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EXHIBIT "F" REORGANIZATION AGREEMENT STATE OF TEXAS § § KNOW ALL MEN BY THESE PRESENTS: COUNTY OF HAYS This is an agreement between ELIM WATER COMPANY, INC., a Texas corporation, with its principal place of business in Hays County, Texas, acting by its duly authorized officers ("COMPANY"); Ruth Ann Hoch of Nueces County, Texas, (93 shares) Harold L. Mallett of Travis County, Texas, (2 shares) Baker Construction Co. Inc. of Cornal County, Texas, (1 shares) Greenhaven Love Investments, a Texas General Partnership of Hays County, Texas, (4 shares) Deerwood Water Investments, a Texas General Partnership of Hays County, Texas, (2 shares) and Southridge Estates Homeowners Association Water General Partnership, a Texas General Partnership of Hays County, Texas, (3 shares). being the shareholders of COMPANY ("SHAREHOLDER" or "SHARE- HOLDERS"); and S.E.M. CORPORATION, a Texas non-profit corporation, with its principal place of business in Hays County, Texas, acting ~y its duly authorized officers ("NPC"). Recitals COMPANY is a public utility providing water service to a defined service area inside and outside the city limits of the City of San Marcos, Texas. COMPANY is authorized to provide water service pursuant to Article 1433 of the Texas Revised Civil Statutes. COMPANY is certificated to serve its water service area by the Texas Water Commission under Haysco Certificate of Convenience and Necessity No. 11546 or by extensions from such certificated areas not served by any other public water utility. COMPANY owns certain assets including, but not limited to: (1) certain customer connections, (2) water production, storage, transmission and distribution facilities, (3) personal property such as equipment, tools, vehicles and machinery, (4) real property interests including facility sites and easements, and (5) other tangible and intangible assets such as funds on hand, accounts receivable and several licenses and permits ("Assets"). COMPANY has determined to: (1) gradually phase out and cease its water service operation, and (2) transfer and convey all of its Assets to NPC. NPC is a non-profit corporation that will: (1) acquire all of the Assets, at such time as COMPANY discharges all of its debts and liabilities, and dissolves, and (2) convey the Assets and other assets of NPC to the City of San Marcos, Texas. 1.