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ATTACHMENTI PERFORMANCE INCENTIVES AND DISINCENTIVES Exceptional Diversion Level Performance Contractor shall receive an incentive payment if the calculated Overall Diversion Level achieved by Contractor in any given Rate Year exceeds the arithmetic average of the calculated Overall Diversion Levels for the five (5) Rate Years prior to the Rate Year under consideration. The incentive payment for Rate Year Eleven (2021) shall equal seventy dollars ($70.00) per Ton for each Ton over that threshold. In subsequent Rate Years, the per -Ton incentive payment amount shall be adjusted by the Annual Index Change in the CPI -U, which is described in Attachment K. For example, when assessing the potential for an incentive payment for completed Rate Year Sixteen, the Rate Year Sixteen Overall Diversion Level shall be compared to the average of the calculated Overall Diversion Level for Rate Years Eleven, Twelve, Thirteen, Fourteen, and Fifteen. Continuing the example, if the calculated Overall Diversion Levels for Rate Years Eleven through Fifteen were 36.5%, 36.7%, 36.8%, 36.9% and 37.1%, respectively, then the arithmetic average over such five (5) Rate Year period would be 36.8%. This is the threshold that Contractor would need to exceed in Rate Year Sixteen to earn an incentive payment. If in Rate Year Sixteen the Contractor Collected the Tonnages set forth in Table 2 above, then the amount of the performance incentive would be calculated as follows: Total Tons of material actually Collected: Tons of Recyclable Material* required to be Collected to meet threshold: Tons of Recyclable Material* actually Collected: Amount by which Contractor exceeded threshold Incentive payment: 422,200 155,370 (= 422,200 x 0.368) 156,200 830 (= 156,200 — 155,370) $58,100 (= 830 x $70.00)** * For purposes of this calculation, Recyclable Materials Collected shall include the sum of Targeted Recyclable Materials, Other Recyclable Materials, and Organic Materials Collected, without adjusting for Contamination pursuant to the definition of "Overall Diversion Level' in Attachment A. ** For simplicity purposes, $70 per Ton has been used in this calculation; however, it is the amount for Rate Year Eleven (2021). The amount for Rate Year Sixteen would equal $70 per Ton adjusted annually by the Annual Index Change in the CPI -U. Minimum Diversion Level Requirements Minimum Sinole-Familv Diversion Level Contractor shall be assessed a Disincentive Payment if the calculated Single -Family Diversion Level in any given Rate Year is less than the arithmetic average of the calculated Single -Family Diversion Levels for the five (5) Rate Years prior to the Rate Year under consideration. The disincentive payment for Rate Year Eleven (2021) shall equal seventy dollars ($70.00) per Ton for each Ton under that arithmetic average). In subsequent Rate Years, the per -Ton incentive payment amount shall be adjusted by the Annual Index Change in the CPI -U, which is described in Attachment K. Franchise Agreement for Collection Services with Recology San Mateo County Attachment I City of Redwood City REV: 03-16-18 MI Performance Incentives and Disincentives Page 4 of 8 ATN/AGR.2018.054/Recology of San Mateo