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PROMISSORY NOTE Date: April 1, 2002 Date of Completion ..5~fh_b-- I Z ocz. 1. FOR VALUE RECEIVED, the Appleton Northwest (ML 369) Lateral and Drainage Corporation ("BORROWER") promises to pay the State of Colorado Water Conservation Board ("STATE"), the principal sum of One Hundred Thousand Dollars ($100,000) plus interest at the rate of two and three quarters percent (2.75%) per annum for a term of thirty (30) years, pursuant to Loan Contract No. C150088 dated April 1, 2002 ("LOAN CONTRACT"). 2. Principal and interest shall be payable in equal installments of $4,938.44, with the first payment due and payable one year from the date that the State determines that the project is substantially complete, and annually thereafter until all principal, interest, and all late charges, if any, have been paid in full. All principal, interest, and late charges, if any, then remaining unpaid shall be due and payable 30 years thereafter. 3. Payments shall be made payable to the Colorado Water Conservation Board and mailed to 1313 Sherman Street, Room 721, Denver, Colorado 80203. 4. If the STATE does not receive the annual payment within 15 calendar days of the due date, the State may impose a late charge in the amount of 5% of the annual payment. 5. This Note may be prepaid in whole or in part at any time without premium or penalty. Any partial prepayment shall not postpone the due date of any subsequent payments or change the amount of such payments. 6. All payments received shall be applied first to late charges, if any, next to accrued interest and then to reduce the principal amount. 7. This Note is issued pursuant to the LOAN CONTRACT between the STATE and the BORROWER. The LOAN CONTRACT creates security interests in favor of the STATE to secure the prompt payment of all amounts that may become due hereunder. The security interests, evidenced by a Security Agreement and a Deed of Trust, dated April 1, 2002, cover certain revenues and real property of the BORROWER. The LOAN CONTRACT, Security Agreement and Deed of Trust grant additional rights to the STATE, including the right to accelerate the maturity of this Note in certain events. 8. If any annual payment is not paid when due or any default under the LOAN CONTRACT or the Security Agreement or Deed of Trust securing this Note occurs, the STATE may declare the entire outstanding principal balance of the Note, all accrued interest, and any outstanding late charges immediately due and payable, and the indebtedness shall bear interest at the rate of 7% per annum from the date of default. The STATE shall give the BORROWER written notice of any alleged default and an opportunity to cure within thirty (30) days of receipt of such notice before the BORROWER shall be considered in default for purposes of this Promissory Note. APPENPIX 2