rental for the use of the Property,
or (2) vacate the Property immediately upon the demand of Lender.

Other Remedies.  Trustee or Lender shall have any other right or remedy provided
in this Deed of Trust or the Note or by law.

Sale of the  Property.  In exercising  its rights and remedies,  Lender shall be
free to designate on or before it files a notice of election and demand with the
Trustee,  that the  Trustee  sell all or any part of the  Property  together  or
separately, in one sale or by separate sales. Lender shall be entitled to bid at
any  public  sale on all or any  portion of the  Property.  Upon any sale of the
Property,  whether  made under a power of sale  granted in this Deed of Trust or
pursuant to judicial  proceedings,  if the holder of the Note is a, purchaser at
such sale,  it shall be  entitled  to use and apply all,  or any portion of, the
Indebtedness  for or in  settlement  or payment of all,  or any  portion of, the
purchase price of the Property purchased, and, in such case, this Deed of Trust,
the Note,  and any  documents  evidencing  expenditures  secured by this Deed of
Trust shall be  presented  to the person  conducting  the sale in order that the
amount of Indebtedness so used or applied may be credited thereon as having been
paid.

Attorneys' Fees; Expenses. If Lender forecloses or institutes any suit or action
to enforce any of the terms of this Deed of Trust,  Lender  shall be entitled to
recover such sum as the court may adjudge reasonable as attorneys' fees at trial
and upon any appeal.  Whether or not any court  action is  involved,  and to the
extent not  prohibited  by law, all  reasonable  expenses  Lender incurs that in
Lender's opinion are necessary at any time for the protection of its interest or
the enforcement of its rights shall become a part of the Indebtedness payable on
demand and shall bear interest at the Note rate from the date of the expenditure
until repaid.  Expenses covered by this paragraph include,  without  limitation,
however  subject to any limits under  applicable law,  Lender's  attorneys' fees
whether or not there is a lawsuit,  including  attorneys'  fees and expenses for
bankruptcy proceedings (including efforts to modify or vacate any automatic stay
or injunction),  appeals, and any anticipated post-judgment collection services,
the cost of searching records,  obtaining title reports  (including  foreclosure
reports),  surveyors' reports, and appraisal fees, title insurance, and fees for
the Trustee,  to the extent  permitted by applicable law.  Grantor also will pay
any court  costs,  in  addition  to all other sums  provided  by law.  Rights of
Trustee.  Trustee shall have all of the rights and duties of Lender as set forth
in this section.

NOTICES.  Any notice  required to be given  under this Deed of Trust,  including
without  limitation  any notice of default and any notice of sale shall be given
in writing,  and shall be  effective  when  actually  delivered,  when  actually
received by  telefacsimile  (unless  otherwise  required by law), when deposited
with a nationally recognized overnight courier, or, if mailed, when deposited in
the United  States mail, as first class,  certified or  registered  mail postage
prepaid,  directed to the  addresses  shown near the  beginning  of this Deed of
Trust.  All copies of notices of  foreclosure  from the holder of any lien which
has priority over this Deed of Trust shall be sent to Lender's address, as shown
near the  beginning of this Deed of Trust.  Any party may change its address for
notices  under this Deed of Trust by giving formal  written  notice to the other
parties,  specifying  that the  purpose of the  notice is to change the  party's
address.  For notice  purposes,  Grantor  agrees to keep Lender  informed at all
times of Grantor's  current address.  Unless  otherwise  provided or required by
law,  if there is more  than one  Grantor,  any  notice  given by  Lender to any
Grantor is deemed to be notice given to all Grantors.

MISCELLANEOUS  PROVISIONS.  The following miscellaneous provisions are a part of
this Deed of Trust:

Amendments. This Deed of Trust, together with any Related Documents, constitutes
the entire  understanding  and  agreement  of the  parties as to the matters set
forth in this Deed of Trust. No alteration of or amendment to this Deed of Trust
shall be  effective  unless  given in writing and signed by the party or parties
sought to be charged or bound by the alteration or amendment.

Annual  Reports.  If the  Property  is used for  purposes  other than  Grantor's
residence,  Grantor shall furnish to Lender, upon request, a certified statement
of net operating  income  received from the Property during  Grantor's  previous
fiscal  year in such form and detail as Lender  shall  require.  "Net  operating
income"   shall  mean  all  cash  receipts  from  the  Property  less  all  cash
expenditures made in connection with the operation of the Property.

Caption  Headings.  Caption  headings in this Deed of Trust are for  convenience
purposes  only and are not to be used to interpret or define the  provisions  of
this Deed of Trust.  Merger.  There shall be no merger of the interest or estate
created by this Deed of Trust with any other  interest or estate in the Property
at any time held by or for the  benefit of Lender in any  capacity,  without the
written consent of Lender.

Governing Law. This Deed of Trust will be governed by, construed and enforced in
accordance with federal law and the laws of the State of Colorado.  This Deed of
Trust has been accepted by Lender in the State of Colorado.

Choice of Venue. If there is a lawsuit,  Grantor agrees upon Lender's request to
submit to the jurisdiction of the courts of Boulder County, State of Colorado.

No Waiver by Lender.  Lender shall not be deemed to have waived any rights under
this Deed of Trust  unless such waiver is given in writing and signed by Lender.
No delay or omission on the part of Lender in exercising any right shall operate
as a waiver of such right or any other right.  A waiver by Lender of a provision
of this Deed of Trust shall not  prejudice  or  constitute  a waiver of Lender's
right  otherwise to demand strict  compliance  with that  provision or any other
provision of this Deed of Trust.  No prior  waiver by Lender,  nor any course of
dealing between Lender and Grantor, shall constitute a waiver of any of Lender's
rights  or of any  of  Grantor's  obligations  as to  any  future  transactions.
Whenever  the  consent  of  Lender is  required  under  this Deed of Trust,  the
granting  of such  consent  by  Lender  in any  instance  shall  not  constitute
continuing consent to subsequent instances where such consent is required and in
all cases such  consent  may be granted or withheld  in the sole  discretion  of
Lender.

Severability.  If a court of competent  jurisdiction finds any provision of this
Deed of Trust to be illegal,  invalid,  or unenforceable as to any circumstance,
that  finding  shall  not make the  offending  provision  illegal,  invalid,  or
unenforceable as to any other circumstance. If feasible, the offending provision
shall be considered modified so that it becomes legal, valid and enforceable. If
the offending  provision cannot be so modified,  it shall be considered  deleted
from this Deed of Trust.  Unless  otherwise  required  by law,  the  illegality,
invalidity, or unenforceability of any provision of this Deed of Trust shall not
affect the legality,  validity or  enforceability of any other provision of this
Deed of Trust.

Successors and Assigns.  Subject to any limitations stated in this Deed of Trust
on transfer of Grantor's interest,  this Deed of Trust shall be binding upon and
inure to the benefit of the parties,  their successors and assigns. If ownership
of the Property becomes vested in a person other than Grantor,  Lender,  without
notice to Grantor,  may deal with  Grantor's  successors  with reference to this
Deed of Trust and the  Indebtedness  by way of forbearance or extension  without
releasing  Grantor from the obligations of this Deed of Trust or liability under
the Indebtedness.

Time is of the Essence.  Time is of the essence in the  performance of this Deed
of Trust.

Waiver of Homestead Exemption. Grantor hereby releases and waives all rights and
benefits  of the  homestead  exemption  laws of the State of  Colorado as to all
Indebtedness secured by this Deed of Trust.

DEFINITIONS.  The following capitalized words and terms shall have the following
meanings  when  used in this Deed of Trust.  Unless  specifically  stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the  plural,  and the plural  shall  include  the  singular,  as the context may
require.  Words and terms not otherwise defined in this Deed of Trust shall have
the meanings attributed to such terms in the Uniform Commercial Code:

Beneficiary.  The word "Beneficiary" means Bank of the West , and its successors
and assigns.

Borrower.  The word "Borrower" means Eldorado  Artesian  Springs,  Inc., and all
other persons and entities signing the Note in whatever capacity.

Deed of Trust.  The words "Deed of Trust" mean this Deed of Trust among Grantor,
Lender, and Trustee, and includes without limitation all assignment and security
interest provisions relating to the Personal Property and Rents.

Default. The word "Default" means the Default set forth in this Deed of Trust in
the section titled "Default".

Environmental  Laws.  The words  "Environmental  Laws"  mean any and all  state,
federal  and  local  statutes,   regulations  and  ordinances  relating  to  the
protection of human health or the environment,  including without limitation the
Comprehensive Environmental Response,  Compensation,  and Liability Act of 1980,
as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments
and  Reauthorization  Act of 1986,  Pub. L. No. 99-499  ("SARA"),  the Hazardous
Materials  Transportation  Act, 49 U.S.C.  Section 1801,  et seq.,  the Resource
Conservation  and  Recovery  Act,  42 U.S.C.  Section  6901,  et seq.,  or other
applicable  state or  federal  laws,  rules,  or  regulations  adopted  pursuant
thereto.

Event of Default. The words "Event of Default" mean any of the events of default
set forth in this Deed of Trust in the events of default section of this Deed of
Trust. Grantor. The word "Grantor" means Eldorado Artesian Springs, Inc..

Guarantor.  The word "Guarantor"  means any guarantor,  surety, or accommodation
party of any or all of the Indebtedness.

Guaranty.  The word  "Guaranty"  means the  guaranty  from  Guarantor to Lender,
including without limitation a guaranty of all or part of the Note.

Hazardous  Substances.  The words  "Hazardous  Substances"  mean materials that,
because of their  quantity,  concentration  or physical,  chemical or infectious
characteristics, may cause or pose a present or potential hazard to human health
or  the  environment  when  improperly  used,  treated,   stored,  disposed  of,
generated, manufactured,  transported or otherwise handled. The words "Hazardous
Substances" are used in their very broadest sense and include without limitation
any and all hazardous or toxic  substances,  materials or waste as defined by or
listed  under the  Environmental  Laws.  The term  "Hazardous  Substances"  also
includes,  without  limitation,  petroleum  and  petroleum  by-products  or  any
fraction thereof and asbestos.

Improvements.   The  word   "Improvements"   means  ail   existing   and  future
improvements,  buildings, structures, mobile homes affixed on the Real Property,
facilities, additions, replacements and other construction on the Real Property.

Indebtedness.  The word "Indebtedness" means all principal,  interest, and other
amounts,  costs  and  expenses  payable  under  the Note or  Related  Documents,
together with all renewals of, extensions of,  modifications of,  consolidations
of and  substitutions for the Note or Related Documents and any amounts expended
or advanced by Lender to discharge Grantor's obligations or expenses incurred by
Trustee or Lender to  enforce  Grantor's  obligations  under this Deed of Trust,
together with interest on such amounts as provided in this Deed of Trust.

Lender. The word "Lender" means Bank of the West , its successors and assigns.

Note.  The word "Note" means the  promissory  note dated August 21, 2001, in the
original principal amount of $1,421,000.00 from Grantor to Lender, together with
all  renewals  of,   extensions   of,   modifications   of,   refinancings   of,
consolidations  of, and  substitutions  for the  promissory  note or  agreement.
Personal Property.  The words "Personal Property" mean all equipment,  fixtures,
and other articles of personal  property now or hereafter owned by Grantor,  and
now or hereafter  attached or affixed to the Real  Property;  together  with all
accessions,  parts, and additions to, all replacements of, and all substitutions
for, any of such  property;  and together with all proceeds  (including  without
limitation  all  insurance  proceeds and refunds of  premiums)  from any sale or
other disposition of the Property.

Property.  The word  "Property"  means  collectively  the Real  Property and the
Personal Property.

Real Property.  The words "Real Property" mean the real property,  interests and
rights, as further described in this Deed of Trust.

Related  Documents.  The words "Related  Documents"  mean all promissory  notes,
credit  agreements,  loan  agreements,   environmental  agreements,  guaranties,
security  agreements,  mortgages,  deeds of trust,  security  deeds,  collateral
mortgages, and all other instruments,  agreements and documents,  whether now or
hereafter existing, executed in connection with the Indebtedness.

Rents.  The word "Rents" means all present and future rents,  revenues,  income,
issues, royalties, profits, and other benefits derived from the Property.

Trustee.  The word  "Trustee"  means  the  Public  Trustee  of  Boulder  County,
Colorado.

GRANTOR  ACKNOWLEDGES  HAVING READ ALL THE PROVISIONS OF THIS DEED OF TRUST, AND
GRANTOR AGREES TO ITS TERMS.

GRANTOR:

 ELDORADO ARTESIAN SPRINGS, INC.

 By  Douglas Larson, President of Eldorado Artesian Springs, Inc.

 By  Jeremy Martin, Vice President of Eldorado Artesian Springs, Inc.

 By  Kevin M. Sipple, Secretary of Eldorado Artesian Springs, Inc.

                           CORPORATE ACKNOWLEDGMENT
 STATE OF Colorado

 COUNTY OF Boulder

On this 29th day of August  2001,  before me,  the  undersigned  Notary  Public,
personally  appeared  Douglas  A.  Larson,  President;  Jeremy S.  Martin,  Vice
President;  Kevin M. Sipple,  Secretary of Eldorado Artesian Springs,  Inc., and
known to me to be authorized agents of the corporation that executed the Deed of
Trust and  acknowledged  the Deed of Trust to be the free and  voluntary act and
deed of the  corporation,  by  authority of its Bylaws or by  resolution  of its
board of directors,  for the uses and purposes  therein  mentioned,  and on oath
stated that they are  authorized to execute this Deed of Trust and authorized to
execute this Deed of Trust on behalf of the corporation.

 Residing at 2299 Pearl Street, #305
 Notary Public in and for the State of Colorado

My commission expires August 20, 2003exh108-033103

                        SELLER CARRYBACK PROMISSORY NOTE

 $200,000.00                                                 August -30 , 2001

     This  PROMISSORY  NOTE (this  "Note") is  executed by DOUGLAS A. LARSON and
KATHLEEN R. LARSON  ("Maker") whose address is P.O. Box 234,  Eldorado  Springs,
Colorado  80025  in  favor  of  ELDORADO  ARTESIAN  SPRINGS,  INC.,  a  Colorado
corporation ("Holder") whose address is P.O. Box 445, Eldorado Springs, Colorado
80025.

     1. Promise to Pay. For value received,  Maker hereby promises to pay to the
order  of  Holder  the  principal  sum  of  Two  Hundred   Thousand  and  No/100
($200,000.00) (the "Principal Sum"),  together with interest thereon at the rate
as  hereinafter  specified,  all in lawful money of the United States of America
which constitutes legal tender for payment of debts,  public and private, at the
time of payment.

     2.  Interest.  Interest shall accrue on the unpaid balance of the Principal
Sum from the date hereof,  until paid The Principal Sum at the rate of seven and
50/100 percent (7.5%) per annum, which annual interest accrual shall be deferred
and paid annually (the "Interest Accrual").

     3. Maturity Date. If not sooner paid, the entire unpaid  principal  balance
of this Note,  together with all accrued and unpaid interest  thereon,  shall be
due and  payable  in full on the date that is sixty  (60)  months  from the date
hereof.

     4. Time and Place of  Payment.  Maker  shall pay the  Interest  Accrual  to
Holder in five (5) annual payments on the anniversary  date hereof  beginning on
the date that is the first  anniversary  of the date  hereof,  at the address of
Holder set forth above or at such other address as may be  designated  from time
to time by Holder by written notice to Maker,  in accordance  with the following
provisions. In the event Maker is paid a bonus by Holder during the term of this
Note,  such bonus amount,  if any,  shall first be credited  toward the Interest
Accrual due during the year of such bonus.  If the bonus amount is  insufficient
to cover the entire  amount of the Interest  Accrual (the  "Shortfall  Amount"),
such Shortfall Amount, if any, shall at Maker's option be (a) paid to Holder; or
(b) added to the Principal Sum and such unpaid  Interest  Accrual and the unpaid
Principal Sum shall  constitute  the unpaid  balance of the Principal Sum, which
shall accrue interest at the rate specified above.

     5.  Prepayment  Privilege.  Maker  shall  have the  right,  at any time and
without premium or fee, to prepay this Note in whole or in part.

     6. Related Documents.  "Related  Documents" shall mean the (a) that certain
Deed of Trust securing this Note ("Deed of Trust") of even date herewith,  which
encumbers  certain property in Boulder County,  Colorado  ("Property");  (b) all
other  documents   executed  or  delivered  by  Maker  in  connection  with  the
indebtedness   evidenced  by  this  Note;  and  (c)  any  and  all   amendments,
modifications,  extensions or renewals of any of the foregoing  documents  which
heretofore have been and hereafter may be executed from time to time.

     7.  Application  of  Payments.  In the  case of an  Event  of  Default,  as
hereinafter  defined, all payments hereunder shall be applied first to costs and
expenses  of  collection,  if any;  second  to the  repayment  of sums,  if any,
advanced by Holder under the provisions of the Related Documents, including sums
advanced  for  the  payment  of  taxes,   assessments,   insurance  premiums  or
maintenance with respect to any of the property encumbered by the Deed of Trust,
together with interest on the sums advanced at the Default Rate, as  hereinafter
defined,  such interest to accrue from the date of any advance until the advance
is repaid; third, to late charges on defaulted payments as hereinafter provided;
fourth,  to the payment of accrued and unpaid  interest on the principal of this
Note,  including  interest accrued at the Default Rate as hereinafter  provided;
and fifth, to the reduction of principal of this Note. So long as any default or
Event of Default  exists,  payments  may be applied in such manner as Holder may
elect in Holder's sole discretion.

     8. Default Interest Rate and Late Charge on Defaulted Payments.  Subject to
Paragraph  4 above,  any payment not made within five (5) days after the same is
due  hereunder,  and  including  sums,  if any,  advanced  by  Holder  under the
provisions of the Deed of Trust,  and including the entire balance of principal,
interest,  and other  sums due upon the  maturity  hereof,  by  acceleration  or
otherwise,  shall bear interest at eighteen percent (18%) ("Default Rate"), such
interest to accrue from the date due until paid in full,  and Holder  shall have
and may exercise any or all of the rights and remedies  provided herein,  in the
Deed of Trust and under applicable law or in equity. In addition,  a late charge
of four cents per dollar  shall be due and payable on all sums not paid when due
but not on any sums due by reason of acceleration.

     9.  Default.  Time is of the  essence of each and every  provision  of this
Note.  Each of the following  shall  constitute an "Event of Default" under this
Note:

     (a) Subject to  Paragraph 4 above,  the failure of Maker to pay in full any
amount due hereunder or under the Related  Documents within five (5) days notice
from  Holder  that  the  same is due,  as  provided  herein,  or in the  Related
Documents or upon maturity of this Note;

     (b) The failure of Maker to perform, satisfy and observe in full, when due,
any of the obligations,  covenants, conditions and restrictions under this Note,
or under the Related  Documents,  not involving  the payment of money,  and such
failure shall  continue for 30 days after written notice from Holder to Maker of
such failure,  or if said failure cannot  reasonably be cured within said 30-day
period,  if Maker shall not in good faith  commence to cure such failure  within
said 30-day period or shall not diligently proceed therewith to completion.

     10. Right to  Accelerate  on Event of Default.  Upon the  occurrence of any
Event of Default hereunder,  the entire balance of principal,  accrued interest,
any other  sums  owing  hereunder  or under the Deed of Trust,  at the option of
Holder, become at once due and payable without prior notice or demand.

     11.  Non-Recourse.  In the event of a default in the payment of any sum due
hereunder,  the sole  remedy of Holder  shall be to (a)  collect on the  Pledged
Collateral pursuant to that certain Pledge Agreement dated August -30 , 2001, by
and between Holder and Maker and/or (b) foreclose on the property secured by the
Deed of Trust and Maker shall have no personal liability for payment of any sums
due hereunder.

     12. Waivers of Demand,  etc. Maker and all parties now or hereafter  liable
for the payment hereof,  primarily or secondarily,  directly or indirectly,  and
whether as endorser,  guarantor,  surety,  or  otherwise,  (a)  severally  waive
demand,  presentment,  notice of dishonor or  nonpayment,  protest and notice of
protest, and diligence in collecting,  (b) consent to substitution,  release, or
impairment of  collateral,  the taking of additional  collateral,  extensions of
time for  payment,  renewals  of this  Note and  acceptance  of late or  partial
payments, whether before, at, or after maturity, all or any of which may be made
without notice to any of said parties and without  affecting  their liability to
Holder, (c) agree that Holder's acceptance of one or more partial payments after
acceleration  of the maturity of this Note will not  constitute a waiver of such
acceleration,  regardless of any contrary notice or statement of condition which
may  accompany  any such  partial  payment,  and (d) waive any right to  require
Holder  to  proceed  against  any  security  for  this  Note  before  proceeding
hereunder.

     13. Costs of Collection.  Maker and all parties now or hereafter liable for
the payment  hereof agree to pay all costs and  expenses,  including  reasonable
attorneys'  fees,  incurred in  collecting  this Note or any part  thereof or in
preserving,  securing  possession  of, and realizing  upon any security for this
Note whether or not legal proceedings are commenced.

     14. No Usury  Payable.  The  provisions of this Note and of all  agreements
between Maker and Holder are hereby expressly  limited so that in no contingency
or event  whatsoever  shall the amount paid, or agreed to be paid, to Holder for
the use,  forbearance,  or retention of the Loan Amount  ("Interest") exceed the
maximum  amount  permissible  under  applicable  law. If, from any  circumstance
whatsoever,  the  performance or  fulfillment of any provision  hereof or of any
other  agreement  between Maker and Holder  shall,  at the time  performance  or
fulfillment  of such  provision  shall be due,  exceed  the limit  for  Interest
prescribed by law, then, ipso facto, the obligation to be performed or fulfilled
shall be reduced to such limit, and if, from any circumstance whatsoever, Holder
should ever receive as Interest an amount which would exceed the highest  lawful
rate,  the amount,  which would be excessive  Interest,  shall be applied to the
reduction of the principal  balance owing hereunder (or, at Holder's option,  be
paid over to Maker) and not to the payment of Interest.

     15.  Severability of Provisions.  If any provision  hereof or of any of the
Related  Documents  shall,  for any  reason  and to any  extent,  be  invalid or
unenforceable,  then the remainder of the  instrument in which such provision is
contained,  the  application  of the  provision  to other  persons,  entities or
circumstances, and any other instrument referred to herein shall not be affected
thereby but instead shall be enforceable to the maximum extent permitted by law.

     16.  Successors  to Maker or Holder.  The term "Maker" as used herein shall
include  the  original  maker of this Note and any  party  who may  subsequently
become primarily liable for the payment hereof. The term "Holder" as used herein
shall mean the original payee of this Note or, if this Note is transferred,  the
then holder of this Note,  provided that, until written notice is given to Maker
designating  another  party as Holder,  Maker may  consider the Holder to be the
original  payee or the party last  designated  as Holder in a written  notice to
Maker.

     17. Notices.  All notices,  consents or other instruments or communications
provided for under this Note shall be in writing, signed by the party giving the
same, and shall be deemed  properly  given and received when actually  delivered
and received or three  business  days after  mailed,  if sent by  registered  or
certified mail, postage prepaid, to the address set forth in the first paragraph
of this Note,  or to such  other  address  as a party may  designate  by written
notice to the other party.

     18. Captions for  Convenience.  The captions to the Sections hereof are for
convenience  only and shall not be considered  in  interpreting  the  provisions
hereof.

     19.  Governing  Law.  Regardless of the place of its  execution,  this Note
shall be  construed  and  enforced in  accordance  with the laws of the State of
Colorado.

                                     MAKER

                                     /s/Douglas A. Larson
                                     DOUGLAS A. LARSON

                                     /s/Kathleen Larson
                                     KATHLEEN LARSON

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