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\^ Pd- / p ~y KJ; jt/f;/II-L I PROMISSORY NOTE Principal Amount:: Term: $2,300,000 40 Years Interest Rate: Loan Payment: 3% $67,200 - 1st 10 years $118,397.08 - remaining 30, years May -'Zf!!!!!:., 1997 Loan Contract:: #C153768 Date: 1. FOR" ALUE RECEI\fED, the Lower Arkansas Water Management Association ("BORROWER") promises to pay the State of Colorado Water Conservation Board ("STATE"), the principal sum of $2,300,000.00 with annual payments of $67,200.00 for the first ten years, and $118,397.08 thereafter, based on the effective intefest fate of 3% pef annum on the outstanding principal balance for a term of 40 years, or until paid in full, pursuant to Loan Contract #C153768 ("LOAN CONTRACT"). 2. The first payment shall be due one year from the date the STATE determines that the PROJECT described in the LOAN CONTRACT has been substantially completed, and annually thereafter until the entire principal sum and any accrued interest shall have been paid in full. 3. All payments received shall be applied first to accrued interest and then to the retirement of the principal. Payments shall be made payable to the Colorado Water Conservation Board and mailed to 1313 Sherman Street, Room 721, Denver, Colorado 80203. 4. This Note may be prepaid in whole or in part at any time without premium or penalty, with prepayments applied first to any accrued interest and then to reduce the principal amount. Any partial prepayment shall not postpone the due date of any subsequent payments or change the amount of such payments. 5. This Note is issued pursuant to th~ LOAN CONTRACT between the STATE and the BORROWER. The LOAN Co.NTRACT creates security interests in favor of the STATE to secure the prompt payment of all amounts which may become due hereunder. The security interests, evidenced by security agreements and deeds of trust, cover certain revenues, accounts and water rights of the BORROWER. The LOAN CONTRACT,security agreements and deeds of trust grant additional rights to the STATE, including the right to accelerate the maturity of this Note in certain events. 6. If any payment of principal or interest is not paid promptly when due or any default under the, LOAN CONTRACT or the security agreements or deeds of trust securing this Note occurs, the STATE may declare the entire outstanding principal balance of the Note, and all accrued interest, immediately due and payable, without notice or demand, and the indebtedness shall bear interest at the rate of 3% per annum from the date of defa'ult. 7. The BORROWER, any guarantor, and any successor of the BORROWER who may hereafter become primarily or secondarily liable for the payment of this Note or any portion thereof hereby agree that if this Note or interest thereon is not paid when due or suit is brought, then it shall pay all reasonable costs of collection, including reasonable attorney fees. In the event of any bankruptcy or similar proceedings, costs of collection shall include all costs and attorney fees incurred in connection with such proceedings, including the fees of counsel for attendance at meetings of creditors' committees or other committees. I 8. This Note shall be govemed in all respects by the laws of the State of Colorado. By By written request this note and Deed of Trust is released Appendix 2 to Loan Contract #C153768