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AG 08-059 1. 2. 4. 5. 6. 7. 8. 9. 10. 11. RETURN TO: men CITY OF FEDERAL WAY LAW DEPARTMENT REQUEST FOR CONTRACT PREPARATION/DOCUMENT REVIEW/SIGNATURE ROUTING SLIP ORIGINATING DEPT./DIVQJ / S\~~n\ v \~ ,<:)'--" ORIGINATING STAFF PERSON, ci'^-~ ""'-oJ. IL...,., EXT,'Zl'Z.'<- 3. DATE REQ. By,AStJl' TYPE OF DOCUMENT REQUESTED (CHECK ONE) \ ~ o PROFESSIONAL SERVICE AGREEMENT 0 SECURITY DOCUMENT (E.G. AGREEMENT & o MAINTENANCE/LABOR AGREEMENT PERF/MAIN BOND; ASSIGNMENT OF FUNDS IN LIEU OF BOND) o PUBLIC WORKS CONTRACT 0 CONTRACTOR SELECTION DOCUMENT o SMALL PUBLIC WORKS CONTRACT (LESS THAN $200,000) o PURCHASE AGREEMENT) (E.G., RFB, RFP, RFQ) Q o CONTRACT AMENDMENT AG#: ag -~ I o CDBG ......... ()\ 1--- (')(OTHER (2.e.,\",,^~(S4-II./,.O_J ~111lLC J PROJECT NAME: ~ )( ALL EXHIBITS REFERENCED IN DOCUMENT TERM: COMMENCEMENT DATE: lJrp~ ~"l? (. v \..:.-- tJ.- COMPLETION DATE: U V\\..: \ ('0....., Id+o"'" Q"'oL..d....l~ h pI><-) c:al., 4."'~ TOTAL COMPENSATION $ ~ "ell c-ruJ... U4 k g...._ r~,t ~,). 71( ~, (INCLUDE EXPENSES AND SALES TAX, IF ANY) - (IF CALCULATED ON HOURLY LABOR CHARGE - ATTACH SCHEDULES OF EMPLOYEES TITLES AND HOLIDAY RATES) REIMBURSABLE EXPENSE: 0 YES 0 NO IF YES, MAXIMUM DOLLAR AMOUNT: $ IS SALES TAX OWED 0 YES 0 NO IF YES, $ PAID BY: 0 CONTRACTOR 0 CITY o PURCHASING: PLEASE CHARGE TO: INITIAL/DATE APPROVED C~TRACT REVIEW M~OJECTMANAGER \ ~DI~ MPt~~"~ ~SK ~1)NAGpMENT (~ APP~ICABLE) .3/2 aftl r:YCAw3/alp/O! '-1/3/0 y V L(f) (A "In ~"Slb+{D'l R.lZ,,-tw-1\.-- to \J,:,h.n.,.,c.{ullLu.t 3.31,06 OJ CQo.A t>~r ~ f\I1A( ~: 1'1 /O~ 'Rte~: ,;;~.o f' CONTRACT SIGNATURE ROUTING 7 INITIAL/DATE APPROVED INITIAL/DATE APPROVED IQ"LAWDEPARTMENT {..;).3.0'\\ IYCITYMANAGER 4- '14' D'i( Itl""'CITYCLERK ",j ;aDlo6 ibo"'SIGN COPY BACK TO ORGINATING DEPT. ~SSIGNEDAG# OF;- CJS9 07/05 CONTRACT FOR SOUTH 320TH UNDERGROUNDING REIMBURSEMENT THIS CONTRACT ("Contract") is dated effective this XJ day of ~ t , 200K and is made by and between the City of Federal Way, a Washington municipal corporation ("City''), and The Quadrant Corporation, a Washington corporation ("Quadrant''). A. Quadrant is in the process of developing a Small Lot Demonstration project ("Quadrant's Project'') that abuts the South 320th Street Right of Way between 32nd Avenue South and the West property line of the South King Fire and Rescue Station #64 in Federal Way, Washington ("Property''). Quadrant's Project is a demonstration project that takes advantage of a new type of zoning regulation in the City of Federal Way (Small Lot Detached Dwelling Units). Quadrant's Project would normally be required to underground the 12.5 KV local power distribution line along the north margin of South 320th Street fronting the Property ("Quadrant Segment''). The cost of this requirement could potentially mean that Quadrant's Project would not be able to proceed or be completed as planned. B. The City of Federal Way has identified the undergrounding of the local power distribution line along South 320th Street as part of the South 320th Street HOV Project (1-5 to Peasley Canyon Road) on the City's Capital Improvement Plan, to be implemented upon designation of funding. It is in the City's and the public interest to underground the local power distribution line in this area. It is also in the City's interest for the Small Lot Demonstration project to proceed in order to demonstrate the value and utility of the new zoning regulations, which are designed to encourage more affordable housing and provide more residential options in higher density zones to help meet the City's density requirements. C. puget Sound Energy ("PSE'') has a Franchise to operate an electrical power distribution system within the City of Federal Way. The City has the authority to enter into a Schedule 74 Agreement with PSE under PSE's Electric Tariff G, through which PSE would bear some of the cost of undergrounding its local power distribution line. D. Quadrant desires that the City enter into a Schedule 74 Agreement for the Quadrant Segment with assurances that Quadrant will reimburse the City for any City incurred costs resulting or associated with that agreement or the project that results from it, in order to reduce the costs associated with Quadrant's Project and ensure its viability. The City desires to enter into the Schedule 74 Agreement with Quadrant's assurances of this reimbursement to ensure that the power distribution line is undergrounded and that the Small Lot Demonstration project succeeds. NOW, THEREFORE, the City and Quadrant ("Parties'') agree to the following terms and conditions: 1. CITY'S OBLIGATIONS The City agrees within 14 days after the mutual execution of this Contract to notify PSE that an underground distribution system is required on the Quadrant Segment under Schedule 74 of PSE's Electric Tariff G. The City further agrees to initiate at that time the process that will expeditiously lead to entering into a Project Design Agreement and a Project Construction Agreement under Schedule 74 of PSE's Electric Tariff G (collectively, "Schedule 74 Agreement'') with PSE to underground the 12.5 KV local power distribution line on the Quadrant Segment. The Schedule 74 Agreement will be substantially in the forms attached to this Contract as Exhibit A with Attachments A and B. 2. QUADRANT'S OBLIGATIONS 2.1 Quadrant agrees to reimburse the City for all of the costs actually incurred by the City as a result of the City entering into the Schedule 74 Agreement ("Costs''). Costs include, but are not limited to, costs of design, construction, legal services, engineering, planning, administrative, and associated costs incurred by the City of Federal Way resulting from the City entering into the Schedule 74 Agreement, including City staff costs or work performed by the City including any such costs not covered by the Schedule 74 Agreement. Costs also include, but are not limited to, costs associated with Schedule 74 Section 2.b, including costs associated with power distribution lines located outside a public thoroughfare or located pursuant to rights not derived from a franchise or pursuant to rights not otherwise granted by the City, less any portion paid by PSE; costs associated with any cancellation of the Schedule 74 Agreement; costs associated with any installation or removal of facilities installed to provide temporary service; costs associated with obtaining rights to underground or install facilities required to be installed outside the public thoroughfare; costs associated with any trenching and restoration and job coordination required for installation of the underground distribution system; costs associated with any surveying for alignment and grades of vaults and ducts. It is contemplated that a portion of the work covered by the Schedule 74 Agreement will be performed by Quadrant; costs under this Contract shall include costs, within the categories described in this Section 2, of such work by Quadrant. 2.2 Quadrant will also pay all costs of undergrounding all other franchise utilities currently collocated with the PSE power distribution line, including, but not limited to, design, construction, and any associated costs. These other costs will be paid directly by Quadrant and will not be incurred by the City. 3. PROCEDURE FOR REIMBURSEMENT 3.1 Phase 1 Estimated Costs. The City and Quadrant have agreed on an estimate of design and engineering Costs, together with related City administrative Costs (collectively, "Phase 1 Costs''). The estimated amount of Phase 1 Costs ("Phase 1 Estimated Costs'') is $80,000. Within 5 business days after the mutual execution of this Contract, Quadrant shall deposit such amount into an account designated by the City. 3.2 Phase 2 Estimated Costs. Construction Costs and any other Costs not included within the categories of Phase 1 Costs, including related City administrative Costs, are referred to collectively as "Phase 2 Costs." On the date of this Contract, the Parties anticipate that Phase 2 Costs will total around $240,000, but both Parties acknowledge that that amount will change as planning proceeds. The City and Quadrant, both acting reasonably, shall use diligent efforts to reach an agreement on estimated Phase 2 Costs ("Phase 2 Estimated Costs'') no later than the execution of the Schedule 74 Construction Agreement, as described in Section 1. Within 20 South 320th Undergrounding Reimbursement Contract - 2 - days after their agreement on Phase 2 Estimated Costs, Quadrant shall deposit into an account designated by the City the amount of the Phase 2 Estimated Costs. 3.3 Actual vs. Estimated Costs. The City agrees to keep accurate records concerning Costs, incurred under the Schedule 74 Agreement and otherwise. If the actual Costs exceed the estimate, Quadrant agrees to deposit the amount of the excess on a monthly basis, within 30 days of receipt of a voucher or invoice from the City, itemizing the costs incurred in reasonable detail against the relevant agreed estimate. To the extent the actual Phase 1 Costs are less than Phase 1 Estimated Costs, the excess shall be held by the City and applied to any overruns of Phase 2 Costs. To the extent that Phase 1 Costs and Phase 2 Costs in the aggregate are less than Phase 1 and Phase 2 Estimated Costs, the City will reimburse Quadrant upon the conclusion of. the undergrounding project, no later than when the final payment is required to be made under Section 7(e) of the Schedule 74 Project Construction Agreement. The City and Quadrant will each be entitled to receive all information concerning the undergrounding project and Schedule 74 Agreement that is received by either of them. In addition, the City shall from time to time on request of Quadrant provide a reasonable detailed accounting of all Costs incurred to date, reconciled against the relevant agreed estimate. 4. INDEMNIFICATION 4.1 Quadrant Indemnification. Quadrant agrees to indemnify, defend, and hold the City, its elected officials, officers, employees, agents, and volunteers harmless from any and all claims, demands, losses, actions and liabilities (including costs and all attorney fees) to or by any and all persons or entities, including, without limitation, their respective employees, agents, licensees, or representatives, arising from, resulting from, or connected with this Contract to the extent caused by the negligent acts, errors or omissions of Quadrant, its partners, shareholders, agents, or employees, or by Quadrant's breach of this Contract. For the sole purpose of giving effect to the foregoing indemnity, and only to the extent necessary for that purpose, Quadrant waives any immunity that may be granted to it under the Washington State Industrial Insurance Act, Title 51 ROO. Quadrant's indemnification shall not be limited in any way by any limitation on the amount of damages, compensation or benefits payable to or by any third party under workers' compensation acts, disability benefit acts or any other benefits acts or programs. 4.2 City Indemnification. The City agrees to indemnify, defend, and hold Quadrant, its officers, directors, shareholders, partners, employees, and agents harmless from any and all claims, demands, losses, actions and liabilities (including costs and attorney fees) to or by any and all persons or entities, including without limitation, their respective employees, agents, licenses, or representatives, arising from, resulting from or connected with this Contract to the extent caused by the negligent acts, errors, or omissions of the City, its employees or agents. The City's indemnification shall not be limited in any way by any limitation on the amount of damages, compensation or benefits payable to or by any third party under workers' compensation acts, disability benefit acts or any other benefits acts or programs. 4.3 Survival. The provisions of this Section shall survive the expiration or termination of this Contract with respect to any event occurring prior to such expiration or termination. South 320th Undergrounding Reimbursement Contract - 3 - 5. INDEPENDENCE It is the intention and understanding of the Parties that each shall be independent of the other and not agents of the other, and that neither is liable nor obligated to pay the other or the other's employee's sick leave, vacation payor any other benefit of employment, nor to pay any social security or other tax which may arise as an incident of employment. No joint venture is intended to be created. PSE is likewise an independent third party entity and not an agent of either Party. The City does not warrantee, guarantee, or indemnify against any act or omission of PSE. 6. GENERAL PROVISIONS 6.1 Entire Contract. This Contract, including the Exhibit, contains all of the agreements of the Parties with respect to any matter covered or mentioned in this Contract and no prior agreements or understandings pertaining to any such matters shall be effective for any purpose. 6.2 Modification. No provisions of this Contract, including this provision, may be amended or added to except by agreement in writing signed by the Parties or their respective successors in interest. 6.3 Full Force and Effect. Any provision of this Contract, which is declared invalid, void or illegal, shall in no way affect, impair, or invalidate any other provision hereof and such other provisions shall remain in full force and effect. 6.4 Assignment. Quadrant shall not transfer or assign, in whole or in part, any or all of its obligations and rights hereunder without the prior written consent of the City. In the event the City consents to any such assignment or transfer, such consent shall in no way release Quadrant from any of its obligations or liabilities under this Contract. 6.5 Successors In Interest. Subject to the preceding Subsection, this Contract shall be binding upon and inure to the benefit of the Parties' successors in interest, heirs and assigns. 6.6 Attorney Fees. In the event of any litigation, arbitration or other proceeding arising out of or brought to enforce or interpret this Contract, the substantially prevailing party therein shall be entitled to an award of its reasonable attorneys' fees incurred therein, in the preparation therefore, and on any appeal or rehearing thereof. The venue for any dispute related to this Contract shall be King County, Washington. 6.7 No Waiver. Failure of either Party to declare any breach or default immediately upon occurrence thereof, or delay in taking any action in connection with, shall not waive such breach or default. Failure of either Party to declare one breach or default does not act as a waiver of that Party's right to declare another breach or default. 6.8 Governing Law. This Contract is made in and shall be governed by and interpreted in accordance with the laws of the State of Washington. South 320th Undergrounding Reimbursement Contract - 4 - 6.9 Authority. Each individual executing this Contract on behalf of the City or Quadrant represents and warrants that such individual is duly authorized to execute and deliver this Contract on behalf of such Party. 6.10 Notices. Any notices required to be given by the City to Quadrant or by Quadrant to the City shall be delivered to the Parties at the addresses set forth below. Any notices may be (i) delivered personally to the addressee of the notice (ii) deposited in the United States mail, postage prepaid, to the address set forth herein, or (Hi) sent by Fedex or other recognized overnight courier service to the address set forth herein. Any notice so posted in the United States mail shall be deemed received three (3) days after the date of mailing. Any notice so sent by overnight courier shall be effective on the business day following receipt by the courier. 6.11 Captions. The respective captions of the Sections of this Contract are inserted for convenience of reference only and shall not be deemed to modify or otherwise affect in any respect any of the provisions of this Contract. 6.12 Performance. Time is of the essence of this Contract and each and all of its provisions in which performance is a factor. 6.13 Compliance with Ethics Code. If a violation of the City's Ethics Resolution No. 91-54, as amended, occurs as a result of the formation and/or performance .of this Contract, this Contract may be rendered null and void, at the City's option. 6.14 Counterparts. This Contract may be executed in any number of identical counterparts, which counterparts shall collectively constitute the entire Contract. 6.15 Equal Opportunity to Draft. The parties have participated and had an equal opportunity to participate in the drafting of this Contract, and the Exhibits, if any, attached. No ambiguity shall be construed against any party upon a claim that that party drafted the ambiguous language. [signatures next page] South 320th Undergrounding Reimbursement Contract - 5 - DATED the day and year set forth above. ATrEST: APPROVED AS TO FORM: ~~rnson [signatures continue on next page] South 320th Undergrounding Reimbursement Contract CITY OF FEDERAL WAY By: ca~::) ft1 rrt- Assistant City Manager/Chief Operating Officer Emergency Manager 33325 8th Avenue South PO Box 9718 Federal Way, WA 98063-9718 - 6- THE QUADRANT CORPORATION By: Ct/~..a ~~- (Signature) ~v ,4L l' k,2 (' (. c.-."\i '::'L../.... C (Name) Quadrant Homes Attn: George Cook 14725 SE 36th Street, Suite 200 Bellevue WA 98006 Mailing address: PO Box 130 Bellevue WA 98009 425.455.2900 STATE OF WASHINGTON COUNTY OF K''''-'G ) ) ss. ) On this day personally appeared before me 1..l),AL--7i:.YZ P Lt-..-s.'f ~L~ , to me known to be the <)'to,,,Q v\()?" P(L,=,S,OoS1 of I~ Q\A..AD~A"')1 Ci.qtflJ{l.,4-r,ho"'that executed the foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned, and on oath stated that he/she was authorized to execute said instrument an9 that the seal affixed, if any, is the corporate seal of said corporation. GIVEN my hand and official seal..this ,:l31,Ju day of Ju.L~~~"- '(. /I. \ . A I L.- it'. /''It.-/..vl: -t;v",-", (typed/printed name of notary) Notary Public in and for the State of Washington. My commission expires q I (')I~ I AD fZ.1 '- , 200 f? Exhibits ~,,"'''''''' III, I .:o-......"\^. ACH~ """ ~ ~ ""'\\\\\\\\It ~Q "" ff rJ"~"sc:,\ON ~~14, ~ ~ - \.:.If .::-:.~,. 1,4", ~ iff$"' 0 A~ ~~ ~ ;; :0 ~ J- ~~ ~ ~ ~u cn~ ~ ~ ~ ' , ~ ~ : ~ ~ ~ 10, "v .= ~ :: ~ 1Il~~, vB\.. :O~:: ~ "", [) '\" ~r :: "'1' ~ 111II -1 5- "......~" ~ "" ~ O"I\\\\\\"'..\\~"f "'111 f: WA.S"',,.............. Schedule 74 '111\\\\\\\\\"" Attachment A - Project Design Agreement Attachment B - Project Construction Agreement A South 320th Undergrounding Reimbursement Contract - 7 - I SCHEDULE 74 UNDERGROUND CONVERSION Project Design Agreement Project Name: Project Number: THIS Agreement, dated as of this _ day of , 200_. is made by and between , a (the "Government Entity"), and PUGETSOUND ENERGY, Inc., a Washington Corporation (the "Company"). RECITALS A. The Company is a public service company engaged in the sale and distribution of electric energy and, pursuant to its franchise or other rights from the Government Entity, currently locates its electric distribution facilities within the jurisdictional boundaries of the Government Entity. B. The Government Entity is considering conversion of the Company's existing overhead electric distribution system to a comparable underground electric distribution, as more specifically described in the Scope of Work (as defined in paragraph 2, below) furnished to the Company by the Government Entity (the "Conversion Project"). C. The Government Entity has requested that the Company perform certain engineering design services and otherwise work cooperatively with the Government Entity to develop a mutually acceptable Project Plan (as defined in paragraph 6. below) for the Conversion Project, in accordance with and subject to the terms and conditions of this Agreement (the "Design Work"). D. The Government Entity and the Company wish to execute this written contract in accordance with Schedule 74 ot the Company's Electric Tariff G ("Schedule 74") to govern the Design Work for the Conversion Project. AGREEMENT The Government Entity and the Company therefore agree as follows: 1. Unless specifically defined otherwise herein, all terms defined in Schedule 74 shall have the same meanings when used in this Agreement. 2. The Government Entity shall, within ten (10) business days after the date ot this Agreement, provide the Company with a written scope of work for the Conversion Project which includes, among other things, (a) a reasonably detailed description of the scope of the work required for the Conversion Project, (b) a list of the key milestone dates for the Conversion Project, (c) reasonably detailed drawings showing any associated planned improvements to the Public Thoroughfare, and (d) a statement as to whether the Government Entity desires to install the ducts and vaults for the Conversion Project (the "Scope of Work"). The Government Entity shall provide the Company two (2) hard copies of the Scope of Work and a copy of the relevant electronic file(s) in a mutually agreed electronic format. 3. Within ten (10) business days of its receipt of the Scope of Work, the Company shall prepare and submit to the Government Entity (a) a reasonably detailed, good faith estimate of the cost to perform the Design Work (the "Design Cost Estimate"), and (b) a proposed schedule for completion of the Design Work which, to the extent reasonably practicable, reflects the apglicable key milestone dates Design Agreement, Attachment "An to Schedule 74, Page 1 [insert project name here] ., J ., . \ \ specified in the Scope of Work and provides for completion of the Design Work within ninety (90) business days from the date the Company receives the Government Entity's notice to proceed under paragraph 5, below (the ADesign Schedule A). The proposed Design Cost Estimate and the proposed Design Schedule shall be based upon the then-current Scope of Work. Unless otherwise specified in the Scope of Work, the Design Work shall not include negotiation or acquisition of third party property rights but shall include preliminary planning between the Company and the Government Entity regarding their respective obligations for negotiating and acquiring third party property rights. 4. Within ten (10) business days after the Government Entity's receipt of the proposed Design Cost Estimate and the proposed Design Schedule from the Company, the Government Entity and the Company shall meet in order to (a) review the proposed Design Cost Estimate, (b) review the proposed Design Schedule; (c) review the Scope of Work, and (d) make any changes necessary to create a final Scope of Work, final Design Cost Estimate, and final Design Schedule that are reasonably acceptable to both parties. If the parties are unable to agree upon a final version of the Scope of Work, Design Cost Estimate, and/or Design Schedule, then either party may, by written notice to the other party, submit the matter for resolution pursuant to the dispute resolution procedures in paragraph 16, below. The final Scope of Work, Design Cost Estimate and Design Schedule, once determined in accordance with this paragraph 4, may thereafter be changed or amended only in accordance with the change procedures set forth in paragraph 13, below. 5. The Government Entity shall, within ten (10) business days after determination of the final of the Scope of Work, Design Cost Estimate, and Design Schedule, issue (a) a written notice to proceed which shall delineate the final Scope of Work, Design Cost Estimate, and Design Schedule, or (b) a written notice to terminate this Agreement without cost to the Government Entity. If the Government Entity terminates this Agreement, the costs incurred by the Company in preparing and submitting the Design Cost Estimate and the Design Schedule shall not be reimbursable to the Company, and the rights and obligations of the parties under this Agreement shall be terminated in their entirety and without liability to either party. 6. Following the Company's receipt of the notice to proceed, and within the applicable time period specified in the Design Schedule, the Company shall, with the cooperation and assistance of the Government Entity as outlined in this Agreement, prepare a project plan for the Conversion Project (the "Project Plan") which shall include, among other things, the following: (a) a detailed description of the work that is required to be performed by each party and any third party in connection with the Conversion Project (the AConstruction Work"), (b) the applicable requirements, drawings, and specifications for the Construction Work, (c) a description of any operating and other property rights that are required to be obtained by each party for the Conversion Project (and the requirements and specifications with respect thereto), (d) a detailed estimate of the costs to be incurred by each party in its performance of the Construction Work, and (e) a detailed schedule for completing the Construction Work (including, without limitation, the dates for delivery of the ducts and vaults and other materials for use at the site of the Construction Work). 7. The Government Entity shall be responsible for coordinating the Design Work with all other design work to be performed in connection with the Conversion Project and any associated planned improvements to the Public Thoroughfare. The parties shall work together in an effort to mitigate the costs of the Conversion Project to each party, including, without limitation, identifying ways to accommodate the facilities of the Company to be installed as part of the Conversion Project within the Public Thoroughfare. 8. Within the applicable time period specified in the Oesign Schedule, the Company shall prepare and submit to the Government Entity a proposed initial draft of the Project Plan. The parties understand and acknowledge that the proposed Project Plan submitted by the Company shall be preliminary in nature and shall not include, without limitation, information required to be supplied by the Government Entity (e.g., scope and estimate of the cost of the Construction Work to be performed by the Government Entity). Design Agreement, Attachment "A" to Schedule 74, Page 2 [insert project name here] .; 9. Within the applicable time period specified in the Design Schedule, the Government Entity shall (a) review the proposed Project Plan submitted by the Company, (b) complete any information required to be supplied by the Government Entity, (c) make any changes required to conform the proposed Project Plan to the Scope of Work and this Agreement, and (d) return the amended Project Plan to the Company_ 10. Within the applicable time period specified in the Design Schedule, the Company shall review the amended Project Plan submitted by the Government Entity and notify the Government Entity in writing of either the Company's acceptance of, or the Company's specific objections to, the amended Project Plan. If the Company makes any objection to the amended Project Plan, and the parties are unable to resolve the objections and mutually agree upon the Project Plan prior to the final design date specified in the Design Schedule, then either party may, by written notice to the other party, submit the matter for resolution pursuant to the dispute resolution procedures in paragraph 16, below. The Project PJan, as mutually agreed upon by the parties or established through the dispute resolution process, shall be attached to and incorporated in a Project Construction Agreement substantially in the form attached hereto as Exhibit A (the 'Construction Agreement") which is to be signed by the parties prior to commencement of the Construction Work. 11. The parties intend and agree that the Design Work and the Project Plan in its final form shall conform to the following requirements: (a) The Project Plan shall, if requested by the Government Entity in its initial Scope of Work, specify that the Government Entity shall install the ducts and vaults for the Conversion Project; provided that (i) the parties mutually agree upon and set forth in the Project Plan (A) the costs of such installation work to be included in the Cost of Conversion, and (8) the specifications and standards applicable to such installation work, and (ii) such installation work is accomplished by the Government Entity in accordance with the applicable design and construction specifications provided by the Company and set forth in the Project Plan. (b) Each estimate of the costs to be incurred by a party shall, at a minimum, be broken down by (i) the design and engineering costs, (ii) property and related costs, including any costs of obtaining operating rights, and (iii) construction costs, including and listing separately inspection, labor, materials, and equipment. (c) All facilities of the Company installed as part of the Conversion Project shall be located, and all related property and operating rights shall be obtained, in the manner set forth in the applicable provisions of Schedule 74. The Project Plan shall describe in detail the location of such facilities, any related property and operating rights required to be obtained, and the relative responsibilities of the parties with respect thereto. (d) The schedule set forth in the Project Plan for completing the Construction Work shall include, at a minimum, milestone time periods for completion of the Trenching, installation of ducts and vaults, the construction and removal of any Temporary Service, and the removal of overhead facilities. (e) The Project Plan may include the specification of work and requirements for Government- Requested Upgrades and Company-Initiated Upgrades; provided, however, that the costs incurred by the Company with respect to the design and engineering of. Company-Initiated Upgrades shall not be included in the costs reimbursable to the Company under this Agreement or the Construction Agreement. For purposes of the foregoing, (i) the term 'Government- Requested Upgrade" shall mean any feature of the Underground Distribution System which is requested by the Government Entity and is not reasonably required to make the Underground Distribution System comparable to the overhead distribution system being replaced, and (ii) the term .Company-Initiated Upgrade. shall mean any feature of the Underground Distribution System which is required by the Company and is not reasonably required to make the Underground Distribution System comparable to the overhead distribution system being replaced. For Design Agreement, Attachment "A" to Schedule 74, Page 3 [insert project name here] purposes of subparagraph (ii), above, a "comparable" system shall include, unless the parties otherwise agree, the number of empty ducts (not to exceed two (2), typically having a diameter of 6" or less) of such diameter and number as may be specified and agreed upon in the final Scope of Work necessary to replicate the load-carrying capacity (system amperage class) of the overhead system being replaced. For purposes of subparagraph (i), above, any empty ducts installed at the request of the Government Entity shall be a Government-Requested Upgrade. (f) The Project Plan shall set forth all specifications, design standards and other requirements for the Construction Work and the Conversion Project, including, but not limited to, the following: (i) applicable federal and state safety and electric codes and standards, (ii) applicable construction and other standards of the Company, and (iii) applicable street design and other standards of the Government Entity which are in effect as of the commencement of the Conversion Project. 12. Upon request of the Government Entity, and in any event at the times specified in the Design Schedule, the Company shall provide periodic reports which compare the actual costs of the Design Work incurred to that point in time to the Design Cost Estimate, as changed or amended in accordance with paragraph 13, below. Further, if at any time the Company reasonably expects that the actual cost of the Design Work will exceed the Design Cost Estimate, as changed or amended in accordance with paragraph 13, below, the Company shall notify the Government Entity immediately. Upon receipt of the Company's notice, the Government Entity may, at its option, (a) notify the Company in writing that this Agreement is terminated; or (b) request a reasonably detailed explanation supported by documentation (reasonably satisfactory to the Government Entity) to establish that the actual costs in excess of the Design Cost Estimate are: (i) reasonable, (ii) consistent with the Scope of Work, and (iii) consistent with sound engineering practices. If the Government Entity requests an explanation, the Government Entity shall, within ten (10) business days after receipt of the explanation, (a) change the Scope of Work in accordance with paragraph 13, below, or (b) direct the Company to continue with the Design Work without a change in the Scope of Work, but reserving to the Government Entity the right to dispute the reasonableness of the costs to be paid the Company under paragraph 14, below, in accordance with the dispute resolution procedures in paragraph 16, below, or (c) direct the Company to discontinue performing the Design Work pending resolution, pursuant to paragraph 16, below, of any dispute regarding the reasonableness of the costs, in which event the Design Schedule will be adjusted to reflect the delay, or (d) notify the Company in writing that this Agreement is terminated. In the event the Government Entity terminates this Agreement or discontinues the performance of the Design Work under subparagraph (c), above, for more than ninety (90) days, the Government Entity shall pay the Company for all costs incurred by the Company in its performance of the Design Work prior to the date the Company receives the Government Entity's notice of termination, plus any costs incurred by the Company for materials and other items ordered or procured by the Company with the prior authorization of the Government Entity in order to meet the schedule for the Conversion Project. The foregoing payment obligation shall survive any termination of this Agreement. Design Agreement, Attachment "A" to Schedule 74, Page 4 [insert project name here] " .. , ~ 13. (a) Either party may, at any time, by written notice thereof to the other party, request changes to the Scope of Work (a "Request for Change"). No Request for Change shall be effective and binding upon the parties unless signed by an authorized representative of each party. If any approved Request for Change would cause an increase in the cost of, or the time required for, the performance of any part of the Design Work, an equitable adjustment in the Design Cost Estimate and the Design Schedule shall be made to reflect such increase. The parties shall negotiate in good faith with the objective of agreeing in writing on a mutually acceptable equitable adjustment If the parties are unable to agree upon the terms of the equitable adjustment, either party may submit the matter for resolution pursuant to the dispute resolution procedures in paragraph 16, below. Notwithstanding any dispute or delay in reaching agreement or arriving at a mutually acceptable equitable adjustment, each party shall, if requested by the other party, proceed with the Design Work in accordance with the Request for Change. Any such request to proceed must be accompanied by a written statement setting forth the requesting party's reasons for rejecting the proposed equitable adjustment of the other party. (b) The Design Cost Estimate and/or the Design Schedule shall be equitably adjusted from time to time to reflect any change in the costs or time required to perform the Design Work to the extent such change is caused by: (i) any Force Majeure Event under paragraph 17, below, (ii) the discovery of any condition within the Conversion Area which affects the scope, cost, schedule or other aspect of the Design Work and was not known by or disclosed to the affected party prior to the date of this Agreement, or (iii) any change or inaccuracy in any assumptions regarding the scope, cost, schedule or other aspect of the Design Work which are expressly identified by the parties in the final Scope of Work. Upon the request of either party, the parties will negotiate in good faith with the objective of agreeing in writing on a mutually acceptable equitable adjustment If, at any time thereafter, the parties are unable to agree upon the terms of the equitable adjustment, either party may submit the matter for resolution pursuant to the dispute resolution provisions in paragraph 16, below. 14. Upon completion of the Design Work (i.e., the date on which the Project Plan is final under paragraph 10, above, either by mutual agreement of the parties or as established through the dispute resolution procedures), the Government Entity shall pay the Company all actual, reasonable costs to the Company for the Design Work (which, if disputed in good faith by the Government Entity, may be submitted by either party for resolution pursuant to the dispute resolution provisions in paragraph 16, below), plus any costs incurred by the Company for materials and other items ordered by the Company with the prior authorization of the Government Entity in order to meet the schedule for the Conversion Project. If, thereafter, the Construction Agreement is executed by the parties and the Conversion Project is completed within five (5) years from the date of this Agreement, the full amount of the costs incurred by the Company in its performance of the Design Work shall be included in the "Shared Company Costs" under the Construction Agreement and any payment of such amounts under this Agreement shall be credited to the Government Entity in calculating the "Net Amount" payable under the Construction Agreement. 15. Within sixty (60) business days after completion of the Design Work, the Company shall issue to the Government Entity an itemized invoice for the amounts payable under this Agreement. Such invoice shall be in a form mutually agreed upon by the Company and the Government Entity and shall, at a minimum, itemize the design and engineering costs, including and listing separately inspection, labor, materials and equipment. In the event the Government Entity does not verify such invoice within ten (10) business days of receipt, the Government Entity shall provide a written request to the Company specifying the additional information needed to verify the invoice. The Company will provide, within a reasonable period after receipt of any request, such documentation and information as the . Government Entity may reasonably request to verify such invoice. The Government Entity shall pay the Company all amounts payable under this Agreement within thirty (30) days after receipt of the Company's invoice. Payment as provided in this Agreement shall be full compensation for the Company's performance of the Design Work, including without limitation all services rendered and all materials, supplies, equipment, and incidentals necessary to complete t~e Design Work. Design Agreement. Attachment "An to Schedule 74, Page 5 [insert project name here] 16. Dispute Resolution Procedures: (a) Any dispute, disagreement or claim arising out of or concerning this Agreement must first be presented to and considered by the parties. A party who wishes dispute resolution shall notify the other party in writing as to the nature of the dispute. Each party shall appoint a representative who shall be responsible for representing the party's interests. The representatives shall exercise good faith efforts to resolve the dispute. Any dispute that is not resolved within ten (10) business days of the date the disagreement was first raised by written notice shall be referred by the parties' representatives in writing to the senior management of the parties for resolution. In the event the senior management are unable to resolve the dispute within twenty (20) business days (or such other period as the parties may agree upon), each party may pursue resolution of the dispute through other legal means consistent with the terms of this Agreement. All negotiations pursuant to these procedures for the resolution of disputes shall be confidential and shall be treated as compromise and settlement negotiations for purposes of the state and federal rules of evidence. (b) Any claim or dispute arising hereunder which relates to the Scope of Work, Design Cost Estimate, and Design Schedule under paragraph 4, above; the Project Plan under paragraph 10, above; or any Request for Change (including, without limitation, any associated equitable adjustment) under paragraph 13, above; and is not resolved by senior management within the time permitted under paragraph 16(a), above, shall be resolved by arbitration in Seattle, Washington, under the Construction Industry Arbitration Rules of the American Arbitration Association then in effect. The decision(s) of the arbitrator(s) shall be final, conclusive and binding upon the Parties. All other disputes shall be resolved by litigation in any court or governmental agency, as applicable, having jurisdiction over the Parties and the dispute. (c) In connection with any arbitration under this paragraph 16, costs of the arbitrator(s), hearing rooms and other common costs shall be divided equally among the parties. Each party shall bear the cost and expense of preparing and presenting its own case (including, but not limited to, its own attorneys' fees); provided,that, in any arbitration, the arbitrator(s) may require, as part of his or her decision, reimbursement of all or a portion of the prevailing party's costs and expenses by the other party. (d) Unless otherwise agreed by the parties in writing, the parties shall continue to perform their respective obligations under this Agreement during the pendency of any dispute. 17. In the event that either party is prevented or delayed in the performance of any of its obligations under this Agreement by reason beyond its reasonable control (a "Force Majeure Event"), then that party's performance shall be excused during the Force Majeure Event. Force Majeure Events shall include, without limitation, war; civil disturbance; flood, earthquake or other Act of God; storm, earthquake or other condition which necessitates the mobilization of the personnel of a party or its contractors to restore utility service to customers; laws, regulations. rules or orders of any governmental agency; sabotage; strikes or similar labor disputes involving personnel of a party, its contractors or a third party; or any failure or delay in the performance by the other party, or a third party who is not an employee, agent or contractor of the party claiming a Force Majeure Event, in connection with the Work or this Agreement. Upon removal or termination of the Force Majeure Event, the party claiming a Force Majeure Event shall promptly perform the affected obligations in an orderly and expedited manner under this Agreement or procure a substitute for such obligation. The parties shall use all commercially reasonable efforts to eliminate or minimize any delay caused by a Force Majeure Event. 18. This Agreement is subject to the General Rules and Provisions set forth in Tariff Schedule 80 of the Company's electric Tariff G and to Schedule 74 of such Tariff as approved by the Washington Utilities and Transportation Commission and in effect as of the date of this Agreement. Design Agreement, Attachment "A" to Schedule 74, Page 6 [insert project name here] " ' '. .... I" 19. Any notice under this Agreement shall be in writing and shall be faxed (with a copy followed by mail or hand delivery), delivered in person, or mailed, properly addressed and stamped with the required postage, to the intended recipient as follows: If to the Government Entity: Altn: Fax: If to the Company: Puget Sound Energy, Inc. Altn: Fax: Either party may change its address specified in this paragraph by giving the other party notice of such change in accordance with this paragraph. 20. This Agreement shall in all respects be interpreted, construed and enforced in accordance with the laws of the State of Washington (without reference to rules governing conflict of laws), except to the extent such laws may be preempted by the laws of the United States of America. 21. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and all other agreements and understandings of the Parties, whether written or oral, with respect to the subject matter of this Agreement are hereby superseded in their entireties. 22. This Agreement shall be binding upon and inure to the benefit of the respective successors, assigns, purchasers, and transferees of the parties, including but not limited to, any entity to which the rights or obligations of a party are assigned, delegated, or transferred in any corporate reorganization, change of organization, or purchase or transfer of assets by or to another corporation, partnership, association, or other business organization or division thereof. Government Entity: Company: PUGET SOUND ENERGY, INC. BY ITS BY ITS Date Signed Date Signed ApprOVed as to form: Design Agreement, Attachment "A" to Schedule 74, Page 7 (insert project name here) ..... " SCHEDULE 74 UNDERGROUND CONVERSION Project Construction Agreement Project Name: Project Number: THIS Agreement, dated as of this _ day of , 200_, is made by and between , a (the "Government Entity"), and PUGET SOUND ENERGY, Inc., a Washington Corporation (the "Company"). RECITALS A. The Company is a public service company engaged in the sale and distribution of electric energy, and pursuant to its franchise or other rights from the Government Entity, currently locates its electric distribution facilities within the jurisdictional boundaries of the Government Entity. B. The Government Entity has determined that it is necessary to replace the existing overhead electric distribution system within the area specified in the Project Plan (as defined below) (the "Conversion Area") with a comparable underground electric distribution system, all as more specifically described in the Project Plan (the "Conversion Project"). C. The Government Entity and the Company have previously entered into a Project Design Agreement dated as of (the "Design Agreement"), pursuant to which the parties completed certain engineering design, cost assessment, operating rights planning and other preliminary work relating to the Conversion Project and, in connection with that effort, developed the Project Plan. D. The Government Entity and the Company wish to execute this written contract in accordance with Schedule 74 of the Company's Electric Tariff G ("Schedule 74") to govern the completion of the Conversion Project, which both parties intend shall qualify as an underground conversion under the terms of Schedule 74. , AGREEMENT The Government Entity and the Company therefore agree as follows: 1. Definitions. (a) Unless specifically defined otherwise herein, all terms defined in Schedule 74 shall have the same meanings when used in this Agreement, including, without limitation, the following: i) Cost of Conversion; ii) Public Thoroughfare; iii) Temporary Service; iv) Trenching and Restoration; v) Underground Distribution System; and vi) Underground Service Lines. (b) "Company-Initiated Upgrade" shall mean any feature of the Underground Distribution System which is required by the Company and is not reasonably required to make the Underground Distribution System comparable to the overhead distribution system being replaced. For purposes of the foregoing, a "comparable" system shall include, unless the Parties otherwise agree, the number of empty ducts (not to exceed two (2), typically hpving a diameter of 6" or less) Construction Agreement, Attachment "B" to Schedule 74, Page 1 [insert project name here} of such diameter and number as may be specified and agreed upon in the Project Plan necessary to replicate the load-carrying capacity (system amperage class) of the overhead system being replaced. (c) "Estimated Reimbursable Private Conversion Costs" shall mean the Company's good faith estimate of the Reimbursable Private Conversion Costs, as specified in the Project Plan and as changed and adjusted from time to time in accordance with Section 6, below. (d) "Estimated Reimbursable Temporary Service Costs" shall mean the Company's good faith estimate of the Reimbursable Temporary Service Costs, as specified in the Project Plan and as changed and adjusted from time to time in accordance with Section 6, below. (e) "Estimated Reimbursable Upgrade Costs" shall mean the Company's good faith estimate of the Reimbursable Upgrade Costs, as specified in the Project Plan and as changed and adjusted from time to time in accordance with Section 6. below. (f) "Estimated Shared Company Costs" shall mean the Company's good faith estimate of the Shared Company Costs, as specified in the Project Plan and as changed and adjusted from time to time in accordance with Section 6, below. (g) "Estimated Shared Government Costs" shall mean the Government Entity's good faith estimate of the Shared Government Costs, as specified in the Project Plan and as changed and adjusted from time to time in accordance with Section 6, below. (h) "Government-Requested Upgrade" shall mean any feature of the Underground Distribution System which is requested by the Government Entity and is not reasonably required to make the Underground Distribution System comparable to the overhead distribution system being replaced. For purposes of the foregoing, any empty ducts installed at the request of the Government Entity shall be a Government-Requested Upgrade. (i) "Party" shall mean either the Company, the Government Entity, or both. (j) "Private Property Conversion" shall mean that portion, if any, of the Conversion Project for which the existing overhead electric distribution system is located, as of the date determined in ' accordance with Schedule 74, (i) outside of the Public Thoroughfare. or (ii) pursuant to rights not derived from a franchise previously granted by the Government Entity or pursuant to rights not otherwise previously granted by the Government Entity. (k) "Project Plan" shall mean the project plan developed by the Parties under the Design Agreement and attached hereto as Exhibit A. as the same may be changed and amended from time to time in accordance with Section 6, below. The Project Plan includes, among other things, (i) a detailed description of the Work that is required to be performed by each Party and any third party, (ii) the applicable requirements and specifications for the Work, (iii) a description of the Operating Rights that are required to be obtained by each Party for the Conversion Project (and the requirements and specifications with respect thereto). (iv) an itemization and summary of the Estimated Shared Company Costs, Estimated Shared Government Costs. Estimated Reimbursable Private Conversion Costs (if any), Estimated Reimbursable Temporary Service Costs (if any) and Estimated Reimbursable Upgrade Costs (if any), and (v) the Work Schedule. (I) "Operating Rights" shall mean sufficient space and legal rights for the construction, operation, repair, and maintenance of the Underground Distribution System. (m) "Reimbursable Private Conversion Costs" shall mean (i) all Costs of Conversion, if any, incurred by the Company which are attributable to a Private Property Conversion, less (ii) the distribution pole replacement costs (if any) that would be avoided by the Company on account of such Private Property Conversion, as determined consistent with the applicable 9<>mpany distribution facilities Construction Agreement. Attachment "8" to Schedule 74. Page 2 [insert project name here] 't " ,> replacement program, plus (iii) just compensation as provided by law for the Company's interests in real property on which such existing overhead distribution system was located prior to conversion; provided that the portion of the Reimbursable Private Conversion Costs attributable to the Costs of Conversion under subparagraph (i) of this paragraph shall not exceed the Estimated Reimbursable Private Conversion Costs without the prior written authorization of the Government Entity. (n) "Reimbursable Temporary Service Costs" shall mean all costs incurred by the Company which are attributable to (i) any facilities installed as part of the Conversion Project to provide Temporary Service, as provided for in Schedule 74, and (ii) the removal of any facilities installed to provide Temporary Service (less salvage value of removed equipment); provided that the Reimbursable Temporary Service Costs shall not exceed the Estimated Reimbursable Temporary Service Costs without the prior written authorization of the Government Entity. (0) "Reimbursable Upgrade Costs" shall mean all Costs of Conversion incurred by the Company which are attributable to any Government-Requested Upgrade; provided that the Reimbursable Upgrade Costs shall not exceed the Estimated Reimbursable Upgrade Costs without the prior written authorization 01 the Government Entity. (p) "Shared Company Costs" shall mean all Costs of Conversion (other than Reimbursable Upgrade Costs, Reimbursable Private Conversion Costs and Reimbursable Temporary Service Costs) incurred by the Company in connection with the Conversion Project; provided, however, that the Shared Company Costs shall not exceed the Estimated Shared Company Costs without the prior written authorization of the Government Entity. For the avoidance of doubt, the "Shared Company Costs. shall, as and to the extent specified in the Design Agreement, include the actual, reasonable costs to the Company for the "Design Work" performed by the Company under the Design Agreement. (q) . "Shared Government Costs" shall mean all Costs of Conversion incurred by the Government Entity in connection with (i) any duct and vault installation Work which the Parties have specified in the Project Plan is to be performed by the Government Entity as part of the Government Work, and (ii) the acquisition of any Operating Rights which the Parties have, by mutual agreement, specified in the Project Plan are to be obtained by the Government Entity for the Conversion Project, but only to the extent attributable to that portion of such Operating Rights which is necessary to accommodate the facilities of the Company; provided, however, that the Shared Government Costs shall not exceed the Estimated Shared Government Costs without the prior written authorization of the Company. , (r) "Total Shared Costs" shall mean the sum of the Shared Company Costs and the Shared Government Costs. For the avoidance of doubt, the Total Shared Costs shall not incJude, without limitation, (i) costs to the Government Entity for Trenching and Restoration, or (ii) costs associated with any joint use of trenches by other utilities as permitted under Section 3(b). (s) "Work" shall mean all work to be performed in connection with the Conversion Project, as more specifically described in the Project Plan, including, without limitation, the Company Work (as defined in Section 2(a), below) and the Government Work (as defined in Section 3(a), below). (t) "Work Schedule" shall mean the schedule specified in the Project Plan which sets forth the milestones for completing the Work, as the same may be changed and amended from time to time in accordance with Section 6, below. 2. Obligations of the Company. (a) Subject to the terms and conditions of this Agreement, the Company shall do the following as specified in, and in accordance with the design and construction specifications and other requirements set forth in, the Project Plan (the "Company Work"): Construction Agreement, Attachment "8" to Schedule 74, Page 3 [insert project name here) " i) furnish and install an Underground Distribution System within the Conversion Area (excluding any duct and vault installation or other Work which the Parties have specified in the Project Plan is to be performed by the Government Entity); ii) provide a Company inspector on-site at the times specified in the Work Schedule to in!=:pect the pei10rmance of any duct and vault installation Work which the Parties have specified in the Project Plan is to be performed by the Government Entity; and iii) upon connection of those persons or entities to be served by the Underground Distribution System and removal of facilities of any other utilities that are connected to the poles of the overhead system, remove the existing overhead system (including associated wires and Company-owned poles) of 15,000 volts or less within the Conversion Area except for Temporary Services, (b) Upon request of the Government Entity, the Company shall provide periodic reports of the progress of the Company Work identifying (i) the Company Work completed to date, (ii) the Company Work yet to be completed, and (iii) an estimate regarding whether the Conversion Project is on target with respect to the Estimated Shared Company Costs, the Estimated Reimbursable Private Conversion Costs (if any), the Estimated Reimbursable Temporary Service Costs (if any), the Estimated Reimbursable Upgrade Costs (if any) and the Work Schedule. (c) Except as otherwise provided in the Company's Electric Tariff G, the Company shall own, operate and maintain all electrical facilities installed pursuant to this Agreement including, but not limited to, the Underground Distribution System and Underground Service Lines. (d) Subject to the terms and conditions of this Agreement, the Company shall perform all Company Work in accordance with the Project Plan, the Work Schedule and this Agreement. 3. ObliQations of the Government Entitv. (a) Subject to the terms and conditions of this Agreement, the Government Entity shall do the following as specified in, and in acc.ordance with the design and construction specifications and other requirements set forth in, the Project Plan (the "Government Work"): i) provide the Trenching and Restoration; ii) perform the surveying for alignment and grades for ducts and vaults; and iii) perform any duct and vault installation and other Work which the Parties have specified in the Project Plan is to be performed by the Government Entity. (b) Other utilities may be permitted by the Government Entity to use the trenches provided by the Government Entity for the installation of their facilities so long as such facilities or the installation thereof do not interfere (as determined pursuant to the Company's electrical standards) with the Underground Distribution System or the installation or maintenance thereof. Any such use of the trenches by other utilities shall be done subject to and in accordance with the joint trench design specifications and installation drawings set forth or otherwise identified in the Project Plan, and the Government Entity shall be responsible for the coordination of the design and installation of the facilities of the other utilities to ensure compliance with such specifications and drawings. (c) Upon request of the Company, the Government Entity shall provide periodiC reports of the progress of the Government Work identifying (i) the Government Work completed to date, (ii) the Government Work yet to be completed, and (iii) an estimate regarding whether the Conversion Project is on target with respect to the Estimated Shared Government Costs and the Work Schedule. (d) The Government Entity shall be responsible for coordinating all work to be performed in connection with the street improvement program within the Conversion Area. Construction Agreement. Atlachment "8" to Schedule 74, Page 4 (insert project name here) (e) Subject to the terms and conditions of this Agreement, the Government Entity shall perform all Government Work in accordance with the Project Plan, the Work Schedule and this Agreement. 4. Work Schedule. (a) The Government Entity and the Company have agreed upon the Work Schedule as set forth in the Project Plan. Changes to the Work Schedule shall be made only in accordance with Section 6, below. (b) Promptly following the execution of this Agreement, and upon completion by the Govemment Entity of any necessary preliminary work, the Government Entity shall hold a pre-construction meeting involving all participants in the Conversion Project to review project design, coordination requirements, work sequencing and related pre-mobilization requirements. Following the pre- construction meeting, the Government Entity shall give the Company written notice to proceed with the Work at least ten (10) business days prior to the commencement date specified in the Work Schedule. (c) Subject to the terms and conditions of this Agreement, each Party shall perform the Work assigned to it under this Agreement in accordance with the Work Schedule. So long as the Company performs the Company Work in accordance with the Work Schedule, the Company shall not be liable to the Government Entity (or its agents, servants, employees, contractors, subcontractors, or representatives) for any claims, actions, damages, or liability asserted or arising out of delays in the Work Schedule. 5. Location of Facilities. All facilities of the Company installed within the Conversion Area pursuant to this Agreement shall be located, and all related Operating Rights shall be obtained, in the manner set forth in the applicable provisions of Schedule 74, as specified by the Parties in the Project Plan. 6. ChanQes. (a) Either Party may, at any time, by written notice thereof to the other Party, request changes in the Work within the general scope of this Agreement (a hRequest for Change"), including, but not limited to: (i) changes in, substitutions for, additions to or deletions of any Work; (ii) changes in the specifications, drawings and other requirements in the Project Plan, (iii) changes in the Work Schedule, and (iv) changes in the location, alignment, dimensions or design of items included in the Work. No Request for Change shall be effective and binding upon the Parties unless signed by an authorized representative of each Party. (b) If any change included in an approved Request for Change would cause a change in the cost of, or the time required for, the performance of any part of the Work, an equitable adjustment shall be made in the Estimated Shared Company Costs, the Estimated Shared Government Costs, the Estimated Reimbursable Private Conversion Costs (if any), the Estimated Reimbursable Temporary Service Costs (if any), the Estimated Reimbursable Upgrade Costs (if any) and/or the Work Schedule to reflect such change.. The Parties shall negotiate in good faith with the objective of agreeing in writing on a mutually acceptable equitable adjustment. If the Parties are unable to agree upon the terms of the equitable adjustment, either Party may submit the matter for resolution pursuant to the dispute resolution provisions in Section 10, below. (c) The Work Schedule, the Estimated Shared Company Costs, the Estimated Shared Government Costs, the Estimated Reimbursable Private Conversion Costs, the Estimated Reimbursable Temporary Service Costs and/or the Estimated Reimbursable Upgrade Costs shall be further equitably adjusted from time to time to reflect any change in the costs or time required to perform the Work to the extent such change is caused by: (i) any Force Majeure Event under Section 11, below, (ii) the discovery of any condition within the Conversion Area. which affects the scope, cost, Construction Agreement, Attachment "8ft to Schedule 74, Page 5 (insert project name here] " schedule or other aspect of the Work and was not known by or disclosed to the affected Party prior to the date of this Agreement, or (iii) any change or inaccuracy in any assumptions regarding the scope, cost, schedule or other aspect of the Work which are expressly identified by the Parties in the Project Plan. Upon the request of either Party, the Parties will negotiate in good faith with the 0bjective of agreeing in writing on a mutually acceptable equitable adjustment. If, at any time thereafter, the Parties are unable to agree upon the terms of the equitable adjustment, either Party may submit the matter for resolution pursuant to the dispute resolution provisions in Section 10, below. (d) Notwithstanding any dispute or delay in reaching agree!T'ent or arriving at a mutually acceptable equitable adjustment, each Party shall, if requested by the other Party, proceed with the Work in accordance with any approved Request for Change. Any request to proceed hereunder must be accompanied by a written statement setting forth the requesting Party's reasons for rejecting the proposed equitable adjustment of the other Party. 7. Compensation and Payment. (a) Subject to and in accordance with the terms and conditions of this Agreement (including, without limitation, the payment procedures set forth in this Section 7), payment in connection with the Conversion Project and this Agreement shall be as follows: i) The Total Shared Costs shall be allocated to the Parties in the following percentages: (A) sixty percent (60%) to the Company, and (8) forty percent (40%) to the Government Entity. ii) The Government Entity shall pay one hundred percent (100%) of all Reimbursable Private Conversion Costs, if any. iii) The Government Entity shall pay one hundred percent (100%) of all Reimbursable Upgrade Costs, if any. iv) The Government Entity shall pay one hundred percent (100%) of all Reimbursable Temporary Service Costs, if any. v) The Government Entity shall pay one hundred percent (100%) of the costs it incurs to perform that portion of the Government Work specified in Section 3(a)(i) and (ii) (Le., Trenching and Restoration and surveying). vi) The Company shall pay one hundred percent (100%) of the costs it incurs to design, jI provide and construct any Company-Initiated Upgrade. vii) The Company shall pay one hundred percent (100%) of the costs it incurs to obtain Operating Rights outside the Public Thoroughfare. (b) Based on the allocation of responsibilities set forth in Section 7(a), above, the Parties shall determine the net amount payable by the Government Entity or the Company, as applicable, to the other Party under this Agreement (the -Net Amount"). The Net Amount shall be determined by using the amount of the Total Shared Costs allocated to the Government Entity under Section 7(a)(i), and adjusting such amount as follows: i) Subtracting (as a credit to the Government Entity) the amount of the Shared Government Costs. ii) Adding (as a credit to the Company) the amount of all Reimbursable Private Conversion Costs, Reimbursable Upgrade Costs and Reimbursable Temporary Service Costs. iii) Subtracting (as a credit to the Government Entity) any payments previously made to the Company by the Government Entity under the Design Agreement which, under the terms of the Design Agreement, are to be credited to the Government Entity under this Agreement. The Net Amount, as so calculated, (A) will be an amount payable to the Company if it is a positive number, and (8) shall be an amount payable to the Government Entity if it is a negative number. Construction Agreement, Attachment "B" to Schedule 74, Page 6 (insert project name here} (c) Within sixty (60) business days of completion of the Conversion Project, the Government Entity shall provide the Company with an itemization of the Shared Government Costs (the "Government Itemization"), together with such documentation and information as the Company may reasonably request to verify the Government Itemization. The Government Itemization shall, at a minimum, break down the Shared Government Costs by the following categories, as applicable: (i) property and related costs incurred and/or paid by the Government Entity, including any costs of obtaining Operating Rights, and (ii) construction costs incurred and/or paid by the Government Entity, including and listing separately inspection, labor, materials and equipment, overhead and all costs charged by any agent, contractor or subcontractor of the Government Entity. (d) Within thirty (30) business days after the Company's receipt of the Government Itemization and requested documentation and information, the Company shall provide the Government Entity a written statement (the "Company Statement") showing (i) an itemization of the Shared Company Costs, (ii) the Parties' relative share of the Total Shared Costs based on the Company's itemization of the Shared Company Costs and the Government Entity's itemization of the Shared Government Costs set forth in the Government Itemization, (iii) any Reimbursable Private Conversion Costs. (iv) any Reimbursable Upgrade Costs, (v) any Reimbursable Temporary Service Costs, (vi) any credits to the Government Entity for payments previously made to the Company by the Government Entity under the Design Agreement which, under the terms of the Design Agreement, are to be credited to the Government Entity under this Agreement, and (vii) the Net Amount, as determined in accordance with Section 7(b), above, together with such documentation and information as the Government Entity may reasonably request to verify the Company Statement. The itemization of the Shared Company Costs included in the Company Statement shall, at a minimum, break down the Shared Company Costs by the following categories, as applicable: (i) design and engineering costs, and (ii) construction costs, including and listing separately inspection, labor, materials and equipment, overhead and all costs charged by any agent, contractor or subcontractor of the Company. (e) Within thirty (30) business days after the Government Entity's receipt of the Company Statement and requested documentation and information, the Net Amount shall be paid by the owing Party to the other Party, as specified in the Company Statement. 8. Indemnification. (a) The Government Entity releases and shall defend, indemnify and hold the Company harmless from all claims, losses, harm, liabilities, damages, costs and expenses (including, but not limited to, reasonable attorneys' fees) caused by or arising out of any negligent act or omission or willful misconduct of the Government Entity in its performance under this Agreement. During the performance of such activities the Government Entity's employees or contractors shall at all times remain employees or contractors, respectively, of the Government Entity. (b) The Company releases and shall defend, indemnify and hold the Government Entity harmless from all claims, losses, harm, liabilities, damages, costs and expenses (including, but not limited to, reasonable attorneys' fees) caused by or arising out of any negligent act or omission or willful misconduct of the Company in its performance under this Agreement. During the performance of such activities the Company's employees or contractors shall at all times remain employees or contractors, respectively, of the Company. (c) Solely for purposes of enforcing the indemnification obligations of a Party under this Section 8, each Party expressly waives its immunity under Title 51 of the Revised Code of Washington, the Industrial Insurance Act, and agrees that the obligation to indemnify, defend and hold harmless provided for in this Section 8 extends to any such claim brought against the indemnified Party by or on behalf of any employee of the indemnifying Party. The foregoing waiver shall not in any way preclude the indemnifying Party from raising such immunity as a defense against any claim brought against the indemnifying Party by any of its employees. Construction Agreement, Attachment "8" to Schedule 74, Page 7 (insert project name here] .., 9. Conversion of Service to Customers within Conversion Area. (a) Upon commencement of the Work, the Government Entity shall notify all persons and entities within the Conversion Area that service lines to such customers must be converted from overhead to underground service within the applicable statutory period following written notice from the Government Entity that service from underground facilities are available in accordance with RCW 35.96.050. Upon the request of any customer, other than a single family residential customer, within the Conversion Area, the Company shall remove the overhead system and connect such persons' and entities' Underground Service Lines to the Underground Distribution System. (b) The Parties acknowledge that single family residences within the Conversion Area must (~ provide a service trench and conduit, in accordance with the Company's specifications, from the underground meter base to the point of service provided during the conversion, and (ii) pay for the secondary service conductors as defined in Schedule 85 of the Company's Electric Tariff G. The Government Entity shall exercise its authority to order disconnection and removal of overhead facilities with respect to owners failing to convert service lines from overhead to underground within the timelines provided in RCW 35.96.050. 10. Dispute Resolution. (a) Any dispute, disagreement or claim arising out of or concerning this Agreement must first be presented to and considered by the Parties. A Party who wishes dispute resolution shall notify the other Party in writing as to the nature of the dispute. Each Party shall appoint a representative who shall be responsible for representing the Party's interests. The representatives shall exercise good faith efforts to resolve the dispute. Any dispute that is not resolved within ten (10) business days of the date the disagreement was first raised by written notice shall be referred by the Parties' representatives in writing to the senior managemcllt of the Parties for resolution. In the event the senior management are unable to resolve the dispute within twenty (20) business days . (or such other period as the Parties may agree upon), each Party may pursue resolution of the dispute through other legal means consistent with the terms of this Agreement. All negotiations pursuant to these procedures for the resolution of disputes shall be confidential and shall be treated as compromise and settlement negotiations for purposes of the state and federal rules of evidence. (b) Any claim or dispute arising hereunder which relates to any Request for Change or any equitable adjustment under Section 6, above, or the compensation payable by or to either Party under Section 7, above, and which is not resolved by senior management within the time permitted under Section 1 O(a) , above, shall be resolved by arbitration in Seattle, Washington, under the Construction Industry Arbitration Rules of the American Arbitration Association then in effect. The decision(s) of the arbitrator(s) shall be final, conclusive and binding upon the Parties. All other disputes shall be resolved by litigation in any court or governmental agency, as applicable, having jurisdiction over the Parties and the dispute. (c) In connection with any arbitration under this Section 10, costs of the arbitrator(s), hearing rooms and other common costs shall be divided equally among the Parties. Each Party shall bear the cost and expense of preparing and presenting its own case (including, but not limited to, its own attorneys' fees); provided, that, in any arbitration, the arbitrator(s) may require, as part of his or her decision, reimbursement of all or a portion of the prevailing Party's costs and expenses (including, but not limited to, reasonable attorneys' fees) by the other Party. (d) Unless otherwise agreed by the Parties in writing, the Parties shall continue to perform their respective obligations under this Agreement during the pendency of any dispute. Construction Agreement, Attachment "8" to Schedule 74, Page 8 [insert project name here) 11. Uncontrollable Forces. In the event that either Party is prevented or delayed in the performance of any of its obligations under this Agreement by reason beyond its reasonable control (a "Force Majeure Event"), then that Party's performance shall be excused dur!!"g ihe Force Majeure Event. Force Majeure Events shall include, without limitation, war; civil disturbance; flood, earthquake or other Act of God; storm, earthquake or other condition which necessitates the mobilization of the personnel of a Party or its contractors to restore utility service to customers; laws, regulations, rules or orders of any governmental agency; sabotage; strikes or similar labor disputes involving personnel of a Party, its contractors or a third party; or any failure or delay in the performance by the other Party, or a third party who is not an employee, agent or contractor of the Party claiming a Force Majeure Event, in connection with the Work or this Agreement. Upon removal or termination of the Force Majeure Event, the Party claiming a Force Majeure Event shall promptly perform the affected obligations in an orderly and expedited manner under this Agreement or procure a substitute for such obligation. The Parties shall use all commercially reasonable efforts to eliminate or minimize any delay caused by a Force Majeure Event. 12. Insurance. (a) PSE shall, and shall require each of its contractors to, secure and maintain in force throughout the duration of the Conversion Project (or, jj sooner, until termination of this Agreement) comprehensive general liability insurances, with a minimum coverage of $ per occurrence and $ aggregate for personal injury; and $ per occurrence/ aggregate for property damages, and professional liability insurance in the amount of $ (b) The Government Entity shall ensure that each of its contractors performing any Government Work secures and maintains in force throughout the duration of the Conversion Project (or, if sooner, until termination of this Agreement) insurance policies having the same coverage, amounts and limits as s!-JBcified Section 12(a), above. (c) In lieu of the insurance requirements set forth in Section 12(a), above, the Company may self- insure against such risks in such amounts as are consistent with good utility practice. Upon the Government Entity's request, the Company shall provide the Government Entity with reasonable written evidence that the Company is maintaining such self-insurance. 13. Other. (a) Agreement Subiect To Tariff. This Agreement is subject to the General Rules and Provisions set forth in Tariff Schedule 80 of the Company's electrical Tariff G and to Schedule 74 of such Tariff as approved by the Washington Utilities and Transportation Commission and in effect as of the date of this Agreement. (b) Termination. The Government Entity reserves the right to terminate the Conversion Project and this Agreement upon written notice to the Company. In the event that the Government Entity terminates the Conversion Project and this Agreement, the Government Entity shall reimburse the Company for all costs reasonably incurred by the Company in connection with the Work performed prior to the effective date of termination. In such event, the costs reimbursable to the Company (i) shall not be reduced by any Shared Government Costs or other costs incurred by the Government Entity, and (ii) shall be paid within thirty (30) days after the receipt of the Company's invoice therefor. Sections 1, 5, 7, 8, 9, 10, 11 and 13 shall survive any termination of the Conversion Project and/or this Agreement. (c) Facilities Greater Than 15,000 Volts. Nothing in this Agreement shall in any way affect the rights or obligations of the Company under any previous agreements pertaining to the existing or future facilities of greater than 15,000 Volts within the Conversion Area. Construction Agreement, Attachmenl "B" to Schedule 74, Page 9 [insert project name here} f (d) Compliance With Law. The Parties shall, in performing the Work under this Agreement, comply with all applicable federal, state, and local laws, ordinances, and regulations. (e) No Discrimination. The Company, with regard to the Work performed by the Company under this Agreement, shall comply with all applicable laws relating to discriminaiion on the basis race, color, national origin, religion, creed, age, sex, or the presence of any physical or sensory handicap in the selection and retention of employees or procurement of materials or supplies. (f) Independent Contractor. The Company and the Government Entity agree that the Company is an independent contractor with respect to the Work and this Agreement. The Company is acting to preserve and protect its facilities and is not acting for the Government Entity in performing the- Work. Nothing in this Agreement shall be considered to create the relationship of employer and employee between the Parties. Neither the Company nor any employee of the Company shall be entitled to any benefits accorded employees of the Government Entity by virtue of the Work or this Agreement. The Government Entity shall not be responsible for withholding or otherwise deducting federal income tax or social security or contributing to the State Industrial Insurance Program, or otherwise assuming the duties of an employer with respect to the Company, or any employee of the Company. (g) Nonwaiver of Rights or Remedies. No failure or delay of either Pariy to insist upon or enforce strict performance by the other Party of any provision of this Agreement or to exercise any other right under this Agreement, and no course of dealing or performance with respect thereto, shall, except to the extent provided in this Agreement, be construed as a waiver or, or choice of, or relinquishment of any right under any provision of this Agreement or any right at law or equity not otherwise provided for herein. The express waiver by either Party of any right or remedy under this Agreement or at law or equity in a particular instance or circumstance shall not constitute a waiver thereof in any other instance or circumstance. (h) No Third Party Beneficiaries. There are no third-party beneficiaries of this Agreement. Nothing contained in this Agreement is intended to confer any right or interest on anyone other than the Parties, their respective successors, assigns and legal representatives. (i) Governmental Authority. This Agreement is subject to the rules, regulations, orders and other requirements, now or hereafter in effect, of all governmental regulatory authorities and courts having jurisdiction over this Agreement, the Parties or either of them. All laws, ordinances, rules, regulations, orders and other requirements, now or hereafter in effect, of governmental regulatory authorities and courts that are required to be incorporated into agreements of this character are by this reference incorporated in this Agreement. (j) No Partnership. This Agreement shall not be interpreted or construed to create an association, joint venture or partnership between the Parties or to impose any partnership obligations or liability upon either Party. Further, neither Party shall have any right, power or authority to enter into any agreement or undertaking for or on behalf of, to act as or be an agent or representative of, or to otherwise bind the other Party. (k) Severabilitv. In the event that any provision of this Agreement or the application of any such provision shall be held invalid as to either Party or any circumstance by any court having jurisdiction, such provision shall remain in force and effect to the maximum extent provided by law, and all other provisions of this Agreement and their application shall not be affected thereby but shall remain in force and effect unless a court or arbitrator holds they are not severable from the invalid provisions. Construction Agreement, Attachment UB" to Schedule 74, Page 10 [insert project name here] (I) Notice. Any notice under this Agreement shall be in writing and shall be faxed (with a copy followed by mail or hand delivery), delivered in person, or mailed, properly addressed and stamped with the required postage, to the intended recipient as follows: If to the Gove~nment Entity: Attn: Fax: If to the ComDany: Puget Sound Energy, Inc. Attn: Fax: Any Party may change its address specified in this Section 13(1) by giving the other Party notice of such change in accordance with this Section 13(1). (m) ADDlicable Law. This Agreement shall in all respects be interpreted, construed and enforced in accordance with the laws of the State of Washington (without reference to rules governing conflict of laws), except to the extent such laws may be preempted by the laws of the United States of America. (n) Entire AQreement. This Agreement constitutes the entire agreement of the Parties with respect to the subject matter hereof and all other agreements and understandings of the Parties, whether written or oral, with respect to the subject matter of this Agreement are hereby superseded in their entireties; provided, however, that except as expressly set forth in this Agreement, nothing herein is intended to or shall alter, amend or supersede the Design Agreement and the same shall remain in full force and effect in accordance with its terms. (0) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the respective successors, assigns, purchasers, and transferees of the Parties, including but not limited to, any entity to which the rights or obligations of a Party are assigned, delegated, or transferred in any corporate reorganization, change of organization, or purchase or transfer of assets by or to another corporation, partnership, association, or other business organization or division thereof. Government Entity: Company: PUGET SOUND ENERGY, INC. BY BY ITS ITS Date Signed Date Signed Approved as to form: Construction Agreement, Attachment MB" to Schedule 74, Page 11 [insert project name here} .,