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b. The State shall loan the Borrower the sum of Fourteen Thousand Four Hundred Dollars <br />(514,400) to make refundable down payments for the purchase of an additional 2.5 cfs of X-Y <br />Ranch water. Upon execution of this contract, the State shall disburse the loan amount to the <br />Borrower within 10 days of written request by the Borrower. <br />c. Provided that the Borrower enters into an option contract and purchase agreements for the <br />purchase of water rights owned by Manvel Canal and Irrigation Company and provided, <br />further, that such option contract and purchase agreement includes terms that are <br />substantially similar to the terms described in Factual Recitals 9 and 10 herein, the State shall <br />loan the sum of up to Two Hundred Thirty Thousand Dollars (5230,000) to Borrower to make <br />a refundable down payment for the purchase of the Manvel water rights. Upon execution of <br />this contract and execution of the Manvel Option Agreements, the Borrower may request the <br />State to disburse the loan amount. The State shall disburse the loan amount within 10 days <br />of the Borrower's written notice. <br />2. Eligible Expenses. Project costs eligible for financing by this loan shall be limited to payment <br />of the refundable down payments under the terms of the X-Y Ranch Option Agreement, the X-Y 2.5 cfs <br />Option Agreements and the Manvel Option Agreements. <br />3. Borrower's Resolution. Pursuant to its Articles of Incorporation and its By-Laws, the Borrower <br />shall have its Board of Directors adopt an order or a resolution, which shall be irrepealable during the term <br />of this loan: <br />Authorizing the Borrower to contract for this loan debt, and authorizing the President and the <br />Secretary to pay the indebtedness on behalf of the Borrower, and <br />b. Authorizing the Borrower to make and levy assessment(s) sufficient to pay off the interest on <br />this loan pursuant to the terms of this contract and to discharge this lawful indebtedness, and <br />c. Authorizing the Borrower to set aside this assessment revenue in a special fund separate and <br />apart from other Borrower revenues to assure repayment of this revenue to the State, and <br />d. Authorizing the Borrower to execute a Security Agreement required by the State, as specified <br />in the Security Interest provisions of the contract. <br />Such order or resolution shall be attached hereto as Appendix B and incorporated herein prior to <br />the State's performance under this contract. <br />4. Promissory Note. The Borrower understands that this Contract is also a promissory note for <br />the repayment of funds loaned by the State to the Borrower according to the terms set forth herein. <br />a. Principal amount. The principal amount of the loan shall be the total amount of funds <br />advanced by the State to the Borrower under the terms of this contract, not to exceed <br />5750,000, distributed as follows: <br />i. The principal amount for the X-Y Ranch Option down payment is 5500,000; <br />ii. The principal amount for the X-Y 2.5 cfs Option down payment is up to 514,400; <br />iii. The principal amount for the Manvel Option down payment is up to 5230,000. <br />b. Interest rate. The interest on the principal shall accrue at the rate of three and one-half <br />percent (3.5%) per annum on all funds advanced to the Borrower. <br />Page 3 of 8 LOWER ARKANSAS WATER MANAGEMENT ASSOC. LOAN CONTRACT <br />