Item 3 Attach DOCSOC-_1360222-v8-CDA_WMWD_Project_Management_Agreement

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Item 3 Attach DOCSOC-_1360222-v8-CDA_WMWD_Project_Management_Agreement Powered By Docstoc
					                          PROJECT MANAGEMENT AGREEMENT

        This PROJECT MANAGEMENT AGREEMENT (“Agreement”) is made this _____ day
of ____________, 2009, by and between the CHINO BASIN DESALTER AUTHORITY, a
California joint exercise of powers authority (“CDA”) and WESTERN MUNICIPAL WATER
DISTRICT OF RIVERSIDE COUNTY, a California water district (“WMWD” or
“Project Manager”) for Project Management and Contract Administration Services for:

               ADDITIONAL          REVERSE        OSMOSIS TRAINS, ION
               11251 HARREL STREET, MIRA LOMA, CALIFORNIA 91752,
               (referred to hereafter as the “Project”)


        This Agreement is entered into on the basis of the following facts, understandings, and
intentions of the parties hereto:

A.     CDA desires to engage the services of Project Manager to perform project management and
       contract administration Services (defined in Section 2.1) for the construction of the Project.
B.     The Project Manager agrees to provide such Services pursuant to, and in accordance with, the
       terms and conditions of this Agreement and has represented to CDA that the Project Manager
       possesses the necessary skills, qualifications, personnel, and equipment to provide such
C.     The Services to be performed by the Project Manager are specifically described in
       Section 2.1 of this Agreement.
D.     Article V of that certain Peace II Agreement: Party Support for Watermaster’s OBMP
       Implementation Plan, Settlement and Release of Claims Regarding Future Desalters set forth
       various terms and conditions for the Expansion of the Chino Basin Desalters and this
       Agreement is intended to comply with those provisions.


       NOW, THEREFORE, in consideration of the foregoing Recitals and mutual covenants
contained herein, CDA and the Project Manager hereby agree as follows:

                                           Page 1 of 14
                               ARTICLE I - TERM OF AGREEMENT

1.1     Effective Date; Term. This Agreement shall become effective on the date first above written.
The term of this Agreement shall continue through the later to occur of (a) the expiration of all
warranty periods provided pursuant to approved construction contracts for all components of the
Project and (b) the CDA Board’s determinations that all components of the Project are fully
operational [Discuss: should “fully operational” be defined by reference to production of a
certain number of additional acre feet of water in a given month or is there a better
benchmark?], unless extended or sooner terminated as provided for herein.

1.2      Termination. Notwithstanding any other provision of this Agreement, either CDA or
WMWD may terminate this Agreement at any time by giving thirty (30) days written notice to the
other party. In the event CDA terminates this Agreement, WMWD shall promptly terminate any and
all construction or other contracts between WMWD and any contractor, materials supplier,
manufacturer, or any other party for provision or transportation of goods or materials or construction
or installation work at the Project, unless otherwise specifically agreed in writing by CDA.

1.3     Payment of Consideration upon Termination. In the event of termination, the payment of
monies due the Project Manager for Services performed prior to the effective date of such
termination shall be paid after receipt of an invoice as provided in this Agreement; however, CDA
shall have no obligation to pay for Services performed after the effective termination date.

                         ARTICLE II - SERVICES TO BE PERFORMED.

2.1     Services. The Project Manager agrees to provide all project management and contract
administration services necessary or appropriate to accomplish the construction, installation, and
completion through operation of the Project, including but not limited to, the following services
described in this Section 2.1 (collectively referred to as “Services”):

        A.      Project Management. Project Manager shall provide the following Services with
respect to the oversight, management, and completion of the Project:

               (i)     Act as CDA agent for purposes of negotiating land and right-of-way
acquisition with respect to the Project, subject to CDA’s execution of contracts in connection
therewith or CDA acquisition by eminent domain if necessary and approved by the CDA Board in its
sole and absolute discretion. Acquisition efforts shall be performed in compliance with the Uniform
Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended.

                 (ii)    Ensure full compliance with the California Environmental Quality Act, Public
Resources Code Section 21000, et seq., and the Guidelines for implementation of the California
Environmental Quality Act set forth at Title 14, California Code of Regulations Section 15000,
et seq. (collectively, “CEQA”) and the National Environmental Policy Act, 42 U.S.C. Section 4321,
et seq. (“NEPA”), as may be required in connection with the Project. Project Manager agrees and
acknowledges that Project Manager shall act as lead agency under CEQA with respect to the Project.

                (iii)    Apply for and obtain any and all permits and approvals as may be necessary
for the construction, installation, and operation of the Project.

                                            Page 2 of 14
                (iv)  Design Phase. [Is design phase complete?] During the design phase of the
Project, Project Manager agrees to:

                         (a)    Issue Requests for Proposal (RFPs) for consultants as needed during
the design phase;

                     (b)    Review RFPs for consultants during design phase and make
recommendations to CDA Board with respect to the award; [CDA Board to advise whether CDA
Board approval will be required for award of consultant and/or construction contracts.]

                         (c)    Award the professional service contracts based on direction from
CDA Board;

                         (d)    Manage and diligently enforce all professional service agreements
with consulting firms;

                       (e)    Attend meetings with consultants as necessary and appropriate to
diligently manage and enforce professional service agreements;

                         (f)    Approve progress payments for consultants in accordance with
Section 2.1(D) below;

                         (g)    Recommend change orders for consultants to CDA Board;

                    (h)   Conduct and provide status reports at regularly scheduled meetings of
the “Sponsor Group” (comprised of the City of Ontario, Jurupa Community Services District
(“JCSD”), and WMWD);

                   (i)      Provide status reports at all CDA Board and Technical Advisory
Committee (TAC) meetings; and

                     (j)    Coordinate and implement,               as    appropriate,    input   and
recommendations of the Sponsors, TAC, and CDA Board.

              (v)        Construction Phase. During the construction phase of the Project, Project
Manager agrees to:

                         (a)    Advertise the Project (or components thereof) for bid;

                         (b)    Conduct pre-bid meetings and job walks, as appropriate;

                         (c)    Conduct public bid openings in accordance with all applicable laws;

                       (d)    Review construction contract bids and make recommendations to the
CDA Board with respect to the award [alternatively, provide for WMWD to award and enter into
contracts subject to either prior budget or Project amount approval by CDA Board with
limitations to include 10% or other amount of leeway for purposes of providing WMWD with
reasonable flexibility]; [If CDA will have any responsibility to pay for improvements, defend
lawsuits or pay damages awards, CDA must have opportunity and authority to approve all
construction (and consultant) contracts, including change orders; if WMWD will completely

                                             Page 3 of 14
indemnify and defend CDA, CDA Board may agree to permit WMWD to award contracts
without CDA Board approval (other than for work CDA will pay for).]

                       (e)    Award construction contracts based on direction from the CDA Board
and issue Notices to Proceed;

                       (f)      Manage contractors and consultants; provide full-time construction
monitoring with daily oversight to ensure work is performed to the level of quality called for in the
construction contract(s) and professional services contract(s) and in compliance with all aspects of
the plans, drawings, and specification for the Project;

                       (g)     Conduct pre-construction meetings;

                         (h)    Review and monitor the contractor’s safety program and attend all of
contractor’s tailgate safety meetings and maintain file copies of contractor’s safety meeting minutes;

                        (i)    Attend weekly jobsite meetings with contractor and other meetings
with contractor(s) and consultant(s) as necessary and appropriate;

                       (j)    Meet with the contractor at the beginning of each day to review
proposed work plans, including any changes that may affect Project progress;

                         (k)     Maintain detailed daily diaries, daily extra work reports, material
testing reports, photo records, and other documentation as appropriate to document the work progress
(all such records and reports shall be and remain the sole property of CDA and shall be delivered to
CDA upon completion of the Project);

                       (l)     Maintain detailed and accurate accounting records with respect to all
Services performed on the basis of actual costs of labor and materials (all such accounting records
shall be and remain the sole property of CDA and shall be delivered to CDA upon completion of the

                        (m)     Document all non-conforming work, issue notices of non-compliance
or default to contractor(s) and track each non-conforming item of work until corrected or otherwise
accepted by the Project Manager;

                       (n)     Review and approve all shop drawing submittals;

                       (o)    Review and respond to all Requests for Deviation (RFD) and
Requests for Information (RFI);

                        (p)    Ensure that Certificates of Compliance are provided by all vendors,
contractors, and consultants and become part of the Project record;

                      (q)  Maintain measurements and calculations for progress payment
estimates and approve progress payments for contractors and consultants in accordance with
Section 2.1(D) below;

                       (r)   Approve change orders under construction contract(s) and
professional services agreements based on direction from CDA Board; [If CDA will have any

                                            Page 4 of 14
responsibility to pay for improvements, defend lawsuits or pay damages awards, CDA must
have opportunity and authority to approve change orders over a specified amount (i.e. provide
dollar threshold for single and cumulative change order amounts that can be approved without
CDA Board approval).]

                      (s)     Proactively identify actual and potential problems associated with the
construction and installation of the Project and work diligently to prevent and/or solve such

                        (t)     Track all notices of potential claims to conclusion; promptly report
any potentially significant claims to CDA Board;

                       (u)    Issue RFPs for consultants during construction, such as inspectors and
consultants performing survey work;

                      (v)  Review RFPs for consultants during construction and make
recommendations to the CDA Board regarding the award;

                     (w)       Award the professional services contracts to consultants based on
direction from CDA Board;

                       (x)     Manage and diligently enforce professional service agreements with
consulting firms;

                       (y)    Provide status reports regarding the progress of the Project, potential
problems with the Project, potential claims under construction contracts or professional services
agreements and other relevant matters at all CDA Board and TAC meetings; and

                       (z)    Make recommendations to the CDA Board regarding Project
acceptance at completion of Project (or distinct portions of the Project, as applicable).

              (vi)    Post-Construction Phase.       After completion of construction of each
component of the Project, Project Manager agrees to:

                       (a)    File a Notice of Completion for each distinct portion of the Project,
upon acceptance of the applicable work by the CDA Board;

                        (b)   Convey each distinct portion of the Project for which a Notice of
Completion is filed to CDA as provided by Section 5.1;

                       (c)     Diligently pursue to resolution any and all warranty claims against
contractors; and

                       (d)     Diligently pursue to resolution any and all claims for damages
(including liquidated damages) on behalf of WMWD, Sponsor Group, and/or CDA against
contractors and/or consultants with respect to services rendered in connection with the Project; and

                      (e)    Diligently pursue to resolution any and all claims under performance
and/or payment bonds, as necessary and appropriate to ensure prompt and satisfactory completion of
the Project.

                                            Page 5 of 14
        B.       Contract Administration. Project Manager shall provide the following Services with
respect to the administration of any and all construction, professional services, and other contracts
relating to the Project:

               (i)    Diligently enforce all contracts, specifically including compliance with all
plans, drawings, specifications, warranties, indemnities, timelines for performance, insurance
requirements (including pursuing claims under insurance policies), pursuing claims under contract
performance bonds and labor and materials payment bonds, and pursuing damages, including
liquidated damages;

                 (ii)    Maintain a complete, documented set of records for the Project;

                 (iii)   Process contract documents with contractors and consultants;

                (iv)   Prepare and submit reports describing the federal jobs created and/or saved at
the Project in compliance with applicable laws;

               (v)  Conduct labor compliance reviews and audits of the Project, in compliance
with Davis Bacon and Section 1720, et seq. (as those terms are defined in Section 8.1), and other
applicable laws;

                 (vi)    Prepare and submit Disadvantaged Business Enterprise (DBE) Compliance

               (vii) Process progress payments to contractors and consultants in accordance with
Section 2.1(D) below;

              (viii) Track and confirm compliance with “Buy American” requirements to ensure
compliance with applicable laws;

                 (ix)    Track and process 20-Day Preliminary Lien Notices and Stop Work Notices
to resolution;

                 (x)     Submit progress payments to each [grant managing agency]; [Define? List?]

                 (xi)    Provide monthly financial status updates to the Sponsor Group and TAC; and

              (xii) Provide quarterly (or more often as appropriate or as requested by TAC or the
CDA Board) financial status reports to the CDA Board.

        C.     Sponsor Projects and Shared Projects. The components of the Project are identified
in the Chino Desalter Phase 3 Preliminary Design Report (PDR) and are designated therein as either
a Sponsor Project or a Shared Project. A Sponsor Project only involves the three agencies that
comprise the Sponsor Group (WMWD, City of Ontario, and JCSD). A Shared Project involves all
CDA members. Each distinct portion of the Project will either be designated as a Sponsor Project or
Shared Project before design commences if the PDR does not make this distinction. [If CDA is to
take ownership and responsibility for Sponsor Projects, CDA Board should have authority
over Sponsor Projects.]

                                             Page 6 of 14
        D.      Progress Payments. WMWD and CDA will jointly approve all invoices and progress
payments. In the event of disagreements between WMWD and CDA regarding approval of invoices
or progress payments, a mutually acceptable third party will provide independent review and the
selected third party’s determination will be final. Payment for approved invoices will be made by
WMWD. Following payment, WMWD will invoice appropriate members of the Sponsor Group
and/or CDA for their respective shares of the billed work pursuant to Cost Sharing Agreements to be
entered into concurrently herewith.

        E.      CDA TAC Meetings. During each TAC meeting, WMWD will provide TAC
members with information regarding the status of Project activities, for the purpose of affording TAC
members an opportunity to offer guidance and input on activities that may affect their respective
operations or otherwise be of interest to them. To the greatest extent possible, WMWD shall provide
relevant information to TAC (and, as appropriate, the CDA Board) before final decisions are made
by WMWD.

        F.     Additional Information and Assistance. Project Manager shall provide CDA General
Counsel, TAC members, and the CDA Board, as appropriate, with such back up information and
Project Manager's recommendations for any items, contracts or services which may be reasonably
necessary or appropriate in connection with the construction of the Project.

                                ARTICLE III - COMPENSATION

3.1    Compensation for Services. Compensation for Services to be performed by the Project
Manager pursuant to this Agreement shall be paid monthly within thirty (30) days of submittal of
invoices detailing the work performed and the materials provided by Project Manager along with
complete copies of all back-up documents needed to verify such invoices. CDA shall only be
responsible for payment of compensation to Project Manager with respect to Services performed in
connection with the Shared Project. Compensation shall include the following costs actually and
reasonably incurred by Project Manager in connection with the Shared Project:

        A.     Actual wages, burden and departmental overhead relating to the Shared Project, with
such burden and overhead determined by multiplying the amount of actual wages by 1.7; however, if
and when Project Manager’s staff members receive overtime pay for time spent performing Services
in connection with the Shared Project hereunder, the 1.7 multiplier described in the immediately
preceding sentence shall be applied to the base hourly wages of such staff members but not to the
additional wages paid as an overtime premium (such that CDA shall reimburse Project Manager for
(1) the base wages paid to such administrative support staff, multiplied by 1.7, and (2) the overtime

       B.      The actual cost of necessary materials and supplies for the Shared Project.

       C.       Any other reasonable, necessary, and actually-incurred costs directly related to the
Services to be provided in connection with the Shared Project.
[Confirm CDA is paying for Services for the Shared Project only.]

3.2    Records. Records of expenses pertaining to the Services to be performed by Project Manager
hereunder shall be available to CDA or CDA’s authorized representatives during reasonable business
hours. If any inspection by CDA of Project Manager’s records, books, correspondence, instructions,
drawings, receipts, vouchers, memoranda, and any other data reveals an overcharge, Project Manager

                                            Page 7 of 14
shall pay CDA upon demand an amount equal to such overcharge plus the cost incurred by CDA to
conduct such audit and/or inspection.


4.1      Best Efforts. The Project Manager agrees to perform all Services for the benefit of CDA in
accordance with the terms and conditions of this agreement and all covenants contained herein, to
diligently furnish its best skills and judgment in accordance with applicable professional standards in
furthering the interests of CDA and to exert its best efforts to perform its services in the most
efficient, expeditious, and economical manner consistent with the interest of the CDA. The Project
Manager shall devote its full energies, interest, abilities, and productive time to the performance of
its duties and obligations under this Agreement. The Project Manager hereby specifically represents
to CDA that Project Manager shall perform the Services pursuant to this Agreement in an
experienced, competent, and professional manner. Project Manager acknowledges and agrees that by
entering into this Agreement a relationship of trust and confidence is established between Project
Manager and CDA and Project Manager accepts such relationship of trust and confidence and the
responsibilities inherent with such relationship.

4.2     Compliance with Laws. The Project Manager shall comply with all local, state, and federal
laws, rules, and regulations in its performance of the Services, including, without limitation, Davis
Bacon and California Labor Code Sections 1720, et seq., 1776, 1777.5, 1777.6, 1777.7, and 1810
through 1815.

4.3     Personnel and Equipment. The Project Manager will supply all personnel and equipment
required to perform the Services required hereunder. Project Manager shall provide such of its
personnel who posses the experience and expertise as may be reasonably necessary to carry out
Project Manager’s duties and responsibilities set forth under this Agreement. Project Manager shall
provide sufficient organization, personnel and management to carry out the requirements of this
Agreement in an expeditious and economical manner consistent with the interests of CDA. Jack
Safely shall be the individual who shall manage the Project on behalf of Project Manager; Mr. Safely
shall devote such time and attention as is necessary to ensure the Project Manager performs its
obligations hereunder. Mr. Safely shall not be replaced without the prior written approval of CDA.

4.4     CDA Preferences re Personnel. In the event CDA requests that specific employees or agents
of Project Manager supervise or otherwise perform the Services specified (instead of or in addition to
Mr. Safely), the Project Manager will attempt to accommodate such request by assigning such
individual (or individuals) the responsibility of performing the Services. CDA may request in
writing that WMWD remove or prevent specific individuals from working on the Services required
hereunder and in such event, WMWD shall use its best efforts to promptly assign another individual
(who is acceptable to CDA) to perform the Services previously performed by the removed individual.

4.5     Consultation with CDA regarding Services. The Project Manager shall perform the Services
assigned herein in consultation with CDA.         The Project Manager shall provide written
comprehensive reports to CDA at the regular quarterly Board Meetings of CDA and at such other
times as requested by the CDA.

4.6   Consultation with CDA General Counsel. Project Manager shall ensure that CDA General
Counsel is kept informed of the progress of the Project and shall promptly inform CDA General
Counsel of any potential problems or claims by or against CDA, WMWD, or any other members of

                                             Page 8 of 14
CDA, and shall periodically, but not less frequently than every thirty (30) days, consult with CDA
General Counsel to ensure that CDA General Counsel has sufficient information to evaluate the
status of the Project and CDA’s potential costs and/or liabilities with respect thereto.

                               ARTICLE V - PROJECT OWNERSHIP

5.1      Project Ownership. The Project Manager will be the owner of each component of the Project
and will remain the owner until not fewer than thirty-five (35) days after the applicable Notice of
Completion is recorded in the Official Records of Riverside County. The Project Manager will deed
ownership of each Project Component for which a Notice of Completion is filed to CDA for no cost,
at least thirty-five (35) days (but not more than sixty (60) days) after the date the applicable Notice of
Completion is recorded in the Official Records of Riverside County.

5.2    Inspections. Upon reasonable prior notice, CDA or its agents shall have the right at any time
and from time to time to enter upon the Project (or any portion thereof) and inspect all work and all
materials, plans, drawings, specifications, contracts, records, or other matters relating to the Project.


6.1     CDA Requests for Changes to Services. During the term of this Agreement, the CDA may,
from time-to-time and without affecting the validity of this Agreement, request changes, deletions,
and additions to the Services to be provided by Project Manager hereunder. These requests will be
evaluated by WMWD and CDA and be implemented by issuance of written change orders or
amendments to this Agreement only when jointly agreed upon by both parties; however, in the event
CDA and Project Manager are unable to come to an agreement regarding the cost or compensation to
Project Manager attributable to changes in the Services requested by CDA hereunder, Project
Manager shall nevertheless promptly perform the changed or additional Services (or stop performing
the deleted Services) as requested by CDA and the parties shall continue to negotiate regarding the
cost or compensation attributable to such changed, deleted, or additional Services.

6.2     Project Manager Requests for Changes to Services. The Project Manager shall advise CDA
as soon as reasonably practicable upon gaining knowledge of a condition, event, or accumulation of
events, that may affect the scope and/or cost of Services to be provided pursuant to this Agreement or
the timing, quality, or cost of construction and completion of the Project. All proposed changes,
modifications, deletions, and/or requests for additional Services shall be reduced to writing for
review and approval or rejection by the CDA Board.

6.3    Changes to Services; Compensation. In the event that CDA orders Services deleted or
reduced, compensation to Project Manager shall be deleted or reduced by a comparable amount as
determined by CDA. The Project Manager shall only be compensated for Services actually
performed. In the event additional Services are properly authorized by change order, payment for the
same shall be made as provided in Section 3.1 above.


7.1     Insurance Requirements. Project Manager shall procure and maintain for the term of this
Agreement the following policies of insurance for not less than the limits of liability set forth below
with regard to the Services to be performed hereunder and the construction of the Project:

                                              Page 9 of 14
       A.      Worker’s Compensations Insurance and Occupational Disease Disability Insurance,
in accordance with applicable State Worker’s Compensation Insurance Laws, for all Project
Personnel. Employer’s Liability Insurance in an amount of not less than One Million Dollars
($1,000,000) for protection of employees not otherwise protected;

        B.      Comprehensive Automobile Liability and Property Damage Insurance coverage on
all vehicles used by Project Manager in connection with the Project, whether owned, non-owned, or
hired, with liability limits not less than One Million Dollars ($1,000,000) combined single limit for
bodily injury and property damage and naming CDA as an additional insured;

        C.      Comprehensive General Liability Insurance with liability limits of not less than One
Million Dollars ($1,000,000) combined single limit for any one occurrence and naming CDA as an
additional insured;

       D.      Umbrella liability insurance in excess of the primary insurance in the amount of One
Million Dollars ($1,000,000) per occurrence and One Million Dollars ($1,000,000) in the aggregate
and naming CDA as an additional insured; and

        E.     Professional Liability Insurance (Errors and Omissions Liability Insurance) in the
amount of One Million Dollars ($1,000,000) per occurrence.
[Please have risk management staff review on behalf of CDA.]

7.2      Evidence of Insurance. Project Manager shall promptly, on request, furnish to CDA any and
all certificates of insurance with respect to the foregoing described insurance policies. To the extent
obtainable at reasonable cost, all insurance policies shall provide for thirty (30) days prior written
notice to be given to CDA in the event coverage will be canceled or not renewed.

7.3     Indemnification. To the maximum extent permitted by law, Project Manager shall defend
(with legal counsel acceptable to CDA), indemnify, and hold CDA and its officers, directors, agents,
and employees harmless from and against any loss, liability, damage, claim, cost, or expense
(including reasonable attorneys’ fees, expert witness fees, and court costs) which CDA may sustain
or incur (a) resulting or arising from or relating to any contracts entered into between Project
Manager and a contractor or consultant for performance of work in connection with the Project
(except to the extent the contractor or consultant performing such work is required by such contract
to indemnify, defend, and hold the CDA harmless pursuant to an indemnification provision
acceptable to CDA) and (b) resulting or arising from or relating to work performed under direction of
the Project Manager at the Project (except to the extent the contractor or consultant performing such
work is required by such contract to indemnify, defend, and hold the CDA harmless pursuant to an
indemnification provision acceptable to CDA) and (c) which may be caused by the failure of Project
Manager to exercise the standard of performance set forth in Article IV hereof or arises out of the
negligence or misconduct of Project Manager or any of its officers, directors, agents, or employees in
rendering the Services under this Agreement.

                          ARTICLE VIII - PREVAILING WAGE LAWS.

8.1     Compliance with Prevailing Wage Laws. Project Manager shall ensure that each and every
contractor hired to perform work at the Project carries out the construction through completion of the
Project in conformity with all applicable federal, state and local labor laws and regulations,
including, without limitation, as applicable, the requirements to pay prevailing wages under federal

                                            Page 10 of 14
law, specifically the Davis Bacon Act, 40 U.S.C. Section 3141, et seq., and the regulations
promulgated thereunder set forth at 29 CFR Part 1 (collectively, “Davis Bacon”) and California law,
specifically, Labor Code Section 1720, et seq. (“Section 1720, et seq.”). Project Manager expressly,
knowingly and voluntarily acknowledges and agrees that CDA has not previously represented to
Project Manager or to any representative, agent or affiliate of Project Manager, or any contractor or
any subcontractor(s) for the construction or development of the Project, in writing or otherwise, in a
call for bids or otherwise, that the Project is (or is not) a “public work,” as defined in Section 1720, et
seq., or under Davis Bacon.

                             ARTICLE IX - DEFAULT AND REMEDIES

9.1     Default. A “Default” shall occur under this Agreement when there shall be a breach of any
condition, covenant, warranty, promise or representation contained in this Agreement and the breach
shall continue for a period of thirty (30) days after written notice thereof to the defaulting party
without the defaulting party curing such breach, or if the breach cannot reasonably be cured within a
thirty (30) day period, commencing the cure of the breach within the thirty (30) day period and
thereafter diligently proceeding to cure the breach.

9.2     Remedies. Subject to Section 9.5, the occurrence of any Default shall give the
non-defaulting party the right to proceed with any and all remedies set forth in this Agreement,
including an action for damages, an action or proceeding at law or in equity to require the defaulting
party to perform its obligations and covenants under the documents executed pursuant hereto or to
enjoin acts or things which may be unlawful or in violation of the provisions of such documents, and
the right to terminate this Agreement.

9.3      Consequential Damages. Project Manager expressly acknowledges and agrees that damages
to existing CDA facilities and equipment will cause harm to CDA far in excess of the cost to repair
or replace such facilities and equipment, if and to the extent CDA is unable to produce and deliver
product water at such facilities as a result of such damage.

9.4      Prosecution of Actions. Project Manager shall, at Project Manager’s sole cost and expense,
diligently pursue, and if necessary litigate to resolution (with counsel acceptable to CDA), any and
all claims for damages (including consequential damages as described in Section 9.3) resulting from
the Project or the actions of any contractor, subcontractor or consultant performing work at the

9.5     Mediation of Disputes. Except as specified above in the event of progress payment
disagreements, any dispute which may arise by and between CDA and the Project Manager shall be
submitted to mediation. In addition to their respective legal counsel, CDA and Project Manager shall
appoint one representative each who will attend the mediation. The mediation shall be conducted
before a third party mediator(s) who will be selected by the CDA and the Project Manager. The
mediation shall be non-binding and, upon completion of the mediation process described herein, any
party may pursue all remedies otherwise provided them by law.

                          ARTICLE X - MISCELLANEOUS PROVISIONS

10.1 Modifications and amendments. Any modifications, extensions, or amendments of this
Agreement will be effective only if in writing and signed by all parties.

                                              Page 11 of 14
10.2 Assignment Prohibited. The Project Manager shall not assign or otherwise transfer any rights
or interest in this Agreement, in whole or in part, without the prior written consent of CDA, which
consent may be granted or withheld in CDA’s sole and absolute discretion. Unless specifically stated
to the contrary in any written consent to an assignment signed by CDA, no assignment will release or
discharge the assignor from any duty or responsibility under this Agreement.

10.3 Independent Contractor. The parties acknowledge and agree that Project Manager shall at all
times relevant to this Agreement be an independent contractor of CDA and shall represent itself as
such with respect to any matters relating to the development of the Project. Project Manager shall
not, because of this Agreement, be deemed to be the partner, joint venturer, agent, employee, or legal
representative of CDA. In accordance with the independent contractor relationship established
hereunder, Project Manager shall have no authority to incur any expense or liability on behalf of
CDA (except with the consent of CDA, as specifically provided herein, and with no diminution,
however, of its right to reimbursement for expenses it incurs, as herein provided). With respect to
the fees payable hereunder to Project Manager, CDA shall not withhold any taxes on, nor shall it
make any contributions for such taxes based upon payroll or income and shall not provide any
benefits to Project Manager or its employees.

10.4 Ownership of Documents. Project Manager acknowledges and agrees that all documents,
reports, materials, or other work product prepared, procured, or produced in the rendition of the
services under this Agreement shall at all times be the property of CDA and all such documents,
reports, materials or other work product shall be delivered to CDA when requested by CDA or
required by this Agreement (but in no event later than the expiration or earlier termination of this
Agreement). Project Manager may retain a record copy of all such documentation.

10.5 Notices. Any notices required or permitted hereunder shall be in writing and shall be
addressed to the parties at the addresses stated below and sent by (a) the United States Mail, certified
mail, return receipt requested, with first class postage prepaid, (b) a reputable overnight courier
service, or (c) personal delivery delivered by a representative of the party giving such notice. Any
party may from time to time change the address to which notices to it are to be sent by giving notice
of such change to the other parties in the manner set forth herein. All notices shall be deemed duly
given (i) when delivered personally or by courier; (ii) on the date of delivery represented by a
reputable overnight courier; or (iii) three (3) days after the date mailed, if sent by registered or
certified mail, return receipt requested and postage prepaid. Any such notice not so given shall be
deemed given upon actual receipt of the same by the party to whom the same is to be given. Notices
shall be sent to the following addresses:

               To CDA:                 Chino Basin Desalter Authority
                                       c/o City of Ontario
                                       1425 South Bon View Avenue
                                       Ontario, California 91761
                                       Attention: Scott Burton, CDA Coordinator

               With a copy to:         Stradling Yocca Carlson & Rauth
                                       660 Newport Center Drive, Suite 1600
                                       Newport Beach, California 92660
                                       Attention: Allison E. Burns, Deputy General Counsel

                                            Page 12 of 14
               To Project Manager:     Western Municipal Water District of Riverside County
                                       450 Allesandro Boulevard
                                       Riverside, California 92508
                                       Attention: Jack Safely

               With copies to:         _________________________________
                                       Attention: John Schatz, Special Counsel

10.6 Entire Agreement. This Agreement shall constitute the entire Agreement between the parties
hereto concerning the subject matter hereof and supersedes all prior agreements and negotiations.

10.7 Authority. Project Manager and CDA each represents that the individuals signing this
Agreement on their behalf have the full authority to bind them to this Agreement.

10.8 Governing Law. This Agreement shall be enforced by, governed by, and construed in
accordance with the laws of the State of California.

10.9 Attorney’s Fees. In the event of any litigation or judicial action to enforce any of the
provisions of this Agreement or any right of any party hereunder, the prevailing party shall be
entitled to recover its courts costs and attorney's fees, including, without limitation, any post-
judgment fees, costs or expenses incurred on any appeal or in collection of any judgment.

10.10 No Waiver. No failure or delay of any party in the exercise of any right hereunder shall
constitute a waiver thereof, nor shall any single or partial exercise of such right include any further
exercise thereof or of any other right. The waiver by a party of any breach or any provision hereof
shall not be deemed to be a waiver of any subsequent breach hereof, or of any breach of any other
provision hereof.

10.11 No Personal Liability. Notwithstanding any other provision of this Agreement to the
contrary, no officer, director, employee, agent or other representative of CDA or Project Manager (or
of any member of CDA) (each an "Individual") shall have any personal liability for the performance
of any obligations, or in respect of any liability of CDA or Project Manager under this Agreement,
and no monetary or other judgment shall be sought or enforced against any such Individuals or their
assets, all such personal liability being expressly waived by each party hereto.

10.12 Titles and Captions. Titles and captions are for convenience of reference only and do not
define, describe or limit the scope or the intent of this Agreement or of any of its terms. References
to Section and Article numbers are to sections and Articles in this Agreement, unless expressly stated

10.13 Interpretation. As used in this Agreement, masculine, feminine or neuter gender and the
singular or plural number shall each be deemed to include the others where and when the context so
dictates. The word “including” shall be construed as if followed by the words “without limitation.”
This Agreement shall be interpreted as though prepared jointly by both parties.

IN WITNESS WHEREOF, the parties hereby have made and executed this Agreement as of the
day and year first above written.

                                            Page 13 of 14

By:                                    By:
      Chairperson                              General Manager

                               Page 14 of 14

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