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Agreement of Purchase and Sale of Jess Ranch Wastewater System and Assessment District No. 86-1 Water System Improvements (June 2, 1998)

SECTION 14. Covenants

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c. Additional Covenants of Water Company and Town.

(1) Water Company shall continuously operate and maintain the Water System for the purpose of providing water service to property within the boundaries of Assessment District No. 86-1.

(2) After the Closing, Town shall operate the Wastewater System as the wholesaler of reclaimed water to Water Company and Water Company shall have the exclusive right and obligation under the Water Company’s C.P.U.C. Certificate to sell and deliver reclaimed water within Water Company’s current and future sales areas within the current and future territorial limits and boundaries of the Town, under the terms and conditions set by the rules, regulations and tariffs of C.P.U.C. The Water Company hereby acknowledges its obligation to sell and deliver reclaimed water to customers within Water Company’s current and future service areas. If the Water Company is unable or refuses to sell and deliver reclaimed water to any customer or customers within Water Company’s current or future service area, which is located within the territorial limits and boundaries of the Town, then the Town shall have the right to sell and deliver reclaimed water to such customer or customers.