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<br />References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan or item.
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<br />CC(Q)1PY
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<br />PROMISSORY NOTE
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<br />Borrower: TREMONT MUTUAL DITCH COMPANY, A
<br />COLORADO CORPORATION
<br />PO BOX 711
<br />SNYDER, CO 80750-0711
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<br />Lender: The Farmers Stale Bank of Ft. Morgan, CO
<br />123 Easl Kiowa Ave,
<br />P,O, Box 798
<br />Ft. Morgan, CO 80701
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<br />Principal Amount: $40,000.00 Initial Rate: 9.250% Date of Note: May 14, 1996
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<br />PROMISE TO PAY. TREMONT MUTUAL DITCH COMPANY, A COLORADO CORPORATION ("Borrower") promises 10 pay 10 The Farmers State
<br />Bank 01 Ft, Morgan, CO ("Lender"), or order,ln lawful money 01 Ihe United Stales 01 Amertca, Ihe prtnclpalamounl 01 Forty Thousand & DOIl00
<br />Dollars ($40,000.00), logelher wllh Inlerest on Ihe unpaid prtnclpal balance from May 1., 1996, unlll paid In lull,
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<br />PAYMENT. Borrower will pay Ihls loan In one prtnclpal paymenl 01 $40,000,00 plus Inleresl on November 12, 1996, This paymenl due
<br />November 12, 1996, will be lor all principal and accrued Inleresl nol yel paid, Inlerest on this Note Is computed on a 365/365 simple Interest basis;
<br />that is, by applying the ratio of the annual Interest rate over the number of days In a year, multiplied by the outstanding principal balance, multiplied by
<br />the actual number of days the principal balance is outstanding. Borrower will pay Lender at Lender's address shown above or at such other place as
<br />Lender may deslgn.te In writing, Unless otherwise agreed or required by applicable law, payments will be applied IIrst to accrued unpaid Interest, then
<br />to principal, and any remaining amount to any unpaid collection costs and late charges.
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<br />VARIABLE INTEREST RATE, The Interest rate on this Note Is subject to ohange Irom time to time based on chang.s in an Index which Is the The
<br />Farmers State Bank Variable Base Rate (the 'Index'). The Index Is not necessarily the lowest rate charged by Lender on Its loans and Is set by Lender
<br />in its sole discretion, ~ the Index becomes unavailable during the term 01 this loan, Lender may designate a substitute Index aller notifying Borrowe'
<br />Lender will tell Borrower the current Index rate upon Borrower's request. Borrower understands that Lender may make loans based on other rates as
<br />well, The Interest rate ohange will not occur more ollen than each week. The Index currenlly Is 9.250% per annum, The Interest rate to be applied
<br />to the unpaid prtnclpal balance 01 Ihls Nole will be al a rale equal to Ihe Index, resulting In an Initial rate 01 9.250% per annum, NOTICE: Under
<br />no circumstances will the Interest rate on this Note be more than the maximum rate allowed by applicable law.
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<br />PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed earlier than It Is due. Early payments will not, unless agreed to
<br />by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments under the payment schedule. Rather I they will reduce the
<br />princIpal balance due. .
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<br />DEFAll..T. Borrower will be in default If any of the following happens: (a) Borrower fails to make any payment when due. (b) Borrower breaks any
<br />promise Borrower has made to Lender, or Borrower fails to comply with or to perform when due any other term, obligation, covenant, or condition
<br />contained in this Note or any agreement related to this Note, or in any other agreement or loan Borrower has with Lender. (c) Any representation or
<br />statement made or furnished to Lender by Borrower or on Borrower's behalf Is false or misleading In any material respect either now or at the time
<br />made or furnished. (d) Borrower becomes insolvent, a receive&: Is appointed for any part of Borrower's property, Borrower makes an assignment for the
<br />benefit of creditors, or any proceeding is commenced either by Borrower or against Borrower under any bankruptcy or insolvency laws. (e) Any
<br />creditor tries to take any of Borrower's property on or in which Lender has a lien or security interest. This includes a garnishment of any of Borrower's
<br />accounts with Lender. (f) Any guarantor dies or any of the other events described in this default section occurs with respect to any guarantor of this
<br />Note. (g) A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of the
<br />Indebtedness is Impaired.
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<br />tf any default, other than a default in payment, is curable and If Borrower has not been given a notice of 8 breach of the same provision of this Note
<br />within the preceding twelve (12) months, it may be cured (and no event of default will have occurred) If Borrower, after receiving written notice from
<br />Lender demanding cure of such default: (a) cures the default within fifteen (15) days; or (b) if the cure requires more than fifteen (15) days,
<br />immediately Initiates steps which Lender deems In Lender's sole discretion to be sufficient to cure the default and thereafter continues and completes 81
<br />reasonable and nece3s~ry steps sufficient to produce compliance as soon as reasonably practical.
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<br />LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal balance on this Note and all accrued unpaid interest immediately
<br />due, without notice, and then Borrower will pay that amount. Upon default, including failure to pay upon final maturity, Lender, at its option. may also, jf
<br />permitted under applicable law, do one or both of the following: (a) increase the variable interest rate on this Note to 21.000% per annum, and (b)
<br />add any unpaid accrued interest to prinCipal and such sum will bear interest therefrom until paid at the rate provided in this Note (Including any
<br />increased rate). The Interest rate will not exceed the maximum rate permitted by applicable law. Lender may hire or pay someone else to help collect
<br />this Note if Borrower does not pay. Borrower also will pay Lender that amount. This includes, subject to any limits under applicable law, Lender's
<br />~ttorne'ys' fees and Lender's legal expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses for bankruptcy proceedings
<br />(mcludlng efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. If not
<br />prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law. This Nole has been delivered to
<br />Lender and accepled by Lender In the State of Colorado. "there Is a lawsull, Borrower agrees upon Lender's requesl 10 submit 10 the
<br />lurtsdlcllon of Ihe courts 01 Morgan County, Ihe Stale 01 Colorado This Nole shall be governed by and construed In accordance wllh Ihe laws
<br />01 Ihe Stale 01 Colorado,
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<br />RIGHT OF SETOFF. Borrower ~ra~ts to ~nder a. contrac~ual possessory security interest in, and hereby assigns, conveys, delivers, pledges, and
<br />transfers to Le~der ~Il Borr?w,er ~ right, tItle and Interest m and to, Borrower's accounts with Lender (whether checking, savings, or some other
<br />account), Includmg Without limitation all accounts held j~lntly with someone else and all accounts Borrower may open in the future, excluding however
<br />all IRA and Keo~h accounts, .and all trust accounts for which the grant of 8 security Interest would be prohibited by law. Borrower authorizes Lender, to
<br />the extent permItted by applicable law, to charge or setoff all sums owing on this Note against any and all such accounts.
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<br />GENERAl PROVIS~ONS. Lender may delay or fo.rgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any
<br />o!her person who signs, guarantees or endor~s thiS Note, to the extent allowed by law, waive presentment, demand for payment, protest and notice of
<br />dishonor. Upon any ch~nge In the terms of thiS Note, and unless otherwise expressly stated in writing, no party who signs this Note. whether as maker,
<br />guarantor, accom~odatt~n maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and
<br />for any I~ngth of time) thiS loan, .or release any party or guarantor or. collateral; or impair, fail to realize upon or perfect Lender's security interest in the
<br />collateral, and take any. other action deemed nea.:ssary by Lender Without the consent of or notice to anyone. All such parties also agree that Lender
<br />may modify this loan Without the consent of or notice to anyone other than the party with whom the modification is made.
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<br />PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD AU. THE PROVISIONS OF THIS NOTE INCLUDING THE VARIABLE
<br />IIIT!;:RES~ R,UE ?ROVISIO'lS. BORROWER AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED
<br />COPY OF THE' NOT"
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