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October 24, 2007 (Special Joint Meeting) Page 595 2. An issue in the Litigation has been whether the City could impose conditions upon the provision of utility services to properties that are outside of the municipal boundary of the City, and what conditions may be permissible. It is acknowledged by all that parties that this is an issue on which there is a legitimate dispute as to the state of the law and the relative authority of the governmental entities involved, but the parties agree that it is in the best interests of the City, the County and the District and the citizens thereof that this issue be resolved by a negotiated agreement rather than by obtaining an adjudication from the Court by means other than agreement. (A) Within the City's Utility Service Area, as that term is defined herein below, the City shall have the exclusive right to provide water and sewer collection utility services, except to the extent that the City has agreed to assign some portion thereof to the Water & Sewer Authority of Cabarrus County (hereinafter WSACC) pursuant to Paragraph 8,below. (B) The City's Utility Service Area, as that term is used in this Agreement shall mean that area that was adopted by the City as its Utility Service Area on or about March 11, 2003, in the City's agreements with other municipalities of Cabarrus County, as that area is shown on that map that is attached hereto as Exhibit B. (C) The City's Utility Service Area is divided into two areas, as shown on the attached Exhibit B. These areas are called Sub-Area 1 and Sub-Area 2. Sub-Area 1 is the .area east of a line beginning at the intersection of Flowes Store Road and Parks Lafferty Road, then continuing north on Flowes Store Road to Miami Church Road to Cold Water Creek, then north along the creek to Atando Road, then north along Atando Road to NC. Highway 99, then north along Heglar Road to Highway 73 west to the City limits then north along the line shown on Exhibits B and C skirting the City limits to Old Salisbury Road, thence west to Cold Water Creek thence north to the northern edge of the Utility Service Area as shown on Exhibit B and C. Sub-Area 2 is all other parts of the Utility Service Area. Within Utility Service Sub- Area 2 the City may provide water and sewer service to all property owners who apply for such service until the Anniversary Date, provided that the conditions (C) (i) through (v) and (d) are met. After the Anniversary Date the City shall have the duty to provide water and sewer service to all property owners who apply therefore, provided that the conditions (c) (i) through (v) and (d) are met. (i) The applicant for such service has complied with all City utility ordinances and regulations that relate to the provision of such utility service. (ii) All technical requirements of the City's utility system are met by the proposed connection. (iii) Sufficient transmission and treatment capacities are available to provide such service to the property of the applicant for the proposed use to which the applicant intends to put the property at that time. (iv) The applicant complies with such policies as the City may have in effect at the time of the application concerning the applicant's responsibility for the costs of extending such service and connecting thereto. (v) If the property for which the application for utility service is being made is located within the Five Year Annexation Area, as that term is defined below, that the applicant comply with the requirements set forth in Paragraph 2(d), below. (Cl) Within Utility Service Sub-Area 1 the City shall have the duty to provide water and sewer service to all property owners who apply therefore after the Anniversary Date, under the same terms and conditions as set forth for Sub-Area 2. With regard to Utility Service Sub-Area 1 from the date of filing this Agreement with the Court until the Anniversary Date, the City shall: (a) Adopt no ordinance annexing any property zoned residential by Cabarrus County in Sub-Area 1 having an effective date before the Anniversary Date; and