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<br /> IDJA <br /> Page 2 - <br /> August 27, 1996 <br /> 4. Upon the City's payment of the negotiation fee to you, you will work with the City <br /> in drafting a purchase agreement for the transfer of the capital stock of Elim to the City. <br /> It is anticipated that this agreement will be completed within two weeks of this letter. You <br /> will coordinate obtaining the approval of all Elim shareholders. The purchase agreement <br /> will take effect (the Agreement Date) upon its execution by all Elim shareholders. <br /> 5. Within five working days of all shareholders executing the purchase agreement, <br /> - the City will deposit a down payment of 25% of the total purchase price in an account <br /> bearing interest in excess of 5% per annum. In the event that the City cancels the <br /> purchase agreement, this down payment shall be refundable to the City with the exception <br /> that all interest earned shall be paid to the Elim shareholders with the percentage payment <br /> to each being the same as the percentage ownership of each. <br /> 6. The City will take a maximum of 30 days from the Agreement Date to analyze <br /> the assets and liabilities of Elim. <br /> 7. The City may take an additional maximum of 60 days from !he Agreement Date <br /> to structure the City's financing process. <br /> We are checking with the Texas Municipal League Risk Pool on the issue of liability <br /> insurance coverage for you. I believe this issue can be addressed in the detailed purchase <br /> agreement. <br /> Please indicate your acceptance of this letter of intent by executing both originals mailed <br /> to you and returning one original to me. <br /> - <br /> Sincerely, <br /> '5f>~1< ~( ~ <br /> Larry D:-Gilley <br /> City Manager <br /> LDG:js <br /> ELiM WATER COMPANY, INC. <br /> Q ~ ~~'/JJ~ <br /> Ruth Á~?~/96t <br /> Date <br />