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2. f. Allow the City of San Marcos, in accordance with the terms of the Agreement between City of San Marcos and COMPANY attached as Exhibit "C", the right to provide water service and to collect all revenues from new customers residing in any area annexed by the City of San Marcos that is also within the water servicè area of COMPANY, as certified by the Texas Water Commission or other successor governmental agency, and not being served by COMPANY. Water service by the City of San Marcos as described herein shall be provided in accordance with its then applicable water service rules, regulations and inside city limit rates and charges. g. Allow the COMPANY to perform all of its obligations listed under Section 2. of this Agreement. COMPANY hereby agrees to: a. Use the $308,700.00 as follows: ( 1 ) Pay Ruth Ann Boch an amount to payoff all loans from Ruth Ann Boch to COMPANY including principal and accrued interest up to the date this Agreement is executed and accepted by NPC upon execution and receipt of all proper releases from Ruth Ann Boch to COMPANY. ( 2 ) Pay Ruth Ann Boch the sum of $156,400.00 to purchase all of her Shares, except one which will be purchased by NPC pursuant to Paragraph 1b. above, at $1700.00 per Share for a net total of 92 Shares. ( 3 ) Pay $20,400.00 to the remaining Shareholders to purchase all of their remaining 12 Shares at $1700.00 per Share; ( 4 ) Pay debentures in the principal sum of $62,000.00; ( 5 ) Pay six percent (6%) interest due on $62,000.00 in debentures for the period of December 1, 1985 to the date the debentures are paid; and ( 6) Use the balance for improvements, contin- gencies and other operating expenses of COMPANY, as needed. b. Pay Ms. Ruth Ann Hoch accrued salary and vacation pay up to the date that Ms. Hoch receives the sums of money outlined in 2.a.(1). c. Repay the loan from NPC according to the terms and conditions stated in the promissory note and accompanying security instrwnents attached as Exhibit "An and "B". d. Prior to the discharge of any employee presently employed by COMPANY, give that employee six (6) months notice of termination or six (6) months salary based upon the previous six (6) months service. 3.