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<br />Promissory Note
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<br />Dat~ IB ,1998
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<br />1, FOR VALUE RECEI'IED, The Farmers Pawnee Canal Company ("BORROWER) promises to pay the State of
<br />Colorado Water Conservation Board ("STATE"), the principal sum of $22,250.00 plus interest at the rate of 3,5
<br />percent per annum for a term of 10 years, pursuant to Loan Contract No, C 153825 ("LOAN CONTRACT").
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<br />2, The first payment of $2,675,37 shall be due one year from the date that the State determines that the project is
<br />substantially complete, and annually thereafter until the entire principal sum, all accrued interest, and all late
<br />charges, if any, shall have been paid in full.
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<br />3, Payments shall be made payable to the Colorado Water Conservation Board and mailed to 1313 Sherman
<br />Street, Room 721, Denver, Colorado 80203,
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<br />4. If the STATE does not receive the annual payment within 15 calendar days of the due date, the State may impose
<br />a late charge in the amount of 5% of the annual payment
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<br />5. This Note may be prepaid in whole or in part at any time without premium or penalty, Any partial prepayment
<br />shall not postpone the due date of any subsequent payments or change the amount of such payments,
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<br />6. All payments received shall be applied first to late charges, if any, nexlto accrued interest and then to reduce the
<br />principal amount
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<br />7. This Note is issued pursuant to the LOAN CONTRACT between the STATE and the BORROWER, The LOAN
<br />CONTRACT creates security interests in favor of the STATE to secure the prompt payment of all amounts that may
<br />become due hereunder, The security interests, evidenced by a Security Agreement, an Assignment of Certificate
<br />of Deposit, and an Assignment of Deposit Account as Security, cover certain revenues arid accounts of the
<br />BORROWER, The LOAN CONTRACT, Security Agreement and Assignments grant additional rights to the STATE,
<br />including the right to accelerate the maturity of this Note in certain events,
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<br />8, If any annual payment is not paid when due or any default under the LOAN CONTRACT, the Security Agreement or
<br />the Assignments securing this Note occurs, the STATE may declare the entire outstanding principal balance of the
<br />Note, all accrued interest, and any outstanding late charges immediately due and payable, without notice or
<br />demand, and the indebtedness shall bear interest at the rate of 15% per annum from the date of default The
<br />STATE shall give the BORROWER written notice of any alleged default and an opportunity to cure within thirty
<br />(30) days of receipt of such notice before the BORROWER shall be considered in default for purposes of this
<br />Promissory Note.
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<br />9. The BORROWER, any guarantor, and any other person who is now or may hereafter become primarily or
<br />secondarily liable for the payment of this Note or any portion thereof hereby agree that if this Note or interest
<br />thereon is not paid when due or, suit is brought, then it shall pay all reasonable costs of collection, including
<br />reasonable attomey fees, In the event of any bankruptcy or similar proceedings, costs of collection shall include
<br />all costs and attomey fees incurred in connection with such proceedings, including the fees of counsel for
<br />attendance at meetings of creditors' committees or other committees,
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<br />10. This Note shall be govemed in all respects by the laws of the State of Colorado,
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<br />BORROWER: The Farmers Pawnee Canal Company,
<br />a Colorado co ora on
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<br />By
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<br />(SEAL)
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<br />Attest:
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<br />By ~,/.. _/ ..jg)
<br />Sandra lis, Secretary
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<br />Appendix 2 to Loan Contract C153825
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