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<br />which is located a water filter plant for-converting raw water into process and
<br />potable water for use in the KWC Water System (the "KWC Water Filter Plant");
<br />and (c) the KWC Real Property; and
<br /> WHEREAS, since the filing of the Condemnation Action, CABARRUS has
<br />expended the sum of at least One Hundred Thousand Dollars ($100,000.00) for an
<br />engineering report regarding the KWC Water System and its integration into
<br />CABARRUS's water distribution system, and additional and related engineering,
<br />accounting, legal and administrative expenses regarding the KWC Water System in
<br />contemplation of its acquisition by CABARRUS or other integration into a
<br />comprehensive regional water supply system (the "KWC Expense"); and
<br /> WHEREAS, on or about August 21, 1989, with the full encouragement and
<br />support of CABARRUS, on behalf of KANNAPOLIS, the Water Company Acquisition
<br />Corporation entered into an agreement with KWC and Atlantic American Properties,
<br />Inc., to acquire the KWC Water System and the KWC Real Property for the benefit
<br />of the cigtzens of Kannapolis and the greater Cabarrus County area and to lease
<br />the KWC Water System and the KWG Real Property to KANNAPOLIS with an option to
<br />purchase the same (the KWC Acquisition Agreement); and
<br /> WHEREAS, subsequent to the execution of the KWC Acquisition Agreement, an
<br />agreement has been or will be executed to transfer all right, title and interest
<br />in the KWG Real Property held by KWC or Atlantic American Properties, Inc., to
<br />KANNAPOLIS, rather than to the Water Company Acquisition Corporation; and
<br /> WHEREAS, pursuant to the terms of this Agreement and an agreement between
<br />the parties relating to the sale of treated water by KANNAPOLIS to CABARRUS
<br />executed simultaneously herewith (the "Treated Water Agreement"), KANNAPOLIS and
<br />CABARRUS desire to resolve the Condemnation Action, to cooperate in an
<br />undertaking regarding construction of the Reservoir, and to encourage long-term
<br />development and integration of water system resources in the greater Cabarrus
<br />County area.
<br /> NOW, THEREFORE, in consideration of the premises herein, the terms of the
<br />Treated Water Agreement, and the mutual covenants and agreements hereinafter set
<br />forth, the WATER COMPANY and CABARRUS agree as follows:
<br /> 1. Purpose. The purpose of this Agreement is: (a) to resolve the
<br />Condemnation Action; (b) to establish a basis for cooperation between KANNAPOLIS
<br />and CABARRUS in the construction, operation and maintenance of the Reservoir
<br />upon land now or formerly owned by Kannapolis Water Company, Atlantic American
<br />Properties, Inc., and/or CABARRUS and/or others in order to provide and supply
<br />an additional source of raw water for the residents of greater Cabarrus County;
<br />and (c) to encourage long-term development and integration of water resources
<br />in the greater Cabarrus County area.
<br /> 2. Duration of Agreement. The duration of this Agreement is forty (40)
<br />years, which term shall be automatically renewed for successive periods of
<br />twenty (20) years each, unless amended or terminated as to executory matters in
<br />the manner set forth in Paragraph 13 of this. Agreement.
<br /> 3. Definitions. For further explanation and interpretation of this
<br />Agreement, the following definitions shall apply herein wherever the context
<br />dictates:
<br /> (a) Actual Maintenance and Operation Expense (the AME): The
<br /> actual expense for electricity and related charges for pumping raw
<br /> water from the Reservoir, if any, and/or if applicable, and the
<br /> actual expense for the operation and maintenance of the Reservoir,
<br /> including, but not limited to, personnel, repairs and related
<br /> expense, but specifically excluding and omitting any and all initial
<br /> capital expense for the Reservoir, whether considered direct or
<br /> indirect cost, amortized debt, or otherwise computed.
<br /> (b) Available Yield: The quantity of water from the Reservoir
<br /> that is available for sale by CABARRUS at any time after providing
<br /> for the Minimum Downstream Release.
<br /> (c) Completion Date: The first date upon which the Reservoir
<br /> is certified to produce treatable water, i.e. the first date the
<br /> Reservoir reaches and is able to sustain a minimum water level of
<br /> 640' Mean Sea Level (MSL) on a weekly basis (the level below which
<br /> rationing shall occur under drought conditions as herein defined).
<br /> (d) Customer(s): Any or all users authorized by CABARRUS, in
<br /> writing, to withdraw, consume or receive raw water from the
<br /> Reservoir, including, but not limited to, KANNAPOLIS, Concord, or
<br /> any other person, firm, corporation, county, municipal corporation,
<br /> water district, sanitary district, or other entity whatsoever so
<br /> authorized, their successors or assigns.
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