ORANGE COUNTY WATER DISTRICT (OCWD)

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(4) no sooner than 270 days from the initial formal notice, terminate this Agreement and seek to recoup, where applicable, the cost of constructing the Treatment System and/or other applicable damages.5 6. FINANCIAL. 6.1 Capital Costs —Payment and Reimbursement. A. OCWD-Built Facilities —Upfront Payment. For OCWD-Built Treatment System, OCWD will pay as up -front costs all planning, design, construction, and start- up costs as described above, except for the costs for property rights, land use entitlements, additions or enhancements, or as otherwise described in this Agreement. B. Producer -Built Facilities —Reimbursement. OCWD shall reimburse the Producer for all of the Producer's reasonable expenses for the planning, design, construction, and start-up of Treatment System on a monthly basis. OCWD shall pay reimbursements to the Producer within 30 days of receiving adequate documentation from the Producer. C. Prior Expenditures. Within 60 days after the Effective Date, OCWD will reimburse the Producer for any previous reasonable and authorized expenses incurred by the Producer prior to the Effective Date in evaluating or developing the design for or constructing the Treatment System for the Producer's Impacted Wells. (1) Authorized expenses include, but may not be limited to: (1) design type costs, consultants and contractor; (2) pre -purchase of equipment and media for Treatment System; (3) equipment installed to temporarily treat for PFAS compounds which can be repurposed by the Producer into the Producer's final Treatment System; (4) permitting cost; and (5) CEQA type expenses. These same expenses incurred by Producer going forward are also eligible for reimbursement. Design, engineering, or evaluative type expenses incurred by a Producer that may be eligible for reimbursement, as reasonably determined by OCWD in its sole discretion (with input from the Producer) could include: (1) outside consultant costs and studies incurred by the Producer and related to the development and design of the Treatment System; (2) equipment installed to temporarily treat for PFAS compounds which can be repurposed by OCWD into a final treatment system; (3) permitting cost; and (4) CEQA type expenses. 5 Any action by OCWD to recoup its, or the Producer's, OCWD funded costs for construction of the PFAS treatment system would be prorated based upon the length of time the treatment facilities has been in operation, and by any percentage of third -party cost recovery OCWD has obtained. For example, a breach by Producer in year twenty-five (25) of the thirty (30) year term of this Agreement would result in OCWD recouping significantly less than if the breach occurred in year five since twenty five years of useful life of the facility would have occurred, and would be further offset by any third -party cost recovery obtained by OCWD during that time. 2629/022499-0087 14979764.1 04/1720 -9-