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<br />Appendix 2 to Loan Contract No. C150058 <br /> <br /> <br />Promissory Note <br /> <br />Date December 10,2002 Initiation Date <br /> <br />1. FOR VALUE RECEIVED, the Dolores Water Conservancy District, acting by and through the <br />Dolores Water Conservancy District Water Activity Enterprise ("BORROWER") promises to <br />pay the State of Colorado Water Conservation Board ("CWCB"), the principal sum of Five <br />Million Four Hundred Sixty One Thousand Two Hundred Dollars ($5,461,200) plus interest <br />at the rate of three and one-half percent (3.5%) per annum for a term of thirty (30) years, <br />pursuant to Loan Contract No. C150058 dated December 10,2002 ("LOAN CONTRACT"). <br /> <br />2. Principal and interest shall be payable in equal installments of $296,932.72, with the first <br />payment due and payable one year from the date that the CWCB determines that the <br />project is substantially complete ("Initiation Date"), and annually thereafter until all principal, <br />interest, and late charges, if any, have been paid in full, with all such principal, interest, and <br />late charges, required to be paid within thirty years after the Initiation Date. <br /> <br />3. Payments shall be made payable to the Colorado Water Conservation Board and mailed to <br />1313 Sherman Street, Room 721, Denver, Colorado 80203. <br /> <br />4. If the CWCB does not receive the annual payment within 15 calendar days of the due date, <br />the CWCS may impose a late charge in the amount of 5% of the annual payment. <br /> <br />5. This Note may be prepaid in whole or in part at any time without premium or penalty. Any <br />partial prepayment shall not postpone the due date of any subsequent payments or change <br />the amount of such payments. <br /> <br />6. All payments received shall be applied first to late charges, if any, next to accrued interest <br />and then to reduce the principal amount. <br /> <br />7. This Note is issued pursuant to the LOAN CONTRACT between the CWCB and the <br />BORROWER. The LOAN CONTRACT creates a security interest in favor of the CWCB to secure <br />the prompt payment of all amounts that may become due hereunder. The security interest, <br />evidenced by a Security Agreement and an Assignment of even date and amount, covers a <br />certain account of the BORROWER. The LOAN CONTRACT, Security Agreement, and <br />Assignment grant additional rights to the CWCB, including the right to accelerate the <br />maturity of this Note in certain events. <br /> <br />8. If any annual payment is not paid when due or any default under the LOAN CONTRACT, <br />Security Agreement, or Assignment securing this Note occurs, the CWCS may declare the <br />entire outstanding principal balance of the Note, all accrued interest, and any outstanding <br />late charges immediately due and payable, and the indebtedness shall bear interest at the <br />rate of 7% per annum. from the date of default. The CWCB shall give the BORROWER <br />written notice of any alleged default and an opportunity to cure within thirty (30) days of <br />receipt of such notice before the BORROWER shall be considered in default for purposes of <br />this Promissory Note. <br /> <br />9. The BORROWER, any guarantor, and any other person who is now or may hereafter become <br />