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. e COpy Mr. Harold P. Pfeiffer July 11, 1994 Page 2 The principal amount of the promissory note at the time of closing will be $575,000.00, with interest thereon at 4.5% per annum. Principal and interest shall be payable annually commencing August 10, 1995, and each August 10th thereafter until the full principal balance and all interest due thereon shall have been fully paid. The City of La Porte will reserve the right to prepay any amount of principal and interest on the promissory note, at any time, prior to maturity. 4. The subject property was appraised by Patricia stone Muston, a state certified general real estate appraiser, on July 31, 1993, who placed a value of $795,000.00 on the property. The City agrees to furnish you with a copy of this appraisal, and to sign the necessary schedule for your use in claiming a charitable deduction for federal income tax purposes, for the difference between the sale price and the appraised price. 5. The City Attorney along with the City's Bond Counsel will prepare all documents and legal instruments to insure this transaction is structured for tax exempt purposes. The City agrees to pay these legal fees. Our City Attorney is Knox W. ASkins, and our Bond Counsel is Paul Martin with MCGinnis, Lochridge & Kilgore, of San Antonio, Texas. 6. You will at your expense have your attorney, Phil Pfeiffer of Fulbright and Jaworski, review all legal documents. 7. The City's attorney will prepare an opinion letter for the city on the property acquisition, or, at the city's option, will secure an owner's title policy, at the City'S expense. 8. The option agreement will be executed, and the City of La Porte will pay the $100,000.00 option fee to you, within thirty (30) days of July 11, 1994. 9. You will retain possession of the property, and be entitled to all income, and be responsible for all expenses on the property, until the date of final closing. If the above nine points clearly and accurately reflect our agreement reached on July 5, 1994, I would appreciate your signing and returning to me, the extra copy of this letter, retaining the original copy as your copy of the agreement between you and the City of La Porte.