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C-9377-1 - Reimbursement Agreement for Groundwater Treatment Facilities
COMMON INTEREST AGREEMENT This Common Interest Agreement ("Agreement") is made by and among the Orange County Water District ("OCWD"); and the Yorba Linda Water District, the City of Anaheim, the City of Fullerton (collectively, the "Participating Producers"), and the City of Newport Beach, California ("Participating Producers" and/or "Newport Beach") concerning litigation involving certain per- and polyfluoroalkyl substances ("PFAS") litigation. OCWD, Yorba Linda Water District, the City of Anaheim, the City of Fullerton, and the City of Newport Beach are each referred to as a "Parry" and collectively referred to as the "Parties". A. COMMON INTEREST PROTECTION The Parties have mutually concluded that they have interests in common and may assert similar claims in connection with litigation against responsible parties, including chemical manufacturers of PFAS, in order to recover costs from parties responsible for placing PFAS into the stream of commerce and/or the environment where it could make its way into (i) the Santa Ana Watershed ("Watershed"), which includes the Orange County Groundwater Basin for which OCWD has the power and responsibility to manage and protect pursuant to the Orange County Water District Act, and (ii) Participating Producers' and Newport Beach's water production facilities ("Facilities"). 2. The Parties also have concluded that their mutual interests will be best served by participating in common interest/joint prosecution meetings, conferences, and communications in which to share confidential, proprietary, work product or privileged documents, factual material, mental impressions, investigative information, memoranda, interview reports, expert reports and other oral or written information made in connection with the litigation' that is the subject of this Agreement, including certain confidences of the Parties (hereinafter referred to as "Common Interest Materials." For purposes of this Agreement, "Common Interest Materials" shall mean and refer to any Confidential Information relating to the Common Interests that is transmitted, shared, disclosed, or otherwise communicated among the Parties and/or their respective attorneys. "Confidential Information" shall mean and refer to any data, recordings, oral or written communications, handwritten, printed, or electronic documents, and any other materials or information in whatever form, that are privileged or protected from discovery or disclosure under the attorney -client privilege, the attorney work product doctrine, the common interest doctrine, the deliberative process privilege, or any other statutory or common law privilege or protection. "Common Interests" shall mean and refer to the Parties' common interests recited herein and in paragraph 1 above. 3. Some or all of these Common Interest Materials may be privileged from disclosure to adverse or other parties as a result of the attorney -client privilege, the work -product privilege, and other applicable privileges, rights, or rules. The Parties have agreed to disclose and exchange certain Common Interest Materials between and/or among themselves in order to further their 'This litigation refers to the December 1, 2020 Complaint filed on behalf of OCWD and the Participating Producers captioned Orange County Water District et al. v. 3MCompany, et al., No. 30-2020-01172419-CU-PL-CXC which has been transferred into the AFFF MDL, in which an amended complaint will be filed to include the City of Newport Beach, referred to as PFAS- related litigation. Common Interests. Such exchanges or disclosures would not have been made and will not be made but for the sake of securing, advancing, or supplying legal representation by the Parties' counsel. The Parties consider all such exchanges and disclosures of Common Interest Materials to be essential to the effective representation of their respective interests, and within the common interest and joint prosecution privileges recognized by California Law and California Rules of Court. 4. It was and is the mutual understanding of the Parties that the exchanges and disclosures referred to in this section are not intended to diminish in any way the confidentiality of such Common Interest Materials, and any exchange of Common Interest Materials is not intended to and will not be deemed to constitute a waiver of any available privilege or right. No privilege attached to the Common Interest Materials shall be deemed to be waived, and the Parties intend for all communications made in furtherance of any Party's PFAS related litigation to be Common Interest Material. All meetings of Parties at which any employee, agent, member, or representative of any Party are present along with a Parties' Counsel are presumed to be Common Interest Materials and are not to be disclosed outside of the Parties absent consent of the Parties and the Party originating the material (if applicable). All Common Interest Materials shall be used solely in connection with the Parties' attempts to: (a) treat or remediate PFAS and other contamination in the Watershed or the Facilities, and (b) identify responsible third parties and prosecute legal actions or otherwise seek cost recovery from responsible third parties for the treatment or remediation of PFAS and other contamination in the Watershed or the Facilities. The Parties' use of Common Interest Materials shall be limited to confidential use by the Parties and their employees, consultants, and counsel, and shall not include the right to disclose the Common Interest Materials to third parties or to introduce, seek to admit into evidence, refer to, or otherwise disclose the Common Interest Materials in any trial, arbitration, mediation, or other judicial, administrative, or other proceedings for any reason, without first obtaining the consent of the Party who first communicated or generated the Common Interest Materials. In addition, except as stated in this Agreement, no Party, and no Party's counsel, shall disclose any Common Interest Materials generated by or received from the other Party to anyone who is not a Party to this Agreement, without obtaining the written consent of the Party who first communicated or generated the Common Interest Materials at issue. Any person who is not a Party to this Agreement receiving any Common Interest Materials pursuant to such written consent shall be advised beforehand that the Common Interest Materials are privileged and subject to the terms of this Agreement. Nothing in this Agreement shall limit the right of any Party or any Party's counsel to disclose any documents or information that has been lawfully obtained or generated by that Party independently of this Agreement. 6. The Parties have agreed that absent a court order, they will not disclose Common Interest Materials received from each other or obtained through their joint efforts, or the contents thereof, to anyone except to legal counsel and the signatories to the respective legal services agreements, attorneys, or their employees or agents throughout the duration, and after conclusion, of litigation. 2 7. If any person or entity requests or demands Common Interest Materials through discovery requests, subpoena, Public Records Act requests, or otherwise, the recipient of such a request or demand shall immediately notify the other Party to this Agreement of the request or demand, if the request or demand seeks Common Interest Materials generated or transmitted by that other Party to this Agreement. Before making any disclosure of Common Interest Materials in response to such a request or demand, the Party receiving the request or demand shall immediately advise the Party who generated the aforementioned Common Interest Materials and shall cooperate with the other Parry's attempts to preserve its privileges and protections. The Parties' duties under this paragraph with regard to Common Interest Materials received while this Agreement is in effect shall survive the termination of this Agreement or the withdrawal of any Party. 8. Any breach of the provisions of this Agreement will cause irreparable harm to the non - breaching Parties. Therefore, the Parties agree that specific performance and injunctive relief shall be available to enforce the terms of this Agreement and shall be the sole remedy for its breach. No breach shall entitle any Party to any claim for damages, sanctions, or any other form of monetary award. 9. Neither the act of entering into this Agreement, nor any action taken under this Agreement, including the exchange of any Common Interest Materials, nor any breach of this Agreement, may be used as the basis for seeking to disqualify any Party's counsel. Nothing in this Agreement shall be deemed to create any duty of cooperation or other legal rights or duties, except as expressly stated herein. This Agreement does not create any agency or partnership relationship. 10. The supplying of Common Interest Materials shall not be considered to provide any license or proprietary rights, including any implied patent license or intellectual property rights in the property of another or any legal rights now or hereinafter held by virtue of this Agreement. 11. The Parties acknowledge that, except as may be set forth in a definitive, written agreement, no Party nor any of its directors, officers, employees, affiliates, advisors, or elected or appointed officials shall have been deemed to make, or shall be responsible for, any representations or warranties, express or implied, with respect to the accuracy or completeness of the Common Interest Materials supplied under this Agreement. Further, it is acknowledged hereby by the Parties that only those representations and warranties made by the Parties in a definitive, written agreement shall have any force or effect. 12. In no event shall any Party be liable to another for consequential, special, indirect, incidental, punitive or exemplary loss, damage or expense relating to this Agreement. 13. The Parties shall protect the disclosed Common Interest Materials by using the same degree of care, but no less than a reasonable degree of care, to prevent the unauthorized use, disclosure, dissemination, or publication of the Common Interest Materials as a Party uses to protect its own Confidential Information. B. SIGNATURE This Common Interest Agreement may be executed by transmittal of electronic (.pdf) signature counterparts. C. MODIFICATIONS All modifications to this Agreement must be in writing and signed by the Parties Dated: APPROVED AS TO FORM: Dated: S-/ Z V/ 2 3 APPROVED AS TO FORM: CONNOR, FLETCHER & HEDENKAMP, LLP By: Ed Connor Oversight Counsel, OCWD Attest: Leilani I. Brown, NAMC, City Clerk Date: CITY OF NEWPORT BEACH By: Gr ce eung, City Manager Aaron Harp, City Attorney ORANGE COUNTY WATER DISTRICT By: Stephen Sheldon, President LN Michael R. Markus, General Manager 11 Dated: Dated: Dated: YORBA LINDA WATER DISTRICT: By: THE CITY OF ANAHEIM: By: THE CITY OF FULLERTON: By: AMENDMENT NO. 1 TO THE LEGAL SERVICES AGREEMENT, ADDENDUM; CIA, AND CONFLICT CONSENT AMONG OCWD, CORONA, THE CURRENT PARTICIPATING PRODUCERS, AND THE FIRMS WHEREAS, Orange County Water District ("OCWD") and City of Anaheim; Serrano Water District; East Orange County Water District; City of Santa Ana; Yorba Linda Water District; City of Fullerton; City of Garden Grove; Irvine Ranch Water District; City of Orange; and City of Tustin (collectively the "Current Participating Producers"), and SL Environmental Law Group PC; Kennedy & Madonna LLP; Taft, Stettinius & Hollister, LLP; Douglas & London, P.C.; Levin, Papantonio, Rafferty, Proctor, Buchanan, O'Brien, & Mougey, P.A.; Kelley, Drye & Warren, LLP; and Robinson Calcagnie, Inc. (collectively the "Firms") are parties to a Legal Services Agreement, dated July 21, 2020 (the "LSA") under which, as more fully described therein, the Firms have agreed to represent OCWD and the Current Participating Producers with respect to contamination of water supplies with per- and polyfluoroalkyl substances ("PFAS"); WHEREAS, the Firms represent OCWD and the Current Participating Producers in a lawsuit seeking damages and other relief related to PFAS contamination, originally initiated in Orange County Superior Court and styled Orange County Water District, et al. v. 3M Company, et al., Case No.: 30-2020-01172419-CU-PL-CXC, which lawsuit has been removed to federal court and consolidated for pretrial purposes in a Multi -District Litigation in the United States District Court for the District of South Carolina styled In re Aqueous Film - Forming Foams Prods. Liab. Litig., Case No. 2:18-mn-02873 (D.S.C.) ("AFFF MDL"), with Member Case No. 2:22-cv-1798-RMG (the "Litigation"); Page 12 WHEREAS, OCWD and the Current Participating Producers previously entered into that certain PFAS Treatment Facilities and Program Agreement, dated July 20, 2020 (the "PFAS Agreement"); WHEREAS, OCWD, the Current Participating Producers, and the Firms entered into Addendum No. 1 to the LSA (the "Addendum"), to strengthen the conflict waiver in LSA Section IV., Paragraph A., subparagraph 1; WHEREAS, OCWD; the Current Participating Producers; the City of Corona, California ("Corona"); and the Firms previously entered into that certain Common Interest Agreement, dated December 2021 (the "CIA") and that certain Conflict Consent, dated December 4, 2021 ("Conflict Consent"); WHEREAS, the Cities of Huntington Beach, Westminster, Newport Beach, and Buena Park, which are within the Orange County Ground Water Basin, each wishes to be a Participating Producer, as defined in the LSA; WHEREAS, the Cities of Huntington Beach, Westminster, Newport Beach, and Buena Park each wishes to enter into an attorney -client relationship with the Firms, on the same terms and conditions as the Current Participating Producers, for the Firms to represent the Cities of Huntington Beach, Westminster, Newport Beach, and Buena Park with respect to PFAS contamination of water supplies; WHEREAS, by this Amendment No. 1 to the Legal Services Agreement, Addendum, CIA, and Conflict Consent Among OCWD, Corona, the Current Participating Producers, and the Firms (the "Amendment No. 1 ") the LSA, the Addendum, the CIA, and the Conflict Consent will each be amended and restated to add a signature block for the Cities of Huntington Beach, Westminster, Newport Beach, and Buena Park; Page 13 WHEREAS, this Amendment No. 1 incorporates by reference the LSA, the Addendum, the CIA, and the Conflict Consent; WHEREAS, the Cities of Huntington Beach, Westminster, Newport Beach, and Buena Park each seeks to join the Litigation as a co -plaintiff, and OCWD and the Current Participating Producers support such action as the Firms indicate that it is benficial to the Litigation; WHEREAS, OCWD and the Current Participating Producers wish to amend the PFAS Agreement to include the Cities of Huntington Beach, Westminster, Newport Beach, and Buena Park, and the Cities of Huntington Beach, Westminster, Newport Beach, and Buena Park each wishes to become covered and bound by the PFAS Agreement; NOW, THEREFORE, in consideration of the foregoing, the Firms, OCWD, Corona, the Current Participating Producers, and the Cities of Huntington Beach, Westminster, Newport Beach, and Buena Park hereby agree as follows: 1. The LSA and the Addendum among the Firms, OCWD, and the Current Participating Producers are hereby amended and restated so that the term "Participating Producers" shall refer, collectively, to the Current Participating Producers and the Cities of Huntington Beach, Westminster, Newport Beach, and Buena Park. The Amended and Restated Legal Services Agreement is attached as Exhibit 1 to this Amendment No. 1. The Amended and Restated Addendum is attached as Exhibit 2 to this Amendment No. 1. 2. Except as expressly stated in this Amendment No. 1, all other provisions of the LSA and the Addendum (as the same may be amended and restated) remain in full force and effect. Page 14 3. The CIA and the Conflict Consent among OCWD, the Current Participating Producers, Corona, and the Firms are hereby amended and restated so that the terms "Client" and "Clients" shall refer, collectively to the Current Participating Producers, Corona, and the Cities of Huntington Beach, Westminster, Newport Beach, and Buena Park. The Amended and Restated Common Interest Agreement is attached as Exhibit 3 to this Amendment No. 1. The Amended and Restated Conflict Consent is attached as Exhibit 4 to this Amendment No. 1. 4. Except as expressly stated in this Amendment No. 1, all other provisions of the CIA and the Conflict Consent (as the same may be amended and restated) remain in full force and effect. 5. By executing this Amendment No. 1, the Cities of Huntington Beach, Westminster, Newport Beach, and Buena Park each hereby assumes all duties and obligations, and agrees to be bound by all terms and conditions, that will apply to it as a party to the Amended and Restated Legal Services Agreement, the Amended and Restated Addendum, the Amended and Restated Common Interest Agreement, and the Amended and Restated Conflict Consent. 6. By executing this Amendment No. 1, The Cities of Huntington Beach, Westminster, Newport Beach, and Buena Park each hereby assumes all duties and obligations, and agrees to be bound by all terms and conditions, that will apply to it as one of the Parties to the PFAS Treatment Facilities and Program Agreement, an Amended and Restated version of which is attached as Exhibit 5 to this Amendment No. 1. Page 15 7. The effective date of this Amendment No. 1 shall be the date on which each of OCWD, the Current Participating Producers, Corona, the Cities of Huntington Beach, Westminster, Newport Beach, and Buena Park, and the Firms have fully executed this Amendment No. 1. 8. Once effective, this Amendment No. 1 shall apply to legal services provided by the Firms to the Cities of Huntington Beach, Westminster, Newport Beach, and Buena Park before the effective date of this Amendment No. 1. 9. This Amendment No. 1 may be executed in counterparts and upon execution by each signatory, each executed counterpart shall have the same force and effect as an original instrument and as if all signatories had signed the same instrument. NOW, THEREFORE, in consideration of the foregoing, and in recognition of the Cities of Huntington Beach, Westminster, Newport Beach, and Buena Park each being adversely impacted by PFAS and wishing to become a Party to the PFAS Agreement, while being subject to the terms and conditions therein, OCWD and the Current Paticipaiting Producers hereby modify the PFAS Agreement to add the Cities of Huntington Beach, Westminster, Newport Beach, and Buena Park each as a Party thereto, pursuant to Section 10.16 of the PFAS Agreement. Each party hereto has duly caused this Amendment No. 1 to be executed on its behalf by its duly authorized representative. [SIGNATURES FOLLOW ON THE NEXT PAGE.] Page 17 Signature Page to Amendment No. 1 to Legal Services Agreement Among OCWD, The Current Particpating Producers, The Firms, and the Cities of Huntington Beach, Westminster, Newport Beach, and Buena Park Dated: , 2023 YORBA LINDA WATER DISTRICT Dated: Dated: Dated: Dated: 2023 2023 2023 2023 CITY OF FULLERTON CITY OF GARDEN GROVE IRVINE RANCH WATER DISTRICT CITY OF ORANGE Dated: , 2023 CITY OF TUSTIN I0 Page 18 Signature Page to Amendment No. 1 to Legal Services Agreement Among OCWD, The Current Particpating Producers, The Firms, and the Cities of Huntington Beach, Westminster, Newport Beach, and Buena Park CITY OF HUNTINGTON BEACH: CITY OF HUNTINGTON BEACH Dated: . 2023 Dated: , 2023 By: CITY OF CORONA: Dated: 2023 Tony Strickland, Mayor Michael Gates Huntington Beach City Attorney CITY OF CORONA M. Dated: , 2023 By: Jacob Ellis, City Manager Dean Derleth Corona City Attorney Page 19 Signature Page to Amendment No. 1 to Legal Services Agreement Among OCWD, The Current Particpating Producers, The Firms, and the Cities of Huntington Beach, Westminster, Newport Beach, and Buena Park CITY OF WESTMINSTER: CITY OF WESTMINSTER Dated: , 2023 By: Scott Miller, Water Manager Dated: , 2023 By: City of Westminster Attorney CITY OF NEWPORT BEACH: Dated: Dated: CITY OF BUENA PARK: Dated: Dated: 2023 2023 CITY OF NEWPORT BEACH By: Gra . Leung, City Manager By: 4 C I�CLe-- Aaron Harp Newport Beach City Attorney Attest: 4w�.Rvryx— Citty CIerR -1.J-0.ula CITY OF BUENA PARK 2023 By: Aaron France, City Manager 2023 By. Buena Park City Attorney Page 19 Signature Page to Amendment No. 1 to Legal Services Agreement Among OC WD, The Current Particpating Producers, The Firms, and the Cities of Huntington Beach, Westminster, Newport Beach, and Buena Park CITY OF WESTMINSTER: CITY OF WESTMINSTER Dated: , 2023 By: Scott Miller, Water Manager Dated: , 2023 By: City of Westminster Attorney CITY OF NEWPORT BEACH: Dated: 2023 Dated: / 5 , 2023 CITY OF BUENA PARK: CITY OF NEWPORT BEACH By: ac . Leung, City Manage By: Agrofi Harp '- Newport Beach City Attorney r Attest: City Clark FO Dated: 2023 CITY OF BUENA PARK Aaron France, City Manager Dated: 2023 By. Buena Park City Attorney Page 110 Signature Page to Amendment No. 1 to Legal Services Agreement Among OCWD, The Current Particpating Producers, The Firms, and the Cities of Huntington Beach, Westminster, Newport Beach, and Buena Park THE FIRMS: Dated: 32023 TAFT STETTINIUS & HOLLISTER LLP By: Robert A. Bilott Dated: , 2023 DOUGLAS & LONDON By: Michael A. London Dated: , 2023 LEVIN, PAPANTONIO, RAFFERTY, PROCTOR, BUCHANAN, O'BRIEN, & MOUGEY, P.A. By: Mark J. Proctor Dated: , 2023 KENNEDY & MADONNA, LLP By: Kevin J. Madonna Dated: , 2023 SL ENVIRONMENTAL LAW GROUP PC By: Alexander Leff Dated: 12023 KELLEY DRYE & WARREN, LLP By: William J. Jackson ROBINSON CALCAGNIE, INC. Dated: , 2023 By: Daniel S. Robinson EXHIBIT 1 LEGAL SERVICES AGREEMENT I. INTRODUCTION A. RECITALS. 1. Orange County Water District ("OCWD") was created in 1933 by the California Legislature and has the legal authority to, among other things, manage, purify, treat, and replenish the Orange County Groundwater Basin ("Basin") within OCWD's boundaries in order to ensure water reliability and quality of groundwater for use within the Basin, preventing seawater intrusion, and protecting the right of OCWD and pumpers from the Basin to beneficially use water from the Santa Ana River and its tributaries. The service area within the OCWD is approximately 350 square miles, providing water supply to 19 public agencies and public utilities that serve more than 2.4 million Orange County residents. These large scale water producing entities include: City of Anaheim; City of Buena Park; East Orange County Water District; City of Fountain Valley; City of Fullerton; City of Garden Grove; Golden State Water Company; City of Huntington Beach; Irvine Ranch Water District; City of La Palma; Mesa Water District; City of Newport Beach; City of Orange; City of Santa Ana; City of Seal Beach; Serrano Water District; City of Tustin; City of Westminster; and the Yorba Linda Water District. Those producers that sign onto this agreement are collectively referred to herein as "Participating Producers". 2. SL Environmental Law Group PC; Kennedy & Madonna; LLP, Taft, Stettinius & Hollister, LLP; Douglas & London, P.C.; Levin, Papantonio, Thomas, Mitchell, Rafferty, & Proctor, P.A.; Kelley, Drye & Warren, LLP; and Robinson Calcagnie, Inc. (collectively the "Firms") are together a team of uniquely qualified and experienced attorneys who have joined together to assist public entities facing the challenges posed by contamination with per- and polyfluoroalkyl substances ("PFAS"). The Firms are comprised of the foremost attorneys in the nation with experience both in PFAS litigation and in the representation of public entities and water suppliers in cases involving groundwater contamination. 3. The purpose of this Legal Services Agreement ("LSA" or "Agreement") is (i) to enter into an attorney -client relationship between OCWD, the Participating- Producers and the Firms (collectively, the "Parties") for the purpose of investigating and assessing potential claims arising out of the presence of contaminants in water supply wells and the Orange County Groundwater Basin affecting OCWD and the Participating Producers; (ii) to authorize the Firms to attempt pre -litigation settlement of claims, and if unsuccessful, to file a civil legal action on behalf of OCWD and the Participating Producers against PFAS manufacturers, or other entities that may be responsible for PFAS contamination as determined as a result of the Firms' investigation, to recover the damages from PFAS as provided herein, and (iii) to provide for the terms and conditions for the representation of OCWD and the Participating Producers in any such civil action that may be filed in the Superior Court of California and/or United States District Court and any proceeding by writ or -1- appeal related to that action filed on behalf of OCWD and the Participating Producers by the Firms (collectively the "Legal Action"). 4. This Agreement is required by California Business and Professions Code section 6147 and is intended to fulfill the requirements of that section. H. INVESTIGATION AND ASSESSMENT OF POTENTIAL CLAIMS A. PRE -LITIGATION SCOPE OF SERVICES. 1. Contaminants. OCWD and the Participating Producers have detected the presence of several PFAS compounds (the "Contaminants" or "Contamination") during testing of groundwater wells and surface waters of the Santa Ana River and its tributaries (collectively the "SAIV ). The engineering, construction, operation and maintenance of systems to treat contamination in affected wells, and potentially in the SAR itself, will result in significant financial costs to OCWD and the Participating Producers. 2. Investigation. OCWD and the Participating Producers have retained the Firms to assist them in investigating the presence of the Contaminants throughout their systems and potential sources of the Contamination, evaluating the potential to recover the costs associated with the Contamination, providing legal advice associated with potential causes of action that could be asserted against responsible parties, and representing OCWD and the Participating Producers in any Legal Action against parties potentially responsible for the Contamination. B. PRE -LITIGATION COSTS AND FEES. 1. OCWDIParticipating Producers. All pre -litigation costs associated with water sampling, laboratory testing and engineering expenses incurred in the ordinary course of operations shall be paid directly by OCWD and the Participating Producers. 2. The Firms. All costs and fees incurred by the Firms during any pre - litigation investigation shall be paid directly by the Firms. 3. Recovery of Pre -Litigation Costs and Fees. Nothing contained herein should be interpreted to preclude seeking recovery of such fees and costs incurred by any Party as part of any Legal Action that may be filed pursuant to this Agreement. In addition, if the Firms file any Legal Action, the Firms may use the time incurred for any investigation contemplated herein to support the reasonableness of this Agreement. C. RETENTION OF FIRMS RATHER THAN PARTICULAR ATTORNEYS. OCWD and the Participating Producers are retaining the Firms, not any particular attorney, and attorney services to be provided to OCWD and the Participating Producers shall not necessarily be performed by any particular attorney. da D. DESIGNATION. The Firms, the OCWD and the Participating Producers will designate specific points of contact to coordinate various stages of investigation and litigation. These designations are intended to establish a clear line of communication and to minimize potential uncertainty, but not to preclude communication between the OCWD, the Participating Producers and the Firms. Points of contact for interface with the Firms will be provided via the Executive Committee and Steering Committee structure detailed in Exhibit A hereto. III. LITIGATION SERVICES A. LITIGATION SERVICES TO BE PROVIDED. 1. Inclusions. It is the intent of the Parties that the Firms shall represent OCWD and the Participating Producers in a one or more civil actions for damages in the Superior Court of California and/or the United States District Court as well as in any proceeding by writ or appeal related to that action. The legal services to be provided by the Firms consist of representation of OCWD and the Participating Producers with respect to: a. The contamination of groundwater supplies and/or soil by the Contaminants or other contaminants identified during the investigation stage described in Section II of this Agreement, as approved by OCWD, the Participating Producers and the Firms. b. Claims and/or actions for damages sustained by OCWD and the Participating Producers as a result of, among other things, actual or threatened conduct relating to contamination of groundwater, the loss of use of groundwater, the impairment of water rights, the replacement of drinking water supplies, and any past, present, and future costs incurred to construct and maintain systems that can remove the Contaminants from drinking water, groundwater and/or soil, and any related appeals in such actions. C. Defending any counterclaims, or other third -party claims filed in or arising from the Legal Action initiated pursuant to this Agreement. 2. Retention; Filing of Legal Action. The filing of any Legal Action pursuant to this Agreement shall be at the discretion of the Parties. Nothing in this Agreement shall be construed as obligating OCWD and the Participating Producers to retain the Firms in connection with any Legal Action or obligating the Firms to file a Legal Action or any appeal on behalf of OCWD and the Participating Producers. B. LEGAL SERVICES SPECIFICALLY EXCLUDED. 1. Exclusions. Legal services that are not to be provided by the Firms under this Agreement specifically include, but are not limited to, the following: -3- a. Proceedings before any administrative or governmental agency, department or board, including, but not limited to the California Attorney General, the California Public Utilities Commission, California Department of Water Resources, California Department of Toxic Substances Control, any Regional Water Quality Control Board and/or the California State Water Resources Control Board. However, at OCWD's or Participating Producer's request, the Firms (via relevant designees) shall endeavor to appear at such administrative proceedings to assist legal counsel for OCWD and the Participating Producers in resolving administrative matters with the potential to affect, adversely or beneficially, OCWD and the Participating Producers' prospects of recovery in the Legal Action. Such assistance will be provided by the Firms without OCWD or the Participating Producers being assessed any additional attorneys' fees in connection with such appearance. b. Defending any legal action(s) against OCWD or the Participating Producers commenced by any person, except as provided in 3(A)(1)(c). C. Defending any claim against OCWD or the Participating Producers for unreasonable use of water and/or waste of water. d. Defending any action concerning water rights except as otherwise provided for in this agreement. 2. Additional Legal Services. If OCWD and the Participating Producers wish to retain the Firms to provide any legal services for additional compensation not provided under this Agreement, a separate written agreement between the Firms, the OCWD and/or the Participating Producers shall be required. C. RESPONSIBILITIES OF THE FIRMS, THE OCWD AND THE PARTICIPATING PRODUCERS. l . The Firms' Responsibilities. The Firms shall perform the legal services called for under this Agreement, keep OCWD and the Participating Producers informed of progress and developments, and respond promptly to OCWD's and the Participating Producers' inquiries and communications. The Firms shall provide status reports to OCWD and the Participating Producers on a mutually agreeable schedule, as events reasonably warrant further reporting, and at the further request of OCWD and the Participating Producers. 2. OCWD and the Participating Producers' Responsibilities. OCWD and the Participating Producers shall cooperate, coordinate, support and assist with the Firms' litigation efforts and keep the Firms reasonably informed of developments in connection with the Legal Action. If there is a disagreement between OCWD and the Participating Producers relating to litigation strategy (not including settlement), OCWD and the Participating Producers agree that the Executive Committee has the authority to make a final decision after consulting with the Steering Committee as detailed in Exhibit A. 3. Where agreement between the Participating Producers and OCWD cannot be reached regarding litigation strategy, settlement or other decision points, Participating Producers can decide at any time to discontinue participation in the Legal Action by withdrawing -4- from the litigation. However, withdrawing Participating Producers must agree to pay to Firms within 60 days of withdrawal the Participating Producers' reasonable share of litigation counsel's reasonable attorneys' fees and cost incurred to date. If the Parties dispute the amount of attorneys fees or costs incurred, said dispute shall be resolved by arbitration proceedings before a mutually agreeable arbitration service, but absent such agreement, before the Judicial Arbitration and Mediation Services (JAMS), with any costs of such proceedings born by OCWD the Participating Producers and the Firms. A withdrawing Producer further agrees to maintain as confidential any attorney -client privileged communications and attorney work product shared with Producer per this Agreement, and to otherwise abide by the requirements of this Agreement, to the extent applicable, after withdrawal. 4. Role of Clients' General and Special Counsel. OCWD and Participating Producers' General or Special Counsels shall be consulted via the Steering Committee process detailed in Exhibit A regarding major litigation decisions except for decisions related to settlement which will require direct consultation with and consent from each General Counsel or Special Counsel, in consultation with their clients, before their client may be bound. Under this Agreement, the Firms will not seek damages or remedies under a public nuisance theory other than damages directly suffered by OCWD or Participating Producers. If Firms assert a cause of action that requires neutrality per Clancy and Santa Clara such as public nuisance for damages beyond those suffered by OCWD or Participating Producers, OCWD and Participating Producers' General or Special Counsels will have supervision and control over major litigation decisions pertaining to such cause of action. Any attorneys' fees due to OCWD and Participating Producers' Counsels in connection with their role in the Legal Action are separate from this Agreement —though such fees/costs incurred separately by OCWD and the Participating Producers for services by their respective legal counsels may constitute a measure of damages recoverable from Defendants in the Legal Action. Selection of Experts. The Firms, OCWD and the Participating Producers shall meet and confer via the Steering Committee and Executive Committee process regarding selection and retention of experts in the Legal Action. OCWD and the Participating Producers, via decisions made by the Executive Committee, shall not unreasonably withhold approval of selection and retention of such experts. 4. Settlement. The Firms shall not settle any Legal Action without the approval of OCWD and the Participating Producers. OCWD and the Participating Producers shall have the absolute right to accept or reject any settlement. The Firms shall notify OCWD and the Participating Producers promptly of the terms of any settlement offer received by the Firms. 5. OCWD and the Producer Agreement Not to Use, Share, or Disclose National Consortium's Materials and Work Product Outside the Context of this Legal Action. OCWD and the Participating Producers and their counsel agree that they shall not use or disclose in any legal proceeding, case, or other context of any kind, other than this Legal Action, or share or disclose to any person not a Party to this Agreement, any documents, work product, or other information made available to or to which any member of OCWD, the Participating Producers or their counsel acquire access through the Firms or any co -counsel of the Firms, including any fact or expert materials produced and/or generated in any prior discovery proceedings in any -5- litigation involving E. I. du Pont de Nemours and Company, The Chemours Company, and/or the 3M Company, without the express written prior approval and consent of the Firms and all such other co -counsel of the Firms. This paragraph does not prohibit OCWD and the Participating Producers from sharing information or filings obtained or used in the Legal Action with their respective boards of directors, governing bodies and members of agency staff with a need to know such information subject to the common interest protections in Section VI below. OCWD and Participating Producers will give Firms notice within five (5) calendar days if they receive a public records request, and will consult with Firms before responding or disclosing any information or documents. D. ATTORNEYS' FEES. 1. Contingent Fee. The amount the Attorneys shall receive as fee for the legal services provided under this Agreement shall consist of a contingent fee ("Contingent Fee"), which shall be calculated as follows: a. 15% of any Gross Recovery obtained before the filing of the complaint in the Legal Action. b. 23% of any Gross Recovery before the commencement of the deposition of any retained expert following formal exchange of expert witness designations under the Code of Civil Procedure or Federal Rules of Civil Procedure. C. 25% of any Gross Recovery obtained after commencement of the deposition of any retained expert following formal exchange of expert witness designations under the Code of Civil Procedure or Federal Rules of Civil Procedure in the Legal Action, but before the close of fact discovery (the fact discovery cut-off set by the Court). d. 27% of any Gross Recovery obtained after commencement of at least one deposition of any retained expert and after the fact discovery cut-off set by the Court. Definitions Relevant to Attorneys' Fees. a. "Gross Recovery" means the total value received by OCWD and the Participating Producers of all Cash Recoveries plus Non -Cash Recoveries, whether awarded by Settlement or Final Judgment in the Legal Action. b. "Costs" include, but are not limited to, court filing fees, deposition costs, expert fees and expenses, investigation costs, reasonable travel and hotel expenses, messenger service fees, photocopying expenses, and process server fees. Items that are not to be considered Costs, and that must be paid by OCWD and the Participating Producers without being SZ either advanced or contributed to by the Firms, include OCWD's and the Participating Producers' expenses incurred in providing information to the Firms or defendants or as part of investigation(s). C. "Final Judgment" lent" means any final, non -appealable court order or judgment terminating any Legal Action filed pursuant to this Agreement and finally determining the rights of any parties to the Legal Action where no issue is left for future consideration or appeal. d. "Settlement" refers to any voluntary agreement executed by OCWD or the Participating Producers and any Defendant in the Legal Action, whether resulting from a settlement conference, mediation, or court stipulation, terminating any Legal Action filed pursuant to this Agreement and finally determining the rights of parties to the Legal Action where no issue is left for future consideration or appeal. e. "Cash Recovery" means, without limitation, the total monetary amount received by OCWD or the Participating Producers in a Settlement or Final Judgment arising from an actual or threatened Legal Action by the Firms pursuant to this Agreement, including interest of any kind received by OCWD or the Participating Producers. Recovery" does not include any Sanctions (as defined below) or civil penalties that may be awarded under claims under the Unfair Competition Law Business and Professions Code section 17200 et seq. ("UCL"), or the False Advertising Law ("FAL"). f. "Non -Cash Recovery" means, without limitation, the fair market value of any property delivered to OCWD or Participating Producers, any services rendered for OCWD's or the Participating Producers' benefit, and any other non -cash benefit, including but not limited to the construction, operation, and maintenance of one or more water treatment facilities; delivery of replacement water; modification, alteration, construction or operation of well(s) and/or any part of a public or private water system; or any other types of injunctive and/or equitable relief conferred on OCWD and the Participating Producers by one or more Defendants, in a Settlement or Final Judgment with OCWD and Participating Producers approved by the Executive Committee, that directly results from an actual or threatened Legal Action by the Firms pursuant to this Agreement. g. "Present Value" means the interest rate of the one-year treasury bill as reported by the United States Federal Reserve in the weekly Federal Reserve Statistical Release closest in time to the date of the recovery for which the present value is being calculated. h. "Sanctions" means a monetary award or the settlement of a monetary award arising from the discovery abuse or other misconduct of a defendant or a defendant's attorneys in the Litigation, such a frivolous motions, objections or defenses, or other discovery abuses. i. "Reasonable Fees" or "Reasonable Attorne 's Fee" are defined in Section III(D)(1)(i). In the event that a court determines that this fee definition is unenforceable, reasonable fees will mean such fees as is reasonably determined by taking into account the amount of time spent on the Legal Action by the Firms and associate counsel retained by the Firms, the -7- value of that time, the complexity of the Legal Action, the benefit conferred on OCWD and the Participating Producers, and the financial risk to the Firms and associate counsel by their agreeing to represent OCWD and the Participating Producers in the Legal Action and to invest time and advance Costs without compensation or reimbursement in the event that there is no Gross Recovery or a Recovery that does not fully compensate or reimburse the Firms and associate counsel for their time and Costs. 3. Calculation of Non -Cash Recovery. a. For any Non -Cash Recovery resulting in the receipt of property, the provision of services, or the receipt of other non -monetary benefits by OCWD and/or the Participating Producers, such property, services, or other non -monetary benefits shall be deemed for purposes of this Agreement to have been received by OCWD and the Participating Producers upon the execution of a Settlement or Final Judgment in the Legal Action approved by the Executive Committee. The value of the services shall be discounted to Present Value. b. If any Non -Cash Recovery is awarded in a Final Judgment in the Legal Action, or before accepting any settlement offer that involves a Non -Cash Recovery in the Legal Action, OCWD and the Participating Producers shall provide the Firms with its estimate of the value of the Non -Cash Recovery. The Firms shall promptly respond in writing, indicating whether the firms accept said estimate. If the Firms object to OCWD's and the Participating Producers' estimate, the Parties shall proceed as set forth in Section III.G ("Disagreements Concerning Value of Recoveries"). Nothing herein shall impede or restrict OCWD's and the Participating Producers' right to include a Non -Cash Recovery in any Settlement, nor the Firms' right to receive a Non -Cash Recovery. E. DISTRIBUTION OF PROCEEDS. 1. The receipt of any Gross Recovery or portion thereof on behalf of OCWD and the Participating Producers shall be received into one of the Firms' IOLTA accounts. Once cleared, the Cash Recovery shall be distributed as follows in the following sequence: (i) the Contingent Fee shall be paid until the Firms are paid in full (understanding and agreeing that the Firms will not receive a separate payment for Costs which will be paid by and through the Contingency Fee), and (ii) any remaining amounts shall be distributed to OCWD and the Participating Producers based upon total percentage of recovery. Specifically, all funds obtained by the Firms as a result of the Legal Action will be proportionally distributed between the Participating Producers and OCWD.1 F. REASONABLE FEE IF CONTINGENT FEE UNENFORCEABLE. 1 OCWD and Producers agree that the Gross Recovery minus all Attorneys' Fees from a Settlement or Final Judgment attributable to Producers and OCWD participating in the Legal Action will be pooled and distributed to OCWD and Participating Producers on a pro rata basis, in proportion to their respective damages, such that each Participating Producer and OCWD recover the same percentage of their overall damages asserted in the Legal Action. -8- 1. Reasonable Fee. In the event of a Final Judgment finding that the Contingent Fee portion of this Agreement is unenforceable for any reason or that the Firms cannot represent OCWD and the Participating Producers on a Contingent Fee basis, OCWD and the Participating Producers shall, after a good faith meet and confer process, pay the Firms a reasonable fee for the services rendered. 2. Fee Determination. To the extent the contingency fee described above is found to be unenforceable, the Parties shall use best efforts to negotiate a reasonable fee. If the Parties fail to do so, said fee shall be determined by arbitration proceedings before a mutually agreeable arbitration service, but absent such agreement, before the Judicial Arbitration and Mediation Services (JAMS), with any costs of such proceedings born by OCWD the Participating Producers and the Firms. G. DISAGREEMENTS CONCERNING VALUE OF RECOVERIES. 1. Procedure. In the event the Parties disagree with respect to the value of any Contingent Fee, Gross Recovery, Cash or Non -Cash Recovery, (collectively, "Disputed Recoveries") or settlement offer, and the Parties cannot resolve the disagreement through good faith negotiations, the Parties shall proceed as follows: a. Each party shall select an appraiser qualified to conduct an appraisal of the value of the Disputed Recoveries or settlement offer within five (5) days of any written notice to the other parry advising of a bona fide dispute that cannot be resolved by negotiations. b. Each party's selected appraiser shall then confer and select a third qualified appraiser within five (5) days of said conference, and the third appraiser shall determine the value of the Disputed Recoveries or settlement offer. C. The third appraiser shall conduct an appraisal, and the valuation of any Disputed Recoveries or settlement offer shall be final and binding, subject to appeal by arbitration in the case of Disputed Recoveries as provided in Section VIX ("Arbitration of Disputes"). 2. Expenses. OCWD, the Participating Producers and the Firms shall each bear the expense of their own selected appraiser, and OCWD and the Firms shall each pay one- half of the expenses of the third appraiser. H. NEGOTIATED FEE. OCWD and Participating Producers are informed that the Attorneys' Fees provided for herein are not set by law but rather are negotiable between the Firms, the OCWD and the Participating Producers and their respective counsel. I. DIVISION OF ATTORNEYS' FEES. l . Division of Fees; Disclosure. The Firms may divide the fees to which it is entitled under this Agreement with another attorney or law firm retained as associate counsel. The terms of such additional division, if any, shall be disclosed to OCWD and the Participating Producers. OCWD and the Participating Producers are informed that, under the Rules of -9- Professional Conduct of the State Bar of California, such a division may be made only with OCWD's and the Participating Producers' written consent after a full disclosure to OCWD and the Participating Producers in writing that a division of fees shall be made and of the terms of such division. The division of fees among the Firms will be provided by a separate document to OCWD and the Participating Producers within 10 days of this fully executed Agreement. 2. Retention of Associate Counsel. The Firms may retain associate counsel to assist with litigating a Legal Action pursuant to this Agreement. The attorney or law firm selected by the Firms shall be subject to OCWD's and the Participating Producers' approval prior to such retention. J. COSTS. 1. Costs Paid by the Firms; Interest. The Firms shall pay all Costs incurred in connection with the Firms' representation of OCWD and the Participating Producers under this Agreement. Although Costs shall be paid by the Firms, the Parties understand that the Firms will be seeking recovery of all litigation Costs from Defendants under the OCWD Act or any other applicable authority, as part of any resolution of the case, including any settlements or verdicts, and that the Firms may argue to Defendants that an interest rate on such Costs may accrue from the date of Cost was incurred to the date of payment by Defendants. 2. Defense of Attorneys' Fees and Costs to Third Party. Notwithstanding any provision of this Agreement to the contrary, the Firms shall defend OCWD and the Participating Producers in any motion seeking an award of Attorneys' Fees or costs against OCWD and the Participating Producers in any Legal Action brought under this Agreement. Any costs incurred in such defense shall be treated as Costs for purposes of, and in the manner provided by, this Agreement. IV. REPRESENTATION OF ADVERSE INTERESTS A. DISCLOSURE. 1. Duty to Disclose; No Conflicts Identified. If any of the Firms have a relationship with another party with interests adverse to OCWD and the Participating Producers, or with someone who would be substantially affected by any action taken under this Agreement, the Rules of Professional Conduct require the Firms to disclose that to OCWD and the Participating Producers so OCWD and the Participating Producers can evaluate whether that relationship causes OCWD and the Participating Producers to have any concerns regarding any of the Firms' loyalty, objectivity, or ability to protect OCWD's and the Participating Producers' confidential information. The OCWD and the Participating Producers waive any conflict under Rule 1.7 of the California Rules of Professional Conduct for the joint representation of the OCWD and the Participating Producers under this Agreement. 2. Representation of Other Clients; Waiver of Potential Conflicts. i. OCWD and the Participating Producers understand that currently, and from time to time, the Firms represent individuals, other municipalities, governmental agencies, -10- governmental subdivisions, or investor -owned public water utilities in other actions or similar litigation, and that such work is the focus of the Firms' practice. Further, OCWD and the Participating Producers understand that the Firms represent other clients in actions similar to what would be brought under this Agreement and against the same potential defendants. OCWD and the Participating Producers understand that a recovery obtained on behalf of another client in a similar suit against the same defendants could, in theory, reduce the total pool of funds available from these same defendants to pay damages in a Legal Action brought under this Agreement. OCWD and the Participating Producers understand that the Firms would not take on this engagement if OCWD and the Participating Producers required the Firms to forgo representations like those described above. OCWD and the Participating Producers have conferred with their own separate and independent counsel about this matter, and has determined that it is in its own best interests to waive any and all potential or actual conflicts of interest that may occur as the result of the Firms' current and continuing representation of cities and other water suppliers in similar litigation, because such waiver enables OCWD and the Participating Producers to obtain the benefits of the Firms' experience and expertise. ii. OCWD and the Participating Producers consent that the Firms may continue to handle such work, and may take on similar new clients and matters outside of Orange County and the Santa Ana Watershed, without disclosing each such new matter to OCWD and the Participating Producers or seeking the consent of OCWD and the Participating Producers while representing them. With the exception of Golden State Water Company and any other entity that already retained the Firms to potentially initiate separate litigation in and outside of Orange County on its behalf, the Firms agree that they must receive advanced written permission from the Executive Committee prior to agreeing to represent other water and wastewater facilities in Orange County and the Santa Ana Watershed that are not parties to this Agreement. Such written permission shall not be unreasonably withheld, but may be withheld to the extent such additional representations are likely to reduce the future cost recovery of OCWD or the Participating Producers. The Firms shall not, of course, take on such other work if it requires the Firms to be directly adverse to OCWD and the Participating Producers while the Firms are still representing OCWD and the Participating Producers under this Agreement. V. TERMINATION A. DISCHARGE OF ATTORNEY. 1. Right to Discharge. OCWD and the Participating Producers may discharge the Firms at any time, with or without cause, by written notice effective when received by the Firms. OCWD and the Participating Producers shall have the right to terminate this Agreement with cause upon the Firms' breach of this Agreement or its failure to strictly adhere to the California Rules of Professional Conduct. Unless specifically agreed by the Firms and OCWD and the Participating Producers, the Firms shall provide no further services and incur no further Costs on OCWD's and the Participating Producers' behalf after receipt of the notice of discharge. If any or all of the Firms are OCWD's and the Participating Producers' attorney of record in any proceeding, OCWD and the Participating Producers shall execute and return a substitution -of -attorney form within a reasonable time after receipt from the Firms. -11- 2. Reimbursement of Costs; Fees. In the event the Firms are discharged without cause before the conclusion of a Legal Action, OCWD and the Participating Producers shall (i) reimburse the Firms for any and all Costs incurred by the Firms for such Legal Action not later than thirty (30) days from receipt of a reasonably detailed final cost accounting from the Firms, and (ii) upon the conclusion of the Legal Action, pay the Firms a Reasonable Attorneys' Fee for services performed up to the point of the discharge. If the Parties dispute the amount of Attorneys' Fees or Costs incurred, said dispute shall be resolved by arbitration proceedings before a mutually agreeable arbitration service, but absent such agreement, before the Judicial Arbitration and Mediation Services (JAMS), with any costs of such proceedings born equally by OCWD the Participating Producers and the Firms. Nothing herein shall be construed to limit OCWD and the Participating Producers' rights and remedies in the event of a discharge of the Firms for cause. 3. Notwithstanding the foregoing, a Participating Producer can decide at any time to discontinue participation in the Legal Action, forego pursuing PFAS-related claims through any counsel, and receive no compensation either in money or other thing of value, in which case the Participating Producer will owe no Attorney's Fees or Costs. Where the OCWD or Participating Producer pursues PFAS-related claims through other counsel and receives compensation either in the form of money or other thing of value, the Attorneys Fees and Costs will be determined as provided in the Legal Services Agreement. B. WITHDRAWAL OF ATTORNEY. 1. Right to Withdraw. The Firms may withdraw from representation of OCWD and and/or some or all of the Participating Producers (i) with OCWD's and the Participating Producers' consent, (ii) upon court approval, or (iii) if no Legal Action is filed, for good cause upon reasonable notice to OCWD and the Participating Producers. Good cause includes OCWD's or the Participating Producers' material breach of this Agreement, OCWD's or the Participating Producers unreasonable refusal to cooperate with the Firms or to follow the Firms' advice on a material matter after elevation of the matter through the Executive Committee process, or any other fact or circumstance that would render the Firms' continuing representation unlawful or unethical. Notwithstanding the Firms' withdrawal for good cause, OCWD and the Participating Producers shall remain obligated to pay the Firms and any associated counsel, out of the Gross Recovery if there is a recovery at the time of withdrawal, a Reasonable Fee for all services provided and to reimburse the Firms for all reasonable Costs advanced before the withdrawal. 2. Withdrawal Without Cause. The Firms may terminate this Agreement at any time, without cause , by giving OCWD and the Participating Producers not less than sixty (60) days prior written notice of termination,2 said notice to specify the effective date of the 2 Any withdrawal by the Firms, with or without cause, shall be subject to California Rules of Professional Conduct, Rule 3-700 which specifies that an attorney "shall not withdraw from employment until [he/she] has taken reasonable steps to avoid reasonably foreseeable prejudice to the rights of the client, including giving due notice to the client [and] allowing time for employment of new counsel...". -12- termination and provide for a reasonable transition of the case, without prejudice to OCWD and the Participating Producers, to qualified replacement counsel. Where the Firms terminate this Agreement without cause, the Firms shall not be entitled to the recovery of any amount, regardless of the status of any pending Legal Action, and regardless of whether any amounts have been or are subsequently received by OCWD and the Participating Producers. VI. COMMON INTEREST PROTECTION 1. The OCWD and Participating Producers have mutually concluded that they have interests in common and may assert common claims in connection with litigation against responsible parties, including chemical manufacturers of PFAS, in order to recover costs from parties responsible for placing PFAS into the stream of commerce and/or the environment where it could make its way into the Basin and Participating Producers' water production facilities. 2. The OCWD and Participating Producers also have concluded that their mutual interests will be best served by participating in common interest/joint prosecution meetings, sharing confidential, proprietary, work product or privileged documents, factual material, mental impressions, investigative information, memoranda, interview reports, expert's reports and other oral or written information, including certain confidences of the OCWD and the Participating Producers, hereinafter referred to as "Common Interest Materials." 3. Some or all of these Common Interest Materials may be privileged from disclosure to adverse or other parties as a result of the attorney -client privilege, the work -product privilege, and other applicable privileges, rights, or rules. The OCWD and Participating Producers have agreed to disclose and exchange certain Common Interest Materials between and among themselves in order to further their common interests. Such exchanges or disclosures would not have been made and will not be made but for the sake of securing, advancing or supplying legal representation and the OCWD and Participating Producers consider all such exchanges and disclosures of Common Interest Materials to be essential to the effective representation of their respective interests, and within the common interest and joint prosecution privileges recognized by California Law and California Rules of Court. 4. It was and is the mutual understanding of the OCWD and Producer that the exchanges and disclosures referred to in this section are not intended to diminish in any way the confidentiality of such Common Interest Materials, and any exchange of Common Interest Materials is not intended to and will not be deemed to constitute a waiver of any available privilege or right. All communications among the OCWD, the Participating Producers and their legal counsel relating to the furtherance of their common interest, or made in connection with the litigation that is the subject of this agreement, are confidential and no privilege shall be deemed to be waived with respect to, or as a result of, such communication(s). All meetings of the Steering Committee and Executive Committee, and materials and presentations shared during such meetings are presumed to be Common Interest Materials and are not to be disclosed outside of the Parties to this Agreement absent the consent of the Executive Committee and the party originating the material (if applicable). The OCWD and the Participating Producers have agreed that they will not disclose Common Interest Materials received from each other or obtained -13- through their joint efforts, or the contents thereof, to anyone except to legal counsel and the signatories to the joint legal services agreement, attorneys with the law firms, their employees or agents throughout the duration, and after conclusion, of litigation. VII. MISCELLANEOUS A. LIEN. OCWD and the Participating Producers hereby grant the Firms a lien, as may be allowed under California law, on any and all claims or causes of action that are the subject of the Firms' Contingent Fee and/or Costs incurred under this Agreement. The lien shall be against the case itself, and not against the OCWD or Participating Producers in their individual capacities. The Firms' lien shall be for sums owed to the Firms for any unpaid Contingent Fee and Costs at the conclusion of the Firms' services. The lien shall attach to any Gross Recovery OCWD and the Participating Producers may obtain. B. RELEASE OF OCWD'S AND PARTICIPATING PRODUCERS' PAPERS AND PROPERTY. Upon the conclusion of services under this Agreement, the Firms shall release promptly to OCWD on request all of OCWD's and the Participating Producers' papers and property. "OCWD's and the Participating Producers' papers and property" includes correspondence, deposition transcripts, exhibits, experts' reports, legal documents, physical evidence, and other items reasonably necessary to OCWD's and the Participating Producers' representation, regardless of whether OCWD and the Participating Producers have paid for said documents or property. C. INDEPENDENT CONTRACTOR. The relationship to OCWD and the Participating Producers of the Firms, and any associate counsel or paralegal provided through the Firms, in the performance of services hereunder, is that of independent contractor and not that of employee of OCWD and the Participating Producers, and no other wording of this Agreement shall stand in derogation. The fees and expenses paid to the Firms hereunder shall be deemed revenues or expense reimbursements of the Firms' offices practices and not remuneration for individual employment apart from the business of the individual Firm's law offices. D. DISCLAIMER OF GUARANTEE. Although the Firms may offer an opinion about possible results regarding the subject matter of this Agreement, the Firms cannot guarantee any particular result. OCWD and the Participating Producers acknowledge that none of the Firms have made promises about the outcome and that any opinion offered by the Firms in the future shall not constitute a guarantee. E. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the parties. No other agreement, statement, or promise made on or before the effective date of this Agreement shall be binding on the parties. F. SEVERABILITY IN EVENT OF PARTIAL INVALIDITY. If any provision of this Agreement is held in whole or in part to be unenforceable for any reason, the remainder of that provision and of the entire agreement shall be severable and remain in effect. -14- G. MODIFICATION BY SUBSEQUENT AGREEMENT. This Agreement may be modified by subsequent agreement of the parties only by an instrument in writing, approved and executed in the same manner as the initial Agreement. H. RECITALS; TITLES, SUBTITLES, HEADINGS. The recitals to this Agreement are part of this Agreement, but all titles, subtitles, or headings in this Agreement have been inserted for convenience and shall not be deemed to affect the meaning or construction of any of the terms or provisions of this Agreement. I. ARBITRATION OF DISPUTES. Notwithstanding any other provision of this Agreement, any disputes relating to the Firms' Contingent Fee and/or arising out of this Agreement may first be submitted to the State Bar's program for arbitration of fee disputes pursuant to Business and Professions Code section 6200 et seq. If a fee dispute arises, the Firms shall provide OCWD and the Participating Producers with information about the State Bar program. J. VENUE IN ACTION ON AGREEMENT. In any dispute relating to the Contingent Fee or other dispute arising out of this Agreement, the venue shall be Orange County, California. K. GOVERNING LAW. The terms and provisions of this Agreement and the performance of the parties hereunder shall be interpreted in accordance with, and governed by, the laws of the State of California. L. EFFECTIVE DATE OF AGREEMENT. The effective date of this Agreement shall be the date when last executed by all of the Parties. Once effective, this Agreement shall, however, apply to services provided by the Firms on this matter before its effective date. M. AUTHORITY OF PARTIES. Each of the signatories to this Agreement warrants that he or she has the authority to enter into and execute this Agreement and to bind the entity or entities on whose behalf each sign. N. EXECUTION. This Agreement may be executed by transmittal of electronic (.pdf) signature counterparts. -15- The foregoing is agreed to by: OCWD: APPROVED AS TO FORM: RUTAN & TUCKER, LLP By: — Je m�eis General Counsel. OCWD THE PARTICIPATING PRODUCERS: ORANGE COUNTY WATER DISTRICT Lalm Markus. General Manager Dated: . 2020 CITY OF ANAHEIM Dated: , 2020 SERRANO WATER DISTRICT Dated: .2020 FAST ORANGE COUNTY WATER DISTRICT By: Dated: .2020 CITY OF SANTA ANA ME -16- The foregoing is agreed to by: OCWD: APPROVED AS TO FORM RUTAN & TUCKER, LLP By-__ _ Jeremy Jungreis General Counsel, OCWD THE PARTICIPATING PRODUCERS: Dated: _ , 2020 Dated: '2020 Dated: __ m_ '2020 ORANGE COUNTY WATER DISTRICT By: _ Vicente Sarmiento, President By:_ Michael R. Markus, General Manager CITY OF ANAHEIM By: Robert Fabeia __ City Attorney SERRANO WATER DISTRICT M EAST ORANGE COUNTY WATER DISTRICT By: Dated: __ _, 2020 CITY OF SANTA ANA -16- The foregoing is agreed to by: OCWD: APPROVED AS TO FORM: RUTAN & TUCKER, LLP By: ORANGE COUNTY WATER DISTRICT By: Vicente Sarmiento, President Jeremy Jungreis By: General Counsel, OCWD Michael R. Markus, General Manager THE PARTICIPATING PRODUCERS: Dated: 4/Z , , 2020 CITY OF ANAHEIM Dated: 4/21/20 2020 APPROVED AS TO FORM: Varco & Rosenbaum Environmental Law Group By: S. Wayne Rosenbaum, Counsel for Serrano Water District Dated: .2020 By: APPROVED AS TO FORM: EAST ORANGE DISTRICT In �� Dated: , 2020 CITY OF SANTA ANA -16- CT WATER The foregoing is agreed to by: OCWD: APPROVED AS TO FORM RUTAN & TUCKER, LLP By: ORANGE COUNTY WATER DISTRICT By: Vicente Sarmiento, President Jeremy Jungreis By: General Counsel, OCWD Michael R. Markus, General Manager THE PARTICIPATING PRODUCERS: Dated: 2020 CITY OF ANAHEIM Dated: , 2020 SERRANO WATER DISTRICT Dated: IVA I ,. % 2020 IA EAST ORANGE COUNTY WATER DISTRICT By: L4e4jlw� Dated: , 2020 CITY OF SANTA ANA A -16- The foregoing is agreed to by: OCWD: APPROVED AS TO FORM: ORANGE COUNTY WATER DISTRICT RUTAN & TUCKER, LLP By: By: Vicente Sarmiento, President Jeremy Jungreis By General Counsel, OCWD Michael R. Markus, General Manager THE PARTICIPATING PRODUCERS: Dated: 2020 CITY OF ANAHEIM By: Dated: 2020 SERRANO WATER DISTRICT By: Dated: 2020 EAST ORANGE COUNTY WATER DISTRICT By: Dated: 12020 CITY OF SANTA ANA ATTE TTE N: By: �1 Approved as to Form Daisy Gomez, MMC Clerk of the Council -itv John M. Funk, Assistant City Attorney Dated: , 2020 YORBA LINDA WATER DISTRICT By: Dated: q ZZ , 2020 CITY LLE B} I ennt M Dated: , 2020 CITY OF GARDEN GROVE By: Dated: , 2020 IRVINE RANCH WATER DISTRICT By: Dated: , 2020 CITY OF ORANGE LIM Dated: , 2020 CITY OF TUSTIN Dated: , 2020 YORBA LINDA WATER DISTRICT Dated: , 2020 CITY OF FULLERTON Dated: 1 2020 CITY OF GARDEN GROVE A66roved as to fo m: f A /1 Dated: , 2020 IRVINE RANCH WATER DISTRICT Dated; , 2020 CITY OF ORANGE 0 Dated: , 2020 CITY OF TUSTIN IM -17- Dated: April 30 , 2020 YORBA LINDA WATER DISTRICT By: / (ct�C_crlC Marc Marcantonio, General Manager Dated: , 2020 CITY OF FULLERTON By: Dated: _ 2020 CITY OF GARDEN GROVE C Dated: I=1—`►� , 2020 IRVINE RANCH WATER DISTRICT Approved as to Form: • By: 11y'- 4PaulA.00k, General Manager Claire Collins, District Counsel Dated: , 2020 CITY OF ORANGE By: Dated: , 2020 CITY OF TUSTIN Um -17- Dated: , 2020 Dated: 2020 Dated: .2020 Dated: Dated: 2 2V 020 APARO ED AS TO FORM 81'1 llt4 MARY . BINNING Senior Assistant City Att rney Dated: , 20 2020 YORBA LINDA WATER DISTRICT CITY OF FULLERTON CITY OF GARDEN GROVE Im IRVINE RANCH WATER DISTRICT CITY OF ORA GE / By: 7�1 �a0so CITY OF TUSTIN �a Jcv�y Gl 0 m'1 -17- Dated: Dated: Dated: Dated: Dated: 2020 YORBA LINDA WATER DISTRICT By: 2020 __ , 2020 , 2020 2020 Dated: 'ZOIJLr- 17- , 2020 CITY OF FULLERTON By: CITY OF GARDEN GROVE By: IRVINE RANCH WATER DISTRICT By: CITY OF ORANGE By: CITY OF TUSTIN By: VV THE FIRMS: Dated: May 7 , 2020 KELLEY DRYE & WARREN, LLP By: L Willia . Jac son Dated: , 2020 TAFT STETTINIUS & HOLLISTER LLP By: Robert A. Bilott Dated: , 2020 DOUGLAS & LONDON By: Michael A. London Dated: 52020 LEVIN PAPANTONIO THOMAS MITCHELL RAFFERTY & PROCTOR, P.A. By: Mark J. Proctor Dated: , 2020 KENNEDY & MADONNA, LLP By: Kevin J. Madonna Dated: , 2020 SL ENVIRONMENTAL LAW GROUP PC By: Alexander Leff Dated: 2020 ROBINSON CALCAGNIE, INC. By: Daniel S. Robinson -18- THE FIRMS: Dated: Dated: Dated: Dated: Dated: Dated: Dated: 2020 KELLEY DRYE & WARREN, LLP By: William J. Jackson 2020 TA'FT STET;TINIUS & HO LIS ALL B,y: ROert A. Bilott 2020 DOUGLAS & LONDON By: Michael A. London 2020 2020 KENNEDY & MADONNA, LLP By: Kevin J. Madonna 2020 SL ENVIRONMENTAL LAW GROUP PC By: Alekander Leff 2020 ROBINSON CALCAGNIE,.INC. By: Daniel S. Robinson -18- THE FIRMS: Dated: , 2020 KELI..EY DRYE & WARREN, LLP By: William J. Jackson Dated: , 2020 TAFT STETTINIUS & HOLLISTER LLP By: Rnl%prt A Rilntt. Dated: l) Gr , 2020 DO By: Dated: , 2020 LEVIN PAPANTONIO THOMAS MITCHELL RAFFERTY & PROCTOR, P.A. By: Mark J. Proctor Dated: 2020 KENNEDY & MADONNA, LLP By: Kevin J. Madonna Dated: , 2020 SL ENVIRONMENTAL LAW GROUP PC By: Alexander Leff Dated: 2020 ROBINSON CALCAGNIE, INC. By: Daniel S. Robinson IH:11 THE FIRMS: Dated: Dated: Dated: Dated: 5/19/2020 Dated: Dated: Dated: 2020 KELLEY DRYE & WARREN, LLP By: William J. Jackson 2020 TAFT STETTINIUS & HOLLISTER LLP By: Robert A. Bilott 2020 DOUGLAS & LONDON By: Michael A. London 2020 LEVIN PAPANTONIO THOMAS MITCHELL RAFFERTY & PROCTOR, P.A. By: Mark J. Proctor 2020 KENNEDY & MADONNA, LLP By: Kevin J. Madonna 2020 SL ENVIRONMENTAL LAW GROUP PC By: Alexander Leff 2020 ROBINSON CALCAGNIE, INC. By: Daniel S. Robinson -18- THE FIRMS: Dated: , 2020 KELLEY DRYS & WARREN, LLP By: William J. Jackson Dated: _ , 2020 TAFT STETTINIUS & HOLLISTER LLP By: Robert A. Bilott Dated: , 2020 DOUGLAS & LONDON By: Michael A. London Dated: , 2020 LEVIN PAPANTONIO THOMAS MITCHELL RAFFERTY & PROCTOR, P.A. By: Mark J. Proctor Dated: , 2020 KENNED A, LLP By: evin rMadonna Dated: , 2020 SL ENVIRONMENTAL LAW GROUP PC By: Alexander Leff Dated: , 2020 ROBINSON CALCAGNIE, INC. By: Daniel S. Robinson -18- THE FIRMS: Dated: 2020 ]KELLEY DRYE & WARREN, LLP By: Dated: 2020 Dated: 2020 Dated: , 2020 Dated: 2020 Dated: .c. I -S, 2020 William J. Jackson TAFT STETTINIUS & HOLLISTER LLP By: Robert A. Bilott DOUGLAS & LONDON By: Michael A. London LEVIN PAPANTONIO THOMAS MITCHELL RAFFERTY & PROCTOR, P.A. By: Mark J. Proctor ]KENNEDY & MADONNA, LLP By: Kevin J. Madonna SL ENVI N G UP PC z� By: Alexander Wf Dated: 2020 ROBINSON CALCAGNIE, INC. By: Daniel S. Robinson -18- THE FIRMS: Dated: Dated: Dated: Dated: Dated: Dated: 2020 KELLEY DRYE & WARREN, LLP By: William J. Jackson 2020 TAFT STETTINIUS & HOLLISTER LLP By: Robert A. Bilott 2020 DOUGLAS & LONDON By: Michael A. London 2020 LEVIN PAPANTONIO THOMAS MITCHELL RAFFERTY & PROCTOR, P.A. By: Mark J. Proctor 2020 KENNEDY & MADONNA, LLP By: Kevin J. Madonna 2020 SL ENVIRONMENTAL LAW GROUP PC By: Alexander Leff Dated: May s 2020 ROBINSON CAL�CAG�NIE, INC. By: ----- Daniel S. Robinson -18- Exhibit A Steering Committee Composition: Producers that agree to participate in litigation with OCWD ("Participating Producers") shall form a Steering Committee with OCWD. OCWD and each Participating Producer will be a "Member" of the Steering Committee, and each Member may have multiple representatives on the Steering Committee, but each Member will have only one vote. OCWD will have no more than three representatives, and each Participating Producer will have no more than two representatives. Quorum: One OCWD representative and a majority of Participating Producers of the Steering Committee (without regard to number of representatives) shall constitute a quorum. Meetings: The Steering Committee will meet every six (6) weeks, or more or less often as determined by majority vote of the Steering Committee, to discuss the litigation with at least one representative of the Firms. Responsibilities: The Steering Committee will direct the Firms via an Executive Committee. The Steering Committee will closely coordinate with, and provide input to, the Executive Committee regarding litigation strategy and settlement. Executive Committee Composition: The Executive Committee will be comprised of three Participating Producer Members, and three OCWD representatives, which will include OCWD's General Counsel (or his/her designee). Each of the Participating Producer Members may have up to two representatives on the Executive Committee, but each Member will have only one vote; and each of the OCWD representatives will have one vote on the Executive Committee. Participating Producer Members: The three Participating Producer Members will consist of Yorba Linda Water District, the City of Anaheim, and one open seat. The open seat on the Executive Committee shall be filled by a majority vote of the Participating Producer Members on the Steering Committee at its first meeting. At any duly noticed Steering Committee meeting, any Participating Producer Member on the Executive Committee may be removed and replaced by another Participating Producer Member by a two-thirds vote of all the Participating Producer Members on the Steering Committee. Quorum: Two OCWD representatives and two Participating Producer Members of the Executive Committee (without regard to number of representatives) shall constitute a quorum. Meetings: The Executive Committee will meet every six (6) weeks, or more or less often as determined by vote of the Executive Committee, and at least one representative of the Firms shall attend those meetings. -19- Responsibilities: The Executive Committee shall be responsible for coordinating and working with the Firms to: (a) evaluate, address, and decide issues related to the HAS litigation, including litigation strategy; (b) address issues raised or information needed by the Firms; and (c) participate in settlement negotiations and discussions. The Executive Committee will closely coordinate with, and seek input from, the Steering Committee in determining litigation strategy and recommending settlement. The Chairperson shall promptly communicate to all Members of the Steering Committee any decisions, directions, or recommendations made during an Executive Committee meeting. At Executive Committee meetings, the Firms may recommend a particular course of action be taken in the litigation. If any Executive Committee Member requests a vote on any recommended course of action, each of the Executive Committee Members then present will vote on the course of action. A majority vote by the Executive Committee disapproving the course of action will reject any proposed course of action. If any such vote of the Executive Committee results in a tie, then the members will immediately revote and if a tie is confirmed, then the Firms shall be permitted to engage in their recommended course of action. The Executive Committee shall have final decision authority regarding litigation strategy and whether to recommend settlement on behalf of OCWD and the Participating Producers. The decision whether to recommend settlement shall require both a majority vote of the Steering Committee and a super -majority vote (five votes) of the Executive Committee. Each Participating Producer will only be bound to a settlement if that settlement is approved by its governing body. Both Steering and Executive Committees At the first meeting of both the Steering Committee and Executive Committee, a Chairperson shall be elected. Both the Executive Committee and Steering Committee may meet in person or telephonically with fifteen days' notice of such meetings provided by the Chairperson, OCWD, or Firms, unless the Chair of the Committee deems an exigent circumstance exists, in which case notice shall be provided as soon as possible after the decision to call a meeting is made. Notice of all Executive Committee meetings will be provided to all Members of the Steering Committee. Except for a vote either to recommend settlement or remove and replace a Participating Producer Member from the Executive Committee, all votes in both Committees shall be by a majority of those present. Meetings of the Steering Committee and Executive Committee are both intended as forums for the discussion of common interest attorney work -product and attorney -client privileged information, and therefore will be limited in attendance to the Committees' Members and their designated representatives. Any Steering Committee members who provide notice to Firms of an intent to attend the Executive Committee meetings may also attend, provided they will not participate in the meeting. -20- EXHIBIT 2 ADDENDUM NO. 1 TO LEGAL SERVICES AGREEMENT This Addendum No. 1 ("Addendum') is attached to and made a part of the Legal Services Agreement ("LSA") between and among the Firms, OCWD, and the Participating Producers, as such entities are defined in the LSA. RECITALS A. In April and May 2020, the Parties entered into the LSA negotiated between the Law Firms ("Firms") and OCWD and Participating Producers (collectively, "Clients") in connection with the subject matter of the LSA (hereinafter referred to as the "Engagement"). B. Under subparagraph 1., Paragraph A., Section IV., of the LSA, the Clients waived any conflict under Rule 1.7 of the California Rules of Professional Conduct for the Firms' joint representation of the Clients. C. The Parties desire to strengthen that conflict waiver by (1) expressly consenting to this joint representation despite the potential for a future actual conflict of interest, (2) expressly consenting to the sharing of Common Interest Materials; and (3) waiving any actual conflicts of interest which might arise in connection with the Firms' representation of the Clients in connection with the Engagement for Clients. D. Pursuant to Section VII.G. of the LSA, all modifications to the LSA must be in writing and signed by the Parties. E. Capitalized terms used in this Addendum, without being separately defined herein, shall have the same meaning as defined in the LSA. AGREEMENT NOW, THEREFORE, in consideration of the mutual promises, covenants, and terms and conditions herein, the Parties agree: A. The following paragraphs are hereby added to the LSA as a new Paragraph B. under Section IV: B. ADDITIONAL CONFLICT WAIVER AND CONSENT 1. Under the rules governing the professional conduct of attorneys in California, the Firms may not represent conflicting interests without the informed and written consent of the Clients. Based upon the information which has been supplied to date, neither the Firms, OCWD, nor the Participating Producers are aware of any actual conflicts of interest created by the Firms' joint representation of Clients in connection with the Engagement. 2. However, the Firms' joint representation of the Clients creates the potential for a future actual conflict of interest. This could happen, for example, if one of the Participating Producers decides to terminate its relationship with the Firms and hire new counsel, or if Clients were to provide inconsistent testimony. Any of these developments would create an actual conflict of interest because the duty of undivided loyalty owed equally to each of the Clients by each of the Firms' lawyers prevents the Firms from taking any action that is adverse to the directions or interests of any of the Clients. 3. Accordingly, in light of the actual conflicts of interest which might arise in connection with the Firms' representation of the Clients in connection with the Engagement, the Clients agree and consent to each of the following terms and conditions: (a) If for any reason any Client believes that it needs any legal advice about rights against or obligations to any of the other Clients, the Firms could not provide that advice because they cannot favor one joint Client over another. That advice would have to be provided by a Client's internal lawyers or by a different law firm; (b) Each Client hereby consents to this joint representation despite the potential for a future actual conflict of interest; (c) If at any time, any Client has a concern about the appropriateness of continued joint representation by the Firms or the existence of a potential or actual conflict, it shall immediately inform the Firms so that the Firms and the Clients can reevaluate whether to continue this joint representation. If the Firms become aware of any such circumstances, the Firms will likewise inform the Clients. If the Firms' representation of any Client terminates for any reason, the Firms will be permitted to continue to represent the remaining Clients under the LSA to the same extent as would have been proper if the Firms had not previously represented the terminating Client. Each Client hereby agrees not to assert that any such continuing representation of the remaining Clients creates a conflict of interest, and hereby waives any right it otherwise might have to seek to disqualify the Firms from continuing to represent the remaining Clients or otherwise bring any legal action against the continued representation. This paragraph applies to the Firms' representation of the remaining Clients and also of any person or organization that is affiliated with any of them in any way, to all representations in which information learned in the course of representing the former Client might be material, and to all representations that arise from or are related to this matter in any other way. Each Client is urged to utilize independent counsel of its own selection at any time, and each Client may terminate the Firms' representation of it at any time, as provided in the LSA; and (d) Any Common Interest Materials or information which the Firms have acquired, or hereafter acquire, in the course of rendering legal services in connection with the Engagement may be disclosed to each of the Clients, irrespective of the source of the materials or information and regardless of whether such materials or information is deemed "privileged" or "confidential" by one or more of the Clients. In other words, any communication between the Firms and one or more of the Clients relating to the subject matter of the Legal Action, the LSA, or the PFAS Treatment Facilities and Program Agreement ("TPA") may be disclosed to the other Clients. Such disclosure shall not constitute a basis for any legal action, including, but not limited to, any motion to disqualify the Firms from representing any of the Clients in the Legal Action or in any other future actions, disputes, proceedings, or arbitrations relating to the subject matter of the LSA or the TPA. 13. All other provisions of the LSA remain unchanged and in full force and effect. C. All references to "LSA" in the newly added language above are deemed to also refer to this Addendum and any subsequent addendums. D. If there is any inconsistency or conflict of any kind between the provisions of this Addendum and the other terms of the LSA, the provisions of this Addendum will control. E. This Addendum may be executed by transmittal of electronic (.pdf) signature counterparts. IN WITNESS WHEREOF, the Parties have executed this Addendum on the respective dates set forth below, and this Addendum shall become effective on the date when last executed and delivered by all of the Parties. The foregoing is agreed to by: OCWD: APPROVED AS TO FORM: RUTAN & TUCKER, LLP B. ngreis General Counsel, OCWD THE PARTICIPATING PRODUCERS: Dated: 2020 Dated: July 1, 2020 , 2020 ORANGE COUNTY WATER DISTRICT , Ueneral Manager CITY OF ANAHEIM Robert Fabela, City Attorney SERRANO WATER DISTRICT By: S. Wayne Rosenbaum, Counsel for Serrano Water District Dated: , 2020 EAST ORANGE COUNTY WATER DISTRICT IN C. All references to "LSA" in the newly added language above are deemed to also refer to this Addendum and any subsequent addendums. D. if there is any inconsistency or conflict of any kind between the provisions of this Addendum and the other terms of the LSA, the provisions of this Addendum will control. E. This Addendum may be executed by transmittal of electronic (.pdf) signature counterparts. IN WITNESS WHEREOF, the Parties have executed this Addendum on the respective dates set forth below, and this Addendum shall become effective on the date when last executed and delivered by all of the Parties. The foregoing is agreed to by: OCWD: APPROVED AS TO FORM RUTAN & TUCKER, LLP Jeremy Jungreis General Counsel, OCWD THE PARTICIPATING PRODUCERS: Dated: 7 Z 2-d , 2020 Dated: July_ 1. 2020 , 2020 ORANGE COUNTY WATER DISTRICT L-In Vicente Sarmiento, President Michael R. Markus, General Manager CITY OF ANAHEIM By: Robert Fabela, City Attorney SERRANO WATER DISTRICT LIM S. Wayne Rosenbaum, Counsel for Serrano Water District Dated: , 2020 EAST ORANGE COUNTY WATER DISTRICT C. All references to "LSA" in the newly added language above are deemed to also refer to this Addendum and any subsequent addendums. D. If there is any inconsistency or conflict of any kind between the provisions of this Addendum and the other terms of the LSA, the provisions of this Addendum will control. E. This Addendum may be executed by transmittal of electronic (.pdf) signature counterparts. IN WITNESS WHEREOF, the Parties have executed this Addendum on the respective dates set forth below, and this Addendum shall become effective on the date when last executed and delivered by all of the Parties. The foregoing is agreed to by: OCWD: APPROVED AS TO FORM RUTAN & TUCKER, LLP Jeremy Jungreis General Counsel, OCWD THE PARTICIPATING PRODUCERS: Dated: 2020 Dated: July 1, 2020 , 2020 ORANGE COUNTY WATER DISTRICT M. Vicente Sarmiento, President Michael R. Markus, General Manager CITY OF ANAHEIM LIN Robert Fabela, City Attorney SERRANO WATER DISTRICT By: S. Wayne Rosenbaum, Counsel for Serrano Water District Dated: August 25 2020 EAST ORANGE COUNTY WATER DISTRICT By: ` 'sa Ohl nd, General Manager Dated: August 24 Dated: Dated: Dated: Dated: Dated: 2020 CITY OF SANTA ANA By: K istine Ridge, City Manager 2020 YORBA LINDA WATER DISTRICT By: Brett R. Barbre, General Manager 2020 CITY OF FULLERTON By: 2020 2020 2020 CITY OF GARDEN GROVE By: IRVINE RANCH WATER DISTRICT By: CITY OF ORANGE By: Dated: , 2020 CITY OF TUSTIN By: Dated: , 2020 CITY OF SANTA ANA By: Dated: July 20 52020 Dated: Dated: Dated: Dated: 2020 YORBA LINDA WATER DISTRICT By: Brett R. Barbre, General Manager CITY OF FULLERTON By: 2020 CITY OF GARDEN GROVE By: 2020 2020 IRVINE RANCH WATER DISTRICT CITY OF ORANGE Dated: 52020 CITY OF TUSTIN By: Dated: 72020 Dated: , 2020 Dated: IS / 1 , 2020 Dated: , 2020 Dated: .2020 Dated: .2020 CITY OF SANTA ANA By: -. YORBA LINDA WATER DISTRICT By: Brett R. Barbre, General Manager CITY -ULL ON y: / CITY OF GARDEN GROVE By: — --- -. IRVINE RANCH WATER DISTRICT CITY OF ORANGE Dated: , 2020 CITY OF TUSTIN Dated: Dated: Dated: 2020 CITY OF SANTA ANA By: 2020 YORBA LINDA WATER DISTRICT By: 2020 Dated: August 7, 2020 proved as t orm: A m oval, ity Attorney Dated: Dated: 2020 2020 Brett R. Barbre, General Manager CITY OF FULLERTON By: CITY OF GARDEN GROVE By: Scott C. Stiles, City Manager IRVINE RANCH WATER DISTRICT By: CITY OF ORANGE By: Dated: , 2020 CITY OF TUSTIN By: Dated: . 2020 CITY OF SANTA ANA Dated: .2020 YORBA LINDA WATER DISTRICT By: Brett R. Barbre, General Manager Dated: 2020 CITY OF FULLERTON By: Dated: 2020 CITY OF GARDEN GROVE By: Dated: {y T!!y .2020 IRVINE RANCH WATER DISTRICT Approved as to Form: / • �• By' -• By. Paul A. (Ook, General Manager Claire Collins, District Counsel Dated: , 2020 CITY OF ORANGE By: Dated: 2020 CITY OF TUSTIN IN Dated: 12020 CITY OF SANTA ANA By: Dated: , 2020 YORBA LINDA WATER DISTRICT By: Brett R. Barbre, General Manager Dated: 52020 CITY OF FULLERTON By: Dated: 92020 CITY OF GARDEN GROVE By: Dated: , 2020 IRVINE RANCH WATER DISTRICT By: Dated: -S as , 2020 Dated: , 2020 CITY OF ORANGE CITY OF TUSTIN By: Dated: Dated: Dated: Dated: Dated: Dated: 2020 2020 2020 CITY OF SANTA ANA By: YORBA LINDA WATER DISTRICT By: Brett R. Barbre, General Manager CITY OF FULLERTON By: 2020 CITY OF GARDEN GROVE By: 2020 2020 Dated: July 31 52020 IRVINE RANCH WATER DISTRICT CITY OF ORANGE IC CITY OF TUSTIN By: 904ieQA)� David Kendig City Attorney THE FIRMS: Dated: August 28 . 2020 KELLEY DRYE & WA N, LLP 1� By: //( L-1 Willia ckso Dated: , 2020 TAFT STETTINIUS & HOLLISTER LLP By: Robert A. Bilott Dated: , 2020 DOUGLAS & LONDON By: _ Michael A. London Dated: , 2020 LEVIN PAPANTONIO THOMAS MITCHELL RAFFERTY & PROCTOR, P.A. By:_ Mark J. Proctor Dated: , 2020 KENNEDY & MADONNA, LLP By: Kevin J. Madonna Dated: , 2020 SL ENVIRONMENTAL LAW GROUP PC By: Alexander Leff Dated: August 26 12020 ROBINSON CALCAGNIE, INC. Daniel S. Robinson THE FIRMS: Dated: .. 2020 Dated: 2020 Dated: , 2020 Dated: p 2020 Dated: _ __.. _.. .) 202C Dated: 2020 Dated; August 26 -- 2020 KELLEY DRYE & WARREN, LLP By: William J. Jackson T FT STLTTINI & HO I LLP By: 7 _ R ert A. Bilott DOUGLAS & LONDON By: Michael A. London LEVIN PAPANTONIO THOMAS MITCHELL RAFFERTY & PROCTOR, P.A. By Mark J. Proctor KENNEDY & MADONNA, LLP By:___-__-_________ Kevin J. Madonna SL ENVIRONMENTAL LAW GROUP PC By: Alexander Leff ROBINSON, CALCAGNIE, INC. By: Daniel S.LRobinson THE FIRMS: Dated: , 2020 KELLEY DRYE & WARREN, LLP By: William J. Jackson Dated: 12020 TAFT STETTINIUS & HOLLISTER LLP By: Robert A. Bilott Dated: �^5jk '2020 DOUGLAS & LOND By: Michael A. ondon Dated: , 2020 LEVIN PAPANTONIO THOMAS MITCHELL RAFFERTY & PROCTOR, P.A. By: Mark J. Proctor Dated: , 2020 KENNEDY & MADONNA, LLP By: Kevin J. Madonna Dated: , 2020 SL ENVIRONMENTAL LAW GROUP PC By: Alexander Leff Dated.. August 26 22020 ROBIN By: Daniel S. Robinson THE FIRMS: Dated: .2020 ]KELLEY DRYE & WARREN, LLP By: William J. Jackson Dated: , 2020 TAFT STETTINIUS & HOLLISTER LLP By: Robert A. Bilott Dated: , 2020 DOUGLAS & LONDON By: Michael A. London Dated: , 2020 LEVIN PAPANTONIO THOMAS MITCHELL RAFFERTY & PROCTOR, P.A. n Ie`" d Digitally signed by Ned BY' Iy _ McWilliams M�fl1tm S 05'00?020.08.28 09:15:03 Dated: — , 2020 ]KENNEDY & MADONNA, LLP By: -- Kevin J. Madonna Dated: , 2020 SL ENVIRONMENTAL LAW GROUP PC By: Alexander Leff Dated: August 26 , 2020 ROBINSON,,CALCAGNIE, INC. By: Daniel S. Robinson THE FIRMS: Dated: Dated: 2020 KELLEY DRYS & WARREN, LLP By: -- - William J. Jackson 2020 TAFT STETTINIUS & HOLLISTER LLP By: — - Robert A. Bilott Dated: _ -- 2020 Dated: Dated: 4g��-2 DOUGLAS & LONDON Michael A. London 2020 LEVIN PAPANTONIO THOMAS MITCHELL RAFFERTY & PROCTOR, P.A. By Mark J. Proctor , 2020 Dated: , 2020 IKENNEDY By evin J. Madonna SL EXander ENTA W GR PC By: r e August 26 � Dated: 22020 ROBINSON CALCAGNIE, INC. By Daniel S. Robinson EXHIBIT 3 COMMON INTEREST AGREEMENT This Common Interest Agreement ("Agreement") is made by and among the "Participating Producers" (City of Anaheim; East Orange County Water District; City of Fullerton; City of Garden Grove; Irvine Ranch Water District; City of Orange; City of Santa Ana; Serrano Water District; City of Tustin; and the Yorba Linda Water District), the Orange County Water District ("OCWD"); the City of Corona, California ("Corona"); and the "Firms" representing these entities in certain per- and polyfluoroalkyl substances ("PFAS") litigation: SL Environmental Law Group PC; Kennedy & Madonna; LLP, Taft, Stettinius & Hollister, LLP; Douglas & London, P.C.; Levin, Papantonio, Thomas, Mitchell, Rafferty, & Proctor, P.A.; Kelley, Drye & Warren, LLP; and Robinson Calcagnie, Inc. OCWD, the Participating Producers, and Corona, are each referred to as a "Client" and collectively referred to as the "Clients." The Clients and Firms are each referred to as a Party and collectively referred to as the Parties. Concurrent with this Agreement, the Parties entered into a Conflict Consent agreement that is incorporated herein by this reference. A. COMMON INTEREST PROTECTION 1. The Clients have mutually concluded that they have interests in common and may assert similar claims in connection with litigation against responsible parties, including chemical manufacturers of PFAS, in order to recover costs from parties responsible for placing PFAS into the stream of commerce and/or the environment where it could make its way into (i) the Santa Ana Watershed ("Watershed"), which includes the Orange County Groundwater Basin for which OCWD has the power and responsibility to manage and protect pursuant to the Orange County Water District Act, and (ii) Participating Producers' and Corona's water production facilities ("Facilities"). 2. The Clients also have concluded that their mutual interests will be best served by participating in common interest/joint prosecution meetings, conferences, and communications in which to share confidential, proprietary, work product or privileged documents, factual material, mental impressions, investigative information, memoranda, interview reports, expert reports and other oral or written information made in connection with the litigation' that is the subject of this Agreement, including certain confidences of the Clients (hereinafter referred to as "Common Interest Materials." For purposes of this Agreement, "Common Interest Materials" shall mean and refer to any Confidential Information relating to the Common Interests that is transmitted, shared, disclosed, or otherwise communicated among the Parties and/or their respective attorneys of record herein. "Confidential Information" shall mean and refer to any data, recordings, oral or written communications, handwritten, printed, or electronic documents, and any other materials or information in whatever form, that are privileged or protected from discovery or disclosure under the attorney -client privilege, the attorney work product doctrine, the common interest doctrine, the deliberative process privilege, or any other statutory or This litigation refers to the December 1, 2020 Complaint filed on behalf of OCWD and the Participating Producers captioned Orange County Water District et al. v. 3M Company, et al., No. 30-2020-01172419-CU-PL-CXC and an anticipated similar action to be filed on behalf of Corona, together referred to as PFAS related litigation. 1 Error! Unknown document property name. common law privilege or protection. "Common Interests" shall mean and refer to the Parties' common interests recited herein and in paragraph 1 above. Some or all of these Common Interest Materials may be privileged from disclosure to adverse or other parties as a result of the attorney -client privilege, the work -product privilege, and other applicable privileges, rights, or rules. The Clients have agreed to disclose and exchange certain Common Interest Materials between and/or among themselves in order to further their Common Interests. Such exchanges or disclosures would not have been made and will not be made but for the sake of securing, advancing, or supplying legal representation by the Firms. Clients consider all such exchanges and disclosures of Common Interest Materials to be essential to the effective representation of their respective interests, and within the common interest and joint prosecution privileges recognized by California Law and California Rules of Court. 4. It was and is the mutual understanding of the Clients that the exchanges and disclosures referred to in this section are not intended to diminish in any way the confidentiality of such Common Interest Materials, and any exchange of Common Interest Materials is not intended to and will not be deemed to constitute a waiver of any available privilege or right. No privilege attached to the Common Interest Materials shall be deemed to be waived, and the Parties intend for all communications made in furtherance of any Party's PAS related litigation to be Common Interest Material. 5. All meetings of Clients at which any employee, agent, member, or representative of any Client are present along with a Clients' General or City Counsel and/or counsel from any of the Firms are presumed to be Common Interest Materials and are not to be disclosed outside of the Parties absent consent of the Clients and the Party originating the material (if applicable). All Common Interest Materials shall be used solely in connection with the Parties' attempts to: (a) treat or remediate PFAS and other contamination in the Watershed or the Facilities, and (b) identify responsible third parties and prosecute legal actions or otherwise seek cost recovery from responsible third parties for the treatment or remediation of PFAS and other contamination in the Watershed or the Facilities. The Parties' use of Common Interest Materials shall be limited to confidential use by the Parties and their employees, consultants, and counsel, and shall not include the right to disclose the Common Interest Materials to third parties or to introduce, seek to admit into evidence, refer to, or otherwise disclose the Common Interest Materials in any trial, arbitration, mediation, or other judicial, administrative, or other proceedings for any reason, without first obtaining the consent of the Party who first communicated or generated the Common Interest Materials. In addition, except as stated in this Agreement, no Party, and no Party's counsel, shall disclose any Common Interest Materials generated by or received from the other Party to anyone who is not a Party to this Agreement, without obtaining the written consent of the Party who first communicated or generated the Common Interest Materials at issue. Any person who is not a Party to this Agreement receiving any Common Interest Materials pursuant to such written consent shall be advised beforehand that the Common Interest Materials are privileged and subject to the terms of this Agreement. Nothing in this Agreement shall limit the right of any Party or any Parry's counsel to disclose any documents or information that has been lawfully obtained or generated by that Party independently of this Agreement. 2 Error! Unknown document property name. 6. The Parties have agreed that absent a court order, they will not disclose Common Interest Materials received from each other or obtained through their joint efforts, or the contents thereof, to anyone except to legal counsel and the signatories to the respective legal services agreements, attorneys with the Firms, or their employees or agents throughout the duration, and after conclusion, of litigation. If any person or entity requests or demands Common Interest Materials through discovery requests, subpoena, Public Records Act requests, or otherwise, the recipient of such a request or demand shall immediately notify the other Party to this Agreement of the request or demand, if the request or demand seeks Common Interest Materials generated or transmitted by that other Party to this Agreement. Before making any disclosure of Common Interest Materials in response to such a request or demand, the Party receiving the request or demand shall immediately advise the Party who generated the aforementioned Common Interest Materials and shall cooperate with the other Party's attempts to preserve its privileges and protections. The Parties' duties under this paragraph with regard to Common Interest Materials received while this Agreement is in effect shall survive the termination of this Agreement or the withdrawal of any Party. Any breach of the provisions of this Agreement will cause irreparable harm to the non - breaching party. Therefore, the Parties agree that specific performance and injunctive relief shall be available to enforce the terms of this Agreement and shall be the sole remedy for its breach. No breach shall entitle any Party to any claim for damages, sanctions, or any other form of monetary award, except that reasonable attorney's fees shall be awarded to the prevailing party in any dispute under this Section of this Agreement. 9. Neither the act of entering into this Agreement, nor any action taken under this Agreement, including the exchange of any Common Interest Materials, nor any breach of this Agreement, may be used as the basis for seeking to disqualify any Party's counsel. Nothing in this Agreement shall be deemed to create any duty of cooperation or other legal rights or duties, except as expressly stated herein. This Agreement does not create any agency or partnership relationship. 10. The supplying of Common Interest Materials shall not be considered to provide any license or proprietary rights, including any implied patent license or intellectual property rights in the property of another or any legal rights now or hereinafter held by virtue of this Agreement. 11. The Parties acknowledge that, except as may be set forth in a definitive, written agreement, no Party nor any of its directors, officers, employees, affiliates, advisors, or elected or appointed officials shall have been deemed to make, or shall be responsible for, any representations or warranties, express or implied, with respect to the accuracy or completeness of the Common Interest Materials supplied under this Agreement. Further, it is acknowledged hereby by the Parties that only those representations and warranties made by the Parties in a definitive, written agreement shall have any force or effect. Error! Unknown document property name. 12. In no event shall any Party be liable to another for consequential, special, indirect, incidental, punitive or exemplary loss, damage or expense relating to this Agreement. 13. The Parties shall protect the disclosed Common Interest Materials by using the same degree of care, but no less than a reasonable degree of care, to prevent the unauthorized use, disclosure, dissemination, or publication of the Common Interest Materials as a Party uses to protect its own Confidential Information. B. SETTLEMENT NOTICE In the event that a settlement offer is received that proposes to resolve one or more of the claims or potential claims of any Party or Parties with respect to PFAS contamination, the Firms shall promptly disclose to all Parties the fact of the proposed settlement. C. SIGNATURE This Common Interest Agreement may be executed by transmittal of electronic (.pdf) signature counterparts. D. MODIFICATIONS All modifications to this Agreement must be in writing and signed by the Parties. Error! Unknown document property name. DocuSign Envelope ID: 21DBC539-3BDF-463B-B1E6-B1FD11171FCA Dated: 3/31/2021 3/31/2021 Dated: OCWD: APPROVED AS TO FORM CONNOR, FLETCHER & HEDENKAMP, LLP Ed Connor Oversight Counsel, OCWD Error! Unknown document property name. CITY OF CORONA f)ocuSigned by: Jacob Ellis, City Manager Approved as to form: s DocuSlgned by: BSB4PBP6D4BE... Dean Derleth, City Attorney ORANGE COUNTY WATER DISTRICT IC Stephen Sheldon, President Michael R. Markus, General Manager CITY OF CORONA Dated: OCWD: APPROVED AS TO FORM: CONNOR, FLETCHER & HEDENKAMP, LLP By: Connor versight Counsel, OCWD Errorl Unknown document property name. ORANGE COUNTY WATER DISTRICT By: 1\ Stephen Sheldon, Pr id nt By: chae Markus, General Manager THE PARTICIPATING PRODUCERS: Dated: 3 .2 Dated: CITY OF ANAHEIM By: % Robert Fabela, City Attorney SERRANO WATER DISTRICT By: S. Wayne Rosenbaum, Counsel for Serrano Water District Dated: EAST ORANGE COUNTY WATER DISTRICT By: David Youngblood, General Manager Dated: CITY OF SANTA ANNA By: Kristine Ridge, City Manager Dated: YORBA LINDA WATER DISTRICT By: Brett R. Barbre, General Manager Dated: CITY OF FULLERTON By: Meg McWade, Director of Public Works Errorl Unknown document property name. THE PARTICIPATING PRODUCERS: Dated: Dated: January 21 2021 Dated: Dated: Dated: Dated: Error! Unknown document property name. CITY OF ANAHEIM By: Robert Fabela, City Attorney SERRANO WATER DISTRICT By: S. Wayne Rosenbaum, Counsel for Serrano Water District EAST ORANGE COUNTY WATER DISTRICT By: David Youngblood, General Manager CITY OF SANTA ANNA By: Kristine Ridge, City Manager YORBA LINDA WATER DISTRICT By: Brett R. Barbre, General Manager CITY OF FULLERTON By: Meg McWade, Director of Public Works THE PARTICIPATING PRODUCERS: Dated: CITY OF ANAHEIM By: Dated: Dated: Dated: Dated: Dated: Error! Unknown document property name. Robert Fabela, City Attorney SERRANO WATER DISTRICT By: �. Wayne Kosenbaum, Counsel for Serrano Water District EAST OR GE COUNTY W R DISTRICT �— vid Youn d, eneral Manager LOB CITY OF SANTA ANNA By: Kristine Ridge, City Manager YORBA LINDA WATER DISTRICT By: Brett R. Barbre, General Manager CITY OF FULLERTON By: Meg McWade, Director of Public Works 6 A-2020-120-02 THE PARTICIPATING PRODUCERS: Dated: Dated: Dated: 10-12-21 Dated: AMOM AS M FORM A.-y��---1 Mft City Anarney Dated: Dated: Errorl Unknown document property name, CITY OF ANAHEIM By: Robert Fabela, City Attorney SERRANO WATER DISTRICT By: S. Wayne Rosenbaum, Counsel for Serrano Water District EAST ORANGE COUNTY WATER DISTRICT By: David Youngblood, General Manager CITY OF SA&TA ANNA By: Kristine Ridge, City Manager YORBA LINDA WATER DISTRICT By: Brett R. Barbre, General Manager CITY OF FULLERTON By: Meg McWade, Director of Public Works THE PARTICIPATING PRODUCERS: Dated: Dated: Dated: Dated: Dated: ^�j jo � Dated: Error) Unknown document property name. CITY OF ANAHEIM By: Robert Fabela, City Attorney SERRANO WATER DISTRICT By: S. Wayne Rosenbaum, Counsel for Serrano Water District EAST ORANGE COUNTY WATER DISTRICT By: David Youngblood, General Manager CITY OF SANTA ANNA By: Kristine Ridge, City Manager YORBA LINDA WATER DISTRICT By; Brett R. Barbre, General Manager CITY OF FULLERTON By: Meg McWade, Director of Public Works THE PARTICIPATING PRODUCERS: Dated: Dated: Dated: Dated: Dated: Dated: lj'1L� -2Q2 Errorl Unknown document property name. CITY OF ANAHEIM By: Robert Fabela, City Attorney SERRANO WATER DISTRICT By: S. Wayne Rosenbaum, Counsel for Serrano Water District EAST ORANGE COUNTY WATER DISTRICT By: David Youngblood, General Manager CITY OF SANTA ANNA By: Kristine Ridge, City Manager YORBA LINDA WATER DISTRICT By: Brett R. Barbre, General Manager CITY OF FULLERTON By: Meg kicy ade, birector of Public Works Dated: %Z- 2CITY OF GARDEN GROVE / By: Scott C. Stiles, City Manager Approved as to form: Dated: - 'I - G B Omar Sandov 1, City Attorney Dated: Dated: Dated: Dated: Errorl Unknown document property name. Cerra. Dvi SYL4, IRVINE RANCH WATER DISTRICT By: Paul A. Cook, General Manager Approved as to form: By: Claire Collins, District Counsel CITY OF ORANGE By: Gary A. Sheatz, City Attorney CITY OF TUSTIN By: David Kendig, City Attorney Dated: CITY OF GARDEN GROVE By: Scott C. Stiles, City Manager Approved as to form: Dated: By: Omar Sandoval, City Attorney Dated: 57- Qek- ZO ZI IRVINE RANCH WATER DISTRICT By: aul A. Cook, General Manager MMR&J =11A Dated: Approved as to form: By: GL�viw►��/lnnn,� Claire Collins, DiVrict Counsel CITY OF ORANGE By: Gary A. Sheatz, City Attorney Dated: CITY OF TUSTIN By: David Kendig, City Attorney Errorl Unknown document property name. Dated: CITY OF GARDEN GROVE By: Scott C. Stiles, City Manager Approved as to form: Dated: By. Omar Sandoval, City Attorney Dated: IRVINE RANCH WATER DISTRICT By: Paul A. Cook, General Manager Dated: Approved as to form: By: Claire Collins, District Counsel Dated:' Dated: Error! Unknown document property name. CITY OF TUSTIN LN David Kendig, City Attorney Dated: Dated: Dated: Dated: Dated: Dated: @rrorl Unknown document property name. CITY OF GARDEN GROVE By: Scott C. Stiles, City Manager Approved as to form: By: Omar Sandoval, City Attorney IRVINE RANCH WATER DISTRICT By: Paul A. Cook, General Manager Approved as to form: By: Claire Collins, District Counsel CITY OF ORANGE By: Gary A. Sheatz, City Attorney CITY OF TUSTIN B. David Kendig, City Attorney DocuSign Envelope ID: 042F34DC-019D-44DF-91E1-2D6312E134EB THE FIRMS: 12/4/2021 Dated: KELLEY, DRYE & WARREN, LLP DocuSigned by: By: 1�Ap�.ghpAgcp��pspa�w Willia f1jff,ffg&3E... [tl 12/2/2021 Dated: TAFT STETTINIUS & HOLLISTER LLP DocuSigned by: By: Vb�loiv Robert —Rljr l 2IV47F... 12/2/2021 Dated: DOUGLAS & LONDON DocuSi ned by: By. Mich f'A135P ?Sn 12/2/2021 Dated: LEVIN PAPANTONIO THOMAS MITCHELL RAFFERTY & PROCTOR PA by: By:FSigned v:i mCWlms Ned 1MMIrldffir.. 12/2/2021 Dated: KENNEDY & MADONNA LLP DocuSigned by: By: keV"A M�JLAA� Kevin ac�onna 12/2/2021 Dated: SL ENVIRONMENTAL LAW GROUP PC DocuSigned by: By: alAIV Alex t611L7&1f6482... Dated: ROBINSON CALCAGNIE By: Daniel S. Robinson Error! Unknown document property name. THE FIRMS: Dated: Dated: Dated: Dated: KELLEY, DRYE & WARREN, LLP By: William J. Jackson TAFT STETTINIUS & HOLLISTER LLP By: Robert A. Bilott DOUGLAS & LONDON By: Michael A. London LEVIN PAPANTONIO THOMAS MITCHELL RAFFERTY & PROCTOR PA By: Ned McWilliams Dated: KENNEDY & MADONNA LLP Dated: Dated: 12/1 /21 Error! Unknown document property name. By: Kevin J. Madonna SL ENVIRONMENTAL LAW GROUP PC By: Alexander Leff ROBINSON CALLCC�AGNIE By: Daniel S. Robinson 8 EXHIBIT 4 INSURANCE NOT REQUIRED A-2020-120-02 WORK MAY PROCEED CLERK OF COUNCIL Return FULLY EXECUTED DATE: copy to C©7C, M-3D OCT 1 Z 2021 La CONFLICT CONSENT �: CIS (5o6vt�nnk) (li This Conflict Consent is entered by, between, and among Orange County Water District ("OCWD"); the Participating Producers (City of Anaheim; East Orange County Water District; City of Fullerton; City of Garden Grove; Irvine Ranch Water District; City of Orange; City of Santa Ana; Serrano Water District; City of Tustin; and the Yorba Linda Water District;); and the City of Corona, California ("Corona"). OCWD, the Participating Producers, and Corona, each a "Client" and together are the "Clients." The Clients' counsel includes the "Firms": SL Environmental Law Group PC; Kennedy & Madonna; LLP, Taft, Stettinius & Hollister, LLP; Douglas & London, P.C.; Levin, Papantonio, Thomas, Mitchell, Rafferty, & Proctor, P.A.; Kelley, Drye & Warren, LLP; and Robinson Caleagnie, Inc. Together the Clients and Firms are the "Parties." Concurrent with this Agreement, the Parties entered into a Common Interest Agreement that is incorporated herein by this reference. RECITALS A. In April and May 2020, OCWD, the Participating Producers, and the Firms entered into a Legal Services Agreement ("Orange County LSA") in connection with contamination from per- and polyfluoroalkyl substances ("PFAS"). Q. Upon approval from OCWD and the Participating Producers, Corona will enter a legal services agreement with the Firms in connection with contamination fi-om PFAS ("Corona LSA"). C. The Firms' representation of Clients relating to contamination fi-om PFAS-- including but not limited to investigating and bringing litigation against responsible parties, including but not limited to chemical manufacturers of PFAS and PFAS containing products, in order to recover costs fi-om those responsible for placing PFAS into the stream of commerce and/or the environment where it could make its way into ground and surface water that ultimately is used as water supply for the Participating Producers' and Corona's water production facilities —shall be described as "The Engagement" for purposes of this Conflict Consent. D. The Parties, by virtue of this Conflict Consent agreement, agree to allow joint representation and either do not perceive or expressly waive any current conflict under Rule 1.7 of the California Rules of Professional Conduct for the Finns' joint representation of Clients with respect to The Engagement. E. The Parties desire to further strengthen the conflict waiver above by (1) expressly consenting to this joint representation despite the potential for a future actual conflict of interest, (2) expressly consenting to the sharing of Common Interest Materials; and (3) OCWD and the Participating Producers had previously waived any conflict between and among themselves under Rule 1.7 of the California Rules of Professional Conduct for the Firms' joint representation of the OCWD and the Participating Producers as well as entering into Addendum I to the Orange County LSA. Errort Unknown document property name. waiving any actual conflicts of interest which might arise in connection with the Firms' representation of the Clients in connection with The Engagement for Clients. AGREEMENT NOW, THEREFORE, in consideration of the mutual promises, covenants, and terms and conditions herein, the Parties agree: l . Under the rules governing the professional conduct of attorneys in California, the Firms may not represent conflicting interests without the informed and written consent of the Clients. Based upon the information which has been supplied to date, including but not limited to the Orange County LSA and Addendum 1 and memorandum regarding "PFAS Litigation Counsel's Engagement by City of Corona" dated January 5, 2021, none of the Parties are aware of any actual conflicts of interest created by the Firms' joint representation of Clients in connection with The Engagement. 2. However, the Firms' joint representation of the Clients creates the potential for a future actual conflict of interest. This could happen, for example, if one of the Parties decides to terminate its relationship with the Firms and hire new counsel, or if Clients were to provide inconsistent testimony, or if the Parties were to take conflicting settlement positions or reach conflicting settlement compromises, etc. Any of these developments could potentially create an actual conflict of interest because the Firms' duty of undivided loyalty owed equally to each of the Clients could possibly prevent the Firms from taking any action that is adverse to the directions or interests of any of the Clients. 3. Accordingly, in light of the actual conflicts of interest which might arise in connection with the Firms' representation of the Clients in connection with The Engagement, the Clients agree and consent to each of the following terms and conditions: (a) Except as otherwise provided in subparagraph (d) below with respect to sharing Common Interest Materials or other information, if for any reason any Client believes that it needs any legal advice about rights against or obligations to any of the other Clients, the Firms could not provide that advice because they cannot favor one joint Client over another. That advice would have to be provided by a Client's internal lawyers or by a different law firm. Notwithstanding the foregoing, however, the Firms shall be allowed to, and expected to, comply with their ethical duties of loyalty and full disclosure by timely informing the Clients of any Common Interest Materials or other information that might materially or adversely affect their separate or collective interests; (b) Firms' joint representation of Clients despite the potential for a future actual conflict of interest; (c) If at any time, any Client has a concern about the appropriateness of continued joint representation by the Firms or the existence of a potential or actual conflict, Error! Unknown document property name. it shall immediately inform the Firms so that the Firms and the Clients can reevaluate whether to continue this joint representation. If the Firms become aware of any such circumstances, the Firms will likewise inform the Clients. If the Firms' representation of any Client terminates for any reason, the Firms will be permitted to continue to represent the remaining Clients under their respective legal services agreement to the same extent as would have been proper if the Firms had not previously represented the terminating Client. Each Client hereby agrees not to assert that any such continuing representation of the remaining Clients creates a conflict of interest, and hereby waives any right it otherwise might have to seek to disqualify the Firms from continuing to represent the remaining Clients or otherwise bring any legal action against the continued representation pursuant to Rules of Professional Conduct 1.7 and 1.9. This paragraph applies to the Firms' representation of the remaining Clients and also of any person or organization that is affiliated with any of them as that affiliation relates to the subject matter of The Engagement such that representation could be alleged to be conflicted pursuant to Rules of Professional Conduct 1.7 or 1.9, to all representations in which information learned in the course of representing the former Client might be material, and to all representations that arise from or are related to this matter in any other way. Each Client is urged to utilize independent counsel of its own selection at any time, and each Client may terminate the Firms' representation of it at any time, as provided in the respective legal services agreements; and (d) Any Common Interest Materials or other information which the Firms have acquired, or hereafter acquire, in the course of rendering legal services in connection with The Engagement may be disclosed to each of the Clients, irrespective of the source of the materials or information and regardless of whether such materials or information is deemed "privileged" or "confidential" or "favorable" or "unfavorable" by one or more of the Clients. In other words, any communication between the Firms and one or more of the Clients relating to the subject matter of The Engagement, or the respective legal services agreements, may be disclosed to the other Clients. Such disclosure shall not constitute a basis for any legal action, including, but not limited to, any motion to disqualify the Firms from representing any of the Clients in The Engagement or in any other future actions, disputes, proceedings, or arbitrations relating to the subject matter of the respective LSAs. 4. This Conflict Consent may be executed by transmittal of electronic (.pdo signature counterparts. 5. All modifications to this Conflict Consent must be in writing and signed by the Parties. IN WITNESS WHEREOF, the Parties have executed this Conflict Consent on the respective dates set forth below, and this Conflict Consent shall become effective on the date when last executed and delivered by all of the Parties. The foregoing is agreed to by: Error! Unknown document property name. DocuSign Envelope ID:21DBC539-3BDF-463B-B1E6-BlFD11171FCA Dated: 3/31/2021 3/31/2021 Dated: OCWD: APPROVED AS TO FORM: CONNOR, FLETCHER & HEDENKAMP, LLP CITY OF CORONA BbocuSigned by: S Jaco 1s. City Manager Approved as to form: BrDocu5tgned by: Dean Derleth, City Attorney ORANGE COUNTY WATER DISTRICT I� By: Ed Connor By: Oversight Counsel, OCWD Error! Unknown document property name. Stephen Sheldon, President Michael R. Markus, General Manager CITY OF CORONA Dated: OCWD: APPROVED AS TO FORM CONNOR, FLETCHER & HEDENKAMP, LLP By: Connor versight Counsel, OCWD Error! Unknown document property name. ORANGE COUNTY WATER DISTRICT By: . Stephen Sheldon, Pr id t By: chae Markus, General Manager THE PARTICIPATING PRODUCERS: Dated: 3 .2 Dated: CITY OF ANAHEIM By: _ Robert Fabela, City Attorney SERRANO WATER DISTRICT By: S. Wayne Rosenbaum, Counsel for Serrano Water District Dated: EAST ORANGE COUNTY WATER DISTRICT By: David Youngblood, General Manager Dated: CITY OF SANTA ANNA By: Kristine Ridge, City Manager Dated: YORBA LINDA WATER DISTRICT By: Brett R. Barbre, General Manager Dated: Errorl Unknown document property name. CITY OF FULLERTON By: Meg McWade, Director of Public Works THE PARTICIPATING PRODUCERS: Dated: Dated: January 21, 2021 Dated: Dated: Dated: Dated: Error! Unknown document property name. CITY OF ANAHEIM By: Robert Fabela, City Attorney SERRANO WATER DISTRICT By: - S. Wayne Rosenbaum, Counsel for Serrano Water District EAST ORANGE COUNTY WATER DISTRICT By: David Youngblood, General Manager CITY OF SANTA ANNA By: Kristine Ridge, City Manager YORBA LINDA WATER DISTRICT By: Brett R. Barbre, General Manager CITY OF FULLERTON By: Meg McWade, Director of Public Works THE PARTICIPATING PRODUCERS: Dated: Dated: Dated: Dated: Dated: Dated: Error! Unknown document property name. CITY OF ANAHEIM By: Robert Fabela, City Attorney SERRANO WATER DISTRICT By: �. Wayne Kosenbaum, Counsel for Serrano Water District EAST ORA GE COUNTY W R DISTRICT vid You n d, eneral Manager t-�,. CITY OF SANTA ANNA By: Kristine Ridge, City Manager YORBA LINDA WATER DISTRICT By: Brett R. Barbre, General Manager CITY OF FULLERTON By: Meg McWade, Director of Public Works 6 A-2020-120-02 THE PARTICIPATING PRODUCERS: Dated: Dated: Dated: 10-12-21 Dated: AMOM AS M FORM .--- 1 M Pumt, As iawt City Attorney Dated: Dated: Errorl Unknown document property name. CITY OF ANAHEIM By: Robert Fabela, City Attorney SERRANO WATER DISTRICT By: S. Wayne Rosenbaum, Counsel for Serrano Water District EAST ORANGE COUNTY WATER DISTRICT By: David Youngblood, General Manager CITY OF SA&TA ANNA By: Kristine Ridge, CiManager YORBA LINDA WATER DISTRICT By: Brett R. Barbre, General Manager CITY OF FULLERTON By: Meg McWade, Director of Public Works THE PARTICIPATING PRODUCERS: Dated: Dated: CITY OF ANAHEIM By: Robert Fabela, City Attorney SERRANO WATER DISTRICT By: S. Wayne Rosenbaum, Counsel for Serrano Water District Dated: EAST ORANGE COUNTY WATER DISTRICT By: Dated: Dated: Dated: Error] Unknown document property name. David Youngblood, General Manager CITY OF SANTA ANNA By: Kristine Ridge, City Manager YORBA LINDA WATER DISTRICT By: 00, Brett R. Barbre, General Manager CITY OF FULLERTON By: Meg McWade, Director of Public Worlcs THE PARTICIPATING PRODUCERS: Dated: CITY OF ANAHEIM By: Robert i~abela, City Attorney Dated: SERRANO WATER DISTRICT By: S. Wayne Rosenbaum, Counsel for Serrano Water District Dated: EAST ORANGE COUNTY WATER DISTRICT By: David Youngblood, General Manager Dated: CITY OF SANTA ANNA By: Kristine Ridge, City Manager Dated: YORBA LINDA WATER DISTRICT By: Brett R. Barbre, General Manager Dated: - � "2021 Error! unknown document property name. CITY OF FULLERTON By: Meg Mc ade, birector of Public Works Dated: 9 CITY OF GARDEN GROVE By: c. Scott C. Stiles, City Manager Approved as to form: Dated: _ �' �� — 1�' B . 4 Omar Sandova*orney, Dated: IRVINE RANCH WATER DISTRICT By: Paul A. Cook, General Manager Dated: Approved as to form: By: Dated: Dated: Errorl Unknown document property name. (OrAf? t t-f-cor l se'if Claire Collins, District Counsel CITY OF ORANGE By: Gary A. Sheatz, City Attorney CITY OF TUSTIN By: David Kendig, City Attorney Dated: CITY OF GARDEN GROVE By: Scott C. Stiles, City Manager Approved as to form: Dated: By: Omar Sandoval, City Attorney Dated: !T ocam Zp 21 IRVINE RANCH WATER DISTRICT By: aul A. Cook, General Manager Dated: Approved as to form: By: Claire Collins, Di rict Counsel Dated: CITY OF ORANGE By: Gary A. Sheatz, City Attorney Dated: CITY OF TUSTIN By: David Kendig, City Attorney Errorl Unknown document property name. Dated: CITY OF GARDEN GROVE By: Scott C. Stiles, City Manager Approved as to form: Dated: By: Omar Sandoval, City Attorney Dated: IRVINE RANCH WATER DISTRICT By: Paul A. Cools, General Manager Dated: Approved as to form: By: Claire Collins, District Counsel Dated: 6) � - Z Zu Z� Dated: Error! Unknown document property name. CITY OF TUSTIN David Kendig, City Attorney Dated: CITY OF GARDEN GROVE By: Scott C. Stiles, City Manager Approved as to form: Dated: By: Omar Sandoval, City Attorney Dated: IRVINE RANCH WATER DISTRICT By: Paul A. Cook, General Manager Dated: Approved as to form: By: Dated: Dated: Errorl Unknown document property name. Claire Collins, District Counsel CITY OF ORANGE By: Gary A. Sheatz, City Attorney CITY OF TUSTIN B. '_" P 4� g David Kendig, City Attorney DocuSign Envelope ID: 042F34DC-019D-44DF-91E1-2D6312E134EB THE FIRMS: 12/4/2021 Dated: KELLEY, DRYE & WARREN, LLP DocuSigned by: By: �� a(�SD►�, Willia �7F�FgRn�AAA3E... L��JJVV lI1I 12/2/2021 Dated: TAFT STETTINIUS & HOLLISTER LLP DocuSigned by: By: rely loil,e{f Robert A6ltf 2 V47F... 12/2/2021 Dated: DOUGLAS & LONDON ned by: - 1-177- By. Mich N�?SP,f€n 12/2/2021 Dated: LEVIN PAPANTONIO THOMAS MITCHELL RAFFERTY & PROCTOR PA by: By:FSigned V:;Mwaiaws Ned C-Wjjj?dff?a6... 12/2/2021 Dated: KENNEDY & MADONNA LLP DocuSigned by: L By: k VIA Mw-16A� Kevin TMadonna ... 12/2/2021 Dated: SL ENVIRONMENTAL LAW GROUP PC DocuSigned by: By: Q- Patn, Alex&T-7&TF8462... Dated: ROBINSON CALCAGNIE By: Daniel S. Robinson Error! Unknown document property name. EXHIBIT 5 PFAS TREATMENT FACILITIES AND PROGRAM AGREEMENT This PFAS TREATMENT FACILITIES AND PROGRAM AGREEMENT (the "Agreement") is effective on the date identified in Section 10.17 ("Effective Date") of the Agreement, and is between the ORANGE COUNTY WATER DISTRICT, a special governmental district organized and existing pursuant to the Orange County Water District Act, Chapter 924, Statutes of 1933, as amended ("OCWD") on the one hand, and the Cities of Anaheim, Fullerton, Garden Grove, Orange, Santa Ana and Tustin; and the East Orange County Water District, Irvine Ranch Water District, Serrano Water District, and Yorba Linda Water District, (each a "Producer," and collectively "Producers"') on the other. OCWD and the Producers are each a "Party" and collectively "Parties" to this Agreement. A. OCWD manages the Orange County Groundwater Basin ("Basin") in northern and central Orange County in order to support a variety of beneficial uses, including potable and non - potable water supply. Much of the potable water supply currently used within northern and central Orange County is pumped groundwater for use by persons and Producers within OCWD's service area. Section 2, subdivision 60.) of the Orange County Water District Act ("OCWD Act") authorizes OCWD to "transport, reclaim, purify, treat, inject, extract, or otherwise manage and control water for the beneficial use of persons or property within the district and to improve and protect the quality of the groundwater supplies within the district." Inasmuch as Orange County is located in a semi -arid area, it is essential that all reasonable efforts be put forth by OCWD, in cooperation with the Producers, to protect the quality and quantity of groundwater supplies within OCWD's boundaries. B. A group of man-made substances known as per- and polyfluoroalkyl substances ("PFAS") has been used in numerous consumer and industrial products since the 1940s. Recent testing in the Basin has revealed that as of the Effective Date, at least eleven producers and at least 71 groundwater wells that are sources of drinking water in the Basin are impacted by PFAS. C. Producers are governmental agencies (or a regulated public utility) that operate public water systems for the purpose of delivering potable water. They obtain a portion of their water supply by pumping groundwater from Water Producing Facilities within the Basin. D. In July 2018, the State of California Division of Drinking Water ("DDW") established a Response Level ("RV) of 70 parts per trillion ("ppt") for perfluorooctanoic acid ("PFOA") and 70 ppt perfluorooctane sulfonate ("PFOS"), two types of PFAS. In February 2020, DDW established revised RLs of 10 parts ppt for PFOA and 40 ppt for PFOS. Assembly Bill 756, codified at Health and Safety Code Section 116378, and effective January 1, 2020, requires that community water systems, including Producers, either notify their customers of PFAS detections "Producers" means the listed public agencies (and a regulated public utility) identified herein, and groundwater pumpers later added per Section 10.16, that extract groundwater from the Basin via "Water Producing Facilities" (as that term is defined in Section 24 of the OCWD Act), and who are adversely impacted by PFAS in one or more Water Producing Facility/Facilities they own or operate. 2629/022499-0087 14979764.1 a08/25/20 exceeding RLs or remove from service drinking water sources with PFAS exceeding RLs.2 The revised RLs are perceived as a de facto regulation by some Producers. E. In November 2019, the State of California Office of Environmental Health Hazard Assessment began the process of developing drinking water Public Health Goals ("PHGs") for PFOA and PFOS, the first step in the regulatory process leading to DDW setting enforceable Maximum Contaminant Levels ("MCLs"). As of the Effective Date, DDW projected establishing MCLs for PFOA and PFOS by the Fall of 2023, with PHGs projected to be established by the Summer of 2021. F. PFAS compounds create a unique groundwater contamination issue that impacts many Producers. Without any action, PFAS impacted groundwater may migrate affecting other Water Producing Facilities and larger portions of the Basin. G. The Parties desire that the Basin continue to provide a groundwater supply of suitable quality to allow for the continuation of all existing and potential beneficial uses, and that is in compliance with all state and federal standards and relevant advisory levels. Quick and effective actions by OCWD, in concert with Producers, are needed to remove, treat and control PFAS down to established regulatory limits while also removing them to prevent their contamination of other portions of the Basin. H. The Parties recognize the necessity and commit to a high level of coordination to expeditiously design, construct and operate PFAS treatment systems ("Treatment Systems") to remove PFAS from the Basin where PFAS is detected in Water Producing Facilities. I. Until Treatment Systems are constructed, the impacted Producers will be purchasing greater amounts of more expensive imported water, and water in the Basin containing PFAS will not be treated so as to prevent its spread to other portions of the Basin. J. As a result of DDW issuing revised RLs for PFOA and PFOS, and anticipated issuance of RLs and state or federal MCLs for other PFAS, Producers have lost, or are anticipated to lose upon finalization of the RLs and/or MCLs for one or more PFAS, pumping capacity in one or more Water Producing Facilities due to the presence of PFAS. Given the magnitude of the PFAS problem within the Basin, and OCWD's desire to improve and protect the quality of the groundwater supplies within the District so that groundwater from the Basin may be beneficially used, OCWD has developed, and is implementing through this Agreement and other actions, a new program that will allow OCWD to purify and treat groundwater containing PFAS by substantially funding, contracting and cooperating with Producers to develop, construct, operate, and maintain Treatment Systems such that water quality within the OCWD will be purified and improved ("Program"), and such that Producers can continue to beneficially use groundwater from the Basin after treatment for drinking water purposes. Producers desire to participate in the Program. 2 DDW's February 2020 guidance directs community water systems to test for PFAS using EPA Method 537.1 and notes that DDW defines PFAS "as those analytes included in EPA Method 537.1." 2629/022499-0087 14979764.1 a06/10/20 -2- K. OCWD has the authority to "construct, purchase, lease, or otherwise acquire, and to operate and maintain necessary waterworks and other works, machinery, [and] facilities ... useful or necessary to ... protect the quality of the common water supplies of [OCWD] and purposes incidental thereto." 3 OCWD may also perform groundwater cleanup, abatement, or remedial work in cooperation with any other governmental agency, and may initiate cost recovery actions against persons responsible for causing contamination of the Basin, and for its costs in cleaning up or containing contamination or pollution of the Basin.4 OCWD is also authorized under Section 2(6)(1.) of the OCWD Act to protect and improve water quality within the Basin by entering into contracts with Producers to produce more groundwater from the Basin, while taking less water from alternative non -tributary sources, where OCWD determines that such increased production of groundwater will result in removal of contaminants or pollutants from the Basin that otherwise would not be removed. Specifically, OCWD has authority, "for the common benefit of the district and for the purpose of managing the groundwater basin and managing, replenishing, regulating, and protecting the groundwater supplies within the district" to enter into an agreement with Producers to increase the production of groundwater in lieu of water from an alternative non - tributary source for the purpose of removing contaminants or pollutants from the Basin. OCWD may also "pay from district funds that portion of the cost of the groundwater production as will encourage the production for beneficial use of polluted or contaminated groundwater, as long as that pollution or contamination is impairing the quality of the water supplies within the district and the quality of the water supplies within the district will be improved by that production." L. OCWD has determined that certain portions of the Basin in the vicinity of Producers' Water Producing Facilities are polluted by PFAS, and that entering into this Agreement with Producers will encourage beneficial use of groundwater polluted by PFAS that would otherwise not be used while improving the quality of water supplies within the District. M. OCWD and the Producers mutually desire to enter into this Agreement pursuant to the OCWD Act to document the Program responsibilities of the Parties in the construction and operation of PFAS Treatment Systems, systems that the Parties will use to treat PFAS pollution and contamination, thereby improving the quality of groundwater supplies within OCWD. The Parties therefore agree as follows: 1. The Recitals above are deemed true and correct and are hereby incorporated in this Agreement as though fully set forth herein. The Parties agree that the actions that will be taken pursuant to this Agreement are reasonable and necessary to accomplish the goals and objectives of the OCWD Act. 2. PURPOSE. 2.1 Facilitation of Basin -wide Treatment. OCWD and the Producers intend to facilitate treatment of Basin groundwater impacted by PFAS. OCWD will coordinate and fund planning and treatment pilot studies and design efforts, and fund the construction costs of PFAS 3 OCWD Act, Section 2, Subd. 5. 4 OCWD Act, Section 8. 2629/022499-0087 14979764.1 a06/10/20 -3- Treatment Systems in the Basin subject to the provisions of this Agreement. OCWD will also fund a portion of the operation and maintenance costs of those facilities. 2.2 PFAS Compounds and Reo ener. The Parties recognize the necessity of and commit to a high level of coordination to expeditiously design, construct and operate PFAS Treatment Systems to remove PFAS from the Basin where HAS is detected in a Producer's (existing or anticipated) Water Producing Facilities at or above 80% of an applicable RL or MCL. The Parties acknowledge that additional compounds within the HAS family may become regulated during the term of this Agreement. To the extent the Treatment Systems developed under this Agreement requires modification to treat PFAS that becomes regulated after the Effective Date, the Parties will, where necessary and mutually agreed upon, amend this Agreement to provide for treatment of additional compounds in the PFAS family. 3. PLANNING. 3.1 Planning_ Study. OCWD has retained a consultant to prepare a "Planning Study" to evaluate the Producers' water systems, any of their Water Producing Facilities impacted by HAS ("Impacted Wells"), and potential locations for construction of PFAS Treatment Systems for Impacted Wells. OCWD shall cause the consultant to actively consult with Producers in connection with preparation of the Planning Study. OCWD shall cause the consultant to provide a final Planning Study report to OCWD and Producers concurrently. 3.2 Pilot Study. OCWD shall perform a PFAS treatment "Pilot Study" to evaluate different treatment technologies to remove PFAS from groundwater. 3.3 Treatment Systems. OCWD shall use the results of the Planning Study and the Pilot Study to reasonably determine the type and final design of the Treatment Systems to treat PFAS contamination in the groundwater produced by Impacted Wells to levels below the RL or MCL. Development of the final design of Treatment Systems will consider 30-year lifecycle costs, including but not limited to Treatment System footprint and physical setting, relative land values, the proximity to existing water infrastructure and energy sources, operational costs and limitations, and any PFAS treatment studies conducted by Producers. The Treatment Systems will be designed for a 30-year useful life. If OCWD and a Producer mutually agree, a Treatment System that can remove PFAS contamination down to non -detect concentrations, depending upon site specific circumstances, may be designed and constructed. 3.4 Enhancements/Additions to Treatment System. If Producer desires to construct additions or enhancements to the PEAS Treatment System beyond what OCWD determines is the appropriate Treatment System, then OCWD will reasonably estimate the cost of those additions or enhancements (including planning costs, design costs, capital costs and operation and maintenance ["O&M"] costs) with assistance and input from Producer(s). For OCWD-Built facilities (defined below), OCWD shall include the additions or enhancements in the design and construction of the treatment facilities upon OCWD determination of feasibility of efficiently operating the Treatment Systems with the requested additions or enhancements. Producer shall reimburse OCWD for all costs associated with the OCWD-Built addition or enhancement constructed by OCWD. For Producer Built Treatment Systems that contain additions or enhancements beyond what OCWD determines to be an appropriate Treatment System, 2629/022499-0087 14979764.1 a06/10/20 -4- Producers shall have no right of reimbursement from OCWD for Producers' costs attributable to such additions or enhancements. 3.5 Producer Assistance. Producers shall support and assist OCWD in connection with the Planning Study, Pilot Study, and development of what constitutes an appropriate Treatment System design. "Support and assist," as used in this Agreement means timely providing reasonable staff time and available data/technical information where requested by OCWD to ensure OCWD has sufficient information to timely complete its obligations under this Agreement. 3.6 Untested Water Producing Facilities. OCWD reserves the discretion to delay the design and to not construct Treatment Facilities at Water Producing Facilities that have not been individually tested for PFAS, or which have not demonstrated consistent exceedance of an applicable PFAS RL or MCL. 4. DESIGN AND CONSTRUCTION OF PFAS TREATMENT FACILITIES. 4.1 Funding. OCWD shall fund the reasonable cost to design and construct the Treatment System, except for necessary real property and entitlements for siting the Treatment System as described in Section 4.4. OCWD's funding obligations apply both to OCWD-Built or Producer -Built Treatment Systems, as defined below. OCWD's funding obligations include planning, design, and construction of the Treatment Systems whether OCWD-Built or Producer - Built. 4.2 OCWD Construction or Reimbursement. The Producer shall elect either: A. to have the Treatment System designed and built by OCWD ("OCWD-Built"); or B. to be reimbursed for having the Treatment System designed and built by the Producer ("Producer -Built"). 4.3 CEQA. In connection with the proposed Treatment System for Impacted Wells, the Parties shall work together to determine the best plan for and the lead agency for the purpose of complying with the California Environmental Quality Act ("CEQA"). Where a Producer serves as lead agency for a CEQA project, OCWD shall serve as a Responsible Agency and approve the portions of the CEQA project that OCWD will carry out. OCWD shall fund CEQA expenses incurred in connection with the Treatment System whether it is a Lead Agency or a Responsible Agency. Upon a Producer's request, OCWD shall prepare necessary CEQA documents for the Treatment System. OCWD shall fund any reasonable CEQA mitigation cost excluding land acquisition expenses. 4.4 Property Acquisition, Entitlements. A. Land and Rights of Way. Each Producer shall secure at its expense any land and/or right of way necessary to construct the Treatment System(s). 2629/022499-0087 14979764.1 a06/10/20 -5- B. Entitlements. Each Producer shall obtain at its expense all land use entitlements necessary to construct the Treatment System(s). C. Property Conditions for OCWD-Built Treatment System. If a Producer chooses an OCWD-Built Treatment System, then OCWD will have no obligation to design or construct the Treatment System until a Producer has demonstrated it has obtained lands and land use entitlements sufficient to permit construction of the Treatment System. OCWD may begin final design work for facilities where land use entitlements are in the process of being obtained. If a Producer is unable to obtain the necessary entitlements within twelve months after the completion of the preliminary design for an Impacted Well, then Producer shall reimburse OCWD for reasonable design costs associated with that location unless the twelve month deadline is extended by mutual agreement of the Parties. 4.5 OCWD-Built Facilities. The provisions of this Section 4.5 apply to PFAS treatment facilities that a Producer elects to have OCWD design and build. A. Design. OCWD will consult with and seek input from the Producer on the design and construction of the Treatment System, including the need for any extended manufacturer's warranties on Treatment System components. Producer shall support and assist OCWD in hiring design consultants and designing the Treatment System, but OCWD will have the reasonable authority and discretion in determining the Treatment System final design. The level of treatment selected by OCWD must allow the Producer to treat regulated PFAS to comply with RLs or MCLs, unless special circumstances dictate an alternative approach. Additions or enhancements to the Treatment System are subject to section 3.4. B. PropertRights. A Producer shall provide OCWD with temporary property rights over any site necessary for construction, staging, and laydown for the Treatment System project. These temporary property rights will be in the form of a license or temporary construction easement, or other property right sufficient to provide for OCWD's control of the site during construction. C. Advertising and Award of Construction Contracts. OCWD shall advertise, where required by the OCWD Act, and award construction contracts for construction of the Treatment System. A Producer shall support and assist OCWD in these efforts, and shall expeditiously provide any documents necessary for construction at no charge to OCWD. D. _Administration and Inspection. OCWD will administer the necessary contracts to construct the Treatment System, including reviewing and responding to contractor requests for information or requests for clarification, reviewing and approving shop drawings, and filing a Notice of Completion. OCWD shall provide all construction and inspection for the Treatment System. E. Transfer of Treatment System. Upon filing the Notice of Completion for the Treatment System, OCWD will transfer the constructed and operating Treatment System to the Producer with an appropriate legal instrument and a quitclaim of any property rights obtained under Section 4.4. OCWD shall provide the Producer with copies of all applicable O&M manuals and record drawings for the Treatment System in OCWD's possession. 2629/022499-0087 14979764.1 a06/10/20 -6- Upon the Producer's receipt of the legal instrument and quitclaim of property rights, Producer shall be solely responsible for ensuring the proper operation, maintenance and repair of the Treatment System. The Parties may arrange for extended warranties on any component of the Treatment System, which additional cost may be paid for by the Producer, and which extended warranty will be transferred to the Producer together with the transfer documents. F. Warranty, Post -Construction Remedies. OCWD will make construction warranty repairs and modifications not attributable to the negligence or willful misconduct of Producer for one year after the date of filing of the Treatment System Notice of Completion. The Parties will also, to the extent they deem prudent, jointly pursue any statutory construction defect remedies against third -party designers and contractors. G. DDW Permit Assistance. OCWD will support and assist the Producer with technical information in modifying the Producer's DDW operating permit to account for and authorize the new Treatment System as part of the Producer's public water system. 4.6 Construction by Producer. The provisions of this Section 4.6 apply to HAS treatment facilities that a Producer elects to design and build. A. OCWD Approval of Design. The Producer shall prepare and submit to OCWD for approval a conceptual design for the Treatment System. OCWD shall review and approve the design in writing within 30 days, which approval will not be unreasonably withheld. Once conceptual design for a Producer's proposed Treatment System is approved by OCWD, the Producer will coordinate with OCWD in the planning and final design of the Treatment System. The Producer shall then prepare and submit the final design to OCWD for approval. OCWD shall participate in the Producer's project meetings as necessary to obtain OCWD's final approval of the Treatment System in an expeditious manner so as not to delay the Producer's design and construction of the Treatment System. OCWD shall review and approve the final design, if deemed reasonable and effective, in writing, within 30 days. Such approval will not be unreasonably delayed or withheld, though OCWD shall have the right to place reasonable conditions on the final design approval. B. Construction. Upon OCWD's approval of the final design, the Producer shall advertise, award, and ensure timely completion of all necessary contracts to construct the Treatment System. The Producer shall notify OCWD upon the award of the construction contract and upon recording the Notice of Completion. OPERATIONS, MAINTENANCE AND REPLACEMENT. 5.1 30-Year Term. Each Producer shall operate, maintain, and repair a Treatment System, and any related Impacted Well, for the earlier of: A. 30 years following the filing of the Notice of Completion; or for PFAS. B. Until water produced from the Impacted Wells meets RLs or MCLs 2629/022499-0087 14979764.1 a06/10/20 -7- 5.2 Operating Standards. OCWD recognizes in the normal course of operating a water system, the Treatment System and Impacted Wells may need to be turned off for routine maintenance, seasonal demands, emergencies, accommodating in -lieu imported water deliveries, and major repairs. Each Producer agrees to operate the Treatment System in a manner consistent with industry standards and take actions in the same manner as a reasonably prudent water system operator, with the understanding that the Treatment System funded by OCWD is intended to be regularly used for daily treatment of groundwater as long as HAS exceeds an RL or MCL in the Basin in the vicinity of the well. The Parties understand and agree that Treatment Systems constructed or funded by OCWD are not intended to be used as "stand by" treatment systems. 5.3 Compliance, Permits Testing Reporting. Each Producer shall obtain and comply with any and all regulatory permits, permissions or approvals necessary to operate and maintain the Treatment System. Producer shall operate and maintain the Treatment System in accordance with state and federal regulatory requirements, prevailing industry standards, good housekeeping practices, and equipment manufacturer recommendations and requirements. Producer shall perform required water quality testing and reporting to verify the successful operation of the Treatment System to comply with regulatory requirements. If a Producer fails to timely perform testing and/or reporting in the future, then OCWD may in its reasonable discretion assume responsibility from a Producer for required water quality testing and/or reporting and that Producer shall timely pay OCWD all reasonable and necessary costs for that testing and reporting or such costs shall be deducted from OCWD's reimbursement payments to the Producer per Section 5.4. 5.4 Post -Completion Inspection• Cost Recoupment. A. OCWD will periodically inspect the Treatment System after the filing of the Notice of Completion, to review the adequacy of Producer O&M activities. Producer shall provide access to the Treatment System after receiving reasonable notice from OCWD. B. To the extent OCWD finds that Producer is not adequately operating and maintaining the Treatment System in accordance with industry standards and the manufacturer's directions, OCWD will, in the following order: (1) meet with the Producer in attempt to resolve the inadequate operation or maintenance; (2) formally notify the Producer of its obligation to properly maintain and operate the treatment system and give the Producer up to 120 days to remedy any OCWD finding of inadequate maintenance and/or improper operational protocols; (3) after 120 days, suspend O&M payments described in Section 6.2 until such time as the Producer demonstrates to OCWD that it is properly operating and maintaining the treatment system; 2629/022499-0087 14979764.1 a06/10/20 -g- (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.' 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. 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 a06/10/20 -9- (2) Unauthorized expenses for reimbursement shall include: (1) the Producer's staff time; (2) direct or indirect overhead type expenses for staff; and (3) costs not primarily attributable to Treatment System design, construction and O&M. 6.2 O&M Reimbursement. A. Reimbursement Rate. OCWD shall reimburse each Producer for 50% of allowable O&M costs, up to $75/acre-foot of water treated by the Treatment System. B. O&M Unit Cost. Each Producer shall annually calculate the O&M unit cost of the Treatment System on a July 1st to June 30th fiscal year basis and submit this information by October 1st of the following fiscal year to OCWD for review and reimbursement. The unit cost shall be calculated by dividing all appropriate and allowable O&M expenses by the Treatment System total water treated. The annual submittal by the Producer shall include all documentation and backup information necessary to support the unit cost calculation. Each Producer shall provide any reasonable information requested by OCWD in verifying the Producer's unit cost or other expenses for which the Producer seeks reimbursement per this Agreement. After execution of the agreement, at the request of the Producer after the Treatment System(s) are fully operational, OCWD will make a six month progress payment by January 30th of each fiscal year based upon no more than 50% of the estimated eligible total O&M cost OCWD would normally reimburse at the end of the fiscal year as determined by OCWD with input from the Producer. C. Reimbursable/Allowable Costs. Allowable O&M costs are the costs to the Producer necessarily incurred for the regular operation and maintenance of the Treatment System, as reasonably determined by OCWD after good faith consultation with Producer. Allowable O&M cost shall consider the specific site issues of each Treatment System. Examples of allowable O&M costs may include, but are not limited to: (1) periodically replacing carbon, resin, or other adsorption media; (2) necessary power and chemical cost to operate the Treatment System; (3) routine maintenance of the Treatment System; (4) periodic repair and replacement type cost items; (5) cost of additional staff time to operate the Treatment System; (6) required water quality sampling and testing for compliance monitoring; (7) determining and implementing compliance with new or revised PFAS regulations; (8) additional pumping cost caused by the Treatment System; 2629/022499-0087 14979764.1 a06/10/20 -10- (9) disposal of waste materials generated by the Treatment System, including landfill costs and incineration, and costs of hazardous waste disposal (if applicable); (10) sewerage costs associated with maintenance/backwash of the Treatment System; and (11) such other reasonable maintenance costs as are necessary to ensure the Treatment System continues to operate properly consistent with its design. D. Non -reimbursable costs include: (1) existing Producer staff time costs not attributable to the PFAS Treatment Facilities; (2) direct or indirect overhead type expenses for staff, and (3) cost resulting from a Producer's inadequate operation and maintenance of the Treatment System. E. Reimbursement Rate Adjustment. The $75/acre foot rate will be automatically adjusted annually each July 1 (beginning July 1, 2021) by the percentage differential based on the last two annual indices set forth in the Bureau of Labor Statistics Consumer Price Index for All Urban Consumers - Los Angeles -Long Beach -Anaheim. The maximum O&M reimbursement rate may be increased by OCWD if there are unforeseen, unique or specific circumstances of the Treatment System that, through no fault of a Producer, result in a higher cost of treatment at a Producer's treatment system, including increased costs attributable to new statutes, regulations or regulatory interpretations. F. Submittals: Reimbursement Timing. OCWD shall reimburse each Producer its allowable O&M costs incurred by a Producer within 60 days of receiving the Producer's annual O&M unit cost calculation and supporting information as described in Section 6.2.13. via direct payment. G. Treatment Media. OCWD may solicit and enter into a future contract with the appropriate activated carbon, resin, and/or other adsorption media manufacturers to obtain a lower price for this material than could be obtained by the individual Producer. Unless a Producer opts out in writing of this Section within 30 days of the Effective Date, Producer will support and participate in OCWD efforts to obtain a lower cost for activated carbon and/or resin. 6.3 Grants. A. OCWD-Sought. OCWD may seek federal, state, or other grant funding to offset costs of the PFAS program contemplated by this Agreement. Each Producer shall support and assist OCWD, as may be reasonably requested by OCWD, to obtain any grants that may be used by OCWD to fund construction and/or future O&M of Treatment Systems. Grant 2629/022499-0087 14979764.1 a06/10/20 -1 1- funds received by OCWD will be used to fund OCWD's costs of planning, design and construction of Treatment systems, unless otherwise required by the terms of that grant. B. Producer Support to OCWD-Sought Grants. Each Producer shall support and assist OCWD in preparing any annual reports or documents necessary for OCWD to comply with grants received for the PFAS program. Subject to the requirements of this Section 6.3, no provisions in this Agreement will prevent a Producer from applying for grants or loans, from any source, for HAS treatment projects in its service territory. C. Producer -Sought Funding. A Producer may also seek third -party funding for Treatment System -related expenses. Any outside development and design type grants or funding initiated and received by a Producer will be utilized to offset OCWD's PFAS design or construction costs for the Producer. If a Producer receives any grants or other third -party funding for operational expenses of the Treatment System, that Producer shall share those proceeds with OCWD in proportion to the percentage of O&M funded by OCWD if allowed by the grant or other third -party funding instrument. 6.4 Records Retention, Audit. The Parties shall keep and maintain all records, accounts and reports relating to this Agreement for a period of at least ten years after the date of a final judgment or final settlement resolving any and all litigation related to PFAS cost recovery initiated per Section 7.4 of this Agreement. The Parties will have access to these records at any time during normal business hours upon 10 calendar days' notice. At its cost, any Parry may audit the books, records and accounts of the Parry relating to its performance of this Agreement, and the audited Party shall provide reasonable cooperation to the auditing Party in this regard. 7. RISK ALLOCATION. 7.1 Insurance. A. Construction Activities. In the hiring of consultants and contractors to design and build the Treatment System, the hiring or contracting Party will have the other Party (OCWD, if Producer -Built, or the designing/building Producer, if OCWD-Built) included as an additional indemnitee and additional insured on the same basis and with the same limits in all contracts. The hiring Party will use the higher of the two Parties' standard limits for the purpose of coverage requirements. For example, in connection with an OCWD-Built Treatment System, OCWD shall have Producer named as an additional indemnitee and an additional insured in all consulting and construction contracts related to the Producer's Treatment System(s). In connection with a Producer -Built Treatment System, Producer shall have OCWD named as an additional indemnitee and an additional insured in all consulting and construction contracts. The hiring or contracting Party shall provide the other Party with proof of insurance, including additional insured endorsements. B. Parties' Coverage. Each Producer shall take out and maintain in effect at all times during the term of this Agreement comprehensive general liability insurance in an amount not less than $2 million per occurrence, for bodily injury, death and property damage associated with the operation and maintenance of the Treatment Facilities and Impacted Wells, naming OCWD as an additional insured under such policy. An endorsement evidencing this 2629/022499-0087 14979764.1 a06/10/20 -12- insurance coverage shall be furnished to OCWD prior to OCWD or Producer commencing construction on a Treatment System. If the Producer is, or becomes, partially or fully self -insured for its public liabilities, a letter executed by the Producer's Chief Executive stating the Producer's self -insured status and acknowledging its responsibility to indemnify OCWD as required in this Agreement, may be furnished in lieu of the insurance endorsement otherwise required herein. The Producer shall provide written notice to OCWD of any change in the Producer's insured or self - insured status within 30 days of the date of such change. 7.2 Indemnitv. A. By Producer: (1) Each Producer shall defend, indemnify and hold OCWD, harmless from and against any and all actions, suits, claims, demands, judgments, attorney's fees, costs, damages to person or property, losses, penalties, obligations, expenses or liabilities (collectively, "Claims") that may be asserted or claimed by any third party arising out of the negligent or reckless performance or implementation of this Agreement by Producer except for Claims arising out of or relating to the design or construction of a Treatment System where OCWD designed or constructed the Treatment System. (2) Producer shall indemnify, defend and hold OCWD harmless from any liability, or regulatory enforcement attributable, in whole or in part, to Producer's failure to properly operate and maintain the Treatment System and Impacted Wells. B. By OCWD: (1) OCWD shall defend, indemnify and hold each Producer harmless from and against any and all Claims that may be asserted or claimed by any third party arising out of the negligent or reckless performance or implementation of this Agreement by OCWD, except for Claims arising out of or relating to the design or construction of a Treatment System where the Producer designed or constructed the Treatment System. 7.3 Release and Hold Harmless. A. Producers' Release of OCWD. (1) Producers, and each of them, hereby release OCWD, its officers, directors, employees, agents and representatives, from any and all liability, known or unknown, arising out of, or otherwise attributable to the discovery and/or presence of PFAS in the Santa Ana River, the Basin, Producers' Water Producing Facilities, and Producers' potable or non - potable water system, before, during or after treatment. Such release shall include, but is not limited to, claims or litigation initiated by third parties against a Producer or OCWD, and any other legal, administrative, or regulatory actions associated with OCWD's performance of its obligations under this Agreement (unless attributable to OCWD's sole active negligence or willful misconduct during such performance). B. OCWD's Release of Producers. 2629/022499-0087 14979764.1 a06/10/20 -13- (1) OCWD hereby releases each Producer, their officers, directors, employees, agents and representatives, from any and all liability, known or unknown, arising out of, or otherwise attributable to the discovery and/or presence of PFAS in the Santa Ana River, the Basin, Producers' Water Producing Facilities, and each Producers' potable or non - potable water system, before, during or after treatment. Such release shall include, but is not limited to, claims or litigation initiated by third parties against a Producer or OCWD, and any other legal, administrative, or regulatory actions associated with a Producer's performance of obligations under this Agreement (unless attributable to a Producer's sole active negligence or willful misconduct during such performance). (2) This release by OCWD does not pertain in circumstances where liability results, or is alleged to result, from the failure of a Producer to properly operate and maintain the Treatment System constructed per this Agreement. C. Producer's Release of other Producers. (1) Each Producer hereby releases and shall hold the other Producers harmless from liability associated with the presence of PFAS in the Basin. (2) However, this release by each Producer does not pertain to circumstances where liability results, or is alleged to result, from the failure of the other Producer(s) to properly operate and maintain the Treatment System(s) constructed per this Agreement. D. No Admission of Liability. Nothing contained herein shall be deemed an admission of liability by any Party to this Agreement. 7.4 Legal Cost Recovery Efforts. A. OCWD anticipates commencing litigation against responsible parties, including chemical manufacturers of PFAS, in order to recover costs from persons responsible for placing PFAS into the stream of commerce and/or the environment where it could make its way into the Basin ("Damages"). The Producers shall support, coordinate, assist and comply with all reasonable OCWD requests regarding OCWD's cost recovery litigation related to pursuit of Damages associated with PFAS. B. OCWD will request each Producer that has sustained Damages to determine if intends to jointly retain counsel ("Shared Litigation Counsel") with OCWD in litigation to recover Damages. Producers who join as co -plaintiffs are "Participating Producers" in OCWD's cost recovery efforts. C. OCWD and Participating Producers will establish a Steering Committee and Executive Committee to direct Shared Litigation Counsel and make litigation decisions. D. OCWD and Participating Producers will enter into an appropriate joint prosecution/common interest agreement to hire Shared Litigation Counsel and establish 2629/022499-0087 14979764.1 a06/10/20 -14- confidentiality and privilege concerning communications and work product of the Steering Committee and Executive Committee. E. OCWD and Participating Producer agree that any Damages obtained in the PFAS litigation will be pooled and distributed to OCWD and Participating Producers proportionally to their respective claimed damages, such that each Participating Producer and OCWD will recover the same percentage of their overall claimed damages in the manner shown on Exhibit A. F. Participating Producers can decide at any time to discontinue participation in the litigation initiated by OCWD, but agree, if applicable, to pay to Shared Litigation Counsel, in accordance with any retainer agreement negotiated with Shared Litigation Counsel, for the withdrawing Producers share of Shared Litigation Counsel's reasonable attorneys' fees and cost incurred prior to the date of withdrawal (if any). Further, per the terms of any retainer agreement with Shared Litigation Counsel, the Participating Producers agree to maintain as confidential, and where applicable, to return, any communications and work product obtained via the litigation. G. OCWD believes that it is in the best interest of OCWD and Producers impacted by PFAS to jointly initiate litigation as co -plaintiffs with Shared Litigation Counsel. However, if a Producer decides to pursue or initiate separate PFAS litigation ("Separate Litigation"), Producer shall notify OCWD of such intent thirty (30) days prior to formally filing the Separate Litigation. Producer in the Separate Litigation must comply with the following: (1) The Producer shall give OCWD the opportunity to review and comment on Separate Litigation documents (e.g., pleadings) prior to any Separate Litigation filing. (2) No PFAS related cost incurred by OCWD, or likely to be incurred by OCWD, and related to the Producers treatment system(s) (construction and/or O&M), will be asserted in a Producer's Separate Litigation. (3) In order to prevent duplicative claims for the same damages in separate lawsuits, assertion of which without OCWD's consent shall constitute a violation of this Agreement, OCWD must approve any PFAS related cost a Producer is seeking to recover prior to its assertion in Separate Litigation. However, OCWD shall not unreasonably withhold such approval, and shall consult in good faith with counsel for a Producer that wishes to initiate Separate Litigation in order to seek ways to accommodate the interests of both Parties, prior to disapproving any cost. (4) A Producer shall closely coordinate its separate legal action with OCWD, and, where requested in good faith by OCWD, support the positions taken by OCWD related to PFAS in court and in political, community and business forums. (5) A Producer shall not assert claims against OCWD in any litigation related to PFAS, or otherwise knowingly take positions that could result in OCWD or other Producers incurring liability related to PFAS as a result of the position asserted by the Producer in the Separate Litigation. 2629/022499-0087 14979764.1 a06/10/20 -15- 8. EXPIRATION AND TERMINATION. This Agreement expires 30 years from the Effective Date. A Producer may terminate this Agreement upon providing 90 days written notice to OCWD. However, if a Producer terminates this Agreement prior to the 30 year date of expiration, the Producer shall reimburse OCWD for all of OCWD's unrecovered costs in constructing the Treatment System using the methodology described in footnote 5, plus any other reasonable expenses incurred by OCWD as a result of the early termination. 9. NOTICE. Any notice, instrument, payment or document required to be given or delivered under this Agreement shall be given or delivered by personal delivery or by depositing the same in a United States Mail depository, first class postage prepaid, and addressed as set forth in Exhibit B. Notice under this Agreement may also be provided to such other address as any Party may direct in writing to the other. Service of any instrument or document given by mail will be deemed complete upon receipt if delivered personally, or forty eight (48) hours after deposit of such instrument or document in a United States mail depository, first class postage prepaid, and addressed as set forth above. 10. MISCELLANEOUS. 10.1 Further Assurances. The Parties shall execute and deliver any documents and cooperate in performing any acts necessary to further the intent of this Agreement. 10.2 Time is of the Essence. Time is of the essence in performing all obligations under this Agreement. 10.3 Counterparts. This Agreement may be executed in multiple counterparts, each of which is an original. All signatures taken together will be considered as one and the same agreement. 10.4 Force Majeure. Upon written notice by a Party, the respective duties and obligations of the Parties will be suspended for the time period that performance by the Party is prevented or substantially impeded by workforce strikes; riots; fire; flood; federal, state or county regulatory action; pandemics, war; or terrorism. 10.5 Dispute Resolution. If a dispute arises between the Parties in connection with this Agreement, the Parties shall engage in a mediation before a third -party neutral. 10.6 Successors and Assigns. All of the terms, conditions and provisions of this Agreement inure to the benefit of and will be binding upon OCWD, the Producer, and their respective successors and assigns. 10.7 No Implied Waivers. If any term, condition or provision of this Agreement is breached by either Party and thereafter waived by the other Party, that waiver will be limited to the specific breach so waived, and will not be deemed either to be a continual waiver or to waive any other breach under this Agreement. 10.8 No Obligation to Third Parties. The approval, execution and performance of this Agreement does not confer any rights upon any person or entity other than OCWD and the Producers. There are no third -party beneficiaries to this Agreement. Each Producer's obligations 2629/022499-0087 14979764.1 a06/10/20 -16- under this Agreement are to OCWD only, unless otherwise specifically stated herein (e.g., requirement to release or provide notice to other Producers). 10.9 Nature of Relationship. This Agreement does not create, and will not be construed or deemed to create, any agency, partnership, joint venture, landlord -tenant or other relationship between OCWD and any Producer except as specified in this Agreement. 10.10 Integration, Construction and Amendment. This Agreement represents the entire understanding of OCWD and each Producer as to the design and construction of PFAS treatment facilities for the Impacted Wells. No prior oral or written understanding will be of any force or effect with respect to those matters covered by this Agreement. This Agreement will be construed as if drafted by both OCWD and each Producer. 10.11 Modification, Variance and Most Favored Nation Provisions. Unless specifically authorized herein, this Agreement may not be modified, altered or amended unless in writing signed by authorized representatives of both OCWD and all Producers, except that OCWD and any individual Producer may enter into a Producer -specific "Variance" that will be applicable only with respect to OCWD and that specific Producer. Except for where site -specific circumstances require unique considerations, OCWD shall interpret and administer this Agreement in a similar manner with each Producer. At least 30 days prior to approving any proposed Variance, OCWD will provide written notice of the proposed Variance to the other Producers and provide each with an opportunity to opt in to the same terms of that Variance. Upon approval of any Variance, OCWD shall provide a fully -executed version of the Variance to each Producer that has opted in under the Variance. 10.12 Severability. Each provision of this Agreement is severable from the whole. If any provision of this Agreement is found contrary to law, the remainder of this Agreement will continue in full force. 10.13 Authority. A. Producer hereby agrees that funding provided by OCWD per this Agreement is in furtherance of OCWD's purpose of treating/purifying water in the Basin to facilitate beneficial use of locally produced groundwater water in order to increase production of groundwater containing HAS from the Basin —to levels typical prior to setting of RLs for PFAS, and that Producer's production of water from the Basin is in lieu of Producer taking water from an alternative non -tributary source, thereby furthering OCWD's efforts to remove or eliminate PFAS contaminants from the Basin. B. By entering into this Agreement, each Party represents that it, and to the best of its understanding the other Parties to this Agreement, have proper legal authority to enter into this Agreement and to fund the work described herein. Each person executing this Agreement on behalf of a Party warrants that they are: (1) duly authorized to execute and deliver this Agreement on behalf of that Party, (2) by executing this Agreement, that Party is formally bound to the provisions of this Agreement, and (3) entering into this Agreement does not violate any provision of any other Agreement to which that Party is bound. No individual signing this Agreement shall have individual liability under this Agreement. As a condition of entering this 2629/022499-0087 14979764.1 a06/10/20 -1 %- Agreement, all Parties expressly waive any future challenge to the legal authority of the other Parties to enter into this Agreement, or to the authority of any other Party to fund the programs described in this Agreement. 10.14 Construction and Amendment. The terms of this Agreement will be construed in accordance with the plain meaning of the language used and will not be construed for or against any Party by reason of the authorship of this Agreement or any other rule of construction which might otherwise apply. The headings of sections and paragraphs of this Agreement are for convenience or reference only and will not be construed to limit or extend the meaning of the terms, covenants and conditions of this Agreement. This Agreement may only be amended by the mutual consent of the Parties by an instrument in writing. 10.15 No Admissions. Nothing in this Agreement may be deemed an admission. Moreover, no language that may have previously been circulated in prior drafts of this Agreement, but subsequently removed at the request of a Producer, shall be used by either Party as evidence, or in any other manner, in litigation currently pending in Los Angeles Superior Court between OCWD and the City of Anaheim, Yorba Linda Water District, Golden State Water Company, Mesa Water District, and East Orange County Water District on the one hand, and Irvine Ranch Water District (IRWD) on the other, Case No. BS168278 [Lead Case] Case No. BS175192 [Consolidated Case] (the "Litigation"), as such Litigation may be amended from time to time. 10.16 Additional Parties. Notwithstanding any other provision of this Agreement, OCWD is authorized to allow other groundwater pumpers in the Basin adversely impacted by PFAS, but not named in this Agreement, to become Parties to and execute this Agreement without obtaining the concurrence of the other Parties to this Agreement or otherwise modifying this Agreement (except to add an additional signature block). 10.17 Effective Date and Binding Effect. The date OCWD executes this Agreement shall be the Effective Date of this Agreement. Each Party executing the Agreement thereafter shall be bound by, and benefit from, the terms of this Agreement on the date that Party executes the Agreement, notwithstanding that other Parties have not yet executed the Agreement. No Party shall be bound by this Agreement until such Party has executed this Agreement, nor shall any Party that has executed this Agreement owe any contractual duty to any Party that has not yet executed this Agreement until such other Party executes this Agreement. The timelines referenced in Sections 6.1(C) and 6.2 (G) of this Agreement shall begin to run on the date a Producer executes this Agreement if such date is after the Effective Date. 10.18 Electronic Signatures. Any Party may execute this Agreement using an "electronic signature," as that term is defined in California Civil Code Section 1633.2, or a "digital signature," as defined by California Government Code Section 16.5. An electronic or digital signature will have full legal effect and enforceability. Nothing in this Agreement requires any Party to use or accept the submission of any subsequent or related document containing an electronic or digital signature where written notice is otherwise required by this Agreement. [SIGNATURES FOLLOW] 2629/022499-0087 14979764.1 a06/10/20 -18- APPROVED AS TO FORM: RUTAN & TUCKER, LLP B (� Jeremy Jungreis General Counsel, OCWD Executed on April 15, 2020 APPROVED AS TO FORM: By: City Attorney APPROVED AS TO FORM: By: City Attorney APPROVED AS TO FORM: By: City Attorney APPROVED AS TO FORM: By: City Attorney [SIGNATURES CONTINUED] 2629/022499-0087 14958393.1 a04/15/20 ORANGE COUNTY WATER DISTRICT By By CITY OF ANAHEIM Um CITY OF FULLERTON CITY OF GARDEN GROVE CITY OF ORANGE Um -19- APPROVED AS TO FORM: RUTAN & TUCKER, LLP LIN Jeremy N. Jungreis General Counsel, OCWD APPROVED AS TO FORM: ORANGE COUNTY WATER DISTRICT LIN Vicente Sarmiento, President Michael R. Markus, General Manager ATTEST: CITY OF NAH Theresa Bas City Clerk By: �-�--�%� By: City Attorney �.VL , t�e C �� Pwbl�e IK,krlti�� APPROVED AS TO FORM: By: City Attorney APPROVED AS TO FORM: By: City Attorney APPROVED AS TO FORM: By: City Attorney [SIGNATURES CONTINUED] 2629/022499.0087 14979764.1 a04/17/20 CITY OF FULLERTON 03 CITY OF GARDEN GROVE M. CITY OF ORANGE IM -19- APPROVED AS TO FORM: RUTAN & TUCKER, LLP Jeremy N. Jungreis General Counsel, OCWD APPROVED AS TO FORM: By: City Attorney APPROVED AS TO FORM: I_ By: City Attorney APPROVED AS TO FORM: By: City Attorney APPROVED AS TO FORM: By: City Attorney [SIGNATURES CONTINUED] 262T077499 0087 14979764.1 a04,1720 ORANGE COUNTY WATER DISTRICT By: Vicente Sarmiento, President Michael R, Markus, General Manager CITY OF ANAHEIM CITY ULL 17 CITY OF GARDEN GROVE By: CITY OF ORANGE to APPROVED AS TO FORM: RUTAN & TUCKER, LLP By: Jeremy N. Jungreis General Counsel, OCWD APPROVED AS TO FORM: By: City Attorney APPROVED AS TO FORM: By: City Attorney ORANGE COUNTY WATER DISTRICT By: Vicente Sarmiento, President Michael R. Markus, General Manager CITY OF ANAHEIM 0 CITY OF FULLERTON APPROVED AS TO ORM: CITY OF GARDEN GROVE By: By: ity Attome APPROVED AS TO FORM: By: City Attorney [SIGNATURES CONTINUED] ?629 022499-00,7 14979764 1 a04 17.20 CITY OF ORANGE 0 an APPROVED AS TO FORM: RUTAN & TUCKER, LLP By: Jeremy N. Jungreis General Counsel, OCWD APPROVED AS TO FORM: B v: City Attorney APPROVED AS TO FORM: By: City Attorney APPROVED AS TO FORM: By: City Attorney [SIGNATURES CONTINUED] ORANGE COUNTY WATER DISTRICT LIM Vicente Sarmiento, President Michael R. Markus, General Manager CITY OF ANAHEIM CITY OF FULLERTON CITY OF GARDEN GROVE CITY OF ORANGE By: Mark . Murphy, Mayor 4-4 rw 0i, T: Pamela -Coleman, City Clerk 2629/022499-0087 14979764.1 a04/17/20 -19- APPROVED AS TO FORM: WOODRUFF, SPRADLIN & SMART, By: %> k 4 WQ avid E. Kendig City Attorney, City of Tustin ATTEST: Daisy Gomez Clerk of the Council APPROVED AS TO FORM SONIA R. CARVALHO, City Attorney By: John M. Funk Assistant City Attorney APPROVED AS TO FORM: ATKINSON, ANDELSON, LOYA, RUUD & ROMO : Jeffrey A. Hoskinson [SIGNATURES CONTINUED] CITY OF TUSTIP T By: t5 Dr. Allan:Bernstein, Mayor CITY OF SANTA ANA go Kristine Ridge City Manager RECOMMENDED FOR APPROVAL Nabil Saba Acting Executive Director Public Works Agency EAST ORANGE COUNTY WATER DISTRICT an 2629/022499-0087 14979764.1 e04/17/20 -20- Lisa Ohlund, General Manager APPROVED AS TO FORM: WOODRUFF, SPRADLIN & SMART, APC David E. Kendig City Attorney, City of Tustin ATTEST: b� \ UA Daisy Gotnez Clerk of the Council APPROVED AS TO FORM SONIA R. CARVALHO, City Attorney By: 1►"• -f—L— JcWn M. Funk Assistant City Attorney APPROVED AS TO FORM: ATKINSON, ANDELSON, LOYA, RUUD & ROMO CITY OF TUSTIN Dr. Allan Bernstein, Mayor CITY OF SANTA ANA By:"s�`TE�� Kristine RM` ge- City Manager RECOMMENDED FOR APPROVAL A ka y Nabil Saba Executive Director Public Works Agency EAST ORANGE COUNTY WATER DISTRICT Lisa Ohlund, General Manager Jeffrey A. Hoskinson [SIGNATURES CONTINUED] 109/022499-0087 14979704.1 a04!IT20 —20— APPROVED AS TO FORM: WOODRUFF, SPRADLIN & SMART, APC IM David E. Kendig City Attorney, City of Tustin ATTEST: Daisy Gomez Clerk of the Council APPROVED AS TO FORM SONIA R. CARVALHO, City Attorney John M. Funk Assistant City Attorney APPROVED AS TO FORM: CITY OF TUSTIN IN Dr. Allan Bernstein, Mayor CITY OF SANTA ANA LIM Kristine Ridge City Manager RECOMMENDED FOR APPROVAL Nabil Saba Acting Executive Director Public Works Agency EAST ORANGE COUNTY WATER D ATKINSON, ANDELSON, LOYA, RUUD & ROMO r B By: Je y A. inson [SIGNATURES CONTINUED] 26291022499-0087 14979764.1 a04/17/20 -20- APPROVED AS TO FORM: HANSON BRIDGETT, LLP By: Claire H. Collins APPROVED AS TO FORM: VARCO & ROSENBAUM ENVIRONMENTAL LAW GROUP By. S. Wayne Rosenbaum Counsel for Serrano Water District APPROVED AS TO FORM: Andrew B. Gagen 2629/022499-0087 149797641 a04/17/20 IRVINE RANCH WATER DISTRICT Paul A. Cook, General Manager SERRANO WATER DISTRICT By: Jerr V' WE YORBA LINDA WATER DISTRICT IN -21- APPROVED AS TO FORM: HANSON BRIDGETT, LLP im Claire H. Collins APPROVED AS TO FORM: S. Wayne Rosenbaum APPROVED AS TO FORM: KIDMAN GAGEN LAW, LLP By: d Andrew B. Gage IRVINE RANCH WATER DISTRICT IN Paul A. Cook, General Manager SERRANO WATER DISTRICT Jerry A. Vilander YORBA LINDA WATER DISTRICT By: /7%tA�/ Marc Marcantonio, General Manager 2629/022499-0087 14979764.1 a04/17/20 —21— Exhibit A Allocation of Recovery Example of proportionally dividing damages assuming litigation, after paying Shared Litigation Counsel, results in a total damage pool of 75% of all damages ($630M) claimed by all Participating Producers (total claims of $839M). The column to the far right reflects each co -plaintiff s hypothetical recovery. (Total Amount Claimed in Litigation by each co -plaintiff x .75) Agency PFAS Cost Incurred Percent of Amount of OCWD $443 53% $332 ' Anaheim $78 9% $58 . 1 EOCWD $12 1% $9 Fullerton $54 6% $40 Garden Grove $42 5% $31 IRWD $6 1% $5 $36 $40 Orange $48 6% Santa Ana $54 6% Serrano $18 2% $14 $14 Tustin $18 2% YLWD 66 8% 50 Total $839 100% $630 M (Dollar amounts shown are for illustrative purposes only and are not related to actual PFAS cost that may be incurred or damages recovered. The numbers used herein are strictly hypothetical) 2629/022499-0087 14979764.1 a06/10/20 Exhibit B Notice Addresses Orange County Water District P.O. Box 8300 18700 Ward Street Fountain Valley, CA 92708 Attn: General Manager Mike Markus City of Anaheim 201 S. Anaheim Blvd., Suite 1101 Anaheim, CA 92805 Attn: Assistant General Manager of Water Services Michael Moore City of Fullerton 303 W. Commonwealth Ave. Fullerton, CA 92843 Attn: Public Works Director Meg McWade City of Garden Grove 13802 Newhope Street Garden Grove CA, 92843 Attn: Public Works Director Bill Murray City of Orange P.O. Box 449 Orange, CA 92856 Attn: Public Works Director Christopher Cash City of Tustin P.O. Box 466 Tustin, CA 92781 Attn: Water Resources Manager Mike Grisso 2629/022499-0087 14979764.1 a06/10/20 City of Santa Ana 220 S. Daisy, Bldg. A Santa Ana, CA 92703 Attn: Water Resources Manager Nabil Saba East Orange County Water District 185 N. McPherson Road Orange, CA 92869-3720 Attn: General Manager Lisa Ohlund Irvine Ranch Water District 15600 Sand Canyon Avenue Irvine, CA 92618 Attn: General Manager Paul Cook Serrano Water District 18021 Lincoln Street Villa Park, CA 92861-6446 Attn: General Manager Jerry Vilander Yorba Linda Water District P.O. Box 309 Yorba Linda, CA 92885-0309 Attn: General Manager Brett Barbre 2629/022499-0087 14979764.1 a08/25/20 -2- PFAS TREATMENT FACILITIES AND PROGRAM AGREEMENT This PFAS TREATMENT FACILITIES AND PROGRAM AGREEMENT (the "Agreement") is effective on the date identified in Section 10.17 ("Effective Date") of the Agreement, and is between the ORANGE COUNTY WATER DISTRICT, a special governmental district organized and existing pursuant to the Orange County Water District Act, Chapter 924, Statutes of 1933, as amended ("OCWD") on the one hand, and the Cities of Anaheim, Fullerton, Garden Grove, Orange, Santa Ana and Tustin; and the East Orange County Water District, Irvine Ranch Water District, Serrano Water District, and Yorba Linda Water District, (each a "Producer," and collectively "Producers"') on the other. OCWD and the Producers are each a "Party" and collectively "Parties" to this Agreement. A. OCWD manages the Orange County Groundwater Basin ("Basin") in northern and central Orange County in order to support a variety of beneficial uses, including potable and non - potable water supply. Much of the potable water supply currently used within northern and central Orange County is pumped groundwater for use by persons and Producers within OCWD's service area. Section 2, subdivision 60.) of the Orange County Water District Act ("OCWD Act") authorizes OCWD to "transport, reclaim, purify, treat, inject, extract, or otherwise manage and control water for the beneficial use of persons or property within the district and to improve and protect the quality of the groundwater supplies within the district." Inasmuch as Orange County is located in a semi -arid area, it is essential that all reasonable efforts be put forth by OCWD, in cooperation with the Producers, to protect the quality and quantity of groundwater supplies within OCWD's boundaries. B. A group of man-made substances known as per- and polyfluoroalkyl substances ("PFAS") has been used in numerous consumer and industrial products since the 1940s. Recent testing in the Basin has revealed that as of the Effective Date, at least eleven producers and at least 71 groundwater wells that are sources of drinking water in the Basin are impacted by PFAS. C. Producers are governmental agencies (or a regulated public utility) that operate public water systems for the purpose of delivering potable water. They obtain a portion of their water supply by pumping groundwater from Water Producing Facilities within the Basin. D. In July 2018, the State of California Division of Drinking Water ("DDW") established a Response Level ("RL") of 70 parts per trillion ("ppt") for perfluorooctanoic acid ("PFOA") and 70 ppt perfluorooctane sulfonate ("PFOS"), two types of PFAS. In February 2020, DDW established revised RLs of 10 parts ppt for PFOA and 40 ppt for PFOS. Assembly Bill 756, codified at Health and Safety Code Section 116378, and effective January 1, 2020, requires that community water systems, including Producers, either notify their customers of PFAS detections ' "Producers" means the listed public agencies (and a regulated public utility) identified herein, and groundwater pumpers later added per Section 10.16, that extract groundwater from the Basin via "Water Producing Facilities" (as that term is defined in Section 24 of the OCWD Act), and who are adversely impacted by PFAS in one or more Water Producing Facility/Facilities they own or operate. 2629/022499-0087 14979764.1 a08/25/20 exceeding RLs or remove from service drinking water sources with PFAS exceeding RLs.2 The revised RLs are perceived as a de facto regulation by some Producers. E. In November 2019, the State of California Office of Environmental Health Hazard Assessment began the process of developing drinking water Public Health Goals ("PHGs") for PFOA and PFOS, the first step in the regulatory process leading to DDW setting enforceable Maximum Contaminant Levels ("MCLs"). As of the Effective Date, DDW projected establishing MCLs for PFOA and PFOS by the Fall of 2023, with PHGs projected to be established by the Summer of 2021. F. PFAS compounds create a unique groundwater contamination issue that impacts many Producers. Without any action, PFAS impacted groundwater may migrate affecting other Water Producing Facilities and larger portions of the Basin. G. The Parties desire that the Basin continue to provide a groundwater supply of suitable quality to allow for the continuation of all existing and potential beneficial uses, and that is in compliance with all state and federal standards and relevant advisory levels. Quick and effective actions by OCWD, in concert with Producers, are needed to remove, treat and control PFAS down to established regulatory limits while also removing them to prevent their contamination of other portions of the Basin. H. The Parties recognize the necessity and commit to a high level of coordination to expeditiously design, construct and operate PFAS treatment systems ("Treatment Systems") to remove PFAS from the Basin where PFAS is detected in Water Producing Facilities. I. Until Treatment Systems are constructed, the impacted Producers will be purchasing greater amounts of more expensive imported water, and water in the Basin containing PFAS will not be treated so as to prevent its spread to other portions of the Basin. J. As a result of DDW issuing revised RLs for PFOA and PFOS, and anticipated issuance of RLs and state or federal MCLs for other PFAS, Producers have lost, or are anticipated to lose upon finalization of the RLs and/or MCLs for one or more PFAS, pumping capacity in one or more Water Producing Facilities due to the presence of PFAS. Given the magnitude of the PFAS problem within the Basin, and OCWD's desire to improve and protect the quality of the groundwater supplies within the District so that groundwater from the Basin may be beneficially used, OCWD has developed, and is implementing through this Agreement and other actions, a new program that will allow OCWD to purify and treat groundwater containing PFAS by substantially funding, contracting and cooperating with Producers to develop, construct, operate, and maintain Treatment Systems such that water quality within the OCWD will be purified and improved ("Program"), and such that Producers can continue to beneficially use groundwater from the Basin after treatment for drinking water purposes. Producers desire to participate in the Program. 2 DDW's February 2020 guidance directs community water systems to test for PFAS using EPA Method 537.1 and notes that DDW defines PFAS "as those analytes included in EPA Method 537.1." 2629/022499-0087 14979764.1 a06/10/20 -2- K. OCWD has the authority to "construct, purchase, lease, or otherwise acquire, and to operate and maintain necessary waterworks and other works, machinery, [and] facilities ... useful or necessary to ... protect the quality of the common water supplies of [OCWD] and purposes incidental thereto."3 OCWD may also perform groundwater cleanup, abatement, or remedial work in cooperation with any other governmental agency, and may initiate cost recovery actions against persons responsible for causing contamination of the Basin, and for its costs in cleaning up or containing contamination or pollution of the Basin.4 OCWD is also authorized under Section 2(6)(1.) of the OCWD Act to protect and improve water quality within the Basin by entering into contracts with Producers to produce more groundwater from the Basin, while taking less water from alternative non -tributary sources, where OCWD determines that such increased production of groundwater will result in removal of contaminants or pollutants from the Basin that otherwise would not be removed. Specifically, OCWD has authority, "for the common benefit of the district and for the purpose of managing the groundwater basin and managing, replenishing, regulating, and protecting the groundwater supplies within the district" to enter into an agreement with Producers to increase the production of groundwater in lieu of water from an alternative non - tributary source for the purpose of removing contaminants or pollutants from the Basin. OCWD may also "pay from district funds that portion of the cost of the groundwater production as will encourage the production for beneficial use of polluted or contaminated groundwater, as long as that pollution or contamination is impairing the quality of the water supplies within the district and the quality of the water supplies within the district will be improved by that production." L. OCWD has determined that certain portions of the Basin in the vicinity of Producers' Water Producing Facilities are polluted by PFAS, and that entering into this Agreement with Producers will encourage beneficial use of groundwater polluted by PFAS that would otherwise not be used while improving the quality of water supplies within the District. M. OCWD and the Producers mutually desire to enter into this Agreement pursuant to the OCWD Act to document the Program responsibilities of the Parties in the construction and operation of PFAS Treatment Systems, systems that the Parties will use to treat PFAS pollution and contamination, thereby improving the quality of groundwater supplies within OCWD. The Parties therefore agree as follows: 1. The Recitals above are deemed true and correct and are hereby incorporated in this Agreement as though fully set forth herein. The Parties agree that the actions that will be taken pursuant to this Agreement are reasonable and necessary to accomplish the goals and objectives of the OCWD Act. 2. PURPOSE. 2.1 Facilitation of Basin -wide Treatment. OCWD and the Producers intend to facilitate treatment of Basin groundwater impacted by PFAS. OCWD will coordinate and fund planning and treatment pilot studies and design efforts, and fund the construction costs of PFAS 3 OCWD Act, Section 2, Subd. 5. 4 OCWD Act, Section 8. 2629/022499-0087 14979764.1 a06/10/20 -3- Treatment Systems in the Basin subject to the provisions of this Agreement. OCWD will also fund a portion of the operation and maintenance costs of those facilities. 2.2 PFAS Compounds and Reopener. The Parties recognize the necessity of and commit to a high level of coordination to expeditiously design, construct and operate PFAS Treatment Systems to remove PFAS from the Basin where PFAS is detected in a Producer's (existing or anticipated) Water Producing Facilities at or above 80% of an applicable RL or MCL. The Parties acknowledge that additional compounds within the PFAS family may become regulated during the term of this Agreement. To the extent the Treatment Systems developed under this Agreement requires modification to treat PFAS that becomes regulated after the Effective Date, the Parties will, where necessary and mutually agreed upon, amend this Agreement to provide for treatment of additional compounds in the PFAS family. 3. PLANNING. 3.1 Planning Stu . OCWD has retained a consultant to prepare a "Planning Study" to evaluate the Producers' water systems, any of their Water Producing Facilities impacted by PFAS ("Impacted Wells"), and potential locations for construction of PFAS Treatment Systems for Impacted Wells. OCWD shall cause the consultant to actively consult with Producers in connection with preparation of the Planning Study. OCWD shall cause the consultant to provide a final Planning Study report to OCWD and Producers concurrently. 3.2 Pilot Study. OCWD shall perform a PFAS treatment "Pilot Study" to evaluate different treatment technologies to remove PFAS from groundwater. 3.3 Treatment Systems. OCWD shall use the results of the Planning Study and the Pilot Study to reasonably determine the type and final design of the Treatment Systems to treat PFAS contamination in the groundwater produced by Impacted Wells to levels below the RL or MCL. Development of the final design of Treatment Systems will consider 30-year lifecycle costs, including but not limited to Treatment System footprint and physical setting, relative land values, the proximity to existing water infrastructure and energy sources, operational costs and limitations, and any PFAS treatment studies conducted by Producers. The Treatment Systems will be designed for a 30-year useful life. If OCWD and a Producer mutually agree, a Treatment System that can remove PFAS contamination down to non -detect concentrations, depending upon site specific circumstances, may be designed and constructed. 3.4 Enhancements/Additions to Treatment S, sue. If Producer desires to construct additions or enhancements to the PFAS Treatment System beyond what OCWD determines is the appropriate Treatment System, then OCWD will reasonably estimate the cost of those additions or enhancements (including planning costs, design costs, capital costs and operation and maintenance ["O&M"] costs) with assistance and input from Producer(s). For OCWD-Built facilities (defined below), OCWD shall include the additions or enhancements in the design and construction of the treatment facilities upon OCWD determination of feasibility of efficiently operating the Treatment Systems with the requested additions or enhancements. Producer shall reimburse OCWD for all costs associated with the OCWD-Built addition or enhancement constructed by OCWD. For Producer Built Treatment Systems that contain additions or enhancements beyond what OCWD determines to be an appropriate Treatment System, 2629/022499-0087 14979764.1 a06/10/20 -4- Producers shall have no right of reimbursement from OCWD for Producers' costs attributable to such additions or enhancements. 3.5 Producer Assistance. Producers shall support and assist OCWD in connection with the Planning Study, Pilot Study, and development of what constitutes an appropriate Treatment System design. "Support and assist," as used in this Agreement means timely providing reasonable staff time and available data/technical information where requested by OCWD to ensure OCWD has sufficient information to timely complete its obligations under this Agreement. 3.6 Untested Water Producing Facilities. OCWD reserves the discretion to delay the design and to not construct Treatment Facilities at Water Producing Facilities that have not been individually tested for PFAS, or which have not demonstrated consistent exceedance of an applicable PFAS RL or MCL. 4. DESIGN AND CONSTRUCTION OF PFAS TREATMENT FACILITIES. 4.1 Funding. OCWD shall fund the reasonable cost to design and construct the Treatment System, except for necessary real property and entitlements for siting the Treatment System as described in Section 4.4. OCWD's funding obligations apply both to OCWD-Built or Producer -Built Treatment Systems, as defined below. OCWD's funding obligations include planning, design, and construction of the Treatment Systems whether OCWD-Built or Producer - Built. 4.2 OCWD Construction or Reimbursement. The Producer shall elect either: A. to have the Treatment System designed and built by OCWD ("OCWD-Built"); or B. to be reimbursed for having the Treatment System designed and built by the Producer ("Producer -Built"). 4.3 CEQA. In connection with the proposed Treatment System for Impacted Wells, the Parties shall work together to determine the best plan for and the lead agency for the purpose of complying with the California Environmental Quality Act ("CEQA"). Where a Producer serves as lead agency for a CEQA project, OCWD shall serve as a Responsible Agency and approve the portions of the CEQA project that OCWD will carry out. OCWD shall fund CEQA expenses incurred in connection with the Treatment System whether it is a Lead Agency or a Responsible Agency. Upon a Producer's request, OCWD shall prepare necessary CEQA documents for the Treatment System. OCWD shall fund any reasonable CEQA mitigation cost excluding land acquisition expenses. 4.4 Property Acquisition, Entitlements. A. Land and Rights of Way. Each Producer shall secure at its expense any land and/or right of way necessary to construct the Treatment System(s). 2629/022499-0087 14979764.1 a06/10/20 -5- B. Entitlements. Each Producer shall obtain at its expense all land use entitlements necessary to construct the Treatment System(s). C. Property Conditions for OCWD-Built Treatment System. If a Producer chooses an OCWD-Built Treatment System, then OCWD will have no obligation to design or construct the Treatment System until a Producer has demonstrated it has obtained lands and land use entitlements sufficient to permit construction of the Treatment System. OCWD may begin final design work for facilities where land use entitlements are in the process of being obtained. If a Producer is unable to obtain the necessary entitlements within twelve months after the completion of the preliminary design for an Impacted Well, then Producer shall reimburse OCWD for reasonable design costs associated with that location unless the twelve month deadline is extended by mutual agreement of the Parties. 4.5 OCWD-Built Facilities. The provisions of this Section 4.5 apply to PFAS treatment facilities that a Producer elects to have OCWD design and build. A. Design. OCWD will consult with and seek input from the Producer on the design and construction of the Treatment System, including the need for any extended manufacturer's warranties on Treatment System components. Producer shall support and assist OCWD in hiring design consultants and designing the Treatment System, but OCWD will have the reasonable authority and discretion in determining the Treatment System final design. The level of treatment selected by OCWD must allow the Producer to treat regulated PFAS to comply with RLs or MCLs, unless special circumstances dictate an alternative approach. Additions or enhancements to the Treatment System are subject to section 3.4. B. Property Rights. A Producer shall provide OCWD with temporary property rights over any site necessary for construction, staging, and laydown for the Treatment System project. These temporary property rights will be in the form of a license or temporary construction easement, or other property right sufficient to provide for OCWD's control of the site during construction. C. Advertising and Award of Construction Contracts. OCWD shall advertise, where required by the OCWD Act, and award construction contracts for construction of the Treatment System. A Producer shall support and assist OCWD in these efforts, and shall expeditiously provide any documents necessary for construction at no charge to OCWD. D. Administration and Inspection. OCWD will administer the necessary contracts to construct the Treatment System, including reviewing and responding to contractor requests for information or requests for clarification, reviewing and approving shop drawings, and filing a Notice of Completion. OCWD shall provide all construction and inspection for the Treatment System. E. Transfer of Treatment System. Upon filing the Notice of Completion for the Treatment System, OCWD will transfer the constructed and operating Treatment System to the Producer with an appropriate legal instrument and a quitclaim of any property rights obtained under Section 4.4. OCWD shall provide the Producer with copies of all applicable O&M manuals and record drawings for the Treatment System in OCWD's possession. 2629/022499-0087 14979764.1 a06/10/20 -6- Upon the Producer's receipt of the legal instrument and quitclaim of property rights, Producer shall be solely responsible for ensuring the proper operation, maintenance and repair of the Treatment System. The Parties may arrange for extended warranties on any component of the Treatment System, which additional cost may be paid for by the Producer, and which extended warranty will be transferred to the Producer together with the transfer documents. F. Warranty, Post -Construction Remedies. OCWD will make construction warranty repairs and modifications not attributable to the negligence or willful misconduct of Producer for one year after the date of filing of the Treatment System Notice of Completion. The Parties will also, to the extent they deem prudent, jointly pursue any statutory construction defect remedies against third -parry designers and contractors. G. DDW Permit Assistance. OCWD will support and assist the Producer with technical information in modifying the Producer's DDW operating permit to account for and authorize the new Treatment System as part of the Producer's public water system. 4.6 Construction by Producer. The provisions of this Section 4.6 apply to PFAS treatment facilities that a Producer elects to design and build. A. OCWD Approval of Design. The Producer shall prepare and submit to OCWD for approval a conceptual design for the Treatment System. OCWD shall review and approve the design in writing within 30 days, which approval will not be unreasonably withheld. Once conceptual design for a Producer's proposed Treatment System is approved by OCWD, the Producer will coordinate with OCWD in the planning and final design of the Treatment System. The Producer shall then prepare and submit the final design to OCWD for approval. OCWD shall participate in the Producer's project meetings as necessary to obtain OCWD's final approval of the Treatment System in an expeditious manner so as not to delay the Producer's design and construction of the Treatment System. OCWD shall review and approve the final design, if deemed reasonable and effective, in writing, within 30 days. Such approval will not be unreasonably delayed or withheld, though OCWD shall have the right to place reasonable conditions on the final design approval. B. Construction. Upon OCWD's approval of the final design, the Producer shall advertise, award, and ensure timely completion of all necessary contracts to construct the Treatment System. The Producer shall notify OCWD upon the award of the construction contract and upon recording the Notice of Completion. 5. OPERATIONS, MAINTENANCE AND REPLACEMENT. 5.1 30-Year Term. Each Producer shall operate, maintain, and repair a Treatment System, and any related Impacted Well, for the earlier of: A. 30 years following the filing of the Notice of Completion; or B. Until water produced from the Impacted Wells meets RLs or MCLs for PFAS. 2629/022499-0087 14979764.1 a06/10/20 -7- 5.2 Operating Standards. OCWD recognizes in the normal course of operating a water system, the Treatment System and Impacted Wells may need to be turned off for routine maintenance, seasonal demands, emergencies, accommodating in -lieu imported water deliveries, and major repairs. Each Producer agrees to operate the Treatment System in a manner consistent with industry standards and take actions in the same manner as a reasonably prudent water system operator, with the understanding that the Treatment System funded by OCWD is intended to be regularly used for daily treatment of groundwater as long as PFAS exceeds an RL or MCL in the Basin in the vicinity of the well. The Parties understand and agree that Treatment Systems constructed or funded by OCWD are not intended to be used as "stand by" treatment systems. 5.3 Compliance, Permits, Testing, Reporting. Each Producer shall obtain and comply with any and all regulatory permits, permissions or approvals necessary to operate and maintain the Treatment System. Producer shall operate and maintain the Treatment System in accordance with state and federal regulatory requirements, prevailing industry standards, good housekeeping practices, and equipment manufacturer recommendations and requirements. Producer shall perform required water quality testing and reporting to verify the successful operation of the Treatment System to comply with regulatory requirements. If a Producer fails to timely perform testing and/or reporting in the future, then OCWD may in its reasonable discretion assume responsibility from a Producer for required water quality testing and/or reporting and that Producer shall timely pay OCWD all reasonable and necessary costs for that testing and reporting or such costs shall be deducted from OCWD's reimbursement payments to the Producer per Section 5.4. 5.4 Post -Completion Inspection; Cost Recoupment. A. OCWD will periodically inspect the Treatment System after the filing of the Notice of Completion, to review the adequacy of Producer O&M activities. Producer shall provide access to the Treatment System after receiving reasonable notice from OCWD. B. To the extent OCWD finds that Producer is not adequately operating and maintaining the Treatment System in accordance with industry standards and the manufacturer's directions, OCWD will, in the following order: (1) meet with the Producer in attempt to resolve the inadequate operation or maintenance; (2) formally notify the Producer of its obligation to properly maintain and operate the treatment system and give the Producer up to 120 days to remedy any OCWD finding of inadequate maintenance and/or improper operational protocols; (3) after 120 days, suspend O&M payments described in Section 6.2 until such time as the Producer demonstrates to OCWD that it is properly operating and maintaining the treatment system; 2629/022499-0087 14979764.1 a06/10/20 -g- (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 CostsPayment 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. 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 a06/10/20 -9- (2) Unauthorized expenses for reimbursement shall include: (1) the Producer's staff time; (2) direct or indirect overhead type expenses for staff, and (3) costs not primarily attributable to Treatment System design, construction and O&M. 6.2 O&M Reimbursement. A. Reimbursement Rate. OCWD shall reimburse each Producer for 50% of allowable O&M costs, up to $75/acre-foot of water treated by the Treatment System. B. O&M Unit Cost. Each Producer shall annually calculate the O&M unit cost of the Treatment System on a July 1st to June 30th fiscal year basis and submit this information by October 1 st of the following fiscal year to OCWD for review and reimbursement. The unit cost shall be calculated by dividing all appropriate and allowable O&M expenses by the Treatment System total water treated. The annual submittal by the Producer shall include all documentation and backup information necessary to support the unit cost calculation. Each Producer shall provide any reasonable information requested by OCWD in verifying the Producer's unit cost or other expenses for which the Producer seeks reimbursement per this Agreement. After execution of the agreement, at the request of the Producer after the Treatment System(s) are fully operational, OCWD will make a six month progress payment by January 30th of each fiscal year based upon no more than 50% of the estimated eligible total O&M cost OCWD would normally reimburse at the end of the fiscal year as determined by OCWD with input from the Producer. C. Reimbursable/Allowable Costs. Allowable O&M costs are the costs to the Producer necessarily incurred for the regular operation and maintenance of the Treatment System, as reasonably determined by OCWD after good faith consultation with Producer. Allowable O&M cost shall consider the specific site issues of each Treatment System. Examples of allowable O&M costs may include, but are not limited to: (1) periodically replacing carbon, resin, or other adsorption media; (2) necessary power and chemical cost to operate the Treatment System; (3) routine maintenance of the Treatment System; (4) periodic repair and replacement type cost items; (5) cost of additional staff time to operate the Treatment System; (6) required water quality sampling and testing for compliance monitoring; (7) determining and implementing compliance with new or revised PFAS regulations; (8) additional pumping cost caused by the Treatment System; 2629/022499-0087 14979764.1 a06/10/20 -10- (9) disposal of waste materials generated by the Treatment System, including landfill costs and incineration, and costs of hazardous waste disposal (if applicable); (10) sewerage costs associated with maintenance/backwash of the Treatment System; and (11) such other reasonable maintenance costs as are necessary to ensure the Treatment System continues to operate properly consistent with its design. D. Non -reimbursable costs include: (1) existing Producer staff time costs not attributable to the PFAS Treatment Facilities; (2) direct or indirect overhead type expenses for staff; and (3) cost resulting from a Producer's inadequate operation and maintenance of the Treatment System. E. Reimbursement Rate Adjustment. The $75/acre foot rate will be automatically adjusted annually each July 1 (beginning July 1, 2021) by the percentage differential based on the last two annual indices set forth in the Bureau of Labor Statistics Consumer Price Index for All Urban Consumers - Los Angeles -Long Beach -Anaheim. The maximum O&M reimbursement rate may be increased by OCWD if there are unforeseen, unique or specific circumstances of the Treatment System that, through no fault of a Producer, result in a higher cost of treatment at a Producer's treatment system, including increased costs attributable to new statutes, regulations or regulatory interpretations. F. Submittals; Reimbursement Timing. OCWD shall reimburse each Producer its allowable O&M costs incurred by a Producer within 60 days of receiving the Producer's annual O&M unit cost calculation and supporting information as described in Section 6.2.13. via direct payment. G. Treatment Media. OCWD may solicit and enter into a future contract with the appropriate activated carbon, resin, and/or other adsorption media manufacturers to obtain a lower price for this material than could be obtained by the individual Producer. Unless a Producer opts out in writing of this Section within 30 days of the Effective Date, Producer will support and participate in OCWD efforts to obtain a lower cost for activated carbon and/or resin. 6.3 Grants. A. OCWD-Sought. OCWD may seek federal, state, or other grant funding to offset costs of the PFAS program contemplated by this Agreement. Each Producer shall support and assist OCWD, as may be reasonably requested by OCWD, to obtain any grants that may be used by OCWD to fund construction and/or future O&M of Treatment Systems. Grant 2629/022499-0087 14979764.1 a06/10/20 -11- funds received by OCWD will be used to fund OCWD's costs of planning, design and construction of Treatment systems, unless otherwise required by the terms of that grant. B. Producer Support to OCWD-Sought Grants. Each Producer shall support and assist OCWD in preparing any annual reports or documents necessary for OCWD to comply with grants received for the PFAS program. Subject to the requirements of this Section 6.3, no provisions in this Agreement will prevent a Producer from applying for grants or loans, from any source, for PFAS treatment projects in its service territory. C. Producer -Sought Funding. A Producer may also seek third -party funding for Treatment System -related expenses. Any outside development and design type grants or funding initiated and received by a Producer will be utilized to offset OCWD's PFAS design or construction costs for the Producer. If a Producer receives any grants or other third -parry funding for operational expenses of the Treatment System, that Producer shall share those proceeds with OCWD in proportion to the percentage of O&M funded by OCWD if allowed by the grant or other third -party funding instrument. 6.4 Records Retention, Audit. The Parties shall keep and maintain all records, accounts and reports relating to this Agreement for a period of at least ten years after the date of a final judgment or final settlement resolving any and all litigation related to PFAS cost recovery initiated per Section 7.4 of this Agreement. The Parties will have access to these records at any time during normal business hours upon 10 calendar days' notice. At its cost, any Parry may audit the books, records and accounts of the Party relating to its performance of this Agreement, and the audited Party shall provide reasonable cooperation to the auditing Parry in this regard. 7. RISK ALLOCATION. 7.1 Insurance. A. Construction Activities. In the hiring of consultants and contractors to design and build the Treatment System, the hiring or contracting Parry will have the other Party (OCWD, if Producer -Built, or the designingibuilding Producer, if OCWD-Built) included as an additional indemnitee and additional insured on the same basis and with the same limits in all contracts. The hiring Party will use the higher of the two Parties' standard limits for the purpose of coverage requirements. For example, in connection with an OCWD-Built Treatment System, OCWD shall have Producer named as an additional indemnitee and an additional insured in all consulting and construction contracts related to the Producer's Treatment System(s). In connection with a Producer -Built Treatment System, Producer shall have OCWD named as an additional indemnitee and an additional insured in all consulting and construction contracts. The hiring or contracting Party shall provide the other Party with proof of insurance, including additional insured endorsements. B. Parties' Coverage. Each Producer shall take out and maintain in effect at all times during the term of this Agreement comprehensive general liability insurance in an amount not less than $2 million per occurrence, for bodily injury, death and property damage associated with the operation and maintenance of the Treatment Facilities and Impacted Wells, naming OCWD as an additional insured under such policy. An endorsement evidencing this 2629/022499-0087 14979764.1 a06/10/20 -12- insurance coverage shall be furnished to OCWD prior to OCWD or Producer commencing construction on a Treatment System. If the Producer is, or becomes, partially or fully self -insured for its public liabilities, a letter executed by the Producer's Chief Executive stating the Producer's self -insured status and acknowledging its responsibility to indemnify OCWD as required in this Agreement, may be furnished in lieu of the insurance endorsement otherwise required herein. The Producer shall provide written notice to OCWD of any change in the Producer's insured or self - insured status within 30 days of the date of such change. 7.2 Indemnity. A. By Producer: (1) Each Producer shall defend, indemnify and hold OCWD, harmless from and against any and all actions, suits, claims, demands, judgments, attorney's fees, costs, damages to person or property, losses, penalties, obligations, expenses or liabilities (collectively, "Claims") that may be asserted or claimed by any third party arising out of the negligent or reckless performance or implementation of this Agreement by Producer except for Claims arising out of or relating to the design or construction of a Treatment System where OCWD designed or constructed the Treatment System. (2) Producer shall indemnify, defend and hold OCWD harmless from any liability, or regulatory enforcement attributable, in whole or in part, to Producer's failure to properly operate and maintain the Treatment System and Impacted Wells. M000 I4Z�IId 1 (1) OCWD shall defend, indemnify and hold each Producer harmless from and against any and all Claims that may be asserted or claimed by any third party arising out of the negligent or reckless performance or implementation of this Agreement by OCWD, except for Claims arising out of or relating to the design or construction of a Treatment System where the Producer designed or constructed the Treatment System. 7.3 Release and Hold Harmless. A. Producers' Release of OCWD. (1) Producers, and each of them, hereby release OCWD, its officers, directors, employees, agents and representatives, from any and all liability, known or unknown, arising out of, or otherwise attributable to the discovery and/or presence of PFAS in the Santa Ana River, the Basin, Producers' Water Producing Facilities, and Producers' potable or non - potable water system, before, during or after treatment. Such release shall include, but is not limited to, claims or litigation initiated by third parties against a Producer or OCWD, and any other legal, administrative, or regulatory actions associated with OCWD's performance of its obligations under this Agreement (unless attributable to OCWD's sole active negligence or willful misconduct during such performance). B. OCWD's Release of Producers. 2629/022499-0087 14979764.1 a06/10/20 -13- (1) OCWD hereby releases each Producer, their officers, directors, employees, agents and representatives, from any and all liability, known or unknown, arising out of, or otherwise attributable to the discovery and/or presence of PFAS in the Santa Ana River, the Basin, Producers' Water Producing Facilities, and each Producers' potable or non - potable water system, before, during or after treatment. Such release shall include, but is not limited to, claims or litigation initiated by third parties against a Producer or OCWD, and any other legal, administrative, or regulatory actions associated with a Producer's performance of obligations under this Agreement (unless attributable to a Producer's sole active negligence or willful misconduct during such performance). (2) This release by OCWD does not pertain in circumstances where liability results, or is alleged to result, from the failure of a Producer to properly operate and maintain the Treatment System constructed per this Agreement. C. Producer's Release of other Producers. (1) Each Producer hereby releases and shall hold the other Producers harmless from liability associated with the presence of PFAS in the Basin. (2) However, this release by each Producer does not pertain to circumstances where liability results, or is alleged to result, from the failure of the other Producer(s) to properly operate and maintain the Treatment System(s) constructed per this Agreement. D. No Admission of Liability. Nothing contained herein shall be deemed an admission of liability by any Party to this Agreement. 7.4 Legal Cost Recovery Efforts. A. OCWD anticipates commencing litigation against responsible parties, including chemical manufacturers of PFAS, in order to recover costs from persons responsible for placing PFAS into the stream of commerce and/or the environment where it could make its way into the Basin ("Damages"). The Producers shall support, coordinate, assist and comply with all reasonable OCWD requests regarding OCWD's cost recovery litigation related to pursuit of Damages associated with PFAS. B. OCWD will request each Producer that has sustained Damages to determine if intends to jointly retain counsel ("Shared Litigation Counsel") with OCWD in litigation to recover Damages. Producers who join as co -plaintiffs are "Participating Producers" in OCWD's cost recovery efforts. C. OCWD and Participating Producers will establish a Steering Committee and Executive Committee to direct Shared Litigation Counsel and make litigation decisions. D. OCWD and Participating Producers will enter into an appropriate joint prosecution/common interest agreement to hire Shared Litigation Counsel and establish 2629/022499-0087 14979764.1 a06/10/20 -14- confidentiality and privilege concerning communications and work product of the Steering Committee and Executive Committee. E. OCWD and Participating Producer agree that any Damages obtained in the PFAS litigation will be pooled and distributed to OCWD and Participating Producers proportionally to their respective claimed damages, such that each Participating Producer and OCWD will recover the same percentage of their overall claimed damages in the manner shown on Exhibit A. F. Participating Producers can decide at any time to discontinue participation in the litigation initiated by OCWD, but agree, if applicable, to pay to Shared Litigation Counsel, in accordance with any retainer agreement negotiated with Shared Litigation Counsel, for the withdrawing Producers share of Shared Litigation Counsel's reasonable attorneys' fees and cost incurred prior to the date of withdrawal (if any). Further, per the terms of any retainer agreement with Shared Litigation Counsel, the Participating Producers agree to maintain as confidential, and where applicable, to return, any communications and work product obtained via the litigation. G. OCWD believes that it is in the best interest of OCWD and Producers impacted by PFAS to jointly initiate litigation as co -plaintiffs with Shared Litigation Counsel. However, if a Producer decides to pursue or initiate separate PFAS litigation ("Separate Litigation"), Producer shall notify OCWD of such intent thirty (30) days prior to formally filing the Separate Litigation. Producer in the Separate Litigation must comply with the following: (1) The Producer shall give OCWD the opportunity to review and comment on Separate Litigation documents (e.g., pleadings) prior to any Separate Litigation filing. (2) No PFAS related cost incurred by OCWD, or likely to be incurred by OCWD, and related to the Producers treatment system(s) (construction and/or O&M), will be asserted in a Producer's Separate Litigation. (3) In order to prevent duplicative claims for the same damages in separate lawsuits, assertion of which without OCWD's consent shall constitute a violation of this Agreement, OCWD must approve any PFAS related cost a Producer is seeking to recover prior to its assertion in Separate Litigation. However, OCWD shall not unreasonably withhold such approval, and shall consult in good faith with counsel for a Producer that wishes to initiate Separate Litigation in order to seek ways to accommodate the interests of both Parties, prior to disapproving any cost. (4) A Producer shall closely coordinate its separate legal action with OCWD, and, where requested in good faith by OCWD, support the positions taken by OCWD related to PFAS in court and in political, community and business forums. (5) A Producer shall not assert claims against OCWD in any litigation related to PFAS, or otherwise knowingly take positions that could result in OCWD or other Producers incurring liability related to PFAS as a result of the position asserted by the Producer in the Separate Litigation. 2629/022499-0087 14979764.1 a06/10/20 -15- 8. EXPIRATION AND TERMINATION. This Agreement expires 30 years from the Effective Date. A Producer may terminate this Agreement upon providing 90 days written notice to OCWD. However, if a Producer terminates this Agreement prior to the 30 year date of expiration, the Producer shall reimburse OCWD for all of OCWD's unrecovered costs in constructing the Treatment System using the methodology described in footnote 5, plus any other reasonable expenses incurred by OCWD as a result of the early termination. 9. NOTICE. Any notice, instrument, payment or document required to be given or delivered under this Agreement shall be given or delivered by personal delivery or by depositing the same in a United States Mail depository, first class postage prepaid, and addressed as set forth in Exhibit B. Notice under this Agreement may also be provided to such other address as any Party may direct in writing to the other. Service of any instrument or document given by mail will be deemed complete upon receipt if delivered personally, or forty eight (48) hours after deposit of such instrument or document in a United States mail depository, first class postage prepaid, and addressed as set forth above. 10. MISCELLANEOUS. 10.1 Further Assurances. The Parties shall execute and deliver any documents and cooperate in performing any acts necessary to further the intent of this Agreement. 10.2 Time is of the Essence. Time is of the essence in performing all obligations under this Agreement. 10.3 Counterparts. This Agreement may be executed in multiple counterparts, each of which is an original. All signatures taken together will be considered as one and the same agreement. 10.4 Force Majeure. Upon written notice by a Party, the respective duties and obligations of the Parties will be suspended for the time period that performance by the Party is prevented or substantially impeded by workforce strikes; riots; fire; flood; federal, state or county regulatory action; pandemics, war; or terrorism. 10.5 Dispute Resolution. If a dispute arises between the Parties in connection with this Agreement, the Parties shall engage in a mediation before a third -party neutral. 10.6 Successors and Assigns. All of the terms, conditions and provisions of this Agreement inure to the benefit of and will be binding upon OCWD, the Producer, and their respective successors and assigns. 10.7 No Implied Waivers. If any term, condition or provision of this Agreement is breached by either Party and thereafter waived by the other Party, that waiver will be limited to the specific breach so waived, and will not be deemed either to be a continual waiver or to waive any other breach under this Agreement. 10.8 No Obligation to Third Parties. The approval, execution and performance of this Agreement does not confer any rights upon any person or entity other than OCWD and the Producers. There are no third -party beneficiaries to this Agreement. Each Producer's obligations 2629/022499-0087 14979764.1 a06/10/20 -16- under this Agreement are to OCWD only, unless otherwise specifically stated herein (e.g., requirement to release or provide notice to other Producers). 10.9 Nature of Relationship. This Agreement does not create, and will not be construed or deemed to create, any agency, partnership, joint venture, landlord -tenant or other relationship between OCWD and any Producer except as specified in this Agreement. 10.10 Integration, Construction and Amendment. This Agreement represents the entire understanding of OCWD and each Producer as to the design and construction of PFAS treatment facilities for the Impacted Wells. No prior oral or written understanding will be of any force or effect with respect to those matters covered by this Agreement. This Agreement will be construed as if drafted by both OCWD and each Producer. 10.11 Modification, Variance and Most Favored Nation Provisions. Unless specifically authorized herein, this Agreement may not be modified, altered or amended unless in writing signed by authorized representatives of both OCWD and all Producers, except that OCWD and any individual Producer may enter into a Producer -specific "Variance" that will be applicable only with respect to OCWD and that specific Producer. Except for where site -specific circumstances require unique considerations, OCWD shall interpret and administer this Agreement in a similar manner with each Producer. At least 30 days prior to approving any proposed Variance, OCWD will provide written notice of the proposed Variance to the other Producers and provide each with an opportunity to opt in to the same terms of that Variance. Upon approval of any Variance, OCWD shall provide a fully -executed version of the Variance to each Producer that has opted in under the Variance. 10.12 Severability. Each provision of this Agreement is severable from the whole. If any provision of this Agreement is found contrary to law, the remainder of this Agreement will continue in full force. 10.13 Authorily. A. Producer hereby agrees that funding provided by OCWD per this Agreement is in furtherance of OCWD's purpose of treating/purifying water in the Basin to facilitate beneficial use of locally produced groundwater water in order to increase production of groundwater containing PFAS from the Basin —to levels typical prior to setting of RLs for PFAS, and that Producer's production of water from the Basin is in lieu of Producer taking water from an alternative non -tributary source, thereby furthering OCWD's efforts to remove or eliminate PFAS contaminants from the Basin. B. By entering into this Agreement, each Party represents that it, and to the best of its understanding the other Parties to this Agreement, have proper legal authority to enter into this Agreement and to fund the work described herein. Each person executing this Agreement on behalf of a Party warrants that they are: (1) duly authorized to execute and deliver this Agreement on behalf of that Party, (2) by executing this Agreement, that Party is formally bound to the provisions of this Agreement, and (3) entering into this Agreement does not violate any provision of any other Agreement to which that Party is bound. No individual signing this Agreement shall have individual liability under this Agreement. As a condition of entering this 2629/022499-0087 14979764.1 a06/10/20 -17- Agreement, all Parties expressly waive any future challenge to the legal authority of the other Parties to enter into this Agreement, or to the authority of any other Party to fund the programs described in this Agreement. 10.14 Construction and Amendment. The terms of this Agreement will be construed in accordance with the plain meaning of the language used and will not be construed for or against any Party by reason of the authorship of this Agreement or any other rule of construction which might otherwise apply. The headings of sections and paragraphs of this Agreement are for convenience or reference only and will not be construed to limit or extend the meaning of the terms, covenants and conditions of this Agreement. This Agreement may only be amended by the mutual consent of the Parties by an instrument in writing. 10.15 No Admissions. Nothing in this Agreement may be deemed an admission. Moreover, no language that may have previously been circulated in prior drafts of this Agreement, but subsequently removed at the request of a Producer, shall be used by either Party as evidence, or in any other manner, in litigation currently pending in Los Angeles Superior Court between OCWD and the City of Anaheim, Yorba Linda Water District, Golden State Water Company, Mesa Water District, and East Orange County Water District on the one hand, and Irvine Ranch Water District (IRWD) on the other, Case No. BS168278 [Lead Case] Case No. BS175192 [Consolidated Case] (the "Litigation"), as such Litigation may be amended from time to time. 10.16 Additional Parties. Notwithstanding any other provision of this Agreement, OCWD is authorized to allow other groundwater pumpers in the Basin adversely impacted by PFAS, but not named in this Agreement, to become Parties to and execute this Agreement without obtaining the concurrence of the other Parties to this Agreement or otherwise modifying this Agreement (except to add an additional signature block). 10.17 Effective Date and Binding Effect. The date OCWD executes this Agreement shall be the Effective Date of this Agreement. Each Party executing the Agreement thereafter shall be bound by, and benefit from, the terms of this Agreement on the date that Party executes the Agreement, notwithstanding that other Parties have not yet executed the Agreement. No Party shall be bound by this Agreement until such Party has executed this Agreement, nor shall any Party that has executed this Agreement owe any contractual duty to any Party that has not yet executed this Agreement until such other Parry executes this Agreement. The timelines referenced in Sections 6.1(C) and 6.2 (G) of this Agreement shall begin to run on the date a Producer executes this Agreement if such date is after the Effective Date. 10.18 Electronic Signatures. Any Party may execute this Agreement using an "electronic signature," as that term is defined in California Civil Code Section 1633.2, or a "digital signature," as defined by California Government Code Section 16.5. An electronic or digital signature will have full legal effect and enforceability. Nothing in this Agreement requires any Parry to use or accept the submission of any subsequent or related document containing an electronic or digital signature where written notice is otherwise required by this Agreement. [SIGNATURES FOLLOW] 2629/022499-0087 14979764.1 a06/10/20 -18- APPROVED AS TO FORM: RUTAN & TUCKER, LLP B C/ Jeremy J u n g r e i s General Counsel, OCWD Executed on April 15, 2020 APPROVED AS TO FORM: By: City Attorney APPROVED AS TO FORM: By: City Attorney APPROVED AS TO FORM: By: City Attorney APPROVED AS TO FORM: By: City Attorney [SIGNATURES CONTINUED] ORANGE COUNTY WATER DISTRICT By%]V - "'Vicente In Markus, General Manager CITY OF ANAHEIM Im CITY OF FULLERTON I: CITY OF GARDEN GROVE IN CITY OF ORANGE 26291022499-0087 14958393.1 a04/15120 -19- APPROVED AS TO FORM: RUTAN & TUCKER, LLP ORANGE COUNTY WATER DISTRICT By: By: Vicente Sarmiento, President Jeremy N. Jungreis By: General Counsel, OCWD Michael R. Markus, General Manager ATTEST: APPROVED AS TO FORM: CITY OF NAH Theresa Bas City Clerk By: By: City Attorney 77 C wx,4r APPROVED AS TO FORM: CITY OF FULLERTON By: By: City Attorney APPROVED AS TO FORM: By: City Attorney APPROVED AS TO FORM: By: City Attorney [SIGNATURES CONTINUED] 2629/022499-0087 14979764.1 a04/17/20 CITY OF GARDEN GROVE CITY OF ORANGE -19- APPROVED AS TO FORM: RUTAN & TUCKER, LLP By: Jeremy N. Jungreis General Counsel, OCWD APPROVED AS TO FORM: By: City Attorney APPROVED AS TO FORM: By: for City Attorney APPROVED AS TO FORM: By: City Attorney APPROVED AS TO FORM: By: City Attorney [SIGNATURES CONTINUED] 262T022499.0087 14979764.1 a04- 17'20 ORANGE COUNTY WATER DISTRICT 0 Vicente Sarmiento, President Michael R. Markus, General Manager CITY OF ANAHEIM CITY ULL B ke—•t0k:J�- A. CITY OF GARDEN GROVE e CITY OF ORANGE -19- APPROVED AS TO FORM: RUTAN & TUCKER, LLP By: Jeremy N. Jungreis General Counsel, OCWD APPROVED AS TO FORM: By: City Attorney APPROVED AS TO FORM: By: City Attorney ORANGE COUNTY WATER DISTRICT By: Vicente Sarmiento, President By: Michael R. Markus, General Manager CITY OF ANAHEIM CITY OF FULLERTON APPROVED AS TO ORM: CITY OF GARDEN GROVE By: By: �. ity Atlorne� APPROVED AS TO FORM: By: City Attorney [SIGNATURES CONTINUED] CITY OF ORANGE 2629r022499-0087 14979764 1 a04;17120 —19— APPROVED AS TO FORM: RUTAN & TUCKER, LLP By: Jeremy N. Jungreis General Counsel, OCWD APPROVED AS TO FORM: By: City Attorney APPROVED AS TO FORM: B y: City Attorney APPROVED AS TO FORM: By: City Attorney [SIGNATURES CONTINUED) ORANGE COUNTY WATER DISTRICT LIM Vicente Sarmiento, President Michael R. Markus, General Manager CITY OF ANAHEIM an CITY OF FULLERTON IN CITY OF GARDEN GROVE CITY OF ORANGE By: Mark . Murphy, Mayor T: Pam e a Coleman, City Clerk 2629/022499-00$7 14979764.1 aOV17120 - 19' APPROVED AS TO FORM: WOODRUFF, SPRADLIN & SMART, By. 7A avid E. Kendig City Attorney, City of Tustin ATTEST: Daisy Gomez Clerk of the Council APPROVED AS TO FORM SONIA R. CARVALHO, City Attorney John M.Funk Assistant City Attorney APPROVED AS TO FORM: ATKINSON, ANDELSON, LOYA, RUUD & ROMO CITY OF TU I By: Dr. Allan ernstein, Mayor CITY OF SANTA ANA LN Kristine Ridge City Manager RECOMMENDED FOR APPROVAL Nabil Saba Acting Executive Director Public Works Agency EAST ORANGE COUNTY WATER DISTRICT WE Lisa Ohlund, General Manager Jeffrey A. Hoskinson [SIGNATURES CONTINUED] 2629/022499-0087 14979764.1 a04/17/20 -20- APPROVED AS TO FORM. - WOODRUFF, SPRADLIN & SMART, APC IC David E. Kendig City Attorney, City of Tustin ATTEST:; Daisy Gomez Clerk of the Council APPROVED AS TO FORM SONIA R. CARVALHO, City Attorney By; (�4'�'• -f—L An M. Funk Assistant City Attorney APPROVED AS TO FORM: ATKINSON, ANDELSON, LOYA, RUUD & ROMO an Jeffrey A. Hoskinson [SIGNATURES CONTINUED] CITY OF TUSTIN Dr. Allan Bernstein, Mayor CITY OF SANTA ANA By: 'Tristine Ri ge City Manager RECOMMENDED FOR APPROVAL NabiI Saba Executive Director Public Works Agency EAST ORANGE COUNTY WATER DISTRICT 2629/022499-0087 14979764.1 04M/20 -20- Lisa Ohlund, General Manager APPROVED AS TO FORM: WOODRUFF, SPRADLIN & SMART, APC David E. Kendig City Attorney, City of Tustin ATTEST: Daisy Gomez Clerk of the Council APPROVED AS TO FORM SONIA R. CARVALHO, City Attorney By: John M. Funk Assistant City Attorney APPROVED AS TO FORM: ATKINSON, ANDELSON, LOYA, RUUD & ROMO r By: Je y A. inson [SIGNATURES CONTINUED] CITY OF TUSTIN Dr. Allan Bernstein, Mayor CITY OF SANTA ANA M. Kristine Ridge City Manager RECOMMENDED FOR APPROVAL Nabil Saba Acting Executive Director Public Works Agency EAST ORANGE COUNTY WATER D 2629.+022499-0087 14979764.1 041T20 -20- APPROVED AS TO FORM: HANSON BRIDGETT, LLP Claire H. Collins APPROVED AS TO FORM: VARCO & ROSENBAI;M ENVIRONMENTAL LAW GROUP Y: S. Wayne Rosenbaum Counsel for Serrano Water District APPROVED AS TO FORM: Andrew B. Gagen IRVINE RANCH WATER DISTRICT Paul A. Cook, General Manager SERRANO WATER DISTRICT By: Jerry : V' ander YORBA LINDA WATER DISTRICT 2629/022499-0037 I49797G4_ 144/t7/20 -21- APPROVED AS TO FORM: HANSON BRIDGETT, LLP Claire H. Collins APPROVED AS TO FORM: S. Wayne Rosenbaum APPROVED AS TO FORM: KIDMAN GAGEN LAW, LLP By: X;�/ Andrew B. Gage ,' IRVINE RANCH WATER DISTRICT Paul A. Cook, General Manager SERRANO WATER DISTRICT Jerry A. Vilander YORBA LINDA WATER DISTRICT By: / CCLA-C._?t Marc Marcantonio, General Manager 2629i622499-0087 14979764.1 a04,17.20 -21- Exhibit A Allocation of Recovery Example of proportionally dividing damages assuming litigation, after paying Shared Litigation Counsel, results in a total damage pool of 75% of all damages ($630M) claimed by all Participating Producers (total claims of $839M). The column to the far right reflects each co -plaintiff's hypothetical recovery. (Total Amount Claimed in Litigation by each co -plaintiff x .75) (Dollar amounts shown are for illustrative purposes only and are not related to actual PFAS cost that may be incurred or damages recovered. The numbers used herein are strictly hypothetical) 2629/022499-0087 14979764.1 a06/10/20 Exhibit B Notice Addresses Orange County Water District P.O. Box 8300 18700 Ward Street Fountain Valley, CA 92708 Attn: General Manager Mike Markus City of Anaheim 201 S. Anaheim Blvd., Suite 1101 Anaheim, CA 92805 Attn: Assistant General Manager of Water Services Michael Moore City of Fullerton 303 W. Commonwealth Ave. Fullerton, CA 92843 Attn: Public Works Director Meg McWade City of Garden Grove 13802 Newhope Street Garden Grove CA, 92843 Attn: Public Works Director Bill Murray City of Orange P.O. Box 449 Orange, CA 92856 Attn: Public Works Director Christopher Cash City of Tustin P.O. Box 466 Tustin, CA 92781 Attn: Water Resources Manager Mike Grisso 2629/022499-0087 14979764.1 a06/10/20 City of Santa Ana 220 S. Daisy, Bldg. A Santa Ana, CA 92703 Attn: Water Resources Manager Nabil Saba East Orange County Water District 185 N. McPherson Road Orange, CA 92869-3720 Attn: General Manager Lisa Ohlund Irvine Ranch Water District 15600 Sand Canyon Avenue Irvine, CA 92618 Attn: General Manager Paul Cook Serrano Water District 18021 Lincoln Street Villa Park, CA 92861-6446 Attn: General Manager Jerry Vilander Yorba Linda Water District P.O. Box 309 Yorba Linda, CA 92885-0309 Attn: General Manager Brett Barbre 2629/022499-0087 14979764.1 a08/25/20 -2-