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<br /> <br />13065 Orono Parkway <br />Elk River, MN 55330 <br /> <br />November 14, 2005 <br /> <br />Mr. Paul Krause <br />18099 Judicial Way North <br />Lakeville MN 55044-7105 <br /> <br />Re: Letter of Intent <br />1400 182nd Avenue NW . <br />Elk River, Mn. <br />Outlots A and B Pinewood Addition, <br />and related personal property and equipment (Property) <br /> <br />Dear Paul: <br /> <br />The purpose of this letter is to set forth the basic business terms under which The <br />City of Elk River, a municipal corporation ("Purchaserll) is willing to enter into an <br />agreement to purchase the Property from Paul Krause ("Sellerll). Notwithstanding <br />anything in this letter to the contrary, it is understood that there will be no binding <br />agreement between the Seller and Purchaser regarding the sale of the Property unless <br />and until the parties have executed a definitive purchase agreement. <br /> <br />The proposed terms of the sale are as follows: <br /> <br />1. Purchase Price. The purchase price is $2,400,000.00, payable as follows: <br /> <br />$500,000 at closing including earnest money <br />$200,000 per year under a Contract for Deed at 5% interest, with the balance <br />due in a balloon payment at the end of the fifth year. <br /> <br />2. Appraisal. Purchaser's obligation to enter into a purchase agreement with <br />Seller is expressly conditioned upon Purchaser obtaining, prior to the the <br />execution of a purchase agreement, an appraisal satisfactory to purchaser in <br />its sole discretion, indicating that the Property is worth $2,400,000.00 or <br />more. <br /> <br />Phone: 763.635.1000 <br />Fax: 763.635.1090 <br /> <br />www.cLelk-river.mn.us <br /> <br />- 1 - <br />