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PROMISSORY NOTE <br /> Date: September 18, 2014 <br /> Borrower: Cottonwood Water and Sanitation District acting by and through its <br /> Cottonwood Water Enterprise <br /> Principal Amount: $381,780.00 <br /> Interest Rate: 3.00% per annum <br /> Term of Repayment: 30 years <br /> Loan CONTRACT No.: C150408A <br /> Loan Payment: $19,478.13 <br /> Payment Initiation Date*: <br /> Maturity Date*: <br /> * Payment Initiation Date and Maturity Date fields are filled in after the project has been <br /> substantially completed. <br /> 1. FOR VALUE RECEIVED, the BORROWER promises to pay the Colorado Water Conservation Board <br /> ("CWCB"), the Principal Amount plus Interest for the Term of Repayment, pursuant to the LOAN <br /> CONTRACT and this PROMISSORY NOTE. <br /> 2. Principal and interest shall be payable in equal Loan Payments, with the first payment due and <br /> payable one year from Payment Initiation Date (the date the CWCB determines that the project <br /> is substantially complete), and annually thereafter. All principal, interest, and late charges, if <br /> any, then remaining unpaid shall be due and payable on or before the Maturity Date. <br /> 3. Payments shall be made to the Colorado Water Conservation Board at 1313 Sherman Street, <br /> Room 718, Denver, Colorado 80203. <br /> 4. The CWCB may impose a late charge in the amount of 5% of the annual payment if the CWCB <br /> does not receive the annual payment within 15 calendar days of the due date. <br /> 5. This PROMISSORY NOTE may be prepaid in whole or in part at any time without premium or <br /> penalty. Any partial prepayment shall not postpone the due date of any subsequent payments <br /> or change the amount of such payments. <br /> 6. All payments received shall be applied first to late charges, if any, next to accrued interest and <br /> then to reduce the principal amount. <br /> 7. This PROMISSORY NOTE is issued pursuant to the LOAN CONTRACT between the CWCB and the <br /> BORROWER. The LOAN CONTRACT creates security interests in favor of the CWCB to secure <br /> the prompt payment of all amounts that may become due hereunder. Said security interests <br /> are evidenced by: a SECURITY AGREEMENT of even date and amount and cover certain <br /> revenues, real property, water rights and/or accounts of the BORROWER. The LOAN CONTRACT <br /> and SECURITY AGREEMENT grant additional rights to the CWCB. <br /> 8. The CWCB shall give the BORROWER written notice of any alleged default and an opportunity <br /> to cure within thirty (30) days of receipt of such notice before the BORROWER shall be <br /> Appendix 2 to Loan Contract C150408A <br /> Page 1 of 2 <br />