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Section 2. Conditions Precedent. Notwithstanding anything to the contrary contained herein, this Franchise Agreement shall not become effective until and unless the appropriate franchise ordinance or resolution is formally adopted by the Town Council of INDIAN RIVER SHORES approving this Franchise Agreement and granting to COUNTY the Franchise contemplated herein. Section 3. Franchise Grant. INDIAN RIVER SHORES hereby grants to COUNTY, with all rights and privileges attendant thereto, a non-exclusive Franchise to construct, maintain, and operate reclaimed water utility systems within the John's Island community and customers not served by the City of Vero Beach ("Service Area"). Such reclaimed water utility systems shall consist of all reclaimed water facilities (including, pipes, fixtures, mains, valves, meters, tanks, lift stations, etc., and telephone and electric lines for water, wastewater, and reclaimed water utility system use) for the purpose of supplying reclaimed water utility service to the Service Area and the inhabitants thereof. Section 4. Franchise Term and Renewal. The term of this Franchise Agreement and the Franchise granted hereunder shall be for a period of Twenty-five (25) years commencing on the Effective Date. This Franchise Agreement shall automatically renew for an additional 25 years unless either party provides notice to the other party of its intent to terminate this Franchise Agreement at least 4 years prior to the expiration of this Franchise Agreement. Section 5. Utility Rates and Fees. Except as set forth in the Agreement, the rates for reclaimed water utility services established and charged by COUNTY for customers within the Service Area shall be no greater than the rates for such utility services as published by the COUNTY for the various rate classifications served. Likewise, any and all other fees and charges established and imposed by COUNTY shall correspond to such fees and charges assessed by COUNTY and shall be no greater that those imposed by COUNTY in each rate classification. The foregoing rates, fees, and charges shall be adopted and applied to each customer's utility billing commencing with the customer's first utility bill that is produced subsequent to Thirty (30) days from the Effective Date. The rates, fees, and other charges assessed shall be adjusted by COUNTY at the same time as any other adjustment made by COUNTY of its corresponding charges and fees. COUNTY shall provide the Town Manager of INDIAN RIVER SHORES for review and comment any proposed rate or fee adjustments no less than Thirty (30) days before the adjustment is scheduled to go before the COUNTY Board of County Commissioners City for consideration. Notwithstanding any of the foregoing language to the contrary, all rates, fees and regulations established by COUNTY shall be otherwise reasonable, and the rates and fees charged by COUNTY shall at all times be subject to such regulation as may be provided by state law. Further, the parties recognize that the right to establish and regulate reclaimed water rates, impact fees, service policies or other rules or regulations, and the construction, operation or maintenance of the reclaimed water utility system shall be vested solely in COUNTY, except as such may be otherwise subject to the applicable laws of the Federal Government and the State of Florida or the provisions of this Franchise Agreement. Page 2 of 7