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expenses incurred or sustained by City cr Subsidiary as a <br />result of Fie!dcrest's negligence cr willful misconduct in <br />connection with the operation of the Water Treatment <br />Facility. Fieldcrest shall obtain and maintain, as long as <br />this Agreement is in effect, a general liability insurance <br />policy with respect to its negligence liability in <br />connection with the operation of the Water Treatment <br />Facility providing coverage of not less than $25 million <br />dollars per claim. Fieldcrest shall provide City with <br />evidence of such policy. In tko event that Fieldcrest is <br />unable, exercising due diligence, to obtain within twenty <br />(20) days after the date of this Agreement written <br />confirmation of coverage under the policy insuring <br />Fieldcrest's liabi!it~.~ to City under this indemnity <br />provision, Fieldcrest may, immediately upon delivery of <br />written notice to City, terminate this Agreement. <br />Fieldcrest shall pay t.he premiums on such policy, which <br />amount shall be included in Total Operating Costs. <br />Fieldcrest shall also indemnify and hold City and Subsidiary <br />harmless from and shall pay any fines or fees to regulatory <br />authorities charged or levied with respect to violations of <br />any applicable governmental or regulatory agency rules, <br />regulations or standards applicable to the operation of the <br />Water Treatment Facility. <br /> <br /> f. Fie!dcrest's operations and personnel in the Water <br />Treatment Facility shall be limited to those directly <br />related to water treatment. <br /> <br /> 3. Depreciatlon Reimbursement By Fieldcrest. <br />Fieldcrest shall reimburse the City monthly for its prorata share <br />of depreciation of the depreciable prcper%y a~ the current bock <br />value of such depreciable property as reflected on the books and <br />records of Kannapolis Water Company on the date of the sale of <br />the Water Treatment Facility to Subsidiary and for depreciation <br />of the cost of the replacement of any depreciab!e property of the <br />Water Treatment Facility as it exists on the date of the sale of <br />the Water Treatment Facility to Subsidiary (and of the cost of <br />replacement of replacements). Fie!dcrest's prorata share of <br />depreciation costs shall be calculated by multiplying such <br />monthly depreciation cost by a fraction, tko numerator of which <br />is the total volume (in gallons) of water drawn by Fieldcrest for <br />such month and the denominator of which is the total volume (in <br />gallons) of water treated through the Water Treatment Facility <br />for such month. Monthly depreciation shall be calculated on a <br />straight-line basis over the remaining useful life of the <br />depreciable property or replacements of such depreciable property <br />divided by the number of months of useful life all in accordance <br />with generally accepted accounting principles. <br /> <br />-4- <br /> <br /> <br />