MUNICIPAL WATER DISTRICT OF ORANGE COUNTY (2) - 2002

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.' . . Operating Party maintains sufficient excess operable production capacity as necessary to meet its MWD Stored Water extraction obligations as set forth in Paragraph 4.5 below. 4.4. Reports. The Operating Party shall provide any and all budgeting documents and other reports pertaining to the Program Well and its overall groundwater pumping capacity as may reasonably be required by the Program Agency or the Member Agency. 4.5. Extraction ofMWD Stored Water. Within fifteen (15) days ofreceiving notification from the Program Agency or the Member Agency to extract MWD Stored Water, the Operating Party shall extract such quantity ofMWD Stored Water from the Program Well or any other existing wells, or be subject to the financial penalty set forth in section XIII.B. of the MWD Agreement unless the Operating Committee recommends other remedies to avoid the penalty. The amount of extraction shall be determined per paragraph 2.5 of this contract which provides for establishing a monthly operating yield. The Operating Party shall place such produced MWD Stored Water into the Operating Party's distribution system, and pay for such produced MWD Stored Water at MWD's then-effective rate for full service non-interruptible treated supplies, less the energy and operation and maintenance cost of the well. Operating Party shall not be deemed in breach of this requirement unless it fails or refuses to begin extracting the requested quantity of MWD stored water within ninety calendar days after proper notice has been given requiring extraction hereunder. 4.6. Breach bv Operating Partv. In the event Operating Party breaches this Contract by failing or refusing to begin extracting the requested quantity ofMWD stored water within the time period set forth in Paragraph 4.5, and the Operating Committee has not agreed to alternative remedies, the Program and Member Agencies may terminate this Contract. Operating Party shall pay to Program Agency the cost of constructing the Program well and any other damages incurred to Program Agency. Operating Party shall not be entitled to use of the Program Well until these costs are paid to Program Agency. Operating Party acknowledges that the unauthorized use by Operating Party of the Program Well during any time that Operating Party is in default of its water extraction obligations pursuant to Paragraph 4.5 above will result in irreparable harm to Program Agency. Operating Party accordingly waives any right to object on the grounds of lack of irreparable harm to Program Agency seeking injunctive relief or specific performance of this Contract to enforce the provisions of this Paragraph prohibiting Operating Party from using the Program Well while in breach of its obligations under Paragraph 4.5 above. 4.7. Alternative Groundwater Basin Management Options. If the Operating Party has made every effort to comply with the Contract but has been unable to extract the MWD Stored Water, and the Operating Committee has not agreed to alternative remedies, then the Program Agency at its discretion will consider implementing alternative groundwater basin management options to extract the MWD Stored Water to avoid being assessed penalties by MWD. 4.8. Expiration. The Operating Party's obligations under this Contract shall expire in 25 years. Section II.B of the MWD Agreement provides for a 25 year effective date but allows for five year extensions of the Agreement with written consent of all parties. Program Agency cannot seek an extension of the MWD Agreement unless written approval by the 131/022499-0028 388856.01 a08/28/03 -5-