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2. Representations, Warranties and Covenants of Member Agency. <br />(a) Member Agency agrees that it shall purchase SSS Program water from <br />Metropolitan for purposes of Seasonal Shift Storage in each SSS Year so that it <br />may recover the Luidepreciated sunk fixed costs for that project or portion of <br />project that was designed to take advantage of the MWD SSS Program and for <br />which a construction contract was let prior to December 31, 1996, as shown in <br />Exhibit A. <br />(b) Member Agency agrees that it will certify monthly Seasonal Shift Storage <br />amounts using certification procedures outlined in Metropolitan's User <br />Handbook for Seasonal Storage -Service, and will be subject to the procedures <br />outlined in Metropolitan's User Handbook for Seasonal Storage Service and <br />other regulations and procedures with respect to the SSS Program which are <br />adopted by Metropolitan from time to time. <br />(c) Member Agency agrees that, as part of its annual assessment of the SSS <br />Program, Metropolitan will recalculate Seasonal Storage Service credits to the <br />nearest one whole acre-foot. Member Agency agrees that it will be bound by <br />such recalculations made by Metropolitan, in the absence of manifest error. <br />Following the reconciliation process, Metropolitan will mare appropriate <br />billing adjustments and Member Agency agrees to pay such adjusted billings. <br />3. Covenants of Metropolitan. <br />Metropolitan agrees that it will bill Member Agency for water purchased as Seasonal <br />Shift Storage pursuant to this Agreement at a discounted rate equal to its rates for Pull <br />Service water prevailing at the time of purchase, less an incentive of $141/AF and S 116/AF <br />for treated and witreated water, respectively. <br />4. Term of Agreement. <br />This Agreement shall be effective as of October 1, 1997, and shall remain in effect <br />until May 1, 2001, or until a cumulative maximum of $2,205,568 in incentives at the higher <br />discount of $141/acre-foot for Seasonal Shift Storage has been received under this <br />Agreement as calculated in Sections 2(b) and 5, whichever comes first. Since the cumulative <br />maximum amount is an estimate at the time of execution of this contract, the cumulative <br />maximum and term may change with actual numbers. Any changes in these amounts shall be <br />evidenced by a written amendment to this agreement executed as provided in Section 8 (e) <br />below. <br />-3 <br />