1998-141-RES WHEREAS, CITY COUNCIL DID HERETOFORE ONTHE 8TH DAY OF JUNE eretofore, on the 8th day of June,

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transfer title and ownership of the Pipeline to Panda in exchange for cash consideration equal to the PEDC's cost therefor, less the amount of any grant funds the PEDC may obtain for such purpose. Panda will transfer title and ownership of the Pipeline to the City promptly thereafter. Section 5.03. Required Completion Date. Panda shall notify the City of the date of Financial Closing on or before such date. The construction of the Pipeline shall be completed such that the City is able to perform its obligations hereunder. Section 5.04. Location ofPipeline~ Costs. The Pipeline shall be constructed along the route described in Schedule 3 attached hereto and made a part hereof. The City shall fully cooperate and support Panda's (or PEDC's) efforts to obtain any rights-of-way; provided, however, that in the event the alignment includes land owned by the City after the date of this Agreement, the City agrees to grant Panda any easement, right-of-entry or other permission necessary to utilize such land for the construction of the Pipeline at no additional cost to Panda, provided that any such easement, right-of-way or permission shall be non-exclusive. In addition, if any additional land, easement, right-of-way or property interest must be acquired to permit the construction of the Pipeline, the City agrees to negotiate and, if necessary, exercise its powers of eminent domain to acquire any such land, easemen~ right-of-way or property interest. All costs associated with the construction of the Pipeline shall be paid by Panda (or PEDe) using certain of the proceeds from the Financial Closing. Such costs shall include, but not be limited to design, engineering, surveying, construction, labor and the cost of all materials. Panda also agrees, if applicable, to pay to the City any permit processing fees, and post any performance or labor and material bonds normally required. Section 5.05. Meters. The supply of Raw Water pursuant to this Agreement shall be measured by an appropriate recording flow Meter(s) specified by the City and agreed to by Panda, with such Meter being installed as specified by the City and agreed to by Panda, which includes a flow versus time recording device and a pressure versus time recording device, which shall be located at the Supply Delivery Point. Should Panda request that such Meter be replaced by a larger Meter, such replacement meter and all costs for the installation of the same shall be borne by Panda (separate and apart from any Raw Water charges pursuant to Section 7.01 and from any charges set forth in Section 6.02.) Section 5.06. Progress Reports and Observation Visits. From the date of Financial Closing until the completion of construction of the Pipeline, Panda (or PEDe) shall keep the City informed in writing on a quarterly basis of the status of the construction project and an estimated schedule for completion of the project. In addition, Panda (or PEDe) shall promptly notify the City of the occurrence of any incident which will or is reasonably expected to result in a material delay in the construction schedule. Panda (or PEDe) shall comply with all reasonable requests of the City for, and assist in arranging, any such observation visits to the Pipeline sites. The City shall have the right to provide a full time inspector. Any work not in compliance with the plans and specifications as provided to the City by Panda, will be reported to the City Engineer, then to Panda. Section 5.07. Testing. The Parties will cooperate with each other in coordinating schedules and providing reasonable assistance in connection with the testing of the Pipeline, the Facilities and the Plant. Section 5.08 Connections to the Pipeline. The City shall have the right to permit and construct connections, at no expense to Panda, to the Pipeline to supply Raw Water for other users. Notwithstanding any other provision herein to the contrary, Panda shall have priority over the use and transportation of the Raw Water. The City shall not enter into any agreement or construct any connection which would have an immediate or long-term consequence of diminishing the amount of Raw Water transported to the Plant by the Pipeline. Any agreements entered into by the City with any Person other than Panda shall contain language acknowledging that Panda has priority over the use and transportation of the amount of Raw Water provided for herein. .4- G:\A TTORNEY\Scott\Current Work\water agr. final.doc4