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20-1120_ECO RESOURCES, INC AND ARB, INC_Construction AgreementAGREEMENT FOR THE CONSTRUCTION OF THE SAN JUAN BASIN DESALTER PROJECT between ECO RESOURCES, INC. and ARB, INC. 4XOW.1 410828 } 412574.1 Capistrano Valley Water District Page i Construction Agreement San Juan Basin Desalter Project UON84 AMA12 412574.1 TABLE OF CONTENTS Page ARTICLE1- GENERAL..........................................................................................................................2 ARTICLE 2 - CONTRACTOR'S SERVICES AND RESPONSIBILITIES......................................14 ARTICLE 3 - DESIGN -BUILDER'S SERVICES AND RESPONSIBILITIES................................27 ARTICLE 4 - HAZARDOUS MATERIALS AND DIFFERING SITE CONDITIONS ...................30 ARTICLE5 - CONTRACT TIMES.......................................................................................................32 ARTICLE 6 - GUARANTEED MAXIMUM PRICE...........................................................................35 ARTICLE 7 - PROCEDURE FOR PAYMENT....................................................................................36 ARTICLE8 - TERMINATION..............................................................................................................42 ARTICLE 9 - REPRESENTATIVES OF THE PARTIES...................................................................47 ARTICLE 10 - INSURANCE AND BONDS..........................................................................................47 ARTICLE11- INDEMNIFICATION....................................................................................................49 ARTICLE12 - CHANGES......................................................................................................................51 412574 1 TABLE OF CONTENTS (continued) Page ARTICLE 13 - DISPUTE RESOLUTION.............................................................................................57 ARTICLE 14 - MISCELLANEOUS.......................................................................................................58 EXHIBIT A — SCOPE OF WORK .......................................... EXHIBIT B — CONTRACTOR PERMITS ............................. ....................................................1 ...................................................1 EXHIBIT C — PROJECT SCHEDULE AND MILESTONES.............................................................1 EXHIBIT D — INSURANCE REQUIREMENTS..................................................................................1 EXHIBIT E — CONCEPTUAL DESIGN DRAWINGS.........................................................................1 EXHIBIT F TIME AND MATERIAL RATES, UNIT PRICES AND EQUIPMENT COSTS .......... I EXHIBIT G SERVICE CONTRACT.....................................................................................................1 EXHIBIT H CONTRACTOR'S PROPOSAL.........................................................................................1 Capistrano Valley Water District San Juan Basin Desalter Project Uesas4 4vwaz 412574.1 Page ii Construction Agreement AGREEMENT FOR THE CONSTRUCTION OF THE SAN JUAN BASIN DESALTER PROJECT This Agreement (the "Agreement") is made as of this _ day of , 2002 (the "Effective Date"), by and between ECO Resources, Inc. ("Design -Builder") and ("Contractor") which entities are sometimes individually referred to herein as "Party" and collectively as the "Parties." RECITALS A. Design -Builder has entered into an agreement (the "Service Contract") with the Capistrano Valley Water District ("Owner") entitled Service Contract for the Design, Construction, Financing and Operation of the San Juan Basin Desalter Project (the "Project"). A copy of the Service Contract, including all appendices thereto, is attached hereto as Exhibit G. B. Under the terms of the Service Contract, Design -Builder has agreed to design, construct, operate and maintain the Project, and also to undertake certain obligations to guarantee bonds being issued to finance the costs of the Project. C. The Service Contract was entered into by Owner and Design -Builder pursuant to California Government Code Sections 5956, et seq., which provisions allow local governmental agencies to use private investment capital to develop, finance, design, build, operate and maintain public infrastructure projects. The costs of the Project will be financed from the proceeds of bonds issued and sold for that purpose. The bond holders will be represented by a trustee who shall, in addition to the Owner, have authority and oversight over the work of the Project and payments to Design -Builder (the "Trustee"). The Trustee shall be represented during the project by an independent engineer, retained by Trustee for that purpose (the "Independent Engineer"). Under the terms of the Service Contract, payments for the work of the Project will be made by the Trustee on behalf of the Owner. D. Design -Builder has retained Boyle Engineering, Inc. (the "Project Engineer") to prepare the Project Design in accordance with Owner's requirements as set forth in the Service Contract. E. Contractor is entering into this Agreement on the basis of conceptual drawings attached hereto as Exhibit E prepared by the Project Engineer and with knowledge of Owner's requirements for the construction of the Project as set forth in the Service Contract. Contractor understands that the Project Design has not been prepared as of the date of Capistrano Valley Water District Page 1 Construction Agreement San Juan Basin Desalter Project 4108281 412574.1 this Agreement and that the Project will be constructed on a "fast track" basis with portions of the Project Design being completed as necessary to maintain the progress of the work of the Project and Owner's schedule requirements as set forth in the Service Contract. Contractor understands and agrees that time is strictly of the essence under the terms of the Service Contract and that Design -Builder may be subject to substantial and cumulative liquidated damages if Owner's schedule requirements are not met. F. Design -Builder wishes to retain Contractor to furnish all work required to construct the Project in accordance with the Project Design prepared by the Project Engineer and in accordance with Owner's requirements as set forth in the Service Contract. In retaining Contractor to construct the Project, Design -Builder is relying on Contractor's experience constructing like projects of similar magnitude and complexity under equivalent time constraints. NOW THEREFORE, for good and valuable consideration, including the mutual covenants and conditions contained herein, Design -Builder and Contractor agree as follows: AGREEMENT ARTICLE 1— GENERAL 1.1 Basic Purpose Design -Builder has contracted with Owner to provide the services necessary for the design and construction of the Project as set forth in the Service Contract. Design -Builder has retained Contractor to furnish all construction services Design -Builder is required to perform under the Service Contract. Design -Builder has separately retained the Project Engineer to furnish all design services Design -Builder is required to perform under the Service Contract. It is the intent of the Parties that, except as otherwise provided herein, Design -Builder and Contractor shall have the same rights, responsibilities, and obligations to one another for the construction of the Project as Owner and Design -Builder under the Service Contract. Design -Builder is retaining Contractor for the purpose of furnishing all labor, services, equipment, materials, facilities, supplies, tools, incidentals and temporary utilities necessary to construct the Project in strict accordance with this Agreement and the documents and materials incorporated by reference herein including, without limitation, the applicable provisions of the Service Contract and the Project Design. 1.2 Definitions Terms used in this Agreement shall have the meanings set forth in the Service Contract unless otherwise provided below. Key terms defined in the Service Contract and used in this Agreement are set forth below. Capistrano Valley Water District Page 2 Construction Agreement San Juan Basin Desalter Project 410828.1 00.8 412574.1 Agreement refers to this Agreement for the Construction of the San Juan Basin Desalter Project between Eco Resources, Inc. and ARB, Inc. including the Contract Documents. Applicable Laws means (1) any federal, state or local law, code, regulation, consent order or agreement; (2) any formally adopted and generally applicable rule, requirement, determination, standard, policy, implementation schedule or order of any Governmental Body having appropriate jurisdiction; (3) any established interpretation of law or regulation utilized by an appropriate Governmental Body if such interpretation is documented by such regulatory body and generally applicable; and (4) any Governmental Approval, in each case having the force of law and applicable from time to time to (a) the construction, equipping, possession, permitting start-up, testing of water treatment systems relating to the Project; (b) the delivery, treatment, storage or supply of water; (c) any other transaction or matter contemplated hereby (including, without limitation, any of the foregoing which pertain to the construction of the Project, including, but not limited to safety, fire, environmental protection, labor relations, building codes, the payment of prevailing or minimum wages and non-discrimination). Applicable Law shall be deemed to include the requirements contained in the final mitigated negative declaration approved by the District in connection with the Project. Booster Pumping Station means the Strawberry Booster Pumping Station, for boosting the pressure of Finished Water conveyed from the Plant to the Water System, including all related buildings, structures, pipes, valves and equipment, as more particularly described in Appendix 1 of the Service Contract. Booster Pumping Station Site means the parcels of real property described in Appendix 1 of the Service Contract on which the Booster Pumping Station is to be constructed by the Contractor. Brine means any sanitary wastewater and any brine, liquid or water -carried pollutant resulting from the treatment of Raw Water that is not capable of, or is prohibited by Applicable Law or the Service Contract from, being recycled at the Plant and requires disposal in accordance with the Service Contract. CERCLA means the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. 9601 et seq., and applicable regulations promulgated thereunder, each as amended from time to time. Change in Law means any of the following acts, events or circumstances to the extent that compliance therewith materially increases the cost of performing or materially increases the scope of the party's obligations hereunder: (a) the adoption, amendment, promulgation, issuance, modification, repeal or written change in administrative or judicial interpretation of any Applicable Law on or after the Effective Date of this Agreement, unless such Applicable Law was on or prior to Capistrano Valley Water District Page 3 Construction Agreement San Juan Basin Desalter Project 4108281 �I OR2R.2 412574.1 the Effective Date duly adopted, promulgated, issued or otherwise officially modified or changed in interpretation, in each case in final form, to become effective without any further action by any Governmental Body; (b) the order or judgment of any Governmental Body issued on or after the Effective Date (unless such order or judgment is issued to enforce compliance with Applicable Law which was effective as of the Effective Date) to the extent such order or judgment is not the result of willful or negligent action, error or omission or lack of reasonable diligence of Contractor or of Design -Builder, whichever is asserting the occurrence of a Change in Law; provided, however, that the contesting in good faith or the failure in good faith to contest any such order or judgment shall not constitute or be construed as such a willful or negligent action, error or omission or lack of reasonable diligence; (c) except with respect to any Governmental Approval required for the construction of the Project as provided within (b) below pertaining to exclusions from "Change in Law",—a delay in the review, issuance or renewal of, or the suspension, termination or interruption of any Governmental Approvals relating to the Work, or the imposition of a term, condition or requirement which is more stringent or burdensome than the standards to be followed by Contractor under this Agreement in connection with the issuance, renewal or failure of issuance or renewal of, any Governmental Approval to the extent that such occurrence is not the result of willful or negligent action, error or omission or a lack of reasonable diligence of the Contractor or of Design -Builder, whichever is asserting the occurrence of a Change in Law; provided, however, that the contesting in good faith or the failure in good faith to contest any such occurrence shall not be construed as such a willful or negligent action or lack of reasonable diligence. It is specifically understood, however, that none of the following shall constitute a "Change in Law": (a) a change in the nature or severity of the actions typically taken by a Governmental Body to enforce compliance with Applicable Law which was effective as of the Effective Date; or (b) acts, events and circumstances with respect to which the Contractor has assumed the permitting risk relating to the Project under this Agreement; City refers to the City of San Juan Capistrano. Concentrate Disposal Line means the transmission line for the conveyance from the Plant to the South Orange County Wastewater Authority PC5 Ocean Outfall of Brine concentrate resulting from the treatment of Raw Water at the Plant, including all related buildings, structures, pipes, valves and equipment, as more particularly described in Appendix 1. The Concentrate Disposal Line includes the Concentrate Disposal Line Site. Capistrano Valley Water District Page 4 Construction Agreement San Juan Basin Desalter Project 41 ON381 410828 412574.1 Concentrate Disposal Line Site means the real property or rights of way described in Appendix 1 on or over which the Concentrate Disposal Line is to be constructed. Conceptual Design Drawings refers to the drawings and plans attached to this Agreement as Exhibit E. Construction Governmental Approvals means those Governmental Approvals which are necessary in order to commence and complete construction of the Project. Construction Manager refers to a representative appointed by Design -Builder. Construction Schedule refers to the schedule for performance of the Work and Completion of the Project prepared by Contractor, and accepted by the Design -Builder pursuant to the terms of this Agreement including, without limitation, the provisions appearing at Exhibit C to this Agreement. Cost Substantiation has the meaning specified in Section 16.5 of the Service Contract. Contract Documents has the meaning specified in Section 1.3 of this Agreement. Guaranteed Maximum Price has the meaning specified in Article 6 of this Agreement. Contract Times refers to times for performance of the Work of the Project set forth at Article 5 and Exhibit C to this Agreement. Contractor refers to ARB, Inc. Contractor Fault means any breach (including the untruth or breach of any Contractor representation or warranty herein set forth), failure, non-performance or non-compliance by the Contractor with respect to its obligations and responsibilities under this Agreement to the extent not attributable to any Uncontrollable Circumstance or Design -Builder Fault, and which materially and adversely affects Design -Builder's rights and obligations or ability to perform under this Agreement or the Service Contract. Day or Days refers to calendar days unless stated otherwise. Deliverable Material has the meaning specified in Section 6.12 of the Service Contract. Design Requirements means the design requirements for the Project set forth in the Appendices to the Service Contract, as the same may be changed or modified in accordance therewith. District means the Capistrano Valley Water District. Capistrano Valley Water District Page 5 Construction Agreement San Juan Basin Desalter Project U08284 Oo= 412574.1 District Engineer means either the City's Director of Public Works or other engineer employed or designated by the District from time to time in writing by the District. District Fault means any breach (including the untruth or breach of any District representation or warranty set forth in the Service Contract), failure, non-performance or non- compliance by the District under the Service Contract with respect to its obligations and responsibilities under the Service Contract to the extent not attributable to any Uncontrollable Circumstance or Design -Builder Fault, and which materially and adversely affects Design - Builder's or Contractor's rights, obligations or ability or costs to perform under this Agreement. Effective Date means the date first set forth above in the preamble to this Agreement. Encumbrances means any Lien, lease, mortgage, security interest, charge, judgment, judicial award, attachment or encumbrance of any kind with respect to the Project, other than Permitted Encumbrances. EPA means the United States Environmental Protection Agency and any successor agency. Exit Test Procedures and Standards means the test procedures and standards for the performance test of the Project to be conducted by Design -Builder prior to termination or expiration of the Service Contract as set forth in Appendix 18 to the Service Contract. Final Completion means completion of the requirements of Section 7.16(A)(1), (A)(3), (A)(4) as applicable, (A)(7), as applicable, (A)(8)as applicable, (A)(9), and 7.16 (B)(2) of the Service Agreement; completion of the Final Punch List work;, and Completion all any and all other construction -related responsibilities described in this Agreement. Final Punch List has the meaning specified in subsection 7.15(A), as applicable, of the Service Contract. Finished Water means Raw Water which has been treated at the Plant in accordance with the Service Contract and delivered to the Finished Water Transmission Line. Finished Water Transmission Line means the transmission line for the conveyance of Finished Water to the Water System, including all related buildings, structures, pipes, valves and equipment, as more particularly described in Appendix 1 of the Service Contract. The Finished Water Transmission Line includes the Finished Water Transmission Line Site. Finished Water Transmission Line Site means the real property or rights of way described in Appendix 1 of the Service Contract on or over which the Finished Water Transmission Line is to be constructed. Capistrano Valley Water District Page 6 Construction Agreement San Juan Basin Desalter Project Good Engineering and Construction Practice means those methods, techniques, standards and practices which, at the time they are to be employed and in light of the circumstances known or reasonably believed to exist at such time, are generally recognized and accepted as good design, engineering, equipping, installation, construction and commissioning practices for the design, construction and improvement of capital assets in the municipal water treatment industry as followed in the southern California region of the United States. Governmental Approvals means all orders of approval, permits, licenses, authorizations, consents, certifications, inspections, tests, exemptions, rulings, entitlements and approvals issued by a Governmental Body of whatever kind and however described which are required under Applicable Law to be obtained or maintained by any person with respect to the Contract Services. Governmental Body means any federal, state, regional or local legislative, executive, judicial or other governmental board, agency, authority, commission, administration, court or other body, or any official thereof having jurisdiction. Hazardous Material means any waste, substance, object or material deemed hazardous under Applicable Law including, without limitation, "hazardous substance" as defined under CERCLA and "hazardous waste" as defined under RCRA. Independent Engineer means a nationally -recognized qualified consulting engineer or firm of consulting engineers representing the Trustee and having experience with respect to obtaining of governmental approvals for, design, construction, testing, operation, maintenance, repair, replacement and management of water treatment facilities and in monitoring construction progress and reviewing related payment applications. Legal Proceeding means every action, suit, litigation, arbitration, administrative proceeding, and other legal or equitable proceeding having a material bearing upon this Service Contract or the performances of the parties hereunder, and all appeals therefrom. Lien means any and every lien against the Project or against any monies due or to become due from the District to Design -Builder under the Service Contract or to Contractor under this Agreement, for or on account of the Work, including mechanics' liens and stop notices. Loss -and -Expense means any and all actual loss, liability, forfeiture, obligation, damage, fine, penalty, judgment, deposit, cost, expense, charge, Tax, or expense, including all Fees and Costs, except as explicitly excluded or limited under any provision of the Service Contract. Metropolitan Agreement means the 1998 San Juan Basin Desalter Project Agreement between the Metropolitan Water District of Southern California, the Municipal Water District of Capistrano Valley Water District Page 7 Construction Agreement San Juan Basin Desalter Project 410828 1 410828.1 412574.1 Orange County and the San Juan Basin Authority, dated December 4, 1998, as amended, modified, clarified and implemented from time to time. Metropolitan means the Metropolitan Water District of Southern California. Non -Conforming Work means defective material, workmanship and/or improper installation or construction performed by Contractor which fails to conform with the requirements of this Agreement. Notice to Proceed means a notice issued by Design -Builder to Contractor to commence the Work. Owner shall mean the Capistrano Valley Water District or its assignee or successor -in - interest as described in the Service Contract. Plant means the San Juan Capistrano Desalter Plant, consisting generally of the treatment works for production of Finished Water from Raw Water. The Plant includes the Plant Site, the Project Structures and Project Equipment involved in water treatment and production, as further described in Appendix 1 of the Service Contract, The Plant will be located proximate to 32400 Paseo Adelanto, San Juan Capistrano, California. Plant Site means the parcel of real property described in Appendix 1 of the Service Contract on which the Plant is to be constructed. Pre -Existing Environmental Condition means, and is limited to, (1) the presence anywhere in, on or under the Project on the Effective Date of this Agreement, if not disclosed to Contractor as of said Effective Date, of underground storage tanks (for the storage of chemicals or petroleum products), and (2) the presence anywhere in, on or under the Project, whether or not disclosed to Contractor as of the Effective Date, of Hazardous Materials. Project means the Sites and the Project Improvements. Project Design refers to the Conceptual Design Drawings and to the drawings, plans, specifications and other documents and materials prepared and to be prepared as the Project progresses by the Project Engineer describing the requirements for construction of the Project in accordance with the provisions of the Service Contract including, without limitation, all approved submittals, executed change orders and responses to requests for information. Project Engineer refers to Boyle Engineering, Inc. Project Equipment means all manufactured equipment, property or assets, whether or not constituting personal property or fixtures, constituting part of the Project Improvements Capistrano Valley Water District Page 8 Construction Agreement San Juan Basin Desalter Project 4109181 4in42R z 412574.1 including tanks, pumps, membrane systems, and water processing and treatment equipment; instrumentation and control systems; remote monitoring and communications systems; filtration, disinfection, corrosion control and water treatment systems; and chemical mixing, metering, storage, handling and feed systems. Appendix 1 generally lists the types of equipment that are expected to be installed in the Project and to constitute "Project Equipment". Project Improvements means the Plant, the Wells, the Raw Water Transmission Line, the Booster Pumping Station, the Finished Water Transmission Line, the Concentrate Disposal Line, and any Capital Modifications made thereto from time to time. After Acceptance, the Booster Pumping Station shall become part of the Water System, and shall not be considered part of the Project Improvements. Project Schedule refers to the times by which the various stages of both the design and construction of the Project must be performed pursuant to the Service Contract so as to satisfy Design -Builder's obligations to Owner. Project Sites shall have the same meaning as the Sites. Project Structures means all structures, buildings, concrete basins and metal tanks, piping and other buried infrastructure, other than Project Equipment, constituting part of the Project Improvements. Property Lease means the Property Lease to be entered into by the District and the Issuer providing for the lease of the Sites from the District to the Issuer, as the same may be amended from time to time in accordance therewith. Provisional Acceptance Date has the meaning specified in Section 7.8 of the Service Contract. Raw Water means any water pumped from the Wells and conveyed to the Plant for treatment hereunder. Raw Water Transmission Line means the transmission lines for the conveyance of Raw Water to the Plant, including all related buildings, structures, pipes, valves and equipment, as more particularly described in Appendix 1. The Raw Water Transmission Line includes the Raw Water Transmission Line Site. Raw Water Transmission Line Site means the real property or rights of way described in Appendix 1 on or over which the Raw Water Transmission Line is to be constructed. RCRA means the Resource Conservation and Recovery Act, 42 U.S.C.A. §6901 et seq., and applicable regulations promulgated thereunder, each as amended from time to time. Capistrano Valley Water District Page 9 Construction Agreement San Juan Basin Desalter Project 41083&1 AI US 2 412574.1 Scheduled Acceptance Date has the meaning specified in Section 7.12 of the Service Contract. Schedule of Values has the meaning specified in Exhibit C to this Agreement and shall be used by Design -Builder, in conjunction with Contractor's Construction Schedule, as the basis for making all payments to Contractor under this Agreement. Service Contract refers to the Service Contract for the Design, Construction, Financing and Operation of the San Juan Basin Desalter Project between the Capistrano Valley Water District and ECO Resources, Inc. dated September 3 2002, including all Appendices thereto and documents incorporated by reference therein. Sites means the Plant Site, the Wellfield, the Booster Pumping Station Site, the Raw Water Transmission Line Site, the Finished Water Transmission Line Site and the Concentrate Disposal Line Site. Specified Site Conditions means, and is limited to: (1) the presence at the Project of subsurface structures, materials or conditions having historical, archaeological, religious or similar significance; (2) the presence at the Project of functioning subsurface structures used by Utility providers on, underneath, near or adjacent to the Project if not disclosed to Contractor as of the Effective Date; (3) the presence at the Project of any habitat of an endangered or protected species as provided in Applicable Law. Subcontractor means every person (other than employees of Contractor) employed or engaged by Contractor (including all subcontractors and suppliers of every tier) to perform or furnish any portion of the Work, whether for the furnishing of labor, materials, equipment, supplies, services or otherwise. Substantial Completion has the meaning specified in Section 7.4.2 of this Agreement. Tax means any tax, fee, levy, duty, impost, charge, surcharge, assessment or withholding, or any payment -in -lieu thereof, and any related interest, penalty or addition to tax. Uncontrollable Circumstance means any act, event or condition that is beyond the reasonable control of the party relying thereon as justification for not performing an obligation or complying with any condition required of such party under this Agreement, and that materially interferes with or materially increases the costs of performing its obligations hereunder (other than payment obligations) to the extent that such act, event or condition is not the result of the willful or negligent act, error or omission, failure to exercise reasonable diligence, or breach of this Service Contract on the part of such party. (1) Inclusions. Subject to the foregoing, Uncontrollable Circumstances shall include, and shall not be limited to, the following: Capistrano Valley Water District Page 10 Construction Agreement San Juan Basin Desalter Project (a) a Change in Law, except as provided in (1) and (m) of item 2 below; (b) the existence of a Pre -Existing Environmental Condition; (c) the existence of a Specified Site Condition; (d) the treatment of Raw Water having parameters which are outside the range established by the Design Raw Water Quality Parameters; (e) contamination of the Project from groundwater, soil or airborne Hazardous Material migrating from sources outside of the Project and not caused by Contractor Fault; (f) naturally occurring events (except weather conditions normal for the Service Area, including 20 days of severe weather as defined in Section 5.5.2 hereof) such as landslides, underground movement, earthquakes, fires, tornadoes, hurricanes, floods, lightning, epidemics and other acts of God; (g) explosion, sabotage or similar occurrence, acts of a declared or undeclared public enemy, extortion, war, blockade or insurrection, riot or civil disturbance; (h) labor disputes, except labor disputes involving employees of the Contractor, its Affiliates, or Subcontractors which affect the performance of the Contract Services; (i) the failure of any Subcontractor (other than the Contractor) to furnish services, materials, chemicals or equipment on the dates agreed to, but only if such failure is the result of an event which would constitute an Uncontrollable Circumstance if it affected the Contractor directly, and the Contractor is not able after exercising all reasonable efforts to timely obtain substitutes; 0) the failure of any appropriate Governmental Body or private utility having operational jurisdiction in the area in which the Project is located to provide and maintain Utilities to the Project which are required for the performance of this Agreement, except as provided in paragraph (h) of item (2) below; (k) the absence of ownership rights by the District or the City in the Sites, notwithstanding the representation of the District with respect thereto in subsection 2.1(H) of the Service Contract; (1) except as provided in (k) of item 2 below, the existence of any right, restriction, servitude, license, easement, right of way, limitation, qualification, exception, adverse claim, Encumbrance or Lien on the Sites which either is unrecorded or not listed as an exception on the Preliminary Title Reports as provided in the Service Contract and which materially and adversely affects the performance of the Work; (m) the preemption, confiscation, diversion, destruction or other interference in possession or performance of materials or services by a Governmental Body in connection with a public emergency or any condemnation or other taking by eminent domain of any material portion of the Project; (n) a violation of Applicable Law by a person other than the affected party or its Subcontractors; (o) any Legal Proceeding described in subsection 4.5(A)(9) of the Service Contract, or any order or decree issued by a court of competent jurisdiction or other Governmental Capistrano Valley Water District Page 11 Construction Agreement San Juan Basin Desalter Project 410818.1 412574.1 Body which delays or prevents the construction or operation of the Project, where such order or decree is not caused by Contractor Fault; (p) District Fault or District -requested Change Orders not due to Contractor Fault; and (2) Exclusions. It is specifically understood that, without limitation, none of the following acts, events or circumstances shall constitute Uncontrollable Circumstances: (a) any act, event or circumstance that would not have occurred if the affected party had complied with its obligations hereunder; (b) changes in interest rates, inflation rates, wage rates, insurance premiums, commodity prices, currency values, exchange rates or other general economic conditions; (c) changes in the financial condition of the Contractor affecting its ability to perform their respective obligations; (d) the consequences of error, neglect or omissions by Contractor or its Subcontractors in the performance of the Work; (e) union or labor work rules, requirements or demands which have the effect of increasing the number of employees employed at the Project or otherwise increasing the cost to the Contractor of performing the Contract Services; (f) any and all surface, subsurface and other conditions affecting the Sites, which may increase cost of performing or cause delay in the performance of the Work, including particularly any subsurface geotechnical conditions, except those constituting Pre -Existing Environmental Conditions and Specified Site Conditions; (g) mechanical failure of equipment to the extent not resulting from a condition that is listed in the "Inclusions" Section of this definition; (h) power outages not caused by third -party Utilities or other Uncontrollable Circumstances; (i) weather conditions normal for the location of the Project, (k) failure of the Contractor to secure any patent or other intellectual property right which is or may be necessary for the performance of the Contract Services; (1) any Change in Law regarding the quality of Finished Water (including the issuance of any Governmental Approval, the enactment of any statute, or the promulgation of any regulation) the terms and conditions of which do not impose more stringent or burdensome requirements on the Contractor than are imposed by the standards to be followed by Contractor under this Agreement, Wellfield means the real property described in Appendix 1 to the Service Contract within which the Wells are to be located and constructed. Wells means the wells to be constructed by the Contractor hereunder for the production of Raw Water, including any related structures and equipment. Work has the meaning specified in Section 2.1 of this Agreement. Capistrano Valley Water District Page 12 Construction Agreement San Juan Basin Desalter Project 4408284 41(15.8.2 412574.1 1.3 Contract Documents The Contract Documents include the following: 1.3.1 Change Orders executed or issued pursuant to the terms of this Agreement; 1.3.2 This Agreement and Exhibits hereto and attachments incorporated by reference herein including, without limitation, the following: 1 the Service Contract; .2 Appendix 1 to the Service Contract (Project Description); .3 Appendix 5 to the Service Contract (Design Requirements); .4 Attachment 1 to Appendix 5 to the Service Contract (Well Construction Specifications); 5 Appendix 6 to the Service Contract (Design/Build Work Review Procedures); .6 Appendix 8 to the Service Contract (Acceptance Test Procedures and Standards); 7 Appendix 9 to the Service Contract (Governmental Approvals); 8 Appendix 11, Part 2 of the Service Contract (Required Construction Insurance) 8 Appendix 14 to the Service Contract (Safety and Security Plan); 9 Appendix 17 to the Service Contract (Acknowledged Subcontractors); 10 Appendix 18 to the Service Contract (Exit Test and Transition Plan); and 11 Appendix 21 to the Service Contract (Milestone Payment Schedules), except that the Milestones listed in said Appendix 21 are incorporated herein for purposes of Contractor's Construction Schedule and not as the basis or schedule for any payments by Design -Builder to Contractor under this Agreement. 1.3.3 The Project Design, including all plans, drawings and specifications prepared by the Project Engineer. Capistrano Valley Water District San Juan Basin Desalter Project uesU.4 1I (IR2R.2 412574.1 Page 13 Construction Agreement 1.4 Interpretation and Intent 1.4.1 Interpretation. The Contract Documents are intended to be complementary and interpreted in harmony so as to avoid conflict, with words and phrases interpreted consistent with construction and design industry standards. In the event of any inconsistency, conflict, or ambiguity between or among the Contract Documents, the Contract Documents shall take precedence in the order in which they are listed in Section 1.3 hereof with the document described in paragraph 1.3.1 above having the highest priority. 1.5 Mutual Obligations and Acknowledgments 1.5.1 Design -Builder and Contractor commit at all times to cooperate fully with each other, and proceed on the basis of trust and good faith, to permit each party to realize the benefits afforded under the Contract Documents. Design -Builder and Contractor shall perform their respective responsibilities, obligations and services in a timely manner to facilitate the other's timely and efficient performance and so as not to delay or interfere with the other's performance of its obligations under the Contract Documents. ARTICLE 2 — CONTRACTOR'S SERVICES AND RESPONSIBILITIES 2.1 Scope of Services In exchange for payment of the Guaranteed Maximum Price in accordance with and subject to the terms and conditions of this Agreement, Contractor shall furnish all of the labor, services, equipment, materials and supplies necessary to construct the Project as described in Exhibit A — Scope of Services, which are referred to collectively in this Agreement as the "Work". 2.2 Delivery of Bonds, Insurance Information, Preliminary Subcontractor List and Construction Schedule 2.2.1 Within seven (7) days after this Agreement is last executed by the Parties, Contractor shall furnish to Design -Builder all bonds and proof of insurance documents required by this Agreement. 2.2.2 Within fourteen (14) days after this Agreement is last executed by the Parties, Contractor shall furnish its preliminary Construction Schedule to Design -Builder. 2.2.3 Within thirty (30) days after this Agreement is last executed by the Parties, Contractor shall furnish the list of subcontractors which will perform Work on the Project. To the extent that subcontractors are added or substituted, Contractor shall give Design -Builder notice of such addition or substitution as soon as practicable. Design -Builder shall have Capistrano Valley Water District San Juan Basin Desalter Project Page 14 Construction Agreement the right to approve all of Contractor's subcontractors, which approval shall not be unreasonably withheld. 2.3 Construction Standards It is the intent of the Parties that Contractor shall employ Good Engineering and Construction Practice and that all Work performed by Contractor shall conform to all applicable standards provided in the Service Contract for the performance of the Work, that the Work shall specifically include and conform to the provisions appearing at Section 6.5 of the Service Contract, and that the standards for performance of the Work shall include, without limitation, the following: 2.3.1 Standards of Workmanship and Materials. Any reference in the Service Contract or this Agreement to materials, equipment, systems or supplies (whether such references are in lists, notes, specifications, schedules, or otherwise) shall be construed to require Contractor to furnish the same in accordance with the grades and standards therefor indicated in the Service Contract. Where the Service Contract and this Agreement do not specify any explicit quality or standard for construction materials or workmanship, Contractor shall use only workmanship and new materials of a quality consistent with that of construction workmanship and materials specified elsewhere in the Design Requirements, and the Design Requirements are to be interpreted accordingly. 2.3.2 Technical Standards and Codes. References in this Agreement to all professional and technical standards, codes and specifications are to the most recently published professional and technical standards, codes and specifications of the institute, organization, association, authority or society specified, all as in effect as of the effective date of the Service Contract. Unless otherwise specified to the contrary, (1) all such professional and technical standards, codes and specifications - shall apply as if incorporated in the Design Requirements and (2) if any material revision occurs, to the Contractor's knowledge, after the effective date of the Service Contract, and prior to completion of the Work, Contractor shall notify Design -Builder. If so directed by Design -Builder, Contractor shall perform the Work in accordance with the revised professional and technical standard, code, or specification as long as Contractor is compensated, subject to Cost Substantiation, for any additional cost or expense attributable to any such revision. Capistrano Valley Water District Page 15 Construction Agreement San Juan Basin Desalter Project U08-184 410828 .2 412574.1 2.4 Review of Site and Contract Documents 2.4.1 Contractor represents and warrants that it has examined the Project Sites so as to reasonably ascertain the nature of the Work and the various conditions affecting the Work as provided in Section 4.1 of the Service Contract. 2.4.2 Contractor represents and warrants that it has carefully examined the Contract Documents. Contractor shall have a continuing obligation to promptly, but in no event more than fifteen (15) days after discovery, provide written notice to Design -Builder of any errors, inconsistencies or omissions in the Contract Documents, or between the Contract Documents and Applicable Laws of which Contractor has actual knowledge. Contractor shall be responsible for the costs of any additional Work and for any damages resulting from such errors, inconsistencies and omissions that would not have been required but for Contractor's failure to promptly provide the notice required by this Section. Contractor's failure to provide the notice required by this Section shall constitute a waiver of Contractor's right to seek an adjustment in the Guaranteed Maximum Price or Time based on such errors, inconsistencies or omissions. 2.5 Commencement of Contract Times; Notice to Proceed The Contract Times shall begin to run upon issuance of the Notice to Proceed by Design -Builder to Contractor. 2.6 Pre -Construction Conference 2.6.1 Within fourteen (14) days after execution of this Agreement, Design -Builder, Project Engineer, Contractor and other necessary persons and parties will meet to discuss and review issues affecting the administration, scheduling and performance of the Work, including: 1 Owner's requirements and compliance with the requirements of the Service Contract; .2 Permit status; 3 Contractor's preliminary Construction Schedule and materials and equipment to be procured by Contractor having a long lead time for ordering; 4 The Project Design and constructability issues; Capistrano Valley Water District San Juan Basin Desalter Project 4108181 aortia 412574.1 Page 16 Construction Agreement 5 Implementation of necessary procedures, including but not limited to those relating to schedule updates, submittals, and payment, to facilitate the ability of the parties to perform their obligations under this Agreement; .6 Designation of Contractor's and Design -Builder's key representatives; 7 The role and authority of the Construction Manager and Project Engineer; 8 Staffing issues; .9 Project Safety issues; .10 Form and process for submittal, review and approval of Contractor's requests for payment; 11 Project reporting requirements; .12 Project meeting requirements and schedule. 2.6.2 Contractor shall attend all pre -construction conferences with Owner required under the Service Contract. 2.7 Assistance With Project Design 2.7.1 Contractor shall meet and confer and attend meetings with the Project Engineer and Design -Builder's representatives to assist the Design -Builder in the preparation of the Project Design. Such assistance shall include: .1 Reviewing the Project Design for constructability; .2 Reviewing the Project Design for consistency with the requirements of the Service Contract; and 3 Reviewing Project Engineer's schedule for the preparation of the various elements of the Project Design so that such elements are available to Contractor when needed to avoid delays, interruptions or other impacts to the progress and prosecution of the Work. 2.7.2 Notwithstanding any assistance provided by Contractor in the preparation of the Project Design, and except as provided elsewhere in this Agreement, Contractor shall not be liable for errors, omissions or inaccuracies in the Project Design. Capistrano Valley Water District San Juan Basin Desalter Project 4109391 41(1828.2 412574.1 Page 17 Construction Agreement 2.8 Supervision and Superintendence of the Work; Personnel 2.8.1 Contractor shall supervise, inspect, and direct the Work competently and efficiently, devoting such attention thereto and applying such skills and expertise as may be necessary to perform the Work in accordance with the Contract Documents and Applicable Laws. The Contractor shall be solely responsible for the means, methods, techniques, sequences, and procedures of construction and all safety precautions and programs incidental thereto. The Contractor shall be knowledgeable of the manufacturer's requirements and recommendations relating to the installation of equipment on the Project. The Contractor shall be responsible to see that the completed Work complies accurately with the Contract Documents. 2.8.2 The Contractor shall designate in writing and keep on the Project at all times during the performance of the Work a technically qualified superintendent who is an employee of the Contractor and who shall not be replaced without written notice to the Design - Builder. The superintendent will be the Contractor's representative at the Site and shall have authority to act on behalf of the Contractor. All communications given to the superintendent shall be as binding as if given to the Contractor. 2.8.3 The Contractor's superintendent shall be present at the Project at all times while work is in progress and shall be available by phone for emergencies 24 hours per day, 7 days per week. Contractor shall provide its superintendent's emergency contact information prior to the commencement of Work. 2.8.4 Contractor shall be aware of and comply with the applicable provisions of Section 6.13 of the Service Contract regarding Personnel and with respect to the construction of the Project, Design -Builder's rights as to Contractor under said section shall be the same as Owner's rights as to Design -Builder. 2.9 Pre -Construction Services 2.9.1 Contractor shall assist Design -Builder regarding the selection of building systems, materials, and equipment, as well as Project cost, schedule, and construction feasibility studies with respect to the Work. Such studies shall address, among other things, labor availability, construction costs, and procurement strategies related to the Work set forth in the Contract Documents. However, the final decision regarding the selection of the foregoing items is vested with Design -Builder. Design -Builder acknowledges that Contractor is not licensed nor qualified to design the Work nor make recommendations concerning the suitability or compatibility of building systems, materials and equipment. Design -Builder shall, to the fullest extent permitted by law, indemnify, defend and hold harmless Contractor, anyone employed directly or indirectly by Contractor, Contractor's officers, directors, employees and agents, from and against any and all claims, losses, Capistrano Valley Water District Page 18 Construction Agreement San Juan Basin Desalter Project U08284 411!328.2 412574.1 damages, liability and expenses, including attorney fees and expenses, arising out of, in whole or in part, the design of the Project or any part thereof. 2.9.2 Contractor shall, if requested by Design -Builder, and to the extent it deems it is qualified to do so, make recommendations to Design -Builder regarding the preparation and issuance of the Project Design for a portion of the Work to permit construction to proceed on that portion of the Work prior to completion of the Project Design for the entire Project. 2.9.3 At the Pre -Construction Conference, Contractor shall advise Design -Builder regarding a schedule for the procurement of items included in the Work, which have long -lead times. 2.10 Construction Schedule Contractor shall prepare, maintain and update the Construction Schedule in accordance with the provisions of Exhibit C. Contractor acknowledges that its scheduling obligations are of the essence of this Agreement. 2.11 Submittals and Substitutions 2.11.1 Contractor understands that the Contract Documents, including the Project Design, will be issued in phases. Within seven (7) days of Contractor's receipt of each element of the Project Design, Contractor shall submit for Design -Builder's review and approval submittals, including shop drawings, product data and samples. Any variances with the Project Design shall be specifically identified in Contractor's submittals. Design - Builder's review and approval of submittals and shop drawings shall not relieve Contractor of its responsibilities to perform the Work in accordance with the standards set forth herein and the Project Design unless Design -Builder or Engineer expressly and specifically approves in writing any such variance in its response to Contractor's submittals. Contractor shall make any necessary revisions to the submittals requested by Design -Builder. 2.11.2 All submittals and shop drawings shall comply with the requirements of the Service Contract. Contractor understands and agrees that its submittals and shop drawings may be subject to review by Owner and the Independent Engineer. 2.11.2 Contractor shall not make any substitutions in the Work or procedures or methods specified by Design -Builder for performing the Work unless it first receives written approval for such substitution from Design -Builder or the Project Engineer. Capistrano Valley Water District Page 19 Construction Agreement San Juan Basin Desalter Project 2.12 Subcontractors 2.12.1 Contractor shall comply with the requirements of Section 16.7 of the Service Contract regarding the use of Subcontractors. Contractor's obligations to Design -Builder with regard to Subcontractors shall be the same as Design -Builder's obligations to Owner under the provisions of the Service Contract including, without limitation, Section 16.7 thereof. 2.12.2 Subcontractors shall be qualified to perform the Work for which they are engaged by Contractor and shall possess all business and professional licenses required by Applicable Laws. Design -Builder shall have the right to approve Contractor's subcontractors, which approval shall not be unreasonably withheld. 2.12.3 Contractor shall ensure that all applicable provisions of this Agreement and the Service Contract, including, but not limited to Section 16.7 thereof, are expressly incorporated by reference into Contractor's subcontracts of all tiers. 2.12.4 Contractor assumes responsibility to Design -Builder for the proper performance of the Work of Subcontractors and suppliers and any acts and omissions in connection with such performance to the same extent as Contractor is responsible for the acts and omissions of its own employees. Contractor shall coordinate the activities of all Subcontractors and suppliers. Nothing in this Agreement is intended or deemed to relieve Contractor from responsibility for the work performed by its Subcontractors, or create any legal or contractual relationship between Owner or Design -Builder and any Subcontractor, including, but not limited to any third -party beneficiary rights. 2.13 Work of Others 2.13.1 If Design -Builder or Owner performs other work on the Project or at the Site with separate contractors under Design -Builder's control, Contractor agrees to reasonably cooperate with those separate contractors and coordinate its work with these separate contractors so that the Project can be completed in an orderly and coordinated manner without unreasonable disruption. 2.13.2 If any part of the Work depends upon other work performed by Design -Builder, or Design -Builder's or Owner's separate contractors, Contractor shall, prior to proceeding with that part of the Work, inspect such other work and promptly notify Design -Builder of any discovered discrepancies or defects that would render it unacceptable for the proper performance of the Work. Contractor shall not proceed with such part of the Work without further direction from Design -Builder. Design -Builder shall promptly correct or cause to be corrected any such discrepancy or defect in the other work. Except to the extent such discrepancies or defects in such other work are latent, Contractor shall Capistrano Valley Water District Page 20 Construction Agreement San Juan Basin Desalter Project U08:184 410,128 2 412574.1 be liable for appropriate losses or damages incurred due to any discrepancies or defects in such other work not reported to Design -Builder by Contractor. 2.14 Use of Premises, Site Cleanup, and Protection of the Work 2.14.1 Contractor's use of the Project Sites shall be in accordance with the provisions of the Service Contract. Contractor shall assist Design -Builder in the preparation of a Community Outreach Program as provided at Appendix 15 of the Service Contract. 2.14.2 Prior to the commencement of the Work, the Contractor shall conduct a pre -construction audit of the condition of the Project Sites and identify any pre-existing damage to areas adjacent to the Project Sites that may be impacted by the Work. Contractor shall create a photographic record of said Sites and provide Design -Builder with a written report of its pre -construction audit. 2.14.3 The Contractor shall confine construction equipment, the storage of materials and equipment, and the operations of the workers to the Project Sites, and areas identified in the Contract Documents. Contractor shall assume responsibility for all damage to such land or area, or the Owner or occupant thereof, or any land or areas contiguous thereto, resulting from the performance of the Work. 2.14.4 The Contractor shall comply with all noise restrictions applicable to its Work. 2.14.3 Contractor shall be responsible, at its sole cost and expense, for obtaining the use of any additional lands required by Contractor as staging or storage areas. 2.14.4 Contractor shall keep the Sites, adjacent streets and other areas utilized by Contractor reasonably free from debris, trash and construction wastes to permit Contractor to perform its construction services efficiently, safely and without interfering with the use of adjacent land areas. Contractor shall not allow any nuisance to occur or continue at the Sites and shall respond promptly to all complaints or concerns relating to Contractor's Work. Upon Substantial Completion of the Work, or a portion of the Work, Contractor shall remove all debris, trash, construction wastes, materials, equipment, machinery and tools arising from the Work or applicable portions thereof to permit Design -Builder and/or Owner to occupy the Project or a portion of the Project for its intended use. Except where permanently modified to accommodate the Work, and except where otherwise provided in the Project Design or the Service Contract, Contractor shall restore the Sites to their prior condition upon completion of the Work. 2.14.5 Contractor shall protect the Work throughout the period of construction and shall bear all risk of loss concerning the Work until Substantial Completion. Capistrano Valley Water District Page 21 Construction Agreement San Juan Basin Desalter Project U08284 4izsN1252 �a. i 2.15 Inspection; Notice of Covering of Work; Correction of Defective Work Design -Builder and Contractor understand and expect that the Project will be subject to considerable scrutiny, oversight, review and/or inspection by numerous entities including, but not limited to, the District, the City, the Trustee and other Governmental Bodies acting by or through their authorized representatives as provided in the Service Contract. Contractor shall anticipate the foregoing level of scrutiny in its performance and scheduling of the Work. 2.15.1 Contractor shall employ and pay for the services of independent inspection agencies or laboratories to perform all construction inspections, tests or approvals required by Applicable Laws, the standards set forth at Section 2.3 of this Agreement, the Contract Documents and the Service Contract including, without limitation, Sections 6.9(B) and 7.2(6) of the Service Contract. Soil tests required by this paragraph shall not be deemed to include soil testing for contaminates and/or hazardous substances. Contractor shall provide Design -Builder with notice of said inspections in compliance with Section 6.9(B) of the Service Contract. 2.15.2 At all reasonable times, Contractor shall provide sufficient facilities for inspection of the Work by Design -Builder, City, Owner and/or the Independent Engineer at the Project Sites and at all locations where portions of the Work are in progress or various stages of completion. The Work will be available, at all times, for appropriate and required inspections. Design -Builder shall monitor the progress of the Work and shall, except to the extent that it is the responsibility of the Contractor, conduct appropriate inspections in a timely manner so as not to interfere with or impede the progress of the Work. 2.15.3 Contractor shall be responsible for obtaining manufacturer inspection of the reverse osmosis system and the iron/manganese filters and such other Project equipment and materials as are required by the Contract Documents and Applicable Laws. Such inspections of installation and testing shall be for the purpose of obtaining certifications that such equipment has been properly installed and tested in accordance with the manufacturers' recommendations and requirements. 2.15.4 In the event that inspections or tests reveal that any portion of the Work does not comply with the Contract Documents or Applicable Laws, Contractor shall promptly correct said non-compliance and shall bear the cost of corrective measures deemed necessary by the Design Builder, the Project Engineer, the Owner and/or the Independent Engineer, as well as the cost of subsequent re -inspection or re -testing. Notwithstanding any inspections or test, Contractor shall have a continuing obligation during this Agreement to correct any Work that does not comply with the Contract Documents. Contractor's obligations and Design -Builder's rights regarding correction of the Work shall be as set forth at Section 6.10 of the Service Contract. Contractor's obligations to Design -Builder shall be the same as Design -Builder's obligations to Owner under said Section and Capistrano Valley Water District Page 22 Construction Agreement San Juan Basin Desalter Project 4108181 410828 ? 412574.1 Design -Builder's rights with respect to Contractor shall be the same as Owner's rights with respect to Design -Builder under said Section. 2.15.5 The obligations, rights and remedies of Design -Builder and Contractor regarding the covering and uncovering of Work shall be as set forth at Section 6.9(E) of the Service Contract. Contractor's obligations to Design -Builder shall be the same as Design - Builder's obligations to Owner under said Section and Design -Builder's rights with respect to Contractor shall be the same as Owner's rights with respect to Design -Builder under said Section. 2.15.6 Notwithstanding any testing requirements set forth herein, Contractor shall have no responsibility for the performance of any Acceptance Testing or for the performance of the design of the Project as required under the Service Contract, except as provided in Exhibit A. 2.16 Patents and Copyrights 2.16.1 Contractor shall pay all license fees and royalties due for items or processes applicable to the Work, which are subject to copyrights or patent rights and which are selected by Contractor. However, where such items or processes are required by the Contract Documents, Design -Builder shall be responsible for payment of all license fees and royalties due for such items. Contractor shall pay all license fees and royalties and assume all costs incident to the use in the performance of the Work or the incorporation in the Work of any invention, design, process, product, or device selected and/or specified by Contractor and which is the subject of patent rights or copyrights held by others. If a particular invention, design, process, product, or device is specified and/or selected by the Design -Builder for use in the performance of the Work and if its use is subject to patent rights or copyrights calling for the payment of any license fee or royalty to others,. With the exception of any invention, design, process, product or device selected by the Contractor for the Work, Design -Builder shall pay all license fees and royalties and assume all costs incident to the use in the performance and/or incorporation into the Work. Contractor shall defend, indemnify and hold Design -Builder harmless from and against all claims and liabilities arising out of any infringement of patent rights or copyrights incident to the use in the performance of the Work or resulting from the incorporation in the Work of any invention, design, process, product, or device not specified in the Contract Documents. Design -Builder shall defend, indemnify and hold Contractor harmless from and against all claims and liabilities arising out of infringement of patent rights or copyrights incident to the use in the performance of the Work or resulting from incorporation in the Work of any invention, design, process or product, or device specified in the Contract Documents. Capistrano Valley Water District San Juan Basin Desalter Project 410829 1 i rnsxa." 412574.1 Page 23 Construction Agreement 2.17 Applicable Laws; Licenses 2.17.1 Contractor shall perform the Work in accordance with all Applicable Laws and shall maintain in effect at all times during this Agreement all professional and business licenses required by law for Contractor to perform the Work hereunder. 2.17.2 Contractor shall be entitled to an adjustment of the Guaranteed Maximum Price and Contract Time made necessary by a change in Applicable laws if and to the same extent as Design -Builder is entitled to such adjustment under the terms of the Service Contract. 2.18 Government Approvals and Permits 2.18.1 Contractor shall be responsible for obtaining, at no cost or expense to Design -Builder, the permits and approvals described in Exhibit B. 2.18.2 Contractor shall provide reasonable assistance to Design -Builder and the Project Engineer in obtaining those Project -related permits, approvals and licenses, if any, that are the responsibility of persons other than the Contractor. 2.18.3 Contractor shall comply with the terms and conditions of all permits governing or affecting the performance of the Work. 2.19 Project Safety 2.19.1 Contractor recognizes the importance of performing the Work in a safe manner so as to prevent damage, injury or loss to (i) all individuals at the Site, whether working or visiting, (ii) the Work, including materials and equipment incorporated into the Work or stored on -Site or off -Site, (iii) the work of others on the Project, and (iv) all other property at the Site or adjacent thereto. Contractor assumes responsibility for implementing and monitoring all safety precautions and programs related to the performance of the Work. Contractor shall, prior to commencing construction, designate a Safety Representative with the necessary qualifications and experience to supervise the implementation and monitoring of all safety precautions and programs related to the Work. Unless otherwise required by the Contract Documents, Contractor's Safety Representative shall be an individual stationed at the Site who may have other responsibilities on the Project in addition to safety. The Safety Representative shall make routine daily inspections of the Work and shall hold weekly safety meetings with Contractor's personnel, Subcontractors and others as applicable. 2.19.2 Contractor and Contractor's Subcontractors shall comply with all Applicable Laws relating to safety set forth in the Contract Documents, including Appendix 14 to the Service Contract, as necessary for the performance of the Work. Contractor will Capistrano Valley Water District Page 24 Construction Agreement San Juan Basin Desalter Project 4109391 412574.1 immediately report in writing any safety-related injury, loss, damage or accident arising from the Work to Design -Builder's Representative and, to the extent mandated by Applicable Laws, to all government or quasi -government authorities having jurisdiction over safety-related matters involving the Project or the Work. 2.19.3 Contractor's responsibility for safety under this Section 2.20 is not intended in any way to relieve Subcontractors or Sub -Subcontractors of their own contractual and legal obligations and responsibility for (i) complying with all Applicable Laws, including those related to health and safety matters, and (ii) taking all necessary measures to implement and monitor all safety precautions and programs to guard against injury, losses, dames or accidents resulting from their performance of the Work. 2.20 Contractor's Warranty; Correction of Defective Work 2.20.1 Contractor warrants that the Work, including all materials and equipment furnished as part of the Work, shall be new, shall comply with all applicable provisions of the Contract Documents and shall be free of defects in materials and workmanship for a period of one (1) year following Final Completion or issuance of a Notice of Completion by Design -Builder, whichever is later (the "Warranty Period"). .1 The one year period referenced in Section 2.20.1 applies only to Contractor's continuing obligation to correct nonconforming Work and is not intended to constitute a period of limitations for any other rights or remedies Design -Builder may have regarding Contractor's obligations under the Contract Documents. 2.20.2 Contractor's warranty obligation excludes defects caused by abuse, alterations, or failure to maintain the Work by persons other than Contractor, subsequent to the completion of the Work, or anyone for whose acts Contractor is not responsible. 2.20.3 Nothing in this warranty is intended to limit any manufacturer's warranty that provides greater warranty rights than provided herein. Contractor will provide and assign to Design -Builder all manufacturers' warranties as a condition of Design -Builder's obligation to make any final payment otherwise due Contractor under this Agreement. 2.20.4 Contractor shall, within seven (7) days of receipt of written notice from Design -Builder during the Warranty Period that the Work is not in conformance with the Contract Documents, take meaningful steps to commence correction of such Non -Conforming Work, including the correction, removal or replacement of the Non -Conforming Work and any damage caused to other parts of the Work or the Project affected by the Non - Conforming Work. If Contractor fails to commence the necessary steps within such seven (7) day period, Design -Builder, in addition to any other remedies provided under the Contract Documents, may provide Contractor with written notice that Design -Builder Capistrano Valley Water District Page 25 Construction Agreement San Juan Basin Desalter Project 4108391 4ins'R, 412574.1 will commence correction of such Non -Conforming Work with its own forces. If Design - Builder does perform such corrective Work, Contractor shall be responsible for all reasonable costs incurred by Design -Builder in performing such correction. If the non- conforming Work prevents the project from producing Finished Water, Contractor shall respond to any notice as provided above within twenty-four (24) hours and Design - Builder's rights if Contractor fails to so respond shall be as set forth above. 1 Contractor's failure to perform its warranty obligations under this Section 2.20 shall constitute a breach of its warranty obligations and shall entitle Design - Builder to seek recourse from Contractor's performance bond surety or, at Design -Builder's discretion, to itself cause such correction work to be performed. 2 Contractor shall be liable to Design -Builder for all Loss -and -Expense and damages of any kind, including cost of correction work, incurred by Design - Builder as a result of Contractor's breach of its warranty obligations hereunder. 2.20.5 Contractor's obligation to perform and complete the Work in accordance with the Contract Documents shall be absolute. None of the following will constitute (a) an acceptance of Work that is not in accordance with the Contract Documents, (b) a release of Contractor's obligation to perform and complete the Work in accordance with the Contract Documents, or (c) a waiver of any of Design -Builder's rights and remedies under the Contract Documents or at law: 1 Observation and inspection of the Work; .2 The making of any payment to Contractor hereunder; .3 The issuance of a notice of completion by Owner; .4 Use or occupancy of the Work or any part thereof except as provided in Section 2.20.2 of this Agreement; 5 Any acceptance, including Final Acceptance by Design -Builder or Owner; and 6 Any review and approval of a shop drawing or sample submittal. 2.21 Excess Spoils Provided excess spoils are not contaminated nor contain hazardous substances which would require removal to a Class I, Class II or Class III disposal site, any excess spoils generated during excavation or grading of the Work shall be the responsibility of the Contractor. To the extent Capistrano Valley Water District San Juan Basin Desalter Project 4OM4 416828.2 412574.1 Page 26 Construction Agreement spoils do contain such contamination, and must be removed to a disposal site as indicated above, the removal thereof shall be the responsibility of Design -Builder. 2.22 Reports, Books and Records, Record Drawings 2.22.1 Contractor shall keep and maintain at the Project Sites available for inspection by Design -Builder and Owner a complete set of Contract Documents and shall have a continuing obligation to update the Contract Documents, including the as -built plans, to reflect the as -built condition of the Work and the Project, including all approved changes. Upon completion of the Project, said Contract Documents shall be the basis for Design - Builder's submission of final as -built Contract Documents. 2.22.2 Contractor shall assist in the preparation of construction -related reports required to be given by Design -Builder to Owner under Sections 6.8 and 6.9(D) of the Service Contract. Design -Builder intends that Contractor's monthly Construction Schedule update, including Narrative Report, shall serve as the basis for the reports required by Section 6.8 of the Service Contract. 2.22.3 Contractor shall comply with Section 6.14 of the Service Contract with regard to the keeping of Construction Books and Records. Design -Builder's rights as to Contractor under said section shall be the same as Owner's rights as to Design -Builder. 2.22.4 Contractor agrees that it will comply with Owner's requirements regarding the submission of reports in digital form. Digital copies shall consist of computer readable data submitted in Autocad, Microsoft Word, Microsoft Access, and Microsoft Excel or in any other similar standard interchange format which the Owner may reasonably request to facilitate the administration and enforcement of this Service Contract. 2.23 Meetings Contractor shall attend all meetings required under Section 6.9(F) of the Service Contract. ARTICLE 3 — DESIGN -BUILDER'S SERVICES AND RESPONSIBILITIES 3.1 Timely Reviews and Approvals 3.1.1. Design -Builder shall provide timely reviews and approvals of submittals consistent with the turnaround times mutually agreed to and set forth in the Construction Schedule. 3.1.2 Design -Builder shall exercise its best efforts to ensure that the level of scrutiny which Contractor's Work is expected to receive does not disrupt or delay Contractors performance of the Work. Design -Builder's efforts shall include providing Contractor Capistrano Valley Water District San Juan Basin Desalter Project U08284 41!1828.2 412574.1 Page 27 Construction Agreement with notices upon receipt from Owner and providing as much advance notification as possible subject to the requirements of the Service Contract and the Contract Documents. 3.2 Design -Builder's Representative 3.2.1 Design -Builder's Representative shall be responsible for providing Design -Builder - supplied information and approvals in a timely manner to permit Contractor to fulfill its obligations under the Contract Documents. 3.2.2 Design -Builder may designate Construction Manager as Design -Builder's representative. In that event, Construction Manager shall act as a Design -Builder's agent for purposes of administering this Agreement except that under no circumstances shall Construction Manager have authority to approve or authorize changes in the Work, the Guaranteed Maximum Price or the Contract Times without Design -Builder's express written approval. 3.3 Furnishing of Services and Information 3.3.1 Unless expressly stated to the contrary in the Contract Documents, and to the extent Design -Builder has received such items from Owner, Design -Builder shall provide for Contractor's information the items listed below. Design -Builder does not warrant the accuracy or completeness of such items provided, however, that Contractor is entitled to rely on these items to the same extent Design -Builder is entitled to rely upon such items in the Service Contract. 1 Surveys describing the property, boundaries, topography and reference points for use during construction, including existing service and utility lines; .2 Geotechnical studies describing subsurface conditions, and other surveys describing other latent or concealed physical conditions at the Site; .3 Temporary and permanent easements, zoning and other requirements and encumbrances affecting land use, or necessary to permit the proper construction of the Project and enable Contractor to perform the Work. .4 A legal description of the Project Sites; 5 As -built and record drawings, if any, of any existing structures at the Project Sites; Capistrano Valley Water District San Juan Basin Desalter Project 4= s� 412574.1 Page 28 Construction Agreement .6 Environmental studies, reports and impact statements describing the environmental conditions, including Hazardous Conditions, in existence at the Site; .7 Owner's Project Criteria; .8 All permits, approvals, and licenses set forth in the Owner's Permit List attached as an exhibit to the Service Contract; and 9 Test and inspection reports. 3.3.2 If Contractor requests Design -Builder to obtain any of the documents described immediately above from Owner, Design -Builder shall, in good faith use all reasonable efforts to do so. To the extent that Design -Builder would have a claim against Owner, based upon: (1) a failure to provide the above -entitled documents; (2) a failure to cooperate in procuring any of the above-described documents if reasonably necessary for the performance of the Work; and/or (3) the inaccuracy of said documents, then, in such event, Contractor shall have a claim against Design -Builder. Except as provided in this Section, Contractor shall no claim against Design -Builder, Project Engineer or Owner arising from the foregoing circumstances. 3.3.3 Design -Builder shall provide Contractor with a fully signed copy of the Service Contract, including all exhibits, attachments, and other Contract Documents enumerated and incorporated therein. 3.3.4 Upon Contractor's reasonable written request, Design -Builder shall provide Contractor with reasonable assurances regarding Design -Builder's ability to meet its payment obligations to Contractor under this Agreement. 3.3.5 Design -Builder shall provide Contractor with the Project Design as provided and subject to the provisions of this Agreement. 3.3.6 Design -Builder shall obtain those permits, approvals and licenses that are not required to be provided by Owner pursuant to the Service Contract or by Contractor pursuant to this Agreement and which are required and/or reasonably necessary for the prosecution of the Work. 3.4 Notification of Errors Design -Builder or the Project Engineer shall promptly notify Contractor of any errors, inconsistencies, or omissions in the Work of which they have actual knowledge. However, Design -Builder's or Project Engineer's failure to discover errors, inconsistencies or omissions in Capistrano Valley Water District Page 29 Construction Agreement San Juan Basin Desalter Project 414 �ngzs.: 412574.1 the Work shall not relieve Contractor of responsibility for such errors, inconsistencies, or omissions or Contractor's obligation to correct such Work. 3.5 Attendance at Design Meetings Design -Builder shall afford Contractor and its Subcontractors the opportunity to attend all necessary design meetings with Owner, Designer and/or Design Consultants. 3.6 Review and Approval of Submittals Design -Builder or its representative shall review and approve submittals in writing, including shop drawings, product data and samples, submitted by Contractor, which review shall be only for the purpose of confirming general conformance with the Project Design. Design -Builder's and/or Engineer's review and approval shall not relieve Contractor of its responsibilities to perform the Work in accordance with the Project Design unless Design -Builder or Project Engineer expressly and specifically approves in writing any such variance in its response to Contractor's submittals. If revisions are necessary to a submittal prior to Design -Builder's approval, Design -Builder shall inform Contractor of any such necessary revisions. Subject to the right of Owner and the Independent Engineer's rights to review such submittals under the terms of the Service Contractor, Design -Builder shall exercise its best efforts to complete such reviews within ten (10) days of submittal. 3.7 Design -Builder's Separate Contractors Design -Builder is responsible for all work performed on the Project or at the Site by separate contractors under Design -Builder's control. Design -Builder shall contractually require its separate contractors to cooperate with, and coordinate their activities so as not to interfere with Contractor's ability to timely complete the Work consistent with the Contract Documents. 3.8 Project Progress Meetings Design Builder, Project Engineer and Contractor shall meet twice a month during the Project to discuss the progress of the Work. ARTICLE 4 — HAZARDOUS MATERIALS AND DIFFERING SITE CONDITIONS 4.1 Hazardous Materials 4.1.1 Unless otherwise expressly provided in the Contract Documents to be part of the Work, Contractor is not responsible for any Hazardous Materials encountered at the Project Sites. Upon encountering any Hazardous Materials, Contractor will stop Work immediately in the affected area and duly notify Design -Builder and, if required by Capistrano Valley Water District Page 30 Construction Agreement San Juan Basin Desalter Project UOW84 JI0=-' 412574.1 Applicable Laws, all government or quasi -government entities with jurisdiction over the Project. In addition, Contractor shall comply with the provisions of Section 14.2 of the Service Contract regarding Uncontrollable Circumstances. 4.1.2 Contractor shall be obligated to resume Work at the affected area of the Project only after Design -Builder provides Contractor with a written certification from Design -Builder's or Owner's expert that (i) the Hazardous Materials have been removed or rendered harmless, and (ii) all necessary approvals have been obtained from all government and quasi -government entities having jurisdiction over the Project or Site. To the extent the Hazardous Condition is the responsibility of Owner, Design -Builder agrees to include Contractor in discussions with Owner to resolve the matter. If Design -Builder and Contractor are unable to resolve the matter with Owner, the matter will be resolved in accordance with the Dispute Resolution provisions of this Agreement. 4.1.3 Contractor will be entitled, in accordance with the Contract Documents, to an adjustment in its Guaranteed Maximum Price and/or Contract Time(s) to the extent Contractor's cost and/or time of performance have been adversely impacted by the presence of Hazardous Materials as provided by Section 14.2 of the Service Contract. Design -Builder's and Contractor's rights and obligations to one another under said Section shall be the same as the rights and obligations of Owner and Design -Builder. 4.1.4 As provided in the Service Contract, Design -Builder has caused Owner to indemnify, defend and hold harmless Design -Builder, anyone employed directly or indirectly by Design -Builder, and their officers, directors, employees and agents, from and against any and all claims, losses, damages, liabilities, and expenses including attorneys' fees and expenses, arising out of or resulting from the presence, removal or remediation of Hazardous Materials at the Site. 4.1.5 Notwithstanding the preceding provisions of this Section 4.1, Contractor is responsible for Hazardous Materials introduced to the Site by itself, Contractor's Subcontractors, and Contractor's Sub -Subcontractors. Contractor shall indemnify, defend and hold harmless Owner, Design -Builder and their officers, directors, employees and agents from and against all claims, losses, damages, liabilities, and expenses, including attorneys fees and expenses, arising out of or resulting from those Hazardous Materials introduced to the Site by Contractor, Contractor's Subcontractors and Contractor's Sub -Subcontractors. 4.2 Differing Site Conditions; Uncontrollable Circumstances Contractor understands and acknowledges that Design -Builder is not entitled to additional compensation or extensions of time from Owner resulting from the discovery of differing surface or subsurface conditions at the Project Sites which increase Contractor's cost of performing or cause delay in Contractor's performance of the Work, except to the extent such conditions Capistrano Valley Water District Page 31 Construction Agreement San Juan Basin Desalter Project 41988 1 AIDS 412574.1 constitute Uncontrollable Circumstances, Pre -Existing Environmental Conditions or Specified Site Conditions as defined herein and in the Service Contract. Contractor shall not be entitled to a change in the Guaranteed Maximum Price or Contract Time(s) due to a differing Site condition except to the extent that Design -Builder is entitled to an adjustment in its compensation or time for performance under the Service Contract. Design -Builder's and Contractor's rights and obligations to one another with respect to Uncontrollable Circumstances shall be the same as the rights and obligations of Owner and Design -Builder to one another under the Service Contract and the provisions of the Service Contract as so modified are incorporated herein as though fully set forth whether or not expressly set forth below or elsewhere in this Agreement. 4.2.1 Before commencing the Work or any portion thereof, Contractor shall make its own investigation, including investigatory explorations, excavations and inquiries with area utility providers, and the appropriate regional notification center, as provided in California Government Code Sections 4216, et seq. 4.2.3 Contractor shall notify Design -Builder of any Uncontrollable Circumstance by facsimile or telephone promptly upon learning of such Uncontrollable Circumstance and shall proceed as provided at Section 14.2 of the Service Contract. 4.2.4 Contractor's failure to give the notice required under this Section, or to maintain all documentation required to establish the existence of an Uncontrollable Circumstance or to substantiate its costs and expenses in the manner required under the Service Contract, shall constitute a waiver of any right Contractor may have otherwise had to seek or obtain an adjustment in the Guaranteed Maximum Price or the Contract Time(s). 4.2.5 Except as provided in this Agreement and in the Service Contract, Contractor shall continue to perform the Work and shall take all steps possible to mitigate any delays and disruptions notwithstanding the occurrence or discovery of an Uncontrollable Circumstance. ARTICLE 5 — CONTRACT TIMES 5.1 Date of Commencement The Work shall commence not more than five (5) days after Contractor's receipt of the Contract Documents and Design -Builder's Notice to Proceed ("Date of Commencement") unless the parties mutually agree otherwise in writing. Capistrano Valley Water District Page 32 Construction Agreement San Juan Basin Desalter Project mesas4 3leszsW 412574.1 5.2 Contract Times 5.2.1 Substantial Completion of the Work, as provided at Section 7.4.2 of this Agreement shall be achieved no later than August 1, 2004 ("Substantial Completion Date"). Contractor's obligation under this section of the Contract shall be limited to Scope of Work and shall not include any duties or obligations of the Design -Builder under the terms of the Service Contract. 5.2.2 Final Completion of the Work shall be achieved as provided herein on or before October 15, 2004. 5.2.3 All of the dates set forth in this Article 5 (the "Contract Time(s)") shall be subject to adjustment in accordance with this Agreement. 5.3 Time is of the Essence Contractor understands and acknowledges that the Project must achieve Acceptance no later than December 4, 2004, and that Design -Builder may be subject to substantial liquidated and other damages under the Service Contract if the foregoing deadlines are not met. Accordingly, Contractor's timely performance of this Agreement is critical and Design -Builder and Contractor mutually agree that time is strictly of the essence with respect to the dates and times set forth in the Contract Documents that relate to the Work, including this Article 5, and the Project Schedule. However, if any delay results from late submission of project design, plans or specifications and/or late submission of design modifications by Design -Builder, at Design - Builder's sole option, Contractor shall be entitled to either 1) a corresponding extension of time for each day such plans, designs, specifications or modifications are delayed, or 2) its reasonable acceleration costs to maintain the Construction Schedule, or 3) both. 5.4 Liquidated Damages 5.4.1 Contractor recognizes that Design -Builder will suffer financial loss if the Work is not completed within the times specified in paragraph 3.1 above, plus any extensions thereof allowed in accordance with this Agreement. The Parties also recognize the delays, expenses and difficulties involved in proving the actual loss suffered by Design -Builder if the Work is not completed on time. Accordingly, instead of requiring any such proof, Design -Builder and Contractor agree that as liquidated damages for delay (but not as a penalty) Contractor shall pay Design -Builder the following amounts: 1) if Substantial Completion is delayed from 1 to 30 days --$2,000.00 per day; 2) if Substantial Completion is delayed from 31-60 days -- $3,000 per day; 3) if Substantial Completion is delayed for 61 days or thereafter -- $,4,000 per day. Such liquidated damages shall be paid for each calendar day that expires after the time for Substantial Completion of the Project until the foregoing events have been achieved, which amounts shall be Capistrano Valley Water District San Juan Basin Desalter Project 410828.1 412574.1 Page 33 Construction Agreement cumulative. Subject to the other provisions of this Agreement, Contractor shall not be responsible for, and Design -Builder will provide or cause to be furnished all finished plans, specifications, designs and/or modifications. Late delivery of such plans, specifications, designs, and modifications shall suspend assessment of Liquidated Damages by the number of days equal to the late delivery. 5.4.2 The liquidated damages provided in Section 5.4.1 shall be in lieu of all liability for any and all extra costs, losses, expenses, claims, penalties and any other damages, whether special or consequential and of whatsoever nature incurred by Design -Builder which are occasioned by any delay in achieving Substantial Completion or Acceptance of the Work. 5.4.3 The limitation set forth in Section 5.4.2 shall not apply in the event that Contractor, except as specifically and expressly permitted in this Agreement, terminates or abandons the Work before completion, in which event Design -Builder shall be entitled to assert all remedies and recover all damages permitted by law even if Contractor's abandonment of the Project or termination of this Agreement is based on a claim for an adjustment in the Guaranteed Maximum Price or Contract Time(s) which it is ultimately determined to be meritorious by a Court or other tribunal. 5.5 Delays to the Work 5.5.1 If Contractor is delayed in the performance of the Work on the Construction Schedule's critical path due to an "Uncontrollable Circumstance" as that term is defined in the Service Contract, and said delay is not due to any fault of Contractor or those for whom Contractor is responsible, including, but not limited to its subcontractors and suppliers, the Contract Time(s) for performance shall be reasonably extended by Change Order but only to the extent Design -Builder's time for performance is extended as provided at Section 14.2 of the Service Contract. Delays which do not impact the critical path of the Work shall not be eligible for any time extension. 5.5.2 If Contractor is delayed in the performance of the work on the Construction Schedule's critical path due as a result of the acts or omissions of Design -Builder or those for whom Design -Builder is responsible, and said delay is not due to any fault of the Contractor or those for whom the Contractor is responsible, Contractor's relief shall for said delay shall be as provided in Section 12.5.4 of this Agreement. 5.5.3 Contractor's construction schedule shall anticipate twenty (20) days per year of delay due to severe weather conditions. Capistrano Valley Water District Page 34 Construction Agreement San Juan Basin Desalter Project 41es1H 1 410828.1 412574.1 ARTICLE 6 — GUARANTEED MAXIMUM PRICE 6.1 Guaranteed Maximum Price 6.1.1 Design -Builder shall pay Contractor in accordance with Article 7 hereof the Guaranteed Maximum Price of Sixteen Million, Five Hundred Thousand Dollars ($16,500,000) ("Guaranteed Maximum Price"), subject to adjustments made in accordance with the Contract Documents. Unless otherwise provided in the Contract Documents, the Guaranteed Maximum Price includes all the costs of labor, supervision, tools, equipment, supplies, materials services, allowances overhead, profits, fees and other costs and expenses related to the construction of the Project. The Guaranteed Maximum Price is based upon to the scope of Work described in the Contract Documents, including, but not limited to Exhibit A and the attachments and appendices referenced therein, the conceptual drawings attached hereto as Exhibit E and the Contractor's Proposal attached as Exhibit H to this Agreement. 6.1.2 Contractor confirms and agrees that its responsibility hereunder is to construct the Project in accordance with the drawings and specifications. It is recognized that the Guaranteed Maximum Price has been determined based upon incomplete design, and the Contractor has exercised reasonable care and judgment to determine the intent of the design and has calculated the Guaranteed Maximum Price on the basis of the quality of construction, equipment, materials, and finishes that can be reasonably inferred from the design documents or other information provided to the Contractor relating to this Project. The Contractor shall utilize Exhibit A and the attachments and appendices referenced therein, the conceptual drawings attached hereto as Exhibit E and the Contractor's Proposal attached as Exhibit H to determine whether or not the scope of the Project has been changed and in determining entitlement to an adjustment to the Guaranteed Maximum Price. A determination regarding requests for adjustment (increase or decrease) to the Guaranteed Maximum Price shall be made in writing within thirty (30) days of a written request for an adjustment. As a condition of Design -Builders review of a request for adjustment of the Guaranteed Maximum Price, Contractor shall be required to submit to Design -Builder all the information described in Section 12.5.3 hereof. 6.1.3 Contractor shall not be entitled to an adjustment in the Guaranteed Maximum Price hereunder for the costs of any Design -Builder generated changes up to 1% of the Guaranteed Maximum Price (hereinafter referred to as the "1% Allowance") 6.1.4 The Guaranteed Maximum price shall include all sales, use, consumer and other taxes mandated by Applicable Laws. The Guaranteed Maximum Price shall constitute payment in full for the performance of the Work and all of Contractor's obligations under this Agreement. Notwithstanding the above, Design -Builder is not responsible for Capistrano Valley Water District Page 35 Construction Agreement San Juan Basin Desalter Project 410838 1 .11(1828.2 412574.1 Contractor's bidding or estimating mistakes, price or wage increases, changes in Union work rules or miscalculation of market conditions. 6.1.5 With respect to any adjustment to the Guaranteed Maximum Price, Contractor's fee shall consist of a 10% home office overhead component and a 5 % profit component. 6.1.6 As a means of promoting a partnership approach and to reward innovation in the value engineering, constructability review, procurement and execution of the Project and to provide incentive for Contractor and Design -Builder to complete the Work at a cost below the Guaranteed Maximum Price, Design -Builder and Contractor agree to share, on an equal 50%-50% basis, any savings in the cost of the Work against the Final Guaranteed Maximum Price. For purposes of this Agreement, the Final Guaranteed Maximum Price shall equal the sum of the Guaranteed Maximum Price and any adjustments to the Guaranteed Maximum Price agreed to between the Design -Builder and Contractor, but not including the 1% Allowance for Design -Builder generated changes and all taxes payable by the Contractor hereunder. 6.1.6 Contractor shall not be permitted to an extension of the Contract Time(s) as a result of any variance between the Conceptual Design Drawings and either the Contract Documents or the Project Design except to the extent that the Owner, without imposing liquidated damages, extends Design -Builder's time for performance of the Service Contract. If an extension of time is not granted by the Owner, the Guaranteed Maximum Price shall be adjusted by appropriate additions or adjustments. Contractor shall supply Design -Builder with all documentation necessary to substantiate the amount of the addition to the price. Subject to 6.1.3, the Guaranteed Maximum Price will be increased in accordance with Section 12.5.4 of this Agreement. ARTICLE 7 — PROCEDURE FOR PAYMENT 7.1 Schedule of Values Payments to Contractor under this Agreement shall be based on progress of the Work reflected by the Project Schedule and Schedule of Values required under Exhibit C to this Agreement. 7.2 Progress Payments 7.2.1 Amount of Progress Payments. Subject to the provisions of Section 7.2 and this Agreement, Design -Builder shall make monthly Progress Payments to Contractor equal to the sum of the following: 1 Cost of the Work in permanent place as of the end of the immediately preceding month. Cost of the Work shall refer to the portion of the Guaranteed Maximum Capistrano Valley Water District San Juan Basin Desalter Project 4108381 410828 2 412574.1 Page 36 Construction Agreement Price applicable to Work performed by Contractor as of the end of the immediately preceding month as shown in the approved Construction Schedule update and Schedule of Values submitted with Contractor's Application for Progress Payment...; .2 Plus cost of materials not yet permanently incorporated in the Work, except as provided in Section 7.2.4 of this Agreement; .3 Less amounts previously paid; .4 Less 10% to be withheld by Design -Builder as retention; Retention shall be reduced to 5% upon Contractor's achievement of Substantial Completion. The balance of Contractor's retention shall be paid upon Final Completion. 5 Less such other amounts Design -Builder is entitled to withhold under the terms of this Agreement. 7.2.2 Progress Payment Applications. Beginning with the first month after the Date of Commencement, and each month thereafter during this Agreement, Contractor shall submit on the twentieth (20th) day of each month for Design -Builder's review and approval Contractor's Progress Payment Application. 7.2.3 Form of Progress Payment Application. Progress Payment Applications shall be in a form acceptable to Design -Builder and shall include, as a minimum, the following: 1 All information and certifications required under Section 5.5(C) and 5.5(D) of the Service Contract. .2 Contractor's Construction Schedule update, including Schedule of Values and supporting information required by Exhibit C. .3 Amounts for which payment is being requested on behalf of Subcontractors. .4 Conditional Waivers and Releases Upon Progress Payments executed by Contractor and all Subcontractors for whom payment is being requested. .5 The Application shall identify the Guaranteed Maximum Price, the amounts of all approved Change Orders, total amount paid by Design -Builder to date, total amount withheld to date by Design -Builder as retention, amount of current Application for Payment, and amount to be withheld as retention from Current Application for Payment. Capistrano Valley Water District San Juan Basin Desalter Project 4108291 4I flq:R 2 412574.1 Page 37 Construction Agreement .6 Amounts for which payment is request pursuant to Section 7.2.4. .7 The value of materials and equipment stored on site which have not been incorporated into the Work, and less a deductive adjustment for materials and equipment installed which were not previously incorporated in the Work, but for which payment was allowed pursuant to this section. 8 Design -Builder may, at its discretion, request the submission of certified payroll information and certifications as a condition precedent to its obligation to make any Progress Payment. 7.2.4 Materials Not Yet Incorporated in the Work. The Application for Payment may request payment for the value of equipment and materials not yet incorporated into the Project, provided that (i) Design -Builder is satisfied that the equipment and materials are suitably stored at either the Site or another acceptable location, (ii) the equipment and materials are protected by suitable insurance, and (iii) upon payment, Design -Builder will receive the equipment and materials free and clear of all liens and encumbrances. Design - Builder may, in its sole discretion, allow payment for such materials. 7.2.5 Contractor's Representation. The Application for Payment shall constitute Contractor's representation that the Work has been performed consistent with the Contract Documents, has progressed to the point indicated in the Application for Payment, and that title to all Work which is the subject of the Application for Payment, as well as risk of loss, will pass to Design -Builder free and clear of all claims, liens, encumbrances, and security interests upon the incorporation of the Work into the Project, or upon Contractor's receipt of payment, whichever occurs earlier. 7.2.6 Approval of Application for Payment. Approval of any part of a Progress Payment Application may be withheld, and all or part of a previous Progress Payment Application may be nullified and withheld from a current payment, on account of any of the following: .1 Defective work not remedied. 2 Third party claims against Design -Builder arising from Contractor's breach of its obligations under this Agreement or Applicable Laws. 3 Mechanic's liens, stop notices or other claims filed against the Project. 4 A reasonable doubt that the Work can be completed within the Contract Times and a failure by Contractor to undertake corrective measures. Capistrano Valley Water District Page 38 Construction Agreement San Juan Basin Desalter Project 4iesa84 .1I /IR2R.2 412574.1 5 Failure of Design Builder to submit any of the materials required to be submitted with Progress Payment Applications. .6 Liquidated Damages as provided by this Agreement. 7.2.7 Payment of Pro gess Pa ment. Subject to the withholding provisions of Section 7.2.6 and other applicable provisions of this Agreement, Design -Builder will pay undisputed and properly submitted Progress Payment Applications no later than thirty (30) days after receipt thereof. 7.2.8 Joint Checks. Design -Builder shall have the right, at its discretion, to make any payments to Contractor under this Agreement which include amounts due from Contractor to Subcontractors by joint check. 7.2.9 No Waiver/Acce tance. Progress payments made by Design -Builder shall not constitute acceptance of defective work or a waiver of any of Design -Builder's rights under this Agreement with regard to any work for which such payment was made. 7.3 Deposit of Securities in Lieu of Retention 7.3.1 Pursuant to Section 22300 of the California Public Contract Code, Contractor may substitute securities for any money withheld by the Design -Builder to insure performance under the Contract. At the request and expense of the Contractor, securities equivalent to the amount withheld shall be deposited with the Design -Builder or with a state or federally chartered bank in California as the escrow agent, who shall return such securities to the Contractor upon satisfactory completion of the Contract. 7.3.2 Alternatively, the Contractor may request and the Design -Builder shall make payment of retentions earned directly to the escrow agent at the expense of the Contractor. At the expense of the Contractor, the Contractor may direct the investment of the payments into securities and the Contractor shall receive the interest earned on the investments upon the same terms provided for in this section for securities deposited by the Contractor. Upon satisfactory completion of the Contract, the Contractor shall receive from the escrow agent all securities, interest, and payments received by the escrow agent from the Design - Builder, pursuant to the terms of this section. The Contractor shall pay to each subcontractor, not later than 20 days of receipt of the payment, the respective amount of interest earned, net of costs attributed to retention withheld from each subcontractor, on the amount of retention withheld to insure the performance of the Contractor. 7.3.3 Securities eligible for investment under Section 7.3 shall be limited to those listed in Section 16430 of the Government Code and to bank or savings and loan certificates of Capistrano Valley Water District Page 39 Construction Agreement San Juan Basin Desalter Project Uesaa4 AIM -Mw 412574,1 deposit, interest bearing demand deposit accounts, standby letters of credit, or any other security mutually agreed to by the Contractor and the Design -Builder. 7.4 Substantial Completion 7.4.1 Contractor shall provide Design -Builder with at least thirty (30) days advance written notice of when Contractor reasonably believes that Substantial Completion as provided in Section 7.3(B) of the Service Agreement will be achieved. 7.4.2 "Substantial Completion" shall mean the completion of all Work necessary to achieve the following: 1) all Work has been completed so that both of the water treatment process trains are fully operational, the wells and pipelines are operational and the Project is ready for Acceptance Testing; 2) a temporary or preliminary certificate of occupancy has been issued for the Project; and 3) the Contractor has delivered to the Design -Builder written certifications of all equipment supplied by Contractor that certify that said equipment has been installed and tested in accordance with the manufacturer's recommendations and requirements. 7.4.3 Contractor shall notify Design -Builder when Contractor reasonably believes that Substantial Completion has been achieved. Within three (3) days of Design -Builder's receipt of Contractor's notice, Contractor, Design -Builder, Project Engineer, Independent Engineer and District Engineer will jointly inspect such Work to verify that it is substantially complete in accordance with requirements of the Contract Documents. Design -Builder shall promptly thereafter provide Contractor with written notice of all Work required to achieve Substantial Completion and Contractor shall promptly perform such Work. The parties shall diligently repeat the above process until Substantial Completion has been achieved. 7.5 Provisional Acceptance and Acceptance Under Service Contract 7.5.1 Design -Builder shall promptly notify Contractor when Substantial Completion and Provisional Acceptance or Acceptance has occurred 7.5.2 On or before the Substantial Completion Date, Contractor shall prepare a proposed final punch list and claims statement in accordance with the provisions of Section 7.15 of the Service Contract. After any required changes to and approval of the proposed final punch list, Contractor shall perform all final punch list items and submit all materials required to be submitted by Contractor under Section 7.16 of the Service Contract. Capistrano Valley Water District Page 40 Construction Agreement San Juan Basin Desalter Project 4108281 410828.1 412574.1 7.6 Partial Use Design -Builder, at its option, may use a portion of the Work which has been determined to be substantially complete provided that (i) a Certificate of Substantial Completion has been issued for the portion of Work addressing the items set forth in Section 7.5.1 above, (ii) Contractor and Design -Builder have obtained the consent of their sureties and insurers, and to the extent applicable, the appropriate government authorities having jurisdiction over the Project, and (iii) Design -Builder and Contractor agree that Design -Builder's use or occupancy will not interfere with Contractor's completion of the remaining Work. Design -Builder's occupation and use of the Project with Contractor in order to monitor and observe the performance of Acceptance Tests shall not relieve Contractor's responsibility for the Project until Final Completion has occurred. 7.7 Final Completion and Final Payment 7.7.1 Contractor shall submit its Final Application for Payment to Design -Builder in accordance with Section 7.7.2 below when Final Completion has been achieved Design - Builder shall make the final payment, including Contractor's final retention payment, based on Contractor's properly submitted and accurate Final Application for Payment within thirty (30) days after receipt of Contractor's Final Application for Payment, provided also that Contractor has satisfied the requirements for final payment set forth in Section 7.7.2 below. 7.7.2 At the time of submission of its Final Application for Payment, and as a condition of such final payment, Contractor shall also submit the following information: .1 Affidavits in a form acceptable to Design -Builder executed by Contractor and its Subcontractors that there are no claims, obligations or liens outstanding or unsatisfied for labor, services, material, equipment, taxes or other items performed, furnished or incurred for or in connection with the Work which will in any way affect Design -Builder's or Owner's interests; 2 Conditional waivers and releases upon final payment conforming with the requirements of California Civil Code Section 3262 executed by Contractor and its Subcontractors. .3 Consent of Contractor's surety, if any, to final payment. .4 All training required to be provided by Contractor. .5 All operating manuals, warranties, certificates of inspection, as -built drawings and specifications and other deliverables or documents required by the Contract Documents; and Capistrano Valley Water District Page 41 Construction Agreement San Juan Basin Desalter Project 4aesas4 3I� 412574.1 .6 Certificates of insurance confirming that required coverages will remain in effect consistent with the requirements of the Contract Documents; .7 Subject to Design -Builder's approval, Contractor's written certification that it has completed all Work required to be performed under this Agreement, including but not limited to all punch list work; and .8 Submission of Contractor's final claims statement, if any, pursuant to Section 7.16(B)(2) of the Service Contract. 7.7.3 Design -Builder shall be entitled to withhold from Contractor's final payment reasonably disputed amounts set forth at Section 7.2.6 of this Agreement. 7.8 Advance Payments Design -Builder has the right, at its sole option, to advance any payment due Contractor under this Agreement. 7.9 Interest/Late Charges Undisputed payments due and unpaid under this Agreement shall bear interest in accordance with Applicable Laws governing the making of such payments. 7.10 Payment Not Acceptance No payment to Contractor under this Agreement shall be evidence of, or construed to be, acceptance of defective, faulty, improper or non -conforming work. 7.11 Contractor's Payment Obligations Contractor will pay Subcontractors, in accordance with its contractual obligations to such parties, all the amounts Contractor has received from Design -Builder on account of their work. Contractor will impose similar requirements on Subcontractors to pay those parties with whom they have contracted. Contractor will indemnify and defend Owner and Design -Builder against any claims for payment and mechanic's liens as set forth in Section 11.3 hereof. ARTICLE 8 — TERMINATION 8.1 Design -Builder's Right To Suspend Work 8.1.1 Design -Builder may, without cause and for its convenience, order Contractor in writing to stop and suspend the Work. Such suspension shall not exceed thirty (30) consecutive days or aggregate more than forty-five (45) days during the duration of the Project. Capistrano Valley Water District Page 42 Construction Agreement San Juan Basin Desalter Project 4108281 412574.1 8.1.2 In the event of a suspension under Section 8.1.1, Contractor shall be entitled to compensation in the amount of the direct incurred by Contractor as a result of such suspension and shall be required to provide Cost Substantiation for such expenses as provided by Section 16.6 of the Service Contract. 8.1.3 If the Work is required to be accelerated in order to avoid delays to the Contract Times as a result of such suspension, Contractor shall be entitled to compensation for the reasonable costs of such acceleration which shall be paid pursuant to a written Change Order issued pursuant to Article 12 of this Agreement. 8.2 Design -Builder's Right to Terminate for Convenience Contractor recognizes that Owner has the right to terminate the Service Contract under Sections 4.11, 13.5, 13.6, 13.7, 13.8 and other provisions of the Service Contract for the Owner's convenience. Design -Builder may terminate this Agreement for its convenience, whether or not Owner exercises its right to terminate the Service Contract for its convenience, upon ten (10) days' written notice to Contractor. 8.2.1 If Design -Builder terminates this Agreement for its convenience as a result of Owner's exercise of its right to terminate the Service Contract for its convenience, Contractor shall receive compensation equal to the amount that would otherwise be due Contractor under the terms of this Agreement for Work performed up to the effective date of such termination plus amounts Contractor has paid or incurred to Subcontractors, including a reasonable sum for demobilization costs. In the event of such a termination, Contractor's right to such compensation shall be subject to Cost Substantiation as provided in Section 16.6 of the Service Contract. 8.2.2 If Design -Builder terminates this Agreement for its convenience but Owner has not exercised its right to terminate the Service Contract for its convenience, Contractor shall receive compensation equal to the amount that would otherwise be due Contractor under the terms of this Agreement for Work performed up to the effective date of such termination plus amounts Contractor has paid or incurred to Subcontractors, including a reasonable sum for demobilization costs. 8.2.3 Contractor shall not be entitled to receive any compensation in the event Design -Builder terminates this Agreement for its convenience except as expressly provided herein. Contractor's compensation in the event of such a termination shall be exclusively limited to that provided in Sections 8.2.1 or 8.2.2 of this Agreement. Design -Builder shall have no obligation to reimburse Contractor for anticipated or lost profits or revenue, consequential damages or any other economic loss or damages of any kind resulting from the termination. Capistrano Valley Water District Page 43 Construction Agreement San Juan Basin Desalter Project 8.3 Design -Builder's Right to Terminate for Default 8.3.1 Design -Builder shall have the right to terminate this Agreement for default if, in Design - Builder's reasonable judgment, Contractor persistently fails to: 1 Provide a sufficient number of skilled workers to perform the Work in accordance with the Contract Documents; .2 Properly manage the Work; .3 Timely provide Design -Builder with Construction Schedule updates; .4 Supply the materials required by the Contract Documents; .5 Comply with Applicable Laws; .6 Timely pay, without cause, its Subcontractors; .7 Prosecute the Work with promptness and diligence to ensure that the Work is completed by the Contract Time(s), as such times may be adjusted; 8 Perform material obligations under the Contract Documents, and if 9 Contractor causes the occurrence of an Event of Default by Contractor as defined in the Service Contract at Section 13.2(B)(1) through (5). 8.3.2 Upon the occurrence of an event set forth in Section 8.3.1 above, Design -Builder may provide written notice to Contractor that it intends to terminate the Agreement for Default unless the problem cited is cured, or commenced to be cured, within seven (7) days of Contractor's receipt of such notice. If Contractor fails to cure, or reasonably and materially commence to cure, such problem, then Design -Builder may give a second written notice to Contractor of its intent to terminate within three (3) day period. If Contractor, within such three (3) day period, fails to cure, or reasonably commence to cure, such problem, then Design -Builder may declare the Agreement terminated for default by providing written notice to Contractor of such declaration. Such a termination shall be effective as of the end of said three-day period. If Design -Builder reasonably determines that any of the events set forth in Section 8.3.1 above have occurred and are not susceptible to cure by Contractor, Design -Builder may terminate this Agreement for default without providing Contractor an opportunity to cure by providing seven (7) days written notice of such termination to Contractor. Capistrano Valley Water District San Juan Basin Desalter Project U08284 airi4:A, 412574.1 Page 44 Construction Agreement 8.3.3 Upon declaring the Agreement terminated pursuant to Section 8.3.2 above, Design - Builder may enter upon the premises and take possession for the purpose of completing the Work, of all materials, equipment, scaffolds, tools, appliances and other items thereon, which have been purchased or provided for the performance of the Work, all of which Contractor hereby transfers, assigns and sets over to Design -Builder for such purpose, and to employ any person or persons to complete the Work and provide all of the required labor, services, materials, equipment and other items. In the event of such termination, Contractor shall not be entitled to receive any further payments under the Contract Documents until the Work shall be finally completed in accordance with the Contract Documents. At such time, if the unpaid balance of the Guaranteed Maximum Price exceeds the cost and expense incurred by Design -Builder in completing the Work, such excess shall be paid by Design -Builder to Contractor. If Design Builder's cost and expense of completing the Work exceeds the unpaid balance of the Guaranteed Maximum Price, then Contractor shall be obligated to pay the difference to Design - Builder. Such costs and expense shall include not only the cost of completing the Work, but also losses, damages, costs and expenses, including attorneys fees and expenses, incurred by Design -Builder in connection with the re -procurement of Work and the defense of claims arising from Contractor's default. 8.3.4 The remedies provided at Section 8.3.3 shall in no way limit any and all other rights and remedies Design -Builder may have at law. 8.4 Contractor's Obligations Upon Termination Contractor's obligations upon any termination of this Agreement by Design -Builder shall be as set forth at Section 13.11(A) through (G). 8.5 Contractor's Right to Terminate 8.5.1 Contractor shall not have the right to terminate this Agreement for any reason except as expressly provided in this Section 8.5.1: 1 Design -Builder fails to pay undisputed amounts due to Contractor under this Agreement. .2 The insolvency of the Design -Builder as determined by the Bankruptcy Code. .3 The filing by the Design -Builder of a petition of voluntary bankruptcy or reorganization under the Bankruptcy Code or consenting to the filing of any bankruptcy or reorganization petition against the Design -Builder. Capistrano Valley Water District San Juan Basin Desalter Project Page 45 Construction Agreement 4. The issuance of an order of a court of competent jurisdiction appointing a receiver, liquidator, custodian or trustee of the Design -Builder. 8.5.2 Upon occurrence of an event set forth in Section 8.5.1 above, Contractor shall provide written notice to Design -Builder if it intends to terminate the Agreement unless the problem cited is cured, or commenced to be cured, within seven (7) days of Design - Builder's receipt of such notice. If Design -Builder fails to cure, or reasonably commence to cure, such problem, then Contractor may give a second written notice to Design - Builder declaring the Agreement terminated for default by providing written notice to Design -Builder of such declaration. In such case, Contractor shall be entitled to recover all damages and relief as allowed by this Agreement and by law. 8.6 Events of Default Without Right to Cure Notwithstanding the provisions of 8.3.2, each of the following shall constitute an event of default by the Contractor upon which the Design -Builder, by notice to the Contractor, may terminate this Agreement without providing any opportunity to cure: 8.6.1 The insolvency of the Contractor as determined by the Bankruptcy Code; 8.6.2 The filing by the Contractor of a petition of voluntary bankruptcy or reorganization under the Bankruptcy Code or consenting to the filing of any bankruptcy or reorganization petition against the Contractor; 8.6.3 The issuance of an order of a court of competent jurisdiction appointing a receiver, liquidator, custodian or trustee of the Contractor; 8.6.4 The termination or expiration of Contractor's performance and payment bonding required hereunder; or 8.6.5 Any bankruptcy filing by Contractor's bonding company. Capistrano Valley Water District Page 46 Construction Agreement San Juan Basin Desalter Project 408M.4 41012.1 412574.1 ARTICLE 9 — REPRESENTATIVES OF THE PARTIES 9.1 Design -Builder's Representatives 9.1.1 Design -Builder designates the individual listed below as its Representative ("Design - Builder's Representative"): Chris Costello Construction Manager ECO Capistrano Valley, Inc. 32234 Paseo Adelanto Suite D San Juan Capistrano, California 92675 Tel: (949) 218-7714 Fax: (949) 218-7716 9.2 Contractor's Representatives 9.2.1 Contractor designates the individual listed below as its Representative ("Contractor's Senior Representative"): Tim Healy Vice President ARB, Inc. 26000 Commer Centre Drive Lake Forest, Ca. 92630 949-454-7144 949- 454-7190 ARTICLE 10 — INSURANCE AND BONDS 10.1 Contractor's Insurance Requirements Contractor, at its sole cost and expense, shall obtain the policies of insurance required by Exhibit D before commencing the Work and shall maintain such insurance in effect all times during this Agreement. Capistrano Valley Water District San Juan Basin Desalter Project UOU84 41=61 412574.1 Page 47 Construction Agreement 10.1.1 Contractor shall be responsible for ensuring that all Subcontractors performing Project Work obtain and maintain all insurance required by Applicable Laws in connection with their presence and performance of Work for the Project. 10.1.2 Contractor and its Subcontractors and Sub -Subcontractors warrant that the insurance coverage set forth in Exhibit D shall not exclude coverage due to participation in design/build projects or similar exclusions that could compromise coverage because of the design -build delivery of the Project. 10.1.3 Prior to commencing any Work, Contractor shall provide Design -Builder with certificates evidencing that (i) all insurance obligations required by the Contract Documents are in full force and in effect and will remain in effect for the duration required by the Contract Documents and (ii) no insurance coverage will be canceled, renewal refused, or materially changed unless at least thirty (30) days prior written notice is given to Design - Builder. 10.2 Performance and Payment Bonds 10.2.1 Prior to the commencing the Work, Contractor shall furnish a performance bond conditioned on Contractor's faithful performance of all of its obligations under this Agreement which shall remain in effect until the end of the Warranty Period. The performance bond shall be in a form acceptable to Design -Builder as provided in the Contract Documents. 10.2.2 Prior to commencing the Work, Contractor shall furnish a payment bond in a form acceptable to Design -Builder as provided in the Contract Documents that complies with the requirements of California Civil Code Sections 3096 and 3248. 10.2.3 The performance bond and payment bond shall each be in the amount of the Guaranteed Maximum Price. 10.2.4 The performance bond and payment bond shall remain in effect for one year after the date of Acceptance. 10.4.2 The performance bond and payment bond shall be issued by admitted surety insurers having an AM Best rating of "A" or better. All Bonds signed by an agent must be accompanied by a certified copy of such agent's authority to act. 10.4.3 If the surety on any bond furnished by the Contractor is declared bankrupt or becomes insolvent or its right to do business is terminated in any state, the Contractor shall within seven (7) days thereafter substitute another bond and surety, which must be acceptable to Capistrano Valley Water District Page 48 Construction Agreement San Juan Basin Desalter Project 4108381 4 ffS28 2 412574.1 the Design -Builder. Absent such a timely substitution, Design Builder may terminate this Agreement for Cause. ARTICLE 11— INDEMNIFICATION 11.1 Patent and Copyright Infringement 11.1.1 Contractor shall defend any action or proceeding brought against Owner or Design - Builder based on any claim that the Work, or any part thereof, or the operation or use of the Work or any part thereof, constitutes infringement of any United States patent or copyright, now or hereafter issued. Design -Builder shall give prompt written notice to Contractor of any such action or proceeding and will reasonably provide authority, information and assistance in the defense of same. Contractor shall defend, indemnify and hold harmless Owner, Design -Builder and Project Engineer from and against any and all claims, demands, liabilities, damages and costs, including but not limited to attorneys fees and expenses awarded against Owner, Design -Builder or Project Engineer in any such action or proceeding. Contractor agrees to keep Design -Builder informed of all developments in the defense of such actions. 11.1.2 If Design -Builder is enjoined from the operation or use of the Work, or any part thereof, as the result of any patent or copyright suit, claim, or proceeding, Contractor shall at its sole expense take reasonable steps to procure the right to operate or use the Work. If Contractor cannot so procure such right within a reasonable time, Contractor shall promptly, at Contractor's option and at Contractor's expense, (i) modify the Work so as to avoid infringement of any patents, or copyrights, or (ii) replace said Work with Work that does not infringe or violate any such patent or copyright. 11.1.3 Sections 11.1.1 and 11. 1.2 above shall not be applicable to any suit, claim or proceeding based on infringement or violation of a patent or copyright (i) relating to a particular process or product of a particular manufacturer specified by Owner, Design -Builder or Project Engineer or (ii) arising from modifications to the Work by Owner or Design - Builder after acceptance of the Work. If the suit, claim or proceeding is based upon events set forth in the preceding sentence, Design -Builder shall defend, indemnify and hold harmless Contractor to the same extent Contractor is obligated to defend, indemnify and hold harmless Design -Builder in Section 11.1.1 above. 11.1.4 The provisions of Section 11.1 shall have no application where the alleged infringement of any United States patent or copyright is due, in whole or part, to the design of the Project or where the alleged infringement was mandated by the Contract Documents. In such event, Design -Builder, to the fullest extent permitted by law, shall indemnify, hold harmless and defend Contractor and its officers, directors, employees and agents and Contractor's Subcontractors, from and against claims, losses, damages, liabilities, Capistrano Valley Water District Page 49 Construction Agreement San Juan Basin Desalter Project 4108281 41(1328.2 412574.1 including attorney fees and expenses, for the infringement or alleged infringement of any United States patent or copyright, now or hereinafter issued. 11.2 Tax Claim Indemnification 11.2.1 If, in accordance with Design -Builder's direction, an exemption for all or part of the Work is claimed for taxes, Design -Builder shall indemnify, defend and hold harmless Contractor from and against any liability, penalty, interest, fine, tax assessment, attorney fees or other expenses or costs incurred by Contractor as a result of any action taken by Contractor in accordance with Design -Builder's directive. 11.3 Payment Claim Indemnification Providing that Design -Builder is not in breach of its contractual obligation to make payments to Contractor for the Work, Contractor shall defend, indemnify and hold harmless Owner and Design -Builder from any claims brought against Owner, Design -Builder, or against the Project as a result of the failure of Contractor, or those for whose acts it is responsible, to pay for any services, materials, labor, equipment, taxes or other items or obligations furnished or incurred for, or in connection with the Work. Within three (3) days of receiving written notice from Design -Builder that such a claim has been filed, Contractor shall commence to take reasonable steps necessary to discharge said claim or lien. If Contractor fails to do so, Design -Builder will have the right to discharge the claim or lien and hold Contractor liable for costs and expenses incurred, including attorneys' fees. 11.4 Contractor's General Indemnification The Contractor shall indemnify, defend and hold harmless the Design -Builder, the District, and their directors, officers, officials, employees, representatives, agents and representatives (each, a "Design -Builder Indemnitee") and the Trustee and its officers, employees, representatives, agents and representatives ("Trustee Indemnitee"), from and against (and pay the full amount of) any and all Loss -and -Expense incurred by a Design -Builder Indemnitee or a Trustee Indemnitee to third parties arising from or in connection with (or alleged to arise from on in connection with): (1) any failure by the Contractor to promptly and perform its obligations under this Service Contract; or (2) the negligence or willful misconduct of the Contractor or any of its officers, directors, employees, agents, representatives or Subcontractors in connection this Service Contract. The Contractor shall also indemnify Design -Builder as and to the extent provided elsewhere in this Agreement. The Contractor's indemnity obligations hereunder shall not be limited by any coverage exclusions or other provisions in any insurance policy maintained by the Contractor which is intended to respond to such events. The Contractor shall not, however, be required to reimburse or indemnify any Design -Builder Indemnitee or Trustee Indemnitee for any Loss -and -Expense to the extent caused by the negligence or willful misconduct of any Design -Builder Indemnitee or Trustee Indemnitee or to the extent attributable Capistrano Valley Water District Page 50 Construction Agreement San Juan Basin Desalter Project to any Uncontrollable Circumstance. A Design -Builder Indemnitee or Trustee Indemnitee shall promptly notify the Contractor of the assertion of any claim against it for which it is entitled to be indemnified hereunder, and the Contractor shall have the right to assume the defense of the claim in any Legal Proceeding and to approve any settlement of the claim. These indemnification provisions are for the protection of the Design -Builder Indemnitee and the Trustee Indemnitee only and shall not establish, of themselves, any liability to third parties. The provisions of this Section shall survive termination of this Service Contract. 11.5 Design -Builder's General Indemnification Design -Builder shall indemnify, defend and hold harmless the Contractor, and its directors, officers, officials, employees, representatives, agents and representatives (each, a "Contractor Indemnitee"), from and against (and pay the full amount of) any and all Loss -and -Expense incurred by a Contractor Indemnitee to third parties arising from or in connection with (or alleged to arise from on in connection with): (1) any failure by the Design -Builder to perform its obligations under this Agreement; or (2) the negligence or willful misconduct of the Design - Builder or any of its officers, directors, employees, agents, representatives or subcontractors in connection this Agreement. With the exception of any claims, damages or injuries caused or contributed to by Contractor's negligence or willful misconduct, the Design -Builder shall also indemnify the Contractor as to any claims arising from damage caused or alleged to have been caused by noise and/or vibration resulting from Pile Driving activities. The Design -Builder's indemnity obligations hereunder shall not be limited by any coverage exclusions or other provisions in any insurance policy maintained by Design -Builder which is intended to respond to such events. The Design -Builder shall not, however, be required to reimburse or indemnify any Contractor Indemnitee for any Loss -and -Expense to the extent caused by the negligence or willful misconduct of any Contractor Indemnitee or to the extent attributable to any Uncontrollable Circumstance. A Contractor Indemnitee shall promptly notify the Design - Builder of the assertion of any claim against it for which it is entitled to be indemnified hereunder, and the Design -Builder shall have the right to assume the defense of the claim in any Legal Proceeding and to approve any settlement of the claim. These indemnification provisions are for the protection of the Contractor Indemnitee only and shall not establish, of themselves, any liability to third parties. The provisions of this Section shall survive termination of this Agreement. ARTICLE 12 — CHANGES 12.1 Design -Builder's Right to Order Changes Design -Builder shall have the right, without breaching this Agreement, to order changes in the Work including, without limitation, additions, modifications and deletions thereto. Capistrano Valley Water District Page 51 Construction Agreement San Juan Basin Desalter Project 4109291 4 7A 7 412574.1 12.1.1 General Notice Requirement. Except as specifically and expressly provided elsewhere in the Contract Documents, Contractor shall provide written notice to Design -Builder of any occurrence, event or circumstance, including any act or omission by Design -Builder and any inaccuracy, ambiguity or error in the Contract Documents, for which Contractor reasonably believes it is entitled to an adjustment in the Guaranteed Maximum Price and/or Contract Time(s). Said notice must be provided no later than ten (10) days after Contractor's discovery of the occurrence, event or circumstance and the failure to provide such notice shall constitute a waiver of Contractor's right to any relief. 12.1.2 General Record Keeping Requirement. Except as specifically and expressly provided elsewhere in the Contract Documents, Contractor shall keep and maintain accurate records of all labor, services, equipment or materials furnished for which Contractor reasonably believes it will be entitled to an adjustment in the Guaranteed Maximum Price and/or Contract Time(s). Such records shall be in the form required by Owner from Design -Builder and shall include, at a minimum, daily records of actual quantities of labor, service, equipment or materials furnished by Contractor as submitted on a daily basis for verification by Design -Builder or its representative, original receipts, invoices, delivery tickets, weigh tickets, photographs and daily extra work reports, and records of payments made by Contractor. 12.1.3 Construction Schedule. Any request by Contractor for a Change Order shall include an analysis of its impact on the Construction Schedule, including the Schedule of Values. Following the issuance of any Change Order, Contractor shall submit a proposed update to the Construction Schedule incorporating the work of the Changer Order therein in the manner required for preparation of the Construction Schedule provided at Exhibit C. Contractor shall make any revisions reasonably required by Design -Builder to the proposed update to the Construction Schedule. 12.1.3 Effect of Failure to Give Notice or to Keep Records. Except as specifically and expressly provided elsewhere in the Contract Documents, Contractor's failure to provide the notice required under Section 12.1.1 or to keep records required under Section 12.1.2 shall constitute a waiver of any right Contractor may have otherwise had to obtain an adjustment in the Guaranteed Maximum Price or Contract Time(s) 12.2 Change Orders 12.2.1 The Guaranteed Maximum Price and Contract Time(s) may not be changed except by written Change Order issued pursuant to this Article 12. A Change Order is a written instrument issued after execution of this Agreement signed by Design -Builder and Contractor, stating their agreement upon all of the following as applicable: 1 Additions, deletions, changes and/or modifications to the Work; Capistrano Valley Water District Page 52 Construction Agreement San Juan Basin Desalter Project 4108181 410828.1 412574.1 2 Changes to the Guaranteed Maximum Price; 3 Changes to the Contract Time(s); and 4 Effect of the change on the Construction Schedule, including the critical path, and the Schedule of Values. 12.2.2 Except for Minor Changes, the Work, the Guaranteed Maximum Price, the Contract Time(s) and the Construction Schedule may not be changed except by written Change Order. 12.2.3 Minor changes in the Work are those that do not increase Contractor's cost of performing the Work and/or the Contract Time and do not materially and adversely affect the Work including the design, quality, performance and workmanship required by the Contract Documents. Design -Builder may make minor changes, as defined above, in the Work consistent with the intent of the Contract Documents, provided, however, that Design - Builder shall promptly inform Contractor, in writing, of any such changes. Design - Builder may request minor changes, as defined in this paragraph, without an adjustment in the Guaranteed Maximum Price and/or Contract Time. 12.2.4 All changes in the Work authorized by applicable Change Order shall be performed under the applicable conditions of the Contract Documents except as modified by the Change Order. 12.3 Owner -Generated Changes 12.3.1 Contractor acknowledges Owner's authority to make changes in the Work as provided in Section 6.11 of the Service Contract. 12.3.2 Design -Builder shall promptly notify Contractor of any Owner requested or directed changes. As provided in Section 6.11 of the Service Contract, Contractor shall promptly thereafter submit a lump -sum quotation for the cost of performing said change including the effect of such change on the current Construction Schedule, including extensions of the Contract Time(s) required to perform said change, and any acceleration of the Work required to perform said change without modifying the Contract Time(s). Contractor shall also advise whether, in its judgment, the proposed change will affect the Project's ability to satisfy the Performance Guarantees under the Service Contract. Contractor assumes no responsibility in connection with any opinions expressed in connection with Owner Requested Changes. 12.3.3 Design -Builder, with the Contractor's assistance, as required, shall promptly proceed to negotiate the terms of such change with Owner. Contractor shall not be obligated to Capistrano Valley Water District Page 53 Construction Agreement San Juan Basin Desalter Project 41082&3 410428.2 412574.1 proceed with the performance of an Owner -directed change except following agreement as to the terms of a Change Order as provided at Section 6.11 of the Service Contract. 12.3.4 Contractor shall provide Cost Substantiation for Work performed pursuant to an Owner - directed Change Order as required under Sections 6.11(F) and 16.6 of the Service Contract. 12.4 Uncontrollable Circumstances 12.4.1 The rights, duties and obligations of Design -Builder and Contractor with regard to Uncontrollable Circumstances shall be the same as those between Owner and Design - Builder as set forth at Sections 14.2(A), (B) and (C) of the Service Contract. 12.4.2 Contractor shall provide notice of any Uncontrollable Circumstance and comply with the conditions and other provisions of Sections 14.2(B) and (C) of the Service Contract with sufficient time for Design -Builder to satisfy all conditions precedent to its right to seek an adjustment in its compensation or time for performance of its obligations from Owner due to an Uncontrollable Circumstance. .1 Should Contractor failure to provide any notice or fail to satisfy any condition necessary to seek an adjustment in the Guaranteed Maximum Price or Contract Time(s), and as a result of such failure Design -Builder cannot obtain a like adjustment in its compensation or time for performance of its obligations, Contractor shall be deemed to have waived any right it may have otherwise had to seek an adjustment in the Guaranteed Maximum Price or Contract Time(s) as a result of an Uncontrollable Circumstance. 12.4.3 Contractor's compensation in the event of an Uncontrollable Circumstance shall be determined as set forth at Sections 14.2(C), 16.5 and 16.6 of the Service Contract and Contractor shall comply with the provisions thereof. 12.5 Design -Builder Generated Changes; Changes Due to Differing Site Conditions Except for changes governed by Sections 12.3 and 12.4 of this Agreement, any change in the Work or the Contract Time(s) requested by Design -Builder, and any change in the Guaranteed Maximum Price or Contract Time(s) requested by Contractor due to an occurrence, direction or other circumstance for which Contractor reasonably believes Design -Builder is responsible and for which Contractor reasonably believes it is entitled to a change in the Guaranteed Maximum Price or Contract Time(s), shall be governed by this Section 12.5. 12.5.1 Change Directed by Design -Builder; Work Change Directive. Should Design -Builder wish to direct a change in the Work, it may issue a Work Change Directive to Contractor Capistrano Valley Water District Page 54 Construction Agreement San Juan Basin Desalter Project 4108381 31()838.1 412574.1 describing such change. A Work Change Directive is a written order prepared and signed by Design -Builder, directing a change in the Work prior to agreement on an adjustment in the Guaranteed Maximum Price and/or the Contract Time(s). .1 If directed in writing by Design -Builder, Contractor shall immediately commence performance of the requested change. .2 Promptly after issuance of a Work Change Directive, Contractor shall submit a proposed Change Order for Design -Builder's consideration setting forth any requested change in the Guaranteed Maximum Price, the Contract Time(s), and steps that will be required to implement and perform the change without delaying the Contract Time(s). .3 Design -Builder and Contractor shall thereafter negotiate in good faith to arrive at the terms of a Change Order. 12.5.2 Change Requested by Contractor. Should Contractor seek an adjustment in the Contract Price or Contract Time(s) due to any occurrence, direction or other circumstance for which Contractor reasonably believes Design -Builder is responsible and for which Contractor reasonably believes it is entitled to a change in the Guaranteed Maximum Price or Contract Time(s), Contractor shall promptly submit a Change Order Request to Design -Builder setting for the following: .1 The reason for the requested change, including supporting documents; .2 Any proposed change to the Guaranteed Maximum Price; and .3 Any proposed change to the Contract Time(s) and Construction Schedule including steps that will be required to avoid any delay to the Contract Time(s); 12.5.3 Guaranteed Maximum Price Adjustment. The increase or decrease in Guaranteed Maximum Price resulting from a change in the Work shall be determined by Design - Builder by one or more of the following methods: 1 Unit prices set forth in Exhibit G to the Agreement or as subsequently agreed in writing between the parties which shall include markup. .2 A mutually accepted, lump sum, properly itemized as supported by sufficient substantiating data to permit evaluation by Design -Builder which shall include markup. .3 Time and Materials plus markup. Capistrano Valley Water District San Juan Basin Desalter Project 4109391 410828,2 412574.1 Page 55 Construction Agreement 4 If Contractor and Design -Builder cannot agree on the terms of an adjustment to the Guaranteed Maximum Price, they shall resolve their differences pursuant to Article 13 of this Agreement. However, in such case, Contractor shall continue to prosecute the Work, including any disputed extra Work, so as to complete the Project within the Contract Time(s). 5 If Contractor and Design -Builder cannot agree on the terms of an adjustment to the Guaranteed Maximum Price, Design -Builder's total liability to Contractor in the event it is ultimately determined that an adjustment is warranted shall not exceed Contractor's actual cost to perform the disputed Work plus a single, all- inclusive mark-up of 15%. The term "actual cost" as used in this sub -section shall not include indirect costs such as extended home -office overhead, extended general conditions, lost revenues, lost profits and other such indirect costs. 12.5.4 Ad'ustment in the Contract Times and Construction Schedule. 1 Contractor shall update the Construction Schedule to reflect any adjustment in the Contract Time(s) or change in the Work that alters the critical path of the Construction Schedule. .2 Contractor agrees that it shall not be entitled to an extension of the Contract Time(s) that would extend the Substantial Completion date or the Scheduled Acceptance Date as set forth at Section 7.12 of the Service Contract, unless those deadlines are extended by Owner. .3 To the extent that delays are caused to Contractor's Work by the acts or omissions of the Design -Builder or someone for whom the Design -Builder is responsible, and said delay was not caused or contributed to by the Contractor, Contractor's relief for said delay shall, at Design -Builder's sole option, be either 1) an extension of the Contract Times, 2) Contractor's reasonable acceleration costs to maintain the Construction Schedule, or 3) both. 12.6 Emergencies In any emergency affecting the safety of persons and/or property, which concerns or relates to the Work, Contractor shall immediately take such actions as it deems necessary to prevent the threatened damage, injury or loss. Any change in the Guaranteed Maximum Price and/or Contract Time(s) on account of emergency work shall be determined as provided in this Article 12. Capistrano Valley Water District San Juan Basin Desalter Project 4108291 41h= 412574.1 Page 56 Construction Agreement ARTICLE 13 — DISPUTE RESOLUTION 13.1 Avoidance of Disputes The parties are fully committed to working with each other throughout the Project and agree to communicate regularly with each other at all times so as to avoid or minimize disputes or disagreements. If disputes or disagreements do arise, Contractor and Design -Builder each commit to resolving such disputes or disagreements in an amicable, professional and expeditious manner so as to avoid unnecessary losses, delays and disruptions to the Work. 13.2 Disputes Involving Owner In the event of a dispute between Design -Builder and Contractor involving or potentially involving Owner, Contractor agrees that the resolution of such dispute shall be governed by Sections 13.15, 13.16 and 13.17 of the Service Contract. Contractor shall ensure that its Subcontractors are bound to Contractor to the same extent as Contractor is bound to Design - Builder under this Section 13.3. 13.3 Disputes Involving Contractor and Design -Builder 13.3.1 In the event of a dispute involving only Contractor and Design -Builder, Contractor and Design -Builder will first attempt to resolve such claim, dispute or controversy at the field level through discussions between Design -Builder's Representative and Contractor's Representative. 13.3.2 If such efforts fail, either party may by written notice to the other demand a meeting between the Parties attended by representatives with full authority to speak for and bind their respective Parties. Within no more than seven (7) days thereafter, the parties shall exchange a concise summary of their respective positions including supporting documentation and identifying key persons with personal knowledge of the issue in dispute. The parties shall then meet in person within no more than ten (10) days after the date of the initial notice to attempt to resolve their differences. 13.3.3 If the parties are unable to resolve their dispute under Sections 13.3.1 and 13.3.2, the parties shall be entitled to pursue all available legal remedies except as provided in this Article 13. 13.4 Continuation of Work Contractor shall continue to diligently perform and prosecute the Work in the event of a dispute and take all steps necessary to achieve the Contract Time(s) including, as necessary, devoting more labor to the Work, scheduling additional shifts and/or otherwise accelerating the Work. Capistrano Valley Water District Page 57 Construction Agreement San Juan Basin Desalter Project 4lesss4 41828 412574.1 Except as expressly and specifically provided otherwise in this Agreement, Contractor shall be liable for all Loss and Expense and all consequential, liquidated and other damages incurred by Design -Builder should Contractor abandon, stop, cease performing or otherwise terminate this Agreement. 13.5 Attorneys Fees In addition to any other relief to which a Party may be entitled, the prevailing Party in any dispute arising from or relating to this Agreement shall be entitled to recover its reasonable attorneys' fees and expert witness fees. ARTICLE 14 — MISCELLANEOUS 14.1 Assignment 14.1.1 Contractor shall not, without the written consent of Design -Builder, assign, transfer or sublet any portion or part of the Work or the obligations required by the Contract Documents. 14.1.2 Contractor expressly acknowledges that at some point during the performance of the Work Owner may transfer its interest in the Project to the City or another Governmental Body as provided at Section 16.9 of the Service Contract. Contractor agrees to be bound to the provisions of Sections 16.9(B), (C) and (D) of the Service Contract. 14.1.3 Contractor expressly acknowledges that at some point during the performance of this Agreement, Design -Builder will transfer and assign all of its rights and obligations hereunder to a Special Business Entity ("SBE"). Contractor agrees to the assignment of this Agreement to said SBE and agrees to release ECO Resources, Inc. from any obligations or liability hereunder upon such Assignment. 14.1.4 In further consideration for Contractor's agreement to the assignment described in Section 14.1.3 above, Design -Builder shall advance and pay to Contractor, as part of the Guaranteed Maximum Price set forth in Section 6.1.1 hereunder, 5% of the Guaranteed Maximum Price ($825,000), with half of said amount ($412,500) to be paid to Contractor within ten (10) days of Design -Builder's receipt of Contractor's first Payment Application, and the balance($412,500) to be paid within thirty (30) days of Design - Builder's receipt of said Payment Application, and 2) Design -Builder shall use its best efforts to maintain ARB in a cash neutral position with respect to the payments for its performance of the Work during the term of this Agreement. Capistrano Valley Water District Page 58 Construction Agreement San Juan Basin Desalter Project U08284 tea.+ 412574.1 14.2 Successors and Assigns This Agreement shall inure to the benefit of the Parties respective successors and assigns. 14.3 Governing Law, Jurisdiction and Venue The Agreement shall be governed by the laws of the State of California. Jurisdiction and venue for any lawsuit or other proceeding arising from or relating to this Agreement shall lie in a Federal or State court located in Orange County, California. 14.4 Severability If any provision or any part of a provision of the Contract Documents shall be finally determined to be superseded, invalid, illegal, or otherwise unenforceable pursuant to any Applicable Laws or court order, such determination shall not impair or otherwise affect the validity, legality, or enforceability of the remaining provision or parts of the provision of the Contract Documents, which shall remain in full force and effect as if the unenforceable provision or part were deleted. 14.5 No Continuing Waiver The failure of either Design -Builder or Contractor to insist, in any one or more instances, on the performance of any of the obligations required by the other under the Contract Documents shall not be construed as a waiver or relinquishment of such obligation or right with respect to future performance. 14.6 Headings 14.6.1 The headings used in this Agreement, or any other Contract Document, are for ease of reference only and shall not in any way be construed to limit or alter the meaning of any provision. 14.7 Notice Notices required under this Agreement shall be given using the fastest means warranted by the circumstances providing for proof of delivery. Whenever the Contract Documents require that notice be provided to the other party, notice will be deemed to have been validly given, four (4) days after being sent by registered or certified mail, postage prepaid, addressed as indicated below or, if transmitted to the other party by fax, at the fax number indicated below. Any notice sent by fax will be deemed to have been validly given by the time stated in a machine generated fax confirmation notice showing that notice was received at the number of the intended recipient. Capistrano Valley Water District San Juan Basin Desalter Project U08284 410828 2 412574.1 Page 59 Construction Agreement If to Design -Builder: Chris Costello Construction Manager ECO Capistrano Valley, Inc. 32234 Paseo Adelanto Suite D San Juan Capistrano, California 92675 Tel: (949) 218-7714 Fax: (949) 218-7716 If to Contractor: Tim Healy Vice President ARB, Inc. 26000 Commer Centre Drive Lake Forest, Ca. 92630 Tel: 949- 454- 7144 Fax: 949- 454-7190 14.8 Amendments This Agreement may not be changed, altered, or amended in any way except in writing signed by a duly authorized representative of each party as provided herein. 14.9 Prevailing Wages Contractor shall comply and shall ensure that its Subcontractors comply with California Labor Code Section 1770 and the provisions that follow regarding the payment of prevailing wages and the keeping and production of certified payroll records. A schedule of the general prevailing wage rates as determined by the Director of Industrial Relations will be on file at Design - Builder's principal office and will be made available to any interested party upon request. By this reference, the applicable schedule of prevailing wage rates is made a part of the Contract Documents. 14.9.1 Contractor shall pay not less than the prevailing wage rates to all covered workers employed by Contractor in the performance of the Work. 14.9.2 Contractor shall require all Subcontractors to pay not less than the prevailing wage rates to all covered workers employed by such Subcontractors in the performance of the Work. Capistrano Valley Water District Page 60 Construction Agreement San Juan Basin Desalter Project ROU84 410928 W 412574.1 14.9.3 Contractor shall be subject to the penalties provided by the California Labor Code for failing to pay workers less than the applicable prevailing wage rate. Such penalties may be deducted by Design -Builder from payments otherwise due Contractor hereunder. 14.9.4 Certified Payroll Records .1 In accordance with Section 1776 of the California Labor Code Contractor and each Subcontractor shall keep an accurate payroll record, showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker, or other employee employed by him or her in connection with the public work. Each payroll record shall contain or be verified by a written declaration that it is made under penalty of perjury, stating both of the following: (a) the information contained in the payroll record is true and correct, and (b) the employer has complied with the requirements of Sections 1771, 1811, and 1815 of the California Labor Code for any work performed by his or her employees on the public works project. .2 The payroll records enumerated under Paragraph 17.2.1 shall be certified and shall be available for inspection at all reasonable hours at the principal office of the Contractor on the following basis: 3 A certified copy of an employee's payroll record shall be made available for inspection or furnished to the employee or his or her authorized representative on request. 4 A certified copy of all payroll records enumerated in Paragraph 17.2.1 shall be made available for inspection or furnished upon request to a representative of the Owner, the Division of Labor Standards Enforcement, and the Division of Apprenticeship Standards of the Department of Industrial Relations. 5 A certified copy of all payroll records enumerated in Paragraph 17.2.1 shall be made available upon request by the public for inspection or copies thereof made; provided, however, that a request by the public shall be made through either the body awarding the contract, the Division of Apprenticeship Standards, or the Division of Labor Standards Enforcement. The public shall not be given access to the records at the principal office of the Contractor. 14.9.5 Certified payroll records shall be on forms provided by the Division of Labor Standards Enforcement or shall contain the same information as the forms provided by the division. Capistrano Valley Water District Page 61 Construction Agreement San Juan Basin Desalter Project UOU84 .9 3 OR2R.� 412574.1 14.9.6 Any copy of records made available for inspection as copies and furnished upon request to the public or any public agency by the awarding body, the Division of Apprenticeship Standards, or the Division of Labor Standards Enforcement shall be marked or obliterated in such a manner as to prevent disclosure of an individual's name, address, and social security number. The name and address of the Contractor awarded the contract or performing the contract shall not be marked or obliterated. 14.9.7 The Contractor shall inform the body awarding the contract of the location of the certified payroll records including the street address, city and county, and shall, within 5 working days, provide a notice of change of location and address. 14.9.8 The Contractor shall have 10 days in which to comply subsequent to receipt of written notice specifying in what respects the Contractor must comply with this Section. In the event that the Contractor fails to comply within the 10 -day period, he or she shall, as a penalty to the state or political subdivision on whose behalf the contract is made or awarded, forfeit twenty-five dollars ($25.00) for each calendar day, or portion thereof, for each worker, until strict compliance is effectuated. Upon the request of the Division of Apprenticeship Standards or the Division of Labor Standards Enforcement, these penalties shall be withheld from progress payments then due. A contractor is not subject to a penalty assessment pursuant to this section due to the failure of a subcontractor to comply with this section. 14.9.9 Notwithstanding any contrary provisions in the Contract Documents, Design -Builder shall have discretion to require that Contractor file copies of its and its Subcontractors' certified payroll records with Design -Builder as a condition precedent to Design - Builder's obligation to make any of the payments to Contractor required by the Contract Documents. 14.10 Employment of Apprentices Contractor shall comply and shall ensure that its Subcontractors comply with the requirements of Sections 1777.5 and 1777.6 of the Labor Code in the employment of apprentices. Information relative to apprenticeship standards, wage schedules, and other requirements may be obtained from the Director of Industrial Relations, ex officio the Administrator of Apprenticeship, San Francisco, California, or from the Division of Apprenticeship Standards and its branch offices. Willful violations of Section 1777.5 will result in a forfeiture of the maximum statutory amount for each calendar day of non-compliance which may be withheld from progress payments by Design -Builder upon notice from the Department of Industrial Relations pursuant to Labor Code Section 1777.7. Willful violations of Section 1777.5 may also result in the suspension of the Contractor's right to bid on or receive the award of any public works construction contract, as provided in Section 1777.7. Capistrano Valley Water District Page 62 Construction Agreement San Juan Basin Desalter Project 410828,1- 412574.1 14.11 Working Hours Contractor shall comply with all applicable provisions of Section 1810 to 1815, inclusive, of the California Labor Code relating to working hours. 14.12 Workers' Compensation; Certification Re: Workers' Compensation In accordance with the provisions of Section 3700 of the California Labor Code, the Contractor shall secure the payment of compensation to its employees. By submitting a bid for the Project and by executing the Agreement, Contractor shall be deemed to have made the following certification: "I am aware of the provisions of Section 3700 of the Labor Code which require every employer to be insured against liability for workers' compensation or to undertake self-insurance in accordance with the provisions of that code, and I will comply with such provisions before commencing the performance of the Work of this Contract." Notwithstanding the foregoing provisions, before the Contract is executed on behalf of the Design -Builder, a bidder to whom a contract has been awarded shall furnish satisfactory evidence that it has secured in the manner required and provided by law the payment of workers' compensation. 14.13 Concrete Forms, Falsework, And Shoring Without limiting Contractor's obligation to comply with all Applicable Laws regarding safety, Contractor shall comply fully with the requirements of Section 1717 of the Construction Safety Orders, State of California, Department of Industrial Relations, regarding the design of concrete forms, falsework and shoring, and the inspection of same prior to placement of concrete. Where said Section 1717 requires the services of a civil engineer registered in the State of California to approve design calculations and working drawings of the falsework or shoring system, or to inspect such system prior to placement of concrete, the Contractor shall employ a registered civil engineer for these purposes, and all costs therefore shall be deemed included in the Guaranteed Maximum Price. 14.14 Protection Of Workers In Trench Excavations Without limiting Contractor's obligation to comply with all Applicable Laws regarding safety, as required by Section 6705 of the California Labor Code and in addition thereto, whenever the Work involves the excavation of any trench or trenches 5 feet or more in depth, Contractor shall submit for acceptance by Design -Builder or by a registered civil or structural engineer, employed by the Design -Builder, to whom authority to accept has been delegated, in advance of excavation, a detailed plan showing the design of shoring, bracing, sloping, or other provisions to Capistrano Valley Water District Page 63 Construction Agreement San Juan Basin Desalter Project Ues184 412574.1 be made for worker protection from the hazard of caving ground during the excavation, of such trench or trenches. If such plan varies from the shoring system standards established by the Construction Safety Orders of the Division of Occupational Safety and Health, the plan shall be prepared by a registered civil or structural engineer employed by Contractor, and all costs therefore shall be included in the Guaranteed Maximum Price. Nothing in this Section shall be deemed to allow the use of a shoring, sloping, or other protective system less effective than that required by the Construction Safety Orders. Nothing in this Section shall be construed to impose tort liability on Design -Builder or Owner, or any of their officers, agents, representatives, or employees. Excavation shall not start until Contractor has obtained a permit from the California Division of Industrial Safety and has posted it at the site. 14.15 Non -Discrimination Contractor shall not discriminate against any employee or applicant for employment because of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, marital status, sex, sexual orientation or age in any manner prohibited by law. Contractor shall take affirmative action to ensure that applicants are hired and that employees are treated during employment in accordance with this non-discrimination obligation. Such action shall include, but not be limited to, employment, upgrading, demotion or transfer, recruitment or recruitment advertising, layoff or termination, rates of pay or other forms of compensation, and selection for training, including apprenticeship. Contractor shall post in conspicuous places, available to employees and applicants for employment, notices setting forth the provisions of this Article. 14.16 Publicity Contractor shall not make any written or oral statement relating to the Work or the Project to any member of the press or public media without prior written approval of Design -Builder. Design - Builder reserves the right to review and approve all Contractor -related copy prior to publication. Contractor agrees not to allow Design -Builder -related copy to be published in the Contractor's advertisements or public relations programs without prior approval from the Design -Builder's Representative. Capistrano Valley Water District Page 64 Construction Agreement San Juan Basin Desalter Project 41083&4 41(!&Sv a1Ma. 1 14.17 Authority Each person executing this Agreement represents and warrants that they have the authority to do so on behalf of the Party for whom they are signing and that they are fully authorized to bind said Party to all of the terms, conditions and obligations herein. In executing this Agreement, Design -Builder and Contractor each individually represents that it has the necessary financial resources to fulfill its obligations under this Agreement, and each has the necessary corporate approvals to execute this Agreement, and perform the Work described herein. ECO RESOURCES, INC. ("Design -Builder") (Signature) Printed Name: Peter J. Moerbeek Title: President Date: Capistrano Valley Water District San Juan Basin Desalter Project 008284 412574.1 ARB, INC. ("Contractor") (Signature) Contractor's License Number Printed Name:Tim Healy Title:Vice President Date: Page 65 Construction Agreement EXHIBIT A — SCOPE OF WORK 1.0 General The Work shall generally consist of furnishing all labor, materials, equipment, supplies, tools, temporary facilities, sanitary facilities, temporary power and light, chemicals, parking, traffic control, security, temporary utilities, dumpsters and trash collection and other services and materials necessary to construct and complete the Project in accordance with the Contract Documents. The Guaranteed Maximum Price shall be deemed good and sufficient consideration for performing the Work. 2.0 Project Elements The Work shall include the following elements described in Section 6.2(A), (C), (D), and (E) of the Service Contract and as described in greater detail Appendix 1 of the Service Contract, excluding Capital Modifications: Plant Project Structures (listed in Attachment 1 to Appendix 1 of the Service Contract) Project Equipment (listed in Attachment 2 to Appendix 1 of the Service Contract) Project Wells (listed in Attachment 1 to Appendix 1 of the Service Contract) Project Pipelines (listed in Attachment 1 to Appendix 1 of the Service Contract) Raw Water Transmission Line Booster Pumping Station Additional Assets Finished Water Transmission Line Concentrate Disposal Line Abandonment of Existing Wells 3.0 Permits Contractor shall be responsible for obtaining the Permits described at Exhibit B. 4.0 Site Work The Work shall include all grading, excavation, demolition and other preparatory work for the Project Sites. Contractor shall be responsible for the import of necessary soils and the disposal of all unsuitable or excess materials, both in preparation for and following construction, except as provided in the Contract Documents. Capistrano Valley Water District Exhibit A — Scope of Work Construction Agreement San Juan Basin Desalter Project Page 1 UON84 412574A 5.0 Initial Work Contractor shall be responsible to perform any initial construction as defined in Section 4.4 of the Service Contract. 6.0 Underground Utilities The Work shall include re-routing or replacing any known interfering underground utilities. Contractor shall be responsible for coordinating and performing such work in cooperation with and subject to the requirements of the affected utility owner. 7.0 Project Wells The Work shall include construction of the Project Wells in accordance with Attachment 1 to Appendix 5 of the Service Contract. Contractor shall promptly advise Design -Builder of any inconsistency between the Project Design and Attachment 1 to Appendix 5 of the Service Contract. 8.0 Plant Foundation Construction Method Pursuant to Section 5.4 of the Service Contract, the District has elected to use the pile driving foundation construction method for the construction of the Plant foundation on the Plant Site. Said construction shall comply with this Agreement, the Service Contract, and the requirements set forth in that certain Contract Administration Memorandum No. SC 2002-3, dated November _, 2002 entitled "District Election as to Foundation Construction Method pursuant to Section 5.4(E) of the Service Contract". 9.0 Reports and Meetings Guaranteed Maximum Price shall include compensation to Contractor to attend all meetings and to produce all reports, in the required quantities, which are reasonably required by Design - Builder. Contractor shall anticipate the need for substantial coordination with the City, the District, the Trustee and their various representatives. 10.0 Start -Up and Testing The Work shall include the cost of assisting the Design -Builder and the Project Engineer with Project start-up and testing as provided at Section 7.3, Section 7.6 of the Service Contract and Appendix 8 of the Service Contract. The Work shall include the furnishing of all utilities required to conduct such tests, except raw water. The Work shall include the furnishing of all chemicals required to conduct such tests. No start up or testing work shall be performed without advance written notice to the Design -Builder and Contractor shall comply with all permit Capistrano Valley Water District Exhibit A — Scope of Work Construction Agreement San Juan Basin Desalter Project Page 2 4108191 410828.2 412574.1 requirements relating to said start-up and testing. Contractor shall be responsible for the lawful disposal of all water generated for start-up and testing. 11.0 Training; Operations and Maintenance Manual The Work shall include providing Design -Builder with assistance as needed for the production of the Operations and Maintenance Manual as described in the Service Contract and for providing training for specialized equipment necessary for operation and maintenance of the Project after completion. Capistrano Valley Water District Exhibit A — Scope of Work Construction Agreement San Juan Basin Desalter Project Page 3 4108284 410328.2 412574.1 EXHIBIT B — CONTRACTOR PERMITS Contractor shall be responsible to obtain the following construction -related permits: Permit Agenc Excavation Permits CAL -OSHA Grading Permits City of San Juan Capistrano Building Permits City of San Juan Capistrano Equipment Permits SCAQMD Traffic Control Plan City of San Juan Capistrano Capistrano Valley Water District Exhibit B — Contractor Permits San Juan Basin Desalter Project Page 1 UOU84 41 W92& 412574.1 Construction Agreement EXHIBIT C — PROJECT SCHEDULE AND MILESTONES 1.0 Progress of the Work It is expressly understood and agreed that the time of beginning, the rate of progress, and the time of completion of the Work are of the essence of this Agreement. Design -Builder is entitled to extensions of time under the Service Contract to complete construction of the Project only under extremely limited circumstances and is liable to Owner and others for substantial liquidated damages in the event of delay. Accordingly, time is of the utmost essence in the performance, prosecution and completion of the Work and the Project, and the Project Schedule requirements set forth herein are critical toward achieving that requirement. Contractor, therefore, expressly agrees that it shall prosecute and perform the Work with such progress as required to prevent any delay to the completion of the Work and the Project. Any float in the Contractor's construction schedule is owned by the Project and Contractor waives any claim for delays that adversely affect any float in Contractor's construction schedule. 2.0 Contractor's Construction Scheduler Contractor shall employ or retain the services of a construction scheduler who shall have verifiable experience as the person primarily responsible for preparing and maintaining the construction schedule on projects of the same or similar size and nature as this Project. The person in charge of scheduling shall be required to attend each Project Progress meeting. 3.0 General 3.1 Intent. The Project Schedule shall provide Design -Builder with a tool to monitor and follow the progress of all phases of the Work and shall serve as the basis for all payments by Design -Builder to Contractor. The Project Schedule shall provide for the completion of all elements of the Work within the Contract Times 3.2 Schedule Methodology. The scheduling method to be used shall be a critical path method schedule in the form of an activity on node precedence diagram network capable of identifying the critical path. 3.3 Scheduling System. Contractor shall use Primavera Project Planner, P3 Version 3.0 or later or comparable system commonly in use in the industry for projects of commensurate size and complexity acceptable to Design -Builder. The system shall be capable of handling, processing, printing, and plotting data to satisfy all scheduling requirements herein. Capistrano Valley Water District Exhibit C — Project Schedule and Milestones Construction Agreement San Juan Basin Desalter Project Page 1 uesas 1- 4iftUa.2 412574.1 4.0 Contents of Schedule 4.1 Network Details. The Project Schedule shall include time -scaled network diagrams as well as computer tabulations. The Project Schedule shall be constructed to show the order in which the Contractor proposes to carry out the Work, to indicate restrictions of access and to show availability of Work areas, and availability and use of manpower, materials and equipment. The Contractor shall utilize the Project Schedule in planning, scheduling, coordinating, and performing the work under the Contract (including all activities of Subcontractors, equipment vendors, and Suppliers). The degree of detail shall include factors to the satisfaction of Design -Builder including, but not limited to, the following required elements: 4.1.1 Notice to Proceed, which shall provide for the commencement of the Work no later than December 4, 2002. 4.1.2 All Project Milestones identified in Appendix 21 to the Service Contract. 4.1.3 The following additional events, constraints and/or activities shall described in the Service Contract: .1 Issuance of all Governmental Approvals required to commence, prosecute and complete the Work, including start-up operations, Acceptance Testing, and operations. .2 The commencement and completion of construction, furnishing and/or installation of the Project Improvements, Project Equipment and Project Structures described in Appendix 1 to the Service Contract. .3 All purchases, submittals, submittal reviews, manufacturer, test, delivery, and installation activities for all major material and equipment, and a separate list of all major items or items of equipment for which the Contractor intends to seek payment prior to installation. .4 Preparation, submittal and approval of shop and/or working drawings including a time frame for at least one (1) re -submittal on all major equipment. 5 Plans for all subcontract work. 6 Assignment of responsibility for performing specific activities. Capistrano Valley Water District Exhibit C — Project Schedule and Milestones Construction Agreement San Juan Basin Desalter Project Page 2 4109281 s'2 412574.1 .7 Access to and availability of the Project Sites and Work areas. .8 Resource loading for cost, manpower, material, and equipment. .9 Identification of any manpower, material, or equipment restrictions, as well as any activity requiring unusual shift work, such as two shifts, five (5) or six (6) day weeks, specified overtime or work at times other than regular days or hours, shall be clearly identified in the Project Schedule. .10 Substantial Completion as provided by Section 7.2 of the Service Contract. .11 Submittal of Acceptance Test Plan in accordance with Section 7.3(A) and Appendix 8 of the Service Contract including a time frame for at least one (1) re- submittal. .12 Issuance of all permits and authorizations required by Applicable Law to commence Acceptance Test. .13 Commencement and completion of Acceptance Test as provided in Section 7.6 and Appendix 8 of the Service Contract. .14 Provisional Acceptance Date as provided in Section 7.8 of the Service Contract. .15 Issuance of CADHS Approval for the delivery of Finished Water to the Water System for potable consumption by Owner's customers. .16 Performance of punch list work as provided in Section 7.15 of the Service Contract. 17 Final Completion as provided in Section 7.16 of the Service Contract. 4.2 Activity Details 4.2.1 The Project Schedule shall show the critical path and sequence and interdependence of activities required for complete performance of the Work within the Contract Times, beginning with the date of the Notice to Proceed and concluding with the date of Final Completion of the Contract. 4.2.2 Use of float suppression techniques such as preferential sequencing, special lead/lag logic restraints, extended activity times or imposed date shall be cause of rejection of the Project Schedule and any revisions or updates. Float belongs to the Project. Capistrano Valley Water District Exhibit C — Project Schedule and Milestones Construction Agreement San Juan Basin Desalter Project Page 3 a;esaar alos:az 412574.1 4.2.3 The activities included in the Project Schedule shall be analyzed in detail to determine activity time duration in units of project working days. Durations shall be based on the labor, equipment, and materials required to perform each activity on a normal work day basis. 4.3 Schedule of Values 4.3.1. The Schedule of Values to be used as the basis for making all payments to Contractor under the Agreement shall be approved by the Design -Builder. The estimated cost to perform each work activity shall be noted for each activity in the network on a tabular listing. The sum of the cost assigned to all activities shall equal the Guaranteed Maximum Price. The accepted cost loaded Project Schedule shall constitute the Schedule of Values from which payments will be made to Contractor in accordance with the provisions of the Agreement. 4.3.2. Contractor shall submit its initial draft Schedule of Values, to Design -Builder in printed and electronic form at least three (3) days prior to the initial conference described in Section 2.6 of the Agreement. At the initial conference Contractor and Design -Builder shall discuss and review Contractor's initial draft Project Schedule of Values. 4.4 Proiect Schedule Reports 4.4.1 The Project Schedule submitted to Design -Builder shall include the time scaled network diagram. Network diagrams shall be based on early start and early finish dates of activities shown. The network diagrams submitted to Design -Builder shall also be accompanied by a computer generated analysis for each activity included in the Project Schedule. Such analysis shall include at a minimum, the following: .1 Predecessor and successor activity number and descriptions; .2 Activity number and description; .3. Activity code(s); .4 Scheduled and actual/remaining duration for each activity; .5 Earliest start date (by calendar date); .6 Earliest finish date (by calendar date); .7 Actual start date (by calendar date); Capistrano Valley Water District Exhibit C — Project Schedule and Milestones Construction Agreement San Juan Basin Desalter Project Page 4 4109291 4LO82 .z 412574,1 .8 Actual finish date (by calendar date); .9 Latest start date (by calendar date); .10 Latest finish date (by calendar date); .11 Float in work days; .12 Monetary value of each activity; .13 Percentage of activity and remaining duration for incomplete activities; .14 Cumulative value of work complete, based on the Contractor's reported portion of activities complete and accepted; .15 Imposed constraints. 5.0 Baseline Schedule 5.1 Initial Submittal and Pre -Construction Conference. Contractor shall submit its initial draft Project Schedule, including Schedule of Values, to Design -Builder in printed and electronic form at least three (3) days prior to the initial conference described in Section 2.6 of the Agreement. At the initial conference Contractor and Design -Builder shall discuss and review Contractor's initial draft Project Schedule and Schedule of Values. 5.2 Variances from Contract Times. Should the initial draft Project Schedule show variances from the requirements of this Agreement, Contractor shall make specific mention of such variances in the letter or transmittal. 5.3 Form of Submittal of Initial Draft Project, Schedule: The initial draft Project Schedule submittal shall include the Project Schedule network diagram and computer tabulation, including Schedule of Values in the following quantities: 5.3.1 Three (3) sets of the Network Diagram in hard -copy; 5.3.2 Three (3) sets of Computer tabulations in hard -copy; 5.3.3 Three (3) sets of Schedule of Values in hard -copy; 5.3.4 Electronic copy of initial draft Project Schedule in computer storage media acceptable to Design -Builder. Capistrano Valley Water District Exhibit C — Project Schedule and Milestones Construction Agreement San Juan Basin Desalter Project Page 5 4iesssi 41082all 412574.1 5.4 Submittal of Revised Project Schedule for Approval; Acceptance of Baseline Schedule. Within seven (7) days after the Pre -Construction Conference, Design -Builder shall provide its written comments and revisions to the initial draft Project Schedule to Contractor. Contractor shall submit a complete revised Project Schedule incorporating Design -Builder's comments and revisions within ten (10) days of receipt of Design - Builder's initial comments and revisions. Design -Builder shall approve or disapprove, in writing, Contractor's revised Project Schedule within five (5) days after receipt of all required information. If Design -Builder disapproves Contractor's revised Project Schedule, Contractor shall make all required corrections and resubmit the Project Schedule for acceptance. Design -Builder and Contractor shall meet and confer as necessary to achieve acceptance of the Project Schedule before Contractor's first payment is due under the terms of this Agreement. The Project Schedule, once accepted in writing by Design -Builder, shall becomes the Baseline Schedule which shall be used for monitoring and evaluating all facets of Contractor's performance, including but not limited to: progress, changes, and delays. The Baseline Schedule shall serve as the basis for all updates or revisions to the Project Schedule and may not be changed except with Design -Builder's express written approval. 5.4.1 Design -Builder's acceptance of the Project Schedule, or any subsequent revisions or updates thereto, shall not constitute a waiver by Design -Builder of Contractor's obligation to prosecute the Work and complete the Project within the deadlines imposed by this Agreement or the Service Contract, except as such deadlines may be modified by written Change Order entered into by the Parties. 5.5 Concurrence of Subcontractors. Contractor, Contractor's Construction Scheduler, and those major trade Subcontractors required by Design -Builder shall be required to participate in all meetings necessary to reach mutual agreement and approval of the Project Schedule. 6.0 Monthly Reports and Meetings 6.1 Contractor shall have a continuing obligation to regularly update the Project Schedule in all respects during the entire term of this Agreement and shall devote sufficient resources to ensure that it is able to perform all of its scheduling obligations. 6.2 On the 15th day of each month, the Contractor shall submit monthly updates to the Project Schedule with each request by Contractor for payment under the Agreement which shall be a condition precedent to Design -Builder's obligation to make any payment required under the Agreement. All updated or revised schedules shall be submitted in the same detail as the original submittal. Capistrano Valley Water District Exhibit C — Project Schedule and Milestones Construction Agreement San Juan Basin Desalter Project Page 6 4108281 Mss 412574.1 6.2.1 The update report shall show the activities or portions of activities complete during the reporting period and their total value as the basis for Contractor's requests for payment. The report shall state the percentage of the work actually complete as of the report date. If the project is behind schedule, progress along other paths with negative float shall also be reported. 6.2.2 At each regularly scheduled construction meeting, Contractor shall provide Design - Builder with two-week look ahead schedules projecting the scheduled work activities to be performed during the two week period following said construction meeting. 6.2.3 With each monthly update, and each revision, Contractor shall also submit a schedule of cost loading and update to the Schedule of Values. There shall be a strict correlation between the sum of individual activity costs and the Guaranteed Maximum Price, including approved Change Orders. 6.3 Contractor shall revise the Project Schedule to reflect the progress of the Work. If any of the required submissions are returned to the Contractor for corrections or revisions they shall be resubmitted along with a new computer diskette(s) and a hard copy listing of each change for approval within seven (7) days after receipt. 6.4 Contractor and Design -Builder shall meet no less than twice a month for the duration of the Agreement to review the entire Project Schedule. 6.5 Update schedules prepared by the Contractor shall include all information available as of the cutoff date. A detailed list of all proposed schedule changes (logic, duration, status, additions, and deletions) shall be submitted with the update. Prior to the bi-monthly update review meeting, Contractor shall obtain from its Subcontractors and staff all necessary information as required to reflect progress to date. A proposed Monthly Update Schedule containing the information set forth below shall be available for review at the meeting. 6.6 The schedule update shall reflect, at a minimum, the following: 6.6.1 For activities started and/or completed during the previous period: actual start and actual completion dates, and number of shifts used to accomplish the activity. 6.6.2 For activities begun but not yet complete to date: Remaining duration of the work, estimated percent complete, and estimated completion date. 6.6.3 For activities not yet started: Estimated start dates, revised durations, and estimated completion dates, as necessary. Capistrano Valley Water District Exhibit C — Project Schedule and Milestones Construction Agreement San Juan Basin Desalter Project Page 7 U082sa A I fIR2R.? 412574.1 6.6.4 For authorized Change Orders: Revised activities, number of shifts, and crew sized by craft, construction equipment required, and durations, and status of all outstanding Notices of Non -Compliance, where required. 6.7 The monthly update of the Network Diagram shall be for the month preceding the meeting and for the remainder of the project. The previous month's activities shall be reported as they actually took place and designated as actually complete, if actually completed, on the network diagram update. 6.8 Portions of the network diagram on which all activities are complete need not be reprinted and submitted in subsequent updates. However, the electronic disk file of the submitted Network Diagrams and the related reports shall constitute a clear record of progress of the work form Notice to Proceed to final completion. 6.9 The monthly submittal shall be accompanied by a Schedule Narrative Report. The Schedule Narrative Report shall describe the physical progress during the report period, plans for continuing the work during the forthcoming report period, actions planned to correct any negative float predictions, and explanation of the potential delays and/or problems and their estimated impact on performance and the overall project completion date. In addition, alternatives for possible schedule recovery to mitigate any potential delay and/or cost increases shall be included for consideration by Design -Builder. The report shall follow the outline set forth below: • Transmittal Letter • Description of problem areas ■ Current and anticipated delays + Cause of delays ■ Corrective action and schedule adjustments to correct delays ■ Impact of delays on other activities, milestones, and completion dates ■ Changes in construction sequences • Pending items and status thereof • Permits + Change Orders ■ Time extensions + Non -Compliance Notices ■ Contract completion date (s) status • Ahead of schedule and number of working days ■ Behind schedule and number of working days ■ Other project or scheduling concerns Capistrano Valley Water District Exhibit C — Project Schedule and Milestones Construction Agreement San Juan Basin Desalter Project Page 8 4109381 �nszs� 412574.1 6.10 Predicated on the results of Design -Builder's review of monthly submissions of the updated Project Schedule and accompanying reports, Contractor may be required to revise the Project Schedule. Conditions under which a revision will be made are as follows: 6.10.1 When a delay in the completion of any work item or sequence of work items results in an indicated extension of the project completion or interim milestone dates detailed herein by ten (10) working days or more. 6.10.2 When delays in submittals or deliveries or work stoppages are encountered which make re -planning, rescheduling, or re -sequencing of the work necessary. 6.10.3 When the schedule does not represent the actual prosecution and progress of the Work. 6.11 Required revisions of the monthly update schedules are due within five (5) days of notice by Design -Builder that a revision is required. All revisions and additions to the Project Schedule are subject to acceptance by Design -Builder which shall not be unreasonably withheld. When the Monthly Schedule Update or its required revision is approved by Design -Builder, it then becomes the current Project Schedule. The current Project Schedule will be used for the period from which it is approved until its successor is submitted and approved. 6.12 Failure of the Contractor to submit schedule updates in a timely, accurate manner and in accordance with the requirements of this Exhibit C will result in progress payments being withheld until such time as the Contractor submits the required update requirements. 6.13 In accordance with the updating procedures, when an activity, is deemed substantially complete by Design -Builder, then such activity will no longer be treated as an activity affecting the critical path or successor activities on the project. The cost of correction of any punchlist items associated with substantially completed activities will be covered by withheld retention or other amounts deemed by Design -Builder to be adequate to cover such costs. 7.0 Responsibility For Completion 7.1 Whenever it becomes apparent from the current monthly updated Project Schedule that phasing, milestone, constraint, restrain, or Contract completion dates will not be met, Contractor shall execute some or all of the following remedial actions: 7.1.1 Increase construction manpower in such quantities and crafts as necessary to eliminate the backlog of work. Capistrano Valley Water District Exhibit C — Project Schedule and Milestones Construction Agreement San Juan Basin Desalter Project Page 9 Ueszs4 A � f�R2R.2 412574.1 7.1.2 Increase the number of work hours in conformance with Applicable Laws. 7.2 Prior to implementing any of the above actions, Contractor shall notify and obtain approval from Design -Builder. If such actions are approved, the Project Schedule revisions shall be incorporated by the Contractor into the Network Diagram before the next update. 7.3 Under no circumstances will the addition of equipment or construction forces, increasing the working hours or any other method, manner, or procedure to return to the contractually required completion date be considered justification for a Change Order or be treated as acceleration where the need for a recovery schedule has been caused by Contractor and/or its Subcontractors. 7.4 Design -Builder may elect to withhold progress payments until the Contractor's progress indicates that the milestone date(s) and/or the Contract completion date will be met. 8.0 Changes Upon approval of any change to the Guaranteed Maximum Price or Contract Time(s), Contractor shall incorporate such change in a proposed update to the current Construction Schedule, including the Schedule of Values, and shall submit such proposed update for approval to Design - Builder for approval in the same manner as Contractor's regular monthly updates. 9.0 As -Built Project Schedule As a condition precedent to any release of retention, the last update to the Project Schedule submitted shall be identified by the Contractor as the As Built Schedule. The As Built Schedule shall reflect the exact manner in which the project was actually constructed (including start and completion dates, activities, sequences, and logic) and shall be signed and certified by the Contractor's Project Manager and Construction Scheduler as being a true reflection of the way in which the project was actually constructed. Capistrano Valley Water District Exhibit C — Project Schedule and Milestones Construction Agreement San Juan Basin Desalter Project Page 10 410818.1 410x2.8, 412574.1 EXHIBIT D — INSURANCE REQUIREMENTS 1.0 Required Polices Contractor shall obtain the following policies of insurance with the indicated coverages and endorsements: 1.1 Workers Compensation Insurance as required by Applicable Laws. 1.2 Employer's Liability Insurance with limits of $1,000,000 per occurrence. 1.3 Commercial General Liability Insurance with contractual liability and products completed operations coverage, with a combined single limit of liability of $1,000,000 per occurrence for bodily injury and for property damage, a general aggregate limit of $2,000,000 (excluding products completed operations), an aggregate limit of $2,000,000 for products and completed operations, and a limit of $1,000,000 for personal injury and advertising injury, $100,000 for fire damage, and a $10,000 medical expense for any one person. 1.4 Excess Liability Insurance above the required commercial general, pollution (on a claims made basis), commercial automobile and employer's liability insurance to result in an overall liability coverage in the amount of $10,000,000 per occurrence and an annual aggregate limit of $10,000,000. 1.5 Commercial Automobile Liability Insurance including owned, non -owned and leased or hired vehicles, with a $1,000,000 combined single limit for bodily injury and property damage, including non -owned and hired coverage. 1.6 Pollution Legal Liability Insurance with limits of $5,000,000 per loss and an annual aggregate limit of $10,000,000. 1.7 Builder's Risk Insurance covering loss, damage, or destruction to the Project (including boilers and machinery coverage) caused by physical damage in an amount equal to the full replacement value of the Project. 2.0 Qualifications of Insurers All insurers for the polices listed in Paragraph 1.0 shall be authorized to do business in the State of California and shall have an A.M. Best Company rating of "A-" or better. Capistrano Valley Water District San Juan Basin Desalter Project U08284 AI (IR2R 2 412574.1 Exhibit D — Insurance Requirements Construction Agreement Page 1 3.0 Additional Insureds All policies listed in Paragraph 1.0 except Workers Compensation Insurance shall list the following as additional insureds: ECO Resources, Inc., Southwest Water Company, the Capistrano Valley Water District and their respective officers, directors, officials, employees and agents. 4.0 Subrogation Waivers All policies listed in Paragraph 1.0 shall be considered primary to any insurance maintained by the District. All policies shall include waivers of subrogation in favor of Design -Builder and its insurers. 5.0 Occurrence Basis All policies listed in Paragraph 1.0 shall be written on an occurrence basis. 6.0 Cancellation and Modification of Coverages All policies listed in Paragraph 1.0 shall provide that thirty (30) days prior written notice to Design -Builder must be provided before cancellation or modification of coverage provisions. 7.0 No Limitation of Liability The coverages provided by policies of insurance listed in Paragraph 1.0 shall not be construed as limitations of Contractor's liability to Design -Builder. Capistrano Valley Water District San Juan Basin Desalter Project 410828.1 4�sza.2 412574.1 Exhibit D — Insurance Requirements Construction Agreement Page 2 EXHIBIT E - CONCEPTUAL DESIGN DRAWINGS Capistrano Valley Water District San Juan Basin Desalter Project 410828.1 4lNZ8-1 412574) Exhibit E — Construction Documents Construction Agreement Page 1 EXHIBIT F TIME AND MATERIAL RATES, UNIT PRICES AND EQUIPMENT COSTS Pursuant to Section 12.5.3 of this Agreement, if Design -Builder determines to utilize time and material rates or, alternatively, unit prices to calculate an increase or decrease the Guaranteed Maximum Price, the following time and material rates or alternatively unit prices, small tools and equipment costs shall be utilized for said pricing: Capistrano Valley Water District Exhibit G — Service Contract Construction Agreement San Juan Basin Desalter Project Page 1 EXHIBIT G SERVICE CONTRACT Capistrano Valley Water District Exhibit G — Service Contract Construction Agreement San Juan Basin Desalter Project Page 1 EXHIBIT H CONTRACTOR'S PROPOSAL 4125741 Document comparison done by DeltaView on Wednesday, November 20, 2002 19.001.09 Input: Document 1 Ipcdocs://mwdocs/410828/1 Document 2 cdocs://mwdocs/410828/2 Rendering set IStandard Legend: Insertion ne MOVCcl to Format change Inserted cell Deleted cell Moved cell Split/Merged cell Padding cell Statistics: Count Insertions 77 Deletions 65 Moved from 1 Moved to 1 Format chan ed 0 Total changes 144 4125741