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10-26-2016 Board Meeting Agenda Packet
Orange County Sanitation District Wednesday, October 26, 2016 Regular Meeting of the 6:00 P.M. BOARD OF DIRECTORS Board Room 0 10844 Ellis Avenue Fountain Valley, CA 92708 (714) 593-7433 AGENDA CALL TO ORDER INVOCATION AND PLEDGE OF ALLEGIANCE (James Ferryman, Costa Mesa Sanitary District) ROLL CALL AND DECLARATION OF QUORUM (Clerk of the Board) PUBLIC COMMENTS: If you wish to address the Board of Directors on any item, please complete a Speaker's Form (located at the table outside of the Board Room) and submit it to the Clerk of the Board or notify the Clerk of the Board the item number on which you wish to speak. Speakers will be recognized by the Chairman and are requested to limit comments to three minutes. SPECIAL PRESENTATIONS: "Resource of the Future"—Video presentation REPORTS: The Board Chair and the General Manager may present verbal reports on miscellaneous matters of general interest to the Directors. These reports are for information only and require no action by the Directors. CONSENT CALENDAR: Consent Calendar Items are considered to be routine and will be enacted, by the Board of Directors, after one motion, without discussion. Any items withdrawn from the Consent Calendar for separate discussion will be considered in the regular order of business. 1. APPROVAL OF MINUTES (Clerk of the Board) RECOMMENDATION: Approve the minutes of the regular Board of Directors Meeting held on September 28, 2016. 1 012 612 01 6 OCSD Board of Directors Agenda Page 1 of 11 2. REHABILITATION OF WESTERN REGIONAL SEWERS, PROJECT NO. 3-64 (Rob Thompson) RECOMMENDATION: Approve a License Agreement between Forest Lawn Memorial-Park Association and the Orange County Sanitation District for access to conduct field investigative work on the Orange County Sanitation District's Los Alamitos subtrunk sewer line. 3. PREVENTATIVE MAINTENANCE OF PLANT NO. 1 AERATION BLOWER NOS. 2, 4, AND 5 (Ed Torres) RECOMMENDATION: A. Approve a sole source service agreement to Siemens Demag Delaval Turbomachinery, Inc. to perform a Class I mechanical service and variable diffuser arm bushing retrofit and installation on aeration blower Nos. 2, 4, and 5, in the amount of$326,185; and B. Approve a contingency of$65,237 (20%). 4. URGENT REPAIR OF TWO HIDROSTAL PUMPS AND FOR THE PURCHASE OF A HIDROSTAL PUMP FOR STEVE ANDERSON LIFT STATION (Ed Torres) RECOMMENDATION: A. Approve a sole source purchase order agreement to Demaria Electric Motor Services Inc. for the repair of two Hidrostal pumps servicing the Steve Anderson Lift Station in an amount not to exceed of $187,680.16 plus tax and freight; B. Approve a contingency of $18,768.02 (10%) for Demaria Electric Motor Services purchase order agreement; C. Approve a sole source purchase order agreement to Flow Systems Inc. for the purchase of a Hidrostal Totally Enclosed Fan Cooled (TEFC) Motor Close Coupled Pump for the Steve Anderson Lift Station in an amount not to exceed of$184,110 plus tax and freight; and D. Approve a contingency of $18,411 (10%) for Flo-Systems Inc. purchase order agreement. 1 012 612 01 6 OCSD Board of Directors Agenda Page 2 of 11 5. OCEAN OUTFALL LEASE AGREEMENT RENEWAL (Rob Thompson) RECOMMENDATION: Adopt Resolution No. OCSD 16-17, entitled: "A Resolution of the Board of Directors of the Orange County Sanitation District directing the General Manager to negotiate an agreement with the California State Lands Commission for a new lease to ensure continued use and maintenance of the ocean outfall line." RECEIVE AND FILE: These items require no action;and without objection, will be so ordered by the Board Chair. 6. REPORT OF THE INVESTMENT TRANSACTIONS FOR THE MONTH OF SEPTEMBER 2016 (Lorenzo Tyner) RECOMMENDATION: Receive and file the report of the Investment Transactions for the month of September 2016. 7. COMMITTEE MINUTES (Clerk of the Board) RECOMMENDATION: Receive and file the approved minutes of the following standing committees: A. Operations Committee meeting of September 7, 2016 B. Legislative and Public Affairs Committee meeting of September 13, 2016 C. Administration Committee meeting of September 14, 2016 D. Steering Committee meeting of September 28, 2016 OPERATIONS COMMITTEE: 8. PLANT NO. 1 FLEET SERVICES UST LEAK REMEDIATION, PROJECT NO. FE14-05 (Rob Thompson) RECOMMENDATION: Increase the task order limit for Contract FE15-00-01 with Dudek from $86,116 to $160,000 for Task Order FE15-00-01-01 to authorize the General Manager to negotiate and award additional engineering services related to Plant No. 1 Fleet Services UST Leak Remediation, Project No. FE14-05. 9. UPDATE TO 2015 AUDIT REPORT OF OCSD'S SANITARY SEWER SYSTEM MANAGEMENT PLAN (Ed Torres) RECOMMENDATION: Receive and file the Closeout Memorandum for the 2015 Orange County Sanitation District's Sewer System Management Plan audit, dated June 30, 2016. 1 012 612 01 6 OCSD Board of Directors Agenda Page 3 of 11 10. INDUSTRIAL CLEANING SERVICES, SPECIFICATION NO. S-2015-714BD (Ed Torres) RECOMMENDATION: A. Approve a contingency increase of$110,565 (21%) to the service contract with Performance Pipeline Technologies for Industrial Cleaning Services, Specification No. S-2015-7146D,forthe period December 11, 2015 through December 10, 2016, for a new total contingency amount not to exceed $215,865 (41%). B. Approve a contingency of $105,300 (20%) per year for all remaining renewal periods. 11. SLUDGE DIGESTER REHABILITATION AT PLANT NO. 1, PROJECT NO. P1-100 (Rob Thompson) RECOMMENDATION: A. Approve a budget increase of$500,000 for Sludge Digester Rehabilitation at Plant No.1, Project No. P1-100,for a total budget amount of$67,150,000; and B. Approve a contingency increase of $837,500 (2.5%) to the construction contract with JR Filanc Construction Company for Sludge Digester Rehabilitation at Plant No. 1, Project No. P1-100, for a total contingency of $9,212,500 (27.5%). ADMINISTRATION COMMITTEE: 12. TEMPORARY EMPLOYMENT SERVICES (Celia Chandler) RECOMMENDATION: Recommend to the Board of Directors to: A. Authorize the General Manager to enter into contracts with various staffing firms for Temporary Employment Services (Specification No.CS-2009- 421 BD); and B. Authorize the General Manager to add or remove staffing firms from the available pool as needed, to meet work requirements identified by the Human Resources Department, with no change to the approved total budget, at a cost not to exceed $814,400. 1 012 612 01 6 OCSD Board of Directors Agenda Page 4 of 11 13. DEFERRED COMPENSATION PROGRAM UPDATE (Celia Chandler) RECOMMENDATION: Recommend to the Board of Directors to: A. Adopt Resolution No. OCSD 16-18, entitled: "A Resolution of the Board of Directors of the Orange County Sanitation District Acknowledging the Change in Title of the Current Deferred Compensation Plan Administrator to Voya Financial Services and Authorizing Voya Financial Services to Continue Serving as Plan Administrator of the Deferred Compensation Plan for Officers and Employees of the Orange County Sanitation District; and, Repealing Resolution No. OCSD 09-02"; and B. Authorize the General Manager, or his designee, to execute all documents necessary to effect said Deferred Compensation Plan, in a form approved by General Counsel. 14. CONTRACTED INTERNAL AUDIT OF CAPITAL IMPROVEMENT PROJECT CONTRACTS (Lorenzo Tyner) RECOMMENDATION: Receive and file the Accountants' Report on Agreed-Upon Procedures Review on Capital Improvement Project Contracts. 15. INVEST AND/OR REINVEST DISTRICT'S FUNDS (Lorenzo Tyner) RECOMMENDATION: Adopt Resolution No. OCSD 16-19, entitled: "A Resolution of the Board of Directors of the Orange County Sanitation District, Authorizing the District's Treasurer to Invest and/or Reinvest District's Funds; Adopting District's Investment Policy Statement and Performance Benchmarks; and Repealing Resolution No. OCSD 15-25." 16. ELIMINATION OF UNFUNDED ACTUARIAL ACCRUED LIABILITY WITHIN THE ORANGE COUNTY EMPLOYEES' RETIREMENT SYSTEM (Lorenzo Tyner) RECOMMENDATION: Direct staff to pay off the Orange County Sanitation District's unfunded actuarial accrued pension liability(UAAL) in its defined pension plan administered by the Orange County Employees Retirement System (OCERS) in an amount not to exceed $40 million. STEERING COMMITTEE: 17. STRATEGIC PLAN UPDATE (Robert Ghirelli) RECOMMENDATION: Receive and file the Strategic Plan Update. 1 012 612 01 6 OCSD Board of Directors Agenda Page 5 of 11 NON-CONSENT CALENDAR: 18. NEWHOPE-PLACENTIA TRUNK REPLACEMENT, PROJECT NO. 2-72 (Rob Thompson) RECOMMENDATION: A. Adopt Resolution No. OCSD 16-20 entitled, "A Resolution of the Board of Directors of the Orange Sanitation District Accepting the Proposition 84 Integrated Regional Water Management Program 2015 Implementation Grant Funding Contract for Newhope-Placentia Trunk Sewer Replacement Project 2-72"; and B. Approve the Contract between the Orange County Sanitation District and the Santa Ana Watershed Project Authority (SAWPA) to allow the Newhope-Placentia Trunk Replacement, Project No. 2-72, to receive Proposition 84 related grant funds up to $1,000,000. 19. CONTRACT SECURITY SERVICES — ARMED SERVICES (Celia Chandler) RECOMMENDATION: A. Authorize the General Manager to approve Amendment No.1 to increase the Service Agreement with Securitas Security Services U.S.A, Purchase Order 105853 OB, Specification No. S-2016-775BD for the period of November 1, 2016 through October 31, 2017, to include all remaining renewal options, for an additional amount of$802,215, increasing the total annual amount not to exceed $1,578,919; and B. Approve a contingency of$157,891 (10%) 20. SUCCESSOR MEMORANDUMS OF UNDERSTANDING FOR THE SUPERVISOR & PROFESSIONAL GROUPS (Celia Chandler) RECOMMENDATION: A. Adopt Resolution No. OCSD 16-21, entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District approving the Memoranda of Understanding between the Orange County Sanitation District and the Supervisory and Professional Management Group (SPMG), for Fiscal Years 2016/2017, 2017/2018 & 2018/2019"; and B. Direct staff to finalize and sign the Memorandum of Understanding (MOUs) between Orange County Sanitation District and the two (2) SPMG bargaining units. 1 012 612 01 6 OCSD Board of Directors Agenda Page 6 of 11 21. SUCCESSOR MEMORANDUMS OF UNDERSTANDING FOR THE ORANGE COUNTY EMPLOYEES ASSOCIATION (Celia Chandler) RECOMMENDATION: A. Adopt Resolution No. OCSD 16-22, entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District approving the Memoranda of Understanding between the Orange County Sanitation District and the Orange County Employees Association for Fiscal Years 2016/2017, 2017/2018 & 2018/2019"; and B. Direct staff to finalize and sign the Memoranda of Understanding (MOUs) between Orange County Sanitation District and the three (3) OCEA bargaining units. 22. SUCCESSOR MEMORANDUM OF UNDERSTANDING FOR THE INTERNATIONAL UNION OF OPERATING ENGINEERS — LOCAL 501 (Celia Chandler) RECOMMENDATION: A. Adopt Resolution No. OCSD 16-23, entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District approving the Memorandum of Understanding between the Orange County Sanitation District and the International Union of Operating Engineers, Local 501 for Fiscal Years 2016/2017, 2017/2018 & 2018/2019; and B. Direct staff to finalize and sign the Memorandum of Understanding (MOUs) between Orange County Sanitation District and the Local 501 bargaining unit. 23. PROPERTY ACQUISITION FOR 18475 PACIFIC AND 18480 BANDILIER CIRCLE, FOUNTAIN VALLEY, CA (Rob Thompson) A. Approve a Standard Offer, Agreement And Escrow Instructions For Purchase Of Real Estate (Purchase Agreement)with Bender Properties for the property at 18475 Pacific Street and 18484 Bandilier Circle for $10,619,180; and B. Approve AIR Commercial Real Estate Association Standard Industrial/Commercial Single-Tenant Lease -- Net (Lease Agreement) with Bender Properties for the property at 18475 Pacific Street and 18484 Bandilier Circle for$35,000 per month as stipulated in the Purchase Agreement. 1 012 612 01 6 OCSD Board of Directors Agenda Page 7 of 11 INFORMATION ITEMS: None. AB 1234 REPORTS: CLOSED SESSION: During the course of conducting the business set forth on this agenda as a regular meeting of the Board, the Chair may convene the Board in closed session to consider matters of pending real estate negotiations,pending or potential litigation,orpersonnel matters,pursuant to Government Code Sections 54956.8, 54956.9, 54957 or 54957.6, as noted. Reports relating to (a) purchase and sale of real property; (b) matters of pending or potential litigation; (c)employment actions or negotiations with employee representatives;or which are exempt from public disclosure under the California Public Records Act, may be reviewed by the Board during a permitted closed session and are not available for public inspection. At such time as the Board takes final action on any of these subjects, the minutes will reflect all required disclosures of information. CONVENE IN CLOSED SESSION. (1) CONFERENCE WITH REAL PROPERTY NEGOTIATORS (Government Code Section 54956.8) Property: 10950 Virginia Cir. Fountain Valley, CA-APN No.156-165-05; 10870 Spencer Ave. Fountain Valley, CA -APN No.156-163-07; 18475 Pacific St. Fountain Valley, CA—APN No. 156-163-08 18480 Pacific St. Fountain Valley, CA -APN No.156-165-04; 18430 Pacific St. Fountain Valley, CA -APN No.156-165-06; 18370 Pacific St. Fountain Valley, CA -APN No.156-165-08; 18429 Pacific St. Fountain Valley, CA -APN No.156-163-09; 18484 Bandilier Cir. Fountain Valley, CA—APN No. 156-163-06 18410 Bandilier Cir. Fountain Valley, CA -APN No.156-163-10; 18368 Bandilier Cir. Fountain Valley, CA -APN No.156-163-11; 10700 Spencer St. Fountain Valley, CA-APN No.156-163-16; 10700 Spencer Ave. Fountain Valley, CA -APN No.156-154-07; 18350 Mt. Langley St. Fountain Valley, CA-APN No.156-154-08; 18386 Mt. Langley St. Fountain Valley, CA-APN No.156-154-06; 18385 Bandilier Cir. Fountain Valley, CA -APN No.156-163-12; 18401 Bandilier Cir. Fountain Valley, CA -APN No.156-163-13; 18424 Mt. Langley St. Fountain Valley, CA-APN No.156-154-05; 18435 Bandilier Cir. Fountain Valley, CA -APN No.156-163-14; 18475 Bandilier Cir. Fountain Valley, CA -APN No.156-163-15; 10725 Ellis Ave. Fountain Valley, CA -APN No.156-154-04; and 10540 Talbert Ave. Fountain Valley, CA -APN No.156-151-03 1 012 612 01 6 OCSD Board of Directors Agenda Page 8 of 11 Agency negotiators: General Manager, Jim Herberg; Director of Engineering, Rob Thompson; Engineering Managers, Kathy Millea and Jeff Mohr; CIP Project Manager, Wendy Sevenandt; Kevin Turner and John Gallivan, Cushman and Wakefield. Negotiating parties: Valley, Business Park, APN Nos. 156-165-05, 156-165-06, 156-163-07; DK-USA LLC, APN No.156-165-04; Fountain Valley Industrial Parcel 13, APN No.156-165-08; Bender Properties, APN Nos. 156-163-06, 156-163-08 Sukut Real Properties LLC, APN Nos. 156-163-09, 156-163-10, 156-163-11; The Ins Trust Shabtai, Nevon, APN No. 156-163-16; The Ins Trust, APN No. 156-154-07; K & A Investments LP, APN No. 156-154-08; Fountain Valley Star LLC, APN No. 156-154-06; TN Sheet Metal Inc., APN No. 156-163-12; 18401 Bandilier LLC, APN No. 156-163-13; Phone Lilly Lin-Lin TR, APN No. 156-154-05; JDK Partners, APN No. 156-163-14; Chandler Real Properties, APN No. 156-163-15; Ellis Avenue LLC, APN No. 156-154-04; and SFII Fountain Valley LLC, APN No. 156-151-03 Under negotiation: Instruction to negotiator will concern price and terms of payment. (2) CONFERENCE WITH LABOR NEGOTIATORS (Government Code Section 54957.6) Agency Designated Representatives: James Herberg, Robert Ghirelli Unrepresented Employees: Confidential Group: Clerk of the Board; Deputy Clerk of the Board; Human Resources Analyst; Human Resources Assistant; Human Resources Supervisor; Principal HR Analyst; Secretary to the General Manager, and Senior Human Resources Analyst. (3) CONFERENCE WITH LABOR NEGOTIATORS (Government Code Section 54957.6) Agency Designated Representatives: James Herberg, Robert Ghirelli Unrepresented Employees: Managers Group: Contracts and Purchasing Manager; Controller; Engineering Manager; Environmental Compliance and Regulatory Affairs Manager; Environmental Lab & Ocean Monitoring Manager; Human Resources & Risk Manager; Information Technology Manager; IT Systems & Operations Manager; Maintenance Manager, and Operations Manager. 1 012 612 01 6 OCSD Board of Directors Agenda Page 9 of 11 (4) CONFERENCE WITH LABOR NEGOTIATORS (Government Code Section 54957.6) Agency Designated Representative: James Herberg Unrepresented Employees: Executive Managers Group: Assistant General Manager; Director of Engineering; Director of Environmental Services; Director of Finance and Administrative Services; Director of Human Resources; and Director of Operations and Maintenance. (5) CONFERENCE WITH LABOR NEGOTIATORS (Government Code Section 54957.6) Agency Designated Representative: John Nielsen Unrepresented Employee: General Manager (6) CONFERENCE WITH LEGAL COUNSEL RE. ANTICIPATED LITIGATION Government Code Section 54956.9(d)(4) Initiation of litigation (1 potential case as plaintiff) (7) CONFERENCE WITH LEGAL COUNSEL RE. ANTICIPATED LITIGATION Government Code Section 54956.9(d)(4) Initiation of litigation (1 potential case as plaintiff) RECONVENE IN REGULAR SESSION. CONSIDERATION OF ACTION, IF ANY, ON MATTERS CONSIDERED IN CLOSED SESSION: OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: ADJOURNMENT: Adjourn the Board meeting until the Regular Board of Directors Meeting on November 16, 2016 at 6:00 p.m. 1 012 612 01 6 OCSD Beard of Direetors Agenda Page 10 of 11 Accommodations for the Disabled: Meeting Rooms are wheelchair accessible. If you require any special disability related accommodations, please contact the Orange County Sanitation District Clerk of the Board's office at (714)593-7433 at least 72 hours prior to the scheduled meeting. Requests must specify the nature of the disability and the type of accommodation requested. Aaenda Postina: In accordance with the requirements of California Government Code Section 54954.2,this agenda has been posted outside the main gate of the Sanitation District's Administration Building located at 10844 Ellis Avenue, Fountain Valley, California, and on the Sanitation District's website at www.ocsd.com, not less than 72 hours prior to the meeting date and time above. All public records relating to each agenda item, including any public records distributed less than 72 hours prior to the meeting to all,or a majority of the Board of Directors, are available for public inspection in the office of the Clerk of the Board. Aaenda Description: The agenda provides a brief general description of each item of business to be considered or discussed. The recommended action does not indicate what action will be taken. The Board of Directors may take any action which is deemed appropriate. NOTICE TO DIRECTORS: To place items on the agenda for a Committee or Board Meeting, items must be submitted to the Clerk of the Board 14 days before the meeting. Kelly A.Lore Clerk of the Board (714)593-7433 klore(docsd.com For any questions on the agenda, Committee members may contact staff at: General Manager Jim Herberg (714)593-7300 iherbem a)ocsd.com Assistant General Manager Bob Ghirelli (714)593-7400 rghirelli(docsd.com Director of Engineering Rob Thompson (714)593-7310 rthomuson(docsd.com Director of Environmental Services Jim Colston (714)593-7450 icolston(a)ocsd.com Director of Finance and Lorenzo Tyner (714)593-7550 ItynertcDocsd.com Administrative Services Director of Human Resources Celia Chandler (714)593-7202 cchandler(docsd.com Director of Operations&Maintenance Ed Torres 714 593-7080 etorres ocsd.com 1 012 612 01 6 OCSD Board of Directors Agenda Page 11 of 11 ITEM NO. 1 Orange County Sanitation District MINUTES BOARD MEETING September 28, 2016 �OJNjy SANII'gTjQy Q ? ¢ c, o � FCl/N H E Administration Building 10844 Ellis Avenue Fountain Valley, California 92708-7018 0 912 81201 6 Minutes of Board Meeting Page 1 of 17 ROLL CALL A regular meeting of the Board of Directors of the Orange County Sanitation District was called to order by Chair John Nielsen on September 28, 2016, at 6:04 p.m., in the Administration Building. Director Greg Mills delivered the invocation and led the Pledge of Allegiance. The Clerk of the Board declared a quorum present as follows: ACTIVE DIRECTORS ALTERNATE DIRECTORS X John Nielsen, Chair Allan Bernstein X Gregory Sebourn, Vice Chair Doug Chaffee X Tom Beamish Tim Shaw X Steven Choi Lynn Schott X Keith Curry Scott Peotter X Ellery Deaton Sandra Massa-Lavitt X Joy Neugebauer Al Krippner X James M. Ferryman Bob Ooten X Steven Jones Kris Beard Jim Katapodis X Erik Peterson X Robert Kiley Michael Beverage X Peter Kim Michele Steggell X Lucille Kring Jordan Brandman X Greg Mills Diana Fascenelli X Richard Murphy Shelley Hasselbrink Steve Nagel X Cheryl Brothers X Glenn Parker Cecilia Hupp X David Shawver Carol Warren X Fred Smith Virginia Vaughn X Teresa Smith Mark Murphy X Michelle Steel Shawn Nelson X Sal Tinajero David Benavides X Chad Wanke Constance Underhill X John Withers Douglas Reinhart X Mariellen Yarc Stacy Berry STAFF MEMBERS PRESENT: Jim Herberg, General Manager; Bob Ghirelli, Assistant General Manager; Mike Dorman, Engineering Manager; Jim Colston, Director of Environmental Services; Lorenzo Tyner, Director of Finance & Administrative Services; Celia Chandler, Director of Human Resources; Ed Torres, Director of Operations and Maintenance; Tina Knapp, Deputy Clerk of the Board; Cindi Ambrose; Marc Brown; Jennifer Cabral; Rob Cortez; Al Garcia; Tyler Hoang; Randy Kleinman; Laurie Klinger; Rebecca Long; Mark Manzo; Kathy Millea; Jeff Mohr; Andrew Nau; Lori Shimomura; Mickey Whitney. 09/28/2016 Minutes of Board Meeting Page 2 of 17 OTHERS PRESENT: Brad Hogin (General Counsel); Laura Kalty, Liebert Cassidy Whitmore; Eric O' Donnell, Townsend Public Affairs; Bob Ooten (Alternate Director CMSD); Eric Sapirstein, ENS Resources; Tama Snow, Hazen and Sawyer; Cori Williams, Townsend Public Affairs. PUBLIC COMMENTS: None. SPECIAL PRESENTATIONS: Chair Nielsen called upon Director of Operations & Maintenance Ed Torres who provided Employee Service Awards to Ron Cortez, Lead Plant Operator— Division 840 (25 years) and Tyler Hoang, Lead Plant Operator— Division 830 (25 years). Chair Nielsen called upon General Manager Jim Herberg who provided an Employee Service Award to Ed Torres, Director of Operations & Maintenance — Division 810 (25 years). Chair Nielsen called upon Assistant General Manager Bob Ghirelli who introduced the State and Federal lobbyists who work on the Sanitation District's legislative activities: Cori Williams, State lobbyist from Townsend Public Affairs, and Eric Sapirstein, Federal lobbyist from ENS. Mr. Ghirelli indicated that bios of these two individuals were provided to the Board. Ms. Williams and Mr. Sapirstein provided updates on recent and future legislative activities including recent bills that have been signed into law, Orange County Sanitation district's legislative plan, accomplishments, and a legislative outlook for 2017. Ms. Williams provided a PowerPoint presentation that highlighted key legislation in 2016, funding priorities, and future issues. Mr. Sapirstein highlighted appropriations, drought relief, Water Resources Development Act, 2016 accomplishments, and priorities in 2017. Director Wanke arrived at 6:40 p.m. REPORTS: Chair Nielsen reported that the Orange County Water District approved the final expansion of the Groundwater Replenishment System (GWRS) at their meeting on September 21$1. Chair Nielsen provided an update from the Legislative and Public Affairs Committee meeting, indicating that the Committee reviewed year-end Public Affairs activities, which reached over 80,000 people through media relations, education, and construction outreach; grants received; and key areas of focus for the new fiscal year. Chair Nielsen indicated that the State of the District is taking place on October 141h at 8:00 a.m. and invitations were provided to the Board. Vice-Chair Sebourn provided a report on the VIP Luncheon, which was held on September 27" and recognized employees that go above and beyond their job duties by volunteering for a wide-variety of events and activities, which helped OCSD reach out to over 8,000 constituents. The luncheon recognized approximately 100 employees. 09/28/2016 Minutes of Board Meeting Page 3 of 17 Mr. Herberg reported that the correct date for the Laboratory Open House is October 26th from 4:30-6:00 p.m. Mr. Herberg indicated that the GWRS surpassed a major milestone in 200 billion gallons in production. Director of Finance & Administrative Services Lorenzo Tyner provided a report on OCSD's Unfunded Actuarial Accrued Liability (UAAL), indicating that the final payment is upcoming and the Administration Committee will review this in more detail in October. Mr. Herberg announced that OCSD was selected among 61 other private and public utilities from across the United States, Canada, and Europe to be recognized and honored as a Utility of the Future Today. Director of Engineering Rob Thompson accepted the award on behalf of OCSD at the Water Environment Federation conference this week. Mr. Herberg concluded his report indicating that OCSD will be hosting a consultant open house on September 301h to learn more about the process for capital improvement projects and studies. CONSENT CALENDAR: 1. APPROVAL OF MINUTES (Clerk of the Board) MOVED, SECONDED, AND DULY CARRIED TO: Approve the minutes of the regular Board of Directors Meeting held on August 24, 2016. AYES: Beamish; Choi; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Neugebauer; Nielsen; Parker; Peterson (Alternate); Seboum; Shawver; F. Smith; T. Smith; Steel; Tinajero; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: Brothers (Alternate) and Curry ABSENT: None RECEIVE AND FILE: These items require no action; and without objection, will be so ordered by the Board Chair. 2. REPORT OF THE INVESTMENT TRANSACTIONS FOR THE MONTH OF AUGUST 2016 (Lorenzo Tyner) Received and filed the report of the Investment Transactions for the month of August 2016. 3. COMMITTEE MINUTES (Clerk of the Board) Received and filed the approved minutes of the following standing committees: A. Operations Committee Meeting of July 6, 2016 B. Legislative and Public Affairs Committee Meeting of July 11, 2016 09/28/2016 Minutes of Board Meeting Page 4 of 17 C. Administration Committee Meeting of July 13, 2016 D. Steering Committee meeting of July 27, 2016 OPERATIONS COMMITTEE: 4. SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL, PROJECT NO. 2.41-8 (Rob Thompson) MOVED, SECONDED, AND DULY CARRIED TO: A. Approve a budget increase of$303,000, increasing the project budget from $3,743,000 to $4,046,000; B. Approve a Professional Design Services Agreement with Michael Baker International, Inc. to provide engineering design services for the Santa Ana River Interceptor Rock Stabilizers Removal, Project No. 2-41-8, for an amount not to exceed $399,008; and C. Approve a contingency of$39,900 (10%). AYES: Beamish; Brothers (Alternate); Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Steel; Tinajero; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: None 5. DISTRICT 6 TRUNK SEWER RELIEF, PROJECT NO. 6-17 (Rob Thompson) MOVED, SECONDED, AND DULY CARRIED TO: A. Approve a Professional Construction Services Agreement with RMC Water and Environment (RMC), to provide construction support services for District 6 Trunk Sewer Relief, Project No. 6-17, for a total amount not to exceed $290,000; and B. Approve a contingency of$43,500 (15%). AYES: Beamish; Brothers (Alternate); Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Steel; Tinajero; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: None 09/28/2016 Minutes of Board Meeting Page 5 of 17 6. PLANT NO. 2 TRICKLING FILTER CHEMICAL ODOR CONTROL, PROJECT NO. FE13-04 (Rob Thompson) MOVED, SECONDED, AND DULY CARRIED TO: Increase the task order limit for Contract FE12-00-08 with GHD from $100,000 to $150,000 for Task Order FE12-00-08-03 to authorize the General Manager to negotiate and award additional engineering services related to Plant No. 2 Trickling Filter Chemical Odor Control, Project No. FE13-04. AYES: Beamish; Brothers (Alternate); Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver, F. Smith; T. Smith; Steel; Tinajero; Wanks; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: None 7. GAS COMPRESSOR BUILDING PIPING REPLACEMENT AT PLANT 2, PROJECT NO. FE15-06 (Rob Thompson) MOVED, SECONDED, AND DULY CARRIED TO: Increase the task order limit for Contract FE12-00-01 with Lee and Ro, Inc. from $100,000 to $160,000 for Task Order FE12-00-01-04 to authorize the General Manager to negotiate and award additional engineering services related to the Gas Compressor Building Piping Replacement at Plant 2, Project No. FE15-06. AYES: Beamish; Brothers (Alternate); Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Steel; Tinajero; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: None 8. SLUDGE DEWATERING AND ODOR CONTROL AT PLANT 2, PROJECT NO. P2-92 (Rob Thompson) MOVED, SECONDED, AND DULY CARRIED TO: A. Authorize out-of-country travel for three Orange County Sanitation District (Sanitation District) employees to observe testing in Germany of dewatered sludge piston pumps to be supplied under the Sludge Dewatering and Odor Control at Plant 2, Project No. P2-92, subject to the Sanitation District's travel policy; and 09/28/2016 Minutes of Board Meeting Page 6 of 17 B. Authorize out-of-country travel for three Orange County Sanitation District (Sanitation District) employees to observe testing in Sweden of dewatering centrifuges to be supplied under the Sludge Dewatering and Odor Control at Plant 2, Project No. P2-92, subject to the Sanitation District's travel policy. AYES: Beamish; Brothers (Alternate); Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver, F. Smith; T. Smith; Steel; Tinajero; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: None 9. AQUACRITOX® EVALUATION/DESIGN, PROJECT NO. SP-125.17 (Rob Thompson) MOVED, SECONDED, AND DULY CARRIED TO: A. Receive and file the AquaCritox® Demonstration Project Evaluation Study; and B. Authorize out-of-country travel for two Orange County Sanitation District (Sanitation District) employees to conduct a site visit to observe the operations and performance of the European Union-funded AquaCritox® project in Valencia, Spain, in connection with the AquaCritox® Evaluation/Design, Project No. SP-125-17, and all travel, lodging, and per diem costs in accordance with the Sanitation District's travel policy. AYES: Beamish; Brothers (Alternate); Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Steel; Tinajero; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: None 10. PRESSURIZATION AND ODOR CONTROL STUDY AT NEWPORT BEACH, PROJECT NO. PS15-07 (Rob Thompson) MOVED, SECONDED, AND DULY CARRIED TO: A. Approve a Professional Services Agreement with Dudek to provide professional services for Pressurization and Odor Control Study at Newport Beach, Project No. PS15-07, for an amount not to exceed $256,478; and, B. Approve a contingency of$25,648 (10%). 09/28/2016 Minutes of Board Meeting Page 7 of 17 AYES: Beamish; Brothers (Alternate); Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Steel; Tinajero; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: None 11. ON-CALL CONTRACTOR SUPPORT SERVICES SPECIFICATION NO. 5-2016-772BD (Ed Torres) MOVED, SECONDED, AND DULY CARRIED TO: A. Approve a Service Contract with Jamison Engineering for On-Call Contractor Support Services, Specification No. 5-2016-77213D, for the period November 1, 2016 through October 31, 2017 for a total annual amount not to exceed $700,615, with four one-year renewal options; and B. Approve an annual contingency of$70,061 (10%). AYES: Beamish; Brothers (Alternate); Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Steel; Tinajero; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: None 12. NEWHOPE-PLACENTIA TRUNK REPLACEMENT, PROJECT NO. 2-72 (Rob Thompson) MOVED, SECONDED, AND DULY CARRIED TO: A. Approve a Cooperative Agreement between the Orange County Sanitation District and the City of Fullerton for pavement rehabilitation work on Yorba Linda Boulevard and State College Boulevard along a portion of the Newhope-Placentia Trunk Sewer Replacement, Segment A, Contract No. 2-72A, for an estimated amount of $600,000 to be reimbursed by the City of Fullerton; B. Approve a budget increase of $600,000 for the Newhope-Placentia Trunk Replacement, Project No. 2-72, for a total budget amount of$100,075,000; and C. Approve a contingency increase of $600,224 (2.84%) to the construction contract with Trautwein Construction Inc. for Newhope-Placentia Trunk Replacement, Segment A, Contract No. 2-72A, for a total contingency of $2,713,689 (12.84%). 09/28/2016 Minutes of Board Meeting Page 8 of 17 AYES: Beamish; Brothers (Alternate); Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Steel; Tinajero; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: None 13. HEADWORKS MODIFICATIONS AT PLANT 2 FOR GWRS FINAL EXPANSION, PROJECT NO. 122-122 (Rob Thompson) MOVED, SECONDED, AND DULY CARRIED TO: Establish a project for Headworks Modifications at Plant 2 for GWRS Final Expansion, Project No. P2- 122, with a budget of$50,000,000. AYES: Beamish; Brothers (Alternate); Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Steel; Tinajero; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: None ADMINISTRATION COMMITTEE: 14. GENERAL MANAGER APPROVED PURCHASES (Lorenzo Tyner) MOVED, SECONDED, AND DULY CARRIED TO: Receive and file District purchases made under the General Manager's authority for the period of April 1, 2016 —June 30, 2016. AYES: Beamish; Brothers (Alternate); Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Steel; Tinajero; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: None 09/28/2016 Minutes of Board Meeting Page 9 of 17 15. REIMBURSEMENTS TO BOARD MEMBERS AND STAFF (Lorenzo Tyner) MOVED, SECONDED, AND DULY CARRIED TO: Receive and file report of reimbursements to Board Members and Staff per Government Code Section 53065.5 for the period of July 1, 2015 through June 30, 2016. AYES: Beamish; Brothers (Alternate); Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver, F. Smith; T. Smith; Steel; Tinajero; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: None 16. PRODUCTION STORAGE ARRAY SYSTEM (Lorenzo Tyner) MOVED, SECONDED, AND DULY CARRIED TO: A. Authorize the purchase of a production storage system to accommodate future system performance and capacity needs with Nimble Storage Array system, using the approved U.S. General Services Agreement (GSA) IT Schedule 70 (M.O. 5/25/16, Item #13) for a total amount not to exceed $284,941.49, in accordance with OCSD Ordinance OCSD-47, Section 2.03(B) Cooperative Purchases; and B. Approve a contingency of $28,494 (10%). AYES: Beamish; Brothers (Alternate); Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Steel; Tinajero; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: None 17. CONTRACT SECURITY SERVICES (Celia Chandler) MOVED, SECONDED, AND DULY CARRIED TO: A. Approve a Service Contract to Securitas Security Services, U.S.A., Specification No. S-2016-775BD, for the period November 1, 2016 through October 31, 2017, for a total annual amount not to exceed $776,704, with up to four (4) one-year renewals; B. Approve an increase of $62,681 to Purchase Order 105775 OA, a bridge purchase contract issued to Securitas Security Services, U.S.A., for a total amount not to exceed $160,723, for the period October 1, 2016 through October 31, 2016; 09/28/2016 Minutes of Board Meeting Page 10 of 17 C. Approve a contingency of$77,670 (10%); D. Authorize a budget increase of $257,055 to Security Services, to be transferred from other Human Resources budgeted line items or the General Manager's contingency fund; and E. Direct staff to return next month to present for the Board's consideration the addition of armed guards at both plants. AYES: Beamish; Brothers (Alternate); Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Steel; Tinajero; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: None 18. 2017 BENEFITS INSURANCE RENEWAL (Celia Chandler) MOVED, SECONDED, AND DULY CARRIED TO: Approve the Orange County Sanitation District 2017 benefits insurance renewal for the not-to-exceed amounts specified below: A. Employee Benefit Specialists (medical, dental, and vision plans; Employee Assistance Program) — Not to Exceed $11,121,627; B. Prudential (basic life, short- and long-term disability) — Not to Exceed $685,560; and C. The Standard (EMT & Manager disability) — Not to Exceed $30,000. AYES: Beamish; Brothers (Alternate); Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver, F. Smith; T. Smith; Steel; Tinajero; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: None 19. GANN LIMIT RESOLUTION CORRECTION FOR FISCAL YEAR 2015-16 (Lorenzo Tyner) MOVED, SECONDED, AND DULY CARRIED TO: Adopt Resolution No. OCSD 16-15 entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District Establishing the Annual Appropriations Limit for Fiscal Year 2015-16, for the District in accordance with the Provisions of Division 9 of Title 1 of the California Government Code; and Repealing Resolution No. OCSD 15-14." 09/28/2016 Minutes of Board Meeting Page 11 of 17 AYES: Beamish; Brothers (Alternate); Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Steel; Tinajero; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: None 20. REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES, SERIES 2016B (Lorenzo Tyner) MOVED, SECONDED, AND DULY CARRIED TO: A. Adopt Resolution No. OCSD 16-16 entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District authorizing the execution and delivery by the District of an Installment Purchase Agreement, a Trust Agreement and a Continuing Disclosure Agreement in connection with the execution and delivery of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2016B, such Notes evidencing principal in an aggregate amountof not to exceed $120,000,000, approving a Notice of Intention to Sell, authorizing the distribution of an Official Notice Inviting Bids and an Official Statement in connection with the offering and sale of such Notes and authorizing the execution of other necessary documents and related actions'; B. That the Orange County Sanitation District Financing Corporation approve the documents supporting and authorizing the Notes in an aggregate amount not to exceed $120,000,000; and C. The proposed financing is structured as another two-year fixed rate maturity that will be sold in a competitive sale. AYES: Beamish; Brothers (Alternate); Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kring; Mills; R. Murphy; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver, F. Smith; T. Smith; Steel; Tinajero; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: Kim ABSENT: None Chair Nielsen recessed the Orange County Sanitation District Board of Directors Meeting at 7:12 p.m. ...................................... 09/28/2016 Minutes of Board Meeting Page 12 of 17 ORANGE COUNTY SANITATION DISTRICT FINANCING CORPORATION CALL TO ORDER: Chair Nielsen called the Board of Directors, Orange County Sanitation District Financing Corporation meeting to order at 7:12 p.m. The Deputy Secretary of the Financing Corporation declared a quorum present as follows: ACTIVE DIRECTORS ALTERNATE DIRECTORS X John Nielsen, Chair Allan Bernstein X Gregory Sebourn, Vice Chair Doug Chaffee X Tom Beamish Tim Shaw X Steven Choi Lynn Schott X Keith Curry Scott Peotter X Ellery Deaton Sandra Massa-Lavitt X Joy Neugebauer Al Krippner X James M. Ferryman Bob Ooten X Steven Jones Kris Beard Jim Katapodis X Erik Peterson X Robert Kiley Michael Beverage X Peter Kim Michele Steggell X Lucille Kring Jordan Brandman X Greg Mills Diana Fascenelli X Richard Murphy Shelley Hasselbrink Steve Nagel X Cheryl Brothers X Glenn Parker Cecilia Hupp X David Shawver Carol Warren X Fred Smith Virginia Vaughn X Teresa Smith Mark Murphy X Michelle Steel Shawn Nelson X Sal Tinajero David Benavides X Chad Wanke Constance Underhill X John Withers Douglas Reinhart X Mariellen Yarc Stacy Berry Tina Knapp, Deputy Secretary of the Financing Corporation, announced that the members of the Orange County Sanitation District Board of Directors are each being compensated $212.50 for the Board Meeting; there is no additional compensation for the Financing Corporation Meeting. 09/28/2016 Minutes of Board Meeting Page 13 of 17 APPROVAL OF MINUTES: FC-1. Hearing no corrections or amendments made, the minutes for the meeting held on February 24, 2016, were deemed approved as so ordered by the Chair. ACTION ITEM: Director of Finance &Administrative Services Lorenzo Tyner provided an overview of this item, indicating it was related to Item 20 on the agenda for the Board of Directors meeting, and answered a question regarding rates. FC-2. MOVED, SECONDED, AND DULY CARRIED TO: Adopt Resolution No. FC-25 entitled; "A Resolution of the Board of Directors of the Orange County Sanitation District Financing Corporation Authorizing the execution and delivery by the Corporation of an Installment Purchase Agreement and a Trust Agreement in connection with the execution and delivery of Orange County Sanitation District Wastewater Refunding Revenue Certificate Anticipation Notes, Series 2016B, Authorizing the execution and delivery of such notes evidencing principal in an aggregate amount of not to exceed $120,000,000 and Authorizing the execution of other necessary documents and related actions." AYES: Beamish; Brothers (Alternate); Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kring; Mills; R. Murphy; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Steel; Tinajero; Wanks; Withers; and Yarc NOES: None ABSTENTIONS: Kim ABSENT: None Chair Nielsen adjourned the meeting of the Board of Directors, Orange County Sanitation District Financing Corporation at 7:15 p.m. 09/28/2016 Minutes of Board Meeting Page 14 of 17 Chair Nielsen reconvened the meeting of the Board of Directors, Orange County Sanitation District at 7:15 p.m. STEERING COMMITTEE: 21. GENERAL MANAGER'S FY 2016-2017 WORK PLAN (Jim Herberg) MOVED, SECONDED, AND DULY CARRIED TO: Receive and File the General Manager's FY 2016-2017 Work Plan. AYES: Beamish; Brothers (Alternate); Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver, F. Smith; T. Smith; Steel; Tinajero; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: None NON-CONSENT CALENDAR: Mr. Herberg provided a brief background of this item and responded to questions from the Board indicating that the bid protest was in regards to the experience of the lowest bidder. 22. DISTRICT 6 TRUNK SEWER RELIEF, PROJECT NO. 6-17 (Rob Thompson) RECOMMENDATION: A. Receive and file an Addendum to the 2007 Collections Systems Improvement Plan Program Environmental Impact Report for additional project analysis for the District 6 Trunk Sewer Relief, Project No. 6-17; B. Receive and file bid tabulation and recommendation; C. Receive and file Award Protest from W.A. Rasic Construction dated August 23, 2016 concerning the award to Charles King Company, Inc.; D. Receive and file response letter from Charles King Company dated September 7, 2016 regarding the bid protest of W.A. Rasic Construction; E. Receive and file Orange County Sanitation District's determination letter dated September 9, 2016 to W.A. Rasic Construction responding to Award Protest; F. Deny Award Protest filed by W. A. Rasic Construction; G. Award a Construction Contract to Charles King Co., Inc. for District 6 Trunk Sewer Relief, Project No. 6-17,for a total amount not to exceed $3,699,301; and H. Approve a contingency of$369,930 (10%). 09/28/2016 Minutes of Board Meeting Page 15 of 17 AYES: Beamish; Brothers (Alternate); Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; Shawver; F. Smith; T. Smith; Steel; Tinajero; Wanke; Withers; and Yarc NOES: None ABSTENTIONS: None ABSENT: None AB 1234 REPORTS: Chair Nielsen reported on his attendance at the recent CASA Conference. Director Ferryman reported on the OCCOG meeting of September 22nd,during which an earthquake preparedness drill was discussed, as well as the hiring of a consultant to conduct a new Board Member orientation. Director Ferryman also reported on the recent meeting of SARFPA, during which the Washington DC advocate spoke and audit costs were discussed. Director Ferryman also reported on the recent Borders Committee meeting he attended, in addition to a meeting of the National Water Research Institute (NWRI) where discussion continued regarding the recruitment of a new Executive Director. Director Mills reported on his participation on OCSD's ocean vessel, the Nerissa, for the recent rig fishing cruise and encouraged all Board Members to participate on the next cruise offering. Vice-Chair Seboum reported briefly on his attendance at the OCWD Board meeting of September 2151 where the GWRS final expansion project was approved. INFORMATION ITEMS: None. CLOSED SESSION: CONVENED IN CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTIONS 54957.6, 54956.8 & 54956.9(d)(1): The Board convened in closed session at 7:26 p.m. to discuss three items. Confidential minutes of the Closed Session have been prepared in accordance with the above Government Code Sections and are maintained by the Clerk of the Board in the Official Book of Confidential Minutes of Board and Committee Closed Session Meetings. Director Steel left the meeting at 7:32 p.m. Director Kiley left the meeting at 7:49 p.m. Director Kring left the meeting at 8:22 p.m. Director Jones left the meeting at 8:45 p.m. 09/28/2016 Minutes of Board Meeting Page 16 of 17 RECONVENED IN REGULAR SESSION: The Board reconvened in regular session at 8:46 p.m. CONSIDERATION OF ACTION, IF ANY, ON MATTERS CONSIDERED IN CLOSED SESSION: General Counsel, Brad Hogin, reported in open session that the Board of Directors voted to approve the General Release and Settlement Agreement with Rosemary Caravetta in the amount of$58,000, in exchange for complete release from Ms. Caravetta. Mr. Hogin reported the vote as follows: AYES: Beamish; Brothers (Alternate); Choi; Curry; Deaton; Ferryman; Jones; Kiley; Kim; Kring; Mills; R. Murphy; Neugebauer; Nielsen; Parker; Peterson (Alternate); Sebourn; F. Smith; T. Smith; Tinajero; Wanke; Withers; and Yarc NOES: Shawver and Steel ABSTENTIONS: None ABSENT: None OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: Director Shawver announced that an ACCOC Infrastructure Tour of Stanton Central Park is being offered on September 301h. ADJOURNMENT: At 8:50 p.m. Chair Nielsen adjourned the meeting in memory of former Orange County Sanitation District Joint Chairman A.B. "Buck" Catlin until the Regular Board Meeting on October 26, 2016 at 6:00 p.m. Vice-Chair Sebourn provided a brief background of Mr. Catlin's dedicated public service and indicated that staff will send a Certificate of Remembrance, on behalf of the Board, to the Catlin family. Submitted by: Tina Knapp Deputy Clerk of the Board 09/28/2016 Minutes of Board Meeting Page 17 of 17 BOARD OF DIRECTORS Meeting Dare I Toel Dir. — 10/26/16 AGENDA REPORT em Number Item Numbe 2 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Director of Engineering SUBJECT: REHABILITATION OF WESTERN REGIONAL SEWERS, PROJECT NO. 3-64 GENERAL MANAGER'S RECOMMENDATION Approve a License Agreement between Forest Lawn Memorial-Park Association and the Orange County Sanitation District for access to conduct field investigative work on the Sanitation District's Los Alamitos subtrunk sewer line. BACKGROUND The Orange County Sanitation District (Sanitation District) owns and maintains regional conveyance facilities in the City of Cypress (City). The purpose of the Rehabilitation of Western Regional Sewers project is to refurbish these lines and, where required, increase their capacity. One of the sewer lines included in the project, the Los Alamitos subtrunk, crosses the full length of Forest Lawn Memorial-Park Association (Forest Lawn) in Cypress. When originally constructed, the sewer was in the public right-of- way, which the City later vacated and transferred to Forest Lawn. At that time, the Sanitation District was given a 15-foot wide easement. This pipeline requires replacement due to capacity deficiency. RELEVANT STANDARDS • Operate and maintain facilities to minimize impacts on surrounding communities, including odor, noise, and lighting • Less than 2.1 sanitary sewer spills per 100 miles PROBLEM To complete the design, the consultant must conduct field investigations, including surveys, soil borings, and inspections. Access to the sewer requires accommodation from Forest Lawn. Forest Lawn is requesting the Sanitation District enter into a license agreement for access to conduct field investigative work. PROPOSED SOLUTION Approve a License Agreement between Forest Lawn and the Sanitation District for access to conduct field investigative work on the Sanitation District's Los Alamitos subtrunk sewer line. Page 1 of 2 TIMING CONCERNS Investigative work is being delayed, which could impact completion of design and construction. RAMIFICATIONS OF NOT TAKING ACTION • Potential for wastewater spills in public streets with associated fines • Difficulty or inability to clean and maintain sewers PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION Due to the nature of the business, sanctity, reverence, and quietude of Forest Lawn, and the peace, comfort, and tranquility required for its visitors, Forest Lawn has included many restrictions and limitations within the license agreement. The Sanitation District's staff and consultants understand these concerns and will work with Forest Lawn to complete the project efficiently with as little disruption to Forest Lawn as possible. CEQA An environmental impact report is currently being prepared for this project and is scheduled to be completed and certified by March 2017. FINANCIAL CONSIDERATIONS This license agreement does not require any payments from the Sanitation District. ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (AW..ocsd.coml with the complete agenda package: • License Agreement for Access (Forest Lawn Memorial-Park Association) HK:dm:gc Page 2 of 2 LICENSE AGREEMENT FOR ACCESS (To conduct surveys and evaluation for initial design of sewer improvements) Forest Lawn Memorial-Park Association, a California mutual-benefit corporation, ("Forest Lawn") gives its revocable permission as of September 1, 2016, and deemed to be effective as of the Effective Date(as defined in Paragraph 5 below)to the Orange County Sanitation District,a special district established by the California State Legislature in the County of Orange, State of California("OCSD"),to use the real property depicted in Exhibit "A" attached hereto and made a part hereof(the "License Area")solely for the purposes set forth herein, and subject to the following terms and conditions. 1. Purpose. This license is solely for the non-exclusive vehicular and personnel ingress and egress of OCSD's employees and agents who have agreed, in writing satisfactory to Forest Lawn, acting in its good faith discretion,to be irrevocably bound by all of the provisions of this license agreement and who have named Forest Lawn as an additional insured on insurance policies which comply with all of the requirements of Paragraph 9 of this license agreement, only from the Lincoln Avenue main entrance to the property identified as "OCSD Consultants Path of Travel" as shown on Exhibit "A" hereto. Forest Lawn shall have the right to relocate the OCSD Consultants Path of Travel at any time, and from time to time, in its sole discretion. This license is granted on the specific understanding that it is to provide access to the cemetery and shall be limited to the non-destructive surveys and evaluation of the site which are described in Exhibit`B"attached hereto, only in the location shown as the License Area on Exhibit "A" attached hereto. OCSD shall use a truck-mounted drill rig equipped with hollow stem auger/mud rotary wash drilling equipment(CME 75 or similar)and a support truck(Ford F-150 or similar), a CCTV truck,ajetter/vactor truck, and a small survey truck(1.5 tons maximum weight), and light towers for night work. At no cost to Forest Lawn, OCSD shall provide Forest Lawn with copies of all reports, studies and other investigation results within five (5)days after OCSD's receipt of such items. Borings and related investigation shall be restricted to the locations shown on Exhibit"C"hereto or other locations approved by Forest Lawn,in advance and in writing. Evening and night time work by OCSD may be limited,but not obstructed,by Forest Lawn to accommodate Forest Lawn's irrigation of the memorial-park. OCSD may not undertake any work near interment sites or any area of the memorial-park in use by Forest Lawn. No more than twelve OCSD agents or employees may be present in the License Area at the same time. OCSD has represented that it will not exercise its access rights under this license, other than as specifically provided in this agreement and following prior notice to Forest Lawn as provided in Paragraph 4 below. OCSD has further represented that in no event shall OCSD access the License Area without the prior consent of Forest Lawn. Both parties agree this License agreement does not alter or amend any existing OCSD's easement rights to install and maintain a sewer line on the Forest Lawn facility located in Cypress, California. 2. Memorial-Park. It is understood by OCSD that the License Area and Forest Lawn's adjacent property is used as a memorial-park and support facilities. The reputation, sanctity, reverence and quietude of the memorial-park, and the peace, comfort and tranquility of other visitors to the memorial-park are of the utmost importance. OCSD agrees to exercise the permission herein given at all times in such manner as will not interfere with the full use and enjoyment of the License Area by Forest Lawn and its employees, agents, contractors, invitees and guests. OCSD agrees that it will conform to the accepted courtesies and respect accorded to visitors to the memorial-park who will be using the License Area and the adjacent Forest Lawn property and support facilities. Specifically, OCSD agrees it will ensure that its employees and agents shall: (1) comply with all applicable rules and regulations adopted by Forest Lawn for the operation and function of Forest Lawn Memorial-Park, including rules requiring cessation of work(including cessation of delivery or removal of materials)to avoid interference with nearby 1 funerals or processions; (2)ensure that if the vehicles of OCSD encounter a funeral procession or graveside service on Forest Lawn Memorial Park roads,the vehicles must take an alternate route to avoid the service or procession or pull over to the curb and stop until the procession has passed or the service has concluded; (3)maintain at all times a dignified,proper and courteous attitude toward members of the public, contact with whom shall be avoided to the extent practicable; (4)follow instructions given by Forest Lawn's authorized personnel(5)observe a non-offensive dress code which requires wearing shirts at all times and forbids wearing short pants; (6)utilize at Forest Lawn's request,an assigned gate or entrance to the site,which gate or entrance may be changed from time to time at Forest Lawn's sole discretion; (7)cooperate with union and nonunion personnel of other contractors, subcontractors or suppliers of Forest Lawn; (8)refrain from smoking anywhere within the License Area; and(9)refrain from harassing, insulting, intimidating, or bothering anyone within the License Area, including but not limited to Forest Lawn's employees. OCSD understands and agrees that OCSD's ingress to or egress from the License Area may be restricted or impaired from time to time or be rerouted in order to accommodate or avoid interference with memorial processions or services. OCSD shall be responsible to ensure that OCSD's agents, employees and contractors do not create noise or visual distractions at any time which could disturb visitors to the memorial-park. OCSD will strictly comply with all speed and other posted signs regarding the use of the License Area and the directions of traffic controllers. OCSD shall never operate its vehicles at more than 25 miles per hour on the License Area. Vehicle windows must be kept closed during transit through the memorial-park. 3. Condition of License Area. Forest Lawn makes no representation or warranty, express or implied,as to the suitability of the License Area for vehicular access or otherwise, and OCSD solely assumes all responsibility for damage or injury of whatever nature to person, property or business arising from the unsuitability of or inability to use the License Area for the purposes contemplated hereunder. OCSD solely assumes all responsibility for damage or injury of whatever nature to person,property or business arising from OCSD's access, surveys, evaluation or other activity in connection with the License Area or the OCSD's actions as contemplated hereunder. Forest Lawn makes no representation or warranty, express or implied, as to the ongoing condition of any items in the License Area, including but not limited to any equipment installed or maintained by OCSD in the License Area, and OCSD hereby releases Forest Lawn from any and all damage to any and all items installed by OCSD in the License Area at any time from any cause including but not limited to Forest Lawn's negligence. OCSD shall maintain the License Area in good condition and shall backfill all holes in accordance with Forest Lawn's requirements. OCSD shall create safe barriers around any hole and shall remove all trash,used materials, and debris from the License Area on a daily basis. OCSD shall repave, in a professional manner acceptable to Forest Lawn,acting in its good faith discretion, any pavement which is disturbed by OCSD or its agents. 4. Written Notice to Forest Lawn Prior to Access by OCSD. OCSD shall,at least two(2)business days prior to accessing the License Area,which access shall be restricted to the OCSD Consultants Path of Travel or undertaking any work in the License Area, send an email to each of the seven(7)Forest Lawn personnel listed below,at the email addresses listed below, requesting Forest Lawn's written consent to access the License Area. If OCSD plans to drill borings,or to engage in any other underground testing or activities, its request for consent shall include a detailed description of the proposed location of the borings or other underground activities, so that Forest Lawn can verify that there are no underground utilities in such locations: Angie Ray gray@forestlawn.com Refugio Gil rgil@forestlawn.com Erin Hogan ehogan@forestlawn.com 2 Helen Nelsen hnelsen@forestlawn.com Clint Granath cgranath@forestlawn.com Nick Scinocca nscinocca@forestlawn.com Patrick Taylor ptaylor@forestlawn.com Forest Lawn shall not unreasonably withhold consent to access the License Area and shall respond to OCSD's written request to access the License Area within two (2)business days after receipt,by each of the seven(7)persons listed above,of the written request. 5. Term. This license shall commence on the Effective Date, defined as of the date that any agent or employee of OCSD first sets forth on property which constitutes a part of Forest Lawn Memorial-Park Cypress for the purposes first set forth in Paragraph 1 above (the "Effective Date"). The license for installation shall terminate on the earlier of. (a)one year from the Effective Date or(b)twenty one(2 1) days after the commencement of the testing described on Exhibit B attached hereto. Notwithstanding the preceding sentence, OCSD may use the License Area during evening hours, not later than 10 pm only after obtaining Forest Lawn's prior consent. Forest Lawn may withhold such consent for, among other reasons,the following reasons: (1)Forest Lawn does not have an employee available to observe the activities of OCSD or its agents during that evening, (2) Forest Lawn has received complaints regarding noise, light or dust from neighboring or nearby property owners or occupants, or(3) there are evening activities scheduled at the Memorial-Park on that day. In no event shall OCSD or its agents conduct activities on the License Area during any hours other than those hours permitted by law. This license may be suspended or revoked by Forest Lawn in whole or in part upon oral or written notice at any time in Forest Lawn's sole discretion and with or without cause. 6 Assignment. This license and permission herein given are personal to OCSD and are not assignable, and any attempt to do so shall be void and shall confer no right on any third party. 7. Parking and Changes. OCSD,its employees,agents and contractors shall not park or leave vehicles or equipment on the License Area outside regular park hours without Forest Lawn's prior written approval,nor shall OCSD make any change or improvement of any nature to the License Area. OCSD shall not park any vehicles or store any equipment or materials in any location without the prior written consent of Forest Lawn.Compliance with Laws. At OCSD's sole expense, OCSD shall comply with all applicable environmental, safety, land use, noise,nuisance, and other statutes, ordinances,rules,regulations and orders. 8. Insurance. OCSD shall at all times during the term of this license maintain at its own expense insurance of the types and amounts indicated below. Such insurance shall be in the form and substance satisfactory to Forest Lawn, shall be issued by carriers acceptable to Forest Lawn which are authorized to do business in California, and shall be maintained until the term of this license agreement is ended. 3 Workers Compensation Statutory Employer's Liability $1,000,000 each accident, $1,000,000 each (including Occupational Disease coverage) disease—policy limit,$1,000,000 each disease (including Occupational Disease) each employee Commercial General Liability, including $2,000,000 General Aggregate Operations, and Contractual coverages— $2,000,000 Products and Completed Operations occurrence basis Aggregate $1,000,000 Personal and Advertising Injury Liability $1,000,000 Each occurrence Commercial Automobile Liability, covering $1,000,000 for bodily injury, and for property OCSD's owned, non-owned and hired vehicles damage used in the License Area Such insurance shall include both Forest Lawn Memorial-Park Association and Forest Lawn Mortuary as additional insureds, and OCSD shall famish to Forest Lawn certificates evidencing such insurance coverage which shall include a clause providing for thirty(30)days advance notice to be given in writing to Forest Lawn of cancellation, termination or modification of the policy or policies so certified. OCSD undertakes to permit no agent to enter onto Forest Lawn's property unless such contractor shall have: (a)obtained insurance as specified above, and(b)named Forest Lawn as an additional insured on all such policies. OCSD shall indemnify,hold harmless and defend Forest Lawn from and against any loss it may suffer,including but not limited to attorney's fees and expenses,by reason of the failure of any contractor or agent to maintain such insurance. 9. Indemnity. OCSD hereby agrees to release, indemnify,protect,defend and hold Forest Lawn, its subsidiaries, officers and employees harmless from and against any and all claims, loss,demands, expenses,damages,or liabilities whatsoever for injuries to or death of persons or damage to property in any manner arising out of the exercise or enjoyment by OCSD of any right or permission herein given or by reason of any failure on the part of OCSD to keep or perform any of the terms or conditions hereof. 10. Recordation. Neither this license nor any memorandum thereof shall be recorded. 11. Attomeys'Fees. In the event of any dispute or legal proceeding between the parties arising out of or relating to this license or its breach,the prevailing party shall be entitled to recover from the non-prevailing party all fees, costs and expenses,including but not limited to attomeys'fees,incurred in connection with such dispute or legal proceeding. Any party entering a voluntary dismissal of any legal proceeding without the consent of the opposing party in such proceeding shall be deemed the non-prevailing party. 4 12. Notice.Notice may be given in person or by mail to the address indicated below the parties' signatures or to such other addresses as the parties may in writing from time to time direct. The giving of notice by mail shall be complete at the time of mailing. 13. Integration. This license agreement contains the entire agreement between Forest Lawn and OCSD relating to the subject matter hereof. Any prior agreements,promises, negotiations or representations not expressly set forth in this license agreement are of no force and effect.No modification of this license which would have the effect of granting greater rights herewith,or imposing any greater obligation on Forest Lawn or lessening OCSD's obligations hereunder, shall be of any legal effect or enforceable unless in writing and signed by both Forest Lawn and OCSD. 14. Waiver. Forest Lawn's waiver of any term or covenant, or any breach in any tern or covenant, shall not constitute the waiver of any other term or covenant, or the breach of any other term or covenant, or any subsequent breach. 15. Partial Invalidity. If any term or covenant of this license agreement is held by a court of competent jurisdiction to be invalid,void or unenforceable,the remaining provisions of this license agreement shall remain in full force and effect. 16. Intetpretation. This license agreement is to be construed in accordance with the laws of the State of California. All headings are for convenience only and shall not be used in interpreting any provision of the agreement. 17. Advertising. No permanent or temporary labeling, trademark signs, or other advertising of any kind shall be exposed on or about the License Area without the written consent of Forest Lawn. Forest Lawn Memorial-Park Association, Orange County Sanitation District, a California mutual benefit corporation a municipal corporation By: _ (Date) By: _ (Date) (Signature) (Signature) Darin B. Drabing, President and CEO Chair, Board of Directors By: (Date) Kelly A. Lore Clerk of the Board Approved as to Form: By: (Date) Bradley Hogin, Legal Counsel 1712 S. Glendale Avenue Glendale,CA 91205 5 Exhibit A (See Attached) 6 EXHIBIT A- LICENSE AREA LICENSE AGREEMENT FOR ACCESS --�' - • -�- / // FORM IAWN MEMOROY-PARK 4471 LINCOLN AVENUE N CVPRESS,CAA063& j ,• ,• jt-:"i i LEGEND MNKx mu j PROPER LINE .PIFH?PE . LICENSE AREA --T-,- O.C,S.0 CONSU,Ml x PAN OE TRAVEL =-TJ---T exit---- -- --11 i wx.cxr mwc'w D PMPINK 1•i—1—J_'•ric`L_Mri1'-y,• 1 I i yl > � F---�'I > • , � a ,roco w.c�wis:___ =iwow•-�_— --,owNo mrA i 'LINCOLN AVENUE XiMI PIINMM wveuw�ue PAfM A4VN ENTRANCE Exhibit B (See Attached) 8 Date: May 12,2016 A.D. To: Steve Speakman,PE, PMP -OCSD Hardat Khublall,PE—OCSD Daisy Covarrubias—OCSD Yvonne Dake - OCSD From: Andrew E. Romer, PE - AECOM cc: Keith Campbell,PE-AECOM Brian Briones, PE—V&A David Madera, PE—AECOM Praveen Yera, PE—AECOM Matthew Tomanek—Cardno Brian Briones—V&A Subject: 3-64 Proposed Work in Forest Lawn-Cypress In regard to your request for information regarding proposed exploratory work on the Forest Lawn-Cypress property so that you legal team can negotiate the right of entry agreement, the following is offered: Geotechnical Explorations will be by AECOM. The geotechnical subsurface exploration, which will be limited to the locations depicted on Schedule 1 attached hereto, will consist of 8 inch diameter boreholes advanced to a maximum depth of 25 feet below the ground surface or refusal using hollow stem auger/mud rotary wash drilling equipment (CME 75 or similar). A truck-mounted rig will be required to access the boreholes located on the roadway. The drill rig will access the Forest Lawn via the main entrance. The boreholes will be performed in the lane along the proposed pipeline alignment to obtain soil parameters. The borehole locations will be marked in the field and clewed for utilities using all of the following methods: (a) Underground Service Alert (USA) of Southern California (Dig Alert) services, (b) prior written notice to Forest Lawn so that Forest Lawn can review the private utility systems shown on its internal survey, and (c) geophysical equipment such as ground penetrating radar (GPR) or similar prior to performing the drilling work. Hand auguring will also be performed in the upper 5 feet (where feasible) of each boring as an additional utility clearance measure. Where difficult conditions are encountered at shallow depths such as boulders, gravel or other obstructions that prevent hand augering to 5 feet, drilling will be performed in the upper 5 feet slowly and cautiously prior to continuing drilling to target depths. Drilling methods employed to advance borings will include a combination of hollow stem auger and conventional rotary wash drilling techniques. Where feasible, hollow stem auger methods will be utilized. However, if groundwater is encountered, drilling will be converted to rotary wash methods until desired exploration depths are achieved. Majority of the drilling work at the cemetery is anticipated to be conducted during night time. Drilling with hollow stem augers is a rotary drilling method using mechanical means to create a boring. As the drill bit grinds away the formation, the cuttings travel up the spiraled wings of the 9 auger and are removed from the boring. In this application, the hollow centered (stem) augers allow sampling through the middle while drilling. A support truck (Ford F-150 or similar truck) carrying drilling supplies and water may be necessary in addition to the drill rig. Typical drill rig setup is shown below: Borings will be sampled at 5-foot intervals alternating between SPT (1.375 inch inside diameter) and California samplers (2.42 inch inside diameter). A bulk sample from each borehole will be obtained in the upper 5 feet for various laboratory testing purposes. Both SPT and California samplers will be driven 18 inches into the subsurface soils using a 140-pound automatic hammer with successive 30-inch drops. The number of blows required to drive the samplers into the subsurface soils will be recorded at 6-inch intervals. The total number of blows required to drive the last 12 inches of the sampler will be recorded on the boring logs. Traffic control will be necessary for the borings located on the roadway and AECOM will employ subcontractor for performing the traffic control for the duration of the drilling work scheduled on the roadway. Traffic control will be performed in accordance with California Manual on Uniform Traffic Control Devices (MUTCD) and Work Area Traffic Control Handbook (WATCH) guidelines. Light towers to illuminate the drill work area will be utilized for night work. Light towers shall be fitted with lamp shields to insure that no light spills over into neighborhoods around the cemetery. The light towers will be directed away from any nearby residential properties. AECOM field representative will visually classify the soil cuttings and will maintain a detailed record of subsurface materials encountered in the exploratory boring. Soil and bedrock materials 10 encountered in each boring will be logged and classified in accordance with the visual-manual procedures outlined in the Unified Soil Classification System and the American Society for Testing and Materials (ASTM) D2488 and ASTM D248. Such record shall be provided to Forest Lawn, from time to time,upon Forest Lawn's request. Additionally, bulk and undisturbed soil and bedrock samples from the exploratory points will be collected for laboratory analysis. Promptly after they are available, Forest Lawn will be provided with copies of such analyses. Precautions will be taken, which meet Forest Lawn's approval, in connection with the storage of any cuttings on Forest Lawn Property. All field activities will be performed by, or under the direct supervision of a State of California Certified Engineering Geologist/Professional Engineer. Borings advanced entirely utilizing hollow stem auger/Rotary wash methods will be backfilled with cement bentonite grout to 1 foot below ground surface with cement-bentonite grout. The upper 1 foot of the borings will be backfilled with quick set concrete and colored with black dye and smoothed to match adjacent grade. Drilling mud waste generated during geotechnical exploration will be loaded into transportable containers and dumped into drums stored in designated project staging areas. During exploration, drilling waste will be analytically tested to classify and profile the waste for hazardous/non-hazardous classification and disposal to appropriate disposal facility. Forest Lawn will be promptly provided with copies of all test results. Once bins have been filled and analytical test results have been obtained, drums/bins will be transported by a subcontracted waste handler and properly disposed of at a licensed disposal facility. All drums shall be property labelled as hazardous/non-hazardous and contain additional labeling in accordance with best practices and applicable industry standards. No drum shall remain on the Forest Lawn property for longer than 60 days. Forest Lawn will be promptly provided with copies of all disposal manifests and related documents. The anticipated duration at each borehole location including sample collection and cleanup is approximately 2 to 3 hours. After completion of the cleanup of the drilling location, the drill rig setup will be moved to the next planned boring location. The time interval between sample collections is around 10 minutes where a hammer is dropped into the ground to drive the sampler and collect sample. The noise associated with drilling operation is anticipated to be in the range of 85 to 95 decibels. The field crews will provide cell phone numbers to Forest Lawn, for at least 2 field crew members and the field crew will immediately stop work if Forest Lawn calls with a noise complaint. Pipeline Condition Assessment CCTV and cleaning of the 18" VC pipe will be done by V&A and its subconsultants. Equipment to be used will include a CCTV truck, a jetter/vactor truck, and traffic cones. Equipment Setup Locations (see attached maps): CCTV truck will be at Manhole No. KNT0275- 0450 new the intersection of Cypress Drive and Guardian Drive in Forest Lawn Cemetery. Jetter/vactor truck will be setup at Manhole No. KNT0275-0445 near the entrance to Forest Lawn Cemetery. 11 Noise: CCTV truck will create minimal noise (under 90 dB). Jetter/vactor truck will create moderate noise(not to exceed 95 dB). The field crews will provide cell phone numbers to Forest Lawn, for at least 2 field crew members and the field crew will immediately stop work if Forest Lawn calls with a noise complaint. Vibration: None. Underground Impacts: None. Sequence of Work: 1. Crews will mobilize on-site. 2. Crews will cone off work area. 3. Crews will open manhole and monitor for gases and odors. Install fall protection. 4. Crews will insert CCTV equipment at Manhole No. KNT0275-0450 and inspect pipeline in the downstream direction. 5. If required, crews will insert jetter at Manhole No. KNT0275-0445 and clean pipeline. Vactor debris as required. 6. Crews will complete pipeline inspection. 7. Crews will remove CCTV and jester/vactor equipment. 8. Crews will replace manhole lid. 9. Crews will remove fall protection and cones (restore site to original conditions). 10. Crews will demobilize from site. Manhole Condition Assessment will be done by MBI as follows: 1. Crews will open the manhole. 2. Crews will then place a protective grating over the manhole for fall protection. 3. Crews will then disperse odor control measures (using a spray mister). This will give off a pleasant aroma to mask any malodors that may be present in the sewer. 4. At the end of each shift, on a daily basis, the field crews will take all measures and precautions necessary to be sure that no sewer odors persist. 5. Crews will then survey the rims and pipe inverts and any inlet pipes into the sewer. 6. Crews will take notes and cover the manholes to original orientation. 7. Crews will demobilize from site. 12 The equipment utilized will be survey levels and slicks necessary to measure depths into the manhole, and a survey vehicle (truck). There will be some noise that could be expected from opening and moving the manhole covers and placing protective grating, as well as tool removal and replacement. The crews will be notified to work as quietly as possible. Each manhole should take not more of 15-20 minutes of survey time. There looks to be only about 5 manholes in the Cemetery area. Non-Destructive Geophysical Explorations which will be done by Cardno, Inc. will consist of utility locating equipment to identify horizontal position of subsurface utilities. Access to pull boxes and some MHs along the alignment will be required. Cardno, Inc. will mark the position of the utilities with paint or flags. Chalk paint will be used in the Forest Lawn areas, which is easily removed. Flags will be in the grass and removed after the survey gets the shot. Observers of the work will see two guys in PPE with equipment that looks like a baby carriage (GPR) or wands(pipe and cable locators) and a surveyor.Noise is not generated. Duration: 1. MH Sweeps: Only 3 MH in Forest Lawn will require the geophysical sweeps. 1-2 hours total. 2. Utility Mapping for alignment replacement: 2-3 days to complete the utility mapping and survey of utility marks in the Cemetery. Attachment 13 E hi it Locations of Borings (to follow) (See Attached) 14 BOARD OF DIRECTORS Meeting Date TOBE.Or .Dir. -- 10/26/16 AGENDA REPORT Item Item 3 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Ed Torres, Director of Operations and Maintenance SUBJECT: PREVENTATIVE MAINTENANCE OF PLANT NO. 1 AERATION BLOWER NOS. 2, 4, AND 5 GENERAL MANAGER'S RECOMMENDATION A. Approve a sole source service agreement to Siemens Demag Delaval Turbomachinery, Inc. to perform a Class I mechanical service and variable diffuser arm bushing retrofit and installation on aeration blower Nos. 2, 4, and 5, in the amount of$326,185; and B. Approve a contingency of$65,237 (20%). BACKGROUND The Orange County Sanitation District (Sanitation District) utilizes nine Turblex Blowers in our secondary treatment to provide air to the biological process. The blowers are vital to the secondary treatment process and require servicing based on their hours of service. The blowers require major mechanical maintenance every 18,000 hours. Class-I mechanical service involves the replacement of all worn and deteriorated parts. Currently, aeration Blower Nos. 2, 4, and 5 located at Plant No. 1 are due for these services at the 36,000 hour mark. Additionally, worn variable diffuser arm bushings need to be replaced on all three of these blowers in order to improve reliability. RELEVANT STANDARDS • Support OCWD expansion of GWRS • Maintain a proactive asset management program • Meet discharge permit 24/7/365 PROBLEM Three of the nine aeration blowers at Plant No. 1 require Class-I mechanical maintenance based upon service hours. Also, current variable diffuser arm bushings on these three blowers are showing extreme wear and are starting to fail, causing shut down of the blowers, which affects reliability and could affect compliance with our Operating Permits. Page 1 of 2 PROPOSED SOLUTION Conduct Class-I maintenance service and repair (or replace)failing bushings. TIMING CONCERNS Continued utilization of these assets without maintenance beyond recommended service times may result in increased risk of failure, resulting in increased repair costs. RAMIFICATIONS OF NOT TAKING ACTION Failure to take action will result in the blowers reaching catastrophic failure, resulting in higher repair costs, or replacement of equipment, and potential violation of our permits. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION Turblex, Inc., which manufactured the blowers currently installed at Plant No. 1, was previously a Board-approved sole source provider. However, Turblex was purchased by Siemens Demag Delaval Turbomachinery, Inc. (SDDTI), making SDDTI the only authorized company to service and repair the blowers. A contingency of $65,237 (20%) is requested to address additional unforeseen repairs that may be discovered in the process of replacing the bushings, as well as the potential need for the vendor to source parts from outside of the United States. CECIA N/A FINANCIAL CONSIDERATIONS This request complies with authority levels of the Sanitation District's Purchasing Ordinance. This item has been budgeted. (Line item: Section 6, Page 92). Project contingency funds will not be used for this agreement. Date of ADDroval Contract Amount Contingency 10/26/2016 $326,185 $65,237(20%). ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package: • Siemens Demag Delaval Turbomachinery, Inc. (SDDTI) service agreements (3) Page 2 of 2 Proposal Package w/ Attachments , . A WASTEWATER AERATION COMPRESSORS SIEMENS SIEMENSField Service Estimate Customer: Orange County Sanitation District Contact: Emilia Anston Emall: FARISTON®ocstl.com Phone: 657.600.12" Siemens Proposal Number: 20005615 Site Name: Orange County Sanitation District Plant No.1 Site#: 094 Location: Fountain Valley,California Model: STC-GO(KA66-SV-GL400) Serial Number(s): 3996 Description or Scope: Includes Class I inspection and VO retrofit installation Labor Tatel Number of Da Chin ISda /cem ressar 5 Quantity of Persons 1 Mobilization 1 to $3.500 Weekday Labor 61312f 8-hr work de $6.560 Airline, $1.380 Per Diem IS days on af,1 travel home day) $1.920 E ul mentlParts a91.094 Required E ul men9Pars fort com ressor Include: partly Pena Dexn Ilon 1 GL315TDOS SHIM SET 1 GL315TOOS SHIM SET 1 N17L57594 O-RING,SILICONE 1 89027262 O-RING 2 89027296 O-RING 1 8N12415 O-RING 1 N17V6290 0-RING 1 PMS1200A Claiming Kit 1 KA66VD VD retm kit Equipment Alignment Change $795 Toolbox Fml hl $350 FsBmatsd Tax a% $7.288 Esdmatad Total for 1 unit $112 987 Notes: The above calculations are only estimates. The final price shall be calculated using the actual Time and Material. Time expenses shall Include all project specific time at Me fixed hourly rates above plus per Mems in accordance with the attached Service Rate Sheet. Time shall include all time required to perform and support the project including,but not limited to.preparation,mobilization,demobilization,sqe specific safety training,travel, site meetings,and start up support. This proposal assumes that the site will provide at least one qualified helper to assist the Siemens technician. This pricing also assumes bat proper certified holding will be available and the inlet filter/Irensition piece,and sound enclosures will be removed(if applicable)for access to perform Class I.Does not Include craft labor and tools to support the work. This proposal Includes the typical replacement components for the service.Any significant wear or abnormalities Identified requiring extra labor andfor pads shall be billed per Siemens'standard Service Rate Schedule. Siemens will provide an estimate of additional time and materials as required. Attachments:Field Service Rate Sheet Siemens Selling Policy.Suggested Preventative Maintenance Schedule,Pre-Service Checklist 8 Mandatory Lifting Device Reporting. Time and Material pricing Par Siemens FS Ratesheets for 2015 Services for USA(onshore) Currency USO Terms of Payment Net 30 Days Terms of Delivery DAP Fountain Valley,California,USA Terms and Cond pions Siemens Selling Policy 1200 dated November 1.2D12 Forward Purchase Orders to Siemens Demag Delaval Turbomachinery,Inc. 840 Nottingham Way Hamilton,NJ 08638 USA Phone:(609)890-5000 f Fax:(609)587-7790 Prepared By Vanity PaMasarathy vandv oarthasarathvylosiemens cem Validity period 09115/2016-10/1412016 Thank you for your confinued interest in Siemens products and services CONFIDENTIAL alomens Domes Delml Turbomachlmry,Inc. Best Regards, Vandy Chakravarthy Parthasarat Customer Service Representative Siemens Demag Delaval Tudtomachinery, Inc. Tel: 417-380-5728 Fax: (609) 587-7790 E-Mail: vandy.parthasarathy@siemens.com Thank you for your continued interest in Siemens products and services CONFIDENTIAL Field Service Rate Sheet Services for USA (onshore) All Siemens Industrial Steam and Gas Turbines, Compressors and Pumps Daily Personnel daily rate daily rate daily rate hourly rate hourly rate Category in excess of in excess of Mon-Fri Saturday Sunday or 8 hours 8 hours based on 8 based on local holiday worked worked hour work 8hour work based on 4 days day 8hour work Mon-Sat Sundayor day local holiday Specialist Services $ 1,976 USD S 2,964 USD $3,952 USD S 371 USD S 494 USD 'O Technical Field S 1,588 USD $2,382 USD $3.176 USD $298 USD S 397 USD Advisor(TFA) Field Service $1,312 USD $1,968 USD $2,624 USD $246 USD $328 USD Technician DemobilizationMobilization I Siemens Demag Upro4hours' Uptoehours• Upmi2homs UpW12hours Upto24hours• Upto36hours• USA/Canada. htaematiowl• W Nottingham Hamilton,NJ 08638 $1,750 $3,500 $SAM $5,750 $10,900 $14-900 All rights res.riad. Subject to change 'Excludes airfare.Airfare is billed at cost plus 15%administration fee. without prior moll I Daily Per Diem Charge: $320 from arriving at location or cost plus 15%administration fee. in this document am the The above rates are in US Dollars and include expenses as referenced in the attached property of Siemens Charging Appendix. AD,it affillates,.,their respective owners. Validity: From January 1,2015 to December 31,2015 Contacts: For Parts,Repairs and Service Support,please contact your local Siemens Power Systems Sales Person,Local District Service Manager,or 609-890-5000. Siemens After-hours Emergency Cell Phone: 609-890-5555 ® 'ZERO'harm to people and the environment is the ultimate goal in our business. Answers for energy. SIEMENS Charging Appendix - Field & Engineering Services For Service on All Siemens Acquired Steam Turbines,Gas Turbines,Compressors and Pumps in U.S.A.and Internationally,except Canada Effective January 1,2015 Subject to change without notice I. Selling Policy A.Travel and Expenses: The Daily Labor All prices contained herein are subject to C.Field Service Technician Rates exclude the fallowing costs, which the terms and conditions of the Siemens Field Service Technician services are the shall be for Customers account and will Demag Delaval Turbomachlnery, Inc. performance of the disassembly, insper be charged separately: CSiemenil Selling Policy 1200 for the lion, and replacement of parts, routine a)MobilizatlonlDemobllization Fees shall Sale of Equipment and Services ('Selling repair and reassembly of rotating equip- be charged at a graded fixed fee de- Policy') in effect on the date an order is ment. or the complete removal and re- pendent on the required travel time received,unless other terms are agreed to installation of the entire unit, from base location to the Site. Mobili- in writing by the parties. Capitalized utionl0emobilization fees include forms used in this document shall have IV. Rates Payable preparation time, visa costs and all the definition set forth herein or, if no Except for small gas turbine services travel time and expenses (excluding such definition is specified in this docu. performed internationally,a Standard Day (i)airfare: fill Per Diem Charge as de- ment,then they shall be as defined in the for onshore work is defined as a hours fined in Section VI(A)(b)). The Selling Policy. working time. A Standard Day for off- transport from the point of embarks. shore work is defined as 12 hours work- lion to an offshore location and back II. Price Policy ing time. For small gas turbine services will be provided by the Customer free All rates and prices are subject to change performed internationally outside of USA of charge. without notice. unless otherwise agreed. or Canada, a Standard Day is defined as b)Per Diem Charge: Accommodation, Siemens rates are expressed on the Field 12 hours working time. meals, local transportation and allow- Service Rates Sheet as daily rates per ances, where net provided by the Cus- category of Siemens personnel ('Daily Minimum billing is the Daily Labor Rate. tomer will be charged on a lump sum Labor Rates'), plus Mobilize The applicable Daily labor Rate applies to daily basis. By agreement,the Custom. tionlDemobill ration Fees and Per Diem all time worked or traveled (excluding er may be charged actual cost of the Charges. Unless contracted otherwise. MobillzationlDemobilization trawl time), accommodation,meals,local transpor- rates and prices for ongoing contracts with an allowance for lunch tatlon and allowances plus a 15% fee will be those In effect at the time the lime.Overtime rates apply for time for handling and administration costs. work is performed. All rates shall be valid worked in excess of a Standard Day.This c)The Per Diem Charge will be assessed only for the period of validity set forth on is an hourly charge, based upon actual for each calendar day an 'individual is the attached price list. Airfare and addi- additional time worked in excess of a assigned to a project including non- tional costs are billed as set forth herein. Standard Day. Two overtime rows apply; working weekend days for jobs extend. No personnel will be dispatched until a one for time worked in excess of a Stand. ing over the week-end(sl. Purchase Order, or written authorization and Day Monday through Saturday and d)Where the Customer provides accom- acknowledging acceptance of terms, one for time worked in excess of a Stand- motlation and food, it is to be to a pricing andamsementto payis received. and Day on a Sunday or local holiday. standard which is acceptable to Sio- mans. In the event that this is, in Sis III. Services Definitions mens'opinion,unsuitable,Siemens m- A. Specialist Services The Daily Labor Rates include the supply serves the right to (Intl an alternative Specialist Services are the following: (i) and use of basic PPE (Personal Protective which will be charged for as above. an engineer, project manager, or tech. Equipment)and the use of standard small e)In the event that unusual expenses are nical field advisor(TFA)directing Siemens hand tools, as required by Field Service required in traveling from the place of personnel or advising Customer person Technicians. accommodation to the Site, Siemens nel to Siemens procedures and process reserves the right to charge the Cus. specifications; fill TFA providing plan- Siemens may offer a priority service, tomer for such expenses at cost plus ning, scheduling, material management when the relevant Siemens personnel are 15% for handling and administration support or working directly with Custom. available, for emergency or breakdown expenses. ers labor supervisor; (ii) diagnostic and callouts. An additional 3016of the appli 0 Siemens reserves the right to charge operational troubleshooting and com- cable Daily Labor Rate will be charged business dais flights. missioning of routing equipment (con where Siemens personnel are requested g)All separately invoiced items over and ducted onsile or by telecommunication); to be mobilized within 24 hours of the above the Daily Labor Rate, Per Diem (iv) diagnostic electrical testing, evalua. request being received. This charge is to Charge, kill liutionl0emobiliul ion tlon and setup activities on control sys. cover for the disruption to job schedules Fees anchor airfare will be charged at tems.voltage regulator systems, any on and the re allocation of manpower to cost plus 15% fee for handling and line diagnostics or Level III NDE and bat accommodate the priority call. If Sie- administration costs. arcing; (v)engineers located at Siemens is unable to meet the 24 hour home facilities, including District Offices mobilization request, there will be no B.Departure Delay and Cancellation and the Technical Support Center,provid. additional charge. a)Departure delay - Standby in Home Ing b chniul studies and information Base relating to the design and operating V. Payment Term. for Supply of Per. If the fixed date for the personnel del parameters of rotating equipment. A job sonnel egation is delayed due to reason by the specific readiness fee will apply to all Payment shall be as follows: Where the Customer.Siemens is prepared to keep orders for Specialist Services that are not duration of the services is less than one the nominated personnel on stand-by firm priced. This fee will cover pre-job month,Payment will be 10M of the price up to 7 calendar days. In this case Sie. efforts and will be quoted separately, of the balance of the services upon com- mens shall charge a delay fee of the pletion of the services. Where the duration full applicable Daily Labor Rate per cal. 6. Technical Field Advisor(TFA) of the services is greater than one month endar day of delay. TFA services are a TFA rendering advice then the balance of the services; shall be b)Departure Delay-At Point of Embarks. and making recommendations based on invoiced on a monthly basis until comple. Lion Siemens procedures and drawings during tion of the services. Payment shall he Should departure of personnel be de- disassembly,Inspection,and replacement received within 30 days of the date of the Iayed at the point of embarkation for of parts,routine repair and reassembly of ini any reason beyond Siemens control, existing and installation of new Siemens the applicable Daily Labor Rau will be supplied rotating equipment to Custom- VI.Traveling and Other Expenses charged per day of delay.Accommoda- er's employees, lion and meals where provided by Sie. Doc.Code:FSCA US 01-01-2015 Page 1 of 2 Charging Appendix - Field & Engineering Services For Service on All Siemens Acquired Steam Turbines, Gas Turbines,Compressors and Pumps in U.S.A.and Internationally, except Canada Effective January 1,2015 Subject to change without notice mans will also be charged according to cessive loss or damaged Tools beyond the published rates. the control of Siemens will be charged In the interests of avoiding language c)Cancellation to the Customer difficulties, the Customer shall, for own Where Siemens is notified by the Cus- account, make available the services of Comer of a cancellation less than 2 days E.Shift Work interpreters where work is being per- Fr to planned mobilization,a cancel- Shift work is defined as those dreumi formed. lotion fee of one single buyer 1001,6 of stances where,in a given day,more than the applicable Daily Labor Rate will be one service crew is engaged to perform If an incident occurs whereby the Sio- charged. the service activity. In such instances mens personnel are unable to safely Should any job be cancelled or post- Siemens reserves the right to charge a continue working at Site and which, in poned by the Customer after the repre- shift premium in addition to the applica- agreement with the Customer, results in sentative has been dispatched all costs ble Daily Labor Rates. their repatriation to home baa, the cast incurred for time and expenses will be for both the repatriation and subsequent charged in accordance with the terms F.Technical Consultation return to Site of the personnel or their of this Field Service Rate Sheet and a)During on-site service work it might be replacements shall be borne by the Cus- Charging Appendix. necessary to involve specialists from comer. Siemens headquarters for particularly C.Home Leave complicated technical questions such MR.Additional Notes a)For USAICanaclan service personnel, as certain analysis,calculations or simi- a)in the event Siemens uses outside or when a project is expected to exceed 5 lar tasks. For such technical consults- subsidiary personnel to perform services continuous weeks of duration, follow lion. Siemens will invoice this charge that would normally be performed by ing every 3 weeks of continuous at- on an hourly basis according to the Siemens personnel.Siemens will invoice tendance at an onshore Site, including Spxialist Services rates as defined in Customer for such personnel at the any days spent traveling,the Customer the published rates sheet. hourly rates published herein. will allow each member of Siemens b)Where technical consultation is re b)Non-Siemens parts or materials supplied personnel an extended weekend home quired to be provided at Site, charges during the work will be charged at cost larval journey at the Customer's ex- will be in accordance with the pub plus 25%. Frame. For International personnel, lished rate sheets for Specialist Set- home leave is permitted every 2 vices.Before such work is commenced, months for 10 days at the Customer's a separate agreement has to be estab- expense. fished,unless it is already agreed upon b)If continuous attendance of Siemens in the order. personnel is requested and Siemens agrees to delegate substitute Person- VII.Work'na Conditions and Special nel, the applicable Mobilize- Costs tionlDemobifization Fee shall be paid Costs for factory security officers, medical by Customer., services, industrial safety and supporting c)Following every fourteen days of con- activities at the Customer site will be for tinuous attendance off-shore,Siemens the account of the Customer. Where addi- reserves the right to charge the Cus- Ronal security is required to comply with tomer a further mobilization fee for Siemens travel regulations (based an Sie- each member of Siemens personnel, mens Corporate Security Office), this will d)Days spent traveling with respect to be charged at out plus 15% fee for han- home leave shall be charged at the ap- dling and adminamotion costs. plicable Daily Labor Rate. Should any member of Siemens personnel cancel a In case of accident or illness,the Customer home leave journey, the Customer undertakes to provide immediate medical shall be charged for the airfare andlor assistance and if necessary,to trensfer any other travel costs incurred by Siemens. injured or sick person to a hospital prefera- bly conforming to North American stand- D.Tools to,.Should repatriation become necessary a)Charges for equipment,tools, measur- Be a result of serious illness or death, the ing instruments and special assembly Customer shall attend to all formalities and tools supplied with Siemens field ser- pay all the costs incurred thereby. Should vice personnel for use by Siemens or its replacement Personnel be required the subcontractors CTools-3 will be quoted costs for Same shall be borne by the Cus, by your local Siemens representative, tome. Costs of transportation of Tools (in- cluding all applicable transportation The Customer shall make available free of charges, insurance, customslduties, charge to Siemens personnel: office etc.) will also be charged at cost plus space, telephone, high speed internet 15% fee for handling and administrate connection and telexlfax(communication Lion casts.The rental time applies from with home office shall be free of charge) the day of dispatch from base to return and all such othef facilities as are nmila- feceipt. bfe to Customer's own personnel. b)Siemens will catalogue the Tools re qui red to be returned to base.If for any Any social amenities available at the job event the catalogued Tools are not re, site or Introduced there during the pro- turned within 30 days after leaving guess of site work, as well as any special site,Siemens will charge the Customer benefits granted shall be made available fire current replacement cost. to Siemens personnel in the same man- c)Prices quoted will include normal net and extent as accorded to any other replenishment and re-calibration. Ex- foreign personnel at the lob site. Doc.Code:FSCA US 01-01-2015 Page 2 of 2 Siemens Demag Delaval Turbomachinery,Inc. Selling Policy 1200. pany SIEMENS 840 Nottinns gham Way Way °CSD Trenton, New Jersey, U.S.A.08638 (For Sales in the U.S.A. Excluding the States of Louisiana and Mississippi) November 1,2012 These Terms and Conditions Govem Supersedes Selling Policy 1200 dated May 1,2005 the Sale of Equipment and Services The tarns and conditions;set form In the Siemens Demag Delaval Turbomachinery, Inc.proposal and in this Selling Policy 1200 are the terms and Wr& bons goveming the Siemens proposal and any Agreement between the parties for the Equipment and/or Services covered by such proposal. Each pro- posal is valid for sixty(60)days from the date of the proposal unless extended or withdrawn in writing by Siemens. The issuance of a Purchaser pur- chase order or any other reasonable manner of acceptance by Purchaser communicated to Siemens during such validity period will form an Agreement based upon the terms and conditions of the Siemens proposal and this Selling Policy 1200. 1. Definitom Whemwr used in this document with initial capitalization,the following definitions shall be applicable: A. 'ACM'as used herein shall mean Asbestos and Presumed Asbestos Containing Materials. B. 'Agreemenr means the Siemens proposal,this Selling Policy 1200,Purchasers purchase order,as accepted by Siemens,(excluding any pre- printed terms and conditions on said purchase order and in any attachments to or Pumhaser documents referenced in said purchase order)or other doe umenl evidencing acceptance of the Siemens offer as set form in the Siemens proposal;or an integrated agreement signed by Siemens and Purchaser, for the Equipment,and/or Services. C. 'Asbestos shall have the meaning set forth in United States Code of Federal Regulations Chapter 29,Sections 1925.1101 et seq. D. "Equipment'means equipment,components,parts,materials and Software provided by Siemens pursuant to the Agreement. E. 'Field Installation Services'mean the installation by Siemens of Purchasers Material at the Site. F. 'Field Repair and Modernization Services'means the repair,modification or modemizatfon work,or some or all of them,performed by Siemens on Purchasers Material at the Site and for certain activities at a repair facility selected by Siemens. G. 'Hazardous Material'means any material listed in the'Hazardous Material Table"set forth in 49 CFR 172.101 as amended. H. 'Maintenance Services'means the disassembly,inspection and reassembly of Purchasers Material at the Site. 1. *Nuclear Inddenr shall have the meaning set forth in the Atomic Energy Act of 1954,42 U.S.C.2011,at seq.,as amended. J. 'Patty"means individually either Siemens or Purchaser. K. "Pedies"means collectively both Siemens and Purchaser. L. 'Presumed Asbestos Containing Material"shall have the meaning set forth in United States Code of Federal Regulations Chapter 29,Sections 1926.1101 at seq. M. 'Purchaser means the entity purchasing Equipment and/or Services,as well as any other owners of the facility where the Equipment or Pur- chasers Material is or will be situated. N. "Purchasers Material"means the equipment,materials,components and gems of any kind owned by Purchaser or any other owner of the Site for which Services are to be provided or are provided under the Agreement. O. 'Services'means Shop Repair and Modernization Services, Field Installation Services, Field Repair and Modernization Services, Maintenance Services,and Technical Services;or some or all of them provMed by Siemens pursuant to the Agreement. P. "Services on Third Parry Parts'means Services in connection with Third Party Paris. O. "Shop Repair and Modernization Services means work performed by Siemens on Purchasers Material at a Siemens manufacturing plant, a Siemens repair facility or another suitable facility selected by Siemens. R. 'Siemens"means Siemens Demag Delaval Turbomachinery, Inc.and as affiliated companies and their subsidiaries.successors and assigns, and each of their respective partners,principals,shareholders,directors,officers,employees,and agents. S. 'She'means the Purchasers facility where the Equipment or Purchasers Material is or will be situated. T. "Spacial Services'means the performance by a Siemens field service representative of diagnostic and operational troubleshooting on Purchas- ers Malarial,both on line and off line.This work may be conducted on Site or by telecommunication. CONFIDENTIAL Selling Policy 1200 U. 'Software'means instructions in machine readable form,other than source code,and associated documentation delivered by Siemens to Pur- chaser in chip,disk and/or tape format. V. "Subsupplier'means any subcontractor or supplier of any tier who supplies goods and services to Siemens in connection with fine obligations of Siemens under the Agreement. W. Technical Field Assistance means the advice and consuhation given to Purchasers personnel by a field service representative of Siemens with respect to: (1) installation,inspection,repair and/or maintenance activities performed by others at the Site,and (2) any Siemens recommended quality assurance procedures for activities performed at the Site. Technical Field Assistance does not include management,supervision or regulation of Purchasers personnel,agents or contractors. X. Technical Services'means(I)Technical Field Assistance;(III Special Services; (iii)inspection of equipment which has been disassembled by Purchaser or others; (iv)technical evaluation of inspections Performed by Siemens, Purchaser or others; (v)technical information provided by Siemens, including data interpretation and reports; (vg inspections,technical evaluation of inspections,technicel analysts of materials and technical recommends, done related to Shop Repair and Modernization Services;(vii)advice and consultation given to Purchasers personnel at the Site or at a Siemens facility by a Siemens engineer or technician; and/or(viil)advice and guidance given to Purchaser by Siemens field arguments)regarding methods and proce- dures for Installation,maintenance and/or coronation of the Equipment or Purchasers Material. Y. Third Party Parts'means parts,components,equipment or materials provided by Purchaser under the Agreement or that exist In the Purchas- ers Material which were nor manufactured or supplied by Siemens or the predecessors of Siemens or which were originally supplied by Siemens or the pmdecessore of Siemens and subsequently repaired,serviced or otherwise modified or altered by any party not affiliated with Siemens or with a prede� censor of Slemens. 2. Scope Siemens will fumish to Purchaser Equipment,and/or Services as specified in and pursuant to the Agreement. 3. Price Policy For an Agreement for Equipment supply only, unless otherwise stated in the Siemens proposal,the price does not include disassembly and reassembly of Equipment at the She. Prices are firm for(0 Equipment with a scheduled shipment date of sixty(60)weeks or less from Siemens acceptance of the Purchase Omer and (10 Services which am scheduled to be performed within sixty(60)weeks from Siemens'acceptance of the Purchase Order. For(0 Equipment with a scheduled shipment date in excess of sixty(60)weeks and(li)Services scheduled to be completed beyond sixty,(60)weeks from Siemens'acceptance of the Purchase Order,the prices are subject to adjustment upward or downward for changes in the specified labor and material indexes in accordance with the provisions of the applicable Siemens Price Adjustment Policy. a. Terms of Payment A. Unless otherwise specked, Siemens shall issue invoices in accordance with the schedule set forth in the Siemens proposal. If an invoice schedule is not set forth in the Siemens pmposal,Siemens shall issue invoices as the work is completed,but no mom often man monthly. In any event, all invoices shall be paid within thirty(30)days after the date of the invoice. B. In any instance where Purchaser is unable to return components fo Siemens for fitting or for coordination with other assemblies by the specific dam agreed to in the Agreement or where a potion of the work is to be performed by Siemens at a later date,Siemens reserves the right to invoice Pur- chaser for work performed to dale and either ship the components to Purchaser in their existing state or hold the components in storage at Purchasers risk and expense.That portion of the work which is to ba performed by Siemens at a later date will be performed as a Purchaser requested change under Article 18,Changes. C. If shipments am delayed by Purchaser,affected payments shall become due based on the dam Siemens is prepared to make shipment. 0. Any past due amounts shall,without prejudice to the right of Siemens to payment when due,bear interest at a floating rate equivalent to one- "Ifth(1112)of the per annum prime ram charged by JPMorgan Chase Bank,New York, New York,U.S.A.,as such prime rate Is published on the first banking day following the date payment is due, plus an additional one-hand of one percent(0.5%), payable each month or portion thereof that payment is delayed. If payments am nor made when due Siemens may, upon fifteen (15)days writer,notice and at its option, (1)terminate this Agreement(which termination shall be treated as a termination pursuant to Article 11,Termination)or(10 suspend all further work hereunder.Resumption of work thereafter is contingent upon correction of the payments deficiency by Purchaser.The schedule for the resumed work will be established by Siemens based on its then current work load and the availability of other resources. All Siemens expenses associated with any such suspension shall be for the account of Purchaser. E. I there exists a good faith dispute over the amounts to be paid, Purchaser shall notify Siemens in writing that such dispute exists and Purchas- er shall pay the undisputed amount.The disputed portion may be held In abeyance until resolution of the dispute with that portion,together with the inter- est charge specified in Paragraph 0 above,due thirty(30)days after said resolution. F. Unless otherwise set forth in the Siemens proposal, if shipment(from the manufacturing plant or repair facility whom the work Is performed) and/or Delivery of an tern of the Equipment or completion of a portion of the Services is delayed for causes which am within the reasonable control of Siemens, issuance of the invoice covering the final five percent(5%)payment for the delayed work will be deferred for twice the number of months by which shipment/Delivery of such item of the Equipment or completion of such portion such Services is delayed;provided, however,that such deferral of the final Invoice shall only be applicable t the delay in shipment and/or Delivery of the Equipment or the delay in complebm of the Services has actually delayed the Purchasers project for which the Equipment and/or Services went purchased. I THE REMEDIES OF PURCHASER SET FORTH ABOVE AND/OR IN THE SIEMENS PROPOSAL FOR DELAY IN SHIPMENTIDELIVERY OR COMPLETION OF SERVICES CAUSED BY SIEMENS ARE PURCHASER'S SOLE AND EXCLUSIVE REMEDIES AND NO OTHER REMEDIES OF ANY KIND WHATSOEVER SHALL APPLY.Deferral of the Issuance of the final five percent(5%)invoke as set forth above and/or provision of the now- CONFIDENTIAL s.x+vawi rawraN+s2�..v Selling Policy 1200 dy set forth In the Siemens proposal shall constitute complete fulfillment of all liabilities of Siemens to Purchaser for delay In shipment/Delivery of Equip. ment or completion of Services whether based in contract,In tort(including negligence and strict liability,or any other theory of recovery. S. Delivery,This and Risk of Loan or Damage A. Unless otherwise staled in the Siemens proposal,delivery of each component of Equipment shall be made Ex Works(Incoterma 2010)at the manufacturing plant(`Delivery).Subject to the provisions of Paragraph B below,legal and equitable title and risk of loss or damage to each such compo- nent of the Equipment shell peas from Siemens to Purchaser upon Delivery. B. Title to and right of possession of any Software licensed hereunder,without legal process,shall remain with Siemens or its licensor,except Nat Purchaser shall have the right of possession and use of the Software provided hereunder for the forrm of the corresponding license provided herein,so long as no breach of this Agreement has been made by Purchaser and all payments due Siemens have been paid. Nothing in this Agreement shall be construed as giving Purchaser any right to sell, assign, lease or in any other manner transfer or encumber Shaman'or Its licensees ownership of Me Software,or as limiting Siemens or its licensor from using and licensing the Software to any Nlyd part. C. Purchaser's Material sent to Siemens for Shop Repair and Modernization Services or Purchasers Material or Equipment being returned pumu- ant to the provisions of Me Warranty or Patents Articles of the Agreement will be delivered by Purchaser at its expense to the repair or manufacturing plant designated by Siemens where the work is to be performed. Rle to such Equipment or Purchasers Material will remain at all times with Purchaser. Risk of loss or damage to such Equipment or Purchasers Material will transfer to Siemens upon its arrival on board the carrier at the repair or manufao- turing plant and will transfer back to Purchaser upon its delivery to the carrier at the repair or manufacturing plant for velum to Purchaser.Delivery of Pur- chasers Material shall be made when the ftem is placed on board center at the repair or manufacturing plant.When repair work is performed by Siemens at the Site,title and risk of loss or damage to the Equipment,to Purchasers Material and to other property shall remain at all times with Purchaser. The to any defective or nonconforming components of the Equipment that are replaced by Siemens,as pad of Its warranty obligations shall,at Siemens'op- tion,revart back to Stamens upon completion of the replacement,with a deemed value of zero. D. Risk of loss of or damage to Purchasers Material or other property located at the Site shall remain with Purchaser at all times during the per. Sentence of work hereunder. If Purchaser procures or has procured property damage insurance applicable to occurrences at the She, Purchaser shall obtain a waiver by the insurers of all subrogation rights against Siemens and its Subsuppliers. S. Transportation A. Transportation and Storage: When Items of Equipment are ready for shipment or Shop Repair and Modernization Services are completed on Purchasers Material, Siemens will notify Purchaser to arrange for shipment. If Siemens has agreed in the Siemens proposal to transport Equipment, when items of Equipment are ready for shipment or Shop Repair and Modemlzation Services is completed on Purchasers Material,Siemens will(I)in the absence of shipping instructions,inform Purchaser of pending shipment and Purchaser will thereafter promptly give shipping Instructions to Siemens;(II) dir om ire the method of transportation and the routing of the shipment and(III)ship the Equipment or Purchasers Material freight prepaid and Included In the price by Normal Carnage: (1) to Purchasers designated destination when shipped by highway transport,or (2) to the nearest suitable red siding to Purchasers designated destination when shipped by rail transport. In the event that Purchaser fails to provide Siemens with timely shipping Instructions,Siemens will ship the Equipment or Purchasers Material by Normal Carriage to Purchaser or to a suitable storage location selected by Siemens. If the Equipment and/or Purchasers Material is to be placed Into storage In accordance with the above,delivery of Me Equipment or Purchasers Material shall be deemed to have occurred for all purposes under the Agreement, Including any payment due upon delivery, at the time the Equipment or Pur- nasees Material Is placed on board the cantor for shipment to the storage location. If the Equipment and/or Purchasers Material Is to be stored in the facility where manufactured, or where Shop Repair and Modernization Services are performed, delivery shall be deemed to have occurred when the Equipment and/or Purchasers Material is placed into the storage location at such facility. In the event of storage pursuant to the preceding Paragraph,all expenses thereby Incurred by Siemens,such as preparation for and placement into stor- age,handling,height,storage, Inspection, preservation,taxes and Insurance,shall be payable by Purchaser upon recelpt of an Involce(s)from Siemens. When conditions permit and upon payment to Siemens of any additional amounts due hereunder.Purchaser shall arrange,at its expense,for removing the Equipment and/or Purchasers Material from storage. B. Normal Carriage: When Siemens is providing the transportation of the Equipment and/or Purchasers Malarial,Siemens shall make every me- sonable effort to ship by highway transport unless rail transport Is required. Normal Carriage means carnage either by highway transport(provided this does not necessitate use of specialized riggers trades)or by red transport,on normal muting from the repair facility or manufacturing plant to(I)Purchas- sea designated destination when shipped by highway transport or(it) the nearest accessible suitable rail siding to Purchasers designated destination when shipped by all transport or(di)the port of expon selected by Siemens in the forty-eight(48)continental United States ft Purchasers designated destination is outside the United Stales or is In Alaska or Hawail. C. Special Transportation and Services: Purchaser agrees to pay or to reimburse Siemens for any transportation charges in excess of regular charges for Normal Carriage, including,but not limited to,excess charges for special routing,special trains,specialized riggers trailers,lighterage,barg- ing and air monsoon. Purchaser also agrees to pay or to reimburse Stamens for any coal incurred or charge resulting from special services performed In connection with the transportation of the Equipment or Purchasers Material, Including, but not limited to,the construction and repair of transportation and handling facilities, bridges and roadways,of whatever kind and wherever located. 7. Warranty A. Equipment Warranty and Exclusive Remedy(excluding Software): Siemens warrants that each component of the Equipment(excluding Soft- ware and wnsumables)furnished to Purchaser will be free of defects In workmanship and materials until the eenler of eighteen (18) months after the Delivery of such component of the Equipment or one(1)year from the date of first use of such component of the Equipment(the'Equipmenl Warranty Period'). CONFIDENTIAL wgway liroli rb'IY,t m II Selling Policy 1200 0 during the Equipment Warranty Period(or the Warranty Repair Warranty Period per Section TH, it applicable),Siemens Is promptly notified in wining that the Equipment or any component thereof falls to conform to the Equipment Warranty,Siemens will at its option and expense coned such nongm- formily by repair or replacement. & Software Warranty and Exclusive Remedy: If Equipment includes Software, Siemens also womints that the Software will be free of snore which materially affect its utility until the earlier of eighteen(18)months after the Delivery of such Software or one(1)year from the dale of first use of the Software(the"Software Warranty Period"). g during the Software Warranty Period(or the Warranty Repair Warranty Period per Section 7.11,if applicable).Siemens is promptly notified in writing that the Software fails to .to.to its warranty,Siemens will at its option and expense cored the nonconformity by connection In the medium originally sup plied or by providing a procedure to Purchaser for comedion of the nonconformity.Third party Software shall be warranted on a pass through basis in the same mother and for the same period and extent provided to Siemens by the entity which supplied said third party software. C. Field Installation Services, Field Repair and Modemizetion Services, Maintenance Sarvicea, and/or Shop Repair and Modernization Services Warranty and Exclusive Remedy: Siemens warrants that the work performed by Siemens on Purchaser's Material, including any materials (excluding consumables)supplied by Siemens in connection therewith(hereinafter in this Paragraph C referred to as the"Work"),will be frea of defects in design, workmanship and materials until one(1)year after the completion of such services (the Tield and Shop Repair and Modemtralion Services Warrant' Period"). If during the Field and Shop Repair and Modernization Services Warranty Period(or the Warranty Repair Warranty Period per Section 7.11,If applicable), Siemens is promptly notified in writing that the Work or any pad thereof fails to conform to the Field Installation Services,Field Repair and Modernization Services,Maintenance Services,and/or Shop Repair and Modernization Services Warranty,Siemens will at its option and expanse correct such noncon- formity by repair, replacement or reperformance of the detective portion of the Work. If repair,replacement or reperformance is Impracticable,Siemens will refund the amount of the compensation paid to Siemens by Purchaser for such nonconforming portion of the Work. D. Technical Services Warranty and Exclusive Remedy: Siemens warrants for each Rem of Technical Services that(i)the advice,recommends. bona and performance of Its personnel will reflect competent professional knowledge and judgment and fill the technical information,reports and analyses bansmifted by Siemens in connection therewith will reflect competent professional knowledge and judgment,beginning with the start of the Rem of Tech- nical Services and ending one(1)year after completion of said Rem of Technical Services by Siemens(the Technical Services Warranty Period"). If during the Technical Services Warranty Period(or the Warranty Repair Womanly Period per Section 7.11,If applicable),Siemens Is prompfty notified in writing that any portion of the Technical Services fails to conform to the Technical Services Warranty,Siemens will promptly reperform such nonconform- ing portion of the Technical Services. If repertomlance Is Impracticable Siemens will refund the amount of the compensation paid to Siemens for such noncontonning portion of the Technical Services. E. Tine: Siemens warrants that the Equipment, upon Delivery,shall not be subject to any encumbrances,liens,security interests,or other defects in title.In the event of any failure to conform to this womanly,Siemens,upon prompt written notice of such failure,shall defend the title to the Equipment. F. Warranty Conditions: The warranties and remedies set forth in this Adds are conditioned upon: (1) Purchasers receipt, handling, storage, installation, testing, operation and maintenance, Including tasks Incident thereto, of the Equipment, Purchasers Materiel or Purchasers equipment, in accordance with the recommendations of Siemens to the extent applicable or, in the absence of such recommendations or to the extent not applicable, in accordance with the generally accepted practices of the industry. In addition,such Equip menl, Purchasers Material or Purchasers equipment shall not have been operated in excess of limitations specified in writing by Siemens and not have been subjected to accident,alteration,abuse or misuse;and (2) For all warranty,work, Purchaser shall provide access to any operating and maintenance data as requested by Siemens,which may include broadband connection. (3) For all warranty work where disassembly,removal,replacement and reinstallation of Equipment,materials,structures or Purchasers Material was not pert of the Siemens scope of work under the Agreement, Purchaser providing,without cost to Siemens,access to the nonconformity by dis- assembling,removing, replacing and reinstalling any Equipment, materials,slmclums or Purchasers Malarial to the extent necessary to Permit Sie- mens to perform its warranty,obligations. (4) All werrany work being performed on a single hilt straight-fire basis,Monday through Friday. In the event Purchaser requests correction of warranty items on an overtime or multiple shin schedule,the premium portion of such overtime or multiple shift shall be to Purchasers account. (5) Purchaser,without cost to Siemens,making its Site factlities and personnel(to the extent consistent with personnel job classifications)avail- able to assist Siemens in the performance of its warranty obligations. (6) Purchaser,with respect to Paragraph 5 above,reimbursing Siemens for all costs incurred in the transportation of personnel and detective,re- paired or replacement parts to and from the Site. (7) Prior to the return of any Equipment or Purchasers Material to Siemens,the Purchaser must obtain authorization and shipping instructions from Siemens. The Equipment or Purchasers Material must be returned with complete identification in accordance with instructions furnished by Siemens. In no event will Siemens be responsible for Equipment or Purchasers Material returned without proper authorization and identification. Siemens resolves the right to mod any unauthorized returns and/or Hazardous Material. G. For the avoidance of doubt,in the event that physical loss or damage to the Purchasers property results from the failure of a warranted defer, five portion of the Equipment or Services to conform to its respective warranty during the applicable warranty period, should Siemens have any liability at all, Siemens' liability shall In no case exceed Siemens' obligation to perform the warranty remedies specified in Article 7 subsections A, g, C,or D, as applicable,which Siemens would have had to perform R such warranty,remedy had been carved out immediately following such failure but prior to the occurrence of the physical loss or damage. H. The warranty period for any Services or Equipment repaired or replaced by Siemens pursuant to this Article 7 shall not exceed the earlier of twelve(12)months after the data of completion of the Rem of repaired,replaced or reperfomrsd Equipment or Services or six(6)months after the expira- tion of the original warranty period(the Warranty Repair Warranty Period"). CONFIDENTIAL s+,sway owrrraanz n.n Selling Policy 1200 I. Additional Conditions Applicable to the Sale of Momtonng Devices: Monitoring devices supplied by Siemens pursuant to the Agreement,such as but not limited to,monitors for generator condition and for steam chemistry,may enable users to better diagnose and control conditions within a tur- bine generator.White such monitors may permit earlier detection of harmful conditions,Siemens does not warrant or represent that the use of such moni- tors will prevent failure or detect all hamful conditions In a turbine generator and Purchaser acknowledges the same. J. Additional Conditions Applicable to Diagnostic and Non-Destructive Examination and Testing: Diagnostic and non-destructive examination and feeling techniques employed by Siemens may not doted all of the defects in Purchaser's Material(including indications of aacldng)and such failure shall net constitute a breach by Siemens of its womanly obligations. Purchaser acknowledges that Siemens will not be responsible for the consequences of undetected defects including undetected cracks. K. Additional Conditions Applicable to Technical Field Assistance: More Siemens furnishes Technical Field Assistance under the Agreement Purchaser is responsible for(I)the supervision, management,regulation,arbitration and determination of the number of its personnel,agents,or contl tom and their work and(ill the planning,scheduling, management and progress of the work. Unless expressly agreed to in wining by Siemens,under no circumstances shall Siemens provide or be obligated to provide Technical Field Assistance directly or indirectly to any competitor of Siemens or their employees,representatives,or consultants. L. Exclusivity of Warranties and Remedies: THE WARRANTIES PROVIDED BY SIEMENS AS SET FORTH IN THIS ARTICLE ARE EXCLU- SIVE AND ARE IN LIEU OF ALL OTHER WARRANTIES WHETHER STATUTORY, EXPRESS, OR IMPLIED (INCLUDING ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE,AND ALL WARRANTIES ARISING FROM COURSE OF DEALING OR USAGE OF TRADE).Correction of noncomormities in the manner and for the period of time provided above constitute Siemens'sole and exclusive liability and Purchaser's sole and exclusive remedy for defective or nonconforming Equipment and/or Services whether claims of the Purchaser are based in contract, in tort(including negligence and surd liability),or any other theory of recovery. S. Taxes The price paid or to ne paid to Siemens under the Agreement does not include any federal,state,or local property,license,privilege,sales,use,excise, value added,gross receipts,or similar taxes(other than federal and state income taxes imposed on Siemens)now or hereafter applicable to,measured by,or imposed upon or with respect to the transaction,the Equipment and Purchaser's Material,its or their sale,their value or their use,or any Services performed in connection therewith.Purchaser agrees to defend,pay,and reimburse Siemens for any such taxes or costs,expenses,claims,liabilities,or losses including without limitations tax liabilities,penalties,and interest as a resuft of Purchasers ads or omissions related to such tours,which Siemens or its Subsuppliers are required to pay or are incurred by Siemens and its Subsuppliers. 9. Reserved 10. Force Majeure A. Siemens will not be liable for failure to perform or delay in performance of any obligation resulting from or contributed to by any cause beyond the reasonable:control of Siemens or its Subsuppliers or from any ad of God;ad of civil or military authority;ad of war whether declared or undeclared; act(including delay, failure to ad or priority)of any govemmerdal authority or Purchaser, ad of terrorism or threat thereof; civil disturbance, rebellion, insurrection, riot or sabotage;fire, inclement weather conditions.earthquake,fiord or natural disaster, strike,work stoppage or other labor difficulty;em- bargo,epidemic or quarantine;railroad car,fuel or energy shortage;major equipment breakdown;tlelay or accident in shipping or transportation;or failure or delay beyond its reasonable control in obtaining necessary manufacturing facilities,labor,work permits or working visas for Siemens'personnel or its Subsuppliers'personnel,necessary import or export licenses,or materials from usual sources. B. In the event of a delay in performance excusable under this Article,the data of Delivery or time for performance of the work will be extended by a period of time reasonably necessary to overcome the effect of such delay,and Purchaser will reimburse Siemens for its additional costs and expenses resulting from the delay. 11.Termination A. Purchaser,in its sole and absolute discretion,may terminate the Agreement, in whole or in part,at any time without cause,at any time by writ- ten notice to Siemens. In such rase, Siemens shall immediately discontinue work (unless the notice directs otherwise). Siemens shall be emitted to payment only for those goods,materials and equipment delivered and services performed that Purchaser has accepted.Should Me work be delayed for a period in excess of sit(S)months for any reason atthbulable to Purchaser and/or force majeure, or should any payment from Purchaser be thirty(30) days or more Past due,at the option of Siemens,Siemens may deem the Agreement to have been terminated by Purchaser.Termination Charges under this Section i 1 will be either. (a)the applicable termination fee from the termination fee schedule sal forth in the Siemens proposal;or(b) in the absence of a termination fee schedule,the portion of the purchase price for the worlr performed, man hours expended and materials acquired as of the data of lamination plus the expenses associated with the lamination, including,but not limited to,any additional expense incurred by reason of termination or cancellation of agreements between Siemens and its Subsuppliers, and any applicable cost allocated in contemplation of performance. Siemens will make every reasonable effort to minim¢e the Termination Charges. The Parties agree that such Termination Charges, including termination fees set fold in the Termination Fee Schedule,are a reasonable determination of the damages that Siemens would incur as a result of such termination and do not constitute a penalty. All Termination Charges shall be due and payable thirty(30)days from the date of the Siemens invoice. B. Purchaser may terminate the Agreement for cause in the event of(I)an ad of insolvency or bankruptcy by Siemens;or(ii,a material breach of the Agreement by Siemens,which Siemens fails to commence to cure within thirty(30)days after notice thereof from Purchaser and fails to diligently pursue thereafter. In such event, as Purchasers sole remedy for such default,Siemens will reimburse Purchaser for its reasonable and verifiable costs to complete the Services or obtain replacement Equipment up to twenty percent(20%) of the price for such gem of Equipment or Services under the Agreement C. In the event of any breach of the Agreement by Purchaser,Siemens shall be entitled to an extension of time to the extent necessitated by the breach and to reimbursement for all costs and expenses incurred by Siemens as a result of such breach. Siemens may terminate the Agreement for cause in the event of a material breach of the Agreement by Purchaser. If Siemens lemrinates the Agreement pursuant to this Paragraph 11.C,Purchas- er shall pay Siemens the Termination Charges(as defined in Paragraph 11 A)within thirty(30)days from the date of the Siemens Invoice. D. In addition,it at any time during the performance of its work under the Agreement Siemens reasonably determines that the Purchasers finan- cial condition may render it insolvent or unable to make future payments under the Agreement,then Siemens shall be entitled to one or more of the fol- lowing at Siemens'option: (I)adequate written assurances, supported by documentation, of Purchasers ability to pay; (ill payment in advance for any CONFIDENTIAL swx rmmfle) m. —o Selling Policy 1200 further work;(Ili)future payments against an irrevocable Letter of Credit on terms,and from an issuing bank,acceptable to Siemens;(iv)other payment seamy,or credit support mutually agreed by Purchaser and Siemens. 12. Intellectual Property Infringement A. Siemens will,at its own expense,defend or at its option settle any suit or proceeding brought against Purchaser so far as based on an allega- fion that any Services on Purchaser's Material or the Equipment(including parts thereop,or use thereof for he intended purpose,constitutes an Infringe- ment of any United States patent,copyright or misappropriation of a third parys trade secret,so long as Siemens Is notified promptly In venting and given authority, information,and assistance In a timely manner for the defense of said suit or proceeding.Siemens will pay the damages and costs awarded in any suit or proceeding so defended.Siemens will not be responsible for any settlement of such suit or proceeding made without its prior written consent. In dies the Services on Purchaser's Material or the Equipment,or any part thereof,as a result of any suit or proceeding so defended is held to constitute infringement of any such United Stales patent,copyright or misappropriation of a third parrs trade secret,or its use by Purchaser is enjoined,Siemens will,at its option and its own expense,either.(a)procure for Purchaser the right to continue using said Equipment or Purchaser's Material;(b)replace it with substantially equivalent non-infringing equipment;or(c)modify it so it becomes non-imringing. B. Siemens will have no duty or obligation to Purchaser under this Article to the extent that the Services on Purchaser's Material or Equipment is (a)supplied according to Purchasers design or instructions wherein compliance therewith has caused Siemens to deviate from its normal aurae of per- formance,(b)modified by Purchaser or Its contractors after delivery by Siemens,or(c)combined by Purchaser or its contractors with items not furnished hereunder and by reason of said design, instruction, modification, or combination a suit Is brought against Purchaser. In addition, 0 by reason of such design, instruction,modification or combination, a suit or proceeding is brought against Siemens, Purchaser shall protect Siemens In the same manner and to the same extent that Stamens has agreed to protect Purchaser under the provisions of Paragraph 12.A above. C. THIS ARTICLE IS AN EXCLUSIVE STATEMENT OF ALL THE DUTIES OF THE PARTIES RELATING TO PATENTS, COPYRIGHTS OR TRADE SECRETS AND DIRECT OR CONTRIBUTORY INFRINGEMENT THEREOF AND OF ALL THE REMEDIES OF PURCHASER RELATING TO ANY CLAIMS, SUITS, OR PROCEEDINGS INVOLVING PATENTS, COPYRIGHTS OR TRADE SECRETS. Compliance with this Article as provided herein shall constitute fulfillment of all liabilities of the parties under the Agreement with respect to patents,copyrights or trade secrab. 13.Confidential Inf...don A. Siemens may have a proprietary interest in information that is furnished pursuant to or In connection with the Agreement. As a Special District in the State of California, Purchaser adheres to the provisions of the California Public Records Act(California Government Code§6250 of no.). To the extent allowed by law,Purchaser will keep in confidence and will not disclose any such Information,or any of Siemens'intellectual property(including,but not limited W.any patents,copyrights or trade secrets),which Is speGOcally designated u being confidential by Siemens or use any such Information for other than the purpose for which it is supplied without the prior written permission of Siemens. The provisions of this Paragraph shall not apply to Infor- mation, notwithstanding any confidential designation thereof,which Is known to Purchaser without any restriction as to disclosure or use at the thne it is furnished,which is or becomes generally available to the public without breach of any eonfidentialiy obligation of Purchaser,or which is received from a third party,Including Purchaser's subsidiaries or affiliates,without limitation or restriction on said third party or Purchaser at the time of disclosure. B. Siemens also has a proprietary interest in (I)its proposal and the Agreement and (II)the processes and procedures used by its personnel in performance of the Agreement. Accordingly,the quotation,the Agreement and such processes and procedures shall not be disclosed or viewed in whole or in pad by third parties without the prior written permission of Siemens. C. Siemens also has a proprietary interest in the manner of performance of the work,including but not limited to the know-how,processes,metR ods and techniques employed by Siemens in connection therewith. The observing or recording of the work or any part thereof,whether by photographic, video or audio devices or in any other manner Is prohibited. In the event any such prohibited observation or recording occurs,any and all copies of any such recording(s)shall be fumed over to Siemens for destruction by Siemens. Siemens may(in addition to any other legal or equitable rights and reme- dies)slop the work until Siemens has satisfied itself that the prohibited conduct has ceased,and in such event(a)the date of delivery or time for Perfor- mance will be extended by a period of time which Siemens determines necessary and(b)Purchaser will reimburse Siemens for Siemens'and its Sub- suppliers'additional costs and expenses resulting from such delay,including but not limited to any far demobilization or remobllization. D. Without limiting its obligations pursuant to paragraphs 13.A and 13.B above, Purchaser agrees not to reverse engineer, modify, improve, or make derivative works of Siemens' confidential Information or intellectual property. Purchaser further agrees not to seek any intellectual property rights directly or indirectly based in whole or part on Siemens'confidential information or intellectual property without Siemens'prior written consent. Purchaser further agrees that it obtains any such intellectual property rights,it has acted or will act as an agent for the benefit of Siemens for the limited purpose of obtaining and securing such intellectual property rights and will upon written direction from Siemens assign the some to Siemens. E. Purchaser shall indemnity and hold Siemens harmless from and against any loss, damage or liability arising or resulting from non-compllence with the provisions of this Article 13. F. When required by appropriate gommmental authority, including governmental regulations,applicable law or regulation, by order of a court of competent jurisdiction or lawful subpoena (hereinafter collectively referred to as 'Governmental Authority'), Purchaser may disclose such corfidemial information to such Governmental Authority; provided, however,that prior to making any such disclosure,Purchaser will: (a)provide Siemens with timely advance written notice of the ProWlelery Information requested by such Governmental Authority and Purchaser's Intent to so disclose; (b)minimize the amount of proprietary information to be provided consonant with the interests of Siemens and its Subsuppliers and the requirements of the Governmental Authority involved; and (c) make every reasonable effort (which shall include participation by Siemens In discussions with the Governmental Authority involved)fo secure confidential treatment and minimization of the proprietary information to be provided. In the event that efforts to secure confidential treatment are unsuccessful,Siemens shall have the prior right to revise such intonation to minlmize the disclosure of such Information in a manner con- sonant with its interests and the requirements of the Governmental Authority involved. fit.LimOation of Liability A. PURCHASER EXPRESSLY AGREES THAT NEITHER SIEMENS NOR ITS SUBSUPPLIERS WILL UNDER ANY CIRCUMSTANCES BE LIA- BLE UNDER ANY THEORY OF RECOVERY,WHETHER BASED IN CONTRACT, IN TORT(INCLUDING BUT NOT LIMITED TO NEGLIGENCE AND STRICT LIABILITY),UNDER WARRANTY, OR OTHERWISE,FOR:ANY INDIRECT,SPECIAL, INCIDENTAL OR CONSEQUENTIAL LOSS OR DAW AGE OR PUNITIVE DAMAGES WHATSOEVER; DAMAGE TO OR LOSS OF ANY PROPERTY OR EQUIPMENT; LOSS OF PROFITS OR REVENUE OR LOSS OF USE THEREOF; LOSS OF USE OF PURCHASER'S MATERIAL, EQUIPMENT OR POWER SYSTEM; LOSS OF DATA; INCREASED COSTS OF ANY KIND,INCLUDING BUT NOT LIMITED TO CAPITAL COST,FUEL COST AND COST OF PURCHASED OR REPLACEMENT POWER; OR ANY CLAIMS OF CUSTOMERS OF PURCHASER. CONFIDENTIAL aammw rnvnw.mnn.o Selling Policy 1200 B. PURCHASER EXPRESSLY AGREES THAT THE REMEDIES PROVIDED IT IN THE AGREEMENT ARE EXCLUSIVE.AND THAT UNDER NO CIRCUMSTANCES SHALL THE TOTAL AGGREGATE LIABILITY OF SIEMENS OR ITS SUBSUPPLIERS UNDER ANY THEORY OF RECOVERY, WHETHER BASED IN CONTRACT, IN TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY), UNDER WARRANTY, OR OTHERWISE, EX. CEED THE TOTAL PRICE PAID TO SIEMENS UNDER THE APPLICABLE PURCHASE ORDER. C. ALL LIABILITY OF SIEMENS AND ITS SUBSUPPLIERS UNDER THIS AGREEMENT SHALL TERMINATE NO LATER THAN THE EXPIRA- TION OF THE WARRANTY PERIOD. D. THE PROVISIONS OF THIS ARTICLE SHALL PREVAIL OVER ANY CONFLICTING OR INCONSISTENT PROVISIONS SET FORTH ELSE- WHERE IN THIS AGREEMENT. 15.Transfer,Ownership and Export Compliance A. Prior to the transfer to another party of any Equipment, Purchasers Materiel,work product famished hereunder by Siemens'or its Subsuppll- ers,or the transfer of any Interest in said Equipment, Purchaser's Material or work product,or the facility In which or the she an which sail Equipment, Purchasers Material or work product Is or will be Installed or furnished, Purchaser shall obtain for Siemens written assurances from the translation of limllation of and protection against liability following the proposed transfer at least equivalent to that afforded Siemens and its Subsupplom under the Agreement. B. If Purchaser is not the sole owner of the Equipment,Purchasers Materiel,work product famished hereunder by Siemens or a,Subsuppliers,or the facility In which or the she on which the Equipment,Purchasers Material or work product is or will be Installed or furnished,Purchaser represents and warrants that it has(and will maintain)written assurances from each and every other owner of limitation of and protection against liability of Siemens and Us Subsuppllers with respect to each and every such other owner at bast equivalent to that afforded Siemens and its Subsuppliers under the Agreement. C. Transfer contrary to the provisions of paragraph 15.A. above or in breach of paragraph 15.8. above, shall make Purchaser the indemnitor of Siemens and its Subsuppllers against any liabilities incurred by Siemens and its Subsuppliers in excess of those that would have been Incurred had no such transfer or breach,as the rase may be,taken place. D. puniness,acknowledges that Siemens is required to comply with applicable export Is"and regulations relating to the sale,exportation,trans- fer,assignment,disposal and usage of the Equipment and/or Services provided underthe Agreement, Including any export license requirements.Pur- chaser agrees that such Equipment and/or Services shall not at any time directly or Indirectly be used,exported,acid,transferred,assigned or otherwise disposed of In a manner which will result in non-compliance with such applicable export laws and regulations.It shall be a condition of the continuing per. fomlance by Siemens of its obligations hereunder that compliance with such export laws and regulations be maintained at all times.PURCHASER AGREES TO INDEMNIFY AND HOLD SIEMENS HARMLESS FROM ANY AND ALL COSTS,LIABILITIES,PENALTIES,SANCTIONS AND FINES RELATED TO NON-COMPLIANCE WITH APPLICABLE EXPORT LAWS AND REGULATIONS.' 16.Software License Siemens grants to Purchaser a nonexclusive,nontransferable license to utilize the Siemens Software furnished hereunder solely for Purchasers internal use in connection with the Siemens equipment for which it is supplied or in which such Software Is Incorporated.All title and ownership of the Siemens Software, Including,without limitation, the copyright to such Software, shall remain exclusively with Siemens. Purchaser may make one backup copy of the Software for the sole purpose of replacement of a wom,impaired,damaged, or destroyed original copy. Purchaser shall not itself,or with the assis- tance of others,reverse compile,reverse engineer,or In any other manner attempt to decipher in whole or In pan the logic or coherence of any Software licensed hereunder. Third pant Software provided by Siemens may be subject to a separate license agreement and/or registration requirements and limitations on copying and use. 17.Compliance with Laws In the performance of work under the Agreement,Siemens and its Subsuppliers shall comply with all applicable provisions of Executive Order 11246,as amended, relating to equal opportunity and non-segregated facilities,the Fair Labor Standards Act of 1933 and the Occupational Safety and Health Ad of 1970.The price for the work is based on compliance by Siemens with applicable laws, regulations and technical codes and standards as they are in affect on the data of the Siemens proposal(or the effective date of the Agreement I no proposal was provided). 13. Changes A. Purchaser may request changes within the scope of the Agreement and, it accepted by Siemens,the pace.performance,schedule and other paNnOnt provisions of the Agreement will be adjusted by mutual agreement of the parties poor to Implementation of the change. B. Expenses incurred by Siemens due to(i)delays, other than delays which are deemed to be within the reasonable control of Siemens, and(lid) changes In applicable laws, regulations and technical codes and standards or the Imposition of new laws, regulations and/or technical codes and stsnb ands after the applicable data set forth in Article 17 will be treated as changes to the scope of work and the Agreement will be adjusted as set forth In the previous Paragraph. C. Siemens may make a change(s)in the Equipment, Services on Purchasers Material or the other Services without additional compensation from Purchaser 0 such change(s)does nit adversely affect the warranties, the Interface with Purchaser's equipment,materials and plant, the technical soundness of the work,the operability of the facility where the Equipment or Purchasers Material is installed or for which Siemens is providing Services under the Agreement,or the schedule. 19. Inspection by Purchaser Purchaser shall have reasonable access to the areas of the Siemens plants where work under the Agreement Is being Performed to enable Purchaser to observe tests on the work. Siemens, if requested, will inform the Purchaser of those tests and procedures which can be witnessed. Should Purchaser elect to witness specific tests,Purchaser must sit specify such requirement In ample time to permit Siemens to Include said witness tests In the schedule. Siemens,it requested,will advise Purchaser of the schedule of such tests.However, no rescheduling of teals or delays in manufacturing or shipment will be made to accommodate such inspection. Siemens will exercise reasonable efforts to secure similar rights with respect to the inspection of Purchasers work at Subsuppllers premises. 20. Removal of Hazardous Material Prior to the shipment of any Equipment or Purchasers Material to Siemens for Services at Siemens' or its Subsuppliers' manufacturing plant or repair facility,the Purchaser must remove all Hazardous Material and ACM. 21. Purchasers Third Party Pent Warranty CONFIDENTIAL s+aawx rxwti rn.wiz n.o Selling Policy 1200 Purchaser warrants that any and all Third Party Palo which may be the subject of any Services shall(a)be fully compatible with the corresponding part, component,equipment or material of the Original Equipment Manufacturer('OEM')In terms of form,fit, and function;(b)shall be timely provided to Sie- mens hereunder, and (c) shall be capable of installation in the same manner and within the same time as the corresponding OEM part, component, equipment,or material. Purchaser assumes the entire liability and risk adsing out of or resulting from Third Party Parts and Services on Third Party Pens. Siemens'wemenlles sat forth In Article 7 do not apply to any Third Party Parts or Services an Third Party Parts,and SIEMENS DISCLAIMS ANY AND ALL WARRANTIES AND REMEDIES,WHETHER STATUTORY,EXPRESS OR IMPLIED(INCLUDING ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND ALL WARRANTIES ARISING FROM COURSE OF DEALING OR USAGE OF TRADE), OR OTHERWISE, FOR OR WITH RESPECT TO THIRD PARTY PARTS OR SERVICES ON THIRD PARTY PARTS. 22.Indemnity Until the expiration of the applicable Warranty Period,Siemens shall Indemnity,hold harmless and defend Purchaser Its officers,directors and employees from and against any claims, demands, suits, liabilities,judgments, losses, damages, costs or expenses (including reasonable legal fees, costs and charges)for personal injury or death or toes of or damage to third party property(except property of customers of Purchaser or property Incorporated in or intended to be incorporated in the project),to the extent mused by or arising out of any negligent act or omission or willful miscontluct of Siemens,or any of Its officers,directors,agents,employees or Subsuppliers in connection with performance of work under the Agreement('Purdlaser Indemnity Claim). Simmons'indemnification obligations under this Section 22 are conditioned upon Purchaser providing Siemens with: (I)prompt notice of any Purchaser Indemnity Claim; (11)the unrestricted dght to defend any Purchaser Indemnity Claim; and(III)full cooperation and support in the investigation,defense and/or settlement of the Purchaser Indemnity Claim. Until the expiration of the applicable Warranty Perod,Purchaser shall indemnify,hold harmless and defend Siemens its officers,directors and employees from and against any claims, demands, suite, liabilities, judgments, losses, damages, costs or expenses (including reasonable legal fees, costs and charges)for personal injury or death or less of or damage to third paid property to the extent mused by or arising out of any negligent ad or omission or willful misconduct of Purchaser,or any of its officers, directors, agents,employees or subcontractors In connection with performance of work under the Agreement(Siemens Indemnity Claim'). Purchase's indemnification obligations under this Section 22 are conditioned upon Siemens providing Pur. chaser with: (i)prompt notice of any Siemens Indemnity Claim;(it)the unrestricted right to defend any Siemens Indemnity Claim;and(III)full cooperation and support In the Investigation,defense and/or settlement of the Siemens Indemnity Claim. 23.Stamm In connection with the Agreement,Siemens shall maintain Insurance(or sag insurance)as specified below: A. Worker's Compensation: Siemens shall comply with workers compensation laws(or equivalent)in each jurisdiction where work is performed, and shall maintain a Workers Compensation and Employers Liability Insurance policy. If any work Is to be performed on or near navigable waters,the policy shall Include coverage for United Stales Longshoremen's and Harbor Workers Ad, Death an the High Seas Ad, Janes Ad,or their equivalent as required by the applicable law in the jurisdiction where such work Is performed. The limits of such Insurenos shall be as follows: Worker's Compensation: Statutory Employers Liability: $1,000,000 each accident and in the aggregate $1,000.000 disease each empleyea B. Commerdal General Liability: Siemens shall maintain commercial general liability insurance on an occurrence basis to provide coo rage for Bodily Injury; Personal Injury,Property Damage,Explosion,Collapse and Underground harards(XCU);Contractual Liability(Particularly applicable to the provisions of the Indemnity Article of this Agreement);and Products and Completed Operations with limits as follows: $1,000,000 each occurrence and in the aggregate C. Business Automobile Liability: Siemens shall maintain business automobile liability Insurance which shall Include coverage for all owned, non- conned and hired vehidee with the following limit: $1,000,000 Combined Single Limit D. Umbrella Liability:Siemens shall maintain umbrella liability Insurance with a limit of$2,000,000 each occurrence and in the aggregate. The pol- icy shall W excess over the Commercial General Llabilly,Business Automobile Liability,and Employees Liability coverages. E. The coverages set forth In B,C and D above shall include Purchaser as additional insured to the extent that bodily injury,death and third parry property damage are caused by the negligent ads or omissions of Siemens or its Subsupplie s. 24.Reserved 26.Miscellaneous Provlslons A. Shipment Dates: Shipment dates are the dates the Equipment or Purchasers Material will be ready for shipment from the manufacturing plant, Siemens repair facility or other facility where the Services are performed and are predicated on the prompt receipt by Siemens from Purchaser of all in. tonation necessary to commence and complete the work without delay or interruption. Unless otherwise stated in a Purchase Omer,shipment dales are not guaranki Should Purchaser request Siemens to ship any Equipment or Purchasers Material prior to a data established based on Siemens stand- ard lead time for such Equipment or Purchasers Material, and provided Siemens accepts in writing the eerier dale, an additional fee will be applied to cover the costs associated with such expedited shipment. B. Warmers: The failure of either Party to enforce at any time any of the provisions of the Agreement or to require at any time performance by the other Party of any of such provisions,shall in no way be construed to be a waiver of such provision,nor In any way to aged the validity of the Agreement or any parts thereof,or the right of either Party thereafter to enforce each and every provision. CONFIDENTIAL s.avrer,witn w.xaa�.o Selling Policy 1200 C. Modification: No waiver, modification, or amendment of any of the previsions of the Agreement shall be binding unless it is in writing and signed by duly authorized representatives of both parties. D. Headings: The headings used in the Agreement are not to be construed as modifying,limiting or expanding in any way the seeps or extent of the previsions in the Agreement. E. Assignment: Except far assignment by Siemens to an affiliate of Siemens,the Agreement will not be assigned by either Party without the prior written consent of the other Parry,which consent will not be unreasonably withheld.Any purported assignment without such prior written consent shall be null and void. F. Governing Law: The Agreement will be construed and interpreted in accordance with the laws of the State of California without application of its choice of law or conflict of law rules. G. Personnel: Siemens reserves the right to change any of its personnel performing Services under the Agreement. In such event,Siemens will provide replacement personnel of equivalent capabilities and bear any additional travel and living expanse associated with providing such replacement personnel. H. Performance Guarentse(s)and Exclusive Remedy: There are no performance guarantees of the Equipment and/or Services unless specifically set forth in the Siemens proposal. In the avant any Performance guarantees are provided In the Siemens proposal,Purchaser's sole and exclusive reme- dy and Siemens'sole and exclusive liability for any failure of the Equipment and/or Services to comply with such performance guarantees under any theo- ry of recovery shall be the liquidated damages specified in such Siemens proposal up to the lima specified therein,which liquidated damages shall only be paid on a'no harm,no but'basis. The Parties agree that such liquidated are a reasonable determination of the damages that Purchaser would incur as a result of the failure of the Equipment and/or Services to meet the Performance Guarenteos and do not constitute a penalty. I. Environmental Compliance: Purchaser recognizes that the Performance of Services at the She may involve the generation of Hazardous Mato- 091. Purchaser shall at its expense furnish Siemens with containers for Hazardous Material and shall designate a waste storage facility at the She where such containers am to be placed by Siemens.Purchaser shall handle,store and dispose of Hazardous Material in accordance with all applicable federal, state and local laws, miss, regulations and ordinances. Purchaser shall reimburse Siemens for additional costs, B any, Incorrect in complying with any such laws,regulations,miss and/or ordinances. Siemens shall have no responsibility or liability with regard to any Hazardous Material which it does not know or have reason to knew will be generated in the perfortmnce of the Services, and Purchaser shall indemnify and hold Siemens harmless for all pollution and environmental impairment arising from the Purchasers property,the Equipment or the Services. J. Asbestos and Thermal Insulation (1) The Purchaser warrants,represents,and certifies that,In any areas which may be accessed by Siemens or its Subsuppliers,any ACM which Is or is contained in thermal insulation or sprayed-on surfacing material is conspicuously and specifically marked as ACM,and any other ACM is in a lawful condition. (2) Prior to Slemens'commencement of Services at the Site: (a) The Purchaser shall, at Purchasers expense remove all thermal insulation, sprayedcn surfacing material, and/or ACM, including ACM which may be disturbed during or removal of which is required for the performance of the Services;and (b) The Purchaser shall ensure that any areas where any activities involving the abatement or removal of thermal Insulation,sprayed-on sur- facing material or ACM shall be conspicuously Identified,posted and isolated,all as required by applicable law. PURCHASER EXPRESSLY ACKNOWLEDGES AND AGREES THAT SIEMENS IN PERFORMING THE SERVICES AND PERMITTING EW PLOYEES TO ENTER THE WORK AREAS IS RELYING UPON THE COVENANTS,AGREEMENTS,WARRANTIES,CERTIFICATIONS AND REPRESENTATIONS MADE BY PURCHASER ABOVE. Without Iimhing its other rights and remedies Siemens shall not be obligated to commence or may slop any work In any Work Areas unless fully satisfied that the Purchaser is in compliance with Paragraph 25.J(1)above and this Paragraph 25.J(2), and shall be entitled to an equitable ed- justment in the schedule,price and other provisions of the Agreement affected thereby or otherwise affected by Purchasers noncompliance. (3) In no event shall Siemens be obligated to install, disturb, handle, or remove any thermal insulation, spreyedon surfacing material, or ACM except as specifically agreed in writing by Siemens and only after Siemens has been provided acceptable chemical analyses verifying that the same are not ACM. (4) Siemens makes no representation that it is licensed to abate ACM. Notwithstanding anything sal forth in the Agreement and unless Siemens is provided satisfactory written evidence that such GPW Is not ACM, Siemens shall be obligated to handle, remove,or reinstall generator wedges, packing,or high temperature gaskets(such materials herein'GPW)only if such activities are within the scope of the Services and only then to the extent that: (I) such activities would be classfied as Class II or Class III activity under United States Code of Federal Regulations Chapter 29 Section CFR 1926.1101 at seq.; gi) such activities do not require a permit,license,or authorization; (III) such activities are not likely to generate anthems asbestos fibers,and (iv)all such GPW is non-friable. In all other cases, such activities shall be Purchasers responsibility and Siemens shall be entitled to an equitable adjuabnent In the schedule,price and other pertinent effected provisions of the Agreement should the same not be performed in a timely manner. The disposal of any GPW or scrap or waste material resulting from its disturbance or removal shall in all mass be the Purchasers msponslbillty. CONFIDENTIAL sevroa-r ammra•>oiz ..u Selling Policy 1200 (5) Purchaser shall defend, indemnify and hold Siemens and as Subsupplism harmless against any and all claims,demands,damages,losses, liabilities,fines,penalties,costs or expenses,including without limitation any dean up or remedial measures arising out of.connected with,or result- ing from the Purchasers failure to comply with the provisions of this Article 25.J. K. Integration: The Agreement contains the entire agreement and understanding between the parties as to the subject matter of the Agreement, and merges and supersedes all prior or contemporaneous agreements,commitments,representations,writings,and discussions between them.Neither of the parties will be bound by any prior or contemporeneous obligations,conditions,warranties,or representations with resped to the subject matter of the Agreement. L. Survival: The provisions entitled'Intellectual Property," Additional Conditions Applicable to Nuclear Installations,' Confidential Information; 'Limitation of Liability;'Tmnsfer, Ownership and Export Compliance;'Software Uconse;the second Paragraph of'Delivery,Tale and Risk of Loss or Damage; and subsection (5) of the provision entitled 'Asbestos and Thermal Insulation' shall survive lamination, expiration or cancellation of the Agreement. M. Site Safety: Purchaser shall comply with all federal,state, and kcal safety regulations and standards applicable to the site and to the equip- ment on which Siemens will Perform the work. Siemens shell not be obligated to commence or perform work unless Purchasers she complies wlth all applicable safety requirements. In the event Purchasers site safety is noncompliant,Siemens may suspend work until such time as Purchaser corrects the noncompliance.To the extent Siemens infers additional time and expense as the result of Purchasers non-compliance,Siemens shall be entitled to an equitable adjustment In the schedule,price and other affected provisions of the Agreement. N. Sewrabiliy: In the event that any one or more of the provisions contained herein shall,for any reason, be held to be invalid, Illegal or unen- forceable in any respect,such Invalidity, Illegality or unenforcoebility,shall not affect any other provisions of this Agreement, but this Agreement shell be construed as R such Invalid,illegal or unenforceable provisions had never been contained hemin,unless the deletion of such provision or provisions would result in such a material change so as to cause completion of the transactions conlemplated herein to be unreasonable. IN WITNESS WHEREOF, intending to be legally bound,the Parties hersto have caused this Purchasing Agreement to be signed by the duly author- ed representatives. ORANGE COUNTY SANITATION DISTRICT Dated: By: Chair,Board of Directors Dated: By: Clark of the Board Dated: By. ContradsfPurchasing Manager SIEMENS DEMAG DELAVAL TURBOMACHINERY, INC. Dated: By. Print Name and T@e of Officer IRS Employees I.D.Number CONFIDENTIAL Suggested Preventative Maintenance Schedule by Plant Personnel 1.0 Routine Inspections A. Inspect general condition including oil leaks and cleanliness of compressor assembly unit B. Inspect and replace inlet filter(s)as required C. Sample and conduct oil analysisichange oil as required D. Inspect and change oil filter(s)as required (See Section H, Item 0740). E. Check lube oil level I fill as required(Max full equals lower 1 inch of your dip stick) F. Verify all 4-20 mA current loops are operating properly(indicated on your transmitter monitor page) G. Verify surge detection unit operates properly 1 Clean per Section H, Item 1370 2.0 Annual Inspections A. Repeat routine inspections, plus--- B. Inspect inlet filters and silencer for cleanliness and general condition C. Verify discharge check valve operates properly to prevent back flows D. Verify proper operation of blow-off,and butterfly valves E. Inspect control arm(s)of variable control vanes for slippage F. Calibrate inlet guide vane and variable diffuser vane operating span G. Check coupling alignment and outer blades of disc-pack for distortion and or fatigue cracks, follow in- structions per Section H, Item 0070 H. Verify discharge expansion joint alignment and allowable flange loading is not exceeded I. Test Limit switches 3.0 Drive Motor A. Keep motor clean and ventilation openings clear of dust,dirt, or other debris. Service and Lubricate as indicated in the 0&M. Follow instructions found in the Components section of this manual (See Section H, Item 0020). 4.0 Auxiliary Oil Pump A. Keep motor clean and ventilation openings clear of dust, dirt,or other debris. Lubricate bearings every three(3)years. Follow instructions found in the Components section of this manual (See Section H, Item 0705). 5.0 Solenoid Valve and Butterfly Valve A. While unit is off-line, operate the valve once a month to insure proper opening and closing. Note: Change of Lube oil A. The lube oil should be changed after the first 500 hours of operation. Subsequent oil samples should be evaluated by an oil analysis service every three(3)months,with change of lube oil to take place accord- ing to the recommendation of the oil analysis service. Suggested Preventative Maintenance Schedule Siemens Demag Delaval Turbomachinery, Inc. Suggested PM Schedule-GK,GA,GL Series Gearbox SIEMENS Revision:2 Date:4115 Suggested Preventative Maintenance Schedule by Authorized Siemens Demag Delaval Turbomachin- ery, Inc. Personnel Siemens offers the following services independently or through our preventative maintenance pro- gram.These services are designed to provide long term performance and maximized power savings throughout the life of the blower. Aeration and process control service and tuning is also available. 1.0 Annual Inspections- A. Inspect general condition including oil leaks and cleanliness of compressor assembly unit B. Inspect and replace inlet filter(s)as required C. Check lube oil level D. Verify all 4-20 mA current loops are operating properly(indicated on your transmitter monitor page) E. Verify surge detection unit operates properly I Clean per Section H. Item 1370 F. Inspect inlet filters and silencer for cleanliness and general condition G. Verify discharge check valve operates properly to prevent back flows H. Verify proper operation of blow-off,and butterfly valves I. Inspect control arm(s)of variable control vanes for slippage J. Calibrate inlet guide vane and variable diffuser vane operating span K. Inspect all mechanical and electrical connections are secure (up to discharge cone) L Check coupling alignment and outer blades of disc-pack for distortion and or fatigue cracks,follow in- structions per Section H, Item 0070 M. Verify discharge expansion joint alignment and allowable flange loading is not exceeded N. Test Limit switches 2.0 Class l Inspection-(air-end) A. First recommended inspection is at approximately 18,000 hours of service(or sooner if site conditions dictate);thereafter, based on oil analysis, site and blower condition, and operation of mechanisms. Es- timated service time: 4-6 days, per unit,assuming one (1) local helper and crane facilities. Class 1In- spection includes the following: 1. Repeat annual inspection, plus--- 2. Dismantle compressor air-end 3. Remove gearbox access covers for visual observation of internal condition. (GL gearbox only) 4. Inspect and clean variable vane system 5. Check variable vane geometry 6. Check axial movement on high and low-speed shafts 7. Check unit alignment before re-start as required 3.0 Class 11 Inspection-(air-end and gearbox) A. Second recommended inspection is at approximately 36,000- 50,000 hours of service(or sooner if site conditions dictate);thereafter, based on oil analysis,site and blower condition, and operation of mech- anisms. Estimated service time: 6-8 days, per unit,assuming one (1) local helper and crane facilities. Class II Inspection includes the following: 1. Repeat Class l Inspection, plus--- 2. Dismantle gearbox 3. Inspect gearwheels, bearings&seals and check clearances, adjust clearances as required. 4. Replace flexible seals(O-rings) 5. Reassemble gearbox 6. Visually inspect electric motor,oil pump,oil cooler,coupling,valves, etc. 7. Provide recommendations for corrections of unusual findings and future services To schedule a Siemens Demag Delaval Turbomachinery.Inc.Field Service Technician,please contact us at Tel:609-690-5000:Fax: 609-587-7790 Suggested Preventative Maintenance Schedule Siemens Demag Delaval Turbomachinery,Inc Suggested PM Schedule-GK,GA,GL Series Gearbox SIEMENS Revision:2 Date:4115 WASTEWATER AERATION TURBOCOMPRESSORS SIEMENS Proposal Package w/ Attachments low i� WASTEWATER AERATION COMPRESSORS SIEMENS SIEMENSField Service Estimate Customer: Orange County Sanitation District Contact Emilio Arislan Email: E ARISTONCocsd.cOm Phone: 657,600.12" Siemens Proposal Number: 20005617 Site Name: Orange County Sanitation District Plant No.1 si a a: 094 Location: Fountain Valley,California Model: STC-GO(I(A68-SV-GI400) Serial Numbers): 3997 Description or Scope: Includes Class I Inspection and VO retrofit Installation Labor Total Number of Days Onslta 5 days/compressor) 5 Quantity of Persons I 1 Weekday Labor 9131W 8-hr wont day) 96,560 Per Dksm 7 days on she Including weekends $2,240 E ul mentyParts $90.601 Required E ul ment/Parls for i coca ressor Include: calmly Pat, D.d Wn 1 GL315TO08 SHIM SET 1 GL315TO08 SHIM SET 1 1417157594 O-RING,SILICONE 1 89027262 O-RING 2 89027296 O-RING 1 89412415 O-RING 1 N17V6290 O-RING 1 hA68VD VD retro kit Ent mate ax( $7,248 Estimated Total far 1 unk it $109 649 Notes: The above calculations are only estimates. The final price shall be calculated using the actual Time and Material. Time expenses shall include all project specific bme at the fixed hourly rates above plus per items In accordance with the attached Service Rate Sheet. Time shall include all time required to perform and support the pmjed including,but not limited to,prepamUon,mobilization,demobilization.site specific safety training,travel, site meetings,and start up support. This proposal assumes that the site will provide at least one qualified helper to assist the Siemens technician. This pricing also assumes that proper cleaned lifting will be available and the Intel filtermansitlan place,and sound enclosures will be removed(If applicable)for access to perform Class I.Does not Include craft labor and tools to support the work. This proposal includes the typical replacement components for the sarvice.Any significant wear or abnormalities identified requiring extra labor andlor pads shall be billed per Siemens'standard Service Rate Schedule. Siemens will provide an estimate of additional time and materials as required. Aftadlments:Field Service Rate Sheol,Siemens Selling Policy,Suggested Preventative Maintenance Schedule,Pre-Service Checklist 6 Mandatary Lifting Device Reponing. Time and Material pricing Per Siemens FS Rateshests for 2015 Services for USA(onshore) Currency USD Terms of Payment Net 30 Days Terms of Delivery DAP Fountain Valley.Califomia,USA Terms and Conditions Slemens Selling Policy 1200 dated November 1,2012 Forward Purchase Orden to Stamens Demag Delaval Turbomachlnery,Inc. 840 Nottingham Way Hamilton,NJ 08638 USA Phone:(609)890-5000 I Fax:(609)587.7790 Prepared By Vandy PaM8sar81hy yandvoanhasarathvUDsiemens.com Validity period 09/1512016-10/142016 Thank you for your continued interest in Siemens products and services CONFIDENTIAL Slemens Dames Delaval Turhomechhmry,Inc. Best Regards, C - Y- V+ Vandy Chakravarthy Parthasarat Customer Service Representative Siemens Demag Delaval Turbomachinery, Inc. Tel: 417-380-5728 Fax: (609) 587-7790 E-Mail: vandy.parthasarathy@siemens.com Thank you for your continued interest in Siemens products and services CONFIDENTIAL Field Service Rate Sheet Services for USA (onshore) All Siemens Industrial Steam and Gas Turbines, Compressors and Pumps Daily Personnel daily rate daily rate daily rate hourly rate hourly rate Category in excess of in excess of Mon-Fri Saturday Sunday or 8hours 8hours based on 8 based on local holiday worked worked hour work 8 hour work based on days day 8hour work Mon-Sat Sunday or day local holiday 1� P Specialist $1,976 USD f 2,964 USD S 3,952 USD $371 USD $494 USD it N Technical Field $11588 USD $21382 USD S 3,176 USD S 298 USD S 397 USD Advisor(TFA) Field Service $1,312 USD $1,968 USD $2,624 USD $246 USD $328 USD 40 Technician pmthatns• Mobilization I DeSiemens Donnas Delaval mobilization Upmehours• Uptol2haos Uptol2hous Upb24homx- Upto36hours• Turbomachinery Inc. U6Al Gnada• International* 840 Nottingham Way Hamilton,NJ 08638 $1,750 S 3,500 $5,000 $5,750 $10,900 $14,SD0 All rights reserved. Subject to change •Exciudes airfare.Airfare is billed at cost plus 15%administration fee. without prior notice.M PS Daily Per Diem Charge: $320 from arriving at location or cost plus 15%administration fee. Tnull mentioned In this document are the The above rates are in US Dollars and include expenses as referenced in the attached property of Siemens Charging Appendix. AG,it affill.too,or their Validity: From January 1,2015 to December 31, 2015 Contacts: For Parts, Repairs and Service Support,please contact your local Siemens Power Systems Sales Person,Local District Service Manager,or 609-890-5000. Siemens After-hours Emergency Cell Phone: 609-890-5555 Doc Code: ® 'ZERO'harm to people and the environment is the ultimate goal in our business. Answers for energy. SIEMENS Charging Appendix - Field & Engineering Services For Service on All Siemens Acquired Steam Turbines,Gas Turbines,Compressors and Pumps in U.S.A.and Internationally,except Canada Effective January 1,2015 Subject to change without notice I. Selling Policy A.Travel and Expanses: The Daily Labor All prices contained herein are subject to C.Field Service Technician Rates exclude the following casts, which the terms and conditions of the Siemens Field Service Technician services are the shall be for Customer's account and will Damao Delaval Turbomachinery, Inc, performance of the disassembly, inspec- be charged separately: ('Siemens") Selling Policy 1200 for the tion, and replacement of parts, routine a)MobilizationlDemobilization Fees shall Sale of Equipment and Services (Selling repair and reassembly of rotating equip. be charged at a graded fixed fee de. Policy') in effect on the date an order is ment, or the complete removal and re- pendent on the required travel time received,unless other terms are agreed to installation of the entire unit. from base location to the Site.Mobili. in writing by the parties. Capitalized zatiunfOmmobilization fees include terms used In this document shall have IV. Rates Payable preparation time, visa costs and all the definition set forth herein or, if no Except for small gas turbine services travel time and expenses excludin : such definition is specified In this docu. performed Internationally,a Standard Day (i) airfare; (if) Per Diem Charge as de. ment,then they shall be as defined in the for on-shore work is defined as 8 hours fined in Section VI(A)(b)). The Selling Policy working time. A Standard Day for off- transport from the point of embarks. shore work is defined as 12 hours work tion to an offshore location and back If. Price Policy ing time. For small gas turbine services will be provided by the Customer free All rates and prices are subject to change performed internationally outside of USA of charge. without notice. Unless otherwise agreed, or Canada, a Standard Day is defined as b)Per Diem Charge: Accommodation, Siemens rates are expressed on the Field 12 hours working time. meals, local transportation and allow- Service Rates Sheet as daily rates per ances, where not provided by the Cus. category of Siemens personnel ('Daily Minimum billing is the Daily Labor Rate, tomer will be charged on a lump sum Laboz Rates'), plus Mobiliza. The applicable Daily labor Rate applies to daily basis. By agreement,the Custom- tipnlDemobilization Fees and Per Diem all time worked or traveled (excluding er may be charged actual cost of the Charges. Unless contracted otherwise. MobilizationlDemobilization travel time), accommodation,meals,local transport rates and prices for ongoing contracts with an allowance for lunch cation and allowances plus a 15% fee will be those in effect at the time the time.Overtime rates apply for time for handling and administration costs. work Is performed. All rates shall be valid worked in excess of a Standard Day.This c)The Per Diem Charge will be assessed only for the period of validity set forth on is an hourly charge, based upon actual for each calendar day an Individual is the attached price list Airfare and addi. additional time worked in guess of a assigned to a project Including non tional costs are billed as set forth herein. Standard Day. Two overtime rates apply; working weekend days for jobs extend. No personnel will be dispatched until a one for time worked in excess of a Stand- ing over the weeknand(s). Purchase Order, or written authorization and Day Monday through Saturday and d)Where the Customer provides accom acknowledging acceptance of terms, one for time worked in excess of a Stand. modation and food, it is to be to a pricing and agreement to pay is received. and Day on a Sunday or local holiday. standard which is acceptable to Sie. mens. In the event that this Is, in Sie. III. Services Definitions mens opinion,unsuitable,Siemens m. A. Specialist Services The Daily labor Rates include the supply serves the right to find an alternative Specialist Services are the following: (i) and use of basic PPE (Personal Protective which will be charged for as above. an engineer, project manager, or tech- Equipment)and the use of standard small e)In the event that unusual expenses are nical field advisor(TFA)directing Siemens hand tools, as required by Field Service required in traveling from the place of personnel or advising Customer person Technicians. accommodation to the Site, Siemens nel to Siemens procedures and process reserves the right to charge the Cuss specifications; (if) TFA providing plan Siemens may offer a priority service, tomer for such expenses at cost plus ning, scheduling, material management when the relevant Siemens personnel are 15% for handling and administration support or working directly with Custom available, for emergency or breakdown expenses. ers labor supervisor: (sit)diagnostic and callouts. An additional 3091,of the appli. D Siemens reserves the right to charge operational trouble-shooting and com- cable Daily Labor Rate will be charged business class flights. missioning of rotating equipment (con where Siemens personnel are requested g)AII separately invoiced items over and ducted onsite or by telecommunication); to be mobilized within 24 hours of the above the Daily Labor Rate, Far Diem (iv) diagnostic electrical testing, evill request being received. This charge is to Charge, Mobilization/Demobilization tion and set-up activities on control sys cover for the disruption to job schedules Fees anchor airfare will be charged at tents, voltage regulator systems, any on- and the reallocation of manpower to cost plus 15% fee for handling and line diagnostics or Level III NDE and bal. accommodate the priority cell. If Sie- administration costs. ancing; (v)engineers located at Siemens mens is unable to meet the 24 hour home facilities, including District Offices mobilization request, there will be no B.Departure Delay and Cancellation and the Technical Support Center,provid- additional charge, a)Departure delay - Standby in Home Ing technical studies and information Base relating to the design and operating V. Payment Terms for Supply of Per. If the fixed date for the personnel del. parameters of rotating equipment. A job sonnel egation is delayed due to reason by the specific readiness fee will apply to all Payment shall be as follows: Where the Customer,Siemens is prepared to keep orders for Specialist Services that are not duration of the services is less than one the nominated personnel on stand-by firm priced. This fee will cover pm-lob month.Payment will be 100%of the price up to 2 calendar days. In this case Sie. efforts and will be quoted separately. of the balance of the services upon com- mens shall charge a delay fee of the pletion of the services. Where the duration full applicable Daily labor Rate per cal- 8. Technical Field Advisor(TFA) of the services is greater than one month endar day of delay. TFA services are a TFA rendering advice then the balance of the services shall be Ill Departure Delay-At Point of Embarks- and making recommendations based on invoiced on a monthly basis until comple- tics Siemens procedures and drawings during tion of the services. Payment shall be Should departure of personnel be de. disassembly,inspection,and replacement received within 3D days of the date of the layed at the point of embarkation for of parts,routine repair and reassembly of Invoice, any reason beyond Siemens control, existing and installation of new Siemens the applicable Daily Labor Rate will be supplied rotating equipment to Custom- VI.Traveling and Other Expenses charged per day of delay.Accommoda. er's employees. lion and meals where provided by Sie- Doc.Code:FSCA US 01-01.2015 Page 1 of 2 Charging Appendix - Field & Engineering Services For Service on All Siemens Acquired Steam Turbines,Gas Turbines,Compressors and Pumps in U.S.A.and Internationally,except Canada Effective January 1,2015 Subject to change without notice mens will also be charged according to passive loss or damaged Tools beyond the published rates, the control of Siemens will be charged In the interests of avoiding language c)Cancellation to the Customer. difficulties, the Customer shall, for own Where Siemens is notified by the Cos- account, make available the services of tamer of a cancellation less than)days E.Shift Work interpreters where work is being per prior to planned mobilization,a cancel. Shift work is defined as those circum formed. lation fee plans single day at 100%of stances where,in a given day,more than the applicable Daily Labor Rate will be one service crew is engaged to perform If an incident occurs whereby the Sie. charged. the service activity. In such instances mens Personnel are unable to safely Should any job be cancelled or post- Siemens reserves the right to charge a continue working at Site and which, in pond by the Customer after the repre- shift premium in addition to the applica- agreement with the Customer, results in tentative has been dispatched,all costs We Daily Labor Rates their repatriation to home base the cost incurred for time and expenses will be for both the repatriation and subsequent charged in accordance with the terms F.Technical Consultation return to Site of the personnel or their of this Field Service Rate Sheet and a)During on-site service work it might be replacements shall be borne by the Cos- Charging Appendix. necessary to involve specialists from timer. Siemens headquarters for particularly C.Nome Leave complicated technical questions such VIIL Additional Notes a)For USAICanadian service personnel, as certain analysis,calculations or simi- a)In the event Siemens uses outside or when a project is expected to exceed 5 lar tasks. For such technical consulta. subsidiary personnel to perform services continuous weeks of duration, follow tion, Siemens will invoice this charge that would normally be Performed by ing every 3 weeks of continuous at. on an hourly basis according to the Siemens personnel,Siemens will invoice tendance at an onshore site,including Specialist Services rates as defined in Customer for such Personnel at the any days spent traveling,the Customer the published rates sheet. hourly rates published herein. will allow each member of Siemens b)Where technical consultation is re- b)Non-Siemens pans or materials supplied personnel an extended Weekend home quired to be provided at Site, charges during the work will be charged at cost leave journey at the Customer's ex will be in accordance with the pub. plus 25%. pense. For International personnel, lished rate sheets for Specialist Set home leave is permitted every 2 vices.Before such work is commenced, months for 10 days at the Customer's a separate agreement has to be estab. expense. lished.unless it is already agreed upon b)If continuous attendance of Siemens in the order. Personnel is requested and Siemens agrees to delegate substitute person- VII.Workinp Conditions and Special hill, the applicable Mobilize- Costs tionlDemobilization Fee shall be paid Costs for factory security officers, medical by Customer.. services, industrial safety and supporting c)Following every fourteen days of con. activities at the Customer site will be for tinuous attendance offshore, Siemens the account of the Customer. Where addi- reserves the right to charge the Cus- tional security is required to comply with tomer a further mobilization fee for Siemens travel regulations (based on Sie- each member of Siemens personnel. mens Corporate Security Office), this will d)Days spent traveling with respect to be charged at cost plus 15% fee for han- home leave shall be charged at the ap- dling and administration costs. plicable Daily Labor Rate. Should any member of Siemens personnel cancel a In can of accident or illness,the Customer home leave journey, the Customer undertakes to provide immediate medical shall be charged for the airfare and/or assistance and if necessary,to transfer any other travel costs incurred by Siemens, injured or sick person to a hospital prefers. bly conforming to North American stand D.Tools ards.Should repatriation become necessary a)Charges for equipment, tools, measur- as a result of serious illness or death, the ing instruments and special assembly Customer shall attend to all formalities and Wets supplied with Siemens field ser- Pay all the costs incurred thereby. Should vice personnel for use by Siemens or its replacement personnel be required the subcontractors(*Tooli)will be quoted costs for same shall be borne by the Cus- by your local Siemens representative. tomer. Costs of transportation of Tools (in- cluding all applicable transportation The Customer shall make available free of charges, insurance, customsldutiet, charge to Siemens personnel: office etc.) will also be charged at cost plus space, telephone, high speed intereet 15% fee for handling and administra. connection and telexliax(communication tion costs.The rental time applies from with home office shall be free of charge) the day of dispatch from base to return and all such other facilities as are availa. receipt. ble to Customers own Personnel. b)Siemens will catalogue the Tools re quired to be returned to base.If for any Any social amenities available at the job event the catalogued Tools are not re, site or introduced there during the pro- turned within 30 days after leaving gress of site work,as well as any special site,Siemens will charge the Customer benefits granted,shall be made available the current replacement cost. to Siemens personnel in the some man- c)Pdces quoted will Include normal ner and extent as accorded to any other replenishment and re-calibration. Ex. foreign personnel at hejob site. Doc.Code:FSCA US 01-01-2015 Page 2 of 2 Siemens Demag Delaval Turbomachinery,Inc. Selling Policy 1200- mpany SIEMENS 840'emens Nottngham Way OCSD Trenton, New Jersey, U.S.A. D8638 (For Sales in the U.S.A. Excluding the States of Louisiana and Mississippi) November 1,2012 These Tema and Conditions Govern Supersedes Selling Policy 1200 dated May 1,2005 the Sale of Equipment and Services The terms and conditions set forth in the Siemens Demag Delavel Turbomachmory,Inc.proposal and In this Selling Policy 1200 are the tams and mn& dons governing the Siemens proposal and any Agreement between the penes for the Equipment and/or Services covered by such proposal. Each pro- posal is wild for stdy(60)days horn the data of the proposal unless extended or wiMdmm in writing by Siemens. The Issuance of a Purchaser pur- chase order or any other reasonable manner of acceptance by Purchaser mmmunlceted to Siemens during such validity period will form an Agreement based upon the terms and mndhlom of the Siemens proposal and this Selling Policy 1200. 1. Definitions Wherever used In this document with initial mpdeltration,the following definitions shell be applicable; A. "ACM'as used herein shall mean Asbestos and Presumed Asbestos Coming Materiels. B. "Agreement"means me Siemens proposal,this Selling Policy 1200, Purchasers purchase order,as accepted by Siemens,(excluding any pre- printed terms and conditions on said purchase order and in any atlachmerds to or purchaser documents referenced in and purchase order)or other doo ument evidencing scorptance of the Siemens offer as sat forth in the Siemens proposal;or an integrated agreement signed by Siemens and Purchaser, for the Equipment,and/or Services. C. 'Asbmtos'shall have the meaning set forth in United States Code of Federal Regulations Chapter 29,Sections 1920.1101 at seq. D. 'Equipment'means equipment,components,parts,materials and Software provided by Siemens pursuant to Me Agreement. E. 'Field Installation SeMcea'means the installation by Siemens of Purchasers Material at the She. F. °Field Repair and Modemtretion Services'means me repair,modification or modemeartion work,or some or all of their,performed by Siemens on Purchasers Material at me She and for certain activities at a repair facility selected by Siemens. G. 'Hazardous Material'means any material listed in the'Hazardous Material Table'set form in 49 CFR 172.101 as amended. H. 'Maintenance Services'means the disassembly,inspection and reassembly of Purchasers Material at the Site. I. 'Nuclear Incident'shall have the meaning sat forth In the Atomic Energy Act of IVA.42 U.S.C.2011.of seq..are amended. J. 'Party means indlviduelly either Siemens or Purchaser. K. 'Parries'means collectively both Siemens and Purchaser. L. "Presumed Asbestos Containing Material'shall have the meaning set forth In United States Code of Federal Regulations Chapter 29,Sedioas 1926.1101 etseq. M. 'Purchaser means the entity purchasing Equipment and/or Services, as well as any ether owners of the facility Whom the Equipment or Pur- cheeers Malarial is orwlll be situated. N. 'Purchasers Material'means the equipment,materials,cemponente and items of any kind owned by Purchaser or any other owner oft"Site forwhich Serviced ere to be provided or era provided under the Agreement O. '9erviom'means Shop Repair and Modernization Services,Field Installation Services,Field Repair and Modernization Services, Maintenance SeMcm,and Technical Services;or soma or all or them provided by Siemens pursuant to the Agreement. P. 'Services an Third Party Parts'means Services In connection with Third Party Paris. 0. 'Shop Repair and Modernization Services means work performed by Siemens on Purchasers Material at a Siemens manufacturing plant a Siemens repair factlhy or another suitable facility selected by Siemens. R. 'Siemens'means Siemens Deming Delaval Tumomachmery, Inc. and its affiliated companies and their subsidiaries.successors and assigns, and each of their respective partners,principals,shareholders,directors,officers,empbyees,and agents. S. 'Site'means the Purchasers facility where the Equipment or Purchasers Material Is or will be situated. T. 'Special Services means the performance by a Siemens field service representative of diagnostic and operational troubleshooting on Purchas are Material,both on line and off Ilre.This work may be conducted on Site or by telecommunication. CONFIDENTIAL Selling Policy 1200 U. "Software'means instructions In machine readable form,other than source Cade,and emaciated documentation delivered by Siemens to Pur- chaser In chip,disk and/or tape format. V. 'Subsuppliar'means any subombactor or supplier of any tier who supplies goods and services to Siemens In Connection with the obligations of Stamens under the Agreement W. Technical Field Assistance'means the advice and consultation given to Purchaser's personnel by a field service representative of Siemens with respect to: (1) installation,inspection,repair and/or maintenance activities performed by others at the She,and (2) any Siemens recommended quality assurance procedures for activites performed at the Ste. Technical Field Assistance does not include management supervision or regulation of Purchaser's personnel,agents or contractors. X Technical Serviws'means(i)Technical Field Assistance;(I)Special Services; Call Inspection of equfpmem which has been disassembled by Purchaser or others;(iv)bachniral evaluation of inspection performed by Siemens,Purchaser or others;(v)technical information provided by Siemens, Including data intapretmon and reports;(v)inspections,technical evaluation of Inspections,technical analysis of materials and technical rerammends- bons related to Shop Repair and Modernization Services;(wit advice and Consultation given to Purchasers personnel at the Site or at a Siemens facility by a Siemens engineer or technician;and/or(vil)adWw and guidance given to Purchaser by Siemens field engineers) regarding methods and proce- dures for installeban,maintenance and/or Calibration of the Equipment or Purchaser's Material. Y. Third Party Pans'means parts,components,equipment or materials provided by Purchaser under the Agreement or that exist in the Purchas- er's Material which were not manufactured or supplied by Siemens or the predecessors of Siemens or which were originally supplied by Siemens or the predacenscrs of Siemens and subsequently repaired,serviced or otherwise modified or altered by any perry not affiliated with Siemens or with a prede- cessor of Siemens. 2. Scapa Siemens will fumish to Purchaser Equipment and/or Services as specified in and pursuant to the Agreement. 3. Price Policy For an Agreement for Equipment supply only, unless Otherwise stated in the Siemens proposal,lire price does not Include chasesemby and reassembly of Equipment at the Site. Prices are firm for()Equlpmem with a scheduled shipment date of sixty(60)weeks or less from Siemens acceptance of the Purchase Order and(i) Services which are scheduled to be performed within sixty(60)weeks from Slemena'acceptance of me Purchase Omer. For It)Equipment with a scheduled shipment date in excess of simy(60)weeks and C)Services scheduled to be Completed beyond sbdy(60)weeks from Siemens'acceptance of the Purchase Order, the prices are subject to adjustment upward or downward for changes in the speGSed labor and material indexes in awordance with the provisions of the applicable Siemens Price Adjustment Policy. a. Term of Payment A Unless otherwise specified, Siemens shall issue invoices in awomance wdh the schedule set fold In the Siemens proposal. K an Im ice schedule is not set fold in the Siemens proposal,Siemens shell issue invoices as Me work is Completed,but no more often than monthly. In any event, all invokes shall be paid within thirty(30)days after me data of the invoice. B. In any Instance where Purchaser is unable to return Components to Siemens for thing or for coordination with other assemblies by the specific date agreed to in the Agreement or whom a portion at the wok is to be performed by Siemens at a later time,Siemens reserves the right to Invoice Pur- chaser for wale performed to data and either ship me Components to Purchaser in their existing state or hold the wmPonems in storage at Purchaser's Oak and expense.That portion of the wok which is to be performed by Siemens at a later date will be Performed as a Purchaser requested change under Article 18,Changes. C. R shipments are delayed by Purchaser,aftented payments shall become due based on the date Siemens Is prepared to make shpment. D. Any past due amounts shall,without prejudice to the right of Siemens to payment when due,bear interest at a floating one equivalent to one- twelit(1112)of the per annum prime rate charged by JPMorgan Chase Bank,New York, New York,U.SA.,as such prime rate is published on the first banking day following the data payment Is due,plus an additional one-he8 of one percent(0.5%),payable each month or portion thereof that payment is delayed. If payments are not made when due Siemens may, upon fifteen(15)days written notice and m its option, ()terminate this Agreement(which lamination shall be treated as a termination pursuant to Article 11,Termination)or(i)suspend all further work hereunder.Resumption of work thereafter Is Contingent upon Correction of the Payments delkiency by Purchaser.The schedule for the resumed work will be established by Stamens based on its then mment work load and the avefiabilay, of other resources.All Siemens expanses associated with any such suspension shall be for the account of Purchaser. E. If there exists a good faith dispute over the amounts to be paid,Purchaser shall notify Siemens in writing that such dispute exists and Purchas- er shell pay the undisputed amount.The disputed portion may be held in abeyance until resolution of the dispute with that portion,together with the inter- est charge specified in Paragraph D above,due thirty(30)days after said resolution. F. Unless otherwise set ROM in Me Siemens proposal, if shipment(from the manufacturing plant or repair facility where the work is performed) and/or Delivery of an Ram of time Equipment or Completion of a portion of the Services Is delayed for Causes which are within the reasonable control of Siemens, issuance of the invoice Covering the final five percent(5%)payment for the delayed work will be deferred for twice the number of months by which shipment/Delivery of sorb Item of the Equipment or Completion of such portion such Services Is delayed;provided,however,Mat such deferral of Me final Invoice shell only be applicable d the delay in shpmem and/or Delivery of the Equipment or the delay in Completion of the Services has actually delayed the Purchaser's project for which the Equipment and/or Services mm purchased. G. THE REMEDIES OF PURCHASER SET FORTH ABOVE AND/OR IN THE SIEMENS PROPOSAL FOR DELAY IN SHIPMENWDELIVERY OR COMPLETION OF SERVICES CAUSED BY SIEMENS ARE PURCHASER'S SOLE AND EXCLUSIVE REMEDIES AND NO OTHER REMEDIES OF ANY KIND WHATSOEVER SHALL APPLY.Deferral of the Issuance of the final five percent(5%)Inv61m as set fold above and/or provision of the reme- CONFIDENTIAL srwropmm�w.smz..,, Selling Palley 1200 dy set forth in the Siemens proposal shall constitute complete fulfillment of all liabilities of Siemens to Purchaser,for delay in shipmer Mee very of Equip- ment or completion of Services whether based in contract,in led(including negligence and amid liability),or any other theory of recovery. S. Delivery,Title and Risk of Loss or Damage A Unless otherwise stated in the Siemens proposal,delivery of each component of Equipment shall be made Ex Works(Incelers 2010)at the manufacturing plant('Delivery).Subject to the provisions of Paragraph B below,legal and equitable this and risk of loss or damage to each such compo, rent of the Equipment shall pass from Siemens to Purchaser upon Delivery. B. TNe to and right of possession of any Software licensed hereunder,without legal process,shall remain with Siemens or is licensor,except that Purchaser shall have the right of possession and use of the Software provided hereunder for the terns of the corresponding license provided herein,so long as no breach of this Agreement has been made by Pumaser and all payments due Siemens have been paid. Nothing in this Agreement shall be construed as giving Purchaser any right to sell, assign, lease or in any other manner transfer or encumber Siemens'or its licensers ownership of the Soflvrare,or as limiting Siemens or its fioansor from using and licensing the Software to any third party. C. Purchasers Material sent to Siemens for Shop Repair and Modernization Services or Purchasers Material or Equipment being returned pusu- am to the previsions of the Warranty or Patents Articles of the Agreement will be delivered by Purchaser at its expense In the repair or manufacturing plant designated by Siemens where the work is to be performed.The to such Equipment or Purchasers Materiel will remain at all than with Purchaser. Risk of loss or damage to such Equipment or Purchasers Material will transfer to Siemens upon He arrival on board the carrier at the repair or manufao Wring plant and whit transfer back to Purchaser upon its delivery to the carrier of the repair or manufacturing plant for Mum to Purchaser.Delivery of Pur- clu secs Malarial shall be made when the item is placed on board carrier m the repair or manufacturing plain.When repair work is performed by Siemens at are Site,title and risk of loss or damage to the Equipment,to Purchasers Materiel and to other property shall remain at all times with Purchaser. Tite to any defective or nonconforming components of the Equipment thet are replaced by Siemens,as part of Its warranty obligations shall,at Siemens'op- tion,revert bark to Siemens upon completion of the replacement,with a deemed value of wro. D. Risk of loss of or damage to Purchasers Material or other property located at the Site shall remain with Purchaser at all times during the per. formance of work hereunder. If Purchaser pewres or has procured property damage Insurance applicable to occurrences at the Ste, Purchaser shall obtain a waiver by the insurers of all subrogation rights against Siemens and its Subsuppllers. 8. Transportation A. Transportation and Storage: When items of Equipment ere ready for shipment or Shop Repair and Modemication Services are completed on Purchasers Material, Siemens will notify Purchaser to arrange far shipment If Siemens has agreed in the Siemens proposer to transport Equipment, when items of Equipment are ready for shipment or Shop Repair and Modernization Services is completed an Purchasers Material,Siemens will()in the absence of shipping instructions,inform Purchaser of perching shipment and Purchaser will thereafter promptly give shipping instructions to Siemens;(i) determine the method of hansporation and the routing of the shipment and(ii)ship the Equipment or Purchasers Material freight prepaid and included in the price by Normal Carriage: (1) to Purchasers designated destination when shipped by highway transport,or (2) to the nearest suitable rail siding to Purchasers designated destination when shipped by rail transport. In the event that Purchaser fails to Provide Siemens with finery shipping instructions,Siemens will ship the Equipment or Purchasers Malarial by Normal Damage to Purchaser or to a suitable stooge location selected by Siemens. If the Equipment and/or Purchasers Material is to be placed into storage in accordance with the shove,delivery of the Equipment or Purchasers Material shall be deemed to have occurred for all purposes under the Agreement, Including any payment due upon delivery, at the time the Equipment or Pur- chasers Material is placed on board the carrier for shipment to the storage location. If the Equipment and/or Purchasers Material is e be stared in the facility where manufactured, or where Shop Repair and Modernization Services are performed, Delivery shall be deemed to have occurred when the Equormard and/or Purchasers Material is placed into the storage location at such facility. In the event of storage pursuant to the preceding Paragraph,all expenses thereby incurred by Siemens,such as preparation for and placement into stor- age,handling,height,storage, inspection,preservation,taxes and insurance,shall W payable by Purchaser upon accept of an Invoice(s)from Semen. When conditions pert and upon payment to Siemens of any additional amounts clue hereunder, Purchaser shall arrange,at its expense,for removing me Equipment and/or Purchasers Material from storage. B. Normal Carriage: When Siemens is providing the transportation of the Equipment and/or Purchaser's Material,Siemens shall make every rea- sonable effort to ship by highway transport unless rail transport is required. Normal Carriage means ceroge ether by highway transport(provided this does not necessitate use of specialised riggers bailer)or by mil transport,on normal muting hoer the repair fadlity or manufacturing plant to(I)Purchas- es designated destination when shipped by highway transport or(t)the nearest accessible suitable rail siding to Purchasers designated dealing!. when shipped by rail transport or(fill the port of export selected by Siemens in the forty4ght(48) continental United Sites if Purchasers designated destination is outside the Unded Sites or is in Alaska or Hawaii. C. Special Transportation and Services: Purchaser agrees to pay or to mimbuse Siemens for any transportation charges in excess of regular charges for Normal Damage, including, but not limited to,excess charges for special routing,special Veins, specialized riggers trailers,lighterage, burg ing and air transport. Purchaser also agrees to pay or to reimburse Siemens for any mat trimmed or charge resulting from special services performed in connection with the transportation of the Equipment or Purchasers Material, including, but not limited to,the construction and repair of transportation and handling facilities, bridges and madways,of whatever kind and wherever located. 7. Warranty A Equipment Warranty are Exclusive Remedy(excluding Software): Siemens warrants that each component of the Equipment(excluding Soft- ware and consumables)furnished!to Purchaser will be free of defects in workmanship and materials unit[the eerier of eighteen (18)months after the Delivery of such component of the Equipment or one(1)year from the date of that use of such component of the Equipment(the'Equipment Warranty Penodl. CONFIDENTIAL xwrvw%r rornre.anzm rr Selling Policy 1200 If during the Equipment Warranty Period(or the Womanly Repair Warranty Period per Section 7.11, 'd applicable),Siemens Is promptly notified In waling that the Equipment or any component thereof falls to conform to the Equipment Warranty,Siemens will at its option and expense correct such noncom fommy by repair or replacement. B. SeMware Warranty and Exclusive Remedy: If Equipment Includes Software, Slemans also warrants that the Software will be free of errors which materially effect He utility un01 the earlier of eighteen(18)months after the Delivery of such Software or one(1)year from the dale of first use of the Software(the'So6ware Warranty Peaodl. If during the Software Warranty Period(or the Warranty Repair Warranty Period per Section 7.14,If applicable),Siemens is promptly notified In waling mat the Software falls to conform W its warranty,Siemens will at its option and expense correct Me nonconformity by correction in the medium originally up- plied or by providing a procedure to Purchaser far correction of the nonconformity.Third party Software shall be warranted on a pass through basis In the same manner and for the same period and extent provided to Siemens by the entity,which supplied said third party software. C. Fuld Inssllatlon Services, Field Repair and Modembatbn Services, Maintenance Services, and/or Shop Repair and Modernization Services Warranty and Exclusive Remedy: Siemens warrants that the work performed by Siemens on Purchaser's Material, including any materials(excluding o nneumebles)supplied by Siemens in connection therewith(hereinafter in this Paragraph C referred to se the Worm,will be free of defects in design, workinonshlp and materials until one(1)year after the completion of such services (the'Fteld and Shop Repair and Modernization Services Warranty Period-). tl during the Field and Shop Repair and Modemcagon Services Warranty Period(or the Warranty Repair Warranty Period per Section 7.1-1,tl applicable), Siemens Is promptly notified In writing that the Work or any pad thereof fails W conform W the Field Installation Services,Field Repair and Modernization Services,Maintenance Services,and/or Shop Repair and Modembation Services Warranty,Siemens will at its option and expense mrract such noncom WrmHy by repair,replacement or reperformance of the defective portion of the Work. If repair,replacement or reperWrmance is Impracticable, Siemens will refund the amount of Me compensation paid to Siemens by Purchaser for such nonconforn ing portion of the Wont. D. Technical Services Warranty and Exclusive Remedy: Siemens warrants for each item of Technical Services that()the advice,recommends- dom and performance of its personnel will rafted competent professional knots edge and judgment and(I)the technical Information,reports and analyses oa anni tend by Siemens in connection therewith will reflect competent professional knowledge and judgment beginning with the start of the Hem of Tech nical Services and ending one(1)year after completion of said item of Technical Services by Siemens(the'Technlcal Services Warranty Period). If during Me Technical Services Warranty Period(or the Warranty Repair Warranty Period per Section 7.1-1,ft applicable),Siemens Is promptly notified in writing that any portion of the Technical Services fails W write=to the Technical Services Warranty,Siemens will promptly neparform such noncentorrry ing portion of the Technical Services. If reperformance s impracticable Siemens will refund the amount of the compensation paid W Siemens for such nonconforming portion of the Technical Services. E. Tale: Siemens warmri6 that the Equipment,upon Delivery,shall not be subject to any encumbrances,lions,security Interests,or other detects In title.In the event of any failure W conte=W this warranty,Siemens,upon prompt written notice of such ailum,shall defend the title W the Equipment. F. Warranty Conditions: The warranties and remedies set forth in this Article are conddloned upon: (1) Purchasers recelpt handling. storage, Installation,testing, operation and maintenance, including tasks incident thereto, of Me Equipment Purchasers Material or Purchasers equipment, in accordance with the recommendations of Siemens W Me extent applicable or, In the absence of such recommendations or W th extent not applicable, in accordance with th generally accepted practices of the industry. In addition, such Equip. ment Purchasers Material or Purchasers equipment shell not have been operated in comas of limitations specified In writing by Siemens and not have been subjected to accident sheretion,abuse or misuse;and (2) For all warranty work. Purchaser shall provide access to any operating and maintenance data as requested by Siemens,which may include broadband connection. (S) For all womanly work where disassembly,removal,replacement and reinstallation of Equipment materials,structures or Purchasers Material was not pert of the Siemens scope of work under the Agreement, Purchaser providing,without cast W Siemens,access W Me nonconformity by it& assembling,removing,replacing and reinstalling any Equipment, materials, structures or Purchasers Material to the eraent necessary to permit Sis mens W Perform he wenamy obligations. (4) All warranty,work being performed on a singioshi6 sleight-time bass,Monday through Friday. In the event Purchaser requests correction of warranty items on an overtime or multiple shift schedule,the premium portion of such over ime or multiple shift shell be to Purchasers amount. (5) Purchaser,without cost W Siemens,making its Site facilities and personnel(to the indent consistent with personnel job classifications)avail- able W assist Siemens in the performance of is warranty,obligations. (6) Purchaser,with respect W Paragraph 5 above,reimbursing Siemens for all costs inured in Me transportation of personnel and defective, m- paired or replacement pars W and from the Site. (7) Prior W the remm of any Equipment or Purchasers Material to Siemens,the Purchaser must obtain authorsatlon and shipping instructions from Siemens. The Equipment or Purchasers Material must be returned with complete identification in accordance with instructions furnished by Stamens. In no event will Siemens be responsible for Equipment or Purchaser's Material returned without proper authorization and Identification. Siemens reserves the right W eject any unauthorized returns and/or Hazardous Material. G. For the avoldanm of doubt, In the event Mat physical loss or damage to Me Purchasers property results from the failure of a warranted deco- Ow portion of the Equipment or Services W conform to its respective warmly during the applicable warranty period,should Siemens have any liability at all,Siemens'liability shall in no rose consent Siemens'obligation W perform the warranty remedies specified In Article 7 subsections A,S.C, or D, as applicable,which Siemens would have had to Perform g such warranty remedy had been mined out immediately following such failure but prior W the occurrence of the physical lass or damage. H. The warranty period for any Services or Equipment repaired or replaced by Siemens pursuant to this Article 7 shall not exceed the eadler of twelve(12)months after the date of completion of the Hem of repaired,replaced or reperformed Equipment or Services or eh(6)months after the expire. ton of the original warranty period(the Warranty Repair Warranty Period"). CONFIDENTIAL awwwev non w.vwxmo Selling Policy 1200 I. Additional Conditions Applicable to the Sale of Monitoring Devices: Monitoring devices supplied by Siemens pursuant to the Agreement,such as but not limited to, montiors for generator condition and for steam chemistry, may enable users to better diagnose and control conditions within a tur. bine generator.While such monitors may permit senior detection of harmful conditions,Siemens does not warrant or represent that the use of such monlk tors will prevent failure or dated all harmful conditions m a turbine generator and Purchaser acknowledges the same. J. Additional Conditions Applicable to Diagnostic and Nan-Destructive Examination and Testing: Diagnostic and non-destructive examination and testing techniques employed by Siemens may not dated all of the defects in Purchames Material(including Indications of packing)and such(allure shall not constitute a breach by Siemens of its warranty obligations. Purchaser acknowledges that Slenrens will not be responsible for the consequences of undetected defects including undetected packs. K Additional Conditions Applicable to Technical Field Assistance: Where Siemens furnishes;Technical Field Assistance under Me Agreement, Purchaser is responsible far(1)the supervision,management,regulation,arbitration and determination of the number of its Personnel,agents,or mntrao- fors and their work and III)the planning,scheduling,management and program of the work. Unless exprase y agreed to In writing by Siemens,under no circumstenms shall Siemens provide or be obligated to provide Technical Field Assistance directly or indirectly to any competitor of Siemens or their employees,representatives,or consutiar s. L Exclusivity of Warrarrias and Remedies: THE WARRANTIES PROVIDED BY SIEMENS AS SET FORTH IN THIS ARTICLE ARE EXCLU- SIVE AND ARE IN LIEU OF ALL OTHER WARRANTIES WHETHER STATUTORY, EXPRESS, OR IMPLIED (INCLUDING ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE,AND ALL WARRANTIES ARISING FROM COURSE OF DEALING OR USAGE OF TRADE).Correction of nonconfonmities In the manner and for the period of time provided above mnstibute Siemens'sole and eucusve liability and Purchasers sole and exclusive remedy for defective or nonconforming Equipment and/or Services whether claims of the Purchaser am based In contract, In tort(including negligence and strict Imbility),or any other theory of recovery. a. Taws The prim paid or to be paid to Siemens under the Agreement does not include any federal,state,or local property, license,privilege,sales,use,excise, value added,gross receipts,or similar taxes(other than federal and state Income taxes imposed on Siemens)now or hereafter applicable to, measured by,or Imposed upon or with respect to the transaction,the Equipment and Purchase's Material,its or their sate,their value or their use,or any Services perfomretl in mnnecbon therewith.Purchaser agrees to defend,pay,and reimburse Siemens for any sudh tams or costs,expenses,claims,liabilities,or losses including without limitations tax liabilities,penalties,and interest as a result of Purchaser's acts or omissions related to such tams,which Siemens or as Subsuppllerm am required to pay or are matured by Siemens and its Subsuppliers. 9. Reserved 10.Force Masure A Siemens will not be liable for failure to perform or delay in performance of any obligation resulting from or contributed to by any muse beyond the reasonable mrhtrol of Siemens or its Subsuppfiers or from any ad of God;ad of civil or military authority;ad of war whether declared or undedared; ad(including delay, failure to ad or priority) of any governmental authority or Purchaser,act of terrorism or threat thereof, cvll disturbance, rebellion, Insurrection,riot or sabotage;fire, Inclement weather conditions,earthquake,flood or natural disaster,strike,work stoppage or other labor dtificu0y;em. bargo,epidemic or quarantine;railroad mr,fuel or energy shortage;major equipment breakdown;delay or accident In shipping or bansponabon;or(allure or delay beyond its reasonable control in obtaining necessary manufacturing facilities,labor,work permits or working visas for Siemens'personnel or its Subsuppliers'personnel,necessary Import or export Ilmnses,or materials from usual sources. B. In the event of a delay in performance excusable under this Article,the date of Delivery or time for performance of the work will be extended by a period of time reasonably necessary to overcome the effect of such delay,and Purchaser will reimburse Siemens for its additional costs and expenses resulting from the delay. 11.Termination A Purchaser,in b sole and absolute discretion,may terminate the Agreement,in whole or in part,at any lime without muse,at any time by wnt- ten notice to Siemens. In such case, Siemens shall immedletehy discontinue work(unless the notld,directs otherwise). Siemens shall be entitled to payment only for those goods,materials and equipment delivered and services performed that Purchaser has accepted.Should the work be delayed for a period in exmee of she(6) months for any reason attributable to Purchaser encilor force majeure, or should any payment from Purc mear be thirty(30) clays or more peat due,at the option of Siemens,Siemens may deem the Agreement to have been terminated by Purchaser.Termination Charges under this Section I I will be either: (a)the applicable termination fee from the termination fee sclhedule son forth in the Siemens proposal;or(b) in the aboard, of a termination fee schedule, the portion of the purchase price for the work Performed, man hour expended and materials acquired as of the data of termination plus the expenses associated with the termination,including,but not limited to,any additional expense Incurred by reason of termination or cancellation of agreements between Siemens and Its Subsuppliars, and any applicable cod allocated in contampletion of performenm. Siemens will make every reasonable effort to minim¢e the Termination Charges. The Ponies agree that such Termination Charges, including termination fees ad forth in the Termination Fee Schedule, era a reasonable determination of the damages that Simons would Incur as a result of such termination and do not constitute a penalty. All Termination Charges shall be due and payable thirty(30)days from the data of the Siemens invoice. B. Purchaser may terminate the Agreement for muse in the event of(q an ad of insolvency or bankruptcy by Siemens;or(ii)a material breach of Me Agreement by Siemens,which Siemens fails to commence to are within thirty(30)days after notice thereof from Purchaser and fails to diligently pursue thereafter. In such event, as Purchasers sole remedy for such default.Siemens will reimburse Purchaser for its reasonable and verifiable costs to complete the Services or obtain replammant Equipment up to twenty percent (20%)of the price for such them of Equipment or Services under the Agreement. C. In Me event of any breach of the Agreement by Purchaser,Siemens shall be enttled to an extension of time to the extant ned,sntlated by the breach and to reimbursement for all costs and expanses incurred by Siemens as a result of such breach. Siemens may terminate the Agreement for mum in the event of a material breach of the Agreement by Purchaser. If Siemens terminahm the Agreement pursuant to this Paragraph 11.C,Purchas- er shall pay Siemens the Termination Charges(as defined in Paragraph f 1 A)within thirty(W)days from the date of the Siemens Invoim. D. In addition.ff at any time during the performance of its work under the Agreement Siemens reasonably determines that the Purchasers firao- cal cardigan may render it Insolvent or unable to make future payments under the Agreement,then Siemens shall be entitled to one or more of the folk lowing at Siemens' option: (i) adequate written assurances, supported by documentation, of Purchasers ability to pay; (ii)payment in advance for any CONFIDENTIAL srvawv rwranxcz n.n Selling Poilry 1200 fuller work;(ill)future payments against an irrevocable Letter of Credit on terms,and from an Issuing bank,acceptable to Siemens;IN)other Payment security or credit support mutually agreed by Purchaser and Siemens. 12.Intellectual Property Infringement A. Siemens will,at ikr own expense,defend or at its option settle any suit or proceeding brought against Purchaser so far as basalt an an allega- tion that any Services on Purchaser's Material or the Equipment(including parts thereof),or use thereof for its Intended purpose,constikrtes an infringe- mid of any United States patent,copyright or misappropriation of a third parys bads most.so long as Siemens is notified promptly in wrPong and given authority,information,and assLstanca in a timely manner for the defense of said suit or proceeding.Sterner will pay fire damages and costs awarded in any suit or proceeding so defended.Siemens will not be responsible for any settlement of such sub or proceeding made without its prior written consent. In case the Services on Purchasers Material or the Equipment,or any pert thereto,as a result of any suit or proceeding so defended Is held to constitute Infringement of any such United Slates patent,copyright or misappropriation of a third partys trade secret or Its use by Purchaser is enjoined,Siemens will,at its option and its own expense,either.(a)protons for Purchaser the right to continue using said Equipment or Purchasers Malarial;(b)replace it with substantially equivalent non-infringing equipment or(c)modify it so it becomes non-InMnging. B. Siemens will have no duty or obligation to Purchaser under this Article to the extent that the Services on Purchasers Material or Equipment Is (a)supplied according to Purchasers design or instructions wherein compliance therewith has caused Siemens to deviate from its normal course of per- fornumm,(b)modified by Purchaser or its contractors after delivery by Siemens,or(c)combined by Purchaser or its contractors with items not furnished hereunder and by reason of said design,instruction, modification, or combination a suit is brought against Purchaser. In addition, 0 by reason of such design, Instruction, modification or combination, a suit or proceeding Is brought against Siemens, Purchaser shall protect Siemens in the same manner and to the same extent that Siemens has agreed to protect Purchaser under the provisions of Paragraph 12A above. C. THIS ARTICLE IS AN EXCLUSIVE STATEMENT OF ALL THE DUPES OF THE PARTIES RELATING TO PATENTS, COPYRIGHTS OR TRADE SECRETS AND DIRECT OR CONTRIBUTORY INFRINGEMENT THEREOF AND OF ALL THE REMEDIES OF PURCHASER RELATING TO ANY CLAIMS, SUITS, OR PROCEEDINGS INVOLVING PATENTS, COPYRIGHTS OR TRADE SECRETS. Compliance with this Article as provided herein shall constitute fulfillment of all liabilities of the parties under the Agreement with respect to patents,copyrights or trade secrets. 13.Confidential Information A Siemens may have a proprietary Interest In Informellon that Is furnished pusuant to or in connection with the Agreement As a Special District In the Stale of California,Purchaser adheres to the provisions of the Celifomts Public Records Act(California Government Code§6250 at seq.). To the extent allowed by law,Purchaser will keep in confidence and will not disclose any such Information,or any of Siemens'intellectual property(Including,but not limited to,any"me,mpyrighls or trade secrets),which is spedfically designated as being mnfdermat by Siemens or use any such information for other than the purpose for which it ls supplied without the prior written permission of Siemens. The provisions of this Paragraph shall not apply to intor- matron,notwithstanding any confidential designation thereof,which is known to Purchaser without any restriction as to disclosure or use at the time it is furnished,which is or becomes generally available to the public without breach of any confidentlelity obligation of Purchaser,or which Is received from a third party,Including Purchasers subsidiaries or afflicies,without limitation or restriction on said third party or Purchaser at the time of disclosure. B. Siemens also has a proprietery interest in (t its proposal and the Agreement and(it)the processes and procedures used by its personnel In performance of the Agreement. Accordingly,the quotation,the Agreement and such processes and procedures shell not be disclosed or viewed in whole or in part by third parties without the prior written permission of Siemens. C. Stamens also has a proprietary interest in the manner of performance of ban work,Including but not limited to the know-how,processes,meth- ods and techniques employed by Siemens In connection therewith. The observing or recording of the work or any part thereof,whether by photographic, video or sucito devices or in any other manner Is prohibited. In the event any such prolebited observation or recording occurs,any and all mixes of any such recording(s)shall be turned over to Siemens for destruction by Siemens. Siemens may(in addition to any other legal or equitable rights and reme- dies)stop the work unfit Siemens has satisfied teat that the prohibited conduct has caused,and in such event(a)the data of delivery or time for perfor- mance will be extended by a period of tame which Siemens determines necessary and (b)Purchaser will reimburse Siemens for Siemens'and its Sub supplier'additional costs and experees resulting from such delay,Including but not limited to any for demobilization or remobil'cation. D. Without limiting its obligations pursuant to paragraphs 13A and 13.13 above, Purchaser agrees not to reverse engineer, modify, improve, or make derivative works of Siemens'confidential information or intellectual property. Purchaser further agrees not to seek any intellectual property rights directly or indirectly basalt in whole or part on Siemens'confdental Infonnagon or intellectual property without Semens'prior written consent Purchaser further agrees that if it obtains any such Intellectual property rights,it has acted or will ad as an agent for the benefit of Siemens for the tinted purpose of obtaining and securing such intellectual property rights and will upon wdten direction from Siemens assign the same to Siemens. E. Purchaser shall indemnify and hold Siemens harmless from and against any loss,damage or liability arising or resulting from noncomplianco with the provisions of this Article 13. F. When required by appropriate governmental authority, including governmental regulations, applicable law or regulation,by order of a court of competent jurisdiction or lawful subpoena (hereinafter collectively retained to as"Governmental Authortn, Purchaser may disclose such confidential Information to such Governmental Authority;provided, however,that prior to making any such disclosure, Purchaser will:(a)provide Siemens with timely advance written notice of the proprietary Information requested by such Governmental Authority and Purchaser's intent to so disclose;(b)minimise the amount of proprietary information to be provided consonant with the interests of Siemens and be Subsuppliers and the requirements of the Governmental Authority involved; and (c) make every reasonable effort(which shall include participation by Siemens In discussions with the Govemmemal Authority involved)to secure confidential treatment all minimization of the proprietary information to be provided. In the event that efforts to secure cormdenlial treatment ere unsuccessful,Siemens shall have the prior right to revise such information to minims the disclosure of such Information In a manner con- sonant with its interests and the requirements of the Governmental Authority inveived. 13.Limitation of Liability A. PURCHASER EXPRESSLY AGREES THAT NEITHER SIEMENS NOR ITS SUESUPPLIERS WILL UNDER ANY CIRCUMSTANCES BE CA- BLE UNDER ANY THEORY OF RECOVERY,WHETHER BASED IN CONTRACT, IN TORT(INCLUDING BUT NOT LIMITED TO NEGLIGENCE AND STRICT LIABILITY),UNDER WARRANTY,OR OTHERWISE, FOR:ANY INDIRECT,SPECIAL, INCIDENTAL OR CONSEQUENTIAL LOSS OR DAM- AGE OR PUNITIVE DAMAGES WHATSOEVER;DAMAGE TO OR LOSS OF ANY PROPERTY OR EQUIPMENT; LOSS OF PROFITS OR REVENUE OR LOSS OF USE THEREOF; LOSS OF USE OF PURCHASER'S MATERIAL,EQUIPMENT OR POWER SYSTEM; LOSS OF DATA; INCREASED COSTS OF ANY KIND,INCLUDING BUT NOT LIMITED TO CAPITAL COST,FUEL COST AND COST OF PURCHASED OR REPLACEMENT POWER; OR ANY CLAIMS OF CUSTOMERS OF PURCHASER. CONFIDENTIAL .mawv+mnw.mhs.+o Selling Policy 1200 B. PURCHASER EXPRESSLY AGREES THAT THE REMEDIES PROVIDED IT IN THE AGREEMENT ARE EXCLUSIVE,AND THAT UNDER NO CIRCUMSTANCES SHALL THE TOTAL AGGREGATE LIABILITY OF SIEMENS OR ITS SUBSUPPLIERS UNDER ANY THEORY OF RECOVERY, WHETHER BASED IN CONTRACT, IN TORT(INCLUDING NEGLIGENCE AND STRICT LIABILITY), UNDER WARRANTY, OR OTHERWISE, EX- CEED THE TOTAL PRICE PAID TO SIEMENS UNDER THE APPLICABLE PURCHASE ORDER. C. ALL LIABILITY OF SIEMENS AND ITS SUSSUPPUERS UNDER THIS AGREEMENT SHALL TERMINATE NO LATER THAN THE EXPIRA- TION OF THE WARRANTY PERIOD, D. THE PROVISIONS OF THIS ARTICLE SHALL PREVAIL OVER ANY CONFLICTING OR INCONSISTENT PROVISIONS SET FORTH ELSE. WHERE IN THIS AGREEMENT. 15.Transfer,Ownership and Export Compliance A. Prior to the transfer to another party of any Equipment, Puchaser's Materiel,work product fumished hereunder by Siemens'or its Subsuppll- es,or the transfer of any interest in said Equipment, Purchaser's Material or work product,or the facility in which or the site on which said Equipment, Purchaser's Material or work product is or will be handled or furnished, Purchaser shell obtain for Siemens written assumnom from the transferee of limbetion of and protection against liability following the proposed transfer at least equivalent to that afforded Siemens and is Subsuppllers under the Agreement. B. If Pumhaser is not the sole owner of the Equipment,Purchasers Material,work product furnished hereunder by Siemens or he Subsuppllem.or the facility in which or the site on whirls the Equipment Purchaser's Material or work product is or will be installed or furnished,Purchaser represents and warrants that it has(aid will maintain)written assurances from each and every other owner of limitation of and protection against fiabilhy of Siemens and Is Subsuppllers with respect to each and every such other owner at least equivalent to that afforded Siemens and its Subsuppllers under the Agreement C. Transfer contrary to the previsions of paragraph 15A above or in breach of paragraph IS.B. above,shall make Purchaser the Indemnitor of Siemens and his Subsuppliers against any liabilities Incurred by Siemens and ter Subsuppllers in excess of those that would have been incurred had no such transferor breach,as the case may be,taken place. D. Purchaser acknowledges that Siemens is required to comply with applicable export laws and regulations resting to the sale,exportation,trans- fer,assignment disposal and usage of the Equipment and/or Services provided under the Agreement,Including any export license requirements.Pur. chaser agrees that such Equipment and/or Services shell not at any time direWy or indirectly be used,exported,sold,transferred,assigned or otherwise disposed of in a manner which will result in nor-oompliance with such applicable export laws and regulations.It shall be a condition of the continuing per- formance by Siemens of his obligations hereunder that compliance with such export laws and regulations be maintained at all times.PURCHASER AGREES TO INDEMNIFY AND HOLD SIEMENS HARMLESS FROM ANY AND ALL COSTS,LIABILITIES,PENALTIES,SANCTIONS AND FINES RELATED TO NONCOMPLIANCE WITH APPLICABLE EXPORT LAWS AND REGULATIONS.' 16.Software License Siemens grents to Purchaser a nonaxclusive, nontransferable license to utlbe the Siemens Software furnished hereunder solely for Purchaser's Internal use in connection with the Siemens equipment for which t is supplied or in which such Software is incorporated.All bid and ownership of the Siemens Software, including,without Ihnitaxon,the copyright to such Software, shall remain exclusively with Siemens.Purchaser may make one backup copy of the Software for the ale purpose of replacement of a wom, impaired,damaged, or destroyed original copy. Purchaser shall not itself.or with the assis- tance of others,reverse compile,reverse engineer,or in any other manner aCempt to decipher in whole or in part the logic or coherence of any Software licensed hereunder. Third paid Software provided by Siemens may be subject to a separate license agreement and for registration requirements and limitations on copying and use. 1T.Compliance with Laws In the performance of work under the Agreement Siemens and its Subsuppllels shall comply with all applicable provisions of Executive Order 11246.as amended,relating to equal opportunity and non-segregated facilities,tre Fair Labor Standards Act of 1933 and the Occupational Safety and Health Act of 1970.The price for the work is based on compliance by Siemens with applicable leas, regulations and technical codes and standards as they are in effect on the date of the Siemens proposal(or the effective data of the Agreement if no proposal was provided). 18. Changes A. Purchaser may request changes within the scope of the Agreement and,t accepted by Siemens,the price,performance,schedule and other pertinent provisions of the Agreement will be adjusted by mutual agreement of the parties prior to implementation of the change. B. Expenses incurred by Siemens due In(I)delays,other than delays which are deemed to be within the reasonable conli of Siemens,and(ii) changes in applicable laws, regulations and technical codes and standards or the imposition of new laws. regulations and/or technical codes and sand ards after the applicable data set forth in Article 17 will be treated as changes to the scope of work and the Agreement will be adjusted as set forth in the previous Paragraph. C. Siemens may make a change(s) in the Equipment Services on Purchaser's Material or the other Services without additional compensation from Purchaser If such change(s)does not adversely affect the warranties,the interface with Purchaser's equipment, materials and plant, the technical soundness of the work,Me operability of the facility where the Equipment or Purchaser's Material is installed or for which Siemens is providing Services under the Agreement,or the schedule. 19. Inspection by Pumhosser Purchaser shall have reasonable access to the areas of the Siemens plans Where work under the Agreement is being performed to enable Purchaser to observe tees on the work. Siemens, if requested,will inform the purchaser of those less and procedures which can be witnessed. Should Purchaser elect to winesr specific teas,Purchaser must so specify such requirement in ample time to permG Siemens to include said witness hers in the schedule. Siemens,h requested,will advise Purchaser of the schedule of such tests.However,no rescheduling of tests or delays in manufacturing or shipment will be made to accommodate such inspection.Siemens will exercise reasonable efforts to secure similar lights with respect to the inspecton of Purchasers work at Subsuppluies premises. 20. Removal of Hazardous Material Prior to the shipment of any Equipment or Purchasers Material to Siemens for Services at Siemens'or is Subsupplieis' manufachai g plant or repair taclfity,the Purchaser must remove all Hazardous Material and ACM. 21. Pumh times Third Party Pars Warranty CONFIDENTIAL samwPo%i�monw.xap.n Selling Policy 1200 Purchaser warrants that any and all Third Party Parts which may be the subject of any Services shall(a)be fully compatible with the corresponding Pad, component,equipment or material of the Original Equipment Manufacturer(`OEMI In larm,of fom,,fit and function;(b)shall be timely provided to Sta- mens hereunder, and (c)shall be mpable of installation In the same manner and within the same time as the corresponding OEM pad, component, equipment,or material. Purchaser assumes the share liability and risk arising out of or resulting from Third Pony Pads and Services on Third Perk Parts. Siemens'warranties set faNr In Article 7 do not apply to any Third Party Parts or Services an Third Petty Parts,and SIEMENS DISCLAIMS ANY AND ALL WARRANT ES AND REMEDIES,WHETHER STATUTORY,EXPRESS OR IMPLIED(INCLUDING ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE,AND ALL WARRANTIES ARISING FROM COURSE OF DEALING OR USAGE OF TRADE), OR OTHERWISE, FOR OR WITH RESPECT TO THIRD PARTY PARTS OR SERVICES ON THIRD PARTY PARTS. 22.Indemnity Ural the aspiration of the applicable Warranty Period,Siemens shall Indemnify,hole harmkros and defend Purchaser its officers,directors and employees from and against any claims, demands, suits, Ilebilkies, judgments, loaves, damages, costs or expenses (including reasonable legal fees, costs and charges)for personal Injury or death or loss of or damage to third parry property(except property of customers of Pumhaser or property Incorporated In or intended to be Incorporated In the project),to the extent caused by or arising out of any negligent act or amirwon or willful misconduct at Siemens,or any of its officers,directors,agents,employees or Subsuppllers In connection with performance of work under the Agreement('Purchaser Indemnity Clelmw). Siemens Indemnification obligator under this Section 22 are conditioned upon Purchaser providing Siemens with: (I)prompt notice of any Purchaser Indemnity Clain; PD the unrestricted right to defend any Purchaser Indemnity Claim; and (Ilg full cooperation and support in the investigation,defense and/or settlement of the Purchaser Indemnity Clain. Until the expiration of the applicable Warranty Period, Purchaser shall Indemnify,hold hamness and defend Siemens Its officers,directors and employees from and against any claims, demands, sub, liabilities,judgments, losses, damages, costs or expenses (Including reasonable legal lees, costa and charges)for personal injury or death or loss of or damage to third party property to the extent mused by or arising out of any negligent act or omission or willful misconduct of Purchaser,or any of its officers.directors,agents,employees or subcontractors in connection with performance of work under the Agreement('Stamens Indemnty,Chdm7. Purchasers indemnification obligations under this Section 22 are conditioned upon Siemens providing Par- clamor with: (p prompt notim of any Siemens Indemnity Cbim;(ii)the unrestricted fight to defend any Siemens Indemnity Claim;and(hit full cooperation and support in the Invsetgation,defense and/or settlement of the Siemens Indemnity Claim. 23.Siemens Insurance In connection with the Agreement.Siemens shall maintain Insurance(or set Insurance)so,specified below: A. Workers Compensation:Siemens shall comply with workers compensation laws(fir equivalent,In each jurisdiction where work is performed, and shall maintain a Workers Compensation and Employers Liability Insurance policy. N any work is to be performed on or near navigable waters,the policy shall Include coverage for United States Longshoreman's and Hadar Waders Act, Death on the High Seas Act,Jones Act,or their equivalent as mquked by the applicable law In the jurisdiction where such work is performed. The limns of such insurance shell be as follows: Workers Compensation: Stole ry Employers Liability. $1,0D0,000 each accident and In the aggregate $1,000,000 disease each employee B. Commercial General Liability: Siemens shall maintain commercial general liability Insurance on an occurrence basis to provide coverage for. Bodily Injury.Personal Injury,Property Damage,E)Oosion,Collapse and Underground hazards(XCU);Contractual Liability(Particularly appliable to the pmvsions of the Indemnity Article of this Agreement);and Products and Completed Operations with limits W follows: $1,000,000 each occurrence and In the aggregate C. Business Automobile Liability:Siemens shall maintain business automobile liability Insurance which shall include coverage for all owned, non- owned and hired vehicles with the following limit $1,IX10,000 Combined Single Umt D. Umbrella Liability:Siemens shall maintain umbrella liability insurance with a limit of$2,000,000 each ocourence and in the aggregate. The pol- icy shall be excess over the Commercial General Liability,Business Automobile Liability,and Employers Liability coverages. E. The coverages see forth In 8,C and D above shall include Purchaser as additional insured to the extent that bodily injury,main and third Party property damage are mused by the negligent acts or omissions of Siemens or its Subsuppllers. 24.Reserved 26.Miscellaneous Provisions A. Shipment Dates: Shipment dales am the dates the Equipment or Purchasers Material will be ready for shipment from the manufacturing plant, Siemens repair feditty or other facility where the Services are Performed acid are predicated on the prompt receipt by Siemens from Purchaser of all in- formation necessary fo commence and complete the work without delay or inter action. Unless otherwise slated in a Purchase Order,shipment dates are not guaranteed. Should Purchaser request Siemens to ship any Equipment or Purchasers Material prior to a data established based on Siemens stand- ard lead fime for each Equipment or Purchasers Material,and provided Siemens accepts In writing the earlier date,an additional fee will be applied to cover the costs associated with such expedited shipment. B. Waivers: The failure of ether Party to enforce at any time any of the provisions of the Agreement or to require at any tors performance by the other Party of any of such provisions,shall in no way be construed to be a walver of each provision,not In any way to affect the validity of the Agreement or any part thereof,or the right of ether Pony thereafter to enforce each and every provision. CONFIDENTIAL Selling Policy 1200 C. Modification: No waiver, modification, or amendment of any of Me provisions of the Agreement shall be binding unless it is in wrifing and signed by duty authorized mpresentatives of both parties. D. Heatlings: The headings used in the Agreement are not to be construed as modifying, limiting or expanding in any way the scope or ardent of the provisions in the Agreement. E. Assignment Except for assignment by Siemens to an affiliate of Siemens,the Agmementd will not be assigned by either Parry without the prior written consent of the other Party,which consent will not be unreasonably withheld.Any purported assignment without such prior written consent shall be null and void. F. Governing Leer The Agreement will be construed and interp ated in accordance with the laws of the State of California without application of its choke of law or conflict of few rules. G. Personnel: Siemens reserves the right to Mange any of its personnel perturrming Services under the Agreement In such event.Siemens will pmvlde replacement personnel of equivalent capabilities and bear any additional travel and living expense associated with Providing such replacement personnel. H. Performance Guaremee(s)and Ecclusive Remedy: There are no performance guarantees ofthe Equipment and/or Services unless specifically set forth in the Siemens proposal. In the event any performance guaantees are provided in the Siemens proposal,Purchaser's sole and exciusne mme- dy and Sionnons'sole and exclusive liability for any failure of the Equipment and/or Services to comply with such performance guarantees under any theo- ry of recovery shall be the liquidated damages specified in such Siemens proposal up to the limit specified therein,which liquidated damages shall only be paid on a'no harm,no four basis. The Parties agree that such liquidated are a reasonable determination of the damages Mat Purchaser would incur as a result of the failure of the Equipment and/or Services to meet the Performance Guammees and do not commute a penalty. I. Environmental Compliance: Purchaser recognizes that the pedortnance of Services at the Site may involve the generation of Hazardous Mate- rial. Purchaser shall at He expense furnish Siemens with containers for Hazardous Material and shall designate a waste storage facility at the Site where such containers am to be placed by Siemens. Purchaser shall handle,slam and dispose of Hazardous Material in accordance with all applicable federal, state and local laws, miss, regulations and ordinances. Purchaser shall reimburse Siemens for additional costs, 'd any, incurred in complying with any such laws,regulations,miss and/or ordinances. Siemens shall have no responsibility or liability with regard to any Hazardous Material which it does not know or have reason to know will be generated in the performance of the Services,and Purchaser shall indemnify and hold Siemens harmless for all pollution and environmental impairment arising from the Purchaser's property,the Equipment or the Services. J. Asbestos and Thermal Insulation (1) The Purchaser warrants,mpmsents,and carcfies that,in any areas which may be accessed by Siemens or its Subsupplims,any ACM which is or is contained in thermal f rsulatiun or sprayed-on surfacing material is conspicuously and specfically marked as ACM,and any other ACM is in a lawful condition. (2) Prior to Siemens'commencement of Services at the Site: (a) The Purchaser shall, at Purchasers expense remove all thermal insulation,sproyed-on surfacing material, and/or ACM, including ACM which may be disturbed during or removal of which is required for the performance of the Services;and (b) The Purchaser shall ensure that any areas where any activities involving the abatement or removal of thermal insulation,spmyedan sur- facing material or ACM shall be conspicuously Identified,posted ant isolated,all as required by applicable law. PURCHASER EXPRESSLY ACKNOWLEDGES AND AGREES THAT SIEMENS IN PERFORMING THE SERVICES AND PERMITTING EM- PLOYEES TO ENTER THE WORK AREAS IS RELYING UPON THE COVENANTS,AGREEMENTS,WARRANTIES, CERTIFICATIONS AND REPRESENTATIONS MADE BY PURCHASER ABOVE. Without limiting its other rights and Hamadan;Siemens shall not be obligated to commence or may stop any work in any Work Areas unless fully satisfied that the Purchaser is in compliance with Pamgmph 25.J(1)above and this Pamgmph 25.J(2), and shall be entitled to an equitable ad- jushnent in the schedule,price and other pmv'sions of the Agreement afiacted thereby or otherwise affected by Purchasers non-compliance. (3) In no event shall Siemens be obligated to install,tlaiurb, handle,or remove any thermal insulation, sprayed-on surfacing material,or ACM e rept as specifically agreed in writing by Siemens and only after Siemens has been pmvided acceptable chemical analyses verifying that the same am not ACM. (4) Siemens makes no representation that it is licensed to abate ACM. Notwithstanding anything set forth in the Agreement and unless Siemens is provided satisfactory written evidence that such GPW is not ACM, Siemens shall be obligated to handle, remove, or reinstall generator wedges, pecking,or high temperaturs gaskets(such materials herein'GPVO")only g such actvties are within the scope of the Services and only then to the event that () such activities would be Uassified as Class II or Class III activity under United States Code of Federal Regulations Chapter 29 Section CFR 1926.1101 at seq.; (f) such activities do not require a permit,license,or authorization; (ii) such activities are not likely to generate aimome asbestos fibers,and (in) all such GPW is non-fdable. In all other cases, such activities shall be Purchasers responsibility and Siemens shall be entitled to an equitable adjustment in the schedule, price and other pertinent affected provisions of the Agreement should the same not be performed in a timely manner. The disposal of any GPW or scrap or waste material moulding from He disturbance or removal shall In all cases be the Purchasers responsibility. CONFIDENTIAL vmymcv�re+nro.z.s�.v Selling Policy 1200 (5) Purchaser shall defend,indemnify and hold Siemens and its Subsuppliers harmless against any and all claims,demands,damages,losses, liabilities,fines,penalties,costs or expenses, including without limitation any dean up or remedial measures arising out of,connected with,or result- ing from the Purchaser's failure to comply with the provisions of this Article 25.J. K Integration: The Agreement contains the entire agreement and understanding behmen the parties as to the subject matter of Me Agreement and merges and supersedes all prior or contemporaneous agreements,commitments,representations,writings,and discussions between them. Neither of the parties will be bound by any prier or contemporaneous obligations,conditions,warranties,or repmser lations with respect to the subject matter of the Agreement L Survival: The provisions entitled'Intellectual Property,''Additional Conditions Applicable to Nuclear Installations;'Confidential Information; 'Limitation of Uabiltty;Transfer, Ownership and Export Compliance;'SOMYdre License;the second Paragraph of'Delivery,True and Risk of Loss or Damage; and subsection (5) of Me provision entitled 'Asbestos and Thermal Insulation' shall survive termination, expiration or cancellation of Me Agreement M. Site Safety. Purchaser shall comply with all federal, state,and local safety regulations and standards applicable to the site and to the equip- ment on which Siemens will perform Me work. Siemens shall not be obligated to commence or perform work unless Purchaser's aim complies with all applicable safety requirements. In the event Purchasers site safety is non-complent,Siemens may suspend work until such time as Purchaser corrects the non-compfwn0e.To Me silent Siemens incurs additional time and expense as the result of Purchas eves non-compliance,Siemens shall be entitled to an equitable adjustment in the schedule,price and other affected provisions of the Agreement N. Severebility: In the avant that any one or mare of the provisions contained herein shall,for any reason, be held to be invalid,Illegal or unen- forceable in any respect,such invalidity, Illegality or unenforceability shall not affect any ocher provisions of this Agreement,but this Agreement shall be consWed as if such invalid,Illegal or unenforceable provisions had never been contained herein,unmet the deletion of such provision or provisions would result In such a material change so as to cause completion of the transactions contemplated herein to be unreasonable. IN WITNESS WHEREOF,intending to be legally bound,the Parties hereto have caused this Purchasing Agreement to be signed by the duty aulhor- aed representatives. ORANGE COUNTY SANITATION DISTRICT Dared: By: Chair,Board of Directors Dated: By: Clerk of the Board Dated: By: Contmcts/Purchasirg Manager SIEMENS DEMAG DELAVAL TURSOMACHINERY, INC. Dated: By. Print Name and Thle of Officer IRS Employees I.D.Number CONFIDENTIAL scowaY,:con w.zwx�v Suggested Preventative Maintenance Schedule by Plant Personnel 1.0 Routine Inspections A. Inspect general condition including oil leaks and cleanliness of compressor assembly unit B. Inspect and replace inlet filter(s)as required C. Sample and conduct oil analysislchange oil as required D. Inspect and change oil filter(s)as required (See Section H. Item 0740). E. Check lube oil level I fill as required (Max full equals lower 1 inch of your dip stick) F. Verify all 4-20 mA current loops are operating properly(indicated on your transmitter monitor page) G. Verify surge detection unit operates properly I Clean per Section H, Item 1370 2.0 Annual Inspections A. Repeat routine inspections, plus--- B. Inspect inlet filters and silencer for cleanliness and general condition C. Verify discharge check valve operates properly to prevent back flows D. Verify proper operation of blow-off,and butterfly valves E. Inspect control arm(s) of variable control vanes for slippage F. Calibrate inlet guide vane and variable diffuser vane operating span G. Check coupling alignment and outer blades of disc-pack for distortion and or fatigue cracks,follow in- structions per Section H, Item 0070 H. Verify discharge expansion joint alignment and allowable flange loading is not exceeded I. Test Limit switches 3.0 Drive Motor A. Keep motor clean and ventilation openings clear of dust, dirt,or other debris. Service and Lubricate as indicated in the 0&M. Follow instructions found in the Components section of this manual (See Section H, Item 0020). 4.0 Auxiliary Oil Pump A. Keep motor clean and ventilation openings clear of dust,dirt,or other debris. Lubricate bearings every three(3)years. Follow instructions found in the Components section of this manual (See Section H, Item 0705). 5.0 Solenoid Valve and Butterfly Valve A. While unit is off-line,operate the valve once a month to insure proper opening and closing. Note: Change of Lube Oil A. The lube oil should be changed after the first 500 hours of operation. Subsequent oil samples should be evaluated by an oil analysis service every three(3) months,with change of lube oil to take place accord- ing to the recommendation of the oil analysis service. Suggested Preventative Maintenance Schedule Siemens Demag Delaval Turbomachinery,Inc Suggested PM Schedule-GK,GA,GL Series Gearbox SIEMENS Revision:2 Date:4115 Suggested Preventative Maintenance Schedule by Authorized Siemens Demag Delaval Thrbomachin- ery, Inc. Personnel Siemens offers the following services independently or through our preventative maintenance pro- gram.These services are designed to provide long term performance and maximized power savings throughout the life of the blower. Aeration and process control service and tuning is also available. 1.0 AnnualInspections- A. Inspect general condition including oil leaks and cleanliness of compressor assembly unit B. Inspect and replace inlet filters)as required C. Check lube oil level D. Verify all 4-20 TO,current loops are operating properly(indicated on your transmitter monitor page) E. Verify surge detection unit operates properly I Clean per Section H, Item 1370 F. Inspect inlet filters and silencer for cleanliness and general condition G. Verify discharge check valve operates properly to prevent back flows H. Verify proper operation of blow-off,and butterfly valves I. Inspect control arm(s)of variable control vanes for slippage J. Calibrate inlet guide vane and variable diffuser vane operating span K. Inspect all mechanical and electrical connections are secure(up to discharge cone) L. Check coupling alignment and outer blades of disc-pack for distortion and or fatigue cracks, follow in- structions per Section H, Item 0070 M. Verify discharge expansion joint alignment and allowable flange loading is not exceeded N. Test Limit switches 2.0 class l Inspection-(air-end) A. First recommended inspection is at approximately 18,000 hours of service (or sooner if site conditions dictate);thereafter, based on oil analysis, site and blower condition, and operation of mechanisms. Es- timated service time: 4-6 days, per unit,assuming one (1) local helper and crane facilities. Class 1In- spection includes the following: 1. Repeat annual inspection, plus--- 2. Dismantle compressor air-end 3. Remove gearbox access covers for visual observation of internal condition. (GL gearbox only) 4. Inspect and clean variable vane system 5. Check variable vane geometry 6. Check axial movement on high and low-speed shafts 7. Check unit alignment before re-start as required 3.0 Class II Inspection-(air-end and gearbox) A. Second recommended inspection is at approximately 36,000- 50,000 hours of service(or sooner if site conditions dictate);thereafter, based on oil analysis, site and blower condition, and operation of mech- anisms. Estimated service time: 6.8 days, per unit,assuming one (1) local helper and crane facilities. Class II Inspection includes the following: 1. Repeat Class l Inspection, plus--- 2. Dismantle gearbox 3. Inspect gearwheels, bearings&seals and check clearances, adjust clearances as required. 4. Replace flexible seals (0-rings) 5. Reassemble gearbox 6. Visually inspect electric motor,oil pump, oil cooler, coupling, valves, etc. 7. Provide recommendations for corrections of unusual findings and future services To schedule a Siemens Dames Delaval Turbomachinery,Inc.Field Service Technician,please contact us at Tel:609-890-5000;Fax: 609-587-7790 Suggested Preventative Maintenance Schedule Siemens Demag Delaval Turbomachinery,Inc Suggested PM Schedule-GK,GA,GL Series Gearbox SIEMENS Revision:2 Date:4115 WASTEWATER AERATION TURBOCOMPRESSORS SIEMENS Proposal Package w/ Attachments o WASTEWATER AERATION COMPRESSORS SIEMENS SIEMENSField Service Estimate Customer: Orange County Sanitation Dm1ria Contact: Emilia Anston Email: EARISTON@ocsd.com Phone: 657.600.12" Siemens Proposal Number: 20005618 She Name: Orange County Sanitation District Plant No.1 Sits it: 094 Location: Fountain Valley,California Model: STC-GO(KA86-SWGL400) Serial Numbams): 3996 Description or Scope: Includes Glass I inspection and VD retrofit installation Labor Total Number of Days Onsde IS days/com ressor 5 Quantity of Persons 1 Weekday Labor 6131 W"r wear,day) $6,560 Per Diem extra on she Including weekends $2,240 E ul meralParts $90.601 Required E ui men[Paas fort com ressmincluds: Quantry, Pat, Discs,ii 1 GL315TODO SHIM SET i GL315T008 SHIM SET 1 N17157594 O-RING,SILICONE 1 89027262 O-RING 2 89D27296 O-RING 1 89412415 O-RING 1 N1 N6290 O-RING 1 M66VD VD more kit Estimated Tax( %) f7,248 Estimated Total for 1 and 9106,649 Notes: The above calculations are only estimates. The final price shall be calculated using the actual Time and Material. Time expenses shall include all project specific time at the fixed hourly rates above plus per diems in accordance with the attached Service Rate Sheet. Time shall include all time required to perform and support the project including.but not limited to,preparation,mobilization,demobilization,site specific safety training,travel, she meetings,and start up support. This proposal assumes that the site will provide at least one qualified helper to assist the Siemens technician. This pricing also assumes Nat proper ceN6ed lilting will be available and the inlet filtemransition piece,and sound enclosures will be removed(if applicable)for access to Perform Class I.Does not include cra6labor and tools to support the work. This proposal includes the typical replacement components for the service.Any significant wear or abnormalities Identified requiring extra labor and/or pairs shall be billed per Siemens'standard Service Rate Schedule. Siemens will provide an estimate of additional time and materials as required. Attachments Field Service Rate Sheet,Siemens Selling Policy,Suggested Preventative Maintenance Schedule,Pre-Service Checklist&Mandatory LiNng Device Reporting. Time and Material pricing par Siemens FS Ratesmets for 2015 Services for USA(onshme) Currency USD Terms of Payment Net 30 Days Tema of Delivery DAP Fountain Valley,California,USA Terms and Condition. Siemens Selling Policy 1200 dated November 1.2012 Forward Purchase Orders to Siemens Demag Delaval TuNomachinery.Inc. 840 Nottingham Way Hamilton,NJ 08638 USA Phone:(609)890-50001 Fax:(609)587-7790 Prepared By Vandy Parmasarathy vandy oaahasmism,Tsemens cam Validity period 091512016-1011412016 Thank you for your continued interest in Siemens products and services CONFIDENTIAL Siemens Demag Delaval Turbomaehlnery,Inc. Best Regards, C J Vandy Chakravarthy Parthasarat Customer Service Representative Siemens Deming Delaval Turbomachinery, Inc. Tel: 417-38D-5728 Fax: (609) 587-7790 E-Mail: vandy.parthasarathy@siemens.00m Thank you for your continued interest in Siemens products and services CONFIDENTIAL -t Field Service Rate Sheet = Services for USA (onshore) All Siemens Industrial Steam and Gas Turbines, Compressors and Pumps Daily Personnel daily rate daily rate daily rate hourly rate hourly rate Category in excess of in excess of Mon-Fri Saturday Sunday or 8hours 8hours based on 8 based on local holiday worked worked hour work 8 hour work based on days day 8 hour work Mon-Sat Sunday or day local holiday p Specialist Services $ 1,976 USD $2,964 USD $3,952 USD $371 U50 $494 USD Technical Field S 1,588 USD $2,382 USD $3,176 USD $298 USD $397 USD Advisor(TFA) Field Service $1,312 USD $1,968 USD $2,624 USD $246 USD $328 USD Technician DemobilizationMobilization I Upta4haws' Uptaehours' Upw12hours Upmt2hours Upw24hours' Upw36hours• USAICamda' International* $1,750 $3,500 $5,000 $5,750 $10,900 $14,500 'Excludes airfare.Airfare is billed at cost plus 15%administration fee. Daily Per Diem Charge: $320 from arriving at location or cost plus 15%administration fee. The above rates are in US Dollars and include expenses as referenced in the attached Charging Appendix. Validity: From January 1,2015 to December 31,2015 Contacts: For Parts,Repairs and Service Support, please contact your local Siemens Power Systems Sales Person,Local District Service Manager,or 609-890-5000. Siemens After-hours Emergency Cell Phone: 609-890-5555 'ZERO'harm to people and the environment is the ultimate goal in our business. Answers for energy. SIEMENS Charging Appendix - Field & Engineering Services For Service on All Siemens Acquired Steam Turbines,Gas Turbines,Compressors and Pumps in U.S.A.and Internationally,except Canada Effective January 1,2015 Subject to change without notice I. Selling Policy A.Travel and Expenses: The Daily Labor All prices contained herein are subject to C.Field Service Technician Rates exclude the following costs, which the terms and conditions of the Siemens Field Service Technician services are the shall be for Customer's account and will Demag Delaval Turbomachinery, Inc. performance of the disassembly, inspect be charged separately: ('Siemens) Selling Policy 1200 for the lion, and replacement of parts, routine a)MobilizztionlDemobilization Fees shall Sale of Equipment and Services(Selling repair and reassembly of rotating equip- be charged at a graded fixed fee de- Policy)in effect on the date an order is ment, or the complete removal and re- pendent on the required travel time received.unless other terms are agreed to installation of the entire unit. from base location to the Site.Mobili- in writing by the parties. Capitalized zationlDemobilization fees include terms used in this document shall have IV. Rates Payable preparation time, visa costs and all the definition set forth herein or, if no Except for small gas turbine services travel time and expenses (excluding: such definition is specified in this docu- performed internationally,a Standard Day 0) airfare; (Ill Per Diem Charge as de- ment,then they shall be as defined in the for on-shore work is defined as 8 hours fined in Section VI(A)(b)). The Selling Poli, working time. A Standard Day for off. transport from the point of ember". shore work is defined as 12 hours work- lion to an offshore location and back II. Price Policv ing time. For small gas turbine services will be provided by the Customer free NI rates and prices are subject to change performed internationally outside of USA of charge. without notice. Unless otherwise agreed. or Canada. a Standard Day is defined as b)Per Diem Charge: Accommodation. Siemens rates are expressed on the Field 12 hours working time. meals, local transportation and allow- Service Rams Sheet as daily rates per antes,where not Provided by the Cur- category of Siemens Personnel ('Daily Minimum billing is the Daily Labor Rate. Romer will be charged on a lump sum Labor Rates), plus Mobilize- The applicable Daily Uabor Rate applies to daily basis.By agreement,the Custom- tionlDemobilization Fees and Per Diem all time worked or traveled (excluding er may be charged actual cost of the Charges. Unless contracted otherwise, MobilizationlDempbilization travel time), accommodation, meals,local transpor. rates and prices for ongoing contracts with an allowance for lunch tation and allowances plus a 15% fee will be Nose in effect at the time the time.Ownime rates apply for time forhandlingand administration costs. work is performed. All rams shall be valid worked in excess of a Standard Day.This c)The Per Diem Charge will be assessed only for the period of validity set forth on is an hourly charge, based upon actual for each calendar day an individual is the attached price list Airfare and a k i- additional time worked in excess of a assigned to a project including non- tonal costs are billed as set forth herein. Standard Day.Two overtime rates apply; working weekend days forjobs extend- No personnel will be dispatched until a one for time worked in excess of a Stand- ing over the weekend(s). Purchase Order, or written authorization and Day Monday through Saturday and it)Where the Customer provides accom- acknowledging acceptance of terms, one for time worked in excess of a Stand modation and food, it is to be to a pricing and agreement to pay is received. and Day on a Sunday or local holiday. standard which is acceptable to Sii mens. In the event that this is, in Sie- III. Services Definitions mens'opinion,unsuitable,Siemens re- A. Specialist Services The Daily labor Rates include the supply serves the right to find an alternative Specialist Services are the following: (i) and use of basic PPE(Personal Prom ive which will be charged for as above. an engineer, project manager, or tech- Equipment)and the use 0f standard small e)In the event that unusual expenses are nical field advisor(TFA)directing Siemens hand tools, as required by Field Service required in traveling from the place of personnel or advising Customer person- Technicians. accommodation to the Site, Siemens nel to Siemens procedures and process reserves the right to charge the Cus specifications; (ii) TFA providing plan- Siemens may offer a priority service, tomer for such expenses at cost plus ning, scheduling, material management when the relevant Siemens personnel are 15% for handling and administration support or working directly with Custom- available, for emergency or breakdown expenses. er's labor supervisor; fiii) diagnostic and callouts. An additional 30%of the appli- 0 Siemens reserves Me right to charge operational trouble-shooting and com- cable Daily Labor Rate will be charged business class Bights. missioning of rotating equipment (con- where Siemens personnel are requested g)AII separately invoiced items over and ducted cnsite or by telecommunication); to be mobilized within 24 hours of the above the Daily Labor Rate. Per Diem (iv) diagnostic electrical testing, evalua- request being received. This charge is to Charge. MobilizationlDemobilization Rion and set-up activities on control sys- cover for the disruption to job schedules Fees and/or airfare will be charged at tams,voltage regulator systems,any on- and the re-allocation of manpower to cost plus 15% fee for handling and line diagnostics or Level If NDE and balaccommodate the priority call. If Sie. administration costs. cing;(v)engineers located at Siemens mens is unable to meet the 24 hour home facilities, including District Offices mobilization request there will be no B.Departure Delay and Cancellation and the Technical Support Center,provid- additional charge. a)Departure delay - Standby in Home Ing technical studies and information Base relating to the design and operating V. Payment Terms for Supply of Per- If the fixed date for the personnel del- Parameters of rotating equipment. A job sonnel egation is delayed due to reason by the specific readiness fee will apply to all Payment shall be as follows: Where the Customer,Siemens is prepared to keep orders for Specialist Services that are not duration of the services is less than one the nominated personnel on stand-by firm priced. This fee will cover pre-job month,payment will be 10016 of the price up to)calendar days. In this case Sie. efforts and will be quoted separately, of the balance of the services upon com- mens shall charge a delay fee of the pletion of the services. Where the duration full applicable Daily labor Rate per cal- B. Technical Field Advisor(TFA) of the services is greater than one month endar day of tlelay. TFA services are a TFA rendering advice then the balance of the services shall be b)Departure Delay-At Point of Embarka- and making recommendations based on invoiced on a monthly basis unfil comple- tion Siemens procedures and drawings during bon of the services. Payment shall be Should departure of personnel be de- disassembly,inspection,and replacement received within 30 days of the date of the layed at the point of embarkation for of parts,routine repair and reassembly of invoice. any reason beyond Siemens control, existing and installation of new Siemens the applicable Daily labor Rate will be supplied rotating equipment to Custom- VI.Traveling and Other Expenses charged per day of delay.Accommoda- er's employee, lion and meals where provided by Sie- Doc.Cade:FSCA US 01-01-2015 Page 1 of 2 Charging Appendix - Field & Engineering Services For Service on All Siemens Acquired Steam Turbines,Gas Turbines,Compressors and Pumps in U.S.A.and Internationally,except Canada Effective January 1,2015 Subject to change without notice mens will also be charged according to cessive loss or damaged Tools beyond the published rates. the control of Siemens will be charged In the interests of avoiding language 0 Cancellation to the Customer. difficulties. the Customer shall, for own Where Siemens is notified by the Cus- account, make available the services of toner of a cancellation less than 2 days E.Shift Work interpreters where work is being per- prior to planned mobilization,a cancel- Shift work is defined as those circum. formed. lotion fee of one single day at 1 DM of stances where,in a given day,more than the applicable Daily tabor Rate will be one service crew is engaged to perform If an incident occurs whereby the Sie charged. the service activity. In such instances mens personnel are unable to safely Should any job be cancelled or post. Siemens reserves the right to charge a continue working at Site and which, in poned by the Customer after the repre shift premium in addition to the applica- agreement with the Customer, results in sentative has been dispatched,all costs ble Daily Labor Rates. their repatriation to home base the cost incurred for time and expenses will be for both the repatriation and subsequent charged in accordance with the terms F.Technical Consultation return to Site of the personnel or their of this Field Service Rate Sheet and a)During on site service work it might be replacements shall be borne by the Cus- Charging Appendix. necessary to involve specialists from tomer. Siemens headquarters for particularly C.Homo Leave complicated technical questions such Vill.Additional Notes a)For USA/Canadian service personnel, ascertain analysis,calculations or simi. alit the event Siemens uses outside or when a project is expected to exceed 5 lar tasks. For such technical consults- subsidiary Personnel to perform services continuous weeks of duration, follow. tion, Siemens will invoice this charge that would normally be performed by ing every 3 weeks of continuous at. on an hourly basis according to the Siemens personnel,Siemens will invoice sentience at an onshore site,including Specialist Services rates as defined in Customer for such personnel at the any days spent traveling,the Customer the published rates sheet. hourly rates published herein. will allow each member of Siemens b)Where technical consultation is re bl Non-Siemens parts or materials supplied personnel an extended weekend home quired to be provided at Site, charges during the work will be charged at cost leave journey at the Customer's ex- will be in accordance with the pub- plus25%. pense. For International personnel, lished rate sheets for Specialist Ser- home leave is permitted every 2 vices.Before such work is commenced, months for 10 days at the Customers a separate agreement has to be estab- expense. lished,unless it is already agreed upon in If continuous attendance of Siemens in the order. personnel is requested and Siemens agrees to delegate substitute person- VII.Workino Conditions and Special nel, the applicable Mobilize- Costs tion/Demobilization Fee shall be paid Costs for factory security officers, medical by Customer.. services, industrial safety and supporting c)Following every fourteen days of con- activities at the Customer site will be for tinuous attendance off-shore.Siemens the account of the Customer. Where addi- reserves the right to charge the Cus- tional security is required to comply with tomer a further mobilization fee for Siemens travel regulations (based on Sie- each member of Siemens personnel. mens Corporate Security Office), this will d)Days spent traveling with respect to the charged at cost plus 15% fee for han- home leave shall be charged at the ap- dling and administration costs. plicable Daily Labor Rate. Should any member of Siemens personnel cancel a In case of accident or illness,the Customer home leave journey, the Customer undertakes to provide immediate medical shall be charged for the airfare andlor assistance and if necessary,to transfer any other travel costs incurred by Siemens. injured or sick person to a hospital prefera bly conforming to North American stand- D.Tools ards.Should repatriation become necessary a)Charges for equipment, tools, measur. as a result of serious illness or death, the ing instruments and special assembly Customer shall attend to all formalities and tools supplied with Siemens field ser- pay all the costs incurred thereby. Should vice personnel for use by Siemens or its replacement personnel be required, the subcontractors ('Tools')will be quoted costs for same shall W borne by the Cus- by your local Siemens representative. tomer. Cosh of transportation of Tools fin- cluding all applicable transportation The Customer shall make available free of charges, insurance, customsfduties, charge to Siemens personnel: office etc.) will also be charged at cost plus space, telephone, high speed internet 15% fee for handling and administra- connection and telex/fax(communication tion costs.The rental time applies from with home office shall be free of charge) the day of dispatch from base to return and all such other facilities as are availa. receipt. ble to Customer's own personnel, b)Siemens will catalogue the Tools re- quired to be returned to base.If for any Any social amenities available at the job event the catalogued Tools are not re- site or Introduced there during the pro, turned within 30 days after leaving gress of site work,as well as any special site,Siemens will charge the Customer benefits granted,shall be made available the current replacement cost. to Siemens personnel in the same man. c)Prices quoted will include normal ner and extent as accorded to any other replenishment and re-calibration. Ex. foreign personnel at the job site. Doc Code:FSCA VS 01-D1.2015 Page 2 of 2 Siemens Demag Delaval Turbomachlnery,Inc. Selling Policy 1200- A Siemens Company SIEMENS 840 Nottingham Way °CSD Trenton, New Jersey, U.S.A.08638 (For Sales in the U.S.A. Excluding the States of Louisiana and Mississippi) November 1,2012 These Terns and Conditions Govern Supersedes Selling Policy 1200 dated May 1,2005 the Sale of Equipment and Services The temp and conditions set forth In the Siemens Demag Delaval Tudwmachmery,Inc proposal and In this Selling Policy 1200 are the terms and condi- tions gemming the Siemens proposal and any Agreement between the parties for the Equipment and/or Services covered by such proposal. Each pro- posal is valid for sixty(60)days from the data of the proposal unless extended or wiMtlrawn in writing by Siemens. The Issuance of a Purchaser pur- chase order or any other reasonable manner of acceptance by Purchaser communicated to Siemens during such validity period will form an Agreement based upon the terms and conditions of the Siemens proposal and this Selling Policy 1200. 1. Def nitons Whenever used in this document with Initial capitalization,the following defnitions shall be applicable: A. 'ACM'ea used herein shall mean Asbestos and Presumed Asbestos Containing Matedals. B. 'Agmemenr means the Siemens pmpesal,this Selling Policy 1200,Purchasers purchase order,as accepted by Siemens,(excluding any pre- printed tames and conditions on said purchase order and in any attachments to or Purchaser documents referenced In said purchase older)or other doo unroll evidencing acceptance of the Siemens offer as set forth in the Siemens proposal;or an Integrated agreement signed by Siemens and Purchaser, for the Equipment,and/or Services. C. 'Asbestos'shall have the meaning set forth In United States Code of Federal Regulations Chapter 29,Sections 1926.1101 at seq. D. 'Equipment'means equipment,components,parts,materials and Software provided by Siemens pursuant to the Agreement E. 'Field Installation Services means the Installation by Siemens of Purchasers Material of the Site. F. 'Fled Repair and Modernization Services means the repair,modification or modernization work,or some or all of them,performed by Siemens on Purchasers Material at the Site and for certain activities at a repair facility selected!by Slsme". G. 'H,oadjoes Matedar means any materiel listed in me'Hazardous Material TabW set forth in 49 CFR 172.101 as amended. H. Waimenance Servioss means the disassembly.Inspection and reassembly of Purchasers Materiel M the Site. I. "Nuclear Incident'shall have the meaning set forth in the Atomic Energy Act of 1964,42 U.S.C.2011,at seq.,as amended. J. 'Party means individually ether Siemens or Purchaser. K. 'Panes'means colletlHely both Siemens and Purchaser. L. 'Presumed Asbestos Containing Matador shall have the meaning set forth In United States Code of Federal Regulations Chapter 29,Sections 1926.1101 at seq. M. 'Purchaser'means the entity purchasing Equipment andlor Services,as well as any other owners of the facility where the Equipment or Pur- chasers Material Is or will be situated. N. 'Purchasers Material'means the equipment,materials,components and tams of any kind owned by Purchaser or any other owner of the Site for which Services are to be provided!or are provided under the Agreement. O. 'Services means Shop Repair and Modernization Services, Field Installation Services, Fled Repair and Modernization Services,Maintenance Services,and Technical Services;or some or all of them pmvldW by Siemens pursuant to the Agreement. P. 'SeMces on Third Pall Parts"means Services in connection with Third Party Parts. Q. 'Shop Repair and Modernization Services'means work performed by Siemens on Purchasers Material st a Siemens manufacturing plant, a Siemens repair facility or another suitable facility selected by Siemens. R. 'Slemens means Siemens Demag Deleval Turbomachinery.Inc. and its affiliated companies and their subsidiaries,successors and assigns, and each of their respectim partners,principals,shareholders,directors,ofHcem,employees,and agents. S. 'Ste'means lee Purchasers facility whoa the Equipment or Purchasers Material Is or will be situated. T. 'Special Services'means the performance by a Siemens fed service representative of diagnostic and operational troubleshooting on Pumhas- ers Material,both on line and of line.This work may be conducted on Site or by telecommunication. CONFIDENTIAL amawmw nwnro.n,x a.o Selling Policy 1200 U. 'Software'means instructions in machine readable fans,other than source code,and associated documentation delivered by Siemens to Pur- chaser in chip,disk and/or tape formal V. °SubsuppiieY means any subcontractor or supplier of any her who supplies goods and services to Siemens in connection with Me obligations of Siemens underthe Agreement W. 'Technical Field Assistance' means the advice and consultation given to Purchaser's personnel by a field service representative of Siemens with respect to: (1) installation,inspection,repair and/or maintenance activities performed by others at the Site,and (2) any Siemens recommended quality assumnm procedures for activities performed in the Site. Technical Field Assistance does not include management,supervision or regulation of Purchasers personnel,agents or contractors. X Technical Services-means()Technical Field Assistance; i Special Services; (ill inspection of equipment which has been disassembled by Purchaser or others;(v)technical evaluation of inspections performed by Siemens,Purchaser or others;(v)technical Information provided by Siemens. Including data interpretation and reports; (v)Inspections,technical evaluation of inspections,technical analysis of materials and technical recommenda- tions related to Shop Repair arch Modembntlon Services;(vi)advice and consultation given to Purchasers personnel at the Site or at a Siemens facility by a Siemens engineer or technician; and/or(vil)advice and guldance given to Purchaser by Siemens field engmeer(s) regarding methods and proce- dures for Installation,maintenance and/or calibration of the Equipment or Purchasers Material. Y. Third Party Parts'means pads,components,equipment or materials pmvided by Purchaser under the Agreement or that exist fn the Purchas- ers Material which ware not manufactured or supplied by Siemens or the predecessors of Siemens or which were originally supplied by Siemens or the predecessors of Siemens and subsequently mpalw,serviced or otherwise modified or shared by any parry not afiliated with Siemens or with a prede- cessor of Siemens. 2. Scope Siemens will fumish to Purchaser Equipment.and/or Services as specified in and pursuant to the Agreement 3. Prim Policy For an Agreement for Equipment supply only, unless ohermse stated in the Siemens proposal,the price does not include disassembly and reassembly of Equipment at the Sm. Prices am firm far 0)Equipment with a scheduled shipment data of ably(60)weeks or less tram Siemens' acceptance of the Purchase Oder and (it) Services which are scheduled to be perfumed within sbdy(60)weeks from Siemens'acceptance of the Purchase Oder. For()Equipment with a scheduled shipment data in excess of oddly(60)weeks and(t)Services scheduled M be completed beyond sbdy(60)weeks from Siemens'acmptance of the Purchase Oder,the prices are subject to adjustment upward or downward for changes in the speoified labor and materiel Indexes in accordance with the provisions of the applicable Siemens Prim Adjustment Policy. 0. Terms of Payment A. Unless otherwise specified, Siemens shall issue Invoices in accordance with the schedule set forth in the Siemens proposal. If an invoice schedule is not cot fold in the Siemens proposal,Siemens shalt issue invoices as the work Is completed,but no more often than monthly. In any avant, all ovoces shall be paid within thirty(30)clays after Me date of the imoice. B. In any instance where Purchaser is unable to return components to Siemens for filling a for coordination with other assemblies by the specific date agreed to in the Agreement or where a potion of the work is to be performed by Siemens at a later date,Siemens reserves Me right to invoke Pur- chaser for work performed to date and either ship the components to Purchaser in their existing state or hold the components in storage at Pumhw a's risk and expense.That portion of the vmrk which is M be performed by Siemens at a later data will be performed as a Purchaser requested change under Article 18,Changes. C. If shipments are delayed by Purchaser,affectetl payments shall become due based on the data Siemens leis prepared to make shipment. D. Any past due amounts shall,without prejudice to the right of Siemens to payment when due,bear interest at a Boating rate equivalent to one- 1weMh(1/12)of the per annum prime rate charged by JPMorgan Chase Bank,New York, New Yank, U.S-A.,as such prime rate is published on the first mnldng clay following me date payment i5 due,plus an additional one-hat of one percent(0.5%),payable each month or portion thereof that payment is delayetl. If payments are not made when due Siemens may, upon fifteen(15)clays written notice and at the option,()terminate this Agreement(which termination shall be bested as a termination pursuant to Article 11,Termination)or(i)suspend all further work hereunder.Resumption of work thereafter is contingent upon connection of the payments deficiency by Purchaser.The schedule for the resumed work end be established by Siemens based on its then current work load and the availability of other resources. All Siemens expenses associated with any such suspension shall be for the account of Purchaser. E. tl there exists a good faith dispute over the amounts to be paid,Purchaser shall notify Siemens in writing that such dispute exists and Purchas- er shall pay the undisputed award.The disputed portion may be held in abeyance until resolution of the dispute with that portion,together with the inter- est charge specified in Paragraph D above,due thirty(30)days after said resolution. F. Unless otherwise set forth in the Siemens proposal, 'd shipment(from the manufacturing plant or repair facility where Me work is performed) and/or Delivery of an item of the Equipment or completion of a portion of the Services is delayed for muses which are within the reasonable cannot of Siemens, issuance of the invoke mvering the final five percent(5%)payment for the delayed work will be deferent for now the number of months by which shipment/Delivery of such item of the Equipment or completion of such portion such Services is delayed,provided,however,met such deferal of the final Invoice shall only be applicable If the delay in shipment and/or Delivery of the Equipment or the may in completion of the Services has actually delayed the Purchasers project for which the Equipment and/or SerNces were purchased. G. THE REMEDIES OF PURCHASER SET FORTH ABOVE AND/OR IN THE SIEMENS PROPOSAL FOR DELAY IN SHIPMENT/DELIVERY OR COMPLETION OF SERVICES CAUSED BY SIEMENS ARE PURCHASER'S SOLE AND EXCLUSIVE REMEDIES AND NO OTHER REMEDIES OF ANY KIND WHATSOEVER SHALL APPLY.Deferral of the issuance of the final five percent(5%)invoice as sat bib above and/or provision of the reme� CONFIDENTIAL smsamr rmolrwrmrEmp Selling Policy 1200 dy set forth in the Siemens proposal shall constitute complete fulfillment of all liabilities of Siemens to Purchaser for delay in shipmenbDelivery of Equip. ment or completion of Sernow whether based in combact,in tort(including negligence and strip liability),or any other theory of recovery. A Delivery,Title and Risk of Loss or Damage A. Unless otherwise stated In the Siemens proposal,delivery of each component of Equipment shell be made Ex Works(Inootenns 2010)at the manufacturing plant(Delivery).Subject to the provisions of Paragraph B below,legal and equitable one and risk of low or damage to each such compo� nent of the Equipment shall pass from Siemens to Purchaser upon Delivery. B. This to and right of possession of any Software licomsed hereunder,without legal process,shall remain with Siemens or its licensor,except that Purchaser shall have the right of possession and use of the Software provided hereunder for the tams of the corresponding license provided herein,w long as no breach of this Agreement has been made by Purchaser and all payments due Siemens have been paid. Nothing in this Agreement shall be construed as giving Purchaser any right to sell, assign, Now or in any other mannsr transfer or encumber Slemene or Its licensors ownership of the Software,or as Ibnning Siemens or its licensor from using and licensing the Software to any third pally. C. Purchasers Material sent In Siemens for Shop Repair and Modemba0on Services or Purchasers Material or Equipment being ndumed purse ant to the provisions of the Warany or Patents ArgrJw of the Agreement will be delivered by Purchaser at its espe w,to the repair or manufacturing plant designated by Siemens wham the work Is to be performed.This to such Equipment or Purchasers Material will remain at all times with Purchaser. Risk of low or damage to such Equipment or Purchasers Material will transfer to Siemens upon its arrival on brand the confer at the repair or mon lfso. Wring plant adding transfer back to Purchaser upon to delivery to the oanier at the repair or manufacturing plant for Mum to Purchaser.Delivery of Pur- chasers Material shall be made when the item is placed on board carrier at the repair or manufacturing plant When repair work Is performed by Siemens m the Site,this and risk of low or damage to the Equipment,to Pumhewes Materiel and to other property shall remain at all times with Purchaser. This to any defactive or nonconforming components of the Equipment that am replaced by Siemens,as part of itn,warranty obligations shall,at Slemens'op- tion,owed beck to Siemens upon completion of the replacement,with a deemed value of zero. D. Risk of low of or damage to Purchasers Material or other property located at the Site shell remain with Purohmer at ell times during the per- formal of work hereunder. If Purchaser procures or has procured property damage insurance applicable to occurrences at the Site, Purchaser shall obtain a waNar by the Insumrs of all subrogation rights against Siemens and his Subsuppllers. 8. Trareporfetlon A Transportation and Storage: When items of Equipment am ready far shipment or Shop Repair and Modernization Services am completed on Purchasers Material, Siemens will notify Purchaser to mrsnge for shipment. If Siemens has agreed In the Siemens proposal to transport Equipment, when items of Equipment ere ready for shipment or Shop Repair and Medembation Services is completed on Purchasers Material,Siemens will(g in the absence of shipping InstrumOns,inform Purchaser of Pending shipment and Purchaser will thereafter promptly give shipping Instructions to Siemens;(III determine the method of transportation and the routing of the shipment and(III)ship the Equipment or Purchasers Material height prepaid and Included in the price by Normal Carriage: (1) to Purchasers designated destination when shipped by highway transport,or (2) to the nearest suitable mil siding to Purchasers designated desertion when shipped by mil transport. In the,event that Purchaser fails to provide Siemens with timely shipping instructions,Siemens will ship the Equipment or Purchasers Material by Normal Carriage to Purchaser or to a suitable storage location selected by Siemens. If the Equipment and/or Purchasers Material is to be placed into storage in accordance with the above,delivery of the Equipment or Purchasers Material shall be deemed to have occurred for all purposes under the Agreement, Including any payment due upon delivery, at the time the Equipment or Pur- chasers Material is placed on board the carver for shipment to the storage location. If the Equipment and/or Purchasers Material is to be stored in the facility where manufactured, or where Shop Repair and Modernization Services am performed, delivery shall be deemed to have occurred when the Equipment and/or Purchasers Material is placed into the storage location at such facility. In the event of sforege pursuant to the preceding Paragraph,all expenses thereby incurred by Siemens,such as preparation for and placement into stor- age,handling,freight,storage,inspection,preservation,tams and Insurance,shall be payable by Purchaser upon receipt of an Invo e(s)from Siemens. When conditions permit and upon payment to Siemens of any additional amounts due hereunder, Purchaser shall arrange,m its expense,for removing the Equipment and/or Purchasers Material from storage. B. Normal Carriage: When Siemens is providing tiro transportation of the Equipment and/or Purchasers Material,Siemens shall make every ma- wnable effort to ship by highway transport unless all transport is required. Normal Carriage means cortege either by highway transport(provided this does not necessitate use of specialized riggers traders)or by hell transport,an normal routing from the repair facility or manufacturing plant to(0 Purchas- era designated destination when shipped by highway transport or(ii)the nearest accessible suitable mil siding to Pwchawrs designated destination when shipped by rail transport or(110 the pod of export selected by Siemens in the forty-eight(48)continental United States 8 Purchasers designated destination is outside the United Slates or is in Alaska or Hawaii. C. Special Transportation and Services: Purchaser agrees to Pay or to reimburse Shamans for any transportation charges in excess of regular charges for Normal Carriage, including, but not limited to,excess charges for special routing,special helms, specialized riggers trailers, lighterage,barg- ing and air transport. Purchaser ales agrees to pay or to reimburse Siemens for any cost Incurred or charge resulting from special services performed In correction with the transportation of the Equipment or Purchasers Material, including, bid not limbed to,the construction and repair of transportation and handling facilities, bridges and roadways,of whatever kind and wherever located. 7. Warranty A. Equipment Warranty and Exclusive Remedy(excluding Software): Siemens warrants that each component of the Equipment(excluding Soft. ware and consumables)furnished to Purchaser will be frw of defects In workmanship and materials until the eadler of eighteen (18)months after the Delivery of such component of the Equipment or one(1)year from the date of first use of such component of the Equipment(the'Equipment Warranty Period'). CONFIDENTIAL .wawrvxr r:mrrr,.:o,:m o Selling Policy 1200 f during the Equipment Warranty Period(or the Warranty Repair Womanly Period per Season 7.11, If applicable), Siemens is promptly notified in writing that the Equipment or any component thereof fails to conform to the Equipment Warranty,Siemens will at Its option and expense coned such noncon- formity by repair or replacement. B. Software Warranty and Exclusive Remedy: If Equipment Includes Softwem, Siemens also warrants that the Software will be two of am. which materially affect its uti ty until the earlier of eighteen if a)months after the Delivery of such Software or one(1)year from the date of first use of the Software(the°Software Warranty Period). If during the Softwars Warranty Period(or the Warranty Repair Warranty Period per Section TH,f applicable),Siemens Is promptly notified in writing that the Software falls to conform to its warranty,Siemens will at its option and exPensa coned the nonconformty by correction In the medium originally sup- plied or by provitling a procedure to Purchaser for correction of the nonconformity.Third Parry Software shall be warranted on a pass through base In the same manner and for the some period and rodent provided to Siemens by the entity which supplied said third parry software. C. Field Installation Services, Field Repair and Modemeatlon Services, Maintenance Services, and/or Shop Repair and Modamhdion Services Womanly and Exclusive Remedy: Siemens warrants that the work performed by Siemens on Purchaser's Material, Including any materials (excluding coneumables)supplied by Siemens In connection therewith(hereinafter In the Paragraph C referred m as the Work),will be free of defads in design, workmanship and materials until one If)year after the completion of such services(the Theld and Shop Repair and Modernization Services Warranty Period). f during the Field and Shop Repair and Modemtatlon Services Warranty Period(or the Womanly Repair Warranty Period per Section TH,t applicable), Siemens Is promptly notified in writing that the Work or any part thereof falls to conform to the Field Installation Services,Field Repair and Modemtation Services,Mainennce Services,and/or Shop Repair and Modernization Services Warranty,Siemens will at its option and expense correct such noncon, fomnty by repair,replacement or mpedormance of the defective portion of the Work. If repair,replacement or mperrommmce is Impracticable.Siemer will refund the amount of the compensation paid b Siemens by Purchaser for such nonconforming portion of her Work. D. Technical Services Warranty and Exclusive Remedy: Siemens warrants for each tam of Technical Services that(1)the advice,moommenda- fon and performance at its personnel will reflect competent professional knowledge and judgment and(It the technical information,reports and analyses transmitted by Siemens In connection therewith will tells&competent professional knowledge and judgment beginning with the start of tie Item of Tech- nical Services and ending one(1)year after completion of sold tern of Technical Services by Siemer(the Technical Services Warranty Period). If during the Technical Services Warranty Period(or the Warranty Repair Warranty Period per Section TH.if applicable),Siemens Is promptly notified in writing that any portion of the Technical Services fails to conform to the Technical Services Warranty,Siemens will promptly reperfomn such nonconfomh- Ing potion of the Technical Services. If repedommnco Is impracticable Siemens will refund the amount of the compensation paid to Siemens for such nonconforming Portion tithe Technical Services. E. This Siemens warrant that the Equipment,upon Delivery,shall not be subject b any encumbrences,liens,security Interests,or other dialects in title.In the awn of any failure to conform to the warranty,Siemens,upon prompt written notice of such fallum,shall defend the title to the Equipment. F. Warranty Condtions: The warranties and remedies set forth in this Article are conditioned upon: (1) Purchasers receipt handling, storage, Installation, testing, operation and maintenance, including tasks incident thereto, of the Equipment Purchasers Matadi or Purchasers equipment,in accordance with the recommendation of Siemens In the extent applicable or, in the absence of such recommendations or to the event not applicable, in accordance with the generally accepted prances of the industry. In addition,such Equip- ment, Purchasers Material or Purchasers equipment shall not have been operated in exo ss of limitations specified in writing by Siemens and nd have been subjected to accident alteration,abuse or misuse;and (2) For all warranty work Purchaser shall provide access to any ownsfing and maintenance data as requested by Simmons.which may include broadband 4ommction. (3) For all warranty work where disassembly,removal,mpecement and reinstallation of Equipment materials,structures or Purchasers Material was not pan of the Siemer scope of work under the Agreement, Purchaser providing,without cost b Siemens,access b the nonconformity,by dis- assembling,removing,replacing and minstalling any Equipment, materials, structures or Purchasers Material to the indent necessary to parrot Sie- mens b perform its warranty obligations. (4) All warranty work being performed on a sirgte-sMf stmight-time bass,Monday through Friday. In the event Purchaser requests correction of warranty,items on an overtime or multiple shift schedule,the premium portion of such overtime or multiple shift shall be to Purchasers account. (5) Purchaser,without cost to Siemens,making its Site facilities and personnel(to the codent consistent with personnel job&ourmw ions)avalk able to assist Siemens in the performance of Its warrant'obligations. (6) Purchaser,with rasped to Paragraph 5 shove,mimbureing Siemens for all runs incurred in the transportation of personnel an detective,m- paired or replacement pads to and from the Site. (7) Prior to the mtum of any Equipment or Purchasers Material to Siemens, the Purchaser must obtain authorizabon and shipping instructions from Siemens. The Equipment or Purchasers Material must be returned with complete identification in accordance with instructions furnished by Shamans. In no event will Siemens be m tponsibie for Equipment or Purchasers Material returned without proper authorization and identification. Siemens miterves the right to read any unauthorized Mums and/or Hazardous Material. O. For the avoidance of doubt,in the event that physical loss or damage to the Purchasers property msulb from the failure of a warranted defog the potion of the Equipment or Services b confomn to Its respective wermmy,during the applicable warrant'period,should Siemens have any Iiablllty al all, Siemens'liability shall in no case exceed Siemens' obligation to perform the wananty remedles specified in Article 7 subsections A,B, C, or D, as applicable,which Siemens would have had to perform 'd such warranty remedy had been carried out immediately following such failure but prior to the occurrence tithe physical loss or damage. H. The warranty period for any Services or Equipment repaired or replaced by Siemens pursuant to this Article 7 shall not exceed the earlier of twelve(12)months after the date of completion of the tem of mpaired,replaced or reperfomned Equipment or Services or six(6)months after the expira- tion of the original weeny,pedod(the Warranty Repair Warranty Padod). CONFIDENTIAL raw Posz ono n ro,errs i..o Selling Policy 1200 I. Additional Conditions Applicable to the Sale of Monitoring Devices: Monitoring devices supplied by Siemens pursuant to the Agreement,men as but not limited to,mondors for generator condlgon and for steam chemistry, may enable users to better diagnose and control conditions within a tur- bine generator.While such monitors may permit earlier detection of hemdul conditions,Siemens does not warrant or represent that the use of such moni fora will prevent failure or dated all hamdul conditions in a turbine generaor and Purchaser acknowledges the same. J. Additional Conditions Applicable to Diagnostic and Non-Destructive Examination and Testing: Dlagnostic and non-0eatrumve examination and testing techniques employed by Siemens may not dated all of the defects in Purchaser's Material(including Indications of cracking)and such failure shall not condltule a breach by Siemens of its warranly obligations. Purchaser acknowledges that Siemens will not be responsible for the consequences of undetected defects including undetected tacks. K Additional Conditions Applicable to Technical Flea Assistance Where Siemens furnishes Technical Field Assistance under the Agreement, Purchaser is responsible for(Q the supervision,management,regulation,arbitration and determination of the number of Its personnel,agents,or comae ors and their work and fill the planning,scheduling,management and pragmse of the work. Unless expressly agreed to in writing by Siemens,under no circumstances shall Siemens provide or be obligated fo provide Technical Flekl Assistance directly or indirectly to any competitor of Siemens or their employees,ropmeemativae.or comeatierlb. L. Exclusivity of Warranties and Remedies: THE WARRANTIES PROVIDED BY SIEMENS AS SET FORTH IN THIS ARTICLE ARE EXCLLL SIVE AND ARE IN LIEU OF ALL OTHER WARRANTIES WHETHER STATUTORY, EXPRESS, OR IMPLIED (INCLUDING ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE,AND ALL WARRANTIES ARISING FROM COURSE OF DEALING OR USAGE OF TRADE).Correction of nonconfmir than In the manner and for the period of time provided above constlnne Siemens'sole and exclusive liability and Purde sane sole and exclusive remedy for defective or nonconforming Equipment and/or Services whether claims of the Purchaser are based in warred, In art(including negligence and sad liability),or any other theory of recovery. g. Time The prim pold or to be paid to Siemens under the Agreement does not Include any federal,sate,or local properly,license,privilege,miss,use,excise, value added,gross receipts,or similar aces(other than federal and area Income faxes imposed on Siemens)now or hereafter applicable to, measured by,or Imposed upon or with aspect to the transaction,the Equipment and Purchasers Material,Its or their sore,their value or their use,or any Services performed in connection therewith.Purchaser agrees to defend,pay,and rehouse se Siemens for any such axes or ware,expenses,claims,liabilities,or losses including without limitations tax liabilities.penalties,and interest as a result of Purchasers ads or omissions mlated to such axes,which Siemens at its Subsuppllam are required a pay or are Incurred by Siemens and its Subsuppllers. 9. Reserved 10.Force Majeum A. Siemens will not be liable for allure to perform or delay In performance of any obligation resulting from or mnblbuted to by any mesa beyond the reasonable control A Siemens or its Subsuppliers or from any ad of God;ad of civil or military authority,ad of war whether declared or undeclared; act(including delay, failure to act or priority)of any governmental authority or Purchaser. ad of terrorism or threat thereof; dvil disturbance, rebellion, counsellor, rat or sabotage;fire,Inclement weather conditions,earthquake,goad or nasal disaster,strike,work stoppage or other tabor difiwlly,em- bargo,epidemic or quaantina;railroad car,fuel or energy shortage;major equipment breakdown;delay or accident In shipping or transportation;or afium or delay beyond its reasonable control In obtaining Mammary manufacturing facilities,labor,work permits or working visor for Siemens'personml or ib Subsuppliers'personnel,necessary Impart or export license,or materials from usual minas. S. In the event of a delay in performance exasable under this Article,the data of Delivery or time for performance of the work will be extended by a period of time reasonably necessary to overcome the effect of such delay,and Purchaser will mimbume Siemens for its additional costs and expenses resulting tram the delay. If.Termination A. Purchaser,In he sea and absolute tlacredon,may terminate the Agreement,In whole or In part,at any time without muse,at any Time by wre- an notice to Siemens. In such case, Siemens shall Immediately discontinue work (unless the nice dude otherwise). Siemens shall be entitled to payment only for those goods,mahenaa and equipment delivered and services performed that Purchaser has accepted.Should the work be delayed for a period In excess of sit(S)months for any mason attributable to Purchaser and/or farm majeurs, or should any payment from Purchaser be thirty(30) days or mom past clue,at the option of Siemens,Siemens may deem the Agreement to have been terminated by Purchase.Termination Charges under this Section 11 will be either. (a)the applicable,termination fee from the termination fee schedule sot forth In the Siemens proposal;or(b) In the absence of a termination fee schedule,the portion of the pachaee prim for the work performed, man hours expended and materials sequined as of the dare of lamination plus the expanses mentioned with the termination. Including,but not limited to,any additional expense incurred by mason of termination or cancellation of agreements between Siemens and its Subsuppllers, and any applicable cost allocated in contemplation of performance. Siemens will make every masonabla effort to minimise the Termination Charges. The Parties agree that such Termination Charges, Including termination fees set foM in the Termination Fee Schedule,am a reasonable determination of the damages that Siemens would Inter as a result of such termination and do net constitute a penalty. Al Termination Charges shall be due and payable thirty(30)days from the date of the Siemens Imroice. B. Purchaser may terminate the Agreement for muse in the avant of(1)an ad of Insahency or bankruptcy by Siemens;or Oil a material breach of the Agreement by Siemens, which Siemens falls to commence to am within thirty(30)days after room thereof tram Purchaser and falls to diligently pursue thereafter. In such event,as Purchasers sole remedy for such default,Siemens will reimburse Purchaser for Its mamnable and verifiable cosy a compare the Services or obtain replacement Equipment up to twenty percent(20%)of the prim for such Item of Equipment or Services under the Agreement. C. In the event of any breach of the Agreement by Purchaser,Siemens shall be entitled to an extension of time to the extent namsseated by the bmach and to almleum ment for all coats and expenses Incurred by Siemens as a result of such breach. Siemens may terminate the Agreement for mum in the event of a material breach of the Agreement by Purchaser. If Siemens lemdnatm the Agreement pursuant to this Paragraph I1.C.Punehas- ter shall pay Siemens the Termination Charges(as defined In Paragraph 11 A)within thirty(30)days from the date of the Siemens Invoice. D. In addition, IT at any time during the performance of its work under the Agreement Siemens reasonably determines that the Purchasers finao- dal condition may render it Insolvent or unable to make Aare payments under the Agreement,than Siemens shall be enti0ed to one or mom of the fol- lowing at Siemens'option: (i)adequate written assurances, supposed by documentation, of Pachasers ability to pay; (Ig payment In advance far any CONFIDENTIAL vavwar omoe.owx,..o Selling Policy 1200 further wort,;(III)future payments against an Irrevocable Letter of Cmdft on terms,and from an issuing bank,acceptable to Siemens;(iv)other payment security,or credit support mutually agreed by Purchaser and Siemens. 12. Intellectual Property Infringement A. Siemens will,at its own expense,defend or at its option sable any suit or proceeding brought against Purchaser so far as based on an allega- tion that any Services on Purchasers Malarial or the Equipment(Including pads thereof),or use thereof for Its intended purpose,constitutes an InMnge- ment of any United Slates patent mpydght or misappropriation of a third party's trade seael,so long as Siemens is notified promptly in writing and given authority, Information,and assistance in a timely manner for the defense of said suit or proceeding.Siemens will pay the damages and costs awarded in any suit or proceeding so defended.Siemens will not be responsible for any settlement of such sub or proceeding made without its prior written consent. In rasa the Services on Purchaeers Material or the Equipment,or any pad thereof as a result of any sub or protecting so defended is held to constitute InMngement of any such United States patent copyright or misappropriation of a third parq/s bade secret or its use by Purchaser is enjoined,Siemens will,at its option and its own expense,either (a)procure for Purchaser the right to mntinue using said Equipment or Purchasers Material;(b)replace it with substantially equivalent non-Imringing equipment or(c)modify I so it becomes noMmringing. B. Siemens will have no duty or obligation to Purchaser under this Article to the extent that the Services on Purchasers Materiel or Equipment Is (a)supplied according to Purchasers design or Instructions wherein compliance therewith has caused Siemens to deviate from Its normal mum of per- formance,(b)modified by Purchaser or its mnbactors after delivery by Siemens,or(c)combined by Purchaser or its contractors with items not furnished hereunder and by reason of mid design, instmctlon, modification,or combination a sub Is brought against Purchaser. In addition, If by reason of such design, instruction, modification or combination,a suit or proceeding is brought against Siemens,Purchaser shall protect Siemens In the same manner and to the same extent that Siemens has agreed to protect Purchaser under the provisions of Paragraph 12A above. C. THIS ARTICLE IS AN EXCLUSIVE STATEMENT OF ALL THE DUTIES OF THE PARTIES RELATING TO PATENTS, COPYRIGHTS OR TRADE SECRETS AND DIRECT OR CONTRIBUTORY INFRINGEMENT THEREOF AND OF ALL THE REMEDIES OF PURCHASER RELATING TO ANY CLAIMS, SUITS, OR PROCEEDINGS INVOLVING PATENTS, COPYRIGHTS OR TRADE SECRETS. Compliance with this Article as provided herein shall constitute fulfillment of all liabilities of the parties under the Agreement with respect to patents,copyrights or trade morsts. 13.Confidential Information A Siemens may have a proprietary interest In information that Is furnished pursuant to or in connection with the Agreement As a Special District in the State or California, Purchaser adheres to the provisions of the California Public Records Act(California Government Code§6250 at seq.). To the extent allowed by law,Purchaser will keep in mnfidence and will not disclose any such Information,or any of Siemens'Intellectual property(including,but not limited to,any patents,copyrights or trade secrets),which Is specifically designated as being confidential by Siemens or use any such information for other than the purpose for which it is supplied without the prior written permisslon of Stemers. The provisions of this Paragraph shall not apply to Irdor- mation, notwithstanding any confidential designation thereof,which is known to Purchaser without any restriction as to disclosure or use at the time it is furnished,which is or becomes generally available to the public without breach of any mnfidentlalily obligation of Purchaser,or which Is received from a third party,including Purchasers subsidlades or affillates,without limitation or restriction on sold third path or Purchaser nt the time of disclosure. B. Siemens also has a proprietary interest in (i) its proposal and the Agreement and(II)the processes and procedures used by Its personnel in performance of the Agreement Accordingly,the quotation,the Agreement and such processes and procedures shall not be disclosed or viewed in whole or in pan by third parties without the prior written permission of Siemens. C. Siemens also has a proprietary interest in the manner of performenm of the work,Including but not limited to the know-how,processes,met)F ods and techniques employed by Siemens in connection therewith. The observing or recording of the work or any pad thereof,whether by photographic, video or audio devices or in any other manner is prohibited. In the event any such prohibited observation or recording occurs,any and all copies of any such remrding(s)shall be tamed over M Siemens for destruction by Siemens. Siemens may(In addition to any other legal or equitable rights and reme- dies)stop the work unfit Siemens has satisfied itself that the prohibited conduct has ceased,and in such event(a)the data of delivery or time for perfor- mance will be extended by a period of time which Siemens determines necessary and(b)Purchaser will reimburse Siemens for Siemens'and its Suti suppliers'additional costs and expanses resulting from such delay.including but not limited to any for demobilization or remobilbation. D. WMout limiting its obligations pursuant to paragraphs 13A and 13.8 above, Purchaser agrees not to reverse engineer, modify, Improve, or make derivative works of Slemers'confidential information or Intellectual property. Purchaser further agrees not to seek any intellectual property rights directly or Indirectly based in whole or part on Siemens'confidential information or intellectual property without Siemens'prior written consent. Purchaser further agrees that If it obtains any such Intellectual pmperty rights,it has aclatl or will act as an agent for the benefit of Siemens for the limited purpose of obtaining and securing such intellectual property rights and will upon written direction from Siemens assign the same to Siemens. E. Purchaser shall indemnify and hold Siemens harmless from and against any Ices,damage or Ilabildly arising or resulting from non-compiismce with the provisions of this Article 13. F. When required by appropriate governmental authority, Including governmental regulations, applicable few or regulation, by order of a mud of competent jurisdiction or lawful subpoena (hereinafter collectively referred to as'Governmental Authority'), Purchaser may disclose such mnfidenaal information to such Governmental Authority;provided.however,that prior to making any such disclosure, Purchaser will:(a)provide Stamens with timely advance written notice of the proprietary Information requested by such Governmental Authority and Purchasers intern to so disclose;(b)minimize the amount of proprietary Information to be provided consonant with the interests of Siemens and Its Subsuppliers and the requirements of the Governmental Authority involved; and (c) make every reasonable effort (which shall Include participation by Siemens In discussions with the Governmental Authority involved)to secure confidential treatment and minimisation of the proprietary information to be provided. In the event that efforts to secure confidential treatment are unsuccessful,Siemens shall have the prior right to revise such information to minimize the disclosure of such information in a manner con- sonant with its interests and the requirements of the Governmental Authority Involved. ia.Limitation of Liability A. PURCHASER EXPRESSLY AGREES THAT NEITHER SIEMENS NOR ITS SUBSUPPLIERS WILL UNDER ANY CIRCUMSTANCES BE LIA- BLE UNDER ANY THEORY OF RECOVERY,WHETHER BASED IN CONTRACT,IN TORT(INCLUDING BUT NOT LIMITED TO NEGLIGENCE AND STRICT LIABILITY),UNDER WARRANTY,OR OTHERWISE,FOR:ANY INDIRECT,SPECIAL,INCIDENTAL OR CONSEQUENTIAL LOSS OR DAM- AGE OR PUNITIVE DAMAGES WHATSOEVER; DAMAGE TO OR LOSS OF ANY PROPERTY OR EQUIPMENT;LOSS OF PROFITS OR REVENUE OR LOSS OF USE THEREOF; LOSS OF USE OF PURCHASER'S MATERIAL, EQUIPMENT OR POWER SYSTEM;LOSS OF DATA; INCREASED COSTS OF ANY KIND,INCLUDING BUT NOT LIMITED TO CAPITAL COST,FUEL COST AND COST OF PURCHASED OR REPLACEMENT POWER; OR ANY CLAIMS OF CUSTOMERS OF PURCHASER. CONFIDENTIAL wavaap rmotrravaeima Selling Policy I= B. PURCHASER EXPRESSLY AGREES THAT THE REMEDIES PROVIDED IT IN THE AGREEMENT ARE EXCLUSIVE,AND THAT UNDER NO CIRCUMSTANCES SHALL THE TOTAL AGGREGATE LIABILITY OF SIEMENS OR ITS SUBSUPPLIERS UNDER ANY THEORY OF RECOVERY, WHETHER BASED IN CONTRACT, IN TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY), UNDER WARRANTY, OR OTHERWISE, EX- CEED THE TOTAL PRICE PAID TO SIEMENS UNDER THE APPLICABLE PURCHASE ORDER. C. ALL LIABILITY OF SIEMENS AND ITS SUBSUPPLIERS UNDER THIS AGREEMENT SHALL TERMINATE NO LATER THAN THE EXPIRA- TION OF THE WARRANTY PERIOD. D. THE PROVISIONS OF THIS ARTICLE SHALL PREVAIL OVER ANY CONFLICTING OR INCONSISTENT PROVISIONS SET FORTH ELSE- WHERE IN THIS AGREEMENT. 15.Transfer,Ownership and Export Compliance A Prior to the transfer to another party of any Equipment, Purchasers Material,work product famished hereunder by Slemens or its Subsuppik am,or the transfer of any Interest In said Equipment, Puchasers Material or work product.or the facility In which or the site on which mid Equipment, Purchasers Materiel or work product Is or will be Installed or furnished, Purchaser shall obtain for Siemens wrlden assurances from the transferee of limitation of and protection against liability follovAng the proposed transfer at least equivalent to that afforded Siemens and Is Subsupplim under the Agreement. B. If Purchaser Is not the sole owner of the Equipment,Purchasers Malarial,work product furnished hereunder by Siemens or Its Subsuppliers,or the facility,In which or the site on which the Equipment,Purchasers Material or work product Is or Mil be Installed or furnished,Purchaser represents and wanana that it has(and will maintain)written assuranom ham each and every other owner of limitation of and protection against liability of Siemens and its Subsuppliers with respect to each and every such other owner at lent equivalent to that afforded Siemens and Its Subsuppliers under Ina Agreement C. Transfer contrary to the provisions of paragraph 15.A. above or in breach of paragraph 15.6. above, shall make Purchaser the Indemnitor of Siemens and Its Subsuppliers against any IIab1II0es Incurred by Siemens and its Subsuppllers In excess of mom that would have bean Incurred had no such transfer or breach,as the ran may be,taken place. D. Purchaser acknowledges that Siemens is required to comply with applicable export levee and regulations relating to Me sale,exportation.trans- far,assignmem,disposal and wage of the Equipment and/or Services provided under the Agreement,Including any export license requirements.Pur- chaser agrees that such Equipment and/or Services shall nor M any time directly or Indirectly be used,exported,mid,transferred,assigned or otherwise disposed of In a manner which will result In nor-compliance with such applicable export laws and regulations.it shell be a condition of the continuing per- formance by Siemens of its obligations hereunder that compliance with such export laws and regulations be maintained at all time.PURCHASER AGREES TO INDEMNIFY AND HOLD SIEMENS HARMLESS FROM ANY AND ALL COSTS,LIABILITIES,PENALTIES,SANCTIONS AND FINES RELATED TO NONCOMPLIANCE WITH APPLICABLE EXPORT LAWS AND REGULATIONS.' Is.Software License Siemens gams to Purchaser a nonexcaive, nontransferable license to utilize the Siemens Software furnished hereunder solely for Purchasers Internal use In connection with the Siemens equipment for which it Is supplied or In which such Software Is Incorporated.All title and ownership of the Siemens Softwars, Including, without limitation,the copyright W such Software, shell remain exdaNely with Siemens. Purchaser may make one backup copy of the Software for the sole purpose of replacement of a worn, Impaired,damaged,or destroyetl original copy. Purchaser shall not hear,or with the a sus- ance of others,rases compile,reverse engineer,or in any other manner attempt to decipher In whole or in pad the logic or mhetanca of any Software licensed hereunder. Thins parry Software provided by Siemens may be subject to a separate Iicansa agreement and for mildwrt on requirements and limrstions on copying and use. 17.Compliance,with Laws In the peramance of work under the Agreement,Siemens and its Subsuppllem shall comply with all applicable provisions of Executive Order 112a5,as amended,relating W equal opportunity and non-segregated facilities.the Fair Labor Standards Ad of 1933 and the Occupational Safety and Heath Ad of 1970.The price for the work is based on compliance by Siemens with applicable laws, regulations and technical cad"and standards as they are In effect on the date A the Stamens proposal(or the effective date of the Agreement f no proposal cum provided). 18. Changes A. Purchaser may request changes within the scope of the Agreement and,If accepted by Siemens,the price,performance,schedule and other pertinent provisions of the Agreement will be adjusted by mutual agreement of the parties prior to implementation of the change. B. Expens"inverted by Siemens due to(1)delays,other than delays which ere deemed to be within the memorable control of Siemens,and(11) changes In applicable laws,regulations and technical codes and standards or the Imposition of new laws,regulations and/or technical cod"and stand- ards after the applicable date set forth in Article 17 will be beefed as changes to tee scope of work and the Agreement will be adjusted as ad forth in the previous Paragraph. C. Siemens may make a change(s) In the Equipment, Services on Purchasers Material or the other Services without additional compensation Ran Purchaser @ such charge(s)do"not adversely aged the warranties, the Interface with Purchasers equipment,materials and pant,the technical soundness of the work,the operability of the facility where the Equipment or Purchasers Material is installed or for which Siemens Is providing Services under the Agreement or the schedule. 19. Inspection by Purchaser Purchaser shall have reasonable access to the areas of the Samara plants where work under the Agreement is being performed to enable Purohamr to observe tests on the work. Siemens, If requested.will inform the Purchaser of those teas and procedures which can be mnossed. Should Purchaser elect to witness specific tests,Purolator must so specify such requirement In ample time to permit Siemens to include said witness tests in the schedule. Siemens,f requested,will advise Purchaser of the schedule of such sets.However,no rescheduling of Wars or delays In manufacturing or shipment will be matte to accommodate such Inspection.Siemens will exercise reasonable efforts to secure similar rights with aspect to the inspection of Purchmers work at Subsuppllees premises. 20. Removal of Hazardous Material Prior W the shipment of any Equipment or Purchasers Materiel to Siemens for Services at Siemens' or its Subsupplars manufacturing plant or repair adllty,the Purchaser must remove all Hazardous Material and ACM. 21. Purehamers Third Party Pads Warranty CONFIDENTIAL m.avrssv rmr.e.mrx..s Selling Policy 1200 Purchaser warrants that any and all Thins Party Pads which may be the subject of any Services shall(a)be fully compatible with the corresponding part, component,equipment or malarial of the Original Equipment Manufacturer('OEM')In terms of form,Po,and function;(b)shall be timely provided to Sle- mans hereunder,, and (c) shall be capable of Installation in me some manner and within the same time as the corresponding OEM part, component, equipment,or malarial. Purchaser assumes the amie,liability and risk aching out of or maulting from Third Pasty Parts and Services on Third Party Parts. Siemens'wamardes set forth In Amtle 7 do net apply to any Third Party Pads or Services on Third Party Paris,and SIEMENS DISCLAIMS ANY AND ALL WARRANRES AND REMEDIES,WHETHER STATUTORY,EXPRESS OR IMPLIED(INCLUDING ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE,AND ALL WARRANTIES ARISING FROM COURSE OF DEALING OR USAGE OF TRADE), OR OTHERWISE, FOR OR WITH RESPECT TO THIRD PARTY PARTS OR SERVICES ON THIRD PARTY PARTS. 22.Indemnity Until the expiration of the applicable Warranty Period,Siemens shall indemnify,hold harmless and defend Purchaser its officers,directors and employees from and agalmd any claims,demands, suits, liabilities, judgments, lessen, damages, costs or expenses (Including reasonable legal lees, cosh and charges)for personal Injury or death or less of or damage to third party property(except property of customers of Purchaser or property Incorporated in or Intended to be Incorporated In the pmjed),to the extent caused by or arising out of any negligent ad or omission or willful misconduct of Siemens,or any of its officers,directors.agents,employees or SabsaPPliem In connection with performance of work under the Agreement('Purchaser Indemnity Cleiml. Siemens'indemnification obligations under this Section 22 am conditioned upon Purchaser providing Siemens with: (I)prompt notice of any Purchaser Indemnity Claim; (i0 the unrestricted right to defend any Purchaser Indemnity Claim; and (III)full cooperation and support In the investigation, defense and/or sealement of the Purchaser Indemnity Galen. Until the expiration of the applicable Warranty Period, Purchaser shall Indemnity,hold harmless and defend Siemens its officers,directors and employees from and against any claims, demands, suits, liabilities,judgments. losses, damages, costs or wpomms (including reasonable legal fees, costs and charges)for personal Injury or death or loss of or damage to thins party property to the extant caused by or arising out of any negligent ad or omission or willful misconduct of Purchaser,or any of he officers,directions,agents,employees or subcontractors in connection with Performance of work under the Agreement(Siemens Indemnity Claim''). Purchasers Indemnification obligations under this Section 22 am conditioned upon Siemens providing Pur- chaser with: (0 prompt notice of any Stamens Indemnity Claim;(IQ the unrestricted fight to defend any Siemens Indemnity Claim;and(III)full cooperation and support In the investigation,defense and/or settlement of the Siemens Indemnity Claim. 23.Siemens Insurance In connection with the Agreement,Stamens shall maintain insurance(or sad insurance)as specified below: A. Worker's Compensation: Siemens shall comply with workers compensation laws(or equivalent)In each jurisdiction wham work Is performed, and shell maintain a Workers Compensation and Employem Liability insurance policy. If any work is to be performed on or near navigable wages,the policy shall Include coverage for United States Longshoreman's and Harbor Worker's Act, Death on the High Seas Ad,Jones Ad,or their equivalent as required by the applicable law In the jurisdiction whom such work is performed. The limits of such Insurance shall be as follows: Workers Compensation: SfaMary Employers Liability: $1,000,000 each accident and in Me aggregate $1,000,000 disease each employee B. Commercial General Usbility: Siemens shall maintain commercial general liability Insurance on an occurrence basis to provide coverage for Bodily Injury;Personal Injury,Property Damage,Explosion,Collapse and Underground hazards(XCU);Contractual Liability(particularly applicable to the provisions of the Indemnity Article of Nis Agreement);and Products and Completed Operations with limits as follows: $1,000,000 each xarence and In the aggregate C. Business Automobile Liability: Siemens shall maintain business automobile liability Insurance which shall include coverage for all owned, non- owned and hired veldtles with the following IIndt $1,000,000 Combined Single Limit O. Umbrella Liability:Slamens shall maintain umbrella liability Insusnce with a limit of$2,000,000 each occurrence and in the aggregate. The pol- Icy shall be excess over the Commercial General Liability,Busirsas Automobile Liability,and Employers LiablOty coverages. E. The coverages set forth In B,C and D above shall include Purchaser as additional Insured to the extent that bodily injury,death and thin party property damage am caused by the negligent ads or omissions of Siemens or Ih Subsuppllem. 24.Reserved 25.Miscellaneous Provisions A. Shipment Dales: Shipment dates am the dot"the Equipment or Purchasers Materiel will be ready for shipment from the manufacturing plant, Siemens repair facility or other Mollify where the Services am performed and am predicated on the prompt receipt by Stamens hem Purchaser of all in- formation necessary to commence and complete the work without delay or interruption. Unless otherwise stated in a Purchase Omer,shipment dates am not guaranteed. Should Purchaser request Siemens to ship any Equipment or Purchasers Material prior to a date established based on Siemens stand- am lead time for such Equipment or Purdraa res Material, and provided Slemens accepts in writing the eadler dale, an additional fee will be applied to cover the costs associated with such expedited shipment. B. Walvers: The failure of either Party to enforce at any time any of the provisions of the Agreement or to require at any time performance by the other Party of any of such provisions,shall In no way be construed to be a welver of such provision,nor In any way fo affect the validity of the Agreement or any pars thereof.or me right of either Party thereafter to enforce each and every prevision. CONFIDENTIAL vsawprvwnrm•wa,..e Selling Policy 1200 C. Modification: No waiver, modification, or amendment of any of the provisions of the Agreement shall be binding unless it is In writing and signed by duty authorized representelwes of both parties. D. Headings: The headings used in the Agreement are not to be construed as modifying,limiting or expanding in any way the scope or extant of the provisions in the Agreement. E. Assignment: Except for assignment by Siemens to an affiliate of Siemens,the Agreement will not be assigned by either Party without the prior written consent of the other Party,which consent will not be unreasonably writheld.Any purported assignment without such prior written ocr ear shall be null and volt. F. Governing Law: The Agreement will be construed and interpreted in accordance with the laws of the State of Call without application of its choice of taw or mrMicl of law rules. G. Permnml: Skrmens reserves the right to change any of its persomal performing Services under the Agreement. In such event,Siemens will provide replacement personnel of equivalent capabilitlm and bear any additional bevel and living expense associated with providing such replacement personnel. H. Performance Commercial and Exclusive Remedy: Thera are no performance guarantees of the Equipment and/or Services unless specifically set forth in the Siemens proposal. In the event any performance guarantees are provided in the Siemens proposal,Purchasers sole and exclusive reme- dy and Siemens'sole and exclusive liability for any failure of the Equipment and/or Services to comply with such pertarmance guarantees under any theo- ry of recovery shall be the liquidated damages specified in such Siemens proposal up to the limit specified therein,which liquidated damages shall only be pald on a'1no harm, no foul'basis. The Parties agree that such liquidated are a reasonable detem ination of the damages that Purchaser would incur as a result of the failure of the Equipment and/or Services to meet the Performance Guerentee;and do not constitute a penalty. I. Environmental Compliance: Purchaser recognkes that the performance of Services at the Sire may involve the generation of Hamdous Marta dal. Purchaser shall at Its expense furnish Siemens with containers for Hazardous Material and shell designate a waste storage facility at the Ste where such containers are to be placed by Siemens. Purchaser shall handle.store and dispose of Hazardous Material in accordance with all applicable federal, state and local laws, rules, regulations and ordinances. Purchaser shell reimburse Siemens for additional costs, If any, incurred in complying with any such laws,regulations,miss and/or ordinances. Siemens shall have no responsibility or liability with regard to any Hazardous Material which it does not know or have reason to know will be generated in the performance of the Services,and Purchaser shall inderrnit,and hold Siemens harmless for all Pollution and environmental Impairment arising from the Purchasers property,the Equipment or the Services. J. Asbestos and Thermal Insulation (1) The Purchaser warrants,represants,and centuries that,in any areas which may be accessed by Siemens or its Subsuppliers,any ACM which Is or is motored in thermal insulation or sprayed-on surfacing material is conspicuously and specifically marked as ACM, and any other ACM is in a lawful mndition. (2) Prior to Slemeos'mmmencomenl of Services at the Site: (a) The Purchaser shall, 9 Purchaser's expense remove all thermal insulation,sproyeoan surfacing material, and/or ACM, including AGM which may be disturbed during or removal of which is required for the performance of the Services;and (b) The Purchaser shall ensure that any areas where any activities Involving the abatement or removal of thermal insulation,sprayerlron sur- facing materiel or ACM shall be conspicuously identified,posted and isolated,all as required by applicable law. PURCHASER EXPRESSLY ACKNOWLEDGES AND AGREES THAT SIEMENS IN PERFORMING THE SERVICES AND PERMITTING EM- PLOYEES TO ENTER THE WORK AREAS IS RELYING UPON THE COVENANTS,AGREEMENTS,WARRANTIES, CERTIFICATIONS AND REPRESENTATIONS MADE BY PURCHASER ABOVE. Without limiting is other rights and remedies Siemens shall not be obligated to commence or may stop any work in any Work Areas unless fully satisfied that the Purchaser is In compliance with Paragraph 25.J(1)above and this Paragraph 25.J(2),and shall be entitled to an equitable ad- justment in the schedule,price and other provisions of the Agreement affected thereby or otherwise affected by Purchasers non-compliance. (3) In no event shall Siemens be obligated to install, disturb, handle, or remove any thermal insulation, sproyedon surfacing material,or ACM except as specifically agreed in writing by Siemens and only after Siemens has been provided acceptable chemical analyses verifying that the some are not ACM. (4) Siemens makes no representation that 9 is licensed to abate ACM. Notwithstanding anything set font in the Agreement and unless Siemens Is provided satsfacory written evidence that such GPW is not ACM, Siemens shall be obligated to handle, remove, or reinstall generator wedges, packing,or high temperature gaskets(such materials hemin'GPWn only If such eclvties are within the scope of the Services and only then to the rpdeni that g) such activities would be classified as Class II or Class III activity under United States Coda of Federal Regulations Chapter 29 Section CFR 1926.1101 et seq.; (i) such actviies do not require a pemrt,license.or authorization: (iii) such ach Aces are not likely to generate airborne asbestos fibers,and (iv)all such GPW Is non-friable. In all other cases,such adivtles shall be Purchasers responsibility and Siemens shall be entitled to an equitable adjustment in the schedule, price and other pertinent affected provisions of the Agreement should the same not be performed in a timely manner. The disposal of any GpW or scrap or waste material residing from id disturbance or removal shall in all cases be the Purchasers responsibility. CONFIDENTIAL a.avrmr nwn ro.mrx+.s Selling Polity 1200 (5) Purchaser shall defend,indemnify and hold Siemens and its Subsuppliers harmless against any and all claims,demands,damages, losses, liabilities,fines,penalties,casts or expenses, including without limitation any clean up or remedial measures arising out of,connected with,or result- ing from the Purchasers failure to comply with the provisions of this Article 25.J. K. Integration: The Agreement contains the entirs agreement and understanding between the parties as to the subject matter of the Agreement, and merges and supersedes all prior or contemporaneous agreements,commitments,represerdabons,writings,and discussions between them.Neither of the parties will be bound by any prior or contemporaneous obligations conditions,warranties,or representations with respect to the subject matter of the Agreement. L SuwNat: The provisions entitied'Intellectual Property;'Addidcoal Conditions Applicable to Nuclear Installations;'Confidential IMomxadon; 'Limitation of Uablifty;Transfer, Ownership and Export Compliance* Software License;the second Paragraph of'Delivary,Title and Rlek of Loss or Damage,' and suosecton (5) of the provision entitled 'Asbestos and Thermal Insulation' shell survive termination, expiration or cancellation of the Agreement M. Site Safely: Purchaser shall comply with all federal, state, and local safety regulations and standards applicable to the site and to the e iulp- ment on which Siemens will perform the work.Siemens shall not be obligated to commence or perform work unless Purchasers site complies with all applicable safety requirements. In the event Purchasers site safety,Is noncompliant, Siemens may suspend work unlit such time as Purchaser connects the noncompliance.To the extent Siemens Incurs additional time and expense as the result of Purchasers non-complianoa,Siemens shall be emitted to an equtsble adjusMent in the schedule,pdeo and other affected provisions of the Agreement N. Sevea billly. In the event that any one or mom of the provisions comalned heroin shall,for any reason, be held to be Invalid.Illegal or unen- forceable In any respect,such invalidity,Illegality or unerdorceablifty shall not affect any ether provisions of this Agreement, but this Agreement shall be construed as such Invalid,Illegal or unenforceable provisions had never been contained herein,unless the deletion of such provision or provisions would result in such a material change so as to cause wmplabon of the transactions contemptated herein to be unreasonable. IN WITNESS WHEREOF,intending to be legally bound,the Partlas hereto have reused this Purchasing Agreement to be signed by the duty author- load representatives. ORANGE COUNTY SANITATION DISTRICT Dated: By: Chair,Scam of DI actors Dated: By: Clerk of the Board Dated: By: Contacts/Purchasing Manager SIEMENS DEMAG DELAVAL TURBOMACHINERY,INC. Dated: By Print Name and Title of Officer IRS Employers I.D.Number CONFIDENTIAL .ww�i�mnw.rmxmn Suggested Preventative Maintenance Schedule by Plant Personnel 1.0 Routine Inspections A. Inspect general condition including oil leaks and cleanliness of compressor assembly unit B. Inspect and replace inlet filter(s)as required C. Sample and conduct oil analysislchange oil as required D. Inspect and change oil filter(s)as required (See Section H, Item 0740). E. Check lube oil level 1 fill as required(Max full equals lower 1 inch of your dip stick) F. Verify all 4-20 mA current loops are operating properly(indicated on your transmitter monitor page) G. Verify surge detection unit operates properly I Clean per Section H, Item 1370 2.0 Annual Inspections A. Repeat routine inspections, plus--- B. Inspect inlet filters and silencer for cleanliness and general condition C. Verify discharge check valve operates properly to prevent back flows D. Verify proper operation of blow-off,and butterfly valves E. Inspect control arm(s)of variable control vanes for slippage F. Calibrate inlet guide vane and variable diffuser vane operating span G. Check coupling alignment and outer blades of disc-pack for distortion and or fatigue cracks, follow in- structions per Section H, Item 0070 H. Verify discharge expansion joint alignment and allowable flange loading is not exceeded I. Test Limit switches 3.0 Drive Motor A. Keep motor clean and ventilation openings clear of dust, dirt,or other debris. Service and Lubricate as indicated in the O&M. Follow instructions found in the Components section of this manual (See Section H, Item 0020). 4.0 Auxiliary Oil Pump A. Keep motor clean and ventilation openings clear of dust, dirt,or other debris. Lubricate bearings every three(3)years. Follow instructions found in the Components section of this manual (See Section H, Item 0705). 5.0 Solenoid Valve and Butterfly Valve A. While unit is off-line,operate the valve once a month to insure proper opening and closing. Note: Change of Lube Oil A. The lube oil should be changed after the first 500 hours of operation. Subsequent oil samples should be evaluated by an oil analysis service every three(3) months, with change of lube oil to take place accord- ing to the recommendation of the oil analysis service. Suggested Preventative Maintenance Schedule Siemens Demag Delaval Turbomachinery,Inc Suggested PM Schedule-GK,GA,GL Series Gearbox SIEMENS Revision:2 Date:4115 Suggested Preventative Maintenance Schedule by Authorized Siemens Demag Delaval Turbomachin- ery, Inc. Personnel Siemens offers the following services independently or through our preventative maintenance pro- gram.These services are designed to provide long term performance and maximized power savings throughout the life of the blower. Aeration and process control service and tuning is also available. 1.0 AnnualInspections- A. Inspect general condition including oil leaks and cleanliness of compressor assembly unit B. Inspect and replace inlet filter(s)as required C. Check lube oil level D. Verify all 4-20 mA current loops are operating properly(indicated on your transmitter monitor page) E. Verify surge detection unit operates properly 1 Clean per Section H, Item 1370 F. Inspect inlet filters and silencer for cleanliness and general condition G. Verify discharge check valve operates properly to prevent back flows H. Verify proper operation of blow-off, and butterfly valves I. Inspect control arm(s) of variable control vanes for slippage J. Calibrate inlet guide vane and variable diffuser vane operating span K. Inspect all mechanical and electrical connections are secure (up to discharge cone) L. Check coupling alignment and outer blades of disc-pack for distortion and or fatigue cracks, follow in- structions per Section H, Item 0070 M. Verify discharge expansion joint alignment and allowable flange loading is not exceeded N. Test Limit switches 2.0 Class l Inspection-(air-end) A. First recommended inspection is at approximately 18,000 hours of service (or sooner if site conditions dictate);thereafter, based on oil analysis,site and blower condition,and operation of mechanisms. Es- timated service time: 4-6 days, per unit, assuming one (1) local helper and crane facilities. Class 1In- spection includes the following: 1. Repeat annual inspection, plus--- 2. Dismantle compressor air-end 3. Remove gearbox access covers for visual observation of internal condition. (GL gearbox only) 4. Inspect and clean variable vane system 5. Check variable vane geometry 6. Check axial movement on high and low-speed shafts 7. Check unit alignment before re-start as required 3.0 Class II Inspection-(air-end and gearbox) A. Second recommended inspection is at approximately 36,000 - 50,000 hours of service(or sooner if site conditions dictate);thereafter, based on oil analysis,site and blower condition, and operation of mech- anisms. Estimated service time: 6-8 days, per unit,assuming one (1) local helper and crane facilities. Class 11 Inspection includes the following: 1, Repeat Class l Inspection, plus--- 2. Dismantle gearbox 3. Inspect gearwheels, bearings&seals and check clearances, adjust clearances as required. 4. Replace flexible seals(O-rings) 5. Reassemble gearbox 6. Visually inspect electric motor,oil pump,oil cooler, coupling,valves, etc. 7. Provide recommendations for corrections of unusual findings and future services To schedule a Siemens Demag Delaval Turbomachinery,Inc.Field Service Technician,please contact us at Tel:509-890.5000;Fax: 609-587-7790 Suggested Preventative Maintenance Schedule Siemens Demag Delaval Turbomachinery, Inc. Suggested PM Schedule-GK,GA,GL Series Gearbox SIEMENS Revision:2 Dale:4115 WASTEWATER AERATION TURBOCOMPRESSORS SIEMENS BOARD OF DIRECTORS Meeting Date TOBd.Of Dir. -- 10/26/16 AGENDA REPORT ItemNumber IemNumber 4 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Ed Torres, Director of Operations and Maintenance SUBJECT: URGENT REPAIR OF TWO HIDROSTAL PUMPS AND FOR THE PURCHASE OF A HIDROSTAL PUMP FOR STEVE ANDERSON LIFT STATION GENERAL MANAGER'S RECOMMENDATION A. Approve a sole source purchase order agreement to Demaria Electric Motor Services Inc. for the repair of two Hidrostal pumps servicing the Steve Anderson Lift Station in an amount not to exceed of$187,680.16 plus tax and freight; B. Approve a contingency of $18,768.02 (10%) for Demaria Electric Motor Services purchase order agreement; C. Approve a sole source purchase order agreement to Flow Systems Inc. for the purchase of a Hidrostal Totally Enclosed Fan Cooled (TEFC)Motor Close Coupled Pump for the Steve Anderson Lift Station in an amount not to exceed of$184,110 plus tax and freight; and D. Approve a contingency of $18,411 (10%) for Flo-Systems Inc. purchase order agreement. BACKGROUND The Steve Anderson Lift Station (SALS) was built in 2007 to divert flow from Plant No. 2 to Plant No. 1 for reclamation in the Ground Water Replenishment System (GWRS). The pump station is an integral facility in providing flows to GWRS and must be kept operational in order to maintain our level of service to GWRS. RELEVANT STANDARDS • Meet volume and water quality needs to support GWRS System • Support OCWD expansion of GWRS • Maintain a proactive asset management program • Maintain a culture of improving efficiency PROBLEM Three pumps are needed to meet GWRS flow requirements. Of the existing five pumps, one pump has failed and requires repair. Based on predictive tests, a second pump could fail at any time and a third pump is in the early stages of failure. Page 1 of 2 PROPOSED SOLUTION Staff recommends a sole source contract with Demaria Electric Motor Services, Inc. (Demaria)to repair and rebuild two SALS pumps. Demaria is a local repair shop that has previously performed reliable repairs and, due to their proximity, can turnaround the repairs more expeditiously than the manufacturer, Hidrostal. Therefore, contracting with Demaria will greatly improve the likelihood of continued uninterrupted service to GWRS. Staff has identified a modified pump/motor configuration,the Totally Enclosed Fan Cooled (TEFC) Motor Close Coupled Pump from Flo Systems, Inc., that will address most of the failure modes that have been experienced. This new configuration has not been proven, so staff will evaluate it on one pump before replacement of all the SALS pumps as a long- term solution. TIMING CONCERNS The repair of the two pumps through Demaria is urgent in order to avoid interruptions to our level of service to GWRS. Additionally, a timely evaluation of the proposed alternative to the existing pump/motor configuration is needed to maintain reliable service to GWRS in the future. RAMIFICATIONS OF NOT TAKING ACTION Failure of not taking action may impact our ability to supply the desired quantity of effluent water to the GWRS. FINANCIAL CONSIDERATIONS This request complies with authority levels of the Sanitation District's Purchasing Ordinance. This item has been budgeted. (Line item: Section 8, Page 85). Project contingency funds may be used for this agreement. Date of AoDroval Contract Amount Contlnaencv 10/26/16 $ 187,680.16 $ 18,768.02 (10%) ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: • Demaria Electric Motor Services, Inc. Quote #U530-Price to rebuild 1 pump • Flo-Systems, Inc. Quote Proposal #060816AS Page 2 of 2 DEMARIA ELECTRIC MOTOR SERVICES, INC. 7048 MARCELLE STREET, PARAMOUNT, CA 90723 (562) 663-9000 FAX (562)663-9100 QUOTE NO. U530 QUOTE DATE: 10/13/2016 ORANGE COUNTY SANITATION DISTRICT 10844 ELLIS AVE FOUNTAIN VALLEY, CA 92708 Page 1 of 2 DATE ORDERED PURCHASE ORDER NO. RELEASE NO. EQUIPMENT NO. RED. JOB NO. 9/15/2016 U530 EQUIPMENT RECEIVED SERIAL NO. MODEL NO. Complete Motor 157213 167213 MANUFACTURER KW RPM FRAME VOLTS Hidrostal 150 892 460 DESCRIPTION LABOR MATERIAL Rebuild one each submersible pump motor, manufactored by Hidrostal. Workscope to include: Rewind stator, repair iron laminations, VPI treat windings, and install new winding 9,292.00 1,440.00 temperature sensors. Modify upper bearing housing and nondrive end shaft journal to accept a double row 3,312.00 96.00 bearing. Repair damaged lower bearing housing seal surface, and bore and sleeve bearing 2,024.00 188.00 housing. Spray and grind both seal surfaces on rotor shaft. 1,992.00 310.00 Repair damaged seal surface in the way of the lower bearing housing of the rotor shaft. 598.00 Balance rotor and pump impeller. 736.00 Furnish all necessary parts required for assembly of motor and pump. Parts to be 46,343.85 purchased from pump manufacturer. (See attached list of required parts.)Total cost of parts$40,299.00, plus 15% markup. Remarks: LABOR MATERIAL SUBTOTAL SALES TAX TOTAL DEMARIA ELECTRIC MOTOR SERVICES, INC. 7048 MARCELLE STREET, PARAMOUNT, CA 90723 (562) 663-9000 FAX (562)663-9100 QUOTE NO. U530 QUOTE DATE: 10/13/2016 ORANGE COUNTY SANITATION DISTRICT 10844 ELLIS AVE FOUNTAIN VALLEY, CA 92708 Page 2 of 2 DATE ORDERED PURCHASE ORDER NO. RELEASE NO. EQUIPMENT NO. RED. JOB NO. 9/15/2016 U530 EQUIPMENT RECEIVED SERIAL NO. MODEL NO. Complete Motor 157213 167213 MANUFACTURER KIN RPM FRAME VOLTS Hidrostal 150 892 460 DESCRIPTION LABOR MATERIAL Inbound freight charges. (To be determined and added to bill.) Labor charges to rebuild,clean and paint parts, assemble,test,and paint motor and 23,368.00 250.00 pump. Lead time on parts from factory, 4-7 weeks ARO, plus freight time from Europe. Once all parts are received, please allow 3 weeks to complete repairs. Remarks: LABOR 41,322.00 MATERIAL 48,627.85 SUBTOTAL 89,949.85 SALES TAX 3,890.23 TOTAL $93,840.08 QUOTE#6968 PF:HIDROSTAL SN 07DW062SS MN L20K-SS-LETZ8 MOTOR#167213 END USER:ORANGE COUNTY SAN DIST ITEMS 1-24:REQUESTED PER CUSTOMER ITEMS 25-41:FACTORY RECOMMENDED ITEM# CITY REF# DESCRIPTION PN UNIT COST XT COST 1 1 209 0-RING 5866544 $45.00 $45.00 2 4 513 DISC SPRING 124/90.5X1.25MM(FOR TOP 5761428 $20.00 $80.00 BRNG 3 1 515 MECHANICAL SEAL 4570571 $4,140.00 $4140.00 4 1 516 MECHANICAL SEAL 8149130 $2,890.00 $2890.00 5 2 519 BARTEC CABLE ENTRY 123347W $445.00 $890.00 6 1 519 BARTEC CABLE ENTRY 123347W $445.00 $445.00 7 1 524 O-RING 4703788 $12.00 $12.00 8 1 525 O-RING 5190675 $10.00 $10.00 9 11 1526 IRING ROLLED MOTOR SIZE 76X600MM 5925010 $52.00 $52.00 10 14 1526 O-RING 9178936 $18.00 $72.00 11 li 1527 O-RING 3010290 $15.00 $15.00 12 1 529 O-PING 9178936 $18.00 $18.00 13 1 530 3-RING 6317017 $11.00 1$11.00 14 1 555 OIL SEAL 135/160X12MM NITRIL NO PN FOUND 15 1 559 SPRING RING MOTOR SIZE 710/SX600MM 7734199 545.00 $45.00 16 1 570 O-RING 6687426 $8.00 $8.00 17 2 571 BEARING TEMPERATURE PROBE 118 121076W $514.00 $1,028.00 DEGREE 18 1 572 FLOAT SWITCH TYPE G 1/8,NC,CABLE 0.2M 76031-11N $477.00 $477.00 19 11 1572 COPPER-SEALING RING 30 13 5X1MM 4504551 $4.00 $4.00 20 1 572 HEXAGON NUT GALVANIZED G I/8 M135W $6.00 $6.00 21 1 572 HEXAGON NUT STAINLESS A461/8 44673W $6.00 $6.00 22 1 578 MOISTURE PROBE INTERNAL 121049W $320.00 $320.00 23 3 121 73248C BM THRUST BEARING 9D15922 $1,631.00 $4893.D0 24 1 513 6214 C3 BEARING 7632402 $88.00 $88.00 25 1 165 FLANGE FOR IMPELLER 8257072 $5,338.00 $5338.00 26 1 415 SOCKET HEAD CAP SCREW M36X250MM 3368685 $453.00 $453.00 TRBLT0190MM SST 27 1 546 SNAP RING SEEGER ALDO SST 4641549 $34.00 $34.00 28 3 536 SEALING RING 13X18X2MM COPPER 1947437 $5.00 $15.00 29 11 1536 SEALING RING 21/26XI.5MM COPPER 6355694 $5.00 $5.00 30 3 536 HEXAGON HEAD SCREW PLUG I/4"SST 5619581 $8.00 I$24.OD 31 1 536 HEXAGON HEAD SCREW PLUG I/2"SST 5074971 P$30.00 $30.00 $8.00 32 1 583 GREASE RETAINING DISC 2-PARTS 2229906 0 $958.00 33 1 545 SNAP RING SEEGER A100 6997519 12.00 34 1 104 SPACER RING 120 15DX3.SMM SPG STL 3749307 $30.00 35 8 590 CABLE CONNECTION I.SMM 2171175 $32.00 36 2 590 CABLE CONNECTION 35MM 3442026 $34.00 37 6 590 CABLE CONNECTION 70MM 4423873 $102.00 38 2 523 DISTANCE RUBBER FOR CABLE 7X1.5 6756600 $16.00 39 1 523 DISTANCE RUBBER FOR CABLE 1OX1.5 3600134 $8.00 40 8 411 SET OF SHIMS M20 6201286 $96.00 41 I CAP&CABLE ASSY,XEIBAIM-23,75FT 1218154 9-00 $17,579.00 TOTAL: $35 716.00 $40,293.00 "ALL ITEMS QUOTED FOB FACTORY.FREIGHT PPD&ADD. ESTIMATED LEAD TIME FOR ITEM 41:CAP&CABLE ASSY 8-10 WEEKSALL ITEMS 4-7 WEEKS ARO ALL OTHERS 4.7 WEEKS ARID /r11 LV V 1 V 1 L.1 V 1%.Jy 11 VW. Adw Established 1976 1405.Chaparral Ct,Ste. 140,Anaheim Hills,CA 92808 1 Phone:(714)102-8101 Fax:(714)627-4936 Website:flo-systems.net July 6, 2016 Proposal: #060816AS REV A Page 1 of 4 Mr. Steven Howard SHowards@OCSD.com Orange County Sanitation District 10844 Ellis Avenue Fountain Valley, CA 92708 Reference: SALS Hidrostal Pump Replacement Dear Mr. Howard, Flo-Systems is pleased to quote the following Hidrostsl Pump Replacement: Please see attached complete factory detail scope of supply. One (1) Wemco Model L20K-SS Hidrostal pump wet end(no volute) with 200 HP TEFC 720 RPM, 3/60/460V, Div. 2, Class 1, Group: D WEG motor, Winding and Bearing RTD, Provision for Vibration sensors, Custom Bearing Frame support. Detailed pump information is attached for your information Price: $184.110.00 Adder for pump volute, if needed: $15,800.00 Equipment is quoted f.o.b. factory with full freight allowed to your jobsite. Jobsite start up is also included. Applicable sales tax is not included. Lead Time: 15-18 weeks after receipt of the purchase order. THIS PROPOSAL EXPIRES IN 45 DAYS from the date of this proposal. This proposal is subject to the attached Flo-Systems Terms of Sale. Any order or contract resulting from this proposal shall be governed by said terms. In addition, Buyer grants to seller a security interest in the equipment listed until contract is completed and full payment is made. Thank you for the opportunity to submit this proposal. Very truly yours, Flo-Systems, Inc. Amir Soltanieh July 6, 2016 Proposal: Orange County SD#060816AS REV A Page 2 of 4 TERMS OF SALE 1. ACCEPTANCE. These terms govern the purchase and sale of equipment,contractors services,etc,refened to in SELLER'S proposal or acknowledgement. Acceptance by SELLER,such offer or acceptance is conditioned on BUYER'S assent to these terms. SELLER rejects all additional or different terms in any of BUYER'S forms or documents unless specifically accepted by SELLER in writing. Where our Principal(manufacturer)reserves the right to accept the purchase order and invoice BUYER directly,our principals'leans and condition shall apply if same is included with the proposal. 2. PAYMENT. Terms are Net 30 days from date of shipment and invoice,subject to approval of credit. SELLER may ship on a'When ready'basis and partial invoice for the equipment that has shipped, Partial invoices are bound by the same terms as those invoices submitted upon complete shipment of equipment. Interest atone percent per month or at the legal maximum rate will be assessed for late payment. 3. RETENTIONS not previously approved in writing by SELLER are not permitted. 4. BACK CHARGES accepted only upon written approval by SELLER. 5. DELIVERY. SELLER shall not be liable for delays in delivery due to this,flood,labor issues,war,civil disorders,delay in transportation,inability to obtain materials,accidents,acts of God or other causes beyond SELLER'S reasonable control. If shipment is delayed due to BUYER or by government action,payment becomes due when the factory Is ready to make shipment and storage charges,Ifany,become the BUYERS responsibility. 6. RESPONSIBILITY. SELLER shall not be responsible for damage to equipment if misused,Improperly stored,Installed or maintained. SELLER SHALL NOT BE LIABLE FOR CONSEQUENTIAL,INCIDENTAL,SPECIAL,PUNITIVE, COLLATERAL,LIQUIDATED OR OTHER INDIRECT DAMAGES. CONSEQUENTIAL DAMAGES FORTHE PURPOSE OF THIS AGREEMENT SHALL INCLUDE BUT NOT BE LIMITED TO,LOSS OF USE,INCOME,PROFIT,LOSS OF OR DAMAGE TO PROPERTY,ETC. These limitations apply whether the liability Is based upon contract,ton,stilt[liability or any other theory. 7. WARRANTY. For benefit of the original user,SELLER warrants all new equipment sold to be free from defects in material and workmanship,and will replace or repair,F.O.B.at its factories or other location designated by it,any pan or parts returned to it which SELLERS examination shall show to have failed under normal use and service by the original user within one year following initial shipment to the BUYER. This warranty does not cover damage by decomposition from chemical action or wear caused by abrasive materials nor does it cover damage resulting from misuse,alteration, accident or neglect,or from improper operation,maintenance, installation,modification or adjustment. Such repair or replacement shall be free for all items except for those items that are consumable and normally replaced during maintenance. THIS WARRANTY IS EXPRESSLY MADE BY SELLER AND ACCEPTED BY BUYER IN LIEU OF ALL OTHER WARRANTIES,WHETHER WRITTEN,ORAL,EXPRESS OR IMPLIED.Warranty does not cover removal and installation of equipment. 8. TARES. Prices are exclusive of all taxes,fededi state local of any kind or nature. 9. TRANSPORTATION. Unless otherwise set forth herein,prices are F.O.B.our factories. The consignee must report all claims for damages in transit to the carrier. 10. COMPLIANCE WITH LAWS. BUYER shall be solely responsible for securing any necessary permits and for compliance with all safety,health,sanitation and any other laws,ordinances and regulations in connection with the design,installation and operation of the equipment. 11. INDEMNIFICATION. It is understood that SELLER has relied upon data furnished by and on behalf of BUYER with respect to the safety aspects and application of the equipment and that It Is BUYER'S responsibility to assure that the equipment will,when installed and put in use,be in compliance with requirements fixed by law and otherwise legally adequate to safeguard against injuries or damage to persons or property. BUYER hereby agrees to defend, indemnify and hold harmless SELLER,its agents and employees against any and all losses,costs,damages,claims,liabilities or expenses,arising out of or resulting from any injury or damage to any person or property caused by the inadequacy of safety features,devices or characteristics in Me equipment or in the installation,use or operation of the same,except claims for repair or replacement of defective parts are provided in Paragraph 7 hereof. SELLER will Indemnify,defend and hold BUYER harmless from any claim,cause of action or liability incurred by BUYER as a result of third party claims for personal injury,death or damage to tangible property,to the extent caused by SELLER'S sole negligence. SELLER shall have the sole authority to direct the defense of and settle any indemnified claim. SELLER'S indemnification is conditioned on BUYER(a)promptly notifying SELLER of any claim,and(b)providing reasonable cooperation in the defense of any claim. SELLER'S liability is limited to the coverage offered and paid by the SELLERS insurance policies. 12. TITLE S LIEN RIGHTS. After delivery to Buyer,Seller will have all such rights,including security interests and liens,in the equipment as lawfully may be conferred upon Seller by contract under any applicable provision of law. 13. MISCELLANEOUS.Goods may not be returned without previous wriften permission and are subject to a restocking charge. The SELLER may cancel agreement only upon written notice and payment of reasonable cancellation charges, including anticipated profit Attorney's fees and coon costs necessary to enforce these terms of sale will be paid to the prevailing party. No part of the Agreement may be changed or cancelled except by a written document signed by SELLER and BUYER. No course of dealing or performance,usage of trade or failure to enforce any term shall be used to modify the Agreement. If any of these terms is unenforceable,such term shall be limited only to the extent necessary to make it enforceable and all other terms shall remain in full force and effect.BUYER may not assign or permit any other transfer of the Agreement without SELLER'S prior written consent.The Agreement shall be governed by the laws of the State of California without regard to its conflict of laws provisions. _*fhw_.&/ A Pumping Solutions for Solids and Sludge Handling Hidrostal LLC 2225 White Oak Circle Aurora IL 60502 United States Invoicing and shipping address: Flo-Systems Inc Flo-Systems Inc 140 S Chaparral Ct 140 S Chaparral Ct Ste 140 Ste 140 Anaheim Hills CA 92808 Anaheim Hills CA 92808 United States United States t.(818)562-5282 16(818)842-3217 Quotation # S012666 Your Reference: Quotation Date: Salesperson: Payment Term: SALS TEFC PUMP MOTOR 06/06/2016 08:59:09 Paul Hanelt 30 Net Days ASSEMBLY Incoterms: FOB ORIGIN- PREPAID& ADD Description Quantity Unit Price Taxes Price NOTE:REVISED BY PAUL HANELT 1.000 Units) 0.00 $0.00 REVISION 2,6-29-2016 CHANGED MOTOR TO WEG 720 RPM AND ADDER FOR BENTLEY NEVADA SENSORS Phone:(630)948-3355 • Fax:(630)W-3353 • Email:infoC�hidrostalpumps.com • Website:http://w .hidrostaipumps.com TIN:47-2924311 • MIS Financial Bank: Checking Account Page: 3 / 4 --ftfrm-1 A Pumping Solutions for Solids and Sludge Handling Hidrostal LLC 2225 White Oak Circle Aurora IL 60502 United States Description Quantity Unit Price Taxes Price QUOTE S012666 ITEM 1 1.000 Unit(s) Qty 1 Bearing Frame with Tandem Mechanical Seals Inboard Seal Ni-Resist/Carbon Faces Outboard Seal Silicon Carbide/Tungsten Carbide W/Moisture Probes Qty 1 Motor WEG 200hp 720rpm,460v/3/60hz,586/7 TC frame,TEFC-W22 Prem Eff Severe duty,Vertical C-Face/footless with vert lifting and drip cover. Motor will have Class F Inverter duty Insulation system rated for 10:1 VT speed range, 1.OSF Motor certified foe Class I, Div 2,Grp D T3 temp code.Aegis ground ring not available on Div 2 motors. DE bearing will have an insulated bearing.The NDE will have Insulated bearing housing. Winding RTD's, PT100, 1/phase,3lead with leads going to Aux CIS. Bearing RTD's, PT100, 1/Brg,3lead with leads going to same Aux C/B. Provisions for Vibration sensors.specify'/."—18 thread for Bentley Nevada provisions,top and bottom motor bracket. Note:Bentley Nevada Vibration sensors are an adder City 1 Custom Motor Support Structure To be installed (by others)onto existing pier structure City 1 Dodge Raptor Coupling Assembly Qty 1 Impeller L20K-SS Hi-Chrome 420 Series Stainless QUOTE S012666 ITEM 1-ADDER N1 1.000 Unit(s) $ VOLUTE CASING L20K, MATH-CAST IRON A45CL30 QUOTE S012666 ITEM 1-ADDER N2 1.000 Unit(s) 0.00 $0.00 Bentley Nevada Vibration Sensors(Cost to follow or Provided by Others) NOTE:LIST PRICING 1.000 Unit(s) 0.00 $0.00 QUOTATION OFFERED AT LIST PRICE. MINIMUM ORDER VALUE IS$200. LEAD TIME 15-18 WEEKS 1.000 Units) 0.00 $0.00 TO SHIP ALL ITEMS ABOVE FROM OUR SITE IN AURORA, IL. SUBJECT TO INVENTORY LEVEL AT TIME OF ORDER. Total Without Taxes $ Taxes $0.00 Phone:(630)948-3355 • Fax:(630)948-3353 • Email: info@hidrostalpumps.com • Website:http://www.hidrostaipumps.mm TIN:47-2924311 • MB Financial Bank: Checking Account Page: 4 / 4 BOARD OF DIRECTORS Meeting Date TOBd.Of Dir. -- 10/26/16 AGENDA REPORT ItemNumber IemNumber s Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Director of Engineering SUBJECT: OCEAN OUTFALL LEASE AGREEMENT RENEWAL GENERAL MANAGER'S RECOMMENDATION Adopt Resolution No. OCSD 16-17, entitled: "A Resolution of the Board of Directors of the Orange County Sanitation District directing the General Manager to negotiate an agreement with the California State Lands Commission for a new lease to ensure continued use and maintenance of the ocean outfall line". BACKGROUND In 1968, the Orange County Sanitation District (Sanitation District) was issued a 49-year right-of-way permit from the California State Lands Commission (Lease No. 4007.9) for the installation and operation of the 120-inch ocean outfall. The Sanitation District uses the ocean outfall to discharge treated wastewater daily making it an essential component of its operations. RELEVANT STANDARDS • Protection of Orange County Sanitation District assets • 24/7/365 treatment plant reliability • Maintain collaborative and cooperative relationships with regulators/Stakeholders PROBLEM The 49-year right-of-way permit from the California State Lands Commission is set to expire on August 27, 2017. A new agreement must be obtained prior to this date. The State Lands Commission has a thorough application process that requires the General Manager (or his designee) to negotiate a new agreement. PROPOSED SOLUTION Authorize the General Manager or his designee to negotiate a new lease agreement with the California State Lands Commission. TIMING CONCERNS The lease agreement is set to expire August 27, 2017, and a new agreement must be in place prior to the expiration date. Page 1 of 2 RAMIFICATIONS OF NOT TAKING ACTION If the lease agreement is not renewed, we will not be authorized to use the ocean outfall land; this will violate access protocol and be considered trespassing. PRIOR COMMITTEE/BOARD ACTIONS October 1968 - Board adopted Resolution No. 68-82 approving a right-of-way agreement with the State Lands Commission (P.R.C. 4007.9) relative to Construction of Ocean Outfall No. 2, and authorized execution of the agreement of behalf of the Sanitation District. ADDITIONAL INFORMATION Once negotiations have been completed and finalized, the new lease agreement with the California State Lands Commission will be brought to the Board of Directors for approval. CEQA N/A FINANCIAL CONSIDERATIONS There is not expected to be a financial impact as any lease costs are typically waived for items of this nature. If financial impacts are proposed relating to this lease agreement, the costs will be approved in accordance with the Sanitation District's Purchasing Ordinance. ATTACHMENT The following attachment(s)are included in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: Resolution No. OCSD 16-17 DK:dm:gc Page 2 of 2 RESOLUTION NO. OCSD 16-17 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT DIRECTING THE GENERAL MANAGER TO NEGOTIATE AN AGREEMENT WITH THE CALIFORNIA STATE LANDS COMMISSION FOR A NEW LEASE TO ENSURE CONTINUED USE AND MAINTENANCE OF THE OCEAN OUTFALL LINE The Board of Directors of the Orange County Sanitation District ("Sanitation District') does hereby find: WHEREAS, the Sanitation District discharges treated wastewater (effluent) to the Pacific Ocean through an ocean outfall line located offshore of Huntington Beach; and WHEREAS under normal operations, the effluent is discharged through a 120-inch diameter ocean outfall line, which extends 8.3 kilometers, or 5.2 miles,from the shoreline; and WHEREAS in 1968, the California State Lands Commission authorized the issuance of a 49-year right-of-way permit to the District for the installation and operation of the ocean outfall line, titled "Lease No PRC 4007.9"; and WHEREAS Lease No. PRC 4007.9 will expire August 27, 2017; and WHEREAS to continue use and maintenance of the ocean outfall line, the Sanitation District must, in addition to conducting any required environmental review, complete a new application for a Surface and Submerged Lands Lease and negotiate a new lease for the continued use of State sovereign land. NOW, THEREFORE, the Board of Directors of the Orange County Sanitation District, DOES HEREBY RESOLVE, DETERMINE, AND ORDER: Section 1: The above recitals are true and correct and are incorporated herein by reference. Section 2: That the General Manager, or his designee, be, and is hereby authorized and directed, to negotiate a new agreement with the California State Lands Commission for the continued use and maintenance of the ocean ouffall line offshore of Huntington Beach. 11966/9.1 OCSD 16-17-1 Section 3: The Clerk of the Board shall certify to the adoption of this Resolution. PASSED AND ADOPTED at a regular meeting of the Board of Directors held October 26, 2016. John Nielsen Board Chairman ATTEST: Kelly A. Lore Clerk of the Board 11966/9.1 OCSD 16-17-2 STATE OF CALIFORNIA ) ss COUNTY OF ORANGE ) I, Kelly A. Lore, Clerk of the Board of Directors of the Orange County Sanitation District, do hereby certify that the foregoing Resolution No. OCSD 16-17 was passed and adopted at a regular meeting of said Board on the 261h day of October 2016, by the following vote, to wit: AYES: NOES: ABSTENTIONS: ABSENT: IN W ITNESS W HEREOF, I have hereunto set my hand and affixed the official seal of Orange County Sanitation District this 261h day of October 2016. Kelly A. Lore Clerk of the Board of Directors Orange County Sanitation District 11966/9.1 OCSD 16-17-3 BOARD OF DIRECTORS Meeting Date TOBd.Of Dir. -- 10/26/16 AGENDA REPORT Item Item fi Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: REPORT OF THE INVESTMENT TRANSACTIONS FOR THE MONTH OF SEPTEMBER 2016 GENERAL MANAGER'S RECOMMENDATION Receive and file the report of the Investment Transactions for the month of September 2016. BACKGROUND The CA Government Code requires that a monthly report of investment transactions be provided to the legislative body. Attached is the monthly report of investment transactions for the month ended September 30, 2016. RELEVANT STANDARDS • CA Government Code Section 53607 PRIOR COMMITTEE/BOARD ACTIONS N/A FINANCIAL CONSIDERATIONS N/A ATTACHMENT The following attachment(s)are included in hard copy and may also be viewed on-line at the OCSD website (mmocsd.com) with the complete agenda package: • Report of the Investment Transactions for the month ended September 30, 2016 Page 1 of 1 C." Orange County Sanitation District Consolidated Transaction Ledger Account#10283 8/31/16 Thru 9/30/16 Transaction Settlement Acq/Disp Interest ,Type Date CUSIP Quantity Security Description Price Yield Amount PurlSold Total Amount GainfLoss ACQUISITIONS Purchase 09/01/2016 261908107 32,959.67 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 32,959.67 0.00 32,959.67 D.DO Purchase 09/01/2016 261908107 9,000.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 9,000.00 0.00 9,000.00 0.00 Purchase 09/01/2016 261908107 1,000,000.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 1,00D,000.00 0.00 1,000,000.00 0.00 Purchase 09/01/2016 261908107 23,374.43 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 23,374.43 0.00 23,374.43 0.00 Purchase 09/02/2016 261908107 450.15 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 450.15 0.00 450.15 0.00 Purchase 09/02/2016 261908107 671.52 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 671.62 0.00 671.62 0.00 Purchase 09/03/2016 261908107 5,600.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 5,500.00 0.00 5,500.00 0.00 Purchase 09/05Q016 261908107 14,687.50 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 14,687.60 0.00 14,687.60 0.00 Purchase 09/07/2016 261908107 3,769,488.96 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 3,769,488.96 0.00 3,769,488.96 0.00 Purchase 09/07/2016 261908107 21,875.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 21,875.00 0.00 21,875.00 0.00 Purchase 09/07/2016 3133MK40 1,200,000.00 FHLB Discount Note 99.973 0.28% 1,199,673.33 0.00 1,199,673.33 0.00 0.28%Due 1 011 2/2 01 6 Purchase 09/07/2016 3133MK40 600,000.00 FHLB Discount Note 99.973 0.28% 599,836.67 0.00 599,836.67 0.00 0.28%Due 1 011 2/2 01 6 Purchase 09/07/2016 89233GKC9 1,000,000.00 Toyota Mawr Credit Discount CP 99.958 0.44% 999,581.94 0.00 999,581.94 0.00 0.43%Due 1 011 2/2 01 6 Purchase 09/08Q016 261908107 56,250.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 56,250.00 0.00 56,250.00 0.00 Purchase 09/09/2016 261908107 51,562.50 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 51,562.50 0.00 51,562.50 0.00 Purchase 09/11/2016 261908107 24,380.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 24,380.00 0.00 24,380.00 0.00 Purchase 09/12/2016 261908107 43,750.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 43,750.00 0.00 43,750.00 0.00 Purchase 09/12/2016 261908107 7,812.50 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 7,812.50 0.00 7,812.50 0.00 Purchase 09/12/2016 261908107 2,500,000.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 2,500,000.00 0.00 2,500,000.00 0.00 Purchase 09/13/2016 161571HHO 4,140,000.00 Chase CHAIT Pool#2016-A7 99.991 1.08% 4,139,643.13 0.00 4,139,643.13 0.00 1.06%Due 9/1 612 01 9 Purchase 09/13/2016 3133MK40 2,900,000.00 FHLB Discount Note 99.978 0.27% 2,899,369.25 0.00 2,899,369.25 0.00 0.27%Due 1 011 2/2 01 6 Purchase 09/14/2016 261908107 8,611.91 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 8,611.91 0.00 8,611.91 0.00 Purchase 09/15/2016 261908107 5,500,000.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 5,500,000.00 0.00 5,500,000.00 0.00 Purchase 09/15/2016 261908107 72,978.47 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 72,978.47 0.00 72,978.47 0.00 Purchase 09/15/2016 261908107 51,625.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 51,625.00 0.00 51,625.00 0.00 Purchase 09/15/2016 261908107 2,104.17 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 2,1D4.17 0.00 2,1D4.17 0.00 Purchase 09/15/2016 261908107 2,096.58 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 2,096.58 0.00 2,096.58 0.00 Chantller Asset Management-CONFIDENTIAL Execution Tme:10/4Y 0169:59:58 AM C." Orange County Sanitation District Consolidated Transaction Ledger Account#10283 8/31/16 Thru 9/30/16 Transaction Settlement Acq/Disp Interest ,Type Date CUSIP Quantity Security Description Price Yield Amount PurlSold Total Amount GainfLoss ACQUISITIONS Purchase 09/15/2016 261908107 4,330.93 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 4,330.93 0.00 4,330.93 0.00 Purchase 09/15/2016 261908107 2,742.67 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 2,742.67 0.00 2,742.67 0.00 Purchase 09/15/2016 261908107 2,168.98 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 2,168.98 0.00 2,168.98 0.00 Purchase 09/15Q016 261908107 3,355.33 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 3,355.33 0.00 3,355.33 0.00 Purchase 09/15/2016 261908107 1,930.66 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 1,930.66 0.00 1,930.66 0.00 Purchase 09/15/2016 261908107 23.75 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 23.75 0.00 23.75 0.00 Purchase 09/15/2016 261908107 207,420.45 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 207,420.45 0.00 207,420.45 0.00 Purchase 09/15/2016 261908107 235,074.01 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 235,074.01 0.00 235,074.01 0.00 Purchase 09/15Q016 261908107 195,384.34 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 195,384.34 0.00 195,384.34 0.00 Purchase 09/16/2016 261908107 57,500.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 57,500.00 0.00 57,500.00 0.00 Purchase 09/16/2016 261908107 1,224.61 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 1,224.61 0.00 1,224.61 0.00 Purchase 09/16/2016 3133MK40 2,000,000.00 FHLB Discount Note 99.981 0.26% 1,999,624.44 0.00 1,999,624.44 0.00 0.26%Due 1 011 2/2 01 6 Purchase 09/16/2016 313396K36 3,000,000.00 FHLMC Discount Note 99.984 0.23% 2,999,531.25 0.00 2,999,531.25 0.00 0.22%Due 1 0111/2 01 6 Purchase 09/19/2016 261908107 101,500.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 101,500.00 0.00 101,500.00 0.00 Purchase 09/19/2016 261908107 2,158.88 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 2,158.88 0.00 2,158.88 0.00 Purchase 09/19/2016 261908107 110,486.10 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 110,486.10 0.00 110,486.10 0.00 Purchase 09/20/2016 261908107 353.65 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 353.65 0.00 353.65 0.00 Purchase 09/20/2016 261908107 287.86 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 287.86 0.00 287.86 0.00 Purchase 09/20/2016 261908107 589.78 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 589.78 0.00 589.78 0.00 Purchase 09/20/2016 261908107 181.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 181.00 0.00 181.00 0.00 Purchase 09/20/2016 261908107 547.66 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 547.66 0.00 547.66 0.00 Purchase 09/21/2016 261908107 4,600,000.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 4,600,000.00 0.00 4,600,000.00 0.00 Purchase 09/21/2016 261908107 270,108.43 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 270,108.43 0.00 270,108.43 0.00 Purchase 09/26/2016 261908107 3,188.25 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 3,188.25 0.00 3,188.25 0.00 Purchase 09/26/2016 261908107 174.09 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 174.09 0.00 174.09 0.00 Purchase 09/26/2016 261908107 361.70 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 361.70 0.00 361.70 0.00 Purchase 09/26/2016 261908107 3,987.70 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 3,987.70 0.00 3,987.70 0.00 Purchase 09/26/2016 261908107 1,660.33 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 1,660.33 0.00 1,660.33 0.00 Purchase 09/26/2016 261908107 473.55 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 473.55 0.00 473.65 0.00 Chantller Asset Management-CONFIDENTIAL Execution Time:10/4Y 0169:59:58 MA C." Orange County Sanitation District Consolidated Transaction Ledger Account#10283 8/31/16 Thru 9/30/16 Transaction Settlement Acq/Disp Interest Type Data CUSIP Quantity Security Description Price Yield Amount PurlSold Total Amount GainfLoss ACQUISITIONS Purchase 09/26/2016 261908107 12,951.55 Dreyfus Trey/Agcy Cash Management 521 1.000 0.21 % 12,951.55 0.00 12,951.55 0.00 Purchase 09/26/2016 261908107 11,497.79 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 11,497.79 0.00 11,497.79 0.00 Purchase 09/26/2016 261908107 5,178.55 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 5,178.55 0.00 5,178.65 0.00 Purchase 09/26/2016 261908107 386.21 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 386.21 0.00 386.21 0.00 Purchase 09/26/2016 261908107 9,548.79 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 9,548.79 0.00 9,548.79 0.00 Purchase 09/26/2016 261908107 1,019.58 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 1,019.58 0.00 1,019.58 0.00 Purchase 09/26/2016 261908107 794.31 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 794.31 0.00 794.31 0.00 Purchase 09/26/2016 261908107 10,501.68 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 10,501.68 0.00 10,501.68 0.00 Purchase 09/26/2016 261908107 1,079.34 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 1,079.34 0.00 1,079.34 0.00 Purchase 09/27/2016 3133MJ59 700,000.00 FHLB Discount Note 99.994 0.25% 699,961.11 0.00 699,961.11 0.00 0.25%Due 1015/2016 Purchase 09/27/2016 3133MK40 4,000,000.00 FHLB Discount Note 99.992 0.20% 3,999,666.68 0.00 3,999,666.68 0.00 0.2%Due 10/12/2016 Purchase 09/28/2016 261908107 17,000.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 17,000.00 0.00 17,000.00 0.00 Purchase 09/28/2016 261908107 2,720,000.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 2,720,000.00 0.00 2,720,000.00 0.00 Purchase 09/28/2016 261908107 7,220.99 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 7,220.99 0.00 7,220.99 0.00 Purchase 09/30/2016 261908107 50,750.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 50,750.00 0.00 50,750.00 0.00 Purchase 09/30/2016 261908107 10,000.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 10,000.00 0.00 10,000.00 0.00 Purchase 09/30/2016 261908107 2,000,000.00 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 2,000,000.00 0.00 2,000,000.00 0.00 Subtotal 43,404,321.86 43,401,209.66 0.00 43,401,209.66 0.00 TOTAL ACQUISITIONS 43,404,321.86 43,401,209.66 0.00 43,401,209.66 0.00 DISPOSITIONS Sale 09/07/2016 261908107 599,836.67 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 599,836.67 0.00 599,836.67 0.00 Sale 09/07/2016 261908107 999,581.94 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 999,581.94 0.00 999,581.94 0.00 Sale 09/07/2016 261908107 1,199,673.33 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 1,199,673.33 0.00 1,199,673.33 0.00 Sale 09/07/2016 912828SSO 3,750,000.00 US Treasury Note 100.211 0.55% 3,757,897.59 11,591.37 3,769,488.96 7,752.25 0.875%Due 41302017 Sale 09/13/2016 261908107 4,139,643.13 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 4,139,643.13 0.00 4,139,643.13 0.00 Chandler Asset Management-CONFIDENTIAL Execution Time:10/4Y 0169:59:58 MA C." Orange County Sanitation District Consolidated Transaction Ledger Account#10283 8/31/16 Thru 9/30/16 Transaction Settlement Acq/Disp Interest Type Data CUSIP Quantity Security Description Price Yield Amount PurlSold Total Amount GainfLoss DISPOSITIONS Sale 09/13/2016 261908107 2,899,369.25 Dreyfus Tmy/Agcy Cash Management 521 1.000 0.21 % 2,899,369.25 0.00 2,899,369.25 0.00 Sale 09/16/2016 261908107 4,999,155.69 Dreyfus Tmy/Agcy Cash Management 521 1.000 0.21 % 4,999,155.69 0.00 4,999,155.69 0.00 Sale 09/27/2016 261908107 4,699,627.79 Dreyfus Trsy/Agcy Cash Management 521 1.000 0.21 % 4,699,627.79 0.00 4,699,627.79 0.00 Subtotal 23,286,887.80 23,294,785.39 11,591.37 23,306,376.76 7,752.25 Paydown 09/01/2016 83162CLJO 20,485.60 Small Business Administration 2001-20C 100.000 20,485.60 2,888.83 23,374.43 0.00 6.34%Due 3/1/2021 Paydown 09/14/2016 62888UAA8 8,263.52 NCUA Guaranteed Note CMO 2010-R2Due 100.000 8,263.52 348.39 8,611.91 0.00 11/6/2017 Paydown 09/15/2016 161571GC2 0.00 Chase CHAIT Pool#2013-A8 100.000 0.00 2,104.17 2,104.17 0.00 1.01%Due 10/15/2018 Paydown 09/15/2016 3133TCE95 1,800.50 FHLMC FSPC E3 A 100.000 1,800.50 130.16 1,930.66 0.00 2.892%Due 8/15/2032 Paydown 09/15/2016 31348SWZ3 18.57 FHLMC FH 786064 100.000 18.57 5.18 23.75 0.00 2.262%Due 1/112028 Paydown 09/15/2016 3837H4NX9 1,194.03 GNMA Pool#2000-9 100.000 1,194.03 30.58 1,224.61 0.00 9.5%Due 2/i6Y2030 Paydown 09/15/2016 43814GAC2 0.00 Honda Auto Receivables 2016-2 A3 100.000 0.00 2,096.58 2,096.58 0.00 1.39%Due 4/15/2020 Paydown 09/15/2016 477877AD6 204,602.70 John Deere Owner Trust 2014-B A3 100.000 204,602.70 2,817.75 207,420.45 0.00 1.07%Due 11/15/2018 Paydown 09/15/2016 47788MAC4 0.00 John Deere Owner Trust 2016-A A3 100.000 0.00 2,742.67 2,742.67 0.00 1.36%Due 4/15/2020 Paydown 09/15/2016 47788NAB4 0.00 John Deere Owner Trust 2016-B A2 100.000 0.00 4,330.93 4,330.93 0.00 1.09%Due D1512019 Paydown 09/15/2016 65478WAB1 0.00 Nissan Auto Receivables Owner 2016-C 100.000 0.00 2,168.98 2,168.98 0.00 A2A 1.07%Due 5/15/2019 Paydown 09/15/2016 89231 MAC9 234,343.08 Toyota Auto Receivables Owner 2014-A 100.000 234,343.08 730.93 235,074.01 0.00 0.67%Due 1 211 5/2 01 7 Paydown 09/15/2016 89231TAB6 194,407.25 Toyota Auto Receivables Owner 2015-C 100.000 194,407.25 977.09 195,384.34 non 0.92%Due V1512018 Paydown 09/15/2016 89236WAC2 0.00 Toyota Auto Receivables Owner 2015-A 100,000 0.00 3,355.33 3,355.33 0.00 1.12%Due V1512019 Paydown 09/19/2016 43814GAC4 109,881.09 Honda Auto Receivables 2014-2 A3 100.000 109,881.09 605.01 110,486.10 0.00 0.77%Due 3/19/2018 Paydown 09/19/2016 43814NAB1 0.00 Honda Auto Receivables 2016-1 A2 100.000 0.00 2,158.88 2,158.88 non 1.01%Due 6/18/2018 Chandler Asset Management-CONFIDENTIAL Execution Time:10/4Y 0169:59:58 MA C." Orange County Sanitation District Consolidated Transaction Ledger Account#10283 8/31/16 Thru 9/30/16 Transaction Settlement Acq/Disp Interest Type Date CUSIP Quantity Security Description Price Yield Amount PurlSold Total Amount GainfLoss DISPOSITIONS Paytlown 09/20/2016 36225CAZ9 309.60 GNMA P0o1#G2 80023 100.000 309.60 44.05 353.65 0.00 2816%Due 12/20/2026 Paytlown 09/20/2016 36225CC20 233.54 GNMA Poo1#G280088 100.000 233.54 54.32 287.86 0.00 2.817%Due 6/20/2027 Paytlown 09/20/2016 36225CN28 439.04 GNMA Poo1#G2 8N08 100.000 439.04 150.74 589.78 0.00 2.691%Due 5/20/2030 Paytlown 09/20/2016 36225CNM4 161.47 GNMA Pool#G2 80395 100.000 161.47 19.53 181.00 0.00 2.877%Due 4/20/2030 Paytlown 09/20/2016 36225DCB8 403.94 GNMA P0o1#G280965 100.000 403.94 143.72 547.66 0.00 2.31%Due 7/20/2034 Paytlown 09/212016 43813JAC9 269,400.29 Honda Auto Receivables 2014-1 A3 100.000 269,400.29 708.14 270,108.43 0.00 0.67%Due 11121/2 01 7 Paytlown 09/26/2016 03215PFN4 0.00 AMRESCO Residential Seventies 1999-1 100.000 0.00 174.09 174.09 0.00 ADue 6/25/2029 Paytlown 09/26/2016 31371NUC7 263.01 FNMA FN 257179 100.000 263.01 98.69 361.70 0.00 4.5%Due 4/1/2028 Paytlown 09/26/2016 31376KT22 3,184.89 FNMA FN 357969 100.000 3,184.89 802.81 3,987.70 0.00 5%Due 9/1/2035 Paytlown 09/26/2016 31381 PDA3 599.56 FNMA FN 466397 100.000 599.56 1,060.77 1,660.33 0.00 3.4%Due 1 t/1/2020 Paytlown 09/26/2016 3138EG6F6 394.59 FNMA FN AL0869 100.000 394.59 78.96 473.55 0.00 4.5%Due 6/1/2029 Paytlown 09/26/2016 313MJY35 7,337.53 FHLMC FSPC T-582A 100.000 7,337.53 5,614.02 12,951.55 0.00 6.5%Due 9/25/2043 Paytlown 09/26/2016 31397QRED 11,121.33 FNMA FNR 2011-3 FA 100.000 11,121.33 376.46 11,497.79 0.00 0.832%Due 2/25/2041 Paytlown 09/26/2016 31398VJ98 0.00 FHLMC FHMS K006 A2 100.000 0.00 3,188.25 3,188.25 0.00 4.251%Due 1/252020 Paytlown 09/262016 31403DJZ3 4,397.75 FNMA Po01#745580 100.000 4,397.75 780.80 5,178.55 0.00 5%Due 6/12036 Paytlown 09/262016 31403GXF4 361.74 FNMA Po01#FN 748678 100.000 361.74 24.47 386.21 0.00 5%Due 10/1/2033 Paytlown 09/26/2016 31406PQYB 8,217.12 FNMA Pool#FN 815971 100.000 8,217.12 1,331.67 9,548.79 0.00 5%Due 3/1/2035 Paytlown 09/26/2016 31406XN/75 632.44 FNMA Po01#FN 823358 100.000 632.44 387.14 1,019.58 0.00 2.875%Due 2/1/2035 Paytlown 09/26/2016 31407BXH7 648.23 FNMA Po01#FN 826080 100.000 648.23 146.08 794.31 0.00 5%Due 7/12035 Paytlown 09/26/2016 31410F4V4 8,949.19 FNMA Pool#FN 888336 100.000 8,949.19 1,552.49 10,501.68 0.00 5%Due 7/1/2036 Cbandler Asset Management-CONFIDENTIAL Execution Time:10/4Y 016 9:59:58 AM CAROrangeCounty Sanitation District Consolidated Transaction Ledger Account#10283 8/31/16 Thing 9/30/16 Type Date CUSIP Quantity Security Description Price Yield Amount PurlSold Total Amount Gain/Loss DISPOSITIONS Paytlown 09/26/2016 31417VAV3 956.90 FNMA Pool#FIN MA0022 100.000 956.90 122.44 1,079.34 0.00 4.5%Due 4/l/2029 Paytlown 09/28/2016 31396X3Q5 7,195.88 FNMA FNR 2007-114 A6Due 10/27/2037 100.000 7,195.88 25.11 7,220.99 0.00 Subtotal 1,100,204.38 1,100,204.38 44,376.21 1,144,580.59 0.00 Maturity, 09/01/2016 191216AU4 1,000,000.00 Coca Cola Company Note 100.000 1,000,000.00 0.00 1,000,000.00 0.00 1.8%Due 9/1/2016 Maturity 09/12/2016 4581XOCJ5 2,500,000.00 Inter-American Dev Bank Note 100.000 2,500,000.00 0.00 2,500,000.00 0.00 0.625%Due 9112/2016 Maturity 09/15/2016 459058BS1 2,500,000.00 Ind.Bank Recon&Development Note 100.000 2,500,000.00 0.00 2,500,000.00 0.00 1%Due 9/15/2016 Maturity, 09/15/2016 912828VW7 3,000,000.00 US Treasury Note 100.000 3,000,000.00 0.00 3,000,000.00 0.00 0.875%Due 9/15/2016 Matudty, 09/21/2016 313384G78 4,600,000.00 FHLB Discount Note 100.000 4,600,000.00 0.00 4,600,000.00 0.00 0.33%Due 9/21/2016 Maturity, 09/28/2016 3135GOCM3 2,720,000.00 FNMA Note 100.000 2,720,000.00 0.00 2,720,000.00 0.00 1.25%Due 9/28/2016 Maturity 09/30/2016 912828RA 2,000,000.00 US Treasury Note 100.000 2,000,000.00 0.00 2,000,000.00 0.00 1%Due 9/30/2016 Subtotal 18,320,000.00 18 320,000 00 0.00 18,320,000.00 0.00 TOTAL DISPOSITIONS 42,707,092.18 42,714,989.77 55,967.58 42,770,957.35 7,752.25 OTHER TRANSACTIONS Jam Interest 09/01/2016 191216AU4 1,000,000.00 Coca Cola Company Note 0.000 9,000.00 0.00 9,000.00 0.00 1.8%Due 9/1/2016 Interest 09/01/2016 30231 GAV4 3,000,000.00 Exxon Mobil Corp Callable Note Cant 0.000 32,959.67 0.00 32,959.67 0.00 2/1/2021 2.222%Due W112021 Interest 09/03/2016 17275RAT9 1,000,000.00 Cisco Systems Note 0.000 5,500.00 0.00 5,500.00 0.00 1.1%Due 3/3/2017 Interest 09/05/2016 40428HPR7 1,250,000.00 HSBC USA Inc Note 0.000 14,687.50 0.00 14,687.50 0.00 2.35%Due 3/5/2020 Interest 09/07/2016 3137EADP1 5,000,000.00 FHLMC Note 0.000 21,875.00 0.00 21,875.00 nor 0.875%Due 3/7/2018 Interest 09/08/2016 3133782142 7,500,000.00 FHLB Note 0.000 56,250.00 0.00 56,250.00 0.00 1.5%Due 3/8/2019 Interest 09/09/2016 313378A43 7,500,000.00 FHLB Note 0.000 51,562.50 0.00 51,562.50 0.00 1.375%Due 3/9/2018 Chandler Asset Management-CONFIDENTIAL Execution Time:1 W4/20169:59:58 AM �'" Orange County Sanitation District Consolidated Transaction Ledger Account#10283 8/31/16 Thru 9/30/16 Transaction Settlement Acq/Disp Interest Type Date CUSIP Quantity Security Description Price Yield Amount PurlSold Total Amount Gain/Loss OTHER TRANSACTIONS Interest 09/11/2016 0640611CW7 2,120,000.00 Bank of New York Callable Note Cont 0.000 24,380.00 0.00 24,380.00 0.00 8/11/2019 2.3%Due 9/11/2019 Interest 09/12/2016 3135GOZG1 5,000,000.00 FNMA Note 0.000 43,750.00 0.00 43,750.00 0.00 1.75%Due 9A2/2019 Interest 09/12/2016 4581XOCJ5 2,500,000DO Inter-American Dam Bank Note 0.000 7,812.50 0.00 7,812.50 0.00 0.625%Due 9/12/2016 Interest 09/15/2016 4581XOCS5 3,500,000.00 Inter-American Dev Bank Note 0.000 32,812.50 0.00 32,812.50 0.00 1.875%Due 3/15/2021 Interest 09/15/2016 459058BS1 2,500,000.00 Im.Bank Recon&Development Note 0.000 12,500.00 0.00 12,500.00 ODD 1%Due 9/15/2016 Interest 09/15/2016 532457BB3 1,000,000.00 Eli Lilly&Co Note 0.000 26,000.00 0.00 26,000.00 0.00 5.2%Due 3/15/2017 Interest 09/15/2016 532457BF4 4,000,000.00 Eli Lilly&Co Note 0.000 39,000.00 0.00 39,000.00 0.00 1.95%Due 3/1512019 Interest 09/15/2016 912828VW7 3,000,000.00 US Treasury Note 0.000 13,125.00 0.00 13,125.00 ODD 0.875%Due 9/15/2016 Interest 09/15/2016 94988J210 500,000DO Wells Fargo Bank Callable Note Cully 0.000 1,165.97 0.00 1,165.97 0.00 6/15/2016 1.117%Due 6/15/2017 Interest 09/16/2016 24422ESS9 5,000,000.00 John Deere Capital Corp Note 0.000 57,500.00 0.00 57,500.00 0.00 2.3%Due 9/16/2019 Interest 09/19/2016 025816AY5 2,900,000.00 American Express Credit Note 0.000 101,500.00 0.00 101,500.00 0.00 7%Due 3/19/2018 Interest 09/28/2016 3135GOCM3 2,720,000.00 FNMA Note 0.000 17,000.00 0.00 17,000.00 0.00 1.25%Due 9/28/2016 Interest 09/30/2016 912828F39 5,800,000.00 US Treasury Note 0.000 50,750.00 0.00 50,750.00 0.00 1.75%Due 9/30/2019 Interest 09/30/2016 912828RJ1 2,000,000.00 US Treasury Note 0.000 10,000.00 0.00 10,000.00 0.00 1%Due 9/30/2016 Subtotal 68,790,000.00 629,130.64 0.00 629,130.64 0.00 Dividend 09/02/2016 261908107 594,548.01 Dreyfus Trsy/Agey Cash Management 521 0.000 450.15 0.00 450.15 0.00 Dividend 09/02/2016 261908107 3,250,857.88 Dreyfus Trsy/Agcy Cash Management 521 0.000 671.62 0.00 671.52 0.00 Subtotal 3,845,405.89 1,121.67 0.00 1,121.67 0.00 TOTAL OTHER TRANSACTIONS 72,835,405.89 630,252.31 0.00 630,252.31 0.00 Chorus,Asset Management-CONFIDENTIAL Execution Time:1 01412 016 9:59:58 AM MINUTES OF THE ITEM NO. 7 OPERATIONS COMMITTEE Orange County Sanitation District Wednesday, September 7, 2016, 5:00 p.m. A regular meeting of the Operations Committee was called to order by Committee Chair Withers on Wednesday, September 7, 2016 at 5:02 p.m. in the Administration Building. Director Beamish led the Flag Salute. A quorum was declared present, as follows: COMMITTEE MEMBERS PRESENT: STAFF PRESENT: John Withers, Chair Jim Herberg, General Manager David Shawver, Vice-Chair Bob Ghirelli, Assistant General Manager Tom Beamish Celia Chandler, Director of Human Resources Kris Beard (Alternate) Jim Colston, Director of Environmental Services Ellery Deaton Rob Thompson, Director of Engineering Robert Kiley Ed Torres, Director of Operations and Maintenance Richard Murphy Lorenzo Tyner, Director of Finance & Steve Nagel Administrative Services Fred Smith Tina Knapp, Deputy Clerk of the Board Chad Wanks Cindi Ambrose Mariellen Yarc Jennifer Cabral John Nielsen, Board Chair Mike Dorman Alfredo Garcia COMMITTEE MEMBERS ABSENT: Mark Manzo Greg Sebourn, Board Vice-Chair Kathy Millea Michelle Steel Cindy Murra George Rivera Richard Spencer Eros Yong OTHERS PRESENT: Brad Hogin, General Counsel Michael Beverage, Alternate Director YLWD Mehul Patel, Orange County Water District (OCWD) Rashi Gupta, Carollo Engineers Peter Bokor, Carollo Engineers PUBLIC COMMENTS: None. REPORT OF COMMITTEE CHAIR: Committee Chair Withers did not provide a report. 09/0]M% Operations Committee Minutes Page 1 of a REPORT OF GENERAL MANAGER: General Manager Jim Herberg did not provide a report. CONSENT CALENDAR: 1. APPROVAL OF MINUTES (Clerk of the Board) MOVED. SECONDED. and DULY CARRIED TO: Approve Minutes of the July 6, 2016 Operations Committee Meeting. AYES: Beamish, Beard (Alternate), Deaton, Kiley, Murphy, Nagel, Nielsen, Shawver, F. Smith, Wanks, Withers, and Yarc NOES: None ABSTENTIONS: None ABSENT: Sebourn and Steel 2. SANTA ANA RIVER INTERCEPTOR ROCK STABILIZERS REMOVAL, PROJECT NO. 2-41-8 (Rob Thompson) MOVED, SECONDED. and DULY CARRIED TO: Recommend to the Board of Directors to: A. Approve a budget increase of$303,000, increasing the project budget from $3,743,000 to $4,046,000, B. Approve a Professional Design Services Agreement with Michael Baker International, Inc. to provide engineering design services for the Santa Ana River Interceptor Rock Stabilizers Removal, Project No. 2-41-8, for an amount not to exceed $399,008. and C. Approve a contingency of $39,900 (10%). AYES: Beamish, Beard (Alternate), Deaton, Kiley, Murphy, Nagel, Nielsen, Shawver, F. Smith, Wanks, Withers, and Yarc NOES: None ABSTENTIONS: None ABSENT: Sebourn and Steel 3. DISTRICT 6 TRUNK SEWER RELIEF, PROJECT NO. 6-17 (Rob Thompson) MOVED, SECONDED, and DULY CARRIED TO: Recommend to the Board of Directors to: A. Approve a Professional Construction Services Agreement with RMC Water and Environment (RMC), to provide construction support services for 0910712016 Operations Committee Minutes Page 2 of 8 District 6 Trunk Sewer Relief, Project No. 6-17, for a total amount not to exceed $290,000; and B. Approve a contingency of$43,500 (15%). AYES: Beamish, Beard (Alternate), Deaton, Kiley, Murphy, Nagel, Nielsen, Shawver, F. Smith, Wanke, Withers, and Yarc NOES: None ABSTENTIONS: None ABSENT: Sebourn and Steel 4. PLANT NO. 2 TRICKLING FILTER CHEMICAL ODOR CONTROL, PROJECT NO. FE13-04 (Rob Thompson) MOVED SECONDED. and DULY CARRIED TO: Recommend to the Board of Directors to: Increase the task order limit for Contract FE12-00-08 with GHD from $100,000 to $150,000 for Task Order FE12-00-08-03 to authorize the General Manager to negotiate and award additional engineering services related to Plant No. 2 Trickling Filter Chemical Odor Control, Project No. FE13-04. AYES: Beamish, Beard (Alternate), Deaton, Kiley, Murphy, Nagel, Nielsen, Shawver, F. Smith, Wanke, Withers, and Yarc NOES: None ABSTENTIONS: None ABSENT: Sebourn and Steel 5. GAS COMPRESSOR BUILDING PIPING REPLACEMENT AT PLANT 2, PROJECT NO. FEIS-06 (Rob Thompson) MOVED. SECONDED. and DULY CARRIED TO: Recommend to the Board of Directors to: Increase the task order limit for Contract FE12-00-01 with Lee and Ro, Inc. from $100,000 to $160,000 for Task Order FE12-00-01-04 to authorize the General Manager to negotiate and award additional engineering services related to the Gas Compressor Building Piping Replacement at Plant 2, Project No. FE15-06. AYES: Beamish, Beard (Alternate), Deaton, Kiley, Murphy, Nagel, Nielsen, Shawver, F. Smith, Wanks, Withers, and Yarc NOES: None ABSTENTIONS: None ABSENT: Sebourn and Steel 09/07/2016 Operations Committee Minutes Page 3 of 8 6. SLUDGE DEWATERING AND ODOR CONTROL AT PLANT 2, PROJECT NO. P2-92 (Rob Thompson) MOVED SECONDED. and DULY CARRIED TO: Recommend to the Board of Directors to: A. Authorize out-of-country travel for three Orange County Sanitation District (Sanitation District) employees to observe testing in Germany of dewatered sludge piston pumps to be supplied under the Sludge Dewatering and Odor Control at Plant 2, Project No. P2-92, subject to the Sanitation District's travel policy; and B. Authorize out-of-country travel for three Orange County Sanitation District (Sanitation District) employees to observe testing in Sweden of dewaterng centrifuges to be supplied under the Sludge Dewatering and Odor Control at Plant 2, Project No. P2-92, subject to the Sanitation District's travel policy. AYES: Beamish, Beard (Alternate), Deaton, Kiley, Murphy, Nagel, Nielsen, Shawver, F. Smith, Wanke, Withers, and Yarc NOES: None ABSTENTIONS: None ABSENT: Seboum and Steel 7. AQUACRITOXO EVALUATIONIDESIGN, PROJECT NO. SP-125-17 (Rob Thompson) MOVED. SECONDED, and DULY CARRIED TO: Recommend to the Board of Directors to: A. Receive and file the AquaCritox® Demonstration Project Evaluation Study; and B. Authorize out-of-country travel for two Orange County Sanitation District (Sanitation District) employees to conduct a site visit to observe the operations and performance of the European Union-funded AquaCritoe project in Valencia, Spain, in connection with the AquaCritoe Evaluation/Design, Project No. SP-125-17, and all travel, lodging, and per diem costs in accordance with the Sanitation District's travel policy. AYES: Beamish, Beard (Alternate), Deaton, Kiley, Murphy, Nagel, Nielsen, Shawver, F. Smith, Wanke, Withers, and Yarc NOES: None ABSTENTIONS: None ABSENT: Sebourn and Steel 2_ 5 Operations Cammiltee Minutes Page 4 of B 8. PRESSURIZATION AND ODOR CONTROL STUDY AT NEWPORT BEACH, PROJECT NO. PS15-07 (Rob Thompson) MOVED. SECONDED. and DULY CARRIED TO: Recommend to the Board of Directors to: A. Approve a Professional Services Agreement with Dudek to provide professional services for Pressurization and Odor Control Study at Newport Beach, Project No. PS15-07, for an amount not to exceed $256,478; and, B. Approve a contingency of$25,648 (10%). AYES: Beamish, Beard (Alternate), Deaton, Kiley, Murphy, Nagel, Nielsen, Shawver, F. Smith, Wanke, Withers, and Yarc NOES: None ABSTENTIONS: None ABSENT: Sebourn and Steel 9. QUARTERLY ODOR COMPLAINT REPORT (Ed Torres) MOVED. SECONDED. and DULY CARRIED TO: Receive and file the Fiscal Year 2015/16 Fourth Quarter Odor Complaint Summary. AYES: Beamish, Beard (Alternate), Deaton, Kiley, Murphy, Nagel, Nielsen, Shawver, F. Smith, Wanks, Withers, and Yarc NOES: None ABSTENTIONS: None ABSENT: Sebourn and Steel 10, ON-CALL CONTRACTOR SUPPORT SERVICES SPECIFICATION NO. S-2016-772BD (Ed Torres) MOVED. SECONDED. and DULY CARRIED TO: Recommend to the Board of Directors to: A. Approve a Service Contract with Jamison Engineering for On-Call Contractor Support Services, Specification No. S-2016-772BD, for the period November 1, 2016 through October 31, 2017 for a total annual amount not to exceed $700,615, with four one-year renewal options; and B. Approve an annual contingency of$70,061 (10%). AYES: Beamish, Beard (Alternate), Deaton, Kiley, Murphy, Nagel, Nielsen, Shawver, F. Smith, Wanks, Withers, and Yarc NOES: None ABSTENTIONS: None ABSENT: Sebourn and Steel 09/0712016 Operations Committee Minutes Page 5 of 8 11. SEWER LINE CLEANING OF SMALL REGIONAL SEWER LINES SPECIFICATION NO. S-2016-788BD (Ed Torres) MOVED SECONDED. and DULY CARRIED TO: A. Approve a Service Contract with Performance Pipeline Technologies for the cleaning services of approximately 60 miles of regional small sewers and manholes, Specification No. S-2016-788BD, for the period November 1, 2016 through October 31, 2017, for a total amount not-to-exceed $166,450, with four one-year renewal options, and B. Approve an annual contingency of$33,290 (20%). AYES: Beamish, Beard (Alternate), Deaton, Kiley, Murphy, Nagel, Nielsen, Shawver, F. Smith, Wanke, Withers, and Yarc NOES: None ABSTENTIONS: None ABSENT: Sebourn and Steel NON-CONSENT CALENDAR: 12. NEWHOPE-PLACENTIA TRUNK REPLACEMENT, PROJECT NO. 2-72 (Rob Thompson) Director of Engineering Rob Thompson provided an overview of this item, indicating that this project is an excellent example of collaboration between agencies of benefit to the public. MOVED. SECONDED, and DULY CARRIED TO: Recommend to the Board of Directors to: A. Approve a Cooperative Agreement between the Orange County Sanitation District and the City of Fullerton for pavement rehabilitation work on Yorba Linda Boulevard and State College Boulevard along a portion of the Newhope-Placentia Trunk Sewer Replacement, Segment A, Contract No. 2-72A, for an estimated amount of $600,000 to be reimbursed by the City of Fullerton; B. Approve a budget increase of $600,000 for the Newhope-Placentia Trunk Replacement, Project No. 2-72, for a total budget amount of$100,075,000; and C. Approve a contingency increase of $600,224 (2.84%) to the construction contract with Trautwein Construction Inc. for Newhope-Placentia Trunk Replacement, Segment A, Contract No. 2-72A, for a total contingency of $2,713,689 (12.84%). 09/07R016 Operations Committee Minutes Page 6 of 8 AYES: Beamish, Beard (Alternate), Deaton, Kiley, Murphy, Nagel, Nielsen, Shawver, F. Smith, Wanke, Withers, and Yarc NOES: None ABSTENTIONS: None ABSENT: Sebourn and Steel 13. HEADWORKS MODIFICATIONS AT PLANT 2 FOR GWRS FINAL EXPANSION, PROJECT NO. P2-122 (Rob Thompson) Engineering Manager Kathy Millea provided an informative PowerPoint presentation related to this item, including an overview of the Groundwater Replenishment System (GWRS), the original plan for the GWRS, processing done through the GWRS, contributions to the project made by the Sanitation District, and an overview of the outstanding projects and next steps needed for final expansion of the GWRS. General Manager Jim Herberg, Ms. Millea, and Mehul Patel, Director of Operations at OCWD, responded to questions from the Committee regarding sources feeding into the GWRS and financing of the remaining projects. Chair Withers left the meeting at 5:08 p.m. Vice-Chair Shawver presided for the remainder of the meeting. MOVED. SECONDED, and DULY CARRIED TO: Recommend to the Board of Directors to: Establish a project for Headworks Modifications at Plant 2 for GWRS Final Expansion, Project No. P2-122, with a budget of$50,000,000. AYES: Beamish, Beard (Alternate), Deaton, Kiley, Murphy, Nagel, Nielsen, Shawver, F. Smith, Wanke, and Yarc NOES: None ABSTENTIONS: None ABSENT: Sebourn, Steel, and Withers INFORMATION ITEMS: 14. ORANGE COUNTY SANITATION DISTRICT SECURITY PROGRAM (Celia Chandler) Director of Human Resources Celia Chandler provided a brief overview of this item and introduced Human Resources & Risk Manager Richard Spencer, who provided a PowerPoint presentation on the Sanitation District's security program. The presentation included security plans, policies, and procedures; video surveillance; perimeter security; contract security services; access control system; and various additional strategies used in the Sanitation District's security program. Mr. Spencer demonstrated one of the key types used by the Sanitation District, a CyberKey, and passed it around for the Committee to see. W07/2016 Operations Committee Minutes Page 7 of 8 Mr. Spencer responded to questions from the Committee regarding armed presence at the Sanitation District on a daily basis, shared security with OCWD/GWRS, and how quickly additional security measures can be implemented in a heightened situation. Suggestions were made by the Committee to issue identification badges to the Board of Directors and create security plans specific to Board meetings, to include evacuation routes. Ms. Chandler provided an update on a recent security matter. DEPARTMENT HEAD REPORTS: None. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: None. ADJOURNMENT Committee Vice-Chair Shawver declared the meeting adjourned at 5:47 p.m. to the next scheduled meeting of Wednesday, October 5, 2016 at 5:00 p.m. Submitted by, VV- 0 t_'t-rrp— Tina Knapp Deputy Clerk of the Board 09W=16 Operations Committee Minutes Page 8 of 8 MINUTES OF THE LEGISLATIVE AND PUBLIC AFFAIRS COMMITTEE Orange County Sanitation District Tuesday, September 13, 2016 at 8:00 a.m. A regular meeting of the Legislative and Public Affairs Committee was called to order by Chair Nielsen on Tuesday, September 13, 2016 at 8:02 a.m. in the Administration Building of the Orange County Sanitation District. Vice-Chair Sebourn led the pledge of allegiance. A quorum was declared present, as follows: COMMITTEE MEMBERS PRESENT: STAFF PRESENT: John Nielsen, Board Chair Jim Herberg, General Manager Robert Kiley, Director Bob Ghirelli, Assistant General Manager Peter Kim, Director Celia Chandler, Director of Human John Withers, Director Resources Lucille Kring, Director Jim Colston, Director of Environmental Greg Sebourn, Board Vice-Chair Services Ed Torres, Director of Operations and COMMITTEE MEMBERS ABSENT: Maintenance Tom Beamish, Director Rob Thompson, Director of Engineering Lorenzo Tyner, Director of Finance & Administrative Services Kelly Lore, Clerk of the Board Alfredo Garcia Rebecca Long Mark Manzo Kelly Newell OTHERS PRESENT: Kendra Carney, Assistant General Counsel Eric O'Donnell, Townsend Public Affairs Eric Sapirstein, ENS (via Teleconference) Cori Williams, Townsend Public Affairs PUBLIC COMMENTS: None. 0 911 3/2 01 6 LeplelatlNe and Public Affaln committee Minutes Page 1 of 4 REPORTS: The Committee Chair and the General Manager may present verbal reports on miscellaneous matters or general interest to the Committee Members. These reports am for information only and require no action by the Committee. General Manager Jim Herberg introduced Director of Human Resources Celia Chandler who provided an update on a recent security matter and stated that the security program and approval of a new security services contract has been placed on the upcoming Administration Committee agenda. CONSENT CALENDAR: Consent Calendar Items am considered to be mutimi and will be enacted, by the Committee, after one notion, without discussion. Any items withdrawn from the Consent Calendar for separate discussion will be considered in the regular order or business. 1. APPROVAL OF MINUTES (Clerk of the Board) MOVED. SECONDED and DULY CARRIED TO: Approve minutes for the regular Legislative and Public Affairs Committee meeting held on July 11, 2016. AYES: Kiley, Kim, Nielsen, Seboum, and Withers NOES: None ABSTENTIONS: None ABSENT: Beamish and Kring NON-CONSENT CALENDAR: 2. LETTER OF SUPPORT TO THE TRANSPORTATION AND INFRASTRUCTURE COMMITTEE (Bob Ghirelli) Assistant General Manager Bob Ghirelli recommended approval of the letter and introduced Eric Sapirstein, ENS Resources,who spoke to this item. MOVED. SECONDED and DULY CARRIED TO: Discuss the request for endorsement received from Congressman Lowenthal and authorize staff to send a letter of support. AYES: Kiley, Kim, Nielsen, Seboum, and Withers NOES: None ABSTENTIONS: None ABSENT: Beamish and Kring Director Kring arrived at 8:12 a.m. 09/13/2016 Legislative and Public Arles Committee Minutes Page 2 of INFORMATION ITEMS: 3. LEGISLATIVE UPDATE (Rebecca Long) Senior Public Affairs Specialist Rebecca Long introduced Cori Williams, Townsend Public Affairs (TPA), who provided a state political update regarding bills moving through the legislative process that impact OCSD; SB 32 (Payley) climate change bill; and the extension of the cap and trade program. Ms. Williams provided a further update on recent amendments to AB 2022 and the work being done with the SWRCB. The bill passed the Legislature and is now on the Governors desk. Eric O'Donnell, TPA, provided a memo to the Committee regarding the Little Hoover Commission — Public Hearing on Special Districts. Mr. O'Donnell provided background and noted the next steps that will be taken by the Commission. TPA will continue to track the review of special districts and keep OCSD up to date. Ms. Williams provided additional information on the historical makeup and overview of the Commission. Ms. Long provided information on two bills at the state level: AB 1217 (OCFA bill): This bill would eliminate "alternate" member participation. A letter of opposition was sent by OCSD to the Governor on August 25. The bill is currently on the Governor's desk; and SB 163 (Hertzberg): The author has indicated he will be reintroducing the bill next year. SB 163 has been gutted and amended to address bail hearings. Mr. Sapirstein provided an update on Water Resources Development Act (WRDA)legislation;WIFIA Program implementation advances; Fiscal Year 2017 appropriations processes; and the Department of Energy review of the application for the grant for the AquaCritox® project, anticipating October completion. Ms. Long announced that OCSD will host the State of the District on Friday, October 14 at 8:00 a.m. Vice-Chair Seboum suggested inviting the various Agency/City Engineers. Ms. Long also announced scheduled items for upcoming Legislative and Public Affairs Committee meetings: October 10, 2016 CASA will attend November 8, 2016 ACC-OC will attend December 13, 2016 Legislative Platform will be presented W/13 116 Legislative and Public Affairs Cmmitlee Minutes Page 3 of 4 4. PUBLIC AFFAIRS UPDATE (Jennifer Cabral) Principal Public Affairs Specialist Jennifer Cabral provided an informative PowerPoint presentation regarding the success of the 2016 Community Open house and the 2016 Plant No. 2 Community Meeting. Ms. Cabral provided a recap of 2015-16 public affairs activities including: community and speaking events, tours, supported programs, industry experts, agency awards, State of the District, grants received, internal communications, social media and news releases, website update, rebranding efforts, legislative positions, and bill tracking focuses. Ms. Cabral also provided "What's Next" in the upcoming Public Affairs plan and asked for additional suggestions from the Committee. Suggestions included: pharmaceutical takeback programs, series of white papers of public policy topics posted on the website, and Community Outreach exit surveys for significant projects. Ms. Cabral also announced that ENS and TPA will each provide legislative updates at the September 28 Board Meeting. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: None. ADJOURNMENT: Chair Nielsen declared the meeting adjourned at 9:00 a.m. to the next Legislative and Public Affairs Committee Meeting, Monday, October 10, 2016 at 3:30 p.m. Submitted by: Key L e CI rk o t Board 09/13/2016 Legislative and Public Affairs Commitlee Minutes Page 4 of MINUTES OF THE ADMINISTRATION COMMITTEE Orange County Sanitation District Wednesday, September 14, 2016 at 5:00 P.M. A regular meeting of the Administration Committee of the Orange County Sanitation District was called to order by Committee Chair Curry on September 14, 2016 at 5:00 p.m. in the Administration Building of the Orange County Sanitation District. Director Katapodis led the Flag Salute. A quorum was declared present, as follows: COMMITTEE MEMBERS PRESENT: STAFF PRESENT: Keith Curry, Chair Jim Herberg, General Manager Lucille Kring, Vice-Chair Bob Ghirelli, Assistant General Manager Steven Choi Celia Chandler, Director of Human Resources Jim Ferryman Jim Colston, Director of Environmental Services Jim Katapodis Rob Thompson, Director of Engineering Peter Kim Lorenzo Tyner, Director of Finance & Greg Mills Administrative Services Joy Neugebauer Kelly Lore, Clerk of the Board Teresa Smith Jennifer Cabral John Nielsen, Board Chair Al Garcia Greg Sebourn, Board Vice-Chair Randy Kleinman Mark Manzo COMMITTEE MEMBERS ABSENT: Laura Maravilla Glenn Parker Gerry Matthews Sal Tinajero George Rivera Richard Spencer Warren Sternin Mike White OTHERS PRESENT: Brad Hogin, General Counsel PUBLIC COMMENTS: None. REPORT OF COMMITTEE CHAIR: Committee Chair Curry did not provide a report. 09/14/2016 Administmtlon Committee Minutes Page 1 of 6 REPORT OF GENERAL MANAGER: General Manager Jim Herberg did not provide a report. REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES: Director of Finance and Administrative Services Lorenzo Tyner reported that an RFP for as needed investment advisory services was recently completed and the incumbent, Callen Associates, was selected. Mr. Tyner also briefly reported on the status of the District's unfunded liability and stated that he will be providing a full report in the near future. CONSENT CALENDAR: 1. APPROVAL OF MINUTES (Clerk of the Board) MOVED SECONDED AND DULY CARRIED TO: Approve Minutes of the July 13, 2016 Administration Committee Meeting. AYES: Choi, Curry, Katapodis, Kim, Kring, Neugebauer, Nielsen, and Sebourn NOES: None ABSTENTIONS: Mills ABSENT: Ferryman, Parker, T. Smith and Tinajero 2. GENERAL MANAGER APPROVED PURCHASES (Lorenzo Tyner) MOVED SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to: Receive and file District purchases made under the General Manager's authority for the period of April 1, 2016—June 30, 2016. AYES: Choi, Curry, Katapodis, Kim, Kring, Mills, Neugebauer, Nielsen, and Sebourn NOES: None ABSTENTIONS: None ABSENT: Ferryman, Parker, T. Smith and Tinajero 3. REIMBURSEMENTS TO BOARD MEMBERS AND STAFF (ANNUAL) (Lorenzo Tyner) MOVED SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to: Receive and file report of reimbursements to Board Members and Staff per Government Code Section 53065.5 for the period of July 1, 2015 through June 30, 2016. 09/14/2016 Administration Committee Minutes Page 2 of 6 AYES: Choi, Curry, Katapodis, Kim, King, Mills, Neugebauer, Nielsen, and Sebourn NOES: None ABSTENTIONS: None ABSENT: Ferryman, Parker, T. Smith and Tinajero 4. PRODUCTION STORAGE ARRAY SYSTEM (Lorenzo Tyner) MOVED, SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to: A. Authorize the purchase of a production storage system to accommodate future system performance and capacity needs with Nimble Storage Array system, using the approved U.S. General Services Agreement (GSA) IT Schedule 70 (M.O. 5/25/16, Item #13) for a total amount not to exceed $284,941.49, in accordance with OCSD Ordinance OCSD-47, Section 2.03(B) Cooperative Purchases; and B. Approve a contingency of$28,494 (10%). AYES: Choi, Curry, Katapodis, Kim, Kring, Mills, Neugebauer, Nielsen, and Sebourn NOES: None ABSTENTIONS: None ABSENT: Ferryman, Parker, T. Smith and Tinajero Director Ferryman arrived at 5:05 p.m. At the request of staff, Committee Chair Curry brought Item No. 7 forward. 7. 2017 BENEFITS INSURANCE RENEWAL (Celia Chandler) Celia Chandler, Director of Human Resources provided a brief introduction of Item No. 7. MOVED SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to: Approve the Orange County Sanitation District 2017 benefits insurance renewal for the not-to-exceed amounts specified below: A. Employee Benefit Specialists (medical, dental, and vision plans; Employee Assistance Program)— Not to Exceed $11,121,627; B. Prudential (basic life, short- and long-term disability) — Not to Exceed $685,560; and C. The Standard (EMT & Manager disability) — Not to Exceed $30,000. 0 911 412 01 6 Administration Committee Minutes Page 3 of 6 AYES: Choi, Curry, Ferryman, Katapodis, Kim, Kring, Mills, Neugebauer, Nielsen, and Sebourn NOES: None ABSTENTIONS: None ABSENT: Parker, T. Smith and Tinajero Director Teresa Smith arrived at 5:07 p.m. INFORMATION ITEMS: 5. ORANGE COUNTY SANITATION DISTRICT SECURITY PROGRAM (Celia Chandler) Director of Human Resources Celia Chandler provided a brief overview of this item and introduced Human Resources & Risk Manager Richard Spencer, who provided a PowerPoint presentation on the Sanitation District's security program. The presentation included security plans, policies, and procedures; video surveillance; perimeter security; contract security services; access control system; and various additional strategies used in the Sanitation District's security program. Mr. Spencer addressed concerns and responded to questions from the Committee regarding monitored video surveillance; armed guards; statistics of past security problems and other additional security strategies. NON-CONSENT: 6. CONTRACT SECURITY SERVICES (Celia Chandler) Mr. Spencer provided information regarding this contract and the need for the additional budget as provided to the Committee in late communication. Discussion ensued regarding the need for additional security measures and an alternate recommendation was made. MOVED SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to: A. Approve a Service Contract to Securitas Security Services, U.S.A., Specification No. S-2016-77513D, for the period November 1, 2016 through October 31, 2017, for a total annual amount not to exceed $776,704, with up to four (4) one-year renewals; B. Approve an increase of $62,681 to Purchase Order 105775 OA, a bridge purchase contract issued to Securitas Security Services, U.S.A., for a total amount not to exceed $160,723, for the period October 1, 2016 through October 31, 2016; C. Approve a contingency of$77,670 (10%); 09/142016 Administration Committee Minutes Page 4 of 6 D. Authorize a budget increase of $257,055 to Security Services, to be transferred from other Human Resources budgeted line items or the General Manager's contingency fund; and E. Direct staff to return next month to present for the Board's consideration the addition of armed guards at both plants. AYES: Choi, Curry, Ferryman, Katapodis, Kim, Kring, Mills, Neugebauer, Nielsen, Sebourn and T. Smith NOES: None ABSTENTIONS: None ABSENT: Parker, and Tinajero 8. GANN LIMIT RESOLUTION CORRECTION FOR FISCAL YEAR 2015-16 (Lorenzo Tyner) Mr. Tyner provided a brief overview of this item. MOVED. SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to: Adopt Resolution No. OCSD 16-XX entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District Establishing the Annual Appropriations Limit for Fiscal Year 2015-16, for the District in accordance with the Provisions of Division 9 of Title 1 of the California Government Code; and Repealing Resolution No. OCSD 15-14." AYES: Choi, Curry, Ferryman, Katapodis, Kim, Kring, Mills, Neugebauer, Nielsen, Sebourn and T. Smith NOES: None ABSTENTIONS: None ABSENT: Parker, and Tinajero 9. REVENUE REFUNDING CERTIFICATE ANTICIPATION NOTES, SERIES 2016E (Lorenzo Tyner) Mr. Tyner provided a brief overview of this item. MOVED SECONDED AND DULY CARRIED TO: Recommend to the Board of Directors to: A. Adopt Resolution No. OCSD16-XX entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District authorizing the execution and delivery by the District of an Installment Purchase Agreement, a Trust Agreement and a Continuing Disclosure Agreement in connection with the execution and delivery of Orange County Sanitation District Revenue Refunding Certificate Anticipation Notes, Series 2016B, such Notes evidencing principal in an aggregate amount of not to exceed $120,000,000, approving a Notice of Intention to Sell, authorizing the distribution of an Official Notice Inviting Bids and an Official Statement in connection with the 09/14/2016 Admi mts ion CommiRee Minutes Page 5 of 6 offering and sale of such Notes and authorizing the execution of other necessary documents and related actions'; and B. That the Orange County Sanitation District Financing Corporation approve the documents supporting and authorizing the Notes in an aggregate amount not to exceed $120,000,000; and C. The proposed financing is structured as another two-year fixed rate maturity that will be sold in a competitive sale. AYES: Choi, Curry, Ferryman, Katapodis, Kring, Mills, Neugebauer, Nielsen, Sebourn and T. Smith NOES: None ABSTENTIONS: Kim ABSENT: Parker, and Tinajero CLOSED SESSION: None. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS IF ANY: None. ADJOURNMENT: Committee Chair Curry declared the meeting adjourned at 5:33 p.m. to the next regularly scheduled meeting of Wednesday, October 12, 2016 at 5:00 p.m. Sub fitted by: Kell A ore Cle f he Board 09/14/P016 Administration Committee Minutes Page 6 of 6 MINUTES OF THE STEERING COMMITTEE Orange County Sanitation District Wednesday, September 28, 2016 at 5:00 p.m. A regular meeting of the Steering Committee of the Orange County Sanitation District was called to order by Chair Nielsen on Wednesday, September 28, 2016 at 5:02 p.m. in the Administration Building of the Orange County Sanitation District. A quorum was declared present, as follows: COMMITTEE MEMBERS PRESENT: STAFF PRESENT: John Nielsen, Chair Jim Herberg, General Manager Greg Sebourn, Vice-Chair Bob Ghirelli, Assistant General Manager Keith Curry, Administration Committee Celia Chandler, Director of Human Chair Resources John Withers, Operations Committee Jim Colston, Director of Environmental Chair Services Tom Beamish, Member-At-Large Mike Dorman, Engineering Manager Lucille Kring, Member-At-Large Ed Torres, Director of Operations & David Shawver, Member-At-Large Maintenance Lorenzo Tyner, Director of Finance & COMMITTEE MEMBERS ABSENT: Administrative Services None Tina Knapp, Deputy Clerk of the Board Marc Brown Jennifer Cabral Al Garcia Randy Kleinman Laurie Klinger Mark Manzo Kathy Millea Jeff Mohr Andrew Nau Mickey Whitney OTHERS PRESENT: Brad Hogin, General Counsel Laura Kalty, Liebert Cassidy Whitmore PUBLIC COMMENTS: No public comments were provided. 09/28/2016 Steering Committee Minutes Page 1 of 3 REPORTS: Chair Nielsen did not provide a report. General Manager Jim Herberg did not provide a report. CONSENT CALENDAR: 1. APPROVAL OF MINUTES (Clerk of the Board) MOVED, SECONDED, AND DULY CARRIED TO: Approve Minutes of the August 24, 2016 Regular Steering Committee Meeting. AYES: Beamish; Nielsen; Sebourn; Shawver; and Withers NOES: None ABSTENTIONS: Curry ABSENT: Kring NON-CONSENT CALENDAR: 2. GENERAL MANAGER'S FY 2016-2017 WORK PLAN (Jim Herberg) General Manager Jim Herberg indicated that the draft version of the General Manager's FY 2016-2017 Work Plan was presented to the Committee in August and the item before them is the final version. MOVED. SECONDED, AND DULY CARRIED TO: Recommend to the Board of Directors to: Receive and file the General Manager's FY 2016-2017 Work Plan. Beamish; Curry; Nielsen; Sebourn; Shawver; and AYES: Withers NOES: None ABSTENTIONS: None ABSENT: Kring CLOSED SESSION: CONVENED IN CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTIONS 54957.6. 54956.8 & 54956.9(d)(1): The Committee convened in closed session at 5:04 p.m. to discuss three items. Confidential minutes of the Closed Session have been prepared in accordance with the above Government Code Sections and are maintained by the Clerk of the Board in the Official Book of Confidential Minutes of Board and Committee Closed Session Meetings. 09/28/2016 Steering Committee Minutes Page 2 of 3 Director Kring arrived at 5:08 p.m. RECONVENED IN REGULAR SESSION: The Committee reconvened in regular session at 5:58 p.m. CONSIDERATION OF ACTION, IF ANY, ON MATTERS CONSIDERED IN CLOSED SESSION: None. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: None. ADJOURNMENT: The Chair declared the meeting adjourned at 6:00 p.m. to the next Steering Committee meeting to be held on Wednesday, October 26, 2016 at 5:00 p.m. Submitted by: Tina Knapp Deputy Clerk of the Board 09/28/2016 Steering Committee Minutes Page 3 of 3 OPERATIONS COMMITTEE Meeting Date TOBd.of Dir. 10/0SI16 10/26/16 AGENDA REPORT ItemNumber Item Number z B Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Director of Engineering SUBJECT: PLANT NO. 1 FLEET SERVICES UST LEAK REMEDIATION, PROJECT NO. FE14-05 GENERAL MANAGER'S RECOMMENDATION Increase the task order limit for Contract FE15-00-01 with Dudek from $86,116 to $160,000 for Task Order FE15-00-01-01 to authorize the General Manager to negotiate and award additional engineering services related to Plant No. 1 Fleet Services UST Leak Remediation, Project No. FE14-05. BACKGROUND Two 12,000-gallon underground storage tanks (UST)at Plant No. 1 were previously used for fuel storage. A leak in the associated piping was discovered and reported to the Orange County Health Care Agency (OCHCA) as required by law. Since then, the tanks and associated piping have been removed. Monitoring and extraction wells were installed to contain and monitor the hydrocarbon plume. Project No. FE14-05 was created underthe Facilities Engineering Program-Plant Master Budget (M-FE-Plant) to remediate the associated contamination. A budget of $14,952,000 has been reserved for this project, based on a worst-case scenario for the amount of work that might be required. Task Order FE15-00-01-01 under Contract FE15-00-01 was issued to Dudek to provide consulting, and design and construction support services related to the project. Following approval by the OCHCA of the proposed work plan, CEQA analysis and documentation will be prepared, followed by detailed design, construction, and post-remediation monitoring of two to five years. Based on consultations with the OCHCA, it appears that the contamination can be remediated by removing and disposing of soil in a 40 foot by 60 foot area, extending down 20 feet, with an associated project cost of approximately$6.4 million, including five years of post-remediation monitoring. RELEVANT STANDARDS • Maintain environmental regulatory oversight by all regulators • Operate and maintain facilities to minimize impacts on surrounding communities, including odor, noise, and lighting Page 1 of 3 PROBLEM Based on the proposed work plan submitted to the OCHCA, the level of effort associated with the required engineering services and additional drilling and analysis is greater than would have been assumed at the time that the original task order was issued. The total estimated effort under the task order is $160,000, which is more than the currently authorized amount of $86,116. The amount required also exceeds the General Manager's approval authority, and Operations Committee approval is required. PROPOSED SOLUTION Approve increasing the task order limit for Contract FE15-00-01 with Dudek from $86,116 to$160,000 for Task Order FE15-00-01-01 to authorize the General Manager to negotiate and award additional engineering services related to Plant No. 1 Fleet Services UST Leak Remediation, Project No. FE14-05. TIMING CONCERNS The contamination can spread beyond the current area and beyond Orange County Sanitation District (Sanitation District) property by rising groundwater if not adequately remediated. The Remediation Plan and design should be completed by January 2017 and construction completed by November 2017. RAMIFICATIONS OF NOT TAKING ACTION The contamination could spread to a larger area, resulting in a greater clean-up cost. PRIOR COMMITTEE/BOARD ACTIONS July 2015 - Approved annual Professional Design Services Agreements with Dudek and eleven other firms for professional engineering design and construction support services projects, Contract No. FE15-00-01, commencing July 1, 2015, with a maximum annual fiscal year contract limitation not to exceed $400,000 for each Professional Design Services Agreement, and, up to two additional one-year optional extensions. Amendment No. 1, Contract No. FE15-00-01, extending the contract period until June 30, 2017, was approved by the General Manager in May 2016. Task Order FE15-00-01-01 for an amount not to exceed $86,116 was approved by the Director of Engineering in September 2015, authorizing design and construction support services related to Plant No. 1 Fleet Services UST Leak Remediation, Project No. FE14-05. ADDITIONAL INFORMATION N/A Page 2 of 3 CEQA CEQA analysis and documentation will be conducted as part of the project and completed prior to remediation of the site. FINANCIAL CONSIDERATIONS This request complies with authority levels of the Sanitation District's Purchasing Ordinance. This item has been budgeted and the budget is sufficient for the recommended action. FY Budget 2016-17 & 2017-18, Section 8, Page 85. ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package: N/A RB:dm:gc Page 3 of 3 OPERATIONS COMMITTEE MeetingDae TOBd.OfDir. 30/06/16 10/26/16 AGENDA REPORT emNumber IemNumber 4 9 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Ed Torres, Director of Operations & Maintenance SUBJECT: UPDATE TO 2015 AUDIT REPORT OF ORANGE COUNTY SANITATION DISTRICT'S SANITARY SEWER SYSTEM MANAGEMENT PLAN GENERAL MANAGER'S RECOMMENDATION Receive and file the Close out Memorandum for the 2015 Orange County Sanitation District's Sewer System Management Plan audit, dated June 30, 2016. BACKGROUND The Orange County Sanitation District (Sanitation District) Sewer System Management Plan (SSMP) audit was received and filed by the Board of Directors in December 2015. The audit found one non-compliance deficiency, one non-conformance deficiency, 14 minor deficiencies, and 15 best practice opportunities. All 16 deficiencies have been corrected. The findings and subsequent corrective actions of this audit were not significant and do not require the Board to recertify the updated SSMP. The 15 "opportunities" and best practice recommendations will be considered and reviewed by Environmental Services and Operations and Maintenance Department staff. The current edition of the Sanitation District's SSMP is posted on the website for public awareness. RELEVANT STANDARDS • Meet or exceed sanitary sewer overflow regulations • Maintain a proactive asset management program • Less than 2.1 sewer spills per 100 miles PRIOR COMMITTEE/BOARD ACTIONS December 2015 - Board of Directors received and filed the 2015 Waste Discharge Requirement (WDR)for SSMP Audit Report dated July 31, 2015. March 2012 - Board of Directors approved the SSMP dated March 28, 2012. May 2009 - Board of Directors approved the SSMP dated May 1, 2009. October 2008-Board of Directors received and Tiled the SSMP Compliance Status Report dated September 24, 2008. Page 1 of 2 July 2007 - Board of Directors approved the SSMP Development Plan and Schedule. October 2006 - Board of Directors approved the development and implementation of a compliance program with the Sanitary Sewer System WDR Order. ADDITIONAL INFORMATION N/A CEQA N/A FINANCIAL CONSIDERATIONS N/A ATTACHMENTS The following attachment(s)is included in hard copy and may also be viewed on-line at the OCSD website (w w..ocsd.coml with the complete agenda package and attachments: • Close Out Memorandum for the 2015 Orange County Sanitation District's Sewer System Management Plan audit, dated June 30, 2016 ET:MAE:MPV:eh Page 2 of 2 4? ORANGE COUNTY SANITATION DISTRICT Memorandum CJ p DATE: June 30, 2016 SUBJECT: Close out Memorandum for the 2015 Orange County Sanitation District's Sewer System Management Plan audit On July 31, 2015, Orange County Sanitation District (OCSD) received the audit findings from an independent auditing fine, RMC, of the Sewer System Management Plan (SSMP). The audit reviewed the period between January 1, 2013 and December 31, 2014 and found OCSD to generally be in compliance with all Provisions of the WDR. The table below summarizes the findings: Non-Com liana 1 Major Deficient Non-Co nce 1 Major Deficient Non-Conformance 14 Minor Deficiencies Opportunities 15 All non-compliance and non-conformance findings have been corrected or adopted. Several '.opportunities" and best practice recommendations were suggested. Staff will review these items during the first half of the 2016/17 fiscal year. The following section summarizes OCSD's response and action for each compliance and deficiency finding. For additional information on the referenced regulatory section and corrective action completion date, a more detailed spreadsheet is available. Non-Compliance (1) The SSMP was last certified in March 2012. The amended Monitoring and Reporting Program (Order No. WQ 2013-0058-EXEC) requires documentation of SSMP updates. Records are not attached to the SSMP documenting all changes made to the SSMP since its last certification indicating when subsections were changed or updated and who authorized the change or update. Created log of changes to the SSMP that have occurred since the amended Monitoring and Reporting Program went into effect in 2013 for Volumes I and 11. This log will be incorporated as part of the cover page of each section, appendices, and/or chapter as appropriate. Non Conformance—Maior Deficiency(1) In October 2014, the District's MS Access CCTV database exceeded the database size limit and would not accept any new records. The District is in the process of creating a Request for Proposals to purchase an off-the-shelf CCTV software to serve as the future repository of CCTV inspection data. In the meantime, CCTV data collected is being summarized for each inspection and loaded into a spreadsheet. According to staff, almost all CCTV data collected is coded using PACP coding standards. A quick review of the MS Access CCTV Database tables indicates the table structure and database format is not currently in PACP database format. OCSD will need to transform that data into a format that can be migrated into the future CCTV repository database. OCSD is purchasing a CCTV software package. Procurement is scheduled to be completed by September 19, 2016. Page 2 of 6 June 30, 2016 Non Conformance -Minor Deficiencies (14) 1. The SSMP Organizational Chart is missing three OCSD staff responsible for key elements of OCSD's SSMP Program. Updated the SSMP Organizational Chart to include OCSD staff responsible for key elements of the SSMP Program. 2. CIWQS lists four OCSD staff an "Onsite Manager' also referred to as Legally Responsible Officials (LRO). Update the SSMP, as appropriate, to identify who in the organization is designated as a Legally Responsible Official in the CIWQS database. The SSMP Organizational Chart and Organizational Narrative were updated to reflect the LROs in CIWQS that can certify SSOs 3. Several of the title descriptions on staff identified in the SSMP Program Organizational Chart are dissimilar from the title descriptions in the Organizational Narrative creating confusion when linking the two documents together. Similarly, the role designations on the SSMP Program Organizational Chart do not always align with the SSMP Responsibility on the Organizational Narrative. Consistency between title descriptions in the SSMP Organizational Chart and Organizational Narrative were addressed. 4. An additional position (i.e., Engineering Supervisor, Collection Facilities Division or designee of the LRO) is included in the Appendix C - Organizational Narrative that is not included in the SSMP Program Organizational Chart. This position is the WDR Subject Matter Expert as defined in the District's Environmental Auditing Procedure TS-ECRA-SOP-011 included as Appendix X1 of the SSMP and is responsible for managing the W DRISSMP audit. The Organizational Narrative and Organizational Chart were updated with positions responsible for key elements of the SSMP Program. 5. The Organizational Narrative incorrectly identifies the Principal Environmental Specialist — Management Services Team as responsible for the SSMP audit, yet this position is only responsible for updating the status of the audit in ECAP. The District should update the Organization Narrative and SSMP Program Organizational Chart to reflect these responsibilities. The Organizational Narrative and SSMP Program Organizational Chart were updated with positions responsible. 6. Update Appendix P2 and Appendix P3 to reflect changes in monitoring and reporting requirements amended on July 30, 2013. Appendix P2 and Appendix P3 were updated on March 23, 2016 and posted to the OCSD SSMP documents external web page. Page 3 of 6 June 30, 2016 7. The OCSD website posts a Sewer Spill Estimation Guide that contains a more comprehensive set of spill volume estimation methods along with a more detailed narrative description for how to utilize these methods. Updated Appendix R with the Sewer Spill Estimation Guide dated May 15, 2014. 8. The 870-GEN SSO response procedures are referenced but not included in the SSMP. Added the new 870-GEN SSO to Volume 11. 9. The SSMP Chapter 7 does not reference notification procedures and response protocols for sewer overflows caused by contractors working for the District. The District requires contractors to develop a Spill Prevention and Countermeasure Control Plan (SPCC Plan), which is not mentioned in the SSMP. The SSMP has been updated. The OCSD Master Specification for Temporary Handling of Sewage constrains language on how to respond to sewage spills in the Collections System. Contractors are made aware of this language during meetings and are provided a copy of the document. 10. SSMP describes the District's periodic master planning process, but does not describe the process used by District staff to review major development proposals, apply the model as needed to evaluate impact on hydraulic capacity, and update the model and its flows as new information becomes available. Describe the District's ongoing modeling and capacity analysis process in the next update of the SSMP. The District will describe the ongoing modeling and capacity analysis process in the next update of the SSMP. 11. References and design criteria information provided in the SSMP are not current. Update the narrative and dates of reference documents for documents that have been revised. The District will update the Design Criteria narrative provided in the SSMP in the next update of the SSMP 12. Based on the work performed for the 2009 Facilities Plan, some of the capacity projects recommended in 2006 have been eliminated or deferred indefinitely on the basis of revisions to flow projections or corrections/changes to the modeled network. However, some projects that were determined in 2006 to present a likelihood of overflow under current development conditions during a 10-year wet weather event have been deferred indefinitely, even though subsequent modeling analysis has confirmed the original hydraulic deficiency. Although the 2009 Facilities Master Plan calls for those potential deficiencies to be monitored, there is no documentation that any monitoring is being performed. The District engineering department is starting a master plan update that includes a large monitoring program. The estimated start is in November 2016 through April 2018. Once this effort has been completed and the data used to calibrate the hydraulic model to present day flows, OCSD staff will consider an on-going flow monitoring program. Type and placement of monitors will depend on numerous factors, including value of the data, on-going construction efforts, and operations and maintenance concerns. Page 4 of 6 June 30, 2016 13. SSMP and referenced documents such as the 2006 Strategic Plan Update, the 2009 Facilities Plan, and Fiscal Year Budgets describe capital improvement projects for capacity enhancement. Some of the identified projects have been completed and others deferred for a variety of reasons. It is not easy to determine the status of each project because the information is contained in various documents. Update table in Appendix M. District will update Appendix M, as appropriate. 14.The Audit Closeout Memo in Appendix Y was not updated after the 2013 WDR Audit. It is not clear whether or how the audit findings from the previous audit were addressed. Update the Audit Closeout Memo in Appendix Y to reflect the decisions and changes resulting from this 2015 W DR Audit. If the District chooses not to update the Audit Closeout Memo then the District should consider updating the SSMP to remove the previous Audit Closeout Memo. Updated the Audit Closeout Memo in Appendix Y to reflect the decisions and changes resulting from the 2013 WDR Audit. Appendix Y will be updated with the decisions and changes resulting from this 2015 WDR Audit. The following section includes the 15"other findings and opportunities for improvements" not linked directly to issues of compliance or conformance with the WDR. Opportunities (15) 1. Section 4.1 (c) of the SSMP discusses access for maintenance, inspection, or repairs for portions of the lateral owned by OCSD. This section misses an opportunity to clearly state that the District does not own and is not responsible for maintenance of the laterals connecting private buildings to local sewers and therefore does not require access for maintenance, inspection, or repairs of those laterals. Legal counsel advised against addressing OCSD's lateral ownership in the SSMP for the following reasons: 1) OCSD is a REGIONAL service provider, 2) OCSD is only a few months away from divesting themselves of the vast majority of local sewers, 3) OCSD does not permit direct lateral connections. Counsel states that it is a moot point to discuss ownership or lack thereof in the SSMP. 2. Internal Stakeholder Meetings did not occur after the last audit. In the past,these meetings served to support increased accountability for addressing WDR audit deficiencies and updates to the SSMP. Management will review recommendation and decide if this needs to be completed. This is not a compliance requirement. 3. Over the past four years, the District has collected multiple data points for every asset in the local sewer system. • Four or more recent completed cleaning work orders with maintenance feedback indicating type and severity of material found during cleaning. • One CCTV inspection focused on condition assessment and potentially a second inspection for cleaning quality control. Management will review recommendation and decide if this needs to be completed. This is not a compliance requirement. Page 5 of 6 June 30, 2016 4. During interviews staff indicated that trouble spot pipe schedules are regularly added, removed, or modified as conditions warrant. For example, if a trouble spot pipe routinely comes back dirty(based on contractor input or data), staff may will consider cleaning it more often. Conversely, if the pipe routinely comes back clean, staff will consider cleaning it less often. Management will review recommendation and decide if this needs to be completed. This is not a compliance requirement. 5. Some of OCSD's internal goals have changed and are now more aggressive than those documented in the SSMP. For example, OCSD's pipe inspection goal has changed from 7 years to 5 years and goals for manhole inspections are now set at 2 years. Management will review recommendation and decide if this needs to be completed. This is not a compliance requirement. 6. OCSD does not currently have a means to continuously update collection system risk as new CCTV data is collected. This has evolved from being a best management practice to becoming a standard industry practice. For example, NASSCO recently incorporated a risk assessment methodology into the PACP standard. Also, off-the-shelf software with risk assessment functionality is readily available in the wastewater industry marketplace. Management will review recommendation and decide if this needs to be completed. This is not a compliance requirement. 7. OCSD currently evaluates the maintenance and renewal needs of sewer pipelines on a case-by-case basis. Management will review recommendation and decide if this needs to be completed. This is not a compliance requirement. 8. The District has utilized an assumption for asset deterioration to generate long-term refurbishment and replacement cost projections. These projections are the basis for future refurbishment and replacement funding for capital investment. Management will review recommendation and decide If this needs to be completed. This is not a compliance requirement. 9. OCSD has collected CCTV inspection data for almost all collection system gravity mainline assets. Management will review recommendation and decide if this needs to be completed. This is not a compliance requirement. 10. The District is considering changing how specifications are assigned to design staff to improve the update process. The process will enable staff to send comments on specifications to both custodian and owner. Management will review recommendation and decide if this needs to be completed. This is not a compliance requirement. Page 6 of 6 June 30, 2016 11. Contractors are required to perform a quality assurance/quality control inspection of pipelines after construction work is completed. In the past, the District would then perform a baseline CCTV inspection. On some projects,the District is having the contractor perform the baseline inspection. According to staff, OCSD's specification for the contractor (Spec 2730)does not require a PACP inspection. Management will review recommendation and decide if this needs to be completed. This is not a compliance requirement. 12. It is difficult to determine which SSOs reported to CIWQS were related to the local system versus the regional system. It appears this information may be determined from the City field, yet this is not clear. Management will review recommendation and decide if this needs to be completed. This is not a compliance requirement. 13. The District has invested significant funds to assist member agencies with their III reduction efforts, but does not monitor the effectiveness of those efforts or attempt to quantify trends in 1/1 over time. It is important to the District that peak 1/1 be controlled by the member agencies. Significant increases in peak 1/1 could result in additional hydraulic deficiencies that have not yet been identified in the District's trunk sewers, as well as in the District's treatment plants and ocean outfalls. OCSD will partially comply, An /// assessment will be completed as part of the Collection Capacity Evaluation Study (start date October 2016); however, the potential date for completion of this task is unknown at this time. If Orange County experiences a good rainfall event during the 2016- 2017 wet weather season then this analysis will be completed after April of next year. If drought conditions persist, then the analysis will hopefully be completed following the wet weather season of 2017- 2018. At this time, OCSD does not intend to formally document I&I improvement efforts by member agencies. 14.Appendix 11 of the SSMP entitled Preventative Maintenance Program, specifies collection system maintenance output goals. These goals are summarized in Table 8. Staff indicated verbally that these commitments are being achieved, yet at the time of the audit data was not readily available to validate this. Management will review recommendation and decide if this needs to be completed. This is not a compliance requirement. 15. ECAP is sending notifications to staff requesting review and update of SSMP sections. It is not clear who the administrator is for the W DR in ECAP and whether these notifications are staying updated. Management will review recommendation and decide if this needs to be completed. This is not a compliance requirement. OPERATIONS COMMITTEE Meeting Date TOBE.Or .Dir. 10/0SI16 10/26/16 AGENDA REPORT Item Item Number S 10 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Ed Torres, Director of Operations & Maintenance SUBJECT: INDUSTRIAL CLEANING SERVICES, SPECIFICATION NO. S-2015-714BD GENERAL MANAGER'S RECOMMENDATION A. Approve a contingency increase of $110,565 (21%) to the service contract with Performance Pipeline Technologies for Industrial Cleaning Services, Specification No. S-2015-71413D, for the period December 11, 2015 through December 10, 2016, for a new total contingency amount not to exceed $215,865 (41 a/%). B. Approve a contingency of$105,300 (20%) per year for all remaining renewal periods. BACKGROUND In October 2015 the Board of Directors awarded a contract to Performance Pipeline Technologies (PPT) for Industrial Cleaning Services, Specification No. S-2015-71413D, for a total amount not to exceed $526,500 for the period December 11, 2015 through December 10, 2016, with four one-year renewal options for cleaning the civil infrastructure at our treatment facilities and pump stations, and a contingency amount of$105,300 (20%). Additional funds are needed to cover unanticipated costs associated with the removal of residual material from Plant 2 Digesters A and B, which are being demolished under Capital Improvement Project (CIP) Project P2-110 — Consolidated Demolition and Utility Improvements at Plant 2,for$110,000. The additional funding request is only for the current contract period and will increase the contingency to 41%. The not to exceed amount of $526,500 will remain for the four one-year renewal options, if exercised. RELEVANT STANDARDS • Sound engineering and accounting practices, complying with local, state and federal laws • Ensure that the public's money is wisely spent • Less than 2.1 sewer spills per 100 miles PROBLEM The current not to exceed Industrial Cleaning Services Contract authorization of$526,500, plus the $105,300 contingency for the December 11, 2015 through December 10, 2016 period, is insufficient to cover the additional $110,000 of unanticipated CIP related costs. Page 1 of 2 PROPOSED SOLUTION Approve a contingency increase to the service contract to cover the unanticipated costs. TIMING CONCERNS The CIP project to demolish Digesters A and B has already begun. If no action is taken to clean the digesters, the project could be delayed. RAMIFICATIONS OF NOT TAKING ACTION Without an increased amount, important cleaning services during the remaining period of the current contract period will have to be postponed, resulting in delayed maintenance, reduced condition assessments, increased risk of process failures and sewage overflows, and, in the case of digesters A and B, potential impact to the demolition schedule. PRIOR COMMITTEE/BOARD ACTIONS October 2015-Award a service contract to Performance Pipeline Technologies for Industrial Cleaning Services, Specification No. S-2015-714BD, for a total amount not to exceed $526,500 for the period December 11, 2015 through December 10, 2016, with four one-year renewal options; and approve a contingency of$105,300 (20%). ADDITIONAL INFORMATION The additional work performed in support of the CIP project was not considered in the scope of the original service contract with PPT. Staff considered all other service options available to complete this work and determined the PPT contract to be the most expedient and efficient mechanism to support the project. FINANCIAL CONSIDERATIONS This recommendation complies with authority levels of the Sanitation District Purchasing Ordinance. This contingency increase has been budgeted in the 2016-17 Annual Budget P2-110 (Section 8, Page 10) and the original contract and contingency within Division 820, Professional and Contractual Services (Section 6, Page 76) and Division 870, Professional and Contractual Services (Section 6, Page 92). Date of ADDroval Contract Amount Contingency 10/28/2015 $526,500.00 $105,300 (20%) 10/26/2016 $215,865(41%) ATTACHMENT The following aftachment(s) may be viewed on-line at the OCSD website (wwwocsd.com) with the complete agenda package: N/A Page 2 of 2 OPERATIONS COMMITTEE Meeting Date TOBE.Or .Dir. 10/0SI16 10/26/16 AGENDA REPORT Item Item Number 6 11 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Director of Engineering SUBJECT: SLUDGE DIGESTER REHABILITATION AT PLANT NO. 1, PROJECT NO. P1-100 GENERAL MANAGER'S RECOMMENDATION A. Approve a budget increase of$500,000 for Sludge Digester Rehabilitation at Plant No.1, Project No. P1-100, for a total budget amount of$67,150,000; and B. Approve a contingency increase of $837,500 (2.5%) to the construction contract with JR Filanc Construction Company for Sludge Digester Rehabilitation at Plant No. 1, Project No. P1-100, for a total contingency of$9,212,500 (27.5%). BACKGROUND This project rehabilitates and improves solids handling capacity for twelve anaerobic digesters and digested sludge holding tanks at Plant No. 1. The project incurred significant delays, primarily due to significant unknown conditions comprised of higher volumes and concentrations of residual solids, repairs of concrete cracks inside the digesters, repairs of existing pipe leaks, replacement of existing valves that could not be rehabilitated, and extensive PVC liner repair inside the digesters. As only two digesters can be taken out of service at a time, these delays multiplied and options for recovery are very limited. Since the delays were associated with unknown conditions, the Orange County Sanitation District (Sanitation District) is generally responsible for the consequences. Staff was able to reach an agreement with the Contractor to resolve all cost and time impacts through July 2015 for the unknown conditions encountered, and establish a revised schedule for completion. Work on the remaining digesters is expected to be completed by early fall 2017. Work is completed for 10 of the 12 digesters and the unknown conditions consumed most of the available construction contract contingency. RELEVANT STANDARDS Ensure that the public's money is wisely spent Page 1 of 4 PROBLEM Based on staffs experience with the previous 10 digesters, it is likely that the currently authorized construction contract contingency will not be enough to complete the final two digesters in the project. PROPOSED SOLUTION Increase the construction contract contingency by $837,500 (2.5%) from $8,375,000 (25%) to $9,212,500 (27.5%) to ensure that any unknown conditions can be addressed at the time they are encountered. This additional contract contingency will require an additional $500,000 of project budget. The full amount of the additional contingency is not needed for the project budget because some savings in staff costs are anticipated. TIMING CONCERNS In order to complete all remaining work and address any unknown conditions that arise, the project contingency needs to be increased such that the work can progress as scheduled without delay to the project. RAMIFICATIONS OF NOT TAKING ACTION Completion of the remaining work may not be possible if the construction contract contingency is insufficient to cover the costs for potential unknown conditions. PRIOR COMMITTEE/BOARD ACTIONS December 2014 - Approved a contingency increase of $4,355,000 (13%) to the construction contract, for a total contingency of$8,375,000 (25%). February 2013-Approved a contingency increase of$1,340,000 (4%)to the construction contract, for a total contingency of$4,020,000 (12%). February 2010 -Awarded a construction contract to JR Filanc Construction Company for Sludge Digester Rehabilitation at Plant No.1, Project No. P1-100, for an amount not to exceed $33,500,000, and approved a contingency of$2,680,000 (8%). ADDITIONAL INFORMATION The P1-100 project includes rehabilitation of 12 digesters (Digesters 5-16) at Plant No.1. These digesters were built between the years of 1959 and 1993. The project incurred added costs and schedule impacts for the cleaning and disposal of the residual material remaining in the digesters due to an unexpected higher concentration and volume of material. This condition was not known and could not have been anticipated until the digesters were shut down for cleaning under this project. Page 2 of 4 There have been significant additional costs incurred on this project due to unknown conditions. Rehabilitation work on the first pair of digesters (Digesters 7 and 8)started in April 2010, and due to the poor condition of the existing concrete, additional work was required to remove the existing liners, fix concrete cracks, and prepare the concrete surface for a new polyurethane coating. It was also determined that the existing PVC liners on the ceiling and walls of Digesters 9, 10, 11, 13, 15, and 16 were badly eroded by the mixing action of the digesters and needed to be repaired. The amount of PVC liner to be repaired exceeded the bid quantity in the project. Considering the project history to date, it is likely that the liners in Digesters 12 and 14 will also require significant repair. Other unknown conditions encountered to date include repairs required for the cable liner holes at Digesters 9 and 10; fixing leaks in the bottom of Digester 6; completion of manway repairs in Digester 10; replacement of valves at Digesters 11, 15, and 16 that could not be rehabilitated; and miscellaneous structural, mechanical, and electrical changes. It is anticipated that some of these unknown conditions will be present in the remaining digesters that have yet to be rehabilitated. Unknown conditions are a particularly large risk in digesters due to the harsh service conditions and the sealed nature of their operating environment. The large cost items generally have bid unit costs, but the quantities estimated in design were too low, especially concrete repair, material deposition, and lining system damage. The lessons learned in this project are being directly applied to the Sanitation District's future projects. The project has incurred roughly $7,752,355 of additional costs that corresponds to 93% of the approved contingency. A budget increase is being requested to cover the additional estimated change orders to complete the project and prevent potential delays to the construction contract. CEQA This project was included in the Secondary Treatment and Plant Improvement Project's Subsequent Environmental Impact Report(SEIR)to the 1999 Strategic Plan Program EIR prepared by Environmental Science Associates and certified on May 25, 2005. A Notice of Determination was filed on May 26, 2005. FINANCIAL CONSIDERATIONS This request complies with authority levels of the Sanitation District's Purchasing Ordinance. This item has been budgeted (FY2016-17 and 2017-18, Section 8, Page 49), however, the budget is insufficient for the recommended action. These funds will be allocated to the project from the Replacement, Rehabilitation, and Refurbishment line item in the cash flow projections, FY2016-17 and 2017-18, Section 4, Page 16. Page 3 of 4 Date of Approval Contract Amount Contingency 02/24/10 $33,500,000 $2,680,000 (8%) 02/27/13 $1,340,000 (4%) 12/17/14 $4,355,000 (13%) 10/28/16 $ 837,500 (2.5%) $9,212,500 (27.5%) ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: PowerPoint Presentation — Operations Committee Meeting 10/05/2016 AL:dm:gc Page 4 of 4 _. - r`."ter JS"�tRd•Lp _��u' .' - - - sli JP►` � 1{c_+ eta ! T�'��. I-wIiILL Y , SLUDGE DIGESTER REHABILITATION AT PLANT NO. 1 PROJECT P1 -100 Operations C • • • • 1 "' y � a� _ A • a Plant No . 1 Digesters Before P1 -100 & P1-101 Projects PRIMARY CLARIFIER DIGESTER BELT FILTER PRESSES CAKE CAKE © STORAGE LOADOUT DISSOLVEDAIR J1 ZSECONDARRYFLOTATIONTHICKENERS After P1 -100 & P1 -101 Projects PRIMARY THICKENING CLARIFIER CENTRIFUGE DIGESTER DEWATERNG CAKE CAKE CENTRIFUGESTORAGE LOA DOUT SECONDARY CLARIFIER NMI �m Plant No . 1 Digesters Digester Year Built Most Recent Cleaning Prior to P1-100 5 1959 N/A - Holding -- - - 6 1962 N/A - Holding3 = ' 7 1964 N/A — Emptyi 8 1970 N/A — Empty 9 1978 2003 _ 10 1978 2003 11 1993 2007 12 1993 2003 13 1993 2009 14 1993 2004 15 1993 2008 16 1993 2002 Project Challenges • Unknown and unanticipated conditions — Higher volume and concentration of sludge — Extensive PVC T-lock repairs at all digesters — Additional mechanical repairs and replacements — Concrete repairs inside digesters • Extra work resulted in delays with cost impacts — Delay mitigation or recovery was minimal due to sequenced schedule . 12/ 11 /2014 10 11 r - o�ro�Eianis i��a9 " `i. j ; Digester Cleaning & Sludge Removal q f s` ar • q I1 e � t— rIr 1 A II y Concrete Dome Repairs Oj .-7: �- • �30990ffi099 ',k7�7g Concrete Dome Repairs Exposed rebar showing possible severe corrosion ICA N • I ' A pocket of concrete where the rebar is exposed and corrosion is evident (moderate to severe). �+ Exposed Rebar at Digesters 0 - PVC T-lock Repairs Inside Digesters Unanticipated condition encountered at all digesters. PVC T-lock Repairs Inside Digesters Existing Piping Conditions r 4 Cone leak, Digester 16 Hole in mix pump suction Line, Digester 9 • � • • • • • 4xTCtFn���?� C ��^ R,1� Possible Future Unknown Conditions • Replacement valves in lieu of rehabilitation • Leak repair at existing pipes inside digesters • PVC T-lock repairs & scaffolding • Concrete crack and corrosion repairs • Manway corrosion repairs • Cleaning interior of existing piping Lessons Learned • Rehabilitate in smaller groups ( i . e. limit risk exposure) • Additional condition assessment during design • Consider end of life replacement vs rehabilitation • Clean on separate contracts if possible . If not possible, specify sludge removal carefully. • Replace equipment completely vs. rehabilitate or partial replacement. Recommended Action • Approve a budget increase of $500,000 for Sludge Digester Rehabilitation at Plant No.1, Project No. P1-100, for a total budget amount of $67,150,000; and • Approve a contingency increase of $837,500 (2.5%) to the construction contract with JR Filanc Construction Company for Sludge Digester Rehabilitation at Plant No. 1, Project No. P1-100, for a total contingency of $9,212,500 (27.5%). ADMINISTRATION COMMITTEE Meeting Dare TOBd.OfDir. 10/12/16 10/26/16 AGENDA REPORT emNumber Iem1umber 2 12 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Celia Chandler, Director of Human Resources SUBJECT: TEMPORARY EMPLOYMENT SERVICES GENERAL MANAGER'S RECOMMENDATION A. Authorize the General Manager to enter into contracts with various staffing firms for Temporary Employment Services (Specification No.CS-2009421 BD); and B. Authorize the General Manager to add or remove staffing firms from the available pool as needed, to meet work requirements identified by the Human Resources Department, with no change to the approved total budget, at a cost not to exceed $814,400. SUMMARY The Orange County Sanitation District's (Sanitation District) strategic plan includes utilizing full-time and part-time employees and, when needed, contract and temporary workers. This report specifically focuses on temporary workers who are utilized to supplement the regular workforce to accommodate workload demands and fluctuations. The Board approved the FY 2016-17 Operating Budget, allocating an amount not to exceed $814,400 for temporary staffing services. Every year, the General Manager requests Board approval to enter into agreements with various staffing firms for the purpose of meeting the Sanitation District's temporary staffing needs. The General Manager requests authorization to identify and select the staffing firms that will be utilized by the Sanitation District moving forward, without the need for additional Board approval, as long as the Board continues to allocate funds for temporary staffing services within the Operating Budget. BACKGROUND Temporary workers are hired,for a limited duration, through third-party staffing firms when regular employees are not available to cover for employee absences due to illness, vacation, and leave of absence; or for unforeseen circumstances such as increased work demands due to regulatory changes. In addition, temporary workers are also used for approved special projects and budgeted capital improvement projects (CIP)that are non- engineering related. Page 1 of 3 The cost of a temporary worker includes the worker's hourly rate in addition to a "mark- up" rate, which is payment to the staffing firm to cover the benefits provided to the temporary worker and overhead costs. The mark-up rates for the current staffing firms utilized by the Sanitation District range from 30% to 70%. The key advantage associated with temporary staffing is Flexibility, since temporary workers are used for adjusting staffing levels quickly and for a limited timeframe. RELEVANT STANDARDS • Ensure that the public's money is wisely spent PROBLEM Every year, the General Manager requests Board approval to enter into agreements with various staffing firms, which could change throughout the year, based on quality of service, caliber of candidates, and competitive rates. PROPOSED SOLUTION Authorize the General Manager to identify and select the staffing firms that will be utilized to meet the changing staffing needs of the Sanitation District. For FY 2016-17, the General Manager has identified a total of 11 staffing fines, 10 of which are currently utilized by the Sanitation District. The agencies are listed below: 1. Aerotek Inc.: (General, Engineering, Laboratory) 2. AppleOne Employment Services: (General) 3. Material and Contract Services - Procurement Services Associates: (Contract Services) 4. On Assignment Staffing Services- Lab Support: (Laboratory) 5. TEG Staffing: (Human Resources) 6. TekSvstems: (Technical) 7. Project Partners: (Technical) 8. Xvon Business Solutions: (Technical) 9. Robert Half, Inc. 10. Procurement Services Associates 11. Elwood Staffing* *Elwood Staffing is being added to the pool of staffing firms to be utilized by the Sanitation District in FY16/17. The Sanitation District anticipates utilizing additional staffing firms in the future to meet its organizational needs; therefore, staff is requesting authorization for the General Manager to enter into similar agreements with other staffing firms, as needed. HR staff interviews each staffing firm prior to entering into a contract for services to ensure administrative requirements are met for doing business with the Sanitation District. Purchasing staff works with the staffing firm to obtain the proper signatures and ensure all requirements Page 2 of 3 are met prior to entering into a contract with the Sanitation District. The contract includes specific information related to work hours, billing rates, invoicing and payment, confidentiality, etc. TIMING CONCERNS Board approval is necessary to ensure the Sanitation District meets its changing staffing needs and workload demands are met. RAMIFICATIONS OF NOT TAKING ACTION The Sanitation District will not have access to temporary staffing services to offset staffing needs that were not pre-planned during the budget process. PRIOR COMMITTEE/BOARD ACTIONS June 2016 — Board approved proposed FY 2016-17 and 2017-18 Budget, allocating $814,400 to temporary services. May 2014— Board approved entering into contracts for Temporary Employment Services (Specification No. CS-2009421 BD)with 12 temporary service firms for a total amount of $550,000 per year, for a one-year period (July 1, 2014 through June 30, 2015), with a one-year renewal option. ADDITIONAL INFORMATION N/A CEQA N/A FINANCIAL CONSIDERATIONS This request complies with authority levels of the Sanitation District's Purchasing Ordinance OCSD-47. This item has been budgeted in the FY 2016-17 approved budget. ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.corn with the complete agenda package: N/A Page 3 of 3 ADMINISTRATION COMMITTEE Meeting Date TOBE.Or .Dir. 10/12/16 10/26/16 AGENDA REPORT Item Item Number 3 13 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Celia Chandler, Director of Human Resources SUBJECT: DEFERRED COMPENSATION PROGRAM UPDATE GENERAL MANAGER'S RECOMMENDATION A. Adopt Resolution No. OCSD 16-18, entitled: "A Resolution of the Board of Directors of the Orange County Sanitation District Acknowledging the Change in Title of the Current Deferred Compensation Plan Administrator to Voya Financial Services and Authorizing Voya Financial Services to Continue Serving as Plan Administrator of the Deferred Compensation Plan for Officers and Employees of the Orange County Sanitation District; and, Repealing Resolution No. OCSD 09-02"; and B. Authorize the General Manager, or his designee, to execute all documents necessary to effect said Deferred Compensation Plan, in a form approved by General Counsel. SUMMARY Voya Financial Services, formerly known as ING Financial Services, changed its name in 2014, and continued to act as agents or advisors for the purpose of administering the Orange County Sanitation District's (Sanitation District) Deferred Compensation Plan. The Sanitation District administers the program on behalf of the employees; however, all plan fees are paid by the participants. The purpose of the report is to request Board approval to adopt Resolution No. OCSD 16-XX, which accurately reflects the name of the firm that currently holds the Sanitation District's deferred compensation assets. BACKGROUND In 2009, the Board approved the transfer of the Sanitation District's Deferred Compensation Plan (Plan) assets from three incumbent providers (AIG Retirement Company, Lincoln Financial Group, ICMA-RC) to ING Financial Services following a competitive process, for the purpose of achieving plan enhancements and participant savings. The move to a single-provider platform reduced the Plan's costs and increased the expected net return on participant investments, as anticipated. RELEVANT STANDARDS Protection of Orange County Sanitation District assets Page 1 of 2 PROBLEM Resolution No. OCSD 09-02, previously approved by the Board, does not accurately reflect the name of the firm holding the Sanitation District's deferred compensation assets. PROPOSED SOLUTION Adopt Resolution No. OCSD 16-18 as described in this report to ensure an accurate record of official Sanitation District documents. PRIOR COMMITTEE/BOARD ACTIONS March 2009 - Resolution No. OCSD 09-02 - Approved a Deferred Compensation Plan with ING Financial Services for Officers and Employees of Orange County Sanitation District, and Repealing Resolution Nos. OCSD 03-27 and 05-27. November 2005 - Resolution No. OCSD 05-27 - Amended the Deferred Compensation Plan to include a mandatory cash-out provision for Officers and Employees of OCSD. November 2003 - Resolution No. OCSD 03-27 - Amended the Deferred Compensation plan to authorize the Plan Administrator, or her designee, to execute, on behalf of the District, any and all documents necessary to effect the District's Deferred Compensation Plan Loan Program. May 2003 - Resolution No. OCSD 03-10 -Amended the Deferred Compensation plan to include a loan provision. July 2002 - Resolution No. OCSD 02-12 - Amended the Deferred Compensation plan to comply with amendments to the Economic Growth and Tax Relief Reconciliation Act of 2001. July 1998 - Resolution No. OCSD 98-36 - Reaffirmed Resolutions 94-39, 95-80, 98-07, and 98-20 consolidating County Sanitation Districts Nos. 1, 2, 3, 5, 6, 7, 11, 13, and 14 into a single District; approved and adopted the OCSD Deferred Compensation plan. ATTACHMENT The following attachment(s)are included in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: • Resolution No. OCSD 16-18 • Voya Financial Services Contract Amendment 2 Page 2 of 2 RESOLUTION NO. OCSD 16-18 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT ACKNOWLEDGING THE CHANGE IN TITLE OF THE CURRENT DEFERRED COMPENSATION PLAN ADMINISTRATOR TO VOYA FINANCIAL SERVICES AND AUTHORIZING VOYA FINANCIAL SERVICES TO CONTINUE SERVING AS PLAN ADMINISTRATOR OF THE DEFERRED COMPENSATION PLAN FOR OFFICERS AND EMPLOYEES OF THE ORANGE COUNTY SANITATION DISTRICT; AND, REPEALING RESOLUTION NO. OCSD 09-02. WHEREAS, the Orange County Sanitation District Deferred Compensation Plan was most recently amended by Resolution No. OCSD 09-02, adopted by the District's Board of Directors on March 25, 2009, and which repealed prior Resolution Nos. 03-27 and 05-27; WHEREAS, as the result of numerous legislative and regulatory changes increasing the scope of the District's fiduciary responsibilities as an employer in the administration of deferred compensation plans, OCSD requested proposals in 2008, for plan administrators to act as agents or advisors for the purpose of implementing and administering the District's Deferred Compensation Plan; and WHEREAS, the Board of Directors appointed ING Financial Services in 2009 to act as agents or advisors for the purpose of implementing and administering the District's Deferred Compensation Plan; and WHEREAS, ING Financial Services changed its name to Voya Financial Services in 2014 without affecting any substantive changes to the scope of services it provided as plan administrator for the District's Deferred Compensation Plan; and WHEREAS, the assets in the Existing Plan, as amended, are currently held with Voya Financial Services. NOW, THEREFORE, the Board of Directors of the Orange County Sanitation District DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1. All of the recitals herein contained are true and correct and the Board of Directors of the District so finds. Section 2. The Orange County Sanitation District Deferred Compensation Plan, as setforth in Exhibit'A"attached hereto and incorporated herein by reference as though set forth herein at length, is hereby adopted, as the new Deferred Compensation Plan of the District, superseding all previous plans and amendments of the District, and shall remain in effect until amended or terminated by Resolution of the Board of Directors. 1 t94905.t OCSD 16-18-1 Section 3. The District's General Manager, or his designee, is hereby authorized to appoint or employ the services of Voya Financial Services to continue acting as agents or advisors for the purpose of implementing and administering the District's Deferred Compensation Plan. Section 4. The District's General Manager, or his designee, is hereby authorized to execute, on behalf of the District, any and all documents necessary to effect the new Deferred Compensation Plan, with the approval as to form by the District's General Counsel. Section 5. Resolution No. OCSD 09-02 is hereby repealed. Section 6. This Resolution shall take effect immediately upon its adoption. PASSED AND ADOPTED at a regular meeting of the Board of Directors held on October 26, 2016. John Nielsen Board Chairman ATTEST: Kelly A. Lore Clerk of the Board APPROVED: Bradley R. Hogin General Counsel t t94905.1 OCSD 16-18-2 STATE OF CALIFORNIA ) ss COUNTY OF ORANGE ) I, Kelly A. Lore, Clerk of the Board of Directors of the Orange County Sanitation District, do hereby certify that the foregoing Resolution No. OCSD 16-18 was passed and adopted at a regular meeting of said Board on the 261h day of October, 2016, by the following vote, to wit: AYES: NOES: ABSTENTIONS: ABSENT: IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of Orange County Sanitation District this 261h day of October, 2016. Kelly A. Lore Clerk of the Board of Directors Orange County Sanitation District t t94905.1 OCSD 16-18-3 Monica McGill Contract Consultant May 31,2016 Ms. Ann Cratton Principal Financial Analyst Orange County Sanitation District 10844 Ellis Avenue Fountain Valley,CA 92708-7018 Re: VOYA RETIREMENT INSURANCE AND ANNUITY COMPANY VOYA INSTITUTIONAL TRUST COMPANY AS TRUSTEE OF THE ORANGE COUNTY SANITATION DISTRICT 457(b)DEFERRED COMPENSATION PLAN Contract: MCA-60284 Enclosed is a fully-executed copy of Amendment 2 for the Orange County contract. Please retain for your files. If you have any questions or concerns please contact me at(860)580-2823 or via email at Mon ica.McGi I I Coy voya.c o m. Thank you for your attention to this matter. Sincerely, Monica A.McGill One Orange Way-C28 Windsor,CT 06095-4774 Tel.: 860-590-2823 Fax: 860-580-2197 Email: Monica.McGi11@voyaxom RETIREMENT I INVESTMENTS I INSURANCE V o w voyayom FINANCIAL California Consumer Notice Important Information to Contract Holders When you have any questions or problems concerning your insurance,or want to make any changes,your Voya representative or agent will be glad to help you.You may contact the insurance company issuing this contract at the following address and telephone number: Voya Retirement Insurance and Annuity Company One Orange Way Windsor,CT 06095-4774 Telephone: 1-800-654-8065 If you have contacted you agent or representative and for some reason,a satisfactory solution to the problem has not been reached, you may seek assistance from the California Department of Insurance. Please write or call: 1.800-927-HELP Consumer Affairs Department of Insurance 300 South Spring Street Los Angeles,CA 90013 CA-NOT(11-00) NOTICE OF PROTECTION PROVIDED BY CALIFORNIA LIFE AND HEALTH INSURANCE GUARANTEE ASSOCIATION This notice provides a brief summary regarding the protections provided to policyholders by the California Life and Health Insurance Guarantee Association("the Association").The purpose of the Association is to assure that policyholders will be protected,within certain limits, in the unlikely event that a member insurer of the Association becomes financially unable to meet its obligations. Insurance companies licensed in California to sell life insurance, health insurance,annuities and structured settlement annuities are members of the Association.The protection provided by the Association is not unlimited and is not a substitute for consumers'care in selecting insurers.This protection was created under California law,which determines who and what is covered and the amounts of coverage. Below is a brief summary of the coverages, exclusions and limits provided by the Association. This summary does not cover all provisions of the law;nor does it in any way change anyone's rights or obligations or the rights or obligations of the Association. COVERAGE Persons Covered Generally,an individual is covered by the Association if the Insurer was a member of the Association and the individual lives in California at the time the insurer is determined by a court to be insolvent. Coverage is also provided to policy beneficiaries,payees or assignees,whether or not they live in California. Amounts of Coveraee The basic coverage protections provided by the Association are as follows. Life Insurance.Annuities and Structured Settlement Annuities For life insurance policies, annuities and structured settlement annuities,the Association will provide the following: Life Insurance 80%of death benefits but not to exceed$300,000 80%of cash surrender or withdrawal values but not to exceed$100,000 Annuities and Structured Settlement Annuities 80%of the present value of annuity benefits, including net cash withdrawal and net cash surrender values but not to exceed$250,000 The maximum amount of protection provided by the Association to an individual,for ell insurance,annuities and structured settlement annuities is$300,000, regardless of the number of policies or contracts covering the individual. Health Insurance The maximum amount of protection provided by the Association to an individual, as of April 1, 2011. is $470,125. This amount will increase or decrease based upon changes In the health care cost component of the consumer price index to the date on which an insurer becomes an insolvent insurer. 115586-CA(9-11) COVERAGE LIMITATIONS AND EXCLUSIONS FROM COVERAGE The Association may not provide coverage for this policy.Coverage by the Association generally requires residency in _ California. You should not rely on coverage by the Association in selecting an insurance company or in selecting an insurance policy. The fallowing policies and persons are among those that are excluded from Association coverage: A policy or contract issued by an insurer that was not authorized to do business in California when it issued the policy or contract. A policy issued by a health care service plan(HMO), a hospital or medical service organization,a charitable organization, a fraternal benefit society, a mandatory stale pooling plan,a mutual assessment company, an insurance exchange, or a grants and annuities society. If the person is provided coverage by the guaranty association of another stale. Unallocated annuity contracts:that is, contracts which are not issued to and owned by an individual and which do not guaranty annuity benefits to an individual. Employer and association plans,to the extent they are self-funded or uninsured. A policy or contract providing any health care benefits under Medicare Part C or Part D. An annuity issued by an organization that is only licensed to issue charitable gift annuities. Any policy or portion of a policy which is not guaranteed by the insurer or for which the individual has assumed the risk,sych as certain investment elements of a variable life insurance policy or a variable annuity contract. Any policy of reinsurance unless an assumption certificate was issued. Interest rate yields(including implied yields)that exceed limits that are specified in Insurance Code Section 1607.02(b)(2)(C). NOTICES Insurance companies or their agents are required by law to give or send you this notice. Policyholders with additional questions should first contact their insurer or agent.To learn more about coverages provided by the Association, please visit the Association's websile at www.califega.org.or contact either of the following: California Life and Health Insurance California Department of Insurance Guarantee Association Consumer Communications Bureau P.O. Box 16860 300 South Spring Street Beverly Hills, CA 90209-3319 Los Angeles,CA 90013 (323)782-0182 (800)927-4357 Insurance companies and agents are not allowed by Callfornia law to use the existence of the Association or Its coverage to solicit,Induce or encourage you to purchase any form of insurance.When selecting an Insurance company, you should not rely on Association coverage.If there is any Inconsistency between this notice and California law, then California law will control. 11 5586-CA(9-11) This contract is amended and restated effective as of Contract Amendment 2 May 1,2016. When you sign this restatement, it will replace all prior versions of your contract. Contracdtolder: ING NATIONAL TRUST AS TRUSTEE OF THE All references to the name of the Contractholder are ORANGE COUNTY SANITATION DISTRICT changed from ING NATIONAL TRUST AS 457(b)DEFERRED COMPENSATION PLAN TRUSTEE OF THE ORANGE COUNTY SANITATION DISTRICT 457(b)DEFERRED Contract Document Number: COMPENSATION PLAN to VOYA ST-60294 INSTITUTIONAL TRUST COMPANY AS TRUSTEE OF THE ORANGE COUNTY SANITATION DISTRICT 457(b)DEFERRED COMPENSATION PLAN. THE VALUE OF THE SEPARATE ACCOUNT(S) DESCRIBED IN THIS CONTRACT,AS AMENDED,IS SUBJECT TO CHANGE AND WILL VARY BOTH UP AND DOWN IN ACCORDANCE WITH THE INVESTMENT RESULTS OF THE ACCOUNT(S)AND IS NOT GUARANTEED AS TO FIXED DOLLAR AMOUNTS. Voya Retirement Insurance and Annuity Company has signed this restatement at its Home Office,One Orange Way,Windsor,Connecticut 06095,on April 211,,20016 Charles P.Nelson,President 9...Idc. A. (91 -- Jennifer M.Ogren,Secretary Restatement Accepted: VOYA INSTITUT N TRUST COMPANY Date: f�cs u!6 By: } Name: /�— Title: Vsce ffv tkk't- ORANGE COUNTY SANITATION DISTRICT Date: % By: 1 wbt✓ Name: LV� C.v.Lu Ty Nr-4t- VOYA, Title: 0%1-,cArw ST,AFP(SV4 Pawl sr-emea This page,the following pages and the application are StabilizersM Contract the entire contract. A group annuity contract issued by Voya Retirement You acknowledge that you have read and understand Insurance and Annuity Company to: this contract and that,by completing an application, VOYA INSTITUTIONAL TRUST COMPANY AS you have agreed to make deposits to this contract. TRUSTEE OF THE ORANGE COUNTY Your application and any other writings acceptable to SANITATION DISTRICT 457(b)DEFERRED us,in which you agree to make deposits,are part of COMPENSATION PLAN this contract. Contract Effective Date: This contract is delivered in California. July 16,2009 THE VALUE OF THE SEPARATE ACCOUNT(S) Contract Document Number: DESCRIBED QI THIS CONTRACT IS SUBJECT ST-60284 TO CHANGE AND WILL VARY BOTH UP AND DOWN IN ACCORDANCE WITH THE INVESTMENT RESULTS OF THE ACCOUNT(S) AND IS NOT GUARANTEED AS TO FIXED DOLLAR AMOUNTS. Voya Retirement Insurance and Annuity Company has signed this contract at its Home Office,One Orange Way,Windsor,Connecticut 06095 on April 21,2016. oi�t Charles P.Nelson,President 9..4 A. O1.,- Jennifer M.Ogren,Secretary VOYA. ST(M Pals+ Sr-61M Table of Contents 1. Definitions Definitions...................................................................2 Parties to this Contract Operation of the Contract............................................4 1.1. Voya is Voya Retirement Insurance and Discontinuance............................................................7 Annuity Company. Wherever"we," I'm"or "our"is used in this contract,it means Voya. Amendments................................................................8 1.2. Contractholder is the holder of this contract Annuities.....................................................................9 named on the face page. Wherever"you"or "your"is used in this contract,it means the Fees............................................................................10 Contractholder. When this contract provides General Matters.........................................................10 that we will make a payment to you,the payment will be made to you if you are a tmstee of the Plan;otherwise,we will pay the Term Schedule(s)/Exhibit(s) Plan funding agent you designate. Other Defined Terms 1.3. Annuity is a Member's periodic benefit that you may direct us to purchase under this contract. 1.4. Benefit Withdrawals are withdrawals(other than Contmctholder Withdrawals as described in the Operation of the Contract section of this contract)made in accordance with your Plan and this contract for: (a)Member-initiated withdrawals; (b)Member-directed transfers of their account balances between Investment Options; (c)loans to Members;or (d)Annuity purchases. Benefit Withdrawals must meet the conditions in the Operation of the Contract section. 1.5. Book Yalue Settlement Phase is the phase this contract enters following its total discontinuance if you elect to receive the balance of the Interest Accumulation Fund subject to the terms described in the attached Book Value Settlement Exhibit. 1.6. Business Day is any day both we and the financial markets are open for business. 1.7. Code is the Internal Revenue Code of 1986,as amended,or any successor to it. PagD7 st-ew 1.8. Competing Investment Option is any 1.15. Immediate Credited Rate is our calculation of Investment Option(other than the one using what the effective annual rate of interest this contract or such other Investment Options determined according to the Credited Rate as we tray from time to time designate as Determination Exhibit would be,assuming the competing in accordance with our next Credited Rate Period were to commence underwriting standards)which is invested in immediately. money market imm meats,repurchase 1.16. Interest Accumulation Fund is an accounting agreements,guaranteed investment contracts, record we maintain under this contract for or investments offering a fixed rate of return, amounts allocated to a Separate Account, or any Investment Option having a targeted reflecting deposits received,withdrawals you duration of less than three(3)years. make,fees charged,plus interest at the 1.9. Contractholder Withdrawals are any Credited Rate and other adjustments. This withdrawals you make which are not Benefit account may be used by you for Plan Withdrawals. moordkeeping and communications. 1.10. Credited Rare is the effective annual rate of 1.17. Investment Option is any facility used for interest we periodically announce for this Member-directed investment of account contract and which is credited to the Interest balances. If the Plan does not have Accumulation Fund. Unless we agree Investment Options,then a reference to an otherwise,it is effective as of the first day of a Investment Option means all Plan funds. Credited Rate Period. 1.18. Member is a participant in the Plan,or any 1.11. Credited Rate Period is the period of time for person deriving his rights from such which the Credited Rate is applicable. It is an participant. A Member has no rights or annual,semiannual or quarterly period as obligations under this contract,except as directed by you or such shorter period as may specifically stated. be required during the Book Value Settlement 1.19. Plan is the Orange County Sanitation District Phase. 457(b)Deferred Compensation Plan. You 1.12. Deposit Agreement is your written must give us a copy of the Plan upon entering commitment,on a form acceptable to us,to into this contract. We are not a party to the make deposits. The Deposit Agreement is a Plan. part of the contract. 120. A Separate Account is a segregated asset 1.13. Eligible Assets are all Plan assets if Members account we established under Connecticut do not have the option to direct investment of law. A Separate Account may have amounts their account balances among various Plan allocated to it on a pooled basis. investment facilities. If Members have such 1.21. Separate Account Balance is an accounting an option,Eligible Assets are all Plan record we maintain to reflect the fair market investments allocated to the Investment value of your pro rats share of a Separate th cn which includes amounts held under Account. this s contract. 1.14. Employer is any corporation,partnership, 122. Term Schedule is an attachment to this proprietorship or other entity whose contract describing the terms applicable to a employees may participate in the Plan. Separate Account you use to support the Interest Accumulation Fund. Pages sr20284 2. Operation of the Contract Deposits 2.5. The balance of the Interest Accumulation 2.1. You agree to make deposits to this contract at Fund is an amount equal to the termination such times,in such amounts and under such value of the predecessor investment vehicle conditions as mutually agreed to in the from which deposits to this contract were paid Deposit Agreement. We are obligated to as proceeds,plus any additional Plan deposits accept only those deposits you are committed plus interest,less any withdrawals, less any to make,except as follows: adjustment made in connection with an Contructholder Withdrawal,and less any fees (a)We may stop accepting deposits under the or expenses that are deducted from time to current Deposit Agreement if an action you time. take causes a reason for discontinuance to 2.6. If you request,we can establish multiple arise under the Discontinuance Section. accounts for Plan recordke eP 6 m purposes. If (b)We may refuse to accept deposits under art additional account has its own Credited any renewal Deposit Agreement. If we refuse Rate,it is treated as a distinct Interest to accept deposits under a renewal Deposit Accumulation Fund. Agreement,we will give you 30 days advance 2.7. Amounts in a Separate Account are invested written notice. consistent with the investment objectives we 2.2. Deposits received by us are allocated to the set for that Separate Account. The Separate Account(s)in which you choose to investments and operation of a Separate participate. Deposits are subject to any Account are also subject to any rules and conditions or limitations in the Term Schedule limitations established by our Board of for that Separate Account. Unless otherwise Directors or its duly authorized committee. agreed,deposits are made by wire transfer. 2.8. The value of a Separate Account is the fair Operation of the Fund market value of investments in the Separate 2.3. As of the contract effective date and at least Account plus cash balances and accruals,less 30 days prior to each Credited Rate Period,or liabilities,in accordance with such methods as such shorter period as may be required during are described in the Term Schedule or as we the Book Value Settlement Phase, we will may adopt from time to time. Income and notify you of the rate to be credited to the gains or losses,realized or unrealized,are Interest Accumulation Food for that period. credited or charged directly to a Separate Interest is credited on a daily basis. Account. The values determined may decrease or increase according to such 2.4. The Credited Rate is determined by us. It procedure. A Separate Account is charged reflects our assumptions as to your deposits with expenses arising from the operation of and withdrawals to this contract and the the account,including taxes,brokerage investment results of the Separate Account. It commissions and other costs. also reflects an adjustment for differences between the balance of the Interest 2.9. Yom pro rata share of a Separate Account Accumulation Fund and the Separate Account increases when you make a deposit or when Balance. The formula we currently use to others participating in the Separate Account determine this contract's Credited Rate is make withdrawals. Your share decreases described in the attached Credited Rate when you make a withdrawal or when others Determination Exhibit. participating make deposits. Pa9B4 9r6PB4 2.10. The assets in a Separate Account are not 2.15. This contract follows a LIFO/pro rata chargeable with liabilities arising out of any of withdrawal order. If all Eligible Assets are our other business. We own the investments being held under this contract,the Plan held in a Separate Account. We are not a agrees to pay all amounts needed for Benefit trustee of such assets. Withdrawals from this contract. If all 2.11. Unless the Term Schedule specifies otherwise, Eligible Assets are not being held under this we may discontinue the use or availability of contract,the Plan agrees to pay all amounts any Separate Account(other than any needed for Benefit Withdrawals from the Separate Account you use during the Book investment vehicle receiving then torten[ Value Settlement Phase). At your direction, Plan fixed fund deposits as long as that we will transfer your Separate Account investment vehicle has Eligible Assets. The Balance to another of our investment facilities term"Plan fixed food deposits" includes or pay such value to you as a Contractholder amounts received by the Plan in the form of Withdrawal. interest payments and proceeds resulting from the maturity or termination of other 2.12. At least annually,we will send you financial Plan investment vehicles that are reinvested statements. by the Plan. If more than one investment Benefit Withdrawals vehicle is receiving then current Plan fixed fund deposits,the Plan agrees to make 2.13. If the Plan has a Competing Investment withdrawals from such investment vehicles Option,Benefit Withdrawals to effect according to their pro raft share of Benefit Member-directed transfers of their account Withdrawals(pro rata share,for this purpose, balances between Investment Options may be equals the total amount needed for Benefit made only if: Withdrawals times the percentage of current (a) the transfers are not made from the fixed fund deposits being directed to each Investment Option that includes amounts held contract from which Benefit Withdrawals are under this contract and to any Competing to be paid). If the investment vehicle(s) Investment Option;or receiving then current Plan fixed fond deposits has no Eligible Assets,the Plan (b) the Plan requires that the amount agrees to make withdrawals from this transferred from the Investment Option that contract equal to this contract's pro rata share includes amounts held under this contract of Benefit Withdrawals(pro ram share,for remain invested in non-Competing Investment this purpose,equals the total amount needed Options for 90 days before being eligible for by the Plan for Benefit Withdrawals times transfer to a Competing Investment Option. the ratio of the Interest Accumulation Fund 2.14. If the Plan permits loans,amounts needed to to the total amount of Eligible Assets). meet Member loan requests are considered 2.16. We can require reasonable proof that Benefit Benefit Withdrawals. The loan must meet the Withdrawals are being made in accordance requirements of section 72(p)(2)of the Code with the Plan and this contract. and,if applicable,section 4975(d)of the Code and section 408(b)(1)of the Employee 2.17. Subject to the withdrawal deferral provision in Retirement Income Security Act of 1974,as the General Matters section of this contract, amended(ERISA). payments are normally made within 30 Business Days alter our receipt of all necessary information or proofs. Pansy SfE07B4 2.18. Benefit Withdrawals are not subject to any 2.24. Subject to the withdrawal deferral provision in market value adjustment. They are deducted the General Matters section of this contract, from the balance of the Interest Accumulation Contractholder Withdrawal requests are Fund and the Separate Account Balance. normally honored promptly,taking into 2.19. Benefit Withdrawals may not exceed the account the character of the investments in the balance in the Interest Accumulation Fund. Separate Account and reasonable business and settlement practices. 2.20. Any withdrawal not eligible for treatment as a 2.25. In connection with any Contractholder Benefit Withdrawal must be withdrawn as a Contractholder Withdrawal. Withdrawal,the balance of the Interest Accumulation Fund is reduced by an amount 2.21. You most promptly give us a description of equal to the payment made times the ratio of any proposed amendment to the Plan. You the balance of the Interest Accumulation Food most also give us a copy of all Plan to the Separate Account Balance. amendments actually adopted. We will add 2.26. Member-initiated withdrawal or transfer these amendments to our copy of the Plan,but we can advise you that we will not alter our requests,directly or indirectly arising out of administration of this contract to comply with corporate actions such as b rate relocations, any Plan amendment which we detemdne may spinoffs,divestitures,incentive programs, relocations, otherwise directly or indirectly have a layoffs,retirement incentive programs, the material adverse effect on our obligations to creation of a Competing Investment Option, you partial or total Plan terminations,or the libemlimtion of Plan withdrawal or transfer 2.22. If,at any time(including any notice period rules,are all Contractholder Withdrawals. preceding a discontinuance of the contract), Such payments are not treated as Benefit we calculate the Immediate Credited Rate to Withdrawals,but as a partial discontinuance be 3%or less and the ratio of the contract's of this contract. Separate Account Balance divided by the Interest Accumulation Fund is less than 95%, 2.27. ContWith our consent,you may elect to treat a then Benefit Withdrawals are not available to Withdrawal if Withdrawal as a Benefit effect either loans to Members or Member- directed transfers between Investment under this section and the Benefit Options. We will notify you promptly that Withdrawals section over ono continuous 12- such action has occurred. month period is less than 20/of the Interest Accumulation Fond balance at the start of that Contractholder Withdrawals period. 2.23. You may withdraw all or a part of your 2.28. Subject to our underwriting requirements and Separate Account Balance. Your Separate approval,we may allow you to transfer your Account Balance is determined as of the Separate Account Balance to another Separate payment date if there is cash available in the Account. This transfer may affect the Separate Account. If no cash is available this Credited Rate. value is detemiined on the date we make any transactions necessary to raise cash to pay your withdrawal request. In no event may you withdraw more than the value of your Separate Account Balance. The Term Schedule for a Separate Account may limit the timing of receipt of amounts from the account. P.g96 STOM84 3. Discontinuance 3.1. You may discontinue this contract by giving (i)We elect to discontinue accepting deposits us 30 days written notice. A discontinuance for all contracts of this class. may be total or may be for a group of 0)Employees of an Employer are no longer Members(a"partial discontinuance"). The eligible to participate in the Plan. (Any such discontinuance is effective on the later of: discontinuance affects only those ineligible (a)the date specified in your notice,or employees.) (b)30 days after we receive your notice. (k)A change in applicable laws and 3.2. We may discontinue this contract,either regulations(including tax laws and totally or partially,by giving you 90 days regulations)which materially affects the notice. taxation of this contract or Separate Account, or otherwise materially affects our obligations 3.3. We may discontinue this contract,either hereunder. totally or partially,after a reason for discontinuance occurs. We will give you 45 3.5. The contract automatically discontinues if,at days written notice. any time,we calculate the Immediate Credited Rate to be 3/or less and the ratio of the 3.4. Reasons for our discontinuance are: contract's Separate Account Balance divided (a)You fail to meet any of your obligations by the Interest Accumulation Fund is less than under this contract or under any related 95%. We give you at least 30 days notice of agreement. such a discontinuance. (b)All amounts under this contract are 3.6. We will pay all available funds to you as withdrawn. follows: (c)The Plan is no longer a qualified plan (a)In the case of a total discontinuance,you under the Code. will direct us to pay you: (d)The Plan is terminated. (i)your Separate Account Balance; or (e)You no longer have any obligations under (ii)the balance of the Interest the Plan Accumulation Food,subject to the terms described in the attached Book Value (f)Any action is taken by you,the plan Settlement Exhibit. sponsor,or other plan official,which: (b)In the case of a partial discontinuance,you (i)creates a Competing Investment Option; will: or (i)direct us under item(a)to pay the (ii)significantly liberalizes,as determined appropriate portion of this contract's value by us,the Plan withdrawal or transfer to Members or the funding agent of a rights of Members;or successor plan;or (iii)materially affects our rights and (ii)request us to issue a new contract to obligations under this contract. the plan sponsor or funding agent of a (g)You,without our written agreement, successor plan. attempt to assign your interest in this contract. (h)You reject an amendment to this contract proposed by us under the Amendments section. 4. Amendments (c)If you do not give us a direction under item (a)within 30 days following the date the 4.1. This contract may be amended by mutual discontinuance is effective,we may pay you agreement. the balance of the Interest Accumulation Ford,subject to the terms described in the 4.2. We may amend any provision of this contract attached Book Value Settlement Exhibit. to comply with applicable laws or regulations Payment order this item fully discharges all of without your consent. our obligations under this contract with 4.3. We may propose other amendments that are respect to both the Interest Accumulation effective 30 days after we give you written Food and the Separate Account Balance. notice of the change. You may reject our (d)Any contract issued upon a partial proposed change by giving us written notice discontinuance of this contract is subject to before it becomes effective. any terns and conditions mutually agreed to 4.4. No amendment to this contract may: and is conditioned upon satisfaction of our reasonable underwriting mles and the securing (a)revoke your right to withdraw amounts of any necessary regulatory approvals. held under this contract. All withdrawals 3.7. Unless you elect to directly pay any due or follow the rules in effect when we receive your request. accrued expense fee at discontinuance,we may deduct the appropriate amount from (b)reduce the amount or change the terns of amounts paid or traosfered out of the any Annuity you have purchased,unless Separate Account. required by applicable laws. 3.8. Payments or transfers upon discontinuance are 4.5. Unless otherwise provided in the Term subject to any limitations or restrictions that Schedule,we may modify any Tenn Schedule appear elsewhere in this contract. by giving you 30 days notice. We may also modify the exhibits. The exhibit states 3.9. You may not make deposits to this contract requirements for making such changes. after discontinuance. 3.10. Annuities purchased prior to discontinuance are not affected by discontinuance. 3.11. We will continue to provide any services necessary to fulfill our obligations or to transfer such responsibility to a successor. You agree to pay us for such services. Pages Sr-Ow 5. Annuities Annuity Purchase Rules annuitant's adjusted age is his or her age as of 5.1. You may direct us to purchase Annuities with the birthday closest to the Annuity effective amounts held under this contract at any time. date reduced by two years for Annuity Any Annuities you purchase are subject to our effective dates occurring during the period of regular practices. You agree to provide us time from January 1,2000 through December with whatever information or application we 31,2009.The annuitant's and second require annuitant's age will be reduced by one additional year for Annuity effective dates 5.2. You may specify the requested Annuity occurring in each succeeding decade. effective date and any form of Annuity we regularly offer under contracts of this class. Interest: 1.50% The Annuity form determines payments to be 5.10. If,when you purchase an Annuity,a more made upon death. favorable premium rate basis is in effect for 5.3. The Annuity effective date is usually the first the Annuity you are purchasing,we use the day of the month coinciding with or next more favorable basis. following the date you request. 5,11. We guarantee your initial minimum annuity 5.4. The minimum amount of Annuity you may premium rate basis through December 31, purchase is$75 per month. We may change 2009. Unless,prior to a guarantee expiration this amount by notifying you. date,we notify you in writing of a new guarantee basis,the current guarantee basis is 5.5. An Annuity may not be revoked,and the automatically extended for an additional three premium,form orjoint annuitant may not be years. changed,after the Annuity effective date. If the Member or his joint annuitant dies before °en1 Annuity Provisions the Annuity effective date,the Annuity is not 5.12. If we are uncertain whether a payee of a life purchased. Any premium we receive is contingent Annuity is alive,we have no returned as you direct. obligation to make any Annuity payment 5.6. Annuities ate subject to my lintitatiow in the unless,within seven years after the payment Plan required by applicable laws or due date,we receive proof from you or the regulations. Plan administrator that the payee was living on that date. If we do not receive proof,our Annuity Purchase Rates obligations pertaining to that payment and 5.7. If you specify the gross premium,we later payments are the same as if the payee determine the Annuity amount using the had died immediately before that payment due Annuity net premium rate then in effect. date. 5.8. The Annuity purchase rate is based on a net 5.13. Annuity payments are made to the Member. If premium. The net premium equals the gross we have on to believe a payee is legally premium,less any applicable premium tax. in minion of giving a valid receipt for any Annuity payment,we may make the payment to 5.9. The initial minimum premium rate basis in any payee permissible under the Plan. Such effect for this contract is: payment discharges our obligation for the Mortality: 1983 Table a. For purposes of Annuity payment. calculating the initial minimum premium rate, 5.14. Certificates we issue include the terms and the annuitant's and second annuitant's adjusted restrictions we believe are in compliance with age will be used.The annuitant's and second applicable laws or regulations. Papa ST-ew 6. Fees 7. General Matters 6.1. Fees are payable as described in the Fee Exhibit 7.1. All agreements,notices or other communication or as otherwise agreed. required by this contract must be in writing. 6.2. Any fee we bill you is payable within 31 days of Notices to us are effective when we receive them the billing date. If we do not receive prompt at the address designated by us. Notices to you payment,we may deduct the unpaid fees plus are effective when sent. One of our duly reasonable interest from the contract or from authorized officers most sign all our agreements. payments due you. 7.2. Any error in making payments or kceping any records pertaining to this contract may be corrected by us. 7.3. Any provision of this contract which we may have waived on one occasion may continue to be enforced by us. 7.4. No interest in this contract may be assigned without our prior written consent. 7.5. You may name,by notice to us,an agent to act for you in matters conceming this contract. The agent will have all your rights,powers and duties in such matters. 7.6. You are responsible for determining the proper accounting for this contract by the Plan. 7.7. You will provide us with satisfactory evidence that the Plan is a qualified plan under the Code. You will notify us promptly if the Plan fails to meet these requirements. 7.8. You(and any person you name responsible for directing Plan investments)are solely responsible for determining whether this contract is a suitable Plan funding vehicle and in making that determination have taken into consideration the Plan investment objectives,including its liquidity and diversification needs. 7.9. We may take my reasonable action,as permitted by this contract,that we determine is appropriate to assure that any of our contractual obligations are adequately supported. 7.10. We are not chargeable with knowledge of the terms of any trust agreement. 7.11. We are not responsible for reconciling Member statements to the contract. P.@aw 6T100281 7.12. We acknowledge that,if the Plan is subject to the Employee Retirement Income Security Act of 1974,as amended (ERISA),we are acting as an investment manager and are a fiduciary,as defined in section 3(38)of ERISA,solely with respect to the management of Plan funds held in a Separate Account. In all other respects,in exercising our rights,we represent ourselves and not the Plan. 7.13. We may defer honoring any withdrawal request or other payment obligation if,due to the closing or other disruption of financial markets or exchanges,we are unable to prudently execute or settle transactions on behalf of a Separate Account.Such deferral generally will be limited to the period of the market disruption. We may also defer honoring any withdrawal request for the period of time necessary to prudently liquidate assets to satisfy such request. Withdrawals may be subject to my other limitations described in the Term Schedules. 7.14. We are not obligated to detemtine whether any payment is made in accordance with the terms of the Plan or any applicable law or regulation. 7.15. If you use more than one Separate Account under this contract,we will normally establish a distinct Interest Accumulation Fund with respect to each account used. Unless we agree otherwise,this comracfs terms,including those pertaining to the Credited Rate,apply separately to each Separate Account and its associated Interest Accumulation Fond. page 11 SI6ra31 Term Schedule Quality Fund II Quality Fund ll is a pooled long-term public bond SA-392 Separate Account. Account investments consist primarily of a diversified portfolio of United States Treasury and agency securities,mortgage pass- Stabilizer Contract: through and other asset backed securities and other ST—60284 publicly traded investment grade debt securities. The portfolio is managed to match the investment duration of the Barclays Capital U.S.A or Better Aggregate Bond Index,plus or minus 0.50 years. The portfolio may also include cash,forward contracts, financial futures and options(including options on futures)or such other instruments and investments as we believe appropriate for the proper management of the Account. Expenses charged to the Account include,but are not limited to,brokerage commissions,transfer taxes and other direct charges arising from the purchase,sale or management of account investments and such other taxes or charges attributable to the assets or operation of the Account,including audit tees. Deposits and Withdrawals Subject to the contract's terms,deposits to and withdrawals from the Account may normally be made on any Business Day. Valuation The value of the Separate Account is the fair market value of all investments held in the Separate Account plus accounts receivable less accounts payable. Market value for publicly traded securities is based on closing sales prices as reported on national securities exchanges,or closing bid prices as reported by investment dealers. Securities purchased but not yet paid for are carried as securities owned at the current market value with the total cost thereof,including commissions and taxes,being an account payable. Securities sold but not yet paid for are carried at their sale price less commissions and taxes. tau ST-02a Credited Rate Determination Credited Rate Under your contract we announce a new Credited Rate for each Credited Rate Period,which is credited to Determination Exhibit your contract's Interest Accumulation Fund. The Conuactholder. formula we use is based on the relationship: VOYA INSTITUTIONAL TRUST COMPANY AS TRUSTEE OF THE ORANGE COUNTY MV(1+1)d—IAF(1 +G)d SANITATION DISTRICT 457(b)DEFERRED COMPENSATION PLAN The equivalent formula,expressed in terms of G is: Contract Document Number: G=[(MV/IAF)I'd x(1+I)] -1 ST-60294 where: G= Yew new Credited Rate. MV= Your projected Separate Account Balance on the date the new Credited Rate is first effective,plus our projection of anticipated net deposits,withdrawals and expense charge deductions in the next Credited Rate Period. IAF= The projected balance of the Interest Accumulation Food on the date the new Credited Rate is first effective,plus our projection of anticipated net deposits, withdrawals and expense charge deductions in the next Credited Rate Period. d= The target investment duration of the Separate Account your contract uses. = The net effective yield available,on the date we determine the new Credited Rate,on assets similar to those in the Separate Account. �ifasQrtranndfiil Pags13 Sr87274 Any projections are based on current balances or values available on the date we detemune the new Credited Rate,and reasonable assumptions as to cash flows,earnings and other occurrences between that date and the date the new Credited Rate is first effective,or during the next Credited Rate Period,as appropriate. The new Credited Rate we announce for any Credited Rate Period will never be less than 06%. We may change this Exhibit by 30 days notice to you. Any change will not apply if you give us a discontinuance notice before the change is effective. SWAMCunad ElftV PaP14 SNXM Fee Description 2016 Stabilizer The asset fee is guaranteed for 2016. If this fee changes,you will receive 30 days written notice. Contract Fee Exhibit Other fees may be changed at any time. The fees are Contractholder. as follows: VOYA INSTITUTIONAL TRUST COMPANY AS Asset Fee TRUSTEE OF THE ORANGE COUNTY SANITATION DISTRICT 457(b)DEFERRED The asset fee is deducted or billed. It equals the COMPENSATION PLAN amount determined applying the following table to the mean assets of the Interest Accumulation Fund Contract Document Number: associated with Quality Fund 11,prorated for periods ST—60284 other than 12 months. Mean Assets Percentage Choree First$25,000,000 0.50% Over$25,000,000 0.40% Extra Reporting Account Fee If you require separate financial information for various groups,a fee of$0 is charged for each such group in excess of one. This fee is prorated for periods other than 12 months. Misceltaneous Fees Additional fees apply for any non-standard service we provide at your request. We will notify you of the applicable fees,if any. 9anlia3Cnda1 FiCYnt pawls srem Book Value Settlement Description Stabilizer Contract If,at contract discontinuance,you elect to receive Book Value Settlement the balance of the Interest Accumulation Fund,your contract will enter into its Book Value Settlement Exhibit Phase. Over the Book Value Settlement Phase,we will pay you the balance of the Interest Accumulation Fond. The Book Value Settlement Contractholder: Phase will operate on the following terms. VOYA INSTITUTIONAL TRUST COMPANY AS TRUSTEE OF THE ORANGE COUNTY within 30 days of the date your contract's SANITATION DISTRICT 457(b)DEFERRED discommumce is effective,we will establish an COMPENSATION PLAN initial installment payment schedule for your contract. The initial installment payment schedule Contract Document Number: will establish three target dates for the payment to ST—60284 you of the balance of the Interest Accumulation Food in installments. The target dates will be established in relation to the target duration of the Separate Account. The first target date will be six months prior to a date(the"Central Maturity Date") that is established by adding a period of time equal to the target duration of the Separate Account to the date your contract's discontinuance is effective. The second target date will be the Central Maturity Date. The third and final target date will be six months after the Central Maturity Date. The amount that is scheduled to be paid on each target payment date is as follows: 6 months prior to 1/3 Remaining Interest Central Maturity Date Accumulation Fond Central Maturity Date 1/2 Remaining Interest Accumulation Fund 6 Months following Remaining Interest Central Maturity Date Accumulation Fond If you desire an alternative initial installment payment schedule or alternative payment amounts we may propose differing schedules and amounts to you. The use of an alternative payment schedule or amounts may be conditioned upon the securing of any necessary regulatory approvals. Unless the parties agree to an alternative,the initial installment payment schedule and payment amounts will be determined as described above. 9aplin3 Caha[6Eitir P.ga18 SrEn207 Upon commencement of the Book Value Settlement (d) Withdrawals may continue to be made in Phase,we will adjust the target duration of the assets accordance with the Benefit Withdrawals and in the Separate Account to equal the average of the Contractholder Withdrawals section of your contract. times remaining to each of the outstanding The portfolio may increase its investment in Treasury installment payments,and we will strive to maintain securities and short term securities in anticipation of the duration of the Separate Account's investments to plus or minus I00/.of this target duration. During the any approaching installment payment. final six months of the Separate Account's operation, On the final installment payment date,we will the Separate Account's target duration will be increase the payment to you by the amount,if any,of adjusted to reflect anticipated withdrawals. the excess of the Separate Account Balance as of that In connection with my installment payment that is date over the Interest Accumulation Fond balance as made,we will reduce your Separate Account Balance of that date. and the balance of the Interest Accumulation Fond by If we calculate the Credited Rate to be 3%or less, an amount equal to the payment that is made. and the ratio of the contract's Separate Account During your contract's Book Value Settlement Phase: Balance divided by the Interest Accumulation Fund is less than 95%,for my Credited Rate Period during (a) We will accept only those deposits that you are the Book Value Settlement Phase,we will establish a committed to make under the current Deposit new target installment payment schedule by Agreement and that we are obligated to accept under extending the Central Maturity Date as far as the Deposits section of the contract. No additional necessary to support a Credited Rate of 3%. deposits will be accepted. We will not enter into any However,in no event may we extend the Central renewal Deposit Agreement. Maturity Date more than ten years from the date your (b) We will continue to renew your Credited Rate as contract's discontinuance is effective. provided under the Operation of the Fund section of Upon any such extension of the Central Maturity the contract and the Credited Rate Determination Date,we will similarly extend the target investment Exhibit. In establishing the variables for purposes of duration of the assets in the Separate Account. the Credited Rate Determination Exhibit,we may If the Central Maturity Date is extended after any take into account our projection of anticipated installment payment(s)has been made,the new withdrawals,scheduled installment payments,and schedule will exclude the that have expense charge deductions over the time remaining payment(s) already been made. until the final target installment payment date. The lowest Credited Rate we will announce for any At any time after your contract has entered its Book Credited Rate Period while your contract is in its Value Settlement Phase,but before the final Book Value Settlement Phase is 0%. installment payment has been made,you may elect (c) Your Credited Rate Period will be quarterly until an early termination of your contract by directing us three months prior to the final scheduled installment to pay you your Separate Account Balance. payment. Credited Rate Periods may,at our Following such an election by you,our payment of discretion,be monthly periods during the three- your Separate Account Balance will terminate your month period prior to the final scheduled installment contract and fully discharge our obligations to you. payment. If we choose to provide monthly Credited We may change this exhibit upon 90 days advance Rate Periods,we will notify you of the rate to be notice to you. Any change will not apply if you give credited for that period concurrently with the start of or have given us a discontinuance notice before the that period. change is effective. 9atili Oxitnid E#t6fl pagan STfi104 Interest Rate 2016 Stabilizer Contract Interest The net effective annual interest rate credited to your Interest Accumulation Fund from May 1,2016 Exhibit through June 30,2016 is 2.58%. We may change this rate at the beginning of each Contractholder. Credited Rate Period upon 30 days advance written VOYA INSTITUTIONAL TRUST COMPANY AS notice to you. TRUSTEE OF THE ORANGE COUNTY SANITATION DISTRICT 457(b)DEFERRED COMPENSATION PLAN Contract Document Number: ST-60284 9abl,.Cn Flit Page 18 S7672B4 ADMINISTRATION COMMITTEE Meeting Date TOBE.Of Dir. 10/12/16 10/26/16 AGENDA REPORT Item Item Number s 14 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: CONTRACTED INTERNAL AUDIT OF CAPITAL IMPROVEMENT PROJECT CONTRACTS GENERAL MANAGER'S RECOMMENDATION Receive and file the Accountants' Report on Agreed-Upon Procedures Review on Capital Improvement Project Contracts. BACKGROUND At the direction of the Administration Committee's Audit Oversight Subcommittee, White Nelson Diehl Evans (WNDE), Certified Public Accountants, and the Orange County Sanitation District's (Sanitation District) contracted internal auditors, were engaged to apply agreed-upon procedures on the Review of Capital Improvement Project Contracts in determining compliance with the California Public Contract Code and with Sanitation District Purchasing Policies and Procedures. Attached is the Accountant Report from WNDE on this agreed upon procedure review. Also attached are separate reports from the Contracts, Purchasing, and Materials Management Division (Contracts) and the Engineering Department (Engineering) on staffs responses to the auditor's findings and recommendations pertaining to this review. In summary, of the 25 procedures performed by WNDE, there were no exceptions noted on 19 of these procedures. Of the remaining six procedures, WNDE noted seven separate findings in the procedures performed by Engineering and three separate findings noted in the procedures performed by Contracts. Upon review of these findings with the Audit Oversight Committee, it was concluded by the Committee that these findings consisted of: • outdated policies and procedures that were not addressing current technology or updated practices; • exceptions being made to policies and procedures because of circumstances not considered in the original establishment of the policies but addressed by other mitigating steps; and • the first Request for Qualification solicitation performed by the Sanitation District was achieved with some minor administrative procedure omissions. Page 1 of 2 Overall, the Committee concluded that the Sanitation District is appropriately following the California Public Contract Code and Sanitation District Purchasing Policies and Procedures in administering its capital improvement project contracts. WNDE was able to provide recommendations for improving the overall effectiveness of this program. RELEVANT STANDARDS • Internal auditing —Approx. 3 per year ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (wwwocsd.corn with the complete agenda package: • Accountants' Report on Agreed-Upon Procedures Review on Capital Improvement Project Contracts • Memorandum from Contracts and Purchasing Manager dated June 24, 2016 • Memorandum from Engineering Manager dated June 24, 2016 Page 2 of 2 ORANGE COUNTY SANITATION DISTRICT AGREED-UPON PROCEDURES REVIEW CAPITAL IMPROVEMENT PROJECTS (CIPS) FOR THE CALENDAR YEARS 2012,2013 AND 2014 INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED-UPON PROCEDURES Board of Directors Orange County Sanitation District Fountain Valley,California We have performed the procedures set forth in this report,which were agreed to by the management of the Orange County Sanitation District, Fountain Valley, California (the District), solely to assist the District in evaluating its compliance with purchasing policies governing Capital Improvement Projects (CIPs) for the calendar years 2012, 2013 and 2014. This agreed-upon procedures engagement was performed in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of the management of the District. Consequently, we make no representations regarding the sufficiency of the procedures described below, either for the purpose for which this report has been requested or for any other purpose. The procedures performed and the results of those procedures are as follows: We met with staff from the District to assist us in selecting the 10 CIP contracts tested below. We reviewed the original contract and any major amendments/change orders for all 10 contracts. Contract#1: Standard Capital Improvement Project(CIP) Contract Project Number: P1-112 Project Name: Plant Water System Rehabilitation at Plant No. 1 Project Description: Water piping replacement at Plant No. 1 PO Number: 104933-OB General Contractor: W.M. Lyles Company Original Contract Amount: $3,743,000 Original Contract Date: September 25, 2013 Compliance Tests Performed and Results: 1. California Public Contract Code (hereinafter referred to in this report as the "CA PCC") Section 22002 generally defines a "public project" to mean "construction, reconstruction, erection, alteration, renovation, improvement, demolition and repair work involving any publicly owned, leased or operated facility". Verify that Project P1-112 is a "public project" within the meaning of CA PCC Section 22002. Results: No exceptions were noted as a result of this testing. 1 2875 Michelle Drive,Suite 300,Irvine,CA 92606 •Tel: 714.978.1300• Fax:714.978.7893 Offices located in Orange and San Diego Counties Contract# 1: Standard Capital Improvement Project(CIP) Contract(Condnued) Compliance Tests Performed and Results(Continued): 2. CA PCC Section 20783 generally sets forth the requirements for Sanitation District contracts in excess of $35,000. Code Section 20784 sets forth certain bidding procedures for such contracts. Verify that Project P1-112 met the requirements of CA PCC Sections 20783 and 20784 with regard to Sanitation Districts. Results: No exceptions were noted as a result of this testing. 3. Verify that the bidder was a "Responsive Bidder" as defined under the provisions of CA PCC Sections 2000 to 2002. Results: No exceptions were noted as a result of this testing. 4. CA PCC Section 6109 defines contractors that are ineligible to bid, or who are debarred from bidding. CA PCC Section 6610 sets forth rules for mandatory prebid conferences, site visits and meetings. CA PCC Section 20103.8 sets forth rules for awarding contracts to the lowest responsible bidder. Verify that Project P1-112 met the requirements of CA PCC Sections 6109, 6610 and 20103.8. Results: No exceptions were noted as a result of this testing. 5. Verify that the District's"Solicitation Procedures"have been followed. Results: No exceptions were noted as a result of this testing. 6. Verify that the District's"Invitation for Bid(IFB)Document Procedures"have been followed. Results: No exceptions were noted as a result of this testing. 7. Verify that the District's"Evaluation of Bid Procedures"have been followed. Results: No exceptions were noted as a result of this testing. 8. Verify that the District's "Contract Award Procedures"have been followed. Results: No exceptions were noted as a result of this testing. 2 Contract#2: Emergency Contract Project Number: 5-58 Project Name: Bitter Point Force Main Rehabilitation Project Description: Repairs to the Santa Ana River levees that were damaged by a contractor during tunneling on Contract 5-58 PO Number: 103994-OB General Contractor: Geo-Solutions,Inc. Original Contract Amount: $1,144,600 Original Contract Date: September 15, 2010 Compliance Tests Performed and Results: 1. Verify that the "Emergency Contracting Procedures" required under CA PCC Section 22050 were followed. Results: No exceptions were noted as a result of this testing. Contract#3: Sole Source Contract(that is not an Emergency Contract) Project Number: SP-166 Project Name: Odor Control Master Plan Project Description: This project included an odor monitoring investigation at the OCSD Wastewater Treatment Facility and completion of the Odor Control Master Plan (OCMP). PO Number: 104839-OB General Contractor: ALS Environmental Original Contract Amount: $282,776 Original Contract Date: May 22, 2013 Compliance Tests Performed and Results: 1. Verify that the District's"Sole Source Procurement Procedures"have been followed. Results: No exceptions were noted as a result of this testing. Contract#4: Standard Capital Improvement Project(CIP) Contract Project Number: P2-105 Project Name: Digester Ferric Chloride System Rehabilitation Project Description: Replace the existing ferric chloride station and associated pipelines at Plant No. 2. PO Number: 104702-OB General Contractor: ODC Engineering and Technology Original Contract Amount: $1,694,000 Original Contract Date: September 26, 2012 3 Contract#4: Standard Capital Improvement Project(CIP) Contract(Continued) Compliance Tests Performed and Results: 1. California Public Contract Code (CA PCC) Section 22002 generally defines a "public project' to mean "construction, reconstruction, erection, alteration, renovation, improvement, demolition and repair work involving any publicly owned, leased or operated facility". Verify that Project P2-105 is a"public project"within the meaning of CA PCC Section 22002. Results: No exceptions were noted as a result of this testing. 2. CA PCC Section 20783 generally sets forth the requirements for Sanitation District contracts in excess of $35,000. Code Section 20784 sets forth certain bidding procedures for such contracts. Verify that Project P2-105 met the requirements of CA PCC Sections 20783 and 20784 with regard to Sanitation Districts. Results: No exceptions were noted as a result of this testing. 3. Verify that the bidder is a "Responsive Bidder" under the provisions of CA PCC Sections 2000 to 2002. Results: No exceptions were noted as a result of this testing. 4. CA PCC Section 6109 defines contractors that are ineligible to bid, or who are debarred from bidding. CA PCC Section 6610 sets forth rules for mandatory pre-bid conferences, site visits and meetings. CA PCC Section 20103.8 sets forth rules for awarding contracts to the lowest responsible bidder. Verify that Project P2-105 met the requirements of CA PCC Sections 6109, 6610 and 20103.8. Results: No exceptions were noted as a result of this testing. 5. Verify that the District's`Solicitation Procedures"have been followed. Results: Section V, step G 8 of the District's `Solicitation Procedures" requires that the District post the bid tabulation (list of vendors and the amount bid on the project) on the District's website within two business days from the day of the bid opening or, if possible, by close of business on the day of the bid opening. The District does not retain records to show when the bid tabulation is posted to the District's website. Therefore, we were unable to determine the timeliness of the bid tabulation posting on the District's website. 4 Contract#4: Standard Capital Improvement Project(CIP) Contract(Continued) 6. Verify that the District's"IFB Document Procedures"have been followed. Results: Section V, step C 4 of the District's "Invitation for Bid (IFB) Document Procedures" requires the Contracts Administrator to notify the Project Engineer/Project Manager that the draft front end IFB document is available in the EDMS database (or a successor database) for review 80 days prior to the first advertisement date. We inspected the contract task report (a report that documents the date of completion for this requirement) and noted that the completion date of the draft front end IFB document occurred on July 3, 2012. The first advertisement date was scheduled for July 17, 2012. Therefore, the completion of the draft font end IFB document occurred approximately 14 days (not 80 days)prior to the fast advertisement date. Section V, step C 5 of the District's "Invitation for Bid (IFB) Document Procedures" requires the Project Engineer/Project Manager to review and return the draft front end IFB documents to the Contracts Administrator with any comments 50 days prior to the first advertisement date. We inspected the contract task report (a report that documents the date of completion for this requirement) and noted the completion of the Project Engineer/Project Manager's review occurred on July 5, 2012. The first advertisement date was scheduled for July 17, 2012. Therefore, the completion of the review of the draft front end IFB document occurred approximately 12 days (not 50 days) prior to the first advertisement date. Per our discussion with District staff, this project needed to move faster than the normal timeline; therefore, the District staff processed the IFB documents more quickly to accommodate the needs of the District. 7. Verify that the District's"Evaluation of Bid Procedures"has been followed. Results: No exceptions were noted as a result of this testing. 8. Verify that the District's"Contract Award Procedures"have been followed. Results: No exceptions were noted as a result of this testing. Contract#5: Contract with Significant Chance Orders Project Number: P2-89 Project Name: Solids Thickening and Processing Upgrades(Plant 2) PO Number: 104452-OB General Contractor: W.M. Lyles Company Original Contract Amount: $26,383,400 Original Contract Date: April 25, 2012 5 Contract#5: Contract with Si¢nificant Chance Orders (Continued) Compliance Tests Performed and Results: 1. Verify that the change orders have been executed in accordance with the requirements of CA PCC Section 20104.50. Results: No exceptions were noted as a result of this testing. 2. Verify that the change orders have been executed in accordance with the District's policies, CIP Procedure C 080. In connection with this testing, we found two general areas of noncompliance: • Change orders not properly executed and/or signed by the Contractor, or • Change orders not properly executed and/or signed by District personnel. Numerous"Not to Exceed Field Chance Orders"(NTE FCOs)were not sinned by the Contractor NTE FCOs are utilized by the District for time and materials or force account change orders that require a not-to-exceed amount. NTE FCOs require signatures from the following persons: (1) resident engineer, (2) supervising engineer, (3) project manager, and (4) contractor. During our review of the NTE FCOs on Project P2-89, we noted 21 NTE FCOs that were not signed by the contractor. Per our discussion with District staff and our review of the contract files, we found that this contract had many change orders (over 100). The contractor made a determination that signing and evaluating each individual FCO was too cumbersome. In addition, the contractor was concerned that the cost impact of certain change orders was not evident at the time change order work was being performed. Therefore,the contractor stopped signing the FCOs,including NTE FCOs. As a result, the District and the contractor entered into a tolling agreement. (Note: A tolling agreement is an agreement between a potential plaintiff and a potential defendant by which the defendant agrees to extend the statutory limitation period on a plaintiffs potential claim, so that both parties will have more time to resolve disputes without litigation.) The tolling agreement on Project P2-89 stated that all defenses pertaining to the ripple effect or cumulative impact of field change orders for the project (with the exceptions of Change Orders 1 through 6) would be tolled and reserved from the effective date of the tolling agreement through and including the final completion and acceptance of the project by the District. 6 Contract#5: Contract with Shmificant Cham¢e Orders (Continued) 2. Verify that the change orders have been executed in accordance with the District's policies, CIP Procedure C 080 (continued). Certain NTE CFOs were not executed and/or sieved by District Personnel a. Time and Materials or Force Account Change Orders that were subsequently"Negotiated": The time and materials/force account change order procedures are set forth at Sections 5.2.4.2 and 5.2.4.4 of the District's policies. These procedures are documented on standard NTE FCO forms. Also, Section 5.2.4.4.4 states the following: "As soon as the remaining work can be priced, the contractor is to submit its cost and schedule proposal (CSP) so a turn price can be negotiated." Therefore, it is the District's preference that change orders that start out as time and materials or force account change orders be revised to a fixed "negotiated" price change order whenever possible. During our review of the change orders on Project P2-89, we noted that some change orders started out as time and materials or force account change orders and were subsequently changed to "negotiated" change orders. However, we noted 8 instances in which the District did not prepare the NTE FCO forms, since the work was performed by the contractor before the NTE FCO could be drafted. Also, we noted 5 instances in which the District did not obtain signatures from all District employees on the NTE FCO form. However, we did note that the final negotiated FCO was signed off by all appropriate District employees. b. Time and Materials or Force Account Change Orders that were Never"Negotiated": If Field Change Orders (FCOs) cannot be negotiated, a final Force Account FCO containing the final dollar impact of the change is to be completed and signed off by District employees and the contractor. We noted 7 cases in which the NTE FCOs were not signed by all required District employees since the work was already performed by the time the NTE FCO was drafted. However, we did note that the final force account FCO was signed off by all appropriate District employees. 7 Contract#5: Contract with Si¢nificant Chance Orders (Continued) 2. Verify that the change orders have been executed in accordance with the District's policies, CIP Procedure C 080 (continued). Cost Estimates Not Prepared in a Timely Manner: The District's policies and procedures over change orders, Section 5.5.1.1.3, require that District initiated changes have an estimate finalized prior to the receipt of the contractor's Cost and Schedule Proposal (CSP). We noted two change orders containing estimates that were prepared subsequent to the receipt of the contractor's CSP. One was prepared 2 days after the receipt of the contractor's CSP and one was prepared 11 days after the receipt of the contractor's CSP. Cost Estimates Prepared by the Resident Engineer Instead of the Estimator: The District's policies and procedures over change orders, Section 5.5.1.1.1, require an independent cost estimate to be developed by the Estimator for changes greater than $35,000. In five cases, we noted that the estimate was prepared by the Resident Engineer instead of the Estimator. Per our discussion with District staff, several years ago the District paid for engineers to attend estimate training so that the engineers could develop the estimates themselves. The District's policies and procedures do not reflect this practice. Contract#6: Contract with Shmificant Cost Overruns,Construction Delays, and/or Disputes Project Number: 5-58 Project Name: Bitter Point Force Main Rehabilitation Project Description: This project is the second phase of a project to mitigate soil settlement along the Santa Ana River, and follow-up work on a tunnel installation at Plant 2 that had emergency repairs in 2011. (See discussion of Contract 2 on page 3 herein.) . PO Number: 104746-OB General Contractor: Magnus Pacific Corporation Original Contract Amount: $9,362,000 Original Contract Date: January 23, 2013 Compliance Tests Performed and Results: 1. Verify that contract adjustments have been made in accordance with California Public Contract Code Sections 9201 (Claims and Disputes) and 20104 to 20104.6 (Resolution of Construction Claims). Results: No exceptions were noted as a result of this testing. 8 Contract#7: Contract with Significant Cost Overruns,Construction Delays.and/or Disputes Project Number: J-106 Project Name: Interplant Gas Line Rehabilitation Project Description: This project was initiated to rehabilitate a pipeline used to transfer digester gas for power generation between the District's two plants, in order to bring the District into compliance with U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration (PHMSA) regulations. The pipeline was taken out of service in 2006 due to noncompliance with PHMSA regulations. PO Number: 104451-013 General Contractor: J.Fletcher Creamer& Sons, Inc. Original Contract Amount: $2,048,060 Original Contract Date: April 25, 2012 Compliance Tests Performed and Results: 1. Verify that contract adjustments have been made in accordance with California Public Contract Code Sections 9201 (Claims and Disputes) and 20104 to 20104.6 (Resolution of Construction Claims). Results: No exceptions were noted as a result of this testing. Contract#8: Professional Design Services Agreement(PDSA) and Contract#9: Professional Consulting Services Agreement(PCSA) Project Number: J-111 Project Name: Cengen Emissions Control Project PDSA Project Description: This project was initiated to install equipment at each plant to control central generation emissions and to comply with existing and proposed regulatory emission limits. The Central Generation System(CGS) engines provide electricity and heat to the District's treatment plants and are permitted to operate by the SCAQMD. Engineering services were needed during the construction phase to review submittals, answer contractor's requests for information, review design changes, provide training and content for operation manuals, prepare record drawings and assist in the close out of the project. PO Number: 105137-OB General Contractor: Black&Fletcher Original Contract Amount: $1,097,212 Original Contract Date: April 23, 2014 Project Number: P2-89 Project Name: Solids Thickening and Processing Upgrades PCSA Project Description: This project was initiated to provide sludge thickening treatment for existing solids, as well as additional solids to be generated at treatment plant no. 2. Construction support services were needed to review submittals, requests for information, preparation and requests for proposals and change orders, and assistance with the commissioning of the new equipment. PO Number: 104445-OB General Contractor: MWH Americas, Inc. Original Contract Amount: $2,199,798 Original Contract Date: April 23, 2014 9 Contract#8: Professional Design Services Agreement(PDSA) and Contract#9: Professional Consulting Services Agreement(PCSA) (Continued) Compliance Tests Performed and Results: 1. Verify that the contracts were executed in accordance with the District's Policy for PDSA and PCSA contracts. Results: Section V, step F.1., L.21. and DD.2. of the District's Policy for PDSA and PCSA Contracts requires that a Request for Proposal (RFP) Variable Form (a fill-in-the-blank form)be completed during the RFP phase utilizing the Document Tracking System(DTS) software. Per our discussion with District staff, DTS software was historically used and resulted in the production of the Variable Form. DTS software involved entering specific project information into a database that, through software integration, automatically populated various contract administration forms, including the REP. The Document Tracking System (DTS) was used for tracking the routing of the RFP for review and approvals. Several years ago, the process of creating the RFP was moved from engineering to contracts administration. When the RFP process was moved to the contracts administration department, the DTS software was no longer utilized for tracking of reviews and approvals. Currently, a different software system is utilized whereby the Administrative Assistants enter specific project information into a database that is used, through software integration, to automatically populate various contract administrative forms. However, the software is only utilized for construction project bids since the professional services solicitation method does not require significant detail and is less restricted to solicit responses for solutions. Currently, professional services contract administration documents, including the RFP, contain yellow highlighted fields that require manual entry of the required information. Although the PDSA Variable Form is no longer applicable to professional services projects, the District's policies and procedures had not been updated to reflect the above practice. Contract#10: Request for Qualifications (RFO) Solicitation Project Number: J-110 Project Name: Final Effluent Sampler and Building Area Upgrades Project Description: The purpose of this project was to construct a new building to provide housing for new sampling equipment. The contract required a preliminary design report (PDR), and final design and construction documents (plans and specifications). Type of Contract: PDSA(Professional Design Services Agreement) PO Number: 104554-OB General Contractor: Atkins North America,Inc. Original Contract Amount: $1,764,022 Original Contract Date: May 23, 2012 10 Contract#10: Request for Qualifications(RFO) Solicitation (Continued) Compliance Tests Performed and Results: Verify that the RFQ was executed in accordance with the District's Policy for Requests and Qualifications. Results: Statement of Qualifications (SOQ)without date stamps: Section V, step A 6, of the District's Policy for Requests for Qualifications requires that the SOQ be date stamped upon receipt. During our review of this project, we noted that only one of the nine SOQs received included a date stamp. Unsigned Evaluation Committee Member Declaration Form: Section V, step A 7a and step E lb, of the District's Policy for Requests for Qualifications require each member of the Evaluation Committee to complete an Evaluation Committee Member's Declaration Form. We noted that the Program Manager served on the Evaluation Committee and did execute a signed Evaluation Committee Member's Declaration Form. Lack of Cover Letter and Professional Consultant Service Agreement: Section V, step B 5, of the District's Policy for Requests for Qualifications requires an RFQ cover letter that briefly defines the general work requirements, submittal date, number of copies, and the Project Manager's name and phone number. We noted that there was no separate cover letter; however, the RFQ contained the above information. Section V, step B 7, of the District's Policy for Requests for Qualifications requires the Director of Engineering to sign the cover letter. Since there was no cover letter, there was no signature from the Director of Engineering. Section V, step C, of the District's Policy for Requests for Qualifications requires that each RFQ package contain the following: (1) cover letter, (2) request for qualifications, (3) scope of work, (4) other attachments, if applicable, and(5) sample professional design services agreement and professional consultant service agreement. We noted that the RFQ package did not contain a cover letter or a sample professional consultant service agreement. 11 Comments Regarding Certain 2015 California Legislation During the calendar year ended December 31, 2015, the California legislature passed various bills which were signed into law by Governor Brown setting forth certain new laws and regulations governing capital improvement projects of governmental agencies within California. It is unlikely that any of these new laws and regulations would retroactively apply to the CIP contracts of the District that we reviewed for the calendar years 2012, 2013 and 2014. Therefore, our testing did not include a review for compliance with these new laws and regulations. Conclusion We were not engaged to, and did not, conduct an audit, the objective of which would be the expression of an opinion, on the accounting and contract records related to the District's Capital Improvement Projects (CIPs) for the calendar years 2012, 2013 and 2014. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. Restriction on the Use of This Report This report is intended solely for the information and use of the management of the Orange County Sanitation District Board of Directors and management and is not intended to be and should not be used by anyone other than those specified parties. Irvine, California May 31, 2016 12 ORANGE COUNTY SANITATION DISTRICT Memorandum DATE: June 24, 2016 TO: Mike White Controller FROM: Marc Dubois Contracts and Purchasing Manager SUBJECT: Independent Accountants' Report on Applying Agreed-Upon Procedures for CIP Contracting Procedures— Contract#4, #8, & #9 The following responses are made to the findings presented by White Nelson Diehl Evans Independent Accountants' Report on Applying Agreed-Upon Procedures for CIP Contracting Procedures on Contract#4, Contract#8, and Contract#9. Contract#4: Standard Capital Improvement Project (CIP) Contract Finding No. t Section V, step G 8 of the District's "Solicitation Procedures" requires that the District post the bid tabulation (list of vendors and the amount bid on the project) on the District's website within two business days from the day of the bid opening or, if possible, by close of business on the day of the bid opening. The District does not retain records to show when the bid tabulation is posted to the District's website. Therefore, the auditors unable to determine the timeliness of the bid tabulation posting on the District's website. Response The District concurs with this finding. Using the current software, there is no technical means by which to identify the time of posting of a bid tabulation. The "Solicitation Procedures" have now been revised eliminating the time element described in this step. However, it will be a continuing practice of Contracts Administration to post the bid tabulation on the District's website as soon as possible with the goal of having it posted without bidders having to call the District to find out the status. Finding No. 2 Section V, step C 4 of the District's "Invitation for Bid (IFB) Document Procedures" requires the Contracts Administrator to notify the Project Engineer/Project Manager that the draft front end IFB document is available in the EDMS database (or a successor 1 database)for review 80 days prior to the first advertisement date. We inspected the contract task report (a report that documents the date of completion for this requirement) and noted that the completion date of the draft front end IFB document occurred on July 3, 2012. The first advertisement date was scheduled for July 17, 2012. Therefore, the completion of the draft font end IFB document occurred approximately 14 days (not 80 days) prior to the first advertisement date. Section V, step C 5 of the District's "Invitation for Bid (IFB) Document Procedures" requires the Project Engineer/Project Manager to review and return the draft front end IFB documents to the Contracts Administrator with any comments 50 days prior to the first advertisement date. We inspected the contract task report (a report that documents the date of completion for this requirement) and noted the completion of the Project Engineer/Project Manager's review occurred on July 5, 2012. The first advertisement date was scheduled for July 17, 2012. Therefore, the completion of the review of the draft front end IFB document occurred approximately 12 days (not 50 days) prior to the first advertisement date. Per our discussion with District staff, this project needed to move faster than the normal timeline; therefore, the District staff processed the IFB documents more quickly to accommodate the needs of the District. Response The District concurs with this finding. The District's policy and procedure included a standard timeline which did not address specific Project needs as they arose during design, such as changes to the scope of work, reviews and approvals by outside agencies, permitting, coordination with other Projects under construction, etc. The District has now updated its policies and procedures to remove the standard timeline and requires the Contracts Administrator and Project Engineer/Project Mangers to establish the timeline for each Project based upon the Project's unique needs and time requirements. Contract#8: Professional Design Services Agreement (PDSA) and Contract #9: Professional Consulting Services Agreement {PCSA) Finding No. 1 Section V, step F.1., L.2.k. and DD.2.of the District's Policy for PDSA and PCSA Contracts requires that a Request for Proposal (RFP) Variable Form (a fill-in-the-blank form) be completed during the RFP phase utilizing the Document Tracking System (DTS) software. Per our discussion with District staff, DTS software was historically used and resulted in the production of the Variable Form. DTS software involved entering specific project information into a database that, through software integration, automatically populated various contract administration forms, including the RFP. The Document Tracking System (DTS) was used for tracking the routing of the RFP for review and approvals. Several years ago, the process of creating the RFP was moved 2 from engineering to contracts administration. When the RFP process was moved to the contracts administration department, the DTS software was no longer utilized for tracking of reviews and approvals. Currently, a different software system is utilized whereby the Administrative Assistants enter specific project information into a database that is used, through software integration, to automatically populate various contract administrative forms. However, the software is only utilized for construction project bids since the professional services solicitation method does not require significant detail and is less restricted to solicit responses for solutions. Currently, professional services contract administration documents, including the RFP, contain yellow highlighted fields that require manual entry of the required information. Although the PDSA Variable Form is no longer applicable to professional services projects, the District's policies and procedures had not been updated to reflect the above practice. Response The District concurs with this finding. The District has now updated its policies and procedures and has removed instructions regarding use of the Document Tracking System (DTS) and the PDSA Variable Form, as they are no longer being used for professional service project RFPs. 3 ORANGE COUNTY SANITATION DISTRICT Memorandum DATE: June 24, 2016 TO: Mike White Controller FROM: Dean Fisher Engineering Manager SUBJECT: Independent Accountants' Report on Applying Agreed-Upon Procedures for CIP Contracting Procedures— Contract#5 and #10 The following responses are made to the findings presented by White Nelson Diehl Evans Independent Accountants' Report on Applying Agreed-Upon Procedures for CIP Contracting Procedures on Contract#5 and Contract#10, as identified in their report. Contract#5: Contract with Significant Change Orders Finding No. 1 During our review of the "Not to Exceed Field Change Orders" (NTE FCOs) on Project 132-89, we noted 21 NTE FCOs that were not signed by the Contractor. Response The District attempted to have the change orders signed by the Contractor but the Contractor would not agree with the terms and conditions of OCSD's change orders in context of the many changes being required and expressed concerns that the cumulative impact of changes on the project might be impacting overall productivity and project completion time. Since both parties agree to the direct cost impacts of this change, both parties worked cooperatively with respective legal counsel to develop a "tolling agreement" that allowed the parties to maintain bilateral agreements to the direct cost while preserving specific rights for both parties on schedule impacts. This was viewed as a better solution than having no agreement on changes being executed. During this period, Not to Exceed Field Change Orders (NTE FCOs)were issued without the Contactor's signature while both parties were developing this agreement. Neither of the parties saw a need to go back and sign these documents since these were superseded by the final cost Field Change Orders as well as the formal approved Contract Change Orders which were signed by both parties. June 23, 2016 Page 2 of 3 Finding No. 2 Certain NTE FCOs were not executed and/or signed by District personnel: Response The District concurs with this finding. The changes identified were relatively small and timing of these items was critical to the project schedule. Since the delays potentially outweighed the cost of the item, verbal direction to proceed was given with a tracking number for time and materials costs while the NTE FCO paperwork was completed. In these cases, the actual work was very short and was completed prior to the completion of the NTE FCO. In the future, the NTE FCO will be signed by District personnel after the fact when small items have been completed before the preparation of the NTE FCO. Finding No. 3 Cost Estimates not prepared in a timely manner: Response Cost estimating workload fluctuates and occasionally resources are challenged. Staffing is kept small and efficient, but sometimes there is a backlog causing a delay. While this timing was inconsistent with procedures, all items were estimated independently prior to negotiation with the Contractor. Finding 4 Cost Estimates prepared by Resident Engineer instead of the Estimator: Response As mentioned above in the previous finding, the cost estimating workload fluctuates and this can lead to minor backlogs. To help remedy this OCSD has provided estimating training and tools to the Resident Engineers to have them assist in preparing cost estimates for less costly and simpler items. This is consistent with construction management practices and policies and procedures were recently approved for this practice. Contract#10: Request for Qualifications (RFQ) Solicitation Findings 1. Section V, step A 6, of the District's Policy for Requests for Qualifications requires that the Statement of Qualifications (SOQ) be date stamped upon receipt. During their review, the auditors noted that only one of the nine SOQs received a date stamp. June 23, 2016 Page 3 of 3 2. Section V, step 13 7, of the District's Policy for Requests for Qualifications requires the Director of Engineering to sign the cover letter. Since there was no cover letter, there was no signature from the Director of Engineering. 3. Section V, step C, of the District's Policy for Requests for Qualifications requires that each RFQ package contain the following: (1) cover letter, (2) request for qualifications, (3) scope of work, (4) other attachments, if applicable, and (5) sample professional design services agreement and professional consultant service agreement. We noted that the RFQ package did not contain a cover letter or a sample professional consultant service agreement. Response The District concurs with the above three findings. The solicitation of this Request for Qualifications was the first solicitation of this type attempted at OCSD and there were some minor administrative omissions as evidenced by these findings. Furthermore, since this solicitation, the OCSD Contracts Group has been assigned to assist with Professional Design Service solicitations to help prevent these types of ommissions from happening in the future. DF: H9depAengV60VwdiM\AUP CIP Audit 20MEngineering Response to AUP CIP Audit 2016.do= ADMINISTRATION COMMITTEE Meeting Date TOBE.Or .Dir. 10/12/16 10/26/16 AGENDA REPORT Item Item Number 6 IS Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: INVEST AND/OR REINVEST DISTRICT'S FUNDS GENERAL MANAGER'S RECOMMENDATION Adopt Resolution No. OCSD 16-XX, entitled "A Resolution of the Board of Directors of the Orange County Sanitation District, Authorizing the District's Treasurer to Invest and/or Reinvest District's Funds; Adopting District's Investment Policy Statement and Performance Benchmarks; and Repealing Resolution No. OCSD 15-25." BACKGROUND This agenda item presents an update to the Orange County Sanitation District's (Sanitation District) Investment Policy Statement to the Administration Committee for consideration in the Committee's capacity as the oversight committee for the Investment Policy (Section 16.2). With adoption of the Resolution, the Board of Directors would readopt the Sanitation District's current Investment Policy Statement, portfolio performance benchmarks, and monitoring and reporting requirements for calendar year 2017. The Sanitation District's Investment Policy Statement was previously approved by the Administration Committee and Board for calendar year 2016 in December 2015. RELEVANT STANDARDS • Orange County Sanitation District Investment Policy • California Government Code Section 53607 and 53646 PROBLEM California Government Code Section 53607 allows for the Board of Directors to delegate authority to invest and/or reinvest the Sanitation District's funds to the Treasurer for a one-year period. California Government Code Section 53646 requires the Sanitation District to review its Investment Policy annually and readopt its Policy at a public meeting, which will establish specific performance benchmarks and objectives, and specific monitoring and reports. On December 16, 2015, the Board of Directors adopted Resolution No. OCSD 15-25 entitled "A Resolution of the Board of Directors of the Orange County Sanitation District, Authorizing the District's Treasurer to Invest and/or Reinvest District's Funds, and Adopting District's Investment Policy Statement and Performance Benchmarks; and Repealing Resolution No. OCSD 14-20:' Authority delegated by the Page 1 of 3 Board of Directors to the Director of Finance/Treasurer to invest and/or reinvest the Sanitation District's funds expires on December 31, 2016. Pursuant to California Government Code Section 53646, the Sanitation District's Investment Policy must be reviewed and readopted prior to December 31, 2016. PROPOSED SOLUTION With adoption of the Resolution, the Board of Directors would renew its delegation of investment authority to the Director of Financefrreasurer for a one-year period, January 1, 2017 to December 31, 2017, in compliance with the requirements of California Government Code Section 53607. Each year, the Board of Directors will consider similar actions, along with the annual reconsideration of the Sanitation District's Investment Policy. TIMING CONCERNS The Board of Directors delegation of authority to the Director of Finance/Treasurer to invest and/or reinvest the Sanitation District's funds will expire on December 31, 2016. Pursuant to California Government Code Section 53646, the Sanitation District's Investment Policy must be reviewed and readopted prior to December 31, 2016. There is no Administration Committee meeting scheduled for December 2016, thus adoption of the proposed Resolution has been moved to October 2016. RAMIFICATIONS OF NOT TAKING ACTION The Sanitation District's Director of Finance/Treasurer will not be able to invest and/or reinvest the Sanitation District's funds and the Sanitation District will not be in compliance with California Government Code Section 53646. PRIOR COMMITTEE/BOARD ACTIONS December 2015 - Board adopted Resolution No. OCSD 15-25, Authorizing the Orange County Sanitation District's Treasurer to Invest and/or Reinvest District's Funds; and Adopting District's Investment Policy Statement and Performance Benchmarks; and, Repealing Resolution No. OCSD 14-20. ADDITIONAL INFORMATION The Investment Policy will govern the investment activities of Chandler Asset Management, the Sanitation District's external money manager, on behalf of the Sanitation District. On December 11, 2012, the Sanitation District's Investment Policy Statement received the Investment Policy Certification of Excellence Award from the California Municipal Treasurer's Association (CMTA). A copy of the letter of certification is included each year in the annual Investment Policy document. The Sanitation District received its first Award of Excellence for the Investment Policy Statement in December 1996. Page 2 of 3 Annual Review of Investment Policy The Investment Policy includes the requirement that the Sanitation District shall review its Investment Policy annually (Sections 1.2 and 16.1). Chandler Asset Management reviewed the existing policy to ensure that the language remains current with the California Government Code. The proposed Investment Policy is attached with redlined changes from the most recent approved policy in December 2015. These proposed changes include: • Limiting the percentage of the total portfolio that may be invested in the banker's acceptances of any one (1) commercial bank to 5%. • California Government Code limits mutual funds exposure to 10% per fund, but makes an exception for Money Market funds. Money Market funds are allowed to have an exposure of up to 20% for one fund. • Updating the Sanitation District Treasury Management Procedures to increase the maximum amount that is allowed to be maintained within the State Local Agency Investment Fund (LAIF)for managing cash flows (i.e., deposits of large revenues, such as property tax and user fee proceeds, and the bi-weekly disbursements of payroll and accounts payable)from $50 million to $65 million. Annual Delegation of Investment Authority Effective January 1, 1997, California Government Code Section 53607 states that governing boards of local agencies may only delegate authority to invest and/or reinvest agency funds to the agency's Treasurer for a one-year period. CEQA N/A FINANCIAL CONSIDERATIONS N/A ATTACHMENT The following attachment(s)are included in hard copy and may also be viewed on-line at the OCSD website (wwwocsd.com) with the complete agenda package: • Exhibit A - OCSD Calendar Year 2016 Investment Policy Statement • Exhibit B - Performance Monitoring & Reporting Summary • Resolution No. OCSD 16-19 • Orange County Sanitation District Treasury Management Procedures Page 3 of 3 ORANGE COUNTY SANITATION DISTRICT INVESTMENT POLICY STATEMENT 1.0 Policy: It is the policy of the Orange County Sanitation District (OCSD) to invest public funds in a manner which ensures the safety and preservation of capital while meeting reasonably anticipated operating expenditure needs, achieving a reasonable rate of return and conforming to all state and local statutes governing the investment of public funds. 1.1. This Investment Policy is set forth by OCSD for the following purposes: 1.1.1. To establish a clear understanding for the Board of Directors, OCSD management, responsible employees and third parties of the objectives, policies and guidelines for the investment of the OCSD's idle and surplus funds. 1.1.2. To offer guidance to investment staff and any external investment advisors on the investment of OCSD funds (see Appendix "A"). 1.1.3. To establish a basis for evaluating investment results. 1.2. OCSD establishes investment policies which meet its current investment goals. OCSD shall review this policy annually, and may change its policies as its investment objectives change. 2.0 Scope: This Investment Policy applies to all financial assets of OCSD; except for the proceeds of OCSD's capital projects financing program, which are invested in accordance with provisions of their specific bond indentures; and such other funds excluded by law or other Board-approved covenant or agreement. These funds are accounted for by OCSD as Enterprise Funds as represented in OCSD's Comprehensive Annual Financial Report. 3.0 Standard of Prudence: The standard of prudence to be used by OCSD internal staff, and any authorized investment advisor(s), shall be as described in Section 53600.3 of the California Government Code as follows: Except as provided in subdivision (a) of Section 27000.3, all governing bodies of local agencies or persons authorized to make investment decisions on behalf of those local agencies investing public funds Page 1 pursuant to this chapter are trustees and therefore fiduciaries subject to the prudent investor standard. When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency. Within the limitations of this section and considering individual investments as part of an overall strategy, investments may be acquired as authorized by law. 4.0 Investment Objectives: The primary objectives of OCSDs investment activities, in priority order, and as described in Section 53600.5 of the California Government Code, shall be: 4.1 Safety: The safety and preservation of principal is the foremost objective of the investment program of OCSD. Investments shall be selected in a manner that seeks to ensure the preservation of capital in OCSD's overall portfolio. This will be accomplished through a program of diversification, more fully described in Section 11.0, and maturity limitations, more fully described in Section 12.0, in order that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio. 4.2 Liquidity: The investment program will be administered in a manner that will ensure that sufficient funds are available for OCSD to meet its reasonably anticipated operating expenditure needs. 4.3 Return on Investments: The OCSD investment portfolio will be structured and managed with the objective of achieving a rate of return throughout budgetary and economic cycles, commensurate with legal, safety, and liquidity considerations. 5.0 Delegation of Authority: 5.1 Authority to manage OCSD's investment program is derived from the California Government Code Sections 53600 et seq, and Sections 53635 et seq. The Board of Directors hereby delegates management responsibility for the OCSD investment program to its Director of Finance and Administrative Services/Treasurer, who shall establish written procedures for the operation of the investment program, consistent with this Policy. The Controller/Assistant Treasurer shall be responsible for Page 2 day-to-day administration, monitoring, and the development of written administrative procedures for the operation of the investment program, consistent with this Policy. The current treasury management procedures are presented in Appendix "B." No person may engage in an investment transaction except as provided under the terms of this Policy and the procedures established by the Treasurer. The Treasurer shall be responsible for all transactions undertaken by OCSD internal staff, and shall establish a system of controls to regulate the activities of internal staff and external investment advisors engaged in accordance with Section 5.3. 5.2 The administrative procedures for the operation of OCSD's investment program will provide for, but not be limited to, the following: 5.2.1 Formats for monthly and quarterly reports to the Administration Committee, and the Board of Directors. 5.2.2 Compliance with generally accepted accounting principles of the Government Accounting Standards Board. 5.2.3 Establishment of benchmarks for performance measurement. 5.2.4 Establishment of a system of written internal controls. 5.2.5 Establishment of written procedures for competitive bids and offerings of securities that may be purchased or sold by internal OCSD staff. 5.2.6 Establishment of a Desk Procedures Manual for treasury operations and management. 5.3 The Board of Directors of OCSD may, in its discretion, engage the services of one or more registered investment advisors to assist in the management of OCSD's investment portfolio in a manner consistent with OCSD's objectives. Such external investment advisors, which shall be selected through a competitive process, shall be granted discretion to purchase and sell investment securities in accordance with this Investment Policy. Such advisors must be registered under the Investment Advisers Act of 1940, or be exempt from such registration. 6.0 Ethics and Conflicts of Interest: 6.1 Officers and employees of OCSD involved in the investment process shall refrain from personal business activities that could conflict with proper Page 3 execution of OCSD's investment program, or which could impair their ability to make impartial investment decisions. Employees and investment officials shall disclose to the General Manager any material financial interests in financial institutions that conduct business within OCSD's boundaries, and they shall further disclose any large personal financial/investment positions, the performance of which could be related to the performance of positions in OCSD's portfolio. 7.0 Authorized Financial Dealers and Institutions: 7.1 For investment transactions conducted by OCSD internal staff, the Treasurer will maintain a list of financial institutions authorized to provide investment services to OCSD, including "primary" or regional dealers that qualify under Securities and Exchange Commission Rule 15C3-1 (Uniform Net Capital rule), and Federal or State of California chartered banks. No public deposit shall be made except in a qualified public depository as established by State law. All financial institutions which desire to become qualified bidders for investment transactions with OCSD must supply the following for evaluation by the Treasurer: 7.1.1. Audited financial statements for the institution's three (3) most recent fiscal years. 7.1.2. A statement, in the format prescribed by the Government Finance Officers Association (GFOA), certifying that the institution has reviewed OCSD's Investment Policy and that all securities offered to the Districts shall comply fully and in every instance with all provisions of the California Government Code and with this Investment Policy. The current statement is presented in Appendix "C." 7.1.3. A statement describing the regulatory status of the dealer, and the background and expertise of the dealer's representatives. Selection of financial institutions, broker/dealers, and banks authorized to engage in transactions with OCSD shall be made through a competitive process. An annual review of the financial condition of qualified institutions will be conducted by the Treasurer. 7.2 Selection of broker/dealers used by external investment advisors retained by OCSD, shall be in compliance with contract provisions between OCSD and any external investment advisors, and shall be in substantially the following form: Page 4 Use of Securities Brokers: Neither the Investment Advisor nor any parent, subsidiary or related firm shall act as a securities broker with respect to any purchases or sales of securities which may be made on behalf of OCSD, provided that this limitation shall not prevent the Investment Advisor from utilizing the services of a securities broker which is a parent, subsidiary or related firm, provided such broker effects transactions on a "cost only" or"nonprofit' basis to itself and provides competitive execution. The Investment Advisor shall provide the Districts with a list of suitable independent brokerage firms (including names and addresses) meeting the requirements of Government Code Section 53601.5, and, unless otherwise directed by OCSD, the Investment Advisor may utilize the service of any of such independent securities brokerage firms it deems appropriate to the extent that such firms are competitive with respect to price of services and execution. 8.0 Authorized and Suitable Investments: All investments shall be made in accordance with the California Government Code including Sections 16429.1 at seq., 53600 et seq., and 53684, and as described within this Investment Policy. Permitted investments under this Policy shall include: 8.1 Securities, obligations, participations, or other instruments of, or issued by, or fully guaranteed as to principal and interest by the US Government, a federal agency, or a US Government-sponsored enterprise pursuant to Section 53601 (f) of the California Government Code. US Treasury securities must make up at least 10% of the portfolio. 8.2 Supranational Obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank. Securities must be eligible for purchase in the United States and be US dollar denominated senior unsecured unsubordinated obligations, with a maximum maturity of five years. Securities eligible for purchase under this section must be rated "AA" or better by a Nationally Recognized Statistical Rating Organization (NRSRO) and shall not exceed 30% of the total portfolio. 8.3 Mortgage pass-through security, collateralized mortgage obligation, mortgage-backed or other pay-through bond, equipment lease- backed certificate, consumer receivable pass-through certificate, or consumer receivable-backed bond of a maximum maturity of five years. Securities eligible for investment under this subdivision shall be issued by an issuer having an "A" or higher rating for the issuer's debt as provided by an NRSRO and rated in a rating category of"AA" or its equivalent or better by an NRSRO. Purchase of securities Page 5 authorized by this subdivision may not exceed 20 percent of the agency's surplus moneys that may be invested pursuant to this section. Purchase of mortgage derivatives, which include interest-only payments (lOs) and principal-only payments (POs); inverse floaters, and RE-REMICs (Real Estate Mortgage Investment Conduits), is hereby prohibited. 8.4 Commercial paper of"prime" quality of the highest ranking or of the highest letter and number rating as provided by an NRSRO, and issued by a domestic corporation organized and operating in the United States with assets in excess of$500 million and having a rating of"A" or better on its long-term debt as provided by an NRSRO. Purchases of eligible commercial paper may not exceed 270 days to maturity from the date of purchase. Purchases of commercial paper shall not exceed 25% of the market value of the portfolio. No more than 5% of the market value of the portfolio, or 10% of the issuer's outstanding paper, may be invested in commercial paper issued by any one (1) eligible corporation. 8.5 Banker's acceptances issued by institutions, the short-term obligations of which are rated of the highest ranking or the highest letter and number rating as provided by an NRSRO provided that: (a) the acceptance is eligible for purchase by the Federal Reserve System; (b)the maturity does not exceed 180 days; (c) no more than 40% of the total portfolio may be invested in banker's acceptances; and (d) no more than 305% of the total portfolio may be invested in the banker's acceptances of any one (1) commercial bank. 8.6 Medium term (or corporate) notes of a maximum of five (5) years maturity issued by corporations organized and operating within the United States, or issued by depository institutions licensed by the United States, or any state, and operating within the United States with assets in excess of$500 million, and which is rated in a rating category of"A" or better on its long-term debt as provided by an NRSRO. If, after purchase, the rating of an eligible note falls below the minimum rating category stipulated above, the external investment advisor shall notify the District of the downgrade, and shall present an analysis and recommendations as to the disposition of the note consistent with the investment objectives of this Investment Policy. No more than 30% of the portfolio may be invested in medium term notes. 8.7 Notes, bonds, or other obligations that are at all times secured by a valid first priority security interest in securities of the types listed by California Government Code Section 53651 as eligible securities for the purpose of securing local agency deposits having a market value at least equal to that required by California Government Code Section 53652 for the purpose of securing local agency deposits. The securities serving as collateral shall be placed by delivery or book entry into the custody of a Page 6 trust company or the trust department of a bank that is not affiliated with the issuer of the secured obligation, and the security interest shall be perfected in accordance with the requirements of the Uniform Commercial Code or federal regulations applicable to the types of securities in which the security interest is granted. 8.8 Shares of mutual funds investing in securities permitted under this policy and under Section 53601 (1) of the California Government Code. Such funds must either: (1) attain the highest ranking, or the highest letter and numerical rating, provided by not less than two of the three largest nationally recognized rating services; or (2) have an Investment Advisor registered with the Securities and Exchange Commission with not less than five (5) years of experience investing in the securities and obligations authorized under this Policy and under California Government Code Section 53601, and with assets under management in excess of$500 million. The purchase price of shares of beneficial interest purchased pursuant to this policy, and the California Government Code may not include any commission that the companies may charge, and shall not exceed 20% of the District's surplus money that may be invested pursuant to this section. (However, ^No more than 10% of the District's surplus funds may be invested in shares of beneficial interest of any one (1) mutual fund pursuant to this section. Money market mutual funds are limited to 20% per issuer and are not subject to the 10% stipulation. 8.9 Certificates of deposit: 8.9.1 Secured (collateralized) time deposits issued by a nationally or state-chartered bank or state or federal savings and loan association, as defined by Section 5102 of the California Financial Code, and having a net operating profit in the two (2) most recently completed fiscal years. Collateral must comply with Chapter 4, Bank Deposit Law, Section 16500 at seq., and Chapter 4.5, Savings and Loan Association and Credit Union Deposit Law, Section 16600 et seq., of the California Government Code. 8.9.2 Negotiable certificates of deposit (NCDs) issued by a nationally or state-chartered bank or state of federal savings and loan association, as defined by Section 5102 of the California Financial Code; and which shall have a rating of"A" or better on its long-term debt as provided by a NRSRO; or which shall have the highest letter and number rating for deposits as provided by a NRSRO; or as otherwise approved by the District's Board of Directors. No more than 30% of the portfolio may be invested in securities pursuant to this section. 8.9.3 To be eligible to receive local agency money, a bank, savings association, federal association, or federally insured individual loan company shall have received an overall rating of not less than Page 7 "satisfactory" in its most recent evaluation by the appropriate federal financial supervisorial agency of its record of meeting the credit needs of California's communities, including low and moderate income neighborhoods, pursuant to Section 2906 of Title 12 of the United States Code. 8.10 Taxable or tax-exempt municipal bonds issued by any of the 50 United States. Such securities must be rated "A" or higher by a NRSRO; or as otherwise approved by the Districts' Board of Directors. 8.11 The State of California Local Agency Investment Fund (LAIF). The LAIF is an investment alternative for California's local governments and special districts managed by the State Treasurer's Office. LAIF is more fully described in the Glossary (See Appendix "H.") The District shall use LAIF as a short-term cash management facility. Investment of District funds in LAIF shall be subject to investigation and due diligence prior to investing, and on a continual basis to a level of review pursuant to Section 3.0, Standard of Prudence, of this Policy. See Appendix "D" for investment pool questionnaire. 8.12 The Orange County Treasurer's Money Market Commingled Investment Pool (OCCIP). The OCCIP is a money market investment pool managed by the Orange County Treasurer's Office. OCCIP is more fully described in the Glossary. (See Appendix"H") The District has no funds invested in OCCIP at this time. Investment of District funds in OCCIP would be subject to investigation and due diligence prior to investing, and on a continual basis to a level of review pursuant to Section 3.0, Standard of Prudence, of this Policy. 8.13 Repurchase agreements provided that: 8.13.1 All repurchase agreements shall be collateralized with securities eligible for purchase under this Policy. In order to anticipate market changes and to provide a level of security for all repurchase agreement transactions, collateralization shall be maintained at a level of at least 102% of the market value of the repurchase agreements, and shall be adjusted no less than weekly. 8.13.2 All repurchase agreements must be the subject of a Master Repurchase Agreement between OCSD and the provider of the repurchase agreement. The Master Repurchase Agreement shall be substantially in the form developed by The Bond Market Association. 8.14 Reverse repurchase agreements provided that: 8.14.1 No more than five percent (5%)of OCSD's portfolio shall be Page 8 invested in reverse repurchase agreements, and there shall be no long- term reverse repurchase agreements unless otherwise authorized by the Districts' Board of Directors. 8.14.2 The maximum maturity of reverse repurchase agreements shall be ninety (90) days. 8.14.3 Reverse repurchase agreements shall mature on the exact date of a known cash flow which will be unconditionally available to repay the maturing reverse repurchase agreement. 8.14.4 Proceeds of reverse repurchase agreements shall be used solely to supplement portfolio income or to provide portfolio liquidity, and shall not be used to speculate on market movements. 8.14.5 All reverse repurchase agreements must be the subject of a Master Repurchase Agreement between OCSD and the provider of the reverse repurchase agreement. The Master Repurchase Agreement shall be substantially in the form developed by The Bond Market Association. 8.15 Sales of OCSD-owned securities in the secondary market may incur losses in order to improve the risk or return characteristics of the portfolio, to prevent anticipated further erosion of principal, or when trading for securities that result in an expected net economic gain to OCSD. 8.16 If securities owned by the OCSD are downgraded below the quality required by this Investment Policy, it shall be OCSD's policy to review the credit situation and make a determination as to whether to sell or retain such securities in the portfolio. If a decision is made to retain the downgraded securities in the portfolio, their presence in the portfolio will be monitored and reported monthly to the OCSD General Manager, the Administration Committee and Board of Directors. 9.0 Collateralization: Generally, the value to secure deposits under this Policy shall comply with Section 53652 of the California Government Code. Collateralization will be required for secured time deposits, as more fully described in Section 8.8.1; and repurchase agreements, as more fully described in Section 8.13.1. Collateral will always be held by an independent third-party, as more fully described in Section 10.1. The right of collateral substitution is granted. 10.0 Safekeepina and Custody: 10.1 All securities transactions, including collateral for repurchase agreements, Page 9 entered into by, or on behalf of OCSD, shall be conducted on a delivery-versus-payment (DVP) basis. Securities will be held by OCSD's third-party custodian bank, which shall be selected through a competitive process, or that agent's representative, or in the agent's account at the Federal Reserve Bank, or within clearing corporations in the U.S., and evidenced by book entry statements. 11.0 Diversification: OCSD will diversify its investments by security type, issuer, and financial institution in accordance with the following: 11.1 There is no limit on investment in securities issued by or guaranteed by the full faith and credit of the U.S. government. 11.2 No more than 20% of the portfolio may be invested in securities of a single agency of the U.S. government, which does not provide the full faith and credit of the U.S. government. 11.3 No more than 5% of the portfolio may be invested in securities of any one issuer, other than the U.S. government or its agencies. Investment in mutual funds is not governed by this Section 11.3. See Section 11.8 for conditions of purchase of mutual funds. 11.4 No individual holding shall constitute more than 5% of the total debt outstanding of any issuer. 11.5 No more than 40% of the portfolio may be invested in banker's acceptances. 11.6 No more than 25% of the portfolio may be invested in commercial paper. 11.7 No more than 30% of the portfolio may be invested in medium-term (corporate) notes. 11.8 No more than 20% of the portfolio may be invested in mutual funds. 9ewevef- No more than 10% of the District's portfolio may be invested in shares of beneficial interest of any one (1) mutual fund. Money market mutual funds are limited to 20% per issuer and are not subject to the 10% stioulation.{wczl 11.9 No more than 30% of the portfolio may be invested in negotiable certificates of deposit. 11.10 No more than 10% of the portfolio may be invested in eligible municipal bonds. Page 10 11.11 No more than 20% of the Long Term Operating Monies portfolio may be invested in a combination of mortgage-backed securities, CMOs and asset-backed securities. 11.12 No more than the lesser of 15% of the portfolio or the statutory maximum may be invested in LAIR 11.13 No more than 15% of the portfolio may be invested in the Orange County Investment Pool. 11.14 No more than 20% of the portfolio may be invested in repurchase agreements. 11.15 No more than 5% of the portfolio may be invested in reverse repurchase agreements. 12.0 Maximum Maturities: To the extent possible, OCSD will attempt to match its investments with reasonably anticipated cash flow requirements. The Treasurer shall develop a five-year cash flow forecast, which shall be updated quarterly. Based on this forecast, the Treasurer shall designate, from time-to-time, the amounts to be allocated to the investment portfolio. OCSD monies invested in accordance with this Policy are divided into two (2) categories: 12.1 Liquid Operating Monies. Funds needed for current operating and capital expenditures are known as Liquid Operating Monies. 12.1.1 The maximum final stated maturity of individual securities in the Liquid Operating Monies account portfolio shall be one (1) year from the date of settlement. 12.1.2 The average duration of the Liquid Operating Monies account portfolio shall be recommended by the Treasurer based on the Districts' cash flow requirements, but may never exceed 180 days. 12.2 Long Term Operating Monies. Funds needed for longer term purposes are known as the Long Term Operating Monies. 12.2.1 The maximum final stated maturity of individual securities in the Long Term Operating Monies account portfolio shall be five (5) years from the date of settlement. 12.2.2 The duration of the Long Term Operating Monies account portfolio shall be recommended by the Treasurer based on the Districts' five-year rash flow forecast, but may never exceed 60 months. Page 11 12.2.3 The duration of the Long Term Operating Monies account portfolio shall never exceed 120% of the duration as established in accordance with Section 12.2.2. 12.2.4 The duration of the Long Term Operating Monies account portfolio shall never be less than 80% of the duration as established in accordance with Section 12.2.2 13.0 Internal Control: 13.1 The Treasurer shall establish an annual process of independent review by an external auditor. This review will provide internal control by assuring compliance with policies and procedures. The current treasury management procedures are presented in Appendix "B." 14.0 Performance Objectives and Benchmarks: 14.1 Overall objective. The investment portfolio of OCSD shall be designed with the overall objective of obtaining a rate of return throughout budgetary and economic cycles, commensurate with investment risk constraints and reasonably anticipated cash flow needs. 14.2 The Liquid Operating Monies. The investment performance objective for the Liquid Operating Monies shall be to earn a total rate of return over a market cycle which exceeds the return on a market index approved by the Administration Committee, and by the District's Board of Directors, when the duration of the portfolio is established. This market index is more fully described in Board Resolution No. OCSD-00 16 OCSD 16-XX (see Appendix "E"). 14.3 The Long Term Operating Monies. The investment performance objective for the Long Term Operating Monies shall be to earn a total rate of return over a market cycle which exceeds the return on a market index selected by the Administration Committee and approved by the Districts' Board of Directors, when the duration of the portfolio is established. This market index is more fully described in Board Resolution No. OCSID 00 16 OCSD 16-XX (See Appendix "E"). 15.0 Reporting: 15.1 Monthly transaction reports in accordance with California Government Code Section 53607 shall be submitted by the Treasurer to the Adrn „6str Conn Cornrnkt p which shall r..rwafa he . „tip to the District's Board of Directors. Page 12 15.2 Quarterly investment reports will be submitted by the Treasurer to the Administration Committee which shall forward the reports to the District's Board of Directors. The quarterly reports shall provide clear and concise status information on the District's portfolios at the end of each reporting period, including performance measures using the benchmarks described in Section 14.0 of this Investment Policy. Sample quarterly reports are presented in Appendix "F" These reports shall contain listings of individual securities held at the end of each reporting period, and shall disclose, at a minimum, the following information about the risk characteristics of OCSD's portfolio: 15.2.1 Cost and accurate and complete market value of the portfolio. 15.2.2 Modified duration of the portfolio compared to Benchmark. 15.2.3 Dollar change in value of the portfolio for a one-percent (1%) change in interest rates. 15.2.4 Percent of portfolio invested in reverse repurchase agreements, and a schedule which matches the maturity of such reverse repurchase agreements with the cash flows which are available to repay them at maturity. 15.2.5 For the Liquid Operating Monies account only, the percent of portfolio maturing within 90 days. 15.2.6 Average portfolio credit quality. 15.2.7 Percent of portfolio with credit ratings below "A" by any rating agency, and a description of such securities. 15.2.8 State that all investments are in compliance with this policy and the California Government Code, or provide a listing of any transactions or holdings which do not comply with this policy or with the California Government Code. 15.2.9 Time-weighted total rate of return for the portfolio for the prior three months, twelve months, year to date, and since inception compared to the Benchmark returns for the same periods. 15.2.10 State that sufficient funds are available for OCSD to meet its operating expenditure requirements for the next six months, or if not, state the reasons for the shortfall. 15.2 OCSD's Treasurer shall meet quarterly with the Administration Committee to review investment performance, proposed strategies and compliance Page 13 with this Investment Policy. External investment advisors may be required to attend said meetings at the discretion of the Chairman of the Administration Committee. 16.0 Investment Policy Adoption and Revision: 16.1 The Investment Policy of OCSD shall be reviewed by the Administration Committee and shall be adopted by resolution of the Board of Directors of OCSD. The Policy shall be reviewed on an annual basis in accordance with California Government Code Section 53646, and this Investment Policy, by the Administration Committee, which shall recommend revisions, as appropriate, to the Board of Directors. Any modifications made thereto shall be approved by the Board of Directors. 16.2 The Administration Committee shall serve as the oversight committee for the District's Investment program and shall adopt guidelines for the ongoing review of duration, quality and liquidity of the District's portfolio. Page 14 APPENDIX "A" SUMMARY OF INVESTMENT AUTHORIZATION INTERNAL AND EXTERNAL MANAGERS SHORT TERM OPERATING FUND INVESTMENT INTERNAL EXTERNAL U.S. Treasuries OK OK Federal Agencies Fixed coupon, fixed mat. OK Supranationals NO OK Mortgage-backed NO NO Commercial paper OK OK Banker's Accept. OK OK Medium Term Notes Fixed coupon, fixed mat.* OK Mutual Funds Money Market Only** Money Market Only Negotiable CDs Fixed coupon, fixed mat.* OK Municipal Bonds OK* NO LAIF OK NO OCIP OK NO CMOs NO OK Asset-backed NO OK Repurchase Agree. OK OK Reverse Repos OK* OK LONG TERM OPERATING PORTFOLIO INVESTMENT INTERNAL EXTERNAL U.S. Treasuries OK OK Federal Agencies Fixed coupon, fixed mat. OK Supranationals NO OK Mortgage-backed NO OK Commercial Paper OK OK Banker's Acceptances OK OK Medium Term Notes Fixed coupon, fixed mat.* OK Mutual Funds Money Market Only** OK Negotiable CDs Fixed coupon, fixed mat.* OK Municipal Bonds OK* OK LAIF OK NO OCIP OK NO CMOs NO OK Asset-backed NO OK Repurchase Agree. OK OK Reverse Repos OK* OK *With prior approval of the Administration Committee. **Using financial institutions approved by the Administration Committee. EXHIBIT "B" Calendar Year 2017 Performance Monitoring & Reporting Schedule For the Administration Committee The Quarterly Investment and Board of Directors meetings of: Management Program Report to be resented for the period of: January 2017 February Oct— Dec 2016 March April May Jan — March 2017 June Jul August Board only) Aril — June 2017 September October November Jul —Sept 2017 December EXHIBIT "B" ORANGE COUNTY SANTIATION DISTRICT PERFORMANCE MONITORING & REPORTING SUMMARY FOR THE DISTRICT'S INVESTMENT PROGRAM POLICY REFERENCE PERFORMANCE CHARACTERISTIC REPORTING PARTY* Chandler BNY Callan 15.2.1 Cost and market value of the portfolio(monthly mark-to-market). M, Q M, Q Q 15.2.2 Modified duration of the portfolio compared to benchmark. M, Q Q 15.2.3 Dollar change in value of the portfolio for a 1%change in interest rate. M, Q Q 15.2.4 Percent of portfolio invested in reverse repurchase agreements, and a schedule which M, Q matches the maturity of such reverse repurchase agreements with the cash flows which are available to repay them at maturity. 15.2.5 For the Liquid Operating Monies account only,the percent of portfolio maturing within 90 M, Q Q days. 15.2.6 Average portfolio credit quality. M, Q Q 15.2.7 Percent of portfolio with credit ratings below"A" by any rating agency, and a description M, Q Q of such securities. 15.2.8 Listing of any transaction or holdings which do not comply with this policy or with the M, Q California Government Code. 15.2.9 Time-weighted total rate of return for the portfolio forthe priorthree months,twelve M, Q Q months, year-to-date, and since inception compared to the benchmark returns for the same periods. ADDL* Comparison of portfolio performance to market index benchmark. M, Q Q ADDL** Comparison of Manager's performance to peer group benchmark. Q ADDL" Monitoring of organizational and structural changes of investment management firm. Q ADDL** Audit portfolios for compliance with investment policy guidelines. Q 15.2.10 OCSD will report if sufficient funds are available for it to meet operating expenditure requirements for the next six months, or if not, state the reason for the shortfall. Notes *M = Monthly *Q =Quarterly **ADDL= Monitoring of Additional Performance Characteristics RESOLUTION NO. OCSD 16-19 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT, AUTHORIZING THE DISTRICT'S TREASURER TO INVEST AND/OR REINVEST DISTRICT'S FUNDS, ADOPTING DISTRICT'S INVESTMENT POLICY STATEMENT AND PERFORMANCE BENCHMARKS; AND REPEALING RESOLUTION NO. OCSD 15-25 WHEREAS, on December 16, 2015, the Board of Directors adopted Resolution No. 15-25, readopting the District's Investment Policy Statement, and establishing specific performance benchmarks and objectives, together with a schedule of frequency of investment performance reports; and WHEREAS, pursuant to California Government Code Section 53607, the Board of Directors may delegate authority to invest and/or reinvest District's funds to the Treasurer for a one-year period; and WHEREAS, pursuant to California Government Code Section 53646, the District is required to review its Investment Policy annually and readopt its Policy at a public meeting,which Policy will establish specific performance benchmarks and objectives, and specific monitoring and reports. NOW, THEREFORE, the Board of Directors of the Orange County Sanitation District, DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1: That the authority of the Board of Directors to invest or reinvest District's surplus funds, or to sell or exchange securities so purchased, or to deposit for safekeeping the funds and investments of the Districts with depositories, as provided for in California Government Code Sections 53608 and 53630, is hereby delegated to the District's Treasurer for a one-year period commencing on the date this Resolution is adopted, as authorized by California Government Code Section 53607. OCSD 16-XX-1 Section 2: That the Board of Directors hereby adopts the Investment Policy Statement of the Orange County Sanitation District, as set forth in Exhibit "A", attached hereto and incorporated herein by reference. Section 3: That the Board of Directors hereby adopts the following specific performance benchmarks for their two investment funds in accordance with Section 14.0 of the District's Investment Policy: LIQUID OPERATING MONIES: The Short-Term Operating Fund will be compared to the three-month T-Bill rate, and the Callan Active Cash Flow Income Style Group. The Callan Active Cash Flow Income Style Group represents a peer group of managers who operate with a maximum maturity of one year. LONG-TERM OPERATING MONIES: The Long-Term Operating Fund will be compared to the Merrill Lynch Government and Corporate One-to-Five Year Maturity Index and to the Callan Defensive Fixed Income Style Group. Section 4: That the Board of Directors hereby adopts a performance monitoring and reporting schedule, as required by Section 15.0 of the District's Investment Policy, which schedule is attached hereto as Exhibit"B", and incorporated herein by reference. Section 5: That Resolution No. OCSD 15-25 is hereby repealed. OCSD 16-XX-2 PASSED AND ADOPTED at regular meeting of the Board of Directors, Orange County Sanitation District held October 26, 2016. John Nielsen Board Chair ATTEST: Kelly A. Lore Clerk of the Board OCSD 16-XX-3 STATE OF CALIFORNIA ) ss COUNTY OF ORANGE ) I, Kelly A. Lore, Clerk of the Board of Directors of the Orange County Sanitation District, do hereby certify that the foregoing Resolution No. OCSD 16-XX was passed and adopted at a regular meeting of said Board on the 26th day of October, 2016, by the following vote, to wit: AYES: NOES: ABSTENTIONS: ABSENT: IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of Orange County Sanitation District this 26th day of October, 2016. Kelly A. Lore Clerk of the Board of Directors Orange County Sanitation District OCSD 16-XX-4 Appendix "B" Revised: BeeNovember 1, 20164 Orange County Sanitation District Treasury Management Procedures 1.0 Purpose 1.1 The purpose of this policy is to establish uniform guidelines and procedures for use in the administration of the District's Treasury functions consistent with the California Government Code and the District's adopted Investment Policy Statement. 2.0 Authority to Investment and/or Reinvestment of District Funds: 2.1 Is delegated annually to the Director of Finance/Treasurer in accordance with California Government Code Section 53607. 3.0 Formal Investment Policy Statement: 3.1 Is prepared by the Treasurer. 3.2 Is reviewed by the District's Administration Committee (ADM), in its role as the finance oversight committee. 3.3 Is submitted to and adopted by the District's Board of Directors annually at a public meeting in accordance with California Government Code Section 53646. 4.0 Delegation of some or all of the investment portfolio management to one or more registered investment advisors (external money managers): 4.1 Is authorized by the District's Investment Policy; 4.2 Applies to the District's entire investment portfolio except for: 4.2.1 A maximum of $6550 million that is maintained within the State Local Agency Investment Fund (LAIF)for managing cash flows (i.e., deposits of large revenues, such as property tax and user fee proceeds, and the bi-weekly disbursements of payroll and accounts payable); 4.2.2 A peg amount of approximately $50,000 is maintained within the District's checking account at Union Bank to serve as compensating balances to offset banking charges (note: the District's Board of Directors has selected Union Bank-to serve as the District's commercial bank (the "Bank"); and 4.2.3 Based on a determination by the District's Treasurer on what is most advantageous to the District, the checking account residual amounts may be invested as follows: Orange County Sanitation District Treasury Management Procedures Revised: November 1,2016 Page 2 of 7 4.2.3.1 Bank balances exceeding the peg balance (as a result of outstanding accounts payable and payroll warrants) may be invested overnight under a repurchase agreement with the Bank; or 4.2.3.2 The District may elect to receive earnings credit against bank charges on all bank balances including the peg amount equal to the 91 Day T-Bill Average. 5.0 Investment transactions involving the LAIF are approved by the Treasurer prior to their execution by the Controller. The approval function indicates that the transactions are in accordance with the District's Investment Policy. The Accounting Manager will serve as backup for the approval function upon the absence of any either of these two employees. 5.1 Specific Procedures involving LAIF include (note: all deposits and withdrawals of funds toffrom LAIF may only be processed through the District's checking account with the Bank): 5.1.1 A "State Treasurer's Local Agency Investment Fund Authorization Form" (see Attachment "A") must be completed prior to the execution of the transaction indicating: 5.1.1.1 The effective date of the transaction; 5.1.1.2 The dollar amount to be withdrawn from or deposited into LAIF; 5.1.1.3 The date and signature approval by the Controller authorizing the transaction; and 5.1.1.4 The date and signature approval of the Treasurer approving the transaction. 5.1.2 The execution of the transaction will be done in accordance with the "State Treasurer's Local Agency Investment Fund Wire Transfer Instructions" (see Attachment "B"). Key internal control features include: 5.1.2.1 The requirement of the District's Personnel Identification Number (PIN)for either deposits or withdrawals, known only by the Treasurer and Controller. 5.1.2.2 Secondary confirmation requirement by the Bank for the Orange County Sanitation District Treasury Management Procedures Revised: November 1,2016 Page 3 of 7 withdrawals/deposits from/to the Bank or LAIF. The confirmation can be made by the Controller or Treasurer(the person that didn't make the original request), the Accounting Manager, or the Principal Accountant. 5.1.3 Each transaction is confirmed the next day by the Bank's Previous Day Reporting modem service by the Principal Accountant and Controller. 6.0 Investment transactions involving the District's external investment program and performed by the independent investment firms are as follows: 6.1 The District's Board of Directors has selected Chandler Asset Management (Chandler) to manage two portfolios: the Districts' Liquid Operating Monies Fund, and the Long-term Operating Monies Fund. 6.1.1 Chandler has authorization to purchase and sell investment securities in accordance with the strict investment guidelines set forth in the District's Investment Policy (Section 8.0). 6.1.2 Hard copy confirmation reporting to the District is required on all transactions. 6.2 The District's Board of Directors has selected Mellon/Boston Trust (the "Custodian")to serve as the District's master custodian and safekeeping bank. In their capacity as Custodian, Mellon/Boston Trust shall perform the following duties to settle purchases and sales and engage in other transactions in the administration of the District's accounts: 6.2.1 Upon execution of any transaction by Chandler, all investment securities are recorded in book entry by the Custodian through either the Depository Trust Company or the Federal Reserve Bank; 6.2.2 Hold the property in safekeeping facilities of the Custodian or of other custodian banks or clearing corporations in the U.S.; 6.2.3 Collect all income payable to and all distributions due to the District's account and sign on the District's behalf all declarations, affidavits, and certificates of ownership required to collect income and principal payments; 6.2.4 Collect all proceeds from securities, certificates of deposit or other investments which may mature or be called; 6.2.5 Submit or cause to be submitted to the District or the external money Orange County Sanitation District Treasury Management Procedures Revised: November 1,2016 Page 4 of 7 manager, as designated by the District, on a best effort basis all information received by the Custodian regarding the ownership rights pertaining to property held in the account; 6.2.6 Attend to involuntary corporation actions; 6.2.7 Determine the fair market value of the District's account on a monthly basis as of such dates as the Districts and the Custodian may agree upon, in accordance with methods consistently followed and uniformly applied; 6.2.8 Render to District, with copies to the external money manager, monthly statements for securities held hereunder; and 6.2.9 Provide the District with copies of the Custodian's financial statements filed with the State of California, or any agency thereof, within thirty(30) days after such filing. 6.3 The District's Board of Directors has selected Callan Associates as the District's Independent Investment Advisor (the "Advisor'). In their capacity as Advisor, Callan shall perform the following duties on behalf of the District: 6.3.1 Monitor and report on Chandler's compliance with the investment requirements of the Districts' Investment Policy, using data from transaction reports prepared by Mellon/Boston Trust, on a quarterly basis; 6.3.2 Review Chandlers investment strategy quarterly; 6.3.3 Monitor and report on the performance of Chandler against the performance benchmark standards established in the District's Investment Policy for both the Liquid Operating Monies Fund and the Long-term Operating Monies Fund on a quarterly basis; and 6.3.4 Review both Liquid and Long-term Operating Funds by asset allocation, asset flow, quarterly factors and cumulative results on a quarterly basis. 6.4 Specific procedures in depositing to or withdrawing funds from the investment portfolio managed by the District's external money manger include: (note: all deposits and withdrawals of funds from the District's investment portfolio managed by Chandler and Mellon/Boston Trust may only be processed through the District's checking account at the Bank): 6.4.1 A"Wire Transfer Form" (see Attachment" C")must be completed by the Controller prior to the execution of the transaction indicating: Orange County Sanitation District Treasury Management Procedures Revised: November 1,2016 Page 5 of 7 6.4.1.1 The dollar amount to be withdrawn/deposited from/to the Bank checking account to/from the Chandler Liquid Operating or Chandler Long-term Operating Monies Funds; 6.4.1.2 The effective date of the transaction; 6.4.1.3 The date and signature review by the Controller; and 6.4.1.4 The date and signature approval of the Treasurer approving the transaction. 6.4.2 The execution of the transaction requires a verbal confirmation call from the Custodian to the Controller at the time of the transaction, and a written confirmation the following day. 6.4.3 Each transaction is confirmed the next day by the Bank's Previous Day Reporting modem service by the Principal Accountant and Controller. 7.0 Recording of investment transactions: 7.1 For investment transactions conducted by District staff with the LAIF, and with the transfer/withdrawal of funds with the Custodian: 7.1.1 Is done by the Controller who maintains a file of all investment transactions. 7.1.2 Is done within the accounting records by the Principal Accountant, who receives a signed copy of all investment transactions from the Controller. 7.2 For investment transactions conducted by the external money manager: 7.2.1 Is done by the Custodian who posts all investment transactions daily within their record keeping system and provides the District with a monthly report that provides both a summary and detail listing of all investment transactions. 7.2.2 Is done on a monthly basis by the Accounting Manager within the accounting records at a summary level using Monthly Transaction Reports prepared by the Custodian. 8.0 Verification of external money manager transactions is performed by: 8.1 The Custodian within their record keeping system (i.e., matching broker Orange County Sanitation District Treasury Management Procedures Revised: November 1,2016 Page 6 of 7 confirmations to custodian records), and is reported to the District and Chandler on a monthly basis. 8.2 Chandler through their internal compliance office and reported monthly to the District as required by the District's Investment Policy. 8.3 The Principal Accountant through reconciliation of Chandler's monthly investment transaction report against the monthly transaction report provided by the Custodian. 9.0 Safeguarding of Assets and Records: 9.1 Reconciliation of investment records to the accounting records is done by the Principal Accountant, or in his absence, the Accounting Manager on a monthly basis. 9.2 Reconciliation of investment records to bank statements is performed by the Principal Accountant (or in their absence, the Accounting Supervisor) within one week following the receipt of the bank statement. 9.3 Review of financial condition, safety, liquidity, and potential yields of investment instruments and reputation and financial condition of investment brokers is done by the District's external money manager, who is authorized to utilize the services of independent securities brokerage firms as deemed appropriate, and which meets the requirements of Government Code Section 53601.5. 10.0 The periodic review of the investment portfolio, including investment types, purchase price, market values, maturity dates, and investment yields as well as conformance to the stated Investment Policy will be performed monthly by the Controller, quarterly by the Advisor, and annually by the District's external independent auditors. 11.0 The District's Administration Committee will serve as the Oversight Investment Advisory Committee to assist the Board of Directors in monitoring treasury management activities. 11.1 The District's Treasurer submits a Quarterly Investment Program Performance Report which includes, but is not limited to, the following information: 11.1.1 Quarterly interest earnings and rates of return; 11.1.2 The market value of the portfolios; 11.1.3 The annualized earnings of the portfolios; Orange County Sanitation District Treasury Management Procedures Revised: November 1,2016 Page 7 of 7 11.1.4 Market recap; 11.1.5 Comparisons with pre-determined benchmarks; 11.1.6 Market forecast; and 11.1.7 Proposed investment strategy for the upcoming quarter. Internal Control Strengths 1. The specific responsibility for the performance of duties is assigned and lines of authority and reporting are clearly identified. 2. Responsibilities are commensurate with the capabilities of the personnel assigned. 3. Incompatible functions have been properly segregated to prevent errors or fraud. 4. All transactions are authorized by an appropriate responsible individual. 5. Safeguards over assets and records are in place to ensure that recorded assets exist and are properly recorded. 6. Management controls are in place to ensure that significant transactions are properly performed and recorded. H1DEPTPINMMWHITEURE SURV MGkMINVESTMENT POLIGW015\TRE SMGMT PROC.DOC ADMINISTRATION COMMITTEE Meeting Date TOBE.Or .Dir. 10/12/16 10/26/16 AGENDA REPORT Item Item Number 7 16 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: ELIMINATION OF UNFUNDED ACTUARIAL ACCRUED LIABILITYWITHIN THE ORANGE COUNTY EMPLOYEES' RETIREMENT SYSTEM GENERAL MANAGER'S RECOMMENDATION Direct staff to pay off the Orange County Sanitation District's (Sanitation District) unfunded actuarial accrued pension liability (UAAL) in its defined pension plan administered by the Orange County Employees Retirement System (OCERS) in an amount not to exceed $40 million. BACKGROUND As of July 1, 2014, the District had an UAAL in its defined pension plan administered by OCERS of $194 million. In fiscal year 2014-15 and fiscal year 2015-16, the District paid down $125 million and $50 million of this liability, respectively. Based on OCERS most recent actuarial valuation report, this existing UAAL now approximates $6 million. However, for the OCERS year ended December 31, 2015, OCERS actuarial assumed rate of return was 7.25 percent, but actual investment returns were less than one percent. OCERS actual investment returns were $660 million less than what was anticipated and the District's allocated share of this shortfall (deferred investment loss) is approximately $33 million. Combining this new UAAL addition of $33 million with the previous existing UAAL of approximately $6 million equals a total UAAL of close to $40 million. Over the last 20 years, OCERS annual rate of return exceeded the Sanitation District's 70 percent of the time. Due to their ability to invest in the equity market, staff believes that, over the long-term, OCERS will consistently outperform the Sanitation District's return on investments. Therefore, staff recommends reducing its investment portfolio to fund its current total UAAL of approximately $40 million. RELEVANT STANDARDS Ensure the public's money is wisely spent Resolution No. OCSD 15-25 — Sanitation District's adopted Investment Policy - prudent investor standard PROBLEM The return on investments by OCERS was less than planned within its actuarial assumptions, thereby creating a new Sanitation District UAAL for the OCERS year-ended Page 1 of 2 December 31, 2015 of approximately $33 million. Combining the Sanitation District's newly established $33 million UAAL along with the existing UAAL of$6 million is close to $40 million. The Sanitation District could amortize the payment of this $40 million UAAL over a long period of time, such as 10 to 20 years; however, in doing so, the Sanitation District would have to make up the anticipated returns these funds would be earning by OCERS over this repayment period. However, by paying this funds off now in a lump sum, the Sanitation District will forgo future anticipated interest expense of approximately 7.25% a year. PROPOSED SOLUTION Direct staff to pay off the Sanitation District's total UAAL estimated at $40 million. TIMING CONCERNS As soon as the UAAL payoff is made, the annual 7.25% interest rate applied against these funds will cease. RAMIFICATIONS OF NOT TAKING ACTION The Sanitation District will have to pay off its UAAL through a 104o-20-year amortization scheduled at a rate of 7.25%, far below its ability to produce returns on its investment portfolio. PRIOR COMMITTEE/BOARD ACTIONS July 2015 - Board approved the FY 2015-16 Budget Update, which included a line item for the pay down of$50 million in UAAL with OCERS. July 2014 - Board action approved $125 million pay down of UAAL with OCERS. ADDITIONAL INFORMATION N/A FINANCIAL CONSIDERATIONS N/A ATTACHMENT The following attachment(s) is included in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.corn with the complete agenda package: Letter to Steve Delaney, Chief Executive Officer, OCERS from Segal Consulting (Actuaries) dated September 9, 2016 Page 2 of 2 7T- Segal Consulting 1W Montgomery Street Suite 500 San Frandsco,CA 941044308 T415.263.8260 sw.waegalco.wm September 9, 2016 Mr. Steve Delaney Chief Executive Officer Orange County Employees Retirement System 2223 Wellington Avenue, Suite 100 Santa Ana, CA 92701-3101 Re: Orange County Employees Retirement System Accelerated Funding of UAAL for O. C. Sanitation District with Additional Contribution to be Made on September 20, 2016 Dear Steve: In this letter we have calculated the additional payment required by O.C. Sanitation District (the District)to pay off their full existing Unfunded Actuarial Accrued Liability(UAAL)with OCERS,using the results from the December 31, 2015 valuation. As further directed by OCERS and requested by the District,we have also included an additional payment for the contingent UAAL that may result from recognizing the deferred investment losses I as of December 31,2015 from asset smoothing. If such payments are made to pay off both the existing and contingent UAALs, and all actuarial assumptions were met in the future, the District would only be required to contribute the normal cost rate for the fiscal year 2017/2018 and beyond. BACKGROUND For the purpose of determining the contribution rates in the ongoing valuation, employers that offer the same plan of benefit have generally been assigned to the same rate group. This should result in more stable contribution rates (especially for the smaller employers)as the actual experience from a larger group of members would be pooled in establishing the contribution rate requirements. Since OCERS is a cost-sharing multiple employer plan,neither UAAL nor assets are maintained on an employer-by-employer basis in our valuation (unless an employer is the only employer in a particular rate group). This has continued to be the case for the District in Rate Group#3 except that when they made additional UAAL contributions in 2014 These deferred investment losses are ormingent on the System earning the assumed 7.25%rate of return on a market value basis after the December 31,2015 valuation. Bereft,Comp nsabon and HR Coneufting.Member of The Segel Gmup.GReas tbmughaut the United Stales and Canada Mr. Steve Delaney September 9, 2016 Page 2 and 2015, we had in the valuation process begun to keep track of the outstanding balance of the additional UAAL contributions as of the date of the annual actuarial valuation and the UAAL contribution rate credit available in the fiscal year that beings 18 months after the valuation date. Other than tracking the outstanding balance of the additional UAAL contributions made in 2014 and 2015, in the valuation we do not maintain a separate UAAL for just the District as their employees are in Rate Group#3 along with employees from O.C. Law Library. Both employers will be expected to make payments to the gross UAAL' in Rate Group 43 in proportion to their payroll. CALCULATION OF EXISTING UAAL Based on the above discussion, we have approximated the District's share of the UAAL by using the ratio of the payroll for that employer to the total payroll for Rate Group#3. This is consistent with the current practice that, in the on-going valuation, a single contribution rate is calculated to pay off the UAAL for all employers in that Rate Group. The gross UAAL for Rate Group#3 as of the December 31, 2015 valuation was $186,082,000.4 Based on the above method of allocating UAAL by payroll,we have estimated the gross UAAL for the District to be$182,629,445 as of December 31, 2015.5 ('this also means that O.C. Law Library's UAAL is $2,943,5556 as of December 31, 2015 when the existing UAAL is allocated by payroll,after reflecting a$509,000 credit to O.C. Law Library for their future service only benefit improvement.) The net UAAL for the District after adjusting for the outstanding balance of the additional UAAL contributions of$177,360,000 is $5,269,4457,8 as of December 31,2015. 2 That is the UAAL in Rate Group#3 after subtracting the outstanding balance of the additional UAAL contributions made by the District as if those contributions bad not been made. 3 Again,there is an adjustment made in the valuation to account for the prior additional contributions made by the District. Also,there is an adjustment made in the valuation to that rate for O.C.Law Library to account for their future service only benefit improvement(for Plans G and In. 4 This is calculated by adding the outstanding balance of the additional UAAL contributions of$126,206,000 and$51,154,000 from the District to the UAAL of$8,722,000 for Rate Group#3. 5 Based on a payroll of$63,106,000 for the District and$1,193,000 for O.C.Law Library as of December 31,2015. 6 This is equal to$186,082,000 minus$182,629,445 minus$509,000. 7 The method stated above is consistent with the first step of the process used by OCERS to set the UAAL contribution rate for a fiscal yew(such as 2017/2018)of implicitly allocating the UAAL by payroll between the two different employers. However,when adjusting for the 18-month lag between the valuation date and the date contribution rates become effective, the above UAAL has not been adjusted for the contribution gain that we built in as a second step of the process used by OCERS to set the UAAL contribution one due to net actuarial experience gains since the 2013 and 2014 valuations.While we have estimated those gains to be about$2 million,those gains when realized will be allocated primarily back to the District as they represent over 98%of the payroll in Rate Group#3. 8 Note that the sum of the UAAL for the District($5,269,445)and O.C,Law Library($2,943,555)is$509,000 less than the $8,722,000 UAAL that we used in the December 31,2015 valuation to set the UAAL contribution rate assuming an all service benefit improvement for all of Rate Group#3.A subsequent credit for future service only benefit improvement is provided in the December 31,2015 valuation for O.C.Law Library,based on the UAAL reduction of$509,000, 5450573A/05794.001 Mr. Steve Delaney September 9, 2016 Page 3 We propose that the payoff amount be determined by adjusting$5,269,445 with interest at the assumed rate of investment return from December 31, 2015 to the actual date of the funding of the UAAL. We understand that the District has requested a calculation based on a payment date of September 20, 2016. If a payment is made on that date, the payment amount would be equal to $5,542,310 (i.e., $5,269,445 adjusted with interest for 264 days from December 31, 2015 to September 20, 2016). We would also propose that upon receiving the amount required to pay off the UAAL,OCERS consider reducing the District's total contribution rate for fiscal yew 2017/2018 to only the level required to pay the normal cost. In particular,this means that if the District were to pay off their UAAL on September 20, 2016,then their total contribution rate for fiscal year 2017/2018 would be reduced to the normal cost rate. This means in essence that all of the amortization bases as of December 31, 2015 associated with the District would be considered fully amortized. Also,upon receiving the amount required to pay off the UAAL from the District, OCERS could consider combining the amortization layers for O.C. Law Library as of December 31,2015 to a single base equal to the UAAL remaining for O.C. Law Library only (i.e., $2,943,555 as of December 31, 2015)as part of the next valuation as of December 31,2016. The single amortization layer for O.C. Law Library could be amortized over a period roughly equal to the single equivalent amortization period for the current amortization layers for Rate Group#3 rounded to an integral number of years. CALCULATION OF CONTINGENT UAAL In the December 31, 2015 valuation, the System had $679,569,000 in total net deferred investment losses. The District requested that an allocated share of those losses be included in the UAAL payoff amount. As the deferred investment losses are expected to be allocated among the different rate groups in future valuations in proportion to the valuation value of assets for each rate group in those valuations,we have approximated Rate Group#3's allocation by using Rate Group 43's proportion of 4.7414% of total valuation value of assets determined as of December 31,2015,resulting in an allocation of$32,221,1779 of the total net unrecognized investment losses to Rate Group#3. Using the same method used above of allocating the UAAL by payroll within the rate groups,we have estimated the District's share of the total net deferred investment losses to be $31,623,347 as of December 31, 2015. We propose that the payment amount be determined by adjusting $31,623,347 with interest at the assumed rate of investment return from December 31, 2015 to the actual date of the funding of the contingent UAAL. If a payment is made on September 20,2016,the payment amount would be equal to $33,260,882 (i.e., $31,623,347 adjusted with interest for 264 days from December 31,2015 to September 20, 2016). 9 The$32,216,930 calculated in our GASB 68 report includes an allocation of the$89,000 in non-valuation reserves. 5450573A/05794.001 Mr. Steve Delaney September 9, 2016 Page 4 If the District were to proceed with a payment towards this contingent UAAL,we would recommend that the District request that OCERS put the contributions allocated to pay the contingent UAAL in a book-keeping account. That is because the contingent UAAL is not yet part of OCERS' actual UAAL. If approved by the Board,the balance in that account would not be included immediately as valuation assets and therefore would not be used to immediately reduce the District's UAAL amount. Instead,the balance from that account adjusted with actual market rates of return(similar to how such rates have been used to adjust the amounts in the County Investment Account)would be used to make payments on the UAAL on a year-by-year basis until the account becomes depleted. We note that this is the first time we have provided a contingent UAAL to one of OCERS' employers for funding purposes. As such,the Retirement System should be reminded that: I The actual amount of UAAL from deferred investment losses may be higher or lower in future valuations if the System either earns less or more than the assumed rate of 7.25% after December 31,2015. 2) In determining the Rate Group#3's share of the $679.6 million in total net deferred investment losses,we have made the simplifying assumption that the Rate Group#3's proportion of assets would remain unchanged after the December 31, 2015 valuation. 3) In determining the District's share of the losses described in 2), we have made the simplifying assumption that the District's proportion of payroll in Rate Group#3 would remain unchanged after the December 31,2015 valuation. 4) Even though we have included the deferred investment losses in calculating the contingent UAAL, in practice,those defered investment losses would not be reflected until the annual actuarial valuation when those amounts are scheduled to be recognized. This means that absent any other adverse actuarial experience(other than the recognition of the deferred investment in each of the next four years), Rate Group#3 would be over 100% funded in the next several valuations if we were to include the additional contributions in the valuation without tracking such contributions in a book- keeping account. If the additional contributions are deposited into a book-keeping account as we recommend in this letter, we would be able to track the amounts intended to fund such deferred investment losses. OTHER CONSIDERATIONS Even though the District may pay off their full UAAL,they should be reminded that new UAAL(either positive or negative)may emerge as a result of any deviation of actual experience from that expected by the assumptions. In practice, any new positive UAAL that emerges afterward would result in the District resuming the payment of UAAL contributions in a future valuation. Conversely, any new negative UAAL(i.e., surplus) would be amortized over 5450573A/057M.001 Mr. Steve Delaney September 9, 2016 Page 5 the Board's funding policy of 30 years and be used to reduce the District's contribution to a level below the normal cost rate. Because of the requirements imposed by the CalPEPRA, surplus would not be amortized until the funded status is in excess of 120%and all other legal conditions imposed by CaIPEPRA are met. We are members of the American Academy of Actuaries and we meet the qualification requirements to render the actuarial opinion contained herein. Please let us know if you have any questions. Sincerely, Paul Angelo, FSA,MAAA,FCA,EA Andy Yeung,ASA, MAAA, FCA, EA Senior Vice President and Actuary Vice President and Actuary AW/bgb cc: Ms. Suzanne Jenike Ms. Brenda Shott 5450513A/057M.001 STEERING COMMITTEE weeung Date T09d.Of Dir. 10/26/16 10/26/16 AGENDA REPORT Item Number Item Number z v Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Robert Ghirelli, Assistant General Manager SUBJECT: STRATEGIC PLAN UPDATE GENERAL MANAGER'S RECOMMENDATION Receive and file the Strategic Plan Update. BACKGROUND In November 2013, the Board of Directors adopted the 2014-2019 Five-Year Strategic Plan identifying eight major Strategic Initiatives. A comprehensive review and Update of the Strategic Plan takes place every two years to make any necessary changes and updates. In October 2015, a Strategic Plan Workshop was held with the Board of Directors. The Directors were briefed on two completed initiatives, and discussed two issues related to the Orange County Sanitation District's Levels of Service (LOS) for odor complaints and the potential of capturing storm water runoff. At the conclusion of the workshop, the Board of Directors decided not to make any changes to the LOS. RELEVANT STANDARDS • Strategic Plan PRIOR COMMITTEE/BOARD ACTIONS October 2015 - Strategic Plan Update Board Workshop. ADDITIONAL INFORMATION The Strategic Plan is on a two-year update cycle. The plan was updated in 2015 following a Board Workshop. The next plan update will occur during 2017. During 2016, we are pleased to report that the following major strategic initiative was completed: • Local Sewer Transfers—Complete the transfer of 174 miles of local sewers serving parts of Tustin and unincorporated areas north of Tustin and local sewer transfers in the City of Santa Ana. ATTACHMENT The following attachment(s)are attached in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.com) with the complete agenda package: • OCSD Strategic Plan Goals Page 1 of 1 OCSD Strategic Plan Goals Providing Exceptional Customer Service #1: Odor Control (Master Plan) December 2016 Protecting Public Health & The Environment #2: Future Biosolids Management Options #3: Energy Efficiency Managing and Protecting the Public's Funds #4: Disinfection of Ocean Discharge Completed 2015 #5: Local Sewer Transfers Completed 2016 Stakeholder Understanding and Support #6: Legislative Advocacy and Public Outreach Completed 2015 #7: Future Water Recycling Options Organizational Effectiveness #8: Workforce Planning and Development BOARD OF DIRECTORS Meeting Date TOBE.Or .Dir. -- 10/26/16 AGENDA REPORT Item Item 18 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Director of Engineering SUBJECT: NEWHOPE-PLACENTIA TRUNK REPLACEMENT, PROJECT NO. 2-72 GENERAL MANAGER'S RECOMMENDATION A. Adopt Resolution No. OCSD 16-20 entitled, "A Resolution of the Board of Directors of the Orange Sanitation District Accepting the Proposition 84 Integrated Regional Water Management Program 2015 Implementation Grant Funding Contract for Newhope-Placentia Trunk Sewer Replacement Project 2-72"; and B. Approve the Contract between the Orange County Sanitation District and the Santa Ana Watershed Project Authority(SAWPA)to allow the Newhope-Placentia Trunk Replacement, Project No. 2-72, to receive Proposition 84 related grant funds up to $1,000,000. BACKGROUND Contract No. 2-72A, Newhope-Placentia Trunk Sewer Replacement, Segment A, includes the Newhope-Placentia Trunk in Yorba Linda Boulevard from Campus Drive to State College Boulevard, and on State College Boulevard from Yorba Linda Boulevard, to just south of the 91 Freeway. This portion of the project is currently under construction within the City of Fullerton (City). The second portion, Contract No. 2-72B, continues south to Orangewood Avenue at Anaheim Stadium and is currently in the preliminary design phase. The additional capacity provided by the project will allow flows currently going to Plant No. 2 to be diverted to Plant No. 1 for reclamation. Through the 2015 Proposition 84 Integrated Regional Water Management Implementation Grant, the State of California will provide funding from the Safe Drinking Water, Water Quality and Supply, Flood Control, River and Coastal Protection Bond Act of 2006 to assist in financing projects related to water resources. SAWPA is the Local Project Sponsor for this program. Staff applied for a grant in fall 2015. SAWPA notified staff in late 2015 that a $1,000,000 grant was approved for the project. Since then, staff has been coordinating with SAWPA to satisfy State requirements. Once finalized, SAWPA will act as an agent of the State. RELEVANT STANDARDS N/A Page 1 of 2 PROBLEM An agreement with SAWPA is required to receive the grant. PROPOSED SOLUTION Approving this agreement will allow the Orange County Sanitation District (Sanitation District)to receive a $1,000,000 grant. TIMING CONCERNS N/A RAMIFICATIONS OF NOT TAKING ACTION The Sanitation District will miss out on the opportunity to receive grant funding. PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION N/A CEQA The Sanitation District, as lead agency, prepared a Program Environmental Impact Report (PEIR) entitled 1999 OCSD Strategic Plan. The Board certified the PEIR on October 27, 1999. The Sanitation District filed a Notice of Determination on October 29, 1999. In February 2016, the Sanitation District received and filed an Addendum to the PEIR. FINANCIAL CONSIDERATIONS The grant will add $1,000,000 to the Sanitation District's budget. ATTACHMENT The following affachment(s)are attached in hard copy and may also be viewed on-line at the OCSD website (wwwocsd.com) with the complete agenda package: • Resolution No. OCSD 16-20 • SAWPAAgreement AN:dm:gc Page 2 of 2 RESOLUTION NO. OCSD 16-20 A RESOLUTION OF THE BOARD OF DIRECTORS OF ORANGE COUNTY SANITATION DISTRICT ACCEPTING THE PROPOSITION 84 INTEGRATED REGIONAL WATER MANAGEMENT PROGRAM 2015 IMPLEMENTATION GRANT FUNDING CONTRACT FOR NEWHOPE-PLACENTIA TRUNK SEWER REPLACEMENT PROJECT 2- 72 WHEREAS, in May of 2015, the Orange County Sanitation District, applied for a Proposition 84 Integrated Regional Water Management Implementation Grant (Administered by the California Department of Water Resources (DWR))to help fund the $104,890,000 Newhope-Placentia Trunk Sewer Replacement Project 2-72; and, WHEREAS, the DWR and Santa Ana Watershed Project Authority (SAWPA) entered into a 2015 Proposition 84 Integrated Regional Water Management Implementation Grant Agreement, providing that SAWPA would serve as the administrator and program manager for grant funds related to the Santa Ana Watershed; and, WHEREAS, SAWPA intends to disburse a portion of the $64,267,686 in grant funds for the Orange County Sanitation District's (Sub-Grantee) Newhope-Placentia Trunk Sewer Replacement Project 2-72 by way of the attached Agreement (Attachment „A„); WHEREAS, in August 2016, the District was notified that it is eligible for a Proposition 84 Integrated Regional Water Management Implementation Grant in an amount not to exceed $1,000,000. As a condition for receiving the grant, the District must enter into an Agreement with SAWPA and comply with all the requirements detailed therein; and, WHEREAS,the Board of Directors is willing to accept the Proposition 84 Integrated Regional Water Management Implementation Grant, and agrees to comply with all the terms and conditions of the Grant Agreement. NOW, THEREFORE, the Board of Directors of Orange County Sanitation District, DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1: That the District accepts the Proposition 84 Integrated Regional Water Management Implementation Grant. Section 2: That the Proposition 84 Integrated Regional Water Management Implementation Grant will be used for partial funding of the Newhope-Placentia Trunk OCSD 16-20-1 Sewer Replacement Project 2-72 in accordance with the terms and conditions specified in the Grant Agreement. PASSED AND ADOPTED at a regular meeting of the Board of Directors held October 26, 2016. John Nielsen Board Chairman ATTEST: Kelly A. Lore Clerk of the Board OCSD 16-20-2 STATE OF CALIFORNIA ) ss COUNTY OF ORANGE ) I, Kelly A. Lore, Clerk of the Board of Directors of the Orange County Sanitation District, do hereby certify that the foregoing Resolution No. OCSD 16-20 was passed and adopted at a regular meeting of said Board on the 261h day of October 2016, by the following vote, to wit: AYES: NOES: ABSTENTIONS: ABSENT: IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of Orange County Sanitation District this 261h day of October 2016. Kelly A. Lore Clerk of the Board of Directors Orange County Sanitation District OCSD 16-20-3 PROPOSITION 84 INTEGRATED REGIONAL WATER MANAGEMENT PROGRAM 2015 IMPLEMENTATION GRANT FUNDING CONTRACT BETWEEN THE SANTA ANA WATERSHED PROJECT AUTHORITY AND ORANGE COUNTY SANITATION DISTRICT This Proposition 84 Integrated Regional Water Management Program("IRWMP")2015 Solicitation Implementation Grant Funding Contract is made between Santa Ana Watershed Project Authority ("SAWPA")and Orange County Sanitation District(the"Sub-Grantee"). SAWPA and the Sub-Grantee may be individually referred to as "Party",and collectively referred to as the "Parties". WHEREAS, Section 79560 et sea.of the Water Code establishes the IRWMP providing approximately Nine Hundred Million dollars($900,000,000)for local assistance grants to be allocated to projects that implement projects and/or programs to accomplish deliverables such as protecting regions from drought, improving regional water quality and improving regional water security by reducing dependence on imported water;and WHEREAS,on XXXX, the California Department of Water Resources("DWR")and SAWPA entered into a 2015 Proposition 84 Integrated Regional Water Management Implementation Grant Agreement ("Grant Agreement"),which is attached hereto as"Attachment A",providing that SAWPA would serve as the program manager for the Sixty Four Million Two Hundred Sixty Seven Thousand Six Hundred Eighty-Six dollar($64,267,686)in grant funds to be disbursed to the Sub-Grantee and other Sub- Grantees, consistent with IRWMP requirements, and ensuring that the maximum benefit of such funds are realized in the Santa Ana River Watershed;and WHEREAS,consistent with the Grant Agreement between DWR and SAWPA,SAWPA intends to disburse a portion of the $64,267,686 in grant funds for the Sub-Grantee's Newhope-Placentia Trunk Sewer Replacement Project 2-72 Project("Project")by way of this Contract with the Sub-Grantee; and THEREFORE,based on the foregoing incorporated recitals and in consideration of the mutual covenants and conditions set forth in this Contract,the Parties hereby agree to the following: SECTION 1. PROJECT DESCRIPTION AND SUB-GRANTEE DELIVERABLES The Project will increase the size of the existing Newhope-Placentia Trunk Sewer by installing approximately 34,800 linear feet(LF)of pipe on State College Boulevard from the Yorba Linda Pump Station(Yorba Linda Boulevard and State College Boulevard in the City of Fullerton,California)to Orangewood Avenue(Orangewood Avenue and State College Boulevard in the City of Anaheim, California; South of Los Angeles Angels of Anaheim Baseball Stadium).The Project will also modify the Rolling Hills Sub-trunk Sewer by installing approximately 3,500 LF of pipe north of the Yorba Linda Pump Station in the City of Fullerton. The Sub-Grantee's Project deliverables include: • The installation of a total of approximately 38,300 LF of pipe will provide the required capacity for current and future sewer flows. The pipeline diameter for the Project will approximately range from 30 inches at the upstream end,up to 66 inches at the downstream end. l 20151RW M Implementation Contract August 2016 • Through implementation of the Project,approximately eight(8)million gallons per day(MGD) of the sewer flows from the Newhope-Placentia Truck Sewer currently going to the Santa Ana Regional Interceptor("SARr')will be diverted to the Sub-Grantee's Plant No. 1 ("P1")in the City of Fountain Valley for treatment before being sent to the Groundwater Replenishment System("GWRS"). From GWRS,the 8 MGD is stored in the Orange County Groundwater Basin (`Basin")by the Sub-Grantee's partner Orange County Water District,where the water will be pumped by various water suppliers and used to protect the Basin from seawater intrusion. • Approximately six(6)MGD,equivalent to 6,300 acre feet per year(AFY),of the eight(8) MGD will reduce salt loading by 4,170 tons/year,which is equivalent to reducing the Total Dissolved Solids levels in the 6,300 AF of Basin water by 457 mg/L per yen if the Project water was used in place of the other main source of Basin recharge water,imported water,because the GWRS water has a lower salt content.The 6 MGD will also provide the multiple benefit of new water supply to water users through Basin pumping and the 2 MGD will protect the Basin by pumping it into the seawater protection barrier managed by the Sub-Grantee's partner Orange County Water District. • The Project Monitoring Plan as described in Paragraph 21 of the Grant Agreement The Project Monitoring Plan most be approved by SAWPA and DWR before the Sub-Grantee implements any sampling or monitoring activities. The Sub-Grantee will report on the benefits of the Project based on the Project Monitoring Plan using a final Project Completion Report and Post Performance Reports described in Section 18 and Section 20 of this Contract. • All other deliverables described in the Grant Agreement such as the deliverables listed in Paragraph 15 of the Grant Agreement SECTION 2. CONTRACT DOCUMENTS; ORDER OF PRECEDENCE; SUB-GRANTEE GENERAL COMMITMENT This Contract incorporates and includes as part of its terms and conditions the Grant Agreement. In the event of any inconsistency between this Contract and the Grant Agreement, except as otherwise specifically provided,the inconsistency shall be resolved by giving precedence to the Grant Agreement. The Sub-Grantee shall comply with all terms,provisions,conditions,and commitments of this Contract and the Grant Agreement. Such compliance shall include providing SAWPA with all deliverables, budget detail,reports and all other documents required by the Grant Agreement. On behalf of and for the benefit of SAWPA,Sub-Grantee shall comply with all of the obligations and requirements of the Grant Agreement as if the Sub-Grantee were the"Grantee"under the terms of the Grant Agreement. Such compliance shall be to the fullest extent necessary and as may be required by SAWPA in order to enable SAWPA to comply with the Grant Agreement as"Grantee." SECTION 3. ESTIMATED ELIGIBLE PROJECT COSTS: GRANT AMOUNT The estimated reasonable cost of the Project at the time of SAWPA's and DWR's approval of the Grant Agreement is One Hundred Four Million Eight Hundred Ninety Thousand dollars ($104,890,000) for implementation of the Project. Subject to all of the terms,provisions,and conditions of this Contract, and subject to the availability of the grant funds, SAWPA shall disburse such grant funds in a sum not to exceed One Million dollars($1,000,000). However, SAWPA's actual grant disbursements to the Sub- 2 20151RW M Implementation Contract August 2016 Grantee under this Contract shall not exceed payments received from the DWR.All grant disbursements will be reimbursements.Per Exhibit D of the Grant Agreement,the DWR shall withhold retention. If the Sub-Grantee proceeds to construction of the Project,the final grant amount will be determined in accordance with the provisions of this Contract. If the Sub-Grantee fails or refuses to proceed with or complete the construction of the Project, SAWPA may consider such failure or refusal to be a material violation and breach of this Contract. SAWPA shall have all rights and remedies as are otherwise available to it for breach of this Contract by the Sub-Grantee. If actual Project costs exceed the Project's estimated reasonable cost, SAWPA shall have no obligation to provide grant funds for such exceedence. Eligible Project costs include the reasonable costs of studies,engineering,design,land and easement acquisition,legal fees,preparation of environmental documentation, environmental mitigations, monitoring, and construction. Reasonable administrative expenses may be included as eligible Project costs or cost share and will depend on the complexity of the Project preparation,planning,coordination,construction,acquisitions, implementation,and maintenance.Reasonable administrative expenses are the necessary costs incidentally but directly related to the Project including the portion of overhead and administrative expenses that are directly related to the Project. Costs not eligible for reimbursement or eligible to be counted as cost share are described in Paragraph ten(10)of the Grant Agreement. Work performed after January 1,2011,is eligible to be counted as cost share.Work performed after January 17,2014, is eligible for grant reimbursement. SECTION 4. SCOPE OF WORK AND COMPLETION OF PROJECT The Scope of Work shall be as provided for Sub-Grantee's Project described in the Grant Agreement, Section 1 of this Contract and any Amendments to the Grant Agreement and/or Contract. The Parties understand that time is of the essence,and agree to expeditiously proceed with and complete the Project. SECTION 5. DISBURSEMENT Grant funds will be disbursed in accordance with the disbursement provisions of the Grant Agreement. Retention is stipulated in Exhibit D of the Grant Agreement. SECTION 6. FISCAL MANAGEMENT SYSTEMS AND ACCOUNTING STANDARDS The Sub-Grantee agrees that,at a minimum,its fiscal control and accounting procedures shall be sufficient to permit tracking of grant funds to a level of expenditure adequate to establish that such funds have not been used in violation of State law or this Contract. The Sub-Grantee shall maintain separate Project accounts in accordance with generally accepted government accounting standards and the conditions outlined in Exhibit D of the Grant Agreement. SECTION 7. TERM 3 20151RW M Implementation Contract August 2016 This Contract shall not be effective until it has been executed by SAWPA. The Term of this Contract shall be until the Project Completion Report for the Sub-Grantee's Project has been accepted by DWR, unless sooner terminated pursuant to the provisions of this Contract or the Grant Agreement. Notwithstanding the foregoing,the obligations of this Contract and the Grant Agreement shall continue through the life of the Project. SECTION 8. COVENANT TO OPERATE AND MAINTAIN PROGRAM The Sub-Grantee shall properly staff,operate and maintain all portions of the Project described in this Contract and the Grant Agreement,including,but not limited to,program management,contractor oversight and monitoring,during the Project's useful life and in accordance with this Contract,the Grant Agreement, and all applicable state and federal laws,rules and regulations. In the event that the Sub-Grantee assigns or transfers all or any portions of the Project to another entity,the Sub-Grantee shall be responsible to ensure that the assignee or transferee of all or any portions of the Project shall properly staff,operate and maintain all portions of the Project during its useful life and in compliance with this Contract,the Grant Agreement,and all applicable state and federal laws,niles and regulations. The Parties to this Contract understand and agree that this covenant shall survive the expiration or termination of this Contract. The Parties further understand and agree that this covenant is for the benefit of SAWPA and DWR and shall be enforceable during the useful life of the Project facilities. The Parties agree that the useful life of the Project facilities is fifty(50)years from and after Project completion and the Sub-Grantee shall comply with Paragraph 20 of the Grant Agreement. The Sub-Grantee shall not abandon,substantially discontinue use of,lease,or dispose of the Project, including its construction,or any significant part or portion thereof,during the useful life of the Project without SAWPA's and DWR's prior written approval. SECTION 9. ASSIGNMENT Neither this Contract,nor any duties or obligations under this Contract,nor any of the Project facilities referenced in this Contract,or the Grant Agreement shall be assigned by any Party without the prior written consent of the other Party. Should an assignment or transfer occur,whenever SAWPA or the Sub-Grantee are named or referred to herein,such reference shall be deemed to include the successor to the powers,duties and functions that are presently vested in SAWPA and the Sub-Grantee,and all Contract and covenants required hereby to be performed by or on behalf of SAWPA and/or the Sub-Grantee shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. SECTION 10. COMPLIANCE WITH LAWS AND REGULATIONS The Sub-Grantee agrees that it shall, at all times,comply with and require its contractors and subcontractors to comply with all applicable federal and state laws,rules,regulations and guidelines. The Sub-Grantee shall comply with,implement, and fulfill all environmental mitigation measures applicable to the Project,and which may otherwise be required by this Contract and the Grant Agreement,the California Environmental Quality Act("CEQA"),and the State CEQA Guidelines. SECTION 11. ACKNOWLEDGEMENT OF CREDIT/SIGNAGE REQUIREMENTS 4 20151RW M Implementation Contract August 2016 The Sub-Grantee shall include appropriate acknowledgement of credit to the State, SAWPA and to all cost-sharing partners for their support when promoting the Project or using any data and/or information developed under this Contract. During construction and post-construction the Grantee shall install a sign in compliance with Exhibit D of the Grant Agreement. In addition to the sign requirements required under Exhibit D,the sign shall include the One Water One Watershed logo(to be provided by SAWPA). Before it is constructed,the Sub-Grantee shall provide the draft design layout of the sign to SAWPA for approval. The Sub-Grantee shall notify SAWPA that the sign has been erected by providing them with a site map with the sign location noted and a photograph of the sign. SECTION 12. CONSTRUCTION ACTIVITIES AND NOTIFICATION The Sub-Grantee shall immediately notify SAWPA in writing of (1) Any substantial change in the scope,budget,or work performed of the Project. The Sub- Grantee agrees that no substantial change in the scope of the Project may be undertaken until written notice of the proposed change has been provided to SAWPA,and SAWPA and DWR have given written approval for such a change; (2) Any public or media event publicizing the accomplishments and/or results of this Grant Agreement and provide the opportunity for attendance and participation. Sub-Grantee must notify SAWPA at least twenty(20)calendar days prior to the event. (3) Unscheduled cessation of all major construction work on the Project where such cessation of work is expected to or does continue for a period of thirty (30)calendar days or more; (4) Any circumstance,combination of circumstances, or condition which is expected to delay project completion for a period of ninety (90)calendar days or more beyond the initial estimated date of completion of the Project previously provided to SAWPA; (5) Completion of construction of the Project and provide SAWPA and DWR the opportunity to participate in the inspection. Sub-Grantee must notify SAWPA at least twenty(20)calendar days prior to final inspection. SECTION 13. PAYMENT OF PROJECT COSTS BY SUB-GRANTEE The Sub-Grantee shall provide for and make payment for all Project costs.All costs and payments for the Project shall be paid by the Sub-Grantee promptly and in compliance with all applicable laws. SECTION 14. WITHHOLDING OF GRANT DISBURSEMENTS SAWPA may withhold all or any portion of the grant funds provided for by this Contract in the event that: (1) The Sub-Grantee has violated,or threatens to violate,any term,provision,condition,or commitment of this Contract; 5 20151RW M Implementation Contract August 2016 (2) The Sub-Grantee fails to maintain reasonable progress toward completion of the Project; or, (3) DWR invokes Section 13 or Section 14 of the Grant Agreement= SECTION 15. INVOICING (A) Invoices shall be completed on a State-provided invoice form and shall meet the following format requirements: (1) Invoices must contain the date of the invoice,the time period covered by the invoice,and the total amount due. (2) Invoices must be itemized. The amount claimed for salaries/wages/consultant fees must include a calculation formula(i.e. hours or days worked times the hourly or daily rate— the total amount claimed).Refer to Attachment C. (3) Each invoice shall clearly delineate those costs claimed for reimbursement from the State's grant amount("Grant Amount")and those costs that represent the Sub-Grantee's cost share("Cost Share")as applicable. State funding cannot be used for Cost Share. Sufficient evidence of the costs(i.e.receipts,copies of checks,timesheets)reflecting the Grant Amount and Cost Share must be included in the invoice. (4) The total Grant Amount and Cost Share to be documented through invoicing is provided in the Grant Agreement.Additional cost share("Additional Cost Share")as provided in the Grant Agreement does not need to be included in invoicing. (B) Invoices also shall include the following information: (1) Costs incurred for work performed in implementing the Project during the period identified in the particular invoice. (2) Costs incurred for any interests in real property(land or easements)that have been necessarily acquired for the Project during the period identified in the particular invoice for the construction,operation,or maintenance of the Project. (3) Appropriate receipts and documentation that show the total outlays for the Grant Amount and Cost Share. Receipts and documentation do not need to be provided for Additional Cost Share. SECTION 16. PROGRESS REPORTS Progress Reports shall be completed using the templates provided in Attachment B. Progress Reports shall provide a brief description of the work performed under all funding categories(Grant Amount,Cost Share and Additional Cost Share),activities,milestones achieved,and any accomplishments as well as any problems encountered in the performance of the Project.The first Progress Report shall cover the period between January 1,2011 and x ,2016,and be submitted no later than x ,2016 to SAWPA,with future Progress Reports due on successive three month increments. Each Progress Report shall be delivered to 6 20151RW M Implementation Contract August 2016 SAWPA fifteen(15)calendar days after the close of the reporting period.Progress Reports are required until the Project Closeout Documentation is received and submitted to DWR. SECTION 17. RECORDS AND REPORTS (A) Without limitation on the requirement that Project accounts be maintained in accordance with generally accepted government accounting standards,the Sub-Grantee shall comply with the records and reporting requirements imposed by the Grant Agreement,and shall also: (1) Establish an official Project file that documents all significant actions relative to the Project; (2) Establish separate accounts that adequately and accurately itemizes and describes all amounts received and expended on the Project,including all grant funds received under this Contract; (3) Establish separate accounts that adequately and accurately itemizes and describes all income received which is attributable to the Project, specifically including any income attributable to grant funds disbursed under this Contract; (4) Establish an accounting system that adequately and accurately itemizes and describes final total costs of the Project,including both direct and indirect costs; (5) Establish such accounts and maintain such records as may be necessary for the State, DWR and SAWPA to fulfill federal reporting requirements, including any and all reporting requirements under federal tax statutes or regulations;and (6) If Force Account is used by the Sub-Grantee for any phase of the Project,establish an account that adequately and accurately itemizes and describes all employee hours, and associated tasks charged to the Project per employee. (B) The Sub-Grantee shall require all Project contractors and subcontractors to maintain books, records, and other material relative to the Project in accordance with generally accepted accounting standards, and to require that such contractors and subcontractors retain such books, records, and other material for a minimum of three(3)years after final payment under this Grant Agreement. The Sub-Grantee shall require that such books,records,and other material shall be subject,at all reasonable times,to inspection,copying,and audit by SAWPA,DWR,the State of California or their authorized representatives. (C) The Sub-Grantee shall maintain its books,records and other material concerning the Project in accordance with generally accepted government accounting standards and as required by the Grant Agreement. (D) All documents required or requested to be provided to SAWPA shall be submitted electronically in the both the native format(e.g.Microsoft Word,Microsoft Excel,etc)and PDF.All documents shall be public domain or the property of SAWPA once submitted. (E) The Sub-Grantee agrees to expeditiously provide,during work on the Project and for three(3) years after final payment under this Grant Agreement,such reports,data,information and certifications as may be reasonably required by SAWPA,DWR,the State of California,or their 7 2015 lRW M Implementation Contract August 2016 authorized representatives. Such documents and information shall be provided in electronic format. SECTION 18. PROJECT REVIEW AND EVALUATION;FINAL REPORTS AND AUDIT (A) SAWPA may perform a Project review or otherwise evaluate the Project to determine compliance with the contract documents at any time or if questions about the proper use or management of the funds arise. SAWPA may review or evaluate the contractor or vendor for compliance with the terms and conditions of the contract document. The Project review and evaluation may be performed by SAWPA or may be contracted to a responsible third party. Any findings and recommendations of the Project review and evaluation shall be addressed by the Sub-Grantee within sixty(60)calendar days of the date such findings and recommendations are provided to the Sub-Grantee and before the next invoice is paid by SAWPA. (B) At least fifteen(15)calendar days prior to submission of the final project invoice,Sub-Grantee shall provide SAWPA the Disposition of Equipment per Exhibit D of the Grant Agreement. (C) In addition to the documents and deliverables required to be provided by the Grant Agreement, within seventy-five(75)calendar days after completion of Project the Sub-Grantee shall provide to SAWPA a final Project Completion Report. The final Project Completion Report shall include,at a minimum the information required in Exhibit G of the Grant Agreement. The final Project Completion Report shall be accompanied by such other financial information as may be required by SAWPA or DWR to verify Sub-Grantee entitlement to grant funds,to assure program integrity,and to comply with any federal or state requirements. A duly authorized representative of the Sub-Grantee shall certify the Project Completion Report as correct. (D) SAWPA may call for an audit of financial information relative to the Project,where SAWPA determines that an audit is desirable to assure program integrity or where such an audit becomes necessary because of federal or state requirements. Where such an audit is called for,the audit shall be performed by a Certified Public Accountant independent of the Sub-Grantee and at the cost of the Sub-Grantee. The audit shall be in the form required by SAWPA. SECTION 19. PROJECT CLOSEOUT DOCUMENTATION To ensure that that the Project is closed out in a manner that provides an auditable file for SAWPA,Sub- Grantee shall follow a close-out procedure that includes payment of all subcontracts,completion of all punch lists,defects correction,satisfaction of warranty or guarantee issues,and any other requirements for the completion of the scope of work Such closeout procedures shall include those procedures contained in the Grant Agreement or otherwise required by SAWPA and DWR. SECTION 20. POST-PERFORMANCE REPORTS Post-Performance Reports as described in Exhibit G of the Grant Agreement shall be submitted to SAWPA within seventy-five(75)calendar days after the first operational yew of the Project has elapsed. This record keeping and reporting process shall be repeated annually for a total often(10)years after the completed Project begins operation. The format of the Post Performance Report is outlined in both the Project Completion Report Section 19(f)and in Exhibit G of the Grant Agreement. The Parties to this Contract understand and agree that this covenant shall survive the expiration or termination of this Contract while not to exceed the Post-Performance Reporting period. 8 20151RW M Implementation Contract August 2016 SECTION 21. MONITORING REOUIREMENTS Not used. SECTION 22. TERMINATION, IMMEDIATE REPAYMENT, INTEREST (A) SAWPA may terminate this Contract at any time prior to completion of the Project for Sub- Grantee's violation of any provision of this Contract upon written notice by SAWPA of the violation and failure of Sub-Grantee to come into compliance within a reasonable time as established by SAWPA. (B) In the event of such termination, the Sub-Grantee agrees,upon demand,to immediately repay to SAWPA an amount equal to the amount of grant funds disbursed to the Sub-Grantee prior to such termination. In the event of termination,prejudgment interest shall accrue on all amounts due from the date that notice of termination is mailed to the Sub-Grantee to the date of full repayment by the Sub-Grantee. (C) SAWPA may terminate this Contract should DWR terminate SAWPA as program manager,or terminate funding for this Contract or the Project or should DWR terminate its standard agreement with SAWPA on this Project.Upon such DWR-caused termination, SAWPA shall not be liable to Sub- Grantee for any damages,costs or expenses resulting from such termination. If such DWR-initiated termination results from SAW PA's violation of the Grant Agreement that is not caused by Sub-Grantee, Sub-Grantee shall not be required to repay to SAWPA any of the grant funds received for the project. SECTION 23. DAMAGES FOR BREACH AFFECTING TAX EXEMPT STATUS In the event that any breach of any of the provisions of this Contract or other action by the Sub-Grantee shall result in the loss of tax exempt status for any bonds,or if such breach shall result in an obligation on the part of the SAWPA to reimburse the federal government by reason of any arbitrage profits, the Sub-Grantee shall immediately reimburse SAWPA and/or DWR in an amount equal to any damages paid by or loss incurred by the State due to such breach. SECTION 24. ARBITRATION Any dispute which may arise under this Contract by and between SAWPA and the Sub-Grantce, including the Sub-Grantee's subcontractors, laborers,and suppliers, shall be submitted to binding arbitration. The arbitrator shall decide each and every dispute in accordance with the laws of the State of California,and all other applicable laws. Unless the Parties stipulate in writing to the contrary,prior to the appointment of the arbitrator,all disputes shall first be submitted to non-binding mediation. SECTION 25. COSTS AND ATTORNEY FEES In the event of arbitration or litigation between the parties hereto arising from this Contract, it is agreed that the prevailing party shall be entitled to recover reasonable costs and attorney fees. SECTION 26. WAIVER 9 20151RW M Implementation Contract August 2016 Any waiver of any rights or obligations under this Contract or the Grant Agreement shall be in writing and signed by the Parry making such waiver, and approved by SAWPA and the DWR. SECTION 27. AMENDMENT This Contract may be amended at any time by mutual written agreement of the Parties. SECTION 28. SAWPA REVIEWS, SUB-GRANTEE AS INDEPENDENT CONTRACTOR (A) The Parties agree that review or approval of the Project or Project plans and specifications by SAWPA is for administrative and eligibility purposes only and does not relieve the Sub-Grantee of its responsibility to properly plan,design,construct, operate,and maintain the Project. As between SAWPA and the Sub-Grantee,the Sub-Grantee agrees that it has sole responsibility for proper planning,design, construction,operation,and maintenance of the Project. (B) The Sub-Grantee is an independent contractor exclusively responsible for the design, construction,operation and maintenance of the specific project funded by this Contract and that the Sub-Grantee is not acting as SAWPA's agent,nor is SAWPA acting as an agent of the Sub- Grantee. SECTION 29. INDEMNIFICATION (A) The Sub-Grantee shall defend,indemnify and hold harmless SAWPA and DWR and their directors, commissioners,officers,employees, agents and assigns(collectively the"Indemnified Parties")against any and all losses,claims,damages or liabilities,joint or several,including attorneys fees and expenses incurred in connection therewith,to which such Indemnified Parties may become liable in connection with or arising from this Contract,and the transactions,funding and construction activities contemplated by this Contract. Sub-Grantee shall reimburse Indemnified Parties for any legal or other expenses incurred by it in connection with investigating any claims against it and defending any actions, insofar as such losses,claims, damages, liabilities or actions arise out of or related to this Contract,and the transactions, funding and construction activities contemplated by this Contract. Sub-Grantee shall indemnify and save the Indemnified Parties harmless from and against any claims,losses,damages, attorneys fees and expenses arising from any and all contracts,contractors,subcontractors, suppliers,laborers,and any other person,entity or corporation furnishing or supplying such services,materials or supplies in connection with Sub-Grantee's Project funded, in part,by this Contract. Sub-Grantee shall indemnify and save Indemnified Parties harmless from any and all claims, losses,damages,attorneys fees and expenses that may arise from any breach or default by Sub-Grantee in the performance of its obligations under this Contract,or any act of negligence by the Sub-Grantee or any of its agents,contractors, subcontractors, servants, employees or licensees concerning the subject matter of this Contractor the Project. Sub-Grantee shall indemnity and hold the Indemnified Parties harmless from any and all claims,losses,damages, attorneys' fees and expenses arising out of the completion of the Project or the authorization of payment of Project Costs to or by the Sub-Grantee. No indemnification is required under this Section for claims,losses or damages arising out of the sole and exclusive misconduct or negligence under this Contract by SAWPA. (B) The Sub-Grantee understands and agrees that it has complied and will comply with CEQA and the State CEQA Guidelines for the project which is the subject matter of this Contract. Sub- 10 20151RW M Implementation Contract August 2016 Grantee understands and agrees that it is ultimately and solely responsible,as the lead agency, for compliance with CEQA and any mitigation measures required for the Project. The Sub- Grantee hereby agrees to indemnify,defend and hold harmless SAWPA and the DWR from any and all claims or actions related to this Project that may be made by any third party or public agency alleging,among other things,violations of CEQA or the State CEQA Guidelines. (C) In addition to complying with the insurance requirements contained in the Grant Agreement, including Exhibit D of that Agreement,the Sub-Grantee shall ensure that adequate insurance coverage is provided by Sub-Grantee and/or its contractors and subcontractors on the Project funded, in part,by this Contract. Such insurance shall include adequate coverage for comprehensive commercial general liability,business auto liability,workers compensation liability,professional and errors and omissions liability,property insurance,including all builders risk insurance. Such insurance coverage shall,at a minimum, insure against injuries to third parties,damage to property owned by third parties,physical damage to the Project and all related facilities,theft of building materials and supplies intended for the Project,delays in Project completion,delays in Project Completion due to strikes and governmental actions, liquidated damages,employee injuries and work-related illnesses,design errors resulting in increased project costs,environmental damage caused by construction activities related to the Project,and nonperformance by the contractors and subcontractors. Such insurance coverages shall be provided by admitted insurance companies authorized to do business in the State of California,and with a minimum`Best's Insurance Guide"rating of"A:Vlr'. SECTION 30. PROJECT AND INFORMATION ACCESS The Sub-Grantee agrees to ensure that SAWPA,DWR,or any authorized representative thereof, shall have reasonable access to the Project site at all reasonable times during Project construction,and thereafter for the useful life of the Project. SECTION 31. OPINIONS AND DETERMINATIONS Where the terms of this contract provide for action to be based upon the opinion,judgment,approval, review,or determination of either party hereto,such terms are not intended to be and shall never be construed as permitting such opinion,judgment,approval,review,or determination to be arbitrary and capricious. 11 20151RW M Implementation Contract August 2016 IN WITNESS THEREOF,the parties have executed this Contract on the later date set forth below. SANTA ANA WATERSHED PROJECT AUTHORITY Dated: By: Celeste Cantu,General Manager ORANGE COUNTY SANITATION DISTRICT Sub-Grantee Dated: By: Chair,Board of Directors Dated: By: Kelly A.Lore, Clerk of the Board Approved as to form: Dated: By: Bradley Hogin,General Counsel 12 20151RW M Implementation Contract August 2016 Attachment A Grant Agreement (See Grant Agreement Template PDF) 13 20151RW M Implementation Contract August 2016 Attachment E Progress Report Template Project: PROJECT STATUS Date: Progress Report#: Implementing Agency: Reporting Period: Overall%Complete XX% BUDGET CATEGORY X: Task x: Work Accomplished During This Reporting Period The following summarizes the key activities accomplished during this reporting period: Scheduling Concerns&Outstanding Issues The following summarizes issues that may delay completion of this task(if applicable): Deliverables Completed this Reporting Period The following project deliverables were completed: WORK ANTICIPATED FOR NEXT PERIOD Project Work for the next reporting period is anticipated to include: PHOTO DOCUMENTATION Include photos taken during the quarter here along with captions for each photo,when appropriate MODIFICATIONS Budget Please describe any informal changes to the budget that were approved by DW R during this period. Schedule Please describe any informal changes to the budget that were approved by DW R during this period. 14 20151RW M Implementation Contract August 2016 Attachment C Invoice Template Backup Documentation Summary Table Invoice a: Grantee: SAWPA Date of invoice: Invoicing Period Proled: Project Proponent: 1—m.O—dptioo Naea In.n.0 kmulee mate In.ix AmeuM Page Number Budget Category(A)Pmlea Adminiavanm SJ�nardf$+ $ - Budget Category(B)land PutoharelEasement $ - Budget Category(C)Planntg'DengnlEtgtxeangd:narmmvental 0ooumeraanon S.dwdF:1 $ - Budyet Category ml ComuuonoMmplementmon .irJ.wrdIDl $ - Grand Total It - 15 20151RW M Implementation Contract August 2016 <Agency> Personnel Hours Summary Date: Work Performed: <date range here> Budget Category n:cBudget Category Title> Employee Classification Work Performed Hours H.uH Toted Itate 8 f 8 8 Total f Budget Category U:<Budget Category Title> Employee Classification Work Performed He. Ho.uAy Tool E E - f f - E Tohl f - 16 BOARD OF DIRECTORS Meeting Date TOBd.Of Dir. -- 10/26/16 AGENDA REPORT Item Item 19 Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Celia Chandler, Director of Human Resources SUBJECT: CONTRACT SECURITY SERVICES —ARMED SERVICES GENERAL MANAGER'S RECOMMENDATION A. Authorize the General Manager to approve Amendment No.1 to increase the Service Agreement with Securitas Security Services U.S.A, Purchase Order 105853 OB, Specification No. S-2016-775BD for the period of November 1, 2016 through October 31, 2017, to include all remaining renewal options, for an additional amount of $802,215, increasing the total annual amount not to exceed $1,578,919; and B. Approve a contingency of$157,891 (10%) BACKGROUND On September 28, 2016, the Board of Directors directed staff to return with a recommendation regarding adding armed security guards to the Orange County Sanitation District's (Sanitation District) security program. The Department of Homeland Security has designated 16 critical infrastructure sectors, which includes water and wastewater systems. Water and wastewater systems are vulnerable to a variety of attacks, including contamination with deadly agents; physical attacks, such as the release of toxic gaseous chemicals, and cyberattacks. In addition, the Department of Homeland Security indicates that the average time it takes for a critical incident to take place is up to twelve (12) minutes while the average police response time can be up to eleven (11)minutes and that time could increase should there be a natural disaster. OCSD has upwards of six hundred (600) employees and often has members of the public on site for tours of the facility or to attend meetings. The prime reason for having an armed security force on plant sites is to proactively deter potential risks and to ensure immediate security responders are available until local law enforcement personnel can arrive. This proactive approach allows the Sanitation District to rapidly respond to any attack or threat. Additionally, a visible armed security presence deters and/or minimizes the effects of an attack against Sanitation District facilities, employees, and contractors. RELEVANT STANDARDS Protection of Orange County Sanitation District assets Provide a safe and collegial workplace Page 1 of 3 PROBLEM The result of any variety of attack could be large numbers of illnesses or casualties and/or a denial of service that would also impact public health and economic vitality. PROPOSED SOLUTION On September 28, 2016, the Board of Directors approved a multi-year security services contract with Securitas Security Services, U.S.A. for$776,704. This contract maintained our unarmed 24/7 gate guard presence, increased the Sanitation District's security posture by transitioning roving security patrols from 8 hours per day to 24 hours per day at both treatment plants, adding 60 hours per week staffing for the security monitoring station at Plant 1, expanding the patrol perimeter to include GW RS, and funded the future capacity of an additional 60 hours per week staffing in the Administration lobby once the freeway overpass construction begins. Staff is recommending the arming of the two (2) main gate and two (2) roving patrol officers at Plants 1 and 2 thereby providing the Sanitation District with a 24/7 armed security force. Furthermore, staff is recommending an additional unarmed roving patrol officer for 60 hours per week, whose primary responsibility will be to assist the Plant 1 main gate officer during high traffic periods. The proposed increased armed security force will fundamentally expand our security posture through the addition of two (2) armed officers at each treatment plant. The two (2) roving patrol armed officers, one (1) at each plant, are classified by Securitas as Tier I, and are either active or recently retired police officers. These armed officers provide the Sanitation District with the highest level of independence and autonomy, since their training and experience provide the Sanitation District with security officers whose role is to respond to and mitigate threats to our facilities, employees, and contractors. The two (2) main gate armed officers, one (1) at each plant, are classified by Securitas as Tier II and will provide the Sanitation District with an armed presence and deterrence at the main gates at Plant 1 and Plant 2 through the presence, training, and ability to safely execute the duties of a security officer while carrying an exposed firearm. These officers primary duties include controlling plant access, responding as appropriate to elevating threat levels, and functioning in an observe and report capacity. Our overall security posture, which also includes our physical and technological tools, are strengthened with the addition of both Tier I and Tier II armed security officers. This approach provides the Sanitation District with resources to establish a highly visible deterrent to threats of violence, significantly reduce our vulnerability, enhance our security self-sufficiency, and facilitate the Sanitation District proactively responding in the event of a threat or attack to our facilities, employees, and contractors. Page 2 of 3 TIMING CONCERNS N/A RAMIFICATIONS OF NOT TAKING ACTION A wastewater treatment plant that cannot provide adequate capacity or performance due to a malicious activity could discharge an effluent with significant impaired quality that can create a public health hazard or cause environmental damage of the downstream. Not knowing who or why someone is entering a building or plant facility leaves the Sanitation District vulnerable to those wishing to do harm immediately or plan for offensive action in the future. PRIOR COMMITTEE/BOARD ACTIONS September 2016 - Board Approved Specification No. S-2016-775BD for a five-year facilities security services contact with Securitas Security Services, USA. June 2010 - Board Approved Specification No. 5-2010468 for a five-year facilities security services contract with Securitas Security Services, USA. ADDITIONAL INFORMATION 1. Tier I Armed Security Officers are individuals who have extensive years of law enforcement experience and training. These officers carry BSIS (Bureau of Security and Investigative Services) license certification as well as maintaining concealed firearm permits. 2. Tier II Armed Security Officers meet all the BSIS requirements to carry an exposed firearm. These officers may have some military or law enforcement training and experience. CEQA N/A FINANCIAL CONSIDERATIONS On September 28, 2016, the Board of Directors approved a multi-year security services contact with Securitas Security Services, U.S.A. for $776,704 and a $77,670 (10%) contingency. The requested additional funding of$802,215 was not budgeted and will be reallocated from another line item. As per the agreement with OCWD for GWRS final expansion, staff has proposed to share the cost of the roving patrol at Plant 1 with OCW D. ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (wwwocsd.corn with the complete agenda package: N/A Page 3 of 3 STEERING COMMITTEE MeetingDae TOBd.ofDir. 30/26/16 10/26/16 AGENDA REPORT emNumber Iem2umber 3 20 Orange County Sanitation District FROM: Laura Kalty, Chief Negotiator SUBJECT: SUCCESSOR MEMORANDUMS OF UNDERSTANDING FOR THE SUPERVISOR & PROFESSIONAL GROUPS CHIEF NEGOTIATOR'S RECOMMENDATION A. Adopt Resolution No. OCSD 16-21, entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District approving the Memoranda of Understanding between the Orange County Sanitation District and the Supervisory and Professional Management Group (SPMG), for Fiscal Years 2016/2017, 2017/2018 & 2018/2019"; and B. Direct staff tofinalize and sign the Memoranda of Understanding (MOUs)between Orange County Sanitation District and the two (2) SPMG bargaining units. BACKGROUND The MOUs between the Orange County Sanitation District (Sanitation District) and the Supervisor Group and Professional Group bargaining units that became effective on July 1, 2013 expired on June 30, 2016. The Supervisory and Professional Management Group (SPMG) submitted its initial proposals for successor MOU(s) on June 27, 2016. SPMG and the Sanitation District have met and conferred in good faith eight (8) times since receiving the initial proposal. As of the last Board meeting on September 28, 2016, approximately ten items proposed had either reached tentative agreement or had been withdrawn. On September 28, 2016, the Board of Directors authorized and directed the Chief Negotiator to make a counter proposal to SPMG, including a three-year contract with a 2.5% salary increase due in the first pay period in July for each year of the contract. Additionally, the proposal included an increase in Development Pay from $62.29 to $75.00 per pay period for education, and from $7.62 to $15.24 per pay period for each certificate/license. The Sanitation District delivered this counter proposal to SPMG on October 4, 2016. SPMG's membership ratified the proposal by majority vote in October 2016. RELEVANT STANDARDS • Ensure the public's money is wisely spent • Competitive compensation and benefits • Highly qualified, well trained, motivated, and diverse workforce Page 1 of 4 • Negotiate fair and equitable labor agreements • Positive employer, employee relations • Provide professional growth & development PROBLEM The MOUs between the Sanitation District and the Supervisor Group and Professional Group bargaining units that became effective on July 1, 2013 expired on June 30, 2016. PROPOSED SOLUTION Adopt Resolution No. OCSD 16-21, entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District approving the Memoranda of Understanding between the Orange County Sanitation District and the Supervisory and Professional Management Group, for Fiscal Years 2016/2017, 2017/2018 & 2018/2019". Based on Board direction, the Sanitation District issued a counter proposal to SPMG on October 4, 2016, including three-year contracts with a 2.5% salary increase for each year of the contract. Additionally, the proposal included an increase in Development Pay to $75.00 per pay period for education and$15.24 per pay period for each certificate/license. SPMG distributed the proposals to their membership for voting and SPMG's membership ratified the proposals by majority vote in October 2016. RAMIFICATIONS OF NOT TAKING ACTION • Labor instability • Possible impacts to morale • Impasse PRIOR COMMITTEE/BOARD ACTIONS On February 19, 2016, an Ad Hoc Subcommittee of the Steering Committee selected Laura Kalty from Liebert Cassidy Whitmore to serve as the Sanitation District's Chief Negotiator. In preparation for and during the meet and confer process, the Chief Negotiator received direction for labor negotiations with SPMG from the Steering Committee and the Board of Directors. The SPMG meet and confer process was agendized for discussion in Closed Session at the following Committee/Board meetings: • April 27, 2016 - Steering Committee and Board Meeting • June 22, 2016 - Steering Committee • July 27, 2016 - Steering Committee and Board Meeting • August 24, 2016 - Steering Committee Meeting • September 28, 2016 - Steering Committee and Board Meeting Page 2 of 4 ADDITIONAL INFORMATION The SPMG is the recognized employee organization certified to provide exclusive representation over wages, hours of work, and other terms and conditions of employment for exempt employees in the Supervisor Group and Professional Group bargaining units. There are 250 exempt employees represented by the SPMG. The Supervisor Group consists of 59 employees and the Professional Group consists of 191 employees. Employees in these groups are assigned to classifications that perform frontline supervisory duties and program-related development, implementation, and analytical duties associated with supporting the collection, treatment, and recycling of wastewater. Some supervisory classifications are assigned to a 365-days per year, 7-days per week, 24-hours per day operation. Based on Board direction, the Sanitation District issued a counter proposal to SPMG on October 4, 2016, including three-year contracts with a 2.5% salary increase for each year of the contract. Additionally, the proposal included an increase in Development Pay to $75.00 per pay period for education and$15.24 per pay period for each certificate/license. SPMG distributed the proposals to their membership for voting and SPMG's membership ratified the proposals by majority vote in October 2016. Full redlined versions of each SPMG MOU are attached for review. A summary of the key changes to the MOUs are as follows: 1. Article 1, Recognition: Term of the agreement begins July 1, 2016. 2. Article 2, Duration: Agreement terminates on June 30, 2019. 3. Article 11, Grievance Procedure: Language and timing revisions to extend response time periods to ten days. 4. Article 13, Salary Adjustments and Compensation: Salary: Year 1 —2.5% Salary Increase, retroactive to the first pay period of July 2016; Year 2 — 2.5% Salary Increase, effective the first pay period of July 2017; Year 3—2.5%Salary Increase, effective the first pay period of July 2018. Development Pay: Education - $75.00 per pay period; Certification/License — $15.24 per pay period per certification/license with a maximum of three (3). 5. Article 17, Hours of Work: include 5/40 schedule. 6. Article 20, Insurance: language cleanup, strike 20.3 Medical Reopener. 7. Article 20, Insurance: incorporate HDHP/HSA side letter dated October 8, 2015. 8. Article 22, Extraordinary Services Compensation: Extend Extraordinary Services Compensation to emergencies and critical incidents, declared by and in sole discretion of General Manager. 9. Article 24, Promotion: strike Section 24.1.1. 10.Article 35, Acting Pay: language revision to include: Time served in higher level assignments shall be credited as qualifying experience for promotional purposes. 11.Article 47, Maintenance of Membership: language cleanup, date removal. 12.Bilingual pay: No language will be added to the MOU; however, the parties agree that if an employee goes through appropriate testing and certification process, Page 3 of 4 bilingual certification is eligible for Development Pay, understanding employee has to go through existing process for District approval of certification. Listed below are articles with proposed housekeeping changes in the tentative agreement by article number: Article 7.0— Nondiscrimination in Employment Article 8.0— Smoke-free Work Environment Article 10.0— Discipline and Dismissal Article 23.0— Probationary Period Article 27.0— Leave of Absence with Pay Article 29.0— Classification Studies CEQA N/A FINANCIAL CONSIDERATIONS The total cost is $5.21VI over the term of the agreement. This request complies with authority levels of the Sanitation District's Purchasing Ordinance. This item has been budgeted. ATTACHMENT The following attachment(s)are included in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: • Resolution No. OCSD NO 16-21 • Supervisor MOU (redlined version) • Professional MOU (reclined version) Page 4 of 4 RESOLUTION NO. OCSD 16-21 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT APPROVING THE MEMORANDA OF UNDERSTANDING BETWEEN THE ORANGE COUNTY SANITATION DISTRICT AND THE SUPERVISORY AND PROFESSIONAL MANAGEMENT GROUP, FOR FISCAL YEARS 2016/2017, 2017/2018 &2018/2019 WHEREAS, on January 28, 2015, the Board of Directors ('Directors') of the Orange County Sanitation District (the "District") authorized the General Manager to sign the Memoranda of Understanding with the Supervisory and Professional Management Group (referred hereinafter as "SPMG'), regarding salaries, benefits and terms and conditions of employment for the period July 1, 2013 through June 30, 2016 ("2013 MOUs"). WHEREAS, prior to the expiration of the 2013 MOUs on June 30, 2016, SPMG requested to meet and confer regard successor MOUs. WHEREAS, pursuant to Government Code Section 3500, at seq., representatives of SPMG have met and conferred with the representatives of the District and have reached an understanding with regard to certain terms and conditions relative to employment; and WHEREAS,the parties have modified the 2013 MOUs between the District and SPMG to reflect the parties' understanding regarding certain terms and conditions, which include: • Duration of the MOUs has been modified and will be for a 3-year term commencing July 1, 2016, and terminating June 30, 2019, as reflected in the Cover Page and Articles 1 and 2 of the MOUs. • Nondiscrimination in Employment has been modified as set forth below and as reflected in Article 7 of the MOUs: o Minor administrative/language changes to align with expanded discrimination law provisions; housekeeping changes. • Smoke-Free Work Environment has been modified as set forth below and as reflected in Article 8 of the MOUs: o Minor administrative/language changes to include current smoking and tobacco products and technologies. • Discipline and Dismissal has been modified as set forth below and as reflected in Article 10 of the MOUs: o Housekeeping changes. • Grievance Procedure has been modified as set forth below and as reflected in Article 11 of the MOUs: o Employees are encouraged, prior to bringing forward a formal grievance, to discuss the issue with the Director of Human Resources, or designee, in an effort to bring about an informal resolution. OCSD 16-21-1 o Minor administrative/language changes regarding submission and response timeline requirements at various steps in the process; housekeeping changes. • Salary Adjustments and Compensation has been modified as set forth below and as reflected in Article 13 of the MOUs: o Year 1 —2.5% Salary Increase, retroactive to the first pay period of July 2016. o Year 2—2.5% Salary Increase, effective the first pay period of July 2017. o Year 3—2.5% Salary Increase, effective the first pay period of July 2018. o Development Pay: Education — $75.00 per pay period for advanced degree; Certification/License — $15.24 per pay period per certification/license with a maximum of three (3). • Hours of Work has been modified as set forth below and as reflected in Article 17 of the MOUs: o Addition of 5/40 schedule • Insurance has been modified as set forth below and as reflected in Article 20 of the MOUS: o Medical reopener language provides for the District to reopen negotiations if needed due to impacts of the Affordable Care Act (ACA). o Side-letter language to include the addition of the High Deductible Health Plan (HDHP) and Health Savings Account (HSA) o Removes the expired language for medical reopener of February 2015. • Extraordinary Services has been modified as set forth below and reflected in Article 22 of the MOUs: o Addition of language to extend Extraordinary Services Compensation to emergencies and critical incidents, declared by and in sole discretion of General Manager. • Probationary Period has been modified as set forth below and as reflected in Article 23 of the MOUs: o Minor updates to language; housekeeping changes. • Promotions has been modified as set forth below and as reflected in Article 24 of the MOUS: o Minor updates to language; housekeeping changes. o Strike Section 24.1.1. • Sick Leave has been modified asset forth below and as reflected in Article 27 of the MOUS: o Addition of domestic violence, sexual assault, or stalking as permissible uses of sick time in accordance with labor code. o Addition of sick leave benefits for temporary employees in accordance with State law. o Minor administrative/language changes to align with expanded leave law provisions; housekeeping changes. OCSD 16-21-2 • Classification Studies has been modified asset forth below and as reflected in Article 29 of the MOUs: o Language cleanup. o The law requires meet and confer over changes to wages, hours, and terms and conditions of employment. • Acting Pay has been modified as set forth below and as reflected in Article 35 of the MOUs: o Language revision to include: Time served in higher level assignments shall be credited as qualifying experience for promotional purposes. • Maintenance of Membership has been modified as set forth below and as reflected in Article 47 of the MOUs: o Language cleanup. o Date Removal. NOW, THEREFORE, the Board of Directors of the Orange County Sanitation District, DOES HEREBY RESOLVE, DECLARE, DETERMINE AND ORDER: Section 1. The aforementioned MOUs between the District and SPMG for the contract period of July 1, 2016 through June 30, 2019 as outlined herein are hereby approved. Section 2. The General Manager is authorized to sign the Memoranda of Understanding with SPMG for the period of July 1, 2016 through June 30, 2019, in a form approved by General Counsel. PASSED AND ADOPTED at a regular meeting of the Board of Directors held October 26, 2016. John Nielsen Board Chairman ATTEST: Kelly A. Lore Clerk of the Board OCSD 16-21-3 STATE OF CALIFORNIA ) ss COUNTY OF ORANGE ) I, Kelly A. Lore, Clerk of the Board of Directors of the Orange County Sanitation District, do hereby certify that the foregoing Resolution No. OCSD 16-21 was passed and adopted at a regular meeting of said Board on the 261h day of October 2016, by the following vote, to wit: AYES: NOES: ABSTENTIONS: ABSENT: IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of Orange County Sanitation District this 261h day of October 2016. Kelly A. Lore Clerk of the Board of Directors Orange County Sanitation District OCSD 16-21-4 MEMORANDUM OF UNDERSTANDING BETWEEN THE ORANGE COUNTY SANITATION DISTRICT AND THE EMPLOYEES IN THE SUPERVISOR GROUP July 1, 2013 2016 through June 30, 24�62019 TABLE OF CONTENTS ARTICLE I. -RECOGNITION.............................................................................................................................1 ARTICLE2. -DURATION....................................................................................................................................1 ARTICLE 3. -SUCCESSOR AGREEMENT........................................................................................................1 ARTICLE 4. -GROUP ACCESS.........................................................................................................................1 ARTICLE S. -GROUP RIGHTS...........................................................................................................................2 ARTICLE 6. -DISTRICT RIGHTS.......................................................................................................................2 ARTICLE 7. -NONDISCRIMINATION IN EMPLOYMENT.................................................................................2 ARTICLE S. -SMOKE-FREE WORK ENVIRONMENT......................................................................................2 ARTICLE9. -SAFETY........................................................................................................................................3 ARTICLE 10. -DISCIPLINE AND DISMISSAL.....................................................................................................3 ARTICLE 11. -GRIEVANCE PROCEDURE.........................................................................................................4 11.3.1. STEP 1 ..................................................................................................................................................... 5 11.3.2. STEP 2..................................................................................................................................................... 5 11.3.4. STEP 3..................................................................................................................................................... 5 11.3.5. STEP 4.....................................................................................................................................................6 ARTICLE 12. -PROBLEM SOLVING PROCEDURE...........................................................................................6 ARTICLEI3. -SALARY ADJUSTMENTS AND COMPENSATION....................................................................6 13.3. MERIT PAY............................................................................................................................................... 7 13.4. PERFORMANCE MANAGEMENT PROGRAM................................................................................................... 7 13.5. DEVELOPMENT PAY................................................................................................................................... 7 13.9. SALARY RANGE......................................................................................................................................... 6 13.10. INVESTMENT INCENTIVE SALARY(IIS)........................................................................................................ 8 ARTICLE 14. -SEVERANCE PAY........................................................................................................................8 ARTICLE 15. -DEFERRED COMPENSATION....................................................................................................8 ARTICLE16. -HOLIDAYS....................................................................................................................................9 16.2. FLOATING HOLIDAY................................................................................................................................... 9 ARTICLE 17. -HOURS OF WORK.................................................................................................................... 10 ARTICLE18. ...................................................................................................................................................... 10 ARTICLE19. ................................................................................................................................................... 10 ARTICLE 20. -INSURANCE.............................................................................................................................. 10 20.3. MEDICAL INSURANCE............................................................................................................................... 10 20.6. GROUP INSURANCE................................................................................................................................. 11 20.7. LIFE INSURANCE...................................................................................................................................... 11 20.9. LONG TERM DISABILITY........................................................................................................................... 11 20.10. DENTAL INSURANCE................................................................................................................................ 12 20.11. VISION INSURANCE.................................................................................................................................. 12 20.12. RETIRING EMPLOYEES............................................................................................................................. 12 ARTICLE 21. -REIMBURSEMENT ACCOUNT................................................................................................. 12 21.2. MEDICAL REIMBURSEMENT ACCOUNT...................................................................................................... 12 21.3. DEPENDENT CARE ASSISTANCE ACCOUNT............................................................................................... 13 Page ARTICLE 22. -EXTRAORDINARY SERVICES COMPENSATION.................................................................. 13 ARTICLE 23. -PROBATIONARY PERIOD....................................................................................................... 14 ARTICLE24. -PROMOTIONS........................................................................................................................... 14 ARTICLE 25. -RETIREMENT............................................................................................................................ 15 25.1.1. EMPLOYEES HIRED PRIOR TOSEPTEMBER 21. 1979................................................................................. 15 25.1.2. EMPLOYEES HIRED ON OR AFTER SEPTEMBER 21, 1979 AND BEFORE OCTOBER 1.2010........................... 15 25.1.3. EMPLOYEES HIRED ON OR AFTER OCTOBER 1.2010................................................................................. 15 ARTICLE 26. -SHIFT DIFFERENTIAL.............................................................................................................. 16 ARTICLE 27. -LEAVE-OF-ABSENCE WITH PAY............................................................................................ 16 27.1. VACATION LEAVE.................................................................................................................................... 16 27.2. SICK LEAVE............................................................................................................................................ 17 27.3. JURY DUTY LEAVE.................................................................................................................................. 19 27.4. WITNESS LEAVE...................................................................................................................................... 19 27.5. MILITARY LEAVE...................................................................................................................................... 19 27.6. BEREAVEMENT LEAVE.............................................................................................................................20 27.7. ADMINISTRATIVE LEAVE...........................................................................................................................20 ARTICLE 28. -LEAVE-OF-ABSENCE WITHOUT PAY....................................................................................21 28.3. SUBSTITUTION OF PAID LEAVE.................................................................................................................21 28.4. PERMISSIBLE USES.................................................................................................................................21 28.5. GENERAL LEAVE.....................................................................................................................................23 28.6. RETURN TO WORK POLICY FOR NON-WORK-RELATED LEAVE...................................................................23 28.7. COMPLIANCE WITH LAW...........................................................................................................................24 ARTICLE 29. -CLASSIFICATION STUDIES.....................................................................................................24 29.4. Y-RATING...............................................................................................................................................25 ARTICLE 30. -DRIVER'S LICENSE..................................................................................................................25 ARTICLE 31. -LAYOFF PROCEDURE.............................................................................................................26 ARTICLE 32. -LIGHT DUTY..............................................................................................................................26 ARTICLE 33. -MEDICAL EXAMINATION.........................................................................................................26 ARTICLE 34. -MILEAGE ALLOWANCE...........................................................................................................26 ARTICLE 35. -ACTING PAY.............................................................................................................................27 ARTICLE36. ......................................................................................................................................................27 ARTICLE 37. -PERSONNEL FILES..................................................................................................................27 ARTICLE 38. -BULLETIN BOARDS.................................................................................................................27 ARTICLE 39. -RELEASE TIME FOR MEET AND CONFER SESSIONS........................................................27 ARTICLE 40. -USE OF DISTRICT FACILITIES................................................................................................27 ARTICLE 41. -SCOPE OF BARGAINING.........................................................................................................28 ARTICLE 42. -IMPASSE PROCEDURES.........................................................................................................28 42.2. IMPASSE PROCEDURES...........................................................................................................................28 ARTICLE43. -SEVERABILITY.........................................................................................................................28 ARTICLE44. -UNIFORMS................................................................................................................................29 ARTICLE 45. -SUBSTANCE ABUSE POLICY.................................................................................................29 45.2. DEPARTMENT OF TRANSPORTATION REGULATIONS...................................................................................29 Page ii ARTICLE 46. - DUES DEDUCTIONS.................................................................................................................29 ARTICLE 47. - MAINTENANCE OF MEMBERSHIP.........................................................................................30 ARTICLE 48. -PEACEFUL RESOLUTION OF DISPUTES.............................................................................. 30 ARTICLE49. ...................................................................................................................................................... 30 ARTICLE 50. -WORKPLACE VIOLENCE AND WEAPONS POLICY............................................................. 30 ARTICLE 51. -RESIGNATION .......................................................................................................................... 30 ARTICLE52. ......................................................................................................................................................30 SIGNATUREPAGE..............................................................................................................................................31 APPENDIX A ...........................................................................................ERROR! BOOKMARK NOT DEFINED. Page iii MEMORANDUM OF UNDERSTANDING BETWEEN THE ORANGE COUNTY SANITATION DISTRICT AND THE EMPLOYEES IN THE SUPERVISOR GROUP In accordance with the provisions of California Government Code Sections 3500, at seq., and Resolution No. 99-24 of the Joint Boards of Directors,the District's authorized representatives have met and conferred in good faith with representatives of the Supervisor Group. These meetings have resulted in an agreement and understanding to recommend that the employees represented by the Supervisor Group accept these terms and conditions, and that the Board of Directors adopt by Resolution the changes and additions to the wages, hours, and conditions of employment for the employees represented by the Supervisor Group as set forth in this Agreement. ARTICLE 1. - RECOGNITION 1.1, This Agreement, effective July 1, 24142016, is entered into between the Orange County Sanitation District, referred to hereinafter as the"District", and the Supervisor Group, referred to hereinafter as "Group",as a mutual recommendation to the Board of Directors of the District of those wages, hours of work, and terms and conditions of employment. ARTICLE 2. - DURATION 2.1. This Agreement will be binding on the District and the Group when approved and adopted by the District's Board of Directors. This Agreement will terminate on June 30,20162019. Any issue regarding the question of representation shall be brought pursuant to the Employer-Employee Relations Resolutions (EERR), Resolution No. OCSD 99-24. ARTICLE 3. - SUCCESSOR AGREEMENT 3.1. The Group will submit in writing its initial proposal for a successor agreement prior to the expiration date of this Agreement. ARTICLE 4. - GROUP ACCESS 4.1. A Group representative will have access to the District facilities during normal working hours for the purpose of assisting Group employees in processing grievances or investigating matters arising out of the application of provisions of this Agreement. 4.2. The Group will provide the Human Resources Department or designee, with a list of Representatives who are authorized to request access under this article,and will notify the Director of Human Resources, or designee, of any changes in that list. 4.3. Group access will not unreasonably interfere with District operations, or with the work of employees in any manner.The District reserves the right to restrict access in certain areas designated confidential or secure. Page 1 of 32 ARTICLE 5. - GROUP RIGHTS 5.1. The Group may designate up to five(5)employees to act as representatives for employees covered by this Agreement. The Group will furnish the Human Resources Department with the names of employees selected as representatives and will update the list as necessary.An alternate representative may be designated to act in the absence of the regular representative. Employees not listed on the roster of representatives provided to the District by the Group may not act as representatives. 5.2. Representatives will not perform non work-related duties on work time without the prior approval of their immediate supervisor. Neither the District nor the Group will interfere with, intimidate, restrain, coerce or discriminate against employees because of the exercise or non-exercise of their rights to engage in Group activity. ARTICLE 6. - DISTRICT RIGHTS 6.1. District inherent rights, powers,functions,duties, responsibilities and authority related to a managerial or administrative character are reserved to the District in its exercise of management decision-making, except as specifically modified by the express provisions of this Memorandum. District rights include, but are not limited to,the exclusive right to consider the merits, necessity or organization of any service or activity provided by law, or administrative order; determine the mission of its constituent departments, commissions and boards; set standards of service, determine the procedures and standards of selection for employment and promotion; establish and implement performance standards; direct its employees;take disciplinary action for proper cause; layoff employees from duty because of lack of work or lack of funds; maintain the efficiency of District operations; determine the methods, means and personnel by which District operations are to be conducted; determine the content of job classifications; classify and reclassify positions;take all necessary actions to carry out its mission in emergencies; and exercise complete control and discretion over its organization and the technology of performing its work. 6.2. District retains all authority and rights conferred on it by law, or other legal sources, except to the extent that such authority is explicitly waived by the express terms of this agreement. District exercise of its management rights hereunder shall not be subject to appeal or meeting and conferring, however,that the exercise of such rights does not preclude the Group from appealing or meeting and conferring the practical consequences or impacts that District decisions have on wages, hours, and other terms and conditions of employment. ARTICLE 7. - NONDISCRIMINATION IN EMPLOYMENT 7.1. There will be no unlawful discrimination in the application of the provisions of this Agreement with regard to actual or perceived race, color, religion, national origin, ancestry, sex, gender, pander identity, gender expression sexual orientation, age, physical or mental disability, medical condition, genetic information marital status or military or veteran status or any other lawfully protected class. To the extent required by law or by the DistricPs rules or regulations,this provision of the Agreement will be applied to all members of the Group without regard to mar;tal status,handicap, medical ^^a'''^^ ^ d sab ed veteran, ^^"'^any protected classification. ARTICLE 8. - SMOKE-FREE WORK ENVIRONMENT 8.1. The District endorses and supports the right of all employees to work in a healthy and Page 2 of 32 safe environment free of recognized hazards. In view of the hazards associated with smoking and the potentially harmful effect it has on the health and well being of District employees and their families, smoking and the use of tobacco(cigarettes, cigars e-cigarettes h'vaping"1 and related tobacco products and technolooies)is not acceptable within District facilities, and may occur only in areas posted for smoking. ARTICLE 9. -SAFETY 9.1. It is the duty of the District to provide and maintain a safe place of employment.The Group will cooperate by encouraging all employees covered by this Agreement to perform their work in a safe manner. It is the duty of all employees covered by this Agreement, in the course of performing their assigned duties,to be alert to unsafe practices, equipment, and conditions,and to follow the safety regulations and requirements of the District, and to report any unsafe practices or conditions to their immediate supervisor. An employee will not be required to perform work that is unsafe. ARTICLE 10. - DISCIPLINE AND DISMISSAL 10.1. Discipline may occur when any of the following actions are taken for just cause with respect to any employee in the Group: verbal reprimand;written reprimand; suspension without pay; reduction in pay; demotion to a classification with a lower pay grade, or dismissal. 10.2. Dismissal,for purposes of this Article, is the separation of a non-probationary employee initiated by the District forjust cause. 10.3. A Notice of Intent is not required when the disciplinary action involves a verbal reprimand or written reprimand. 10.4. A Notice of Intent is required and will be given to an employee whenever the disciplinary action involves suspension without pay, reduction in pay, demotion to a classification with a lower pay grade, or dismissal.The notice will be given to the affected employee either by delivery in person or by Certified Mail sent to the employee's last known address. Such personal delivery or mailing will be presumed to provide actual notice to the affected employee. The Notice of Intent will indicate the date on which it was personally delivered or deposited in the mail, which will be the date of issuance. 10.5. The Notice of Intent will contain the following: (1)a description of the disciplinary action intended and the effective date of the action; (2)the reasons for the proposed action; (3)a copy of the charges and materials upon which the action is based; and, (4) a statement of the employee's right to respond, either verbally or in writing to the person initially imposing the discipline, or to a District management representative with authority to make an effective recommendation on the proposed action; the person to whom any response must be directed, and the fact that such response must be received within ten (10) business days of the date of issuance of the notice. The Notice will also advise the employee of the right to representation. 10.6. Prior to the effective date of the proposed disciplinary action, the employee will be given an opportunity to respond either verbally or in writing to a management representative with authority to make an effective recommendation on the proposed action. After review of an employee's response,the District will notify the employee in writing of the action that will be taken. Such action may not involve discipline more severe than that described in the Notice of Intent; however,the District may reduce Page 3 of 32 discipline without further notice. Further clarification of the disciplinary policies and procedures are covered in the District's Personnel Policies& Procedures Manual. 10.7. Dismissal will be preceded by at least one (1)written reprimand,except in those situations in which the employee knows or reasonably should have known that the performance or conduct was unsatisfactory. Such performance or conduct may involve, but is not limited to, dishonesty, possession, use, sale or being under the influence of drugs or alcohol, theft or misappropriation of District property or funds, fighting on the job, insubordination, acts endangering people or property, or other serious misconduct.The District may substitute documented suspensions without pay for written reprimands. 10.8. If a Notice of Intent is upheld and the disciplinary action is imposed, the employee may request a post-disciplinary hearing. The request must be submitted to the Assistant General Manager or designee,within ten If 0)business days following the effective date of the disciplinary action (for suspensions,the effective date will be the first business day following the final day of the suspension). The A^^'^. gr ant Gp,"^^^^r- ManagerDirector of Human Resources, or designee,will schedule a post disciplinary hearing with the General Manager or a hearing officer selected by the General Manager.The hearing officer may not be an employee of the District. The hearing officer will provide a written,advisory decision to the General Manager.The General Manager may uphold the disciplinary action that has been taken or may reduce such discipline without the issuance of a further Notice of Intent. The decision of the General Manager will be final. If the hearing officer upholds the disciplinary action, the employee will pay the full cost and expenses of the hearing officer. 10.9. All disciplinary action documentation, except verbal reprimand documentation,will be placed in an employee's Personnel File in the Human Resources Department. Verbal reprimand documentation will be kept in the supervisor's employee files. Supervisors shall inform management staff when a verbal reprimand is to be implemented. If after twenty-four(24) months from implementation there have been no recurrences of similar incidents, the supervisor shall destroy the verbal reprimand documentation. 10.10. Written reprimands may be removed from an employee's personnel file twenty-four (24)months subsequent to the date of the issuance, provided that there has been no recurrence of a similar incident during the period. If the Human Resources Department agrees to remove the written reprimand documentation from an employee's personnel file such documentation will be retained in a separate file by the Human Resources Department for the purpose of showing that progressive discipline has been followed or in support of the District proposed discipline. 10.11. Verbal reprimands and written reprimands may only be reviewed under this Agreement through the Problem Solving Procedure. Nothing in this article will be construed as a waiver of any statutory or constitutional rights. 10.12. A reduction in pay or demotion to a classification with a lower pay grade that is not a result of performance deficiencies (for example, reclassifications, "bumping" associated with layoffs, reasonable accommodation) shall not be considered discipline. ARTICLE 11. - GRIEVANCE PROCEDURE 11.1. A grievance is any complaint that management has violated a specific provision of this Agreement, except that, in accordance with Article 10 above, discipline which Page 4 of 32 requires a Notice of Intent may not be reviewed under this Grievance Procedure. 11.2. A grievance may be brought to the attention of the District by an individual employee within the Group or by the Group.The District may not bring a grievance through this procedure. Grievances brought by two(2)or more employees, and concerning the same incident, issue, or course of conduct,or multiple grievances brought by the same employee may, upon mutual agreement of the District and the Group, be consolidated for the purposes of this procedure. 4 9-:2-.11.3. EmploVees are encouraged prior to bringing forward a formal grievance to discuss the issue with the Director of Human Resources, or designee in an effort to bring about an informal resolution. 4-4-11.4. An employee maybe self-represented or be represented by the Group at all steps of the Grievance Procedure unless specifically agreed otherwise by the Group and the employee. The District will provide a copy of all written grievance settlements to the Group. Any reference to days in this article implies business days. ^-- 11.4.1. Step 1. An employee who has a complaint will attempt to resolve it with his/her immediate supervisor within five-()ten 10 days of the occurrence of the event giving rise to the complaint,or within five-(&)ten 10 days from the time that the employee became aware of such event.The supervisor will attempt to resolve the issues surrounding the complaint, and respond to the employee within five-( en 10)days. 11-32.11.4.2. Step 2. If the grievance is not settled informally at Step 1, it may be submitted in writing to the employee's Department Head, or designee. This request for formal review must be presented on a form provided by the District within five ten (510)days of the conclusion of Step 1. A copy of each written communication on a grievance shall be filed with the Assistant General Manager,or designee. The written grievance must: 41 2 2 1 11.4.2.1. Identify the specific management act to be reviewed; 41 2 2 2.11.4.2.2. Specify how the employee was adversely affected; 41 2 2�.11.4.2.3. List the specific provisions of this agreementthe-M9U that were allegedly violated and state how they were violated; 41 2 2 4 11.4.2.4. Specify the remedy requested; and �2.5.11.4.2.5. Provide the date of attempts at informal resolution and the name of the supervisor or individual involved. 1132 11.4.3. The Department Head will respond in writing to the employee within ten (10)days after the date the grievance is received. 113411.4.4. Step 3. If a grievance is not settled under Step 1 or 2, it may be presented to the Assistant General Manager,or designee, for review and written response.The request for formal review must be presented on a form provided by the District within ten (10)days of the conclusion of Step 1 or 2, and must contain the information specified in Step 2 above. A copy of each written communication on a grievance shall be filed with the Assistant General Manager, or designee.The Assistant General Manager, or designee, will respond in writing to the employee within ten (10)days after Page 5 of 32 the date the grievance is received. 44-3-&11.4.5. Step 4. If the grievance cannot be resolved under Step 3, it may be presented to the General Manager within ten (10)days from the date the Step 3 finding was issued.The General Manager, or designee, will respond in writing to the employee within fifteen If 5)days after the date the grievance is received. The decision of the General Manager is final. 44-411.5. General Provisions. An employee will be given reasonable time off without loss of pay to present and process a grievance. If an employee is represented by the Group,the Group may designate one(1)employee to present and process the grievance.The employee representative will be given reasonable time off without loss of pay to perform this responsibility. Absence from work will be approved only if it does not cause disruption to District operations. However, if the time requested cannot be provided, an alternate time will be arranged. 41a11.6. Failure of a supervisor, Department Head or other management representative to respond within the appropriate time limit will provide a basis for the employee appealing to the next step. If a grievance is not presented or appealed within the time limits, it will be considered resolved on the basis of the preceding response. The Human Resources Department may be petitioned in writing to waive the step or time requirements provided sufficient cause exists. Time limits may also be extended at any step upon mutual agreement of the parties. The District agrees to meet face-to- face with the employee at each step of the grievance procedure at the request of the employee. 14-.45-11.7. Resolution may be agreed upon at any stage of the grievance process. However, the Group will be notified prior to the resolution of any formal grievance matter. ARTICLE 12. - PROBLEM SOLVING PROCEDURE 12.1. Employees may bring problems to the attention of District managers through the Problem Solving Procedure. This Procedure was developed to encourage and facilitate the resolution of employee concems in a responsive and fair manner, and may be used to attempt to resolve issues that may not be subjected to the Grievance Procedure. Any reference to days in this article implies business days. 12.2. Employees should discuss concerns regarding issues that are not grevable with their supervisor as soon as possible. The supervisor will review the situation or decision, and provide a written response within five(5)days from the date they were notified of the problem. 12.3. If the problem is not resolved to the employee's satisfaction, the employee may file a written statement concerning the problem with the Human Resources Department within ten (10)days of receipt of the supervisor's decision. Upon request of either party, a meeting will be held to define issues and establish the remedies sought. The employee will be provided a written response within ten (10)days after his/her statement is received. Time limits may be extended for cause upon mutual consent of the parties, and the decision of the Human Resources Department is final. ARTICLE 13. - SALARY ADJUSTMENTS AND COMPENSATION 13.1. Each pay grade is divided into five(5)steps,with an approximate 5.0% difference between each step. Page 6 of 32 13.2. Pay increases will only apply to eligible employees in an active payroll status on the effective date of implementation. Eligible employees will not receive retroactivity if active payroll status becomes effective after the date of implementation. 13.3. Merit Pav 13.3.1. Step Increase Pav—Group employees are eligible for Step Increase Pay based upon receipt of year-end performance appraisal ratings issued by the assigned supervisor. Step Increase Pay will be paid according to the following: 13.3.1.1. Eligible-Employees must have a proficient year-end performance appraisal to receive a one(1)step base-building salary increase until earning placement at step five (5). 13.3.1.2. Ineligible-Employees who are placed on a Performance Improvement Plan (PIP)due to a needs improvement performance review on the year-end appraisal or who are on a PIP at the time of the year-end appraisal period will remain at their current step until the PIP is satisfactorily completed. 13.4. Performance Management Program: The performance management program includes two(2)rating categories (proficient and needs improvement)for performance appraisals. 13.5. Development Pav—Employees under this Agreement are eligible for Development Pay. Development Pay is a non-base building pay type that will be distributed in a lump-sum amount each pay period. Employees must have a proficient year-end performance appraisal to be eligible for the following Development Pay types: 13.5.1. Education—Effective the first pay period in July 2016. €eligible employees who obtain or who have obtained a graduate degree of approved subjects at an accredited college or university will receive $62.2975_00 per pay period. T nt of Fducat an Pay s fixed at$62 nn per nn. n 13.5.2. Certification/License—Effective the first pav period in July 2016 eligible employees who obtain or who have obtained a District approved certification or license will receive$7.62 15.24 per pay period per certificate or license with a maximum of three(3)certificates and/or licenses. The max mum nme nt of nertfiGat on/1 sense pay for any m6'net'n of Gant f'sate And/or Isenses' 'n fixed at$22 ac per nn per+od. 13.5.3. Grade V Pay—Employees who receive Grade V pay in accordance with the applicable District policy are ineligible to receive Development Pay for their Grade V California Wastewater Treatment Plant Operator Certificate. Employees who possess a Grade V Certificate and do not meet the criteria for Grade V Pay are eligible for Development Pay in accordance with the Development Pay Program Guidelines. 1266 The overallm Development on ,for eduGat on, n f Gat on andlor Isenses s faxed at G9515 per pa per ind 43-7- 3.6. Employees who are placed on a PIP due to a needs improvement performance Page 7 of 32 review on the year-end performance appraisal are not eligible for Development Pay until the PIP is satisfactorily completed. 43..&13.7. Employees who are placed on a PIP due to needs improvement performance outside the year-end appraisal will have all Development Pay suspended until the PIP is satisfactorily completed. The return of Development Pay will not be retroactive. 49-9- 3.8. Salary Range Adjustments 13.9.1.13.8.1. Effective the first pay period in July29 ltly 2016, employees under this Agreement will receive salary range adjustments at a flat rate of 28/2.5%. 13.8.2. Effective the first pay period in July-201 qJ 2017, employees under this Agreement will receive salary range adjustments at a flat rate of 2 0%2.50%. 13 9 2 13.8.3. Effective the first pay period in July 2018, employees under this Agreement will receive salary range adjustments at a flat rate of 2.50%. 13,10,13.9. Investment Incentive Salary(IIS) 13 10 1 13.9.1. An additional amount of 4%of base salary will be paid to employees hired or promoted into the Group on or before October 16, 2003 in a lump-sum amount each pay period.This provision continues to make employees whole as a result of the Ventura decision.The above percentages will not be counted toward base salary for the purpose of salary surveys. ,'�13.9.2. In addition, employees hired or promoted into the Group on or before October 16, 2003 will be paid $1250 annually or$48.08 per pay period in HIS to further encourage savings and investment for retirement. 43�8.a13.9.3. IIS amounts are applied to annual, retirement, and termination leave payouts for eligible employees. ARTICLE 14. - SEVERANCE PAY 14.1. Employees are expected to give a minimum of two(2)weeks written notification when terminating employment with the District. Except for disciplinary cause,when a full-time employee is terminated by action of the District,the employee will be notified in writing two (2)weeks prior to the effective separation date. The employee will be entitled to severance pay in accordance with the formula set forth below: 14.1.1. Full-time, regular employees will be entitled to eight(8) hours pay for each full calendar month of continuous employment not to exceed one hundred sixty(160)hours pay. 14.1.2. Employees in limited term or part-time positions, probationary employees and employees who are separated for cause are not eligible for severance pay under any circumstances. ARTICLE 15. - DEFERRED COMPENSATION Page 8 of 32 15.1. Employees may participate in the District approved deferred compensation plan, subject to IRS requirements, and in accordance with all guidelines for voluntary participation established by District management. ARTICLE 16. - HOLIDAYS 16.1. The days listed below are observed by the District as holidays. Employees will receive holiday pay if their entire scheduled work shifts immediately preceding and following the holiday are in a paid payroll status, meaning the employee worked those shifts or utilized paid time off in lieu of working those shifts.When an employee's work schedule requires that they work on an observed holiday,the employee will be paid at the employee's regular rate of pay for the holiday, and will also receive pay at the rate of one and one half(1.5)times his/her regular hourly rate for all hours actually worked. Employees may also elect to receive Holiday Compensatory Time Off on an hour for hour basis rather than receive holiday pay. When a holiday occurs on an employee's regular scheduled day off,the employee will accrue compensatory time off for the amount of hours normally scheduled for that day. Employees with a compensatory time off balance in excess of fifty(50) hours as of the last pay period ending in October will receive a mandatory payout for the hours that exceed fifty(50). Holidays New Year's Day Lincoln's Birthday President's Day Memorial Day Independence Day Labor Day Veteran's Day Thanksgiving Day Day after Thanksgiving Day before Christmas Christmas Day Floating Holiday" 16.2. Floating Holiday: Employees may elect one(1)day during each year as a "Floating Holiday."New employees shall be granted a"Floating Holiday'on a pro rate basis in the first calendar year of service per the following table: Hire Date Percent 1 st Quarter(January-March) 100% 2^d Quarter(April-June) 75% 3'd Quarter(July-September) 50% Page 9 of 32 Hire Date Percent P`Quarter(October-December) 0% 16.3. Employees must use the"Floating Holiday'within the year it is granted. Every effort will be made to approve an employee's request for a"Floating Holiday"off providing sufficient notice is given. 16.4. Part-time employees are eligible for holiday benefits on a pro-rata basis as set forth in applicable District Policy. ARTICLE 17. - HOURS OF WORK 17.1. The work schedule for full-time employees will be eighty(80) hours per biweekly pay period, normally scheduled in shifts of five(5)eight 8-hour days each week.four(4) nine-9-hour days each week and one (1)additional 8-hour day on alternate weeks (9/80),four(4)ten 10-hour days each week(8/80), or three(3)twelve 12-hour days each week and one(1)additional 8-hour day on alternate weeks (7180). However, with the approval of the employee's supervisor, employees may be allowed to flex their schedule within the pay period provided that the business needs,work Flow, and customer service needs of the District are met. 17.2. The District may, at its sole discretion, change an employee's work schedule with thirty(30)days written notice to the affected employee,which may be waived by the employee per written request. 17.2.1. The 30-day notice will not be applicable if the change is a result of a reasonable accommodation. ARTICLE 18. (This article intentionally left blank) ARTICLE 19. (This article intentionally left blank) ARTICLE 20. - INSURANCE 20.1. The District will provide healthcare and welfare insurance benefits. 20.2. All insurance coverage will become effective on the first day of the month following date of hire, regardless of hire date.An open enrollment period will be held annually. on& Hart r., RealpeneF The D StF Gt e couc agree Fxnegis rAninp, A Alhor ty(GSAG FIA), or to another Garr er d reedy, and varied 24.¢20.3. Medical Insurance 20120.3.1. The District will provide medical health insurance coverage Page 10 of 32 through a Health Maintenance Organization(HMO)medical insurance plan,-aad a Preferred Provider Organization(PPO)medical insurance plan,and a High Deductible Health Plan (HDHP). •-•"sud- - h a 28.�20.4. Regular.full-time emolovees The District will contribute 90%of employee only premiums for the HMO medical health plans and 80%of employee only premiums for the PPO medical plan. The District will contribute 80%of the employee +1 dependent and full family premiums for the HMO or PPO medical plans. Any change in insurance rates will be shared equally in same ratio as the District and employees currently pay premiums. Before the renewal of any District sponsored health insurance plan, the parties agree to meet and confer as to changes in the plan. 20.5. Regular, part-time employees Part-time employees are eligible for medical insurance benefits on a pro-rata basis as set forth in the applicable District Policy. 20.6. The HDHP will be accompanied by a Health Savings Account(HSA)to pay for qualified medical expenses. OCSD will use a portion of the cost savings in premiums to fund the HSAAS accounts during active employment only.The HSA will be funded with the savings generated annually by calculating the difference between the District's share of the PPO and HDHP Premiums. Exact HSA account funding will be calculated annually, prior to open enrollment, in an amount up to the difference in deductibles, not to exceed the District's aforementioned annual Premium cost savings. 2B. The District may reopen negotiations at any time during the term of this agreement to address the impact of the Affordable Care Act(ACA). 20.7. 20:7-20.8. Group Insurance Premiums 2 -7-4-20.8.1. Group insurance premiums that are paid by salary redirection can be made on a pre-tax basis. 2B:&20.9. Life Insurance 20.8.1.20.9.1. The District will pay the full premium for$50,000 term life insurance on each employee. 20?.120.10. Short Term Disability 20?9.1.20.10.1. The District will provide a non-work related, short-term disability indemnity plan that provides benefits for employees equal to the maximum weekly amount provided through California's State Disability Insurance(SDI) program for up to twenty-six (26)weeks following a fourteen (14)calendar day waiting period. 20 4&20.11. Long Term Disability 29404-.20.11.1. The District will provide a non-work related, long-term disability indemnity plan that pays two-thirds of the employee's rate of pay in effect at the time of such disability, not to exceed $5,000 per month,following a 90-day waiting period of continuous disability, at such time that an employee completes five (5)years of service. Page 11 of 32 20:44-. -20.11.2. For participants age 64 and younger,the maximum period of payment is based on the Social Security Act retirement age of 65. For participants age 65 and older,the maximum period of payment is specified. The specified periods and additional information about coverage is included in OCSD's long term disability plan contract accessible on the intranet. 20.10.3.20.11.3. No combination of disability or sick leave pay will result in more than an employee's regular rate of pay. Employees may not receive short-term and long-term disability benefits at the same time.An employee who is otherwise not eligible for District paid Long Term Disability may purchase such coverage at their own expense. 20120.12. Dental Insurance 29444-.20.12.1. The District will contribute 80%of employee only and full family premiums for dental insurance. M 12.20.13. Vision Insurance 20.124-.20.13.1. The District will provide a vision insurance plan for regular,full- time employees and eligible dependents. Part-time employees are eligible for vision insurance benefits on a pro-rata basis as set forth in applicable District Policy. 201320.14. Retiring Employees 244414-.20.14.1. The District will pay, for employees hired prior to July 1, 1988, two and one-half(2.5)months' premium for each year of continuous service of a retiring employee towards the premium costs of coverage for the employee and eligible dependents under the District medical plan. 20:32-2-20.14.2. In the event the District adds additional optional insurance plans, the District's share of the premium will be the same as for existing plans as set forth above. In the event the District changes underwriters for existing insurance plans, the District's share of the premium will be the same as for existing insurance plans as set forth above. 20 433-.20.14.3. The District will continue to implement the retiree medical health premium offset program wherein the cost of health premiums are offset by$10 per month for every year of continuous service up to a maximum of 25 years or$250 per month. ARTICLE 21. - REIMBURSEMENT ACCOUNT 21.1. Section 125 of the Internal Revenue Code permits employees to use pre-tax dollars to pay for their portion of the cost of benefits under the Plan through salary redirection arrangements. The options available under the flexible benefits program are listed below. This is a brief overview of the different options. For complete information regarding Flexible Spending Accounts employees must refer to the plan booklet available in the Human Resources Department. 21.2. Medical Reimbursement Account 21.2.1. The purpose of this account is to provide a method through which the Page 12 of 32 employee can accumulate pre-tax funds in a Medical Care Reimbursement Account for purposes of reimbursing himself/herself for payment of health care costs not otherwise covered by his/her medical insurance. 21.3. Dependent Care Assistance Account 21.3.1. The purpose of this account is to provide a method through which the employee can accumulate pre-tax funds in a Dependent Care Assistance Account for purposes of reimbursing himself/herself for child care expenses or day care for a disabled dependent ARTICLE 22. — EXTRAORDINARY SERVICES COMPENSATION 22.1. Employees in the Group are exempt from the overtime provisions of the Fair Labor Standards Act. However,when services are required beyond what is normally expected of a position in this Group, employees will be eligible to receive additional compensation, as defined herein, for the performance Of^U" oertormina extraordinary services, upon approval of r Department Head or des'^^^^ as set forth below. Extraordinary services shall be defined as: 22.1.1. The General Manager declares an emeraencv.A declaration of an emergency is at the sole discretion of the General Manager whose decision is final and not sub act to any other provision of this Agreement. including Article 11 —Grievance Procedure or Article 12—Problem Solving Procedure. 22.1.2. The General Manager determines that there exists a critical event.A critical event is defined as work of a prolonged nature: involving non- emergency related services: major special projects: or when a substantial effort must be expended to meet a compliance date or scheduled deadline. The designation of a critical event is at the sole discretion of the General Manager whose decision is final and not sub act to any other provision of this Agreement, including Article 11 — Grievance Procedure or Article 12—Problem Salvino Procedure. 22.1.3. Written approval of a critical event must be obtained in advance of the work to be performed. The authorization shall set forth the work to be accomplished,the anticipated start and end date and those employees expected to participate in the work. The Department Head or designee will be responsible for determining the actual start and end date as well as those who actually work the event. 22.2. Upon the declaration of an emergency or upon the designation of a critical event employees will be compensated as follows: 22.2.1. Compensation will be restricted to those employees that are assigned to the event, independent from which department they are assigned. 22 1 1 22.2.2. For emergencies, compensation will occur for all hours outside the employee's regularly scheduled work shift. For critical events, compensation will occur for all hours after an initial 10 hours of uncompensated time has elapsed. 22.2.3. Employees in the Operations Supervisors classification will be Page 13 of 32 receive additional compensation at one and one-half(1.5)times their regular rate of pay caused by an emergency declared as such by the General Manager 0 D :a ons, wh an becomes necessary to Cover h ^ regularly,.A.,h an fall, on an othery�e non Work day OF sh .All other classifications shall receive straight time compensation. ARTICLE 23. — PROBATIONARY PERIOD 23.1. All new employees serve an initial probationary period beginning with the date of hire and extending to at least the first day of the pay period following six monthsks of employment without a break in service. Extended absence without pay, short-term and long-term disability and Workers' Compensation leave does not provide an opportunity to judge an employees'capability to meet performance expectations for a position, and thus the time spent on such leaves will not be included towards completion of the probationary period and may result in an extension. 23.2. Employees who are rehired following a break in service must complete a new probationary period whether or not one was previously completed. An employee may be released during his/her Probationary Period at the discretion of the District without recourse to the Grievance Procedure. 23.3. Employees who are reassigned or laterally transferred will serve a probationary period of six monthstwent�eks. The"probationary period"shall not divest an employee of his/her property right in his/her former position. Rejection of probation during this period shall result in the employee reverting to his/her former assignment and/or position. ARTICLE 24. — PROMOTIONS 24.1. A promotion is the appointment of an employee to another classification with a higher maximum rate of pay.The District will determine whether a vacant position will be filled as an open or promotional recruitment.Whenever the District intends to fill a position by promotion, the District will post the opportunity for a minimum of ten (10) business days. Employees must apply during the period of posting. Notices will be posted on the District's intranet. 24.1.1. Wier t^ ,the n..tleast one (1)m n mally qua'fied appl sent,the 6�#Of shall -and-Gtzm .,s,...t.. ..a...t.. t on In the event them ex sts a 24.2. A promoted employee will serve a promotional probationary period lasting at least until the first day of the pay period six months h.errty c:- (.. 26 weekc:.cc!:c after the effective date of the promotion. 24.3. At any time during the promotional probationary period, an employee may be returned to his/her previous position.The promotional probation period may be extended by mutual agreement between the employee and District management for Page 14 of 32 up to ninety(90)days. 24.4. If an employee is promoted during his/her initial probationary period, the period will be extended until at least the first day of the pay period six months 64 weeksafter the effective date of the promotion. 24.5. Promoted employees will receive the equivalent of a one(1)step increase in pay, not to exceed the top of the range for the new classification or the minimum rate of the new classification whichever is greater. ARTICLE 25. — RETIREMENT 25.1. The District will continue participation in the Orange County Employees Retirement System (OCERS),wherein all full-time employees and part-time employees scheduled to work twenty(20)hours per week or more are considered members. The following retirement program is in effect pursuant to the contract between OCERS and the District. 25.1.1. Employees hired prior to September 21, 1979: The District will continue to contract with OCERS to provide the 2.5% @ 55 benefit formula (Plan G)based on the highest consecutive twelve (12) months average earnings, past and future service. 25.1.1.1. The District will continue to pay 4.5%towards the employee's contribution to OCERS for those employees who elected to make a one-time decision to remain in the Plan G program. 25.1.2. Employees hired on or after September 21, 1979 and before October 1. 2010:The District will continue to contract with OCERS to provide the 2.5% @ 55 benefit formula (Plan H) based on the highest consecutive thirty-six(36)months average earnings, past and future service. 25.1.2.1. The District will continue to pay 3.5% of an eligible employee's base salary towards the employee's contribution to OCERS. 25.1.3. Employees hired on or after October 1, 2010 and before January 1, 2013: The District will contract with OCERS to provide the 1.667% @ 57.5 benefit formula (Plan B) based on the highest consecutive thirty-six (36)months average earnings, past and future service. 25.1.3.1. The District will pay 0°% of an eligible employee's base salary towards the employee's contributions to OCERS. 25.1.4. Employees hired on or after January 1. 2013: The District will contract with OCERS to provide the 2.5% @ 67 benefit formula(Plan U - PEPRA) based on the highest consecutive thirty-six(36)months average earnings, past and future service. 25.1.4.1. The District will pay 0% of an eligible employee's base salary towards the employee's contribution to OCERS. 25.2. All monies actually contributed into the retirement system by an employee will be deducted from gross salary for taxation purposes in accordance with Internal Page 15 of 32 Revenue Code provisions. ARTICLE 26. - SHIFT DIFFERENTIAL 26.1. Employees who are assigned to work a night shift that consists of 50%or more of the hours between 6:00 p.m. and 6:00 a.m. and who actually work that shift will receive a shift differential of$2.50 per hour. ARTICLE 27. - LEAVE-OF-ABSENCE WITH PAY 27.1. Vacation Leave 27.1.1. Except as otherwise provided, regular full-time employees accrue vacation leave, beginning with the first day of employment, in accordance with the following schedule: Years of Service Hours-Biweekly Hours-Annual In years 0 through 4 3.08 80 In years 5 through 10 4.62 120 In year 11 4.93 128 In year 12 5.24 136 In year 13 5.54 144 In year 14 5.85 152 In year 15 6.16 160 In year 16 6.46 168 In year 17 6.77 176 In year 18 7.08 184 In year 19 7.39 192 In year 20 and over 7.69 200 27.1.2. Part-time employees accrue vacation leave on a pro-rata basis as set forth in applicable District Policy. 27.1.3. Vacation leave begins after an employee has completed twenty-six (26) weeks of continuous service.After his/her first twenty-six(26)weeks of service, his/her account will be credited with forty(40)hours. After that time,they will accrue vacation hours consistent with the above chart. Vacation leave may only be utilized in increments of one-half hour or more. Vacation leave is accrued for all paid hours, including hours actually worked and hours in a paid-leave payroll status. 27.1.4. When unpaid absences occur,vacation leave accruals will be applied by straight proration of leave accruals based on the number of hours paid within the pay period, and is applicable to all types of leave,whether legally protected or not. 27.1.5. Annual Payoff. Employees may have a maximum accumulation of two hundred (200) hours as of the last day of the final pay period in December of each year. In the event an employee accrues vacation leave in excess of two hundred (200)hours, it must be used prior to said Page 16 of 32 December date,all other remaining hours in excess of two hundred (200) will be paid to the employee in the first pay period in January at the employee's then current hourly rate of compensation. 27.2. Sick Leave 27.2.1. Definition. Sick leave is an insurance or protection provided by the District to be granted to employees in circumstances of adversity to promote the health and welfare of the individual employee. It is not an earned right to take time off from work. Sick leave is defined as the absence from duty of an employee because of a bona fide illness, injury, or pregnancy�r to attend to the illness or injury of a family member as hereinafter defined: or,for an employee who is a victim of domestic violence sexual assault or stalking for the purposes described in Labor Code sections 230(c)and 230.1(a).Temporary employees shall receive are-not ant ided-te sick leave benefits as required by State law..- 27.2.2. Method. -Sick Leave Accrual. Full-time employees hired prior to November 27, 1981, accrue paid sick leave at the rate of three and one- half(3.5)hours for each biweekly pay period of continuous service; ninety-one (91) hours per year. Full-time employees hired on or after November 27, 1981, accrue paid sick leave at the rate of three(3.0) hours for each biweekly pay period of continuous service; (seventy-eight (78) hours per year), beginning with the first day of employment. 27.2.3. Part-time employees accrue sick leave on a pro-rata basis as set forth in applicable District Policy. 27.2.4. When unpaid absences occur,sick leave accruals will be applied by straight proration of leave accruals based on the number of hours paid within the pay period, and is applicable to all types of leave,whether legally protected or not. 27.2.5. Annual Payoff. Employees may elect annually to be paid for any unused sick leave hours accrued through the end of October at their current hourly rate according to the following payoff schedule. Accrued Sick Leave Hours Rate of Payoff 0-100 0% 101-240 25% 241-560 35% Over 560 (mandatory) 50% 27.2.6. Employees who terminate for any reason other than retirement or death will be compensated for any accrued and unused sick leave according to the above schedule. Employees who retire or decease with twenty(20) years or more of service will be paid at the one hundred percent(100%) rate for all accrued and unused sick leave. Employees who retire or decease with less than twenty(20)years of service will be paid at the seventy-five percent(75%)rate for all accrued and unused sick leave. 27.2.7. Permissible Uses. Sick leave may be applied only to: Page 17 of 32 27.2.7.1. Absence due to illness, injury or pregnancy of an employee. 27.2.7.2. Absence due to medical and dental office appointments of an employee when approved by the employee's supervisor. 27.2.7.3. Absence for the care of the employee's father,father-in-law, mother, mother-in-law, brother, sister, husband, wife, domestic partner, child, child of domestic partner, grandparent, grandchild legal guardian,or family member with whom the employee resides. 27.2.7.4. Absence due to a job-related injury. "�'-r.'.".27.2.7.5. Absence related to an employee who is a victim of domestic violence, sexual assault, or stalking,for the purposes described in Labor Code sections 230(c)and 230.1(a). 27.2.8. General Provisions. To qualify for sick leave pay, the employee must notify the District at or in advance of the time the employee is scheduled to report for duty. Minimum charge to the employee's sick leave account will be one-half(0.5)hour increments. 27.2.9. The Human Resources Department and department management will be responsible for controlling the abuse of the sick leave privilege. For absences of ten (10)consecutive working days or more,a request for leave and a medical statement, on prescribed forms, stating expected date of return must be submitted to the Human Resources Department. Upon return to work, a written doctor's release must be submitted to the Human Resources Department. For absences of one (1)or more working days in an unpaid status, a request for leave and a medical statement,on prescribed fors,stating expected date of return must be submitted to the Human Resources Department. 27.2.10. If the need for leave is due to the employee's serious health condition,as defined in the Family and Medical Leave Act("FMLA")or the California Family Rights Act("CFRA"), the certification requirement will comply with the provisions of these Acts. 27.2.11. Sick Leave Incentive Plan. If the average sick leave usage of employees in the Group is under forty(40)hours per year, calculated on annualized actual time off from October to October, based on the last pay periods ending in October, exclusive of catastrophic illness or injury requiring absence in excess of two hundred (200)hours or industrial injury leave in excess of eighty(80)hours,the annual payoff for unused sick leave will be as follows: Accrued Sick Leave Hours Rate of Payoff 0- 100 15% 101 —240 45 241 —560 60 Over 560(mandatory) 75 Page 18 of 32 27.3. Jury Duty Leave 27.3.1. Any full-time, including probationary, employee who is called for jury duty will be entitled to his/her regular pay for those hours of absence due to performance of the jury duty for a period up to twenty-two(22)working days. 27.3.2. Prior to jury duty service, employees must complete an online time off request form.To be entitled to receive regular pay for such jury leave, employees must report for work during their regularly scheduled work shift when they are relieved from jury duty service, unless there is less than one-half(%)of a regular shift remaining. Employees are not compensated forjury duty occurring on scheduled days off. 27.3.3. An employee serving jury duty must obtain an attendance slip from the court to be submitted to his/her supervisor with his/her timesheet in order to be eligible for regular pay for those hours of absence due to jury duty. 27.4. Witness Leave 27.4.1. Any full-time, including probationary, employee,who is required to be absent from work by a subpoena properly issued by a court,agency or commission legally empowered to subpoena witnesses, which subpoena compels his/her presence as a witness, except in a matter wherein he/she is named as a defendant or plaintiff or as an expert witness,will, upon approval of an online time off request, be entitled the time necessary to comply with such subpoena. An employee's regular pay will be reduced by the amount of witness leave pay received, exclusive of mileage. 27.4.2. An employee so subpoenaed must submit a copy of the subpoena to his/her supervisor and complete an online time off request form in order to be eligible for pay for such absence.To be entitled to receive regular pay for such witness leave, the employee must report for work at the District for time not actually retained on witness service of one(1) hour or more prior to and/or upon completion of each days service, exclusive of travel time. 27.5. Military Leave 27.5.1. A request for military leave will be made upon leave-of-absence forms approved by the Human Resources Department and will state the date when it is desired to begin the leave-of-absence and the date of anticipated return.A copy of the orders requiring such military service will be submitted with the request. 27.5.2. Provisions of the Military and Veterans Code of the State of California, Sections 395-395.5 will govern military leave. In general, current law provides that an employee having one (1)year or more service with a public entity is entitled to military leave with pay not exceeding thirty(30) days per year if the employee is engaged in military duty ordered for purposes of active military training or encampment.An employee who is required to attend scheduled service drill periods or perform other inactive duty reserve obligations is entitled to military leave without pay, not exceeding seventeen (17)calendar days per year, although the Page 19 of 32 employee may, at his or her option, elect to use vacation, administrative leave, or personal leave time to attend the scheduled reserve drill periods or to perform other inactive drill period obligations. Employees who participate in weekend military drill duty are not eligible for leave with pay for such activity, but may have their regular work schedule changed to accommodate the required time off. 27.6. Bereavement Leave 27.6.1. Any full-time employee,whether probationary or regular, shall receive a maximum of thirty-six(36) hours off with pay for the death or funeral of an immediate family member. Immediate family member is defined as the employee's father, step-father,father-in-law, mother, step-mother, mother-in-law, brother, step-brother, sister, step-sister, husband, wife, domestic partner, biological child, adopted child, step-child, child of a domestic partner, grandchild, grandparent,foster parent,foster child, legal guardian, or any family member with whom the employee resides. Employees must submit an online time off request form for approval by their supervisor. 27.6.2. Part-time employees are eligible for bereavement leave on a pro-rata basis as set forth in applicable District Policy. 27.7. Administrative Leave 27.7.1. Effective the first pay period in July, regular full-time employees in the Group shall be granted forty(40) hours of Administrative Leave. Employees who are hired or promoted into the Group shall be granted Administrative Leave on a pro-rats basis per the following schedule: Hire Date Percent July-September 100% October-December 75% January-March 50% April-June 0% 27.7.2. Administrative Leave will be administered in accordance with the following guidelines: 27.7.2.1. Administrative Leave may be used in one-quarter-(0.25) hour increments 27.7.2.2. Any unused Administrative Leave,within the fiscal year granted, will not be carried over to the next fiscal year. 27.7.2.3. Any unused Administrative Leave,within the fiscal year granted, is not subject to cash out or eligible for any mandatory payout. Page 20 of 32 27.7.2.4. Employees who cease to be part of the Group for any reason will forfeit any unused Administrative Leave. ARTICLE 28. - LEAVE-OF-ABSENCE WITHOUT PAY 28.1. It is the policy of the District to grant employees leaves-of-absence without pay under certain circumstances and in accordance with state and federal benefit entitlement laws. Except as stated below, employees will not receive compensation during an unpaid leave-of-absence. Employees will not be granted an unpaid leave of absence prior to exhausting all paid leave accrual balances, excluding employees protected by PDL(Pregnancy Disability Leave)/FMLA(Family and Medical Leave Act)/CFRA (California Family Rights Act)for their own serious health condition. 28.2. Using the prescribed forms,approved by District management, any full-time, including probationary, or part-time employees with at least fifty-two(52)weeks of service and at least twelve hundred fifty(1,250)hours of service, may be granted an FMLA or CFRA leave-of-absence without pay, not to exceed twelve(12)weeks in a rolling twelve (12)month calendar period.A"rolling"twelve(12)month period is measured backward from the date the employee uses the leave.A request for leave of absence without pay must be made upon prescribed fors in all instances where an employee is absent without pay for more than five(5)consecutive working days, or for absences of ten(10)working days or more when using paid sick leave accruals. 28.3. Substitution of Paid Leave. 28.3.1. Employees who request FMLA or CFRA Leave for qualifying purposes other than the employee's own serious health condition will be required to use all accruals before unpaid leave is granted. 28.3.2. Vacation, administrative leave or personal leave accruals may be used for the care of the employee's father, step-father,father-in-law, mother, step-mother, mother-in-law, brother, step-brother, sister, step-sister, husband,wife,domestic partner, biological child, adopted child, step- child,foster child, legal ward, child of a domestic partner, grandchild, grandparent, foster parent, legal guardian, or any family member with whom the employee resides. 28.4. Permissible Uses 28.4.1. FMLA Leave. FMLA leave may be used for: 28.4.1.1. The birth of a child or to care for a newborn of an employee; 28.4.1.2. The placement of a child with an employee in connection with the adoption or foster care of a child; 28.4.1.3. The care for the employee's father, step-father,father-in-law, mother, step-mother, mother-in-law, brother, step-brother, sister, step-sister, husband,wife, biological child, adopted child, step-child, foster child, legal ward, child of a domestic partner, grandchild, grandparent, foster parent, legal guardian, or any family member with whom the employee resides, who has a serious health condition, as defined in the Act; Page 21 of 32 28.4.1.4. The employee's own serious health condition that renders the employee unable to perform the essential functions of his or her position, including incapacity due to pregnancy; 28.4.1.5. A qualifying exigency arising out of the fact that an employee's family member is on covered active duty or called to covered active duty status in the Armed Forces. A qualifying exigency may include activities such as making arrangements for childcare, attending counseling relating to the active duty of the service member, or attending to farewell or arrival arrangements for the service member; 28.4.1.6. The care for the employee's family member or"next of kin" service member of the United States Armed Forces who has a serious injury or illness incurred in the line of duty while on active military duty. This leave may consist of up to 26 weeks of unpaid leave during a single 12-month period. 28.4.2. CFRA Leave. CFRA Leave may be used for: 28.4.2.1. The same purposes as FMLA Leave, including the care of a domestic partner or child of a domestic partner, and will run concurrently with FMLA leave. 28.4.2.2. CFRA Leave may not be used for 1)an employee's incapacity due to pregnancy, 2) leave due to a qualifying exigency, or 3) to care for a family member or next of kin with a serious injury or illness incurred in the line of duly. However, incapacity due to pregnancy may entitle an employee to up to four(4)months of pregnancy disability leave under California's Pregnancy Disability Leave(PDL)law. 28.5. General Provisions 28.5.1. Requests for FMLA and CFRA Leave 28.5.1.1. Where the need for Leave is foreseeable,the District requests thirty(30)days advance notice. 28.5.2. Medical Certification 28.5.2.1. As a condition of FMLA or CFRA Leave because of a serious health condition,the District may require certification by the employee's attending physician in accordance with the Department of Labor(DOL)regulations. 28.5.3. Medical and Dental Premiums 28.5.3.1. During FMLA and CFRA Leave, the District will pay for medical and dental benefits at the same level as coverage would have been provided if the employee was not on leave. The employee will be required to pay his or her share of medical and dental premiums. Failure to submit a monthly co-payment, in full,within forty-five (45)days of the invoice date will result in loss of group coverage. Coverage will be reinstated upon Page 22 of 32 return to active employment. 28.5.4. Reinstatement 28.5.4.1. Upon expiration of FMLA or CFRA Leave, the employee will be reinstated to the same or a comparable position unless the employee would not otherwise have been entitled to that position for reasons unrelated to such leave(e.g., lay-off), in which case the District's obligation to continue health and dental or other benefits will cease. 28.5.5. District Employment of Soouses/Domestic Partners 28.5.5.1. FMLA Leave Married employees will be limited to a combined total of twelve(12)weeks FMLA or CFRA Leave in a rolling twelve(12)month calendar period for the care of a parent or newly born or placed child. 28.5.5.2. CFRA Leave Married employees and employees in domestic partnerships will be limited to a combined total of twelve (12) weeks CFRA Leave in a rolling twelve(12)month calendar period for the care of a parent or newly born or placed child. 28.5.6. General Leave 28.5.6.1. Employees who have exhausted all paid time off accruals may request to be granted a general leave-of-absence by District management to attend to personal matters, or for FMLA or CFRA qualifying events after the expirations of previously authorized leave. 28.5.6.2. During a general leave-of-absence, the employee will be required to pay both the District's and the employee's share of medical and dental premiums. 28.5.6.3. Failure to submit a monthly co-payment, in full,within forty-five (45)days of the invoice date will result in loss of group coverage. Coverage will be reinstated upon return to active employment. 28.5.7. Return to Work Policv 28.5.7.1. An employee who has been absent from work due to a medical reason may be subject to a Return-to-Work medical evaluation. 28.5.7.2. If it is determined that the job demands of the position last held by the employee are not compatible with the employee's restrictions(with reasonable accommodation if the employee is disabled within the meaning of the ADA/FEHA)and the employee is willing to return to work, placement in an alternative position, if available, will be considered. The employee will be re-classified as medically disqualified while alternative positions are being considered. Such time off will be without pay; however, the employee may elect to use Page 23 of 32 accrued leave hours, such as vacation, sick or personal,to receive compensation. Placement of an employee in an alternative position requires a pre-placement medical evaluation for the alternative job. 28.5.7.3. If it is determined that the job demands of the position last held by the employee are not compatible with the employee's restrictions(and cannot be reasonably accommodated if the employee is disabled within the meaning of ADA/FEHA)and there is not an alternative position, or the employee's restrictions are not compatible with an alternative position, or the employee is not willing to return to work,the employee will be re-classified as medically disqualified and not permitted to work. Thereafter, the employee will be retired for disability, if eligible,or dismissed. Such dismissal will not imply disciplinary action for cause. If requested,the employee's file will indicate the employee left for personal reasons. 28.5.8. Bridge of Service 28.5.8.1. If an employee is dismissed per Section 28.5.7.3 and then is rehired to a position within the District within one(1)year, the District will bridge the employee's service date. Bridging of service procedures involve adding the total number of days away from work to the employee's original date of hire. 28.5.9. Failure to Return to Work 28.5.9.1. If, upon the expiration of FMLA or CFRA Leave, or any District- approved extension thereof including General Leave, an employee fails to return to work and no additional leave has been authorized, the employee will be considered to have automatically resigned from his/her position. In such cases,the employee will receive advance notification of the District's intent to implement an automatic resignation. 28.5.10. Compliance with Law 28.5.10.1.These Leave-of-Absence provisions will be interpreted and applied in a manner that is consistent with the provisions of FMLA, CFRA,ADA and all other laws. In the event there is a direct conflict between these provisions, as written or applied, the provisions of law will govern. ARTICLE 29. - CLASSIFICATION STUDIES Oren . de a Feipresentat ,e from the Supery erGroup and the Profess anal 29.1. The law requires meet and confer over changes to wages, hours,and terms and conditions of employment:the District is committed to complying with the law. 29�29.2. An employee who believes his/her position is not properly classified may submit Page 24 of 32 a written request to the Department Head asking that a classification study be conducted.The Department Head will acknowledge the request in writing and review the request for accuracy, and forward it to the Human Resources Department for consideration and response. Classification studies will only be conducted twice a year in November and during the budget process;therefore, classification study requests shall be submitted October 1'r for the November review and according to the Finance budget schedule which normally requests all information by the end of February. District management may also conduct classification studies at their discretion to ensure that the duties and responsibilities of all employees are appropriately allocated within the classification structure. 29 1 1 29.2.1. All classification study findings regarding existing classifications are subject to approval by the General Manager; findings recommending a new job classification range are subject to approval by the District's Board of Directors.The recommendations of the classification study will be implemented in the first pay period immediately following the completion of the study unless the recommendations require action to be taken by the Board of Directors prior to implementation. In such event, the recommendations will be implemented in the first pay period immediately following authorization by the Board. 29-2-29.3. Y-Ratina 29.2..1.29.3.1. In the event the duties and responsibilities of a position are allocated to a lower paid classification, the salary of the incumbent of that position will remain unchanged. 29.2-2:29.3.2. Y-rating will be granted for all reclassifications where employees are working in a job classification with a lower maximum rate of pay resulting from changes to the District's staffing requirements, organizational structure or"bumping"associated with layoffs.Y-rating shall not apply in cases involving disciplinary actions or voluntary changes to a job classification with a lower maximum rate of pay(unless otherwise authorized by the General Manager). 29.2.2.29.3.3. The Y-rate will remain in effect until the salary range for the new classification equals or exceeds the employee's Y-rated salary. Employees become eligible for merit increases and range adjustments when the Y-rate is no longer in effect. ARTICLE 30. - DRIVER'S LICENSE 30.1. Employees who are required by the District to drive must notify their supervisor and the Risk Management Division immediately upon receipt of any suspension or revocation of their California Driver's License privileges. Failure to do so could result in disciplinary action up to and including separation. 30.2. If an employee whose license is suspended or revoked and is unable to perform his/her regular duties and responsibilities notifies the District in a timely fashion, an attempt will be made to place the employee in an equal or lower level position for which he/she is qualified. Placement in the range of the new classification is subject to District's management discretion. 30.3. The District will continue to pay the license renewals and physical examination costs of Class A and B licenses that are specifically required by the District. Page 25 of 32 ARTICLE 31. - LAYOFF PROCEDURE 31.1. If, in the sole discretion of District's management, personnel reductions are necessary, layoff order and recall lists will be developed based upon job classification, priority of function,job performance, individual qualifications and seniority. The Group and employees subject to lay off will be provided with at least two (2)weeks notification in writing whenever possible. 31.2. Employees in classifications subject to layoff may request a voluntary demotion to any previously held position for which they remain qualified. Such request must be made in writing to the Human Resources Department within five(5)days of receipt of the Layoff Notice.The salary of an employee who voluntarily demotes will be unchanged, except that it may not exceed the top step of the range for the lower level classification. 31.3. Recall lists will be developed for all classifications experiencing personnel reductions, and will be maintained for a period of two (2)years from the date of layoff. Individuals will be placed on the list in the inverse order of layoff, so that the last person laid off is the first recalled.When a vacancy occurs in a classification for which a Recall list exists, an offer of reemployment will be made to the individual on the top of the list. That individual must respond to the offer within five(5)days,or the offer will be made to the next person on the list. An individual who either does not respond or refuses three (3)consecutive offers will have his/her name removed from the list. 31.4. All notification and responses must be in writing and delivered either in person or by Certified Mail. It is the responsibility of all employees to keep the Human Resources Department informed of their current address, or where they may be contacted. ARTICLE 32. - LIGHT DUTY 32.1. An employee who is released by a physician to perform limited duties because of a temporary disability may be assigned to light duty at the discretion of the District. Light duty may consist of duties other than those normally performed by the employee and that are within the employee's medical restrictions.An employee assigned to light duly will be paid the regular wage rate for the job classification to which he or she was assigned prior to being temporarily disabled. ARTICLE 33. - MEDICAL EXAMINATION 33.1. When there is reasonable evidence to suggest that an employee is impaired in a manner that endangers his/her own health or safety, or that of others, the District may require that employee to be examined or evaluated by a health care provider. The purpose of such examination must be job related. Any examination under this provision will be conducted on District time and at District expense. An employee may submit an independent medical opinion regarding his/her condition and addressing his/her ability to competently perform the duties of the position. This information will be reviewed and considered by a competent medical authority in arriving at a decision regarding the individual's continued employment in the position. ARTICLE 34. - MILEAGE ALLOWANCE 34.1. Approved use of a personal vehicle for District business will be reimbursed at the current IRS rate. Page 26 of 32 ARTICLE 35. - ACTING PAY 35.1. Employees who are assigned by District management to perform the duties of an open, budgeted position at a higher level for a period of at least one hundred (100) consecutive hours will be eligible for a one(1)step salary increase, or the first step of the range for the higher level classification,whichever is greater.The higher rate of pay begins with the 101 st hour, and continues until the assignment ends or the six (6) month limitation has been reached at which time a determination will be made as to whether the position should or should not be posted. Requests for acting pay require the approval of the Department Head and the Human Resources Department. The one hundred (100)-hour eligibility period may be waived at the discretion of the General Manager.Time served in higher level assignments shall be credited as qualifying experience for Promotional purposes. ARTICLE 36. (This article intentionally left blank.) ARTICLE 37. - PERSONNEL FILES 37.1. Employees have the right to inspect their Personnel File in the Human Resources Department during the normal office hours of the Human Resources Department by appointment. Employees who wish to correct allegedly erroneous information in their file, or request that items related to disciplinary matters be removed after the indicated time period has elapsed, should submit a request in writing to the Human Resources Department. It is the responsibility of each employee to keep the personal information in his/her files current, including home address, telephone number and person to contact in an emergency. ARTICLE 38. - BULLETIN BOARDS 36.1. The Group may use the bulletin boards located at Plant 1 and Plant 2 which are designated for use by employee Groups to post notices to District employees provided that: (a) no controversial matter which is critical or derogatory of the District, its employees, officers or Directors may be posted; (b)nothing posted by the District may be removed; (c)the Group will remove its notices after a reasonable length of time; and (d)only a reasonable number of notices will be posted. ARTICLE 39. - RELEASE TIME FOR MEET AND CONFER SESSIONS 39.1. A maximum of three (3)employees covered by this Agreement and appointed by the Group will be granted reasonable release time for attending meet and confer sessions at the bargaining table. Release time will not be compensated for any hours that exceed the employee's regularly scheduled hours of work. 39.2. The Group will provide the Human Resources Department with the names of employees requiring meet and confer release time in advance of the meet and confer session. The release time will be granted provided that the needs of the District permit the time away from assigned work. ARTICLE 40. - USE OF DISTRICT FACILITIES 40.1. District facilities may be used by the Group with prior notice to the Human Resources Department for the purpose of holding meetings,to the extent that such use does not Page 27 of 32 interfere with normal District operations.The Group agrees to pay for the cost of any additional custodial or security services. ARTICLE 41. - SCOPE OF BARGAINING 41.1. The District and the Group acknowledge that during the negotiations which resulted in this Agreement, each parry had the unlimited right and opportunity to make demands and proposals with respect to all proper subjects within the scope of representation.Therefore,the District and the Group,for the term of this Agreement, except as otherwise provided herein, each voluntarily and unqualifiedly waive the right, and each agrees that the other will not be obligated to bargain collectively with respect to any subject or matter contained in this Agreement. ARTICLE 42. - IMPASSE PROCEDURES 42.1. If either the District or Group declares that an impasse exists in the meet and confer process,the party so declaring may initiate the impasse procedure by providing the other party with a written request for an impasse meeting,together with a statement of its position on all issues.An impasse meeting will be scheduled and held between the parties within fourteen(14)calendar days or as soon as practicable to: 42.1.1. Review the position of the parties in a final effort to reach agreement on a memorandum of understanding, and if the impasse is not resolved,to discuss the immediate utilization of impasse procedures outlined herein. 42.2. Impasse Procedures are: 42.2.1. Mediation: If the parties mutually agree to submit the dispute to the State Mediator and Conciliation Service all mediation proceedings will be private and as soon as practicable. The mediator will make no public recommendation, nor take any public position at any time concerning the issues. 42.2.2. Fact-Finding: Whether the parties submit the dispute to mediation or not, the Group may request that the parties'differences be submitted to a facifinding panel as soon as practicable.The cost of a fact finder and other mutually incurred costs will be mutually shared by the District and Group. 42.2.3. Board Actions: If the parties fail to resolve the impasse,the dispute will be sent to the District Board of Directors for resolution. Each party will submit its written proposal on all issues to the Board.The Board may take such action to resolve the impasse as it deems appropriate to the public interest.Any action taken by the Board to resolve the impasse will be final and binding. ARTICLE 43. -SEVERABILITY 43.1. Notwithstanding any other provisions in this Agreement, in the event that any article, section or subsection of this Agreement will be declared invalid by any court or by any state or federal law or regulation, or should a decision by any court or any state or federal law or regulation diminish the benefits provided by this Agreement, or impose additional obligations on the District,the District and the Group will meet and confer on the affected article, section or subsection. In such event, all other articles, sections or subsections of this Agreement not affected will continue in full force and Page 28 of 32 effect. ARTICLE 44. - UNIFORMS 44.1. The District will provide and maintain ten (10)uniform pants and shirts, which may include the name of the employee and District seal, at no cost to employees whose duties require that they wear uniforms. The District will also provide lab coats as required by the lab manager. 44.2. All employees who are issued uniforms must wear them during the performance of their regular duties. Other clothing appropriate to the occasion, as determined by District management, may be worn when attending business meetings. Failure to wear required clothing, shoes and safety equipment may be cause for disciplinary action. ARTICLE 45. - SUBSTANCE ABUSE POLICY 45.1. The District's Substance Abuse Policy will apply to all Group members.The District and the Group agree to meet and confer for any proposed revisions to the policy. The District may adopt or implement rules, regulations and policies to be in compliance with federal and state laws. In such cases, notification will be provided to the Group prior to implementation. 45.2. Department of Transportation (DOT) Reaulations 45.2.1. Every driver who operates a commercial motor vehicle in interstate or intrastate commerce, and is subject to the commercial driver's license requirements of the Department of Transportation, Federal Highway Administration CFR Part 382 is subject to the District's Anti-Drug and Alcohol Program. The District will ensure that all alcohol or controlled substances testing conducted under the Substance Abuse and Alcohol Misuse Plan complies with the procedures set forth in CFR Part 40. 45.3. District's Substance Abuse Policv: 45.3.1. Any employee may be subject to discipline, up to and including termination, for any alcohol screen test that indicates an alcohol concentration level of 0.02%or greater. ARTICLE 46. - DUES DEDUCTIONS 46.1. At monthly orientation meetings for new employees, a Group informational packet will be provided to those employees holding Group-represented positions. The informational packet will include Group contact information, a Group Payroll Deduction Authorization Form, and a transmittal indicating: 46.1.1. Management representatives will not encourage or discourage Group membership participation; 46.1.2. The employee belongs to a classification represented by the Group; 46.1.3. The Group is the exclusive recognized employee organization for all employees in the Group; and Page 29 of 32 46.1.4. The employee may complete the Group Payroll Deduction Authorization Form and submit it to the Human Resources Department if he/she would like to join the group. 46.2. The District will deduct from each regular paycheck and remit to Group the dues, initiation fees and assessments for each employee who voluntarily authorizes such deduction in writing. Such authorizations must be fled by the end of the pay period prior to the period for which the deduction is requested. 46.3. The District will provide the Group a quarterly list of the names of those employees for whom it has made deductions. In addition,the District will provide the names of new employees and the names of employees who have terminated within the reporting period. ARTICLE 47. — MAINTENANCE OF MEMBERSHIP 47.1. All employees who—, Gn-JWy�997;are members of the Group, or who thereafter become members of the Group, shall remain members of the Group, except that any employee may withdraw his/her membership by written notice to the Group and the District during the ten day period between ninety(90)and one hundred (100)days preceding the expiration of this agreement. ARTICLE 48. — PEACEFUL RESOLUTION OF DISPUTES 48.1. During the term of this Memorandum, or any subsequent period when impasse resolution procedures are in progress or recommendations resulting from such procedures are being considered by the parties,the District agrees it will not lockout employees in this Group, and Group agrees that it will neither advocate, encourage or participate in any strike, including sympathy strike, or work stoppages, nor encourage employees to refrain in whole or in part from the full, faithful and proper performance of their duties of employment. ARTICLE 49. (This article intentionally left blank) ARTICLE 50. -WORKPLACE VIOLENCE AND WEAPONS POLICY 50.1. The District's Workplace Violence and Weapons Policy will apply to all Group members.The District and the Group agree to meet and confer for any proposed revisions to the policy. ARTICLE 51. - RESIGNATION 51.1. Voluntary written resignation of employment with the District is irrevocable after seventy-two(72)hours from the District's receipt of the resignation except by approval of the Human Resources Department. ARTICLE 52. (This article intentionally left blank) Page 30 of 32 SIGNATURE PAGE 2013 2016—20196 MEMORANDUM OF UNDERSTANDING BETWEEN THE ORANGE COUNTY SANITATION DISTRICT AND THE EMPLOYEES OF THE SUPERVISOR GROUP Executed: SUPERVISOR GROUP ORANGE COUNTY SANITATION DISTRICT Carlos MejiaSleve Koffkkroth, Business ofames-.-.o.� 'eLaura Kalty, Chief Negotiator Representative, AFSCME Council 36 (Affiliate of SPMG) Marc Brown, Principal Staff Analyst james D. Herberg, GeneraklylaregerCellia Chandler. Director of Human Resources Angela Brandt, Accounting Supervisor Robert P. GhiFell , Asa slant GAPA4 ManagerAndrew Nau. Principal Human Resources Analyst Bob Bell, Maintenance Supervisor MaeagerLaura Maravilla Human Resources SupervisoAndrew Nau, PrnG+pal Human Rego-imps AnalysiJanine Aguilar. Principal Human Resources Analyst AnalysiLaurie Klinger. Senior Human Resources Analyst Page 31 of 32 APPENDIX A Medical Insurance Plan Design Components-� CURRENT STATE Non-Network Deductible $150/$450 $1 300/52,60 Annual Out-of- 2000 3000 2500 5000 Pocket Max/Member Annual Out-of- q 000 6 000 5 000 10 000 Pocket Max/Family Physician Office Visit 15 Visit 30% 10% 30% Specialist Off ice Visit 15 Visit 30% 10% 30% Preventive Care No Charge 30% No Charge Not Covered 30%(up to Inpatient Hospitalization 10% 30%+$500 10% $1.000/day,non - emergencyl Outpatient 10% 30% 10% 30%(up to Hospitalization/Surgery $350/admit) Emereencv Room $100/Visit $100/Visit $100/Visit (waived if admitted) (waived if admitted) (waived if admitted) Infertility Benefits Not Covered Not Covered Urgent Care 15 Visit 30% 10% 30% Chiropractic 15 Visit 30% 10% Visit 30% Visit (30 visits/year) (30 visits/year) (30 visits/year) (30 visits/year) Opt-Out from Plan Yes Yes Yes P $5/$20/$3S S10/S25/S40 after Retail (30-day supply) Not Covered deductible Not Covered (30-day supply) $5/$40/$70 $201$501$80 after Mail Order deductible (90-day supply) Not Covered 190 Not Covered -day supply) Plan Design Components will include any applicable mandated legislative changes. 3 This is not a complete descnption of all benefit Provisions.The information contained in Summary Plan Descriptions(SPDs)and Evidence of Coverage EOC booklets revails. Page 32 of 32 Medical Insurance Plan Design Componentsit CURRENT STATE Kaiser ze Deductible None None $50001ndividu al $10000 Family Annual Out of1500 $1,500 6250 Pocket Max/Member Annual Out of3000 $3.000 12500 Pocket Max/Family Physician Office Visit 15 Visit 15 Visit 60 Visit Specialist Office Visit 15 Visit 15 Visit 70 Visit Preventive Care No Charge No Charge No Charge Inpatient Hospitalization $100 Admit $100 Admit 30% Outpatient 50 Admit 15 Co-Day 30% Hospitalization/Surgery (Per procedure) Emergency Room 100 Visit 100 Visit 300 Visit (waived if admitted) (waived if admitted) (waived if admitted) Infertility Benefits Status Quo Not Covered Urgent Care 15 Visit 15 Visit 60 Visit Chiropractic SO Visit 10 Visit Not Covered (30 visits/year) (30 visits/year) Opt-Out from Plan Yes Yes Yes G d S5/$20/$35 s 20 $15/$50 medical Retail (30-day supply) (30-day supply) deductible applies (30-day supplvl $5/$40/$70 g 20 $30/$100 medical Mail Order 100-daysupplvl (100-dav suoolvl deductible applies 1100-day suoolvl Plan Design Components will include any applicable mandated legislative changes. 'This is not a com let.descd lion of all benefit provisims.1ne informOon contained in Summary Plan Descriptions(SPD. and Evidence of Coverage EOC booklets prevails. APPENDIXQ Page 33 of 32 fiber �9 $3,990 439e 4500 $4,000 $F,999 $3,000 $3,000 p 3Q% 3G% PFIVIRtiW QF. N8 ChaFge 3G% inpatient Hose tal Mien 10% �t50 $10 dm $ 0 „.. $Io 6------_ tnfem n Status Qua 36% $10/Vsit $10/Vsit h mp:aat;c f39 visHs{year� a a �9 «��,< «��,_ 0 o (ae-dev supply) (30 day supply) f1e9-day-seaa4vi (90 day A9ail-e�9eF supply) WA Page 34 of 32 MEMORANDUM OF UNDERSTANDING BETWEEN THE ORANGE COUNTY SANITATION DISTRICT AND THE EMPLOYEES IN THE PROFESSIONAL GROUP July 1, 2013 2016 through June 30, 24�62019 TABLE OF CONTENTS ARTICLE I. -RECOGNITION.............................................................................................................................1 ARTICLE2. -DURATION....................................................................................................................................1 ARTICLE 3. -SUCCESSOR AGREEMENT........................................................................................................1 ARTICLE 4. -GROUP ACCESS.........................................................................................................................1 ARTICLE S. -GROUP RIGHTS...........................................................................................................................2 ARTICLE 6. -DISTRICT RIGHTS.......................................................................................................................2 ARTICLE 7. -NONDISCRIMINATION IN EMPLOYMENT.................................................................................2 ARTICLE S. -SMOKE-FREE WORK ENVIRONMENT......................................................................................2 ARTICLE9. -SAFETY........................................................................................................................................3 ARTICLE 10. -DISCIPLINE AND DISMISSAL.....................................................................................................3 ARTICLE 11. -GRIEVANCE PROCEDURE.........................................................................................................4 11.3.1. STEP 1 ..................................................................................................................................................... 5 11.3.2. STEP 2..................................................................................................................................................... 5 11.3.4. STEP 3..................................................................................................................................................... 5 11.3.5. STEP 4.....................................................................................................................................................6 ARTICLE 12. -PROBLEM SOLVING PROCEDURE...........................................................................................6 ARTICLEI3. -SALARY ADJUSTMENTS AND COMPENSATION....................................................................6 13.3. MERIT PAY............................................................................................................................................... 7 13.4. PERFORMANCE MANAGEMENT PROGRAM................................................................................................... 7 13.5. DEVELOPMENT PAY................................................................................................................................... 7 13.9. SALARY RANGE......................................................................................................................................... 6 13.10. INVESTMENT INCENTIVE SALARY(IIS)........................................................................................................ 8 ARTICLE 14. -SEVERANCE PAY........................................................................................................................8 ARTICLE 15. -DEFERRED COMPENSATION....................................................................................................8 ARTICLE16. -HOLIDAYS....................................................................................................................................9 16.2. FLOATING HOLIDAY................................................................................................................................... 9 ARTICLE 17. -HOURS OF WORK.................................................................................................................... 10 ARTICLE18. ...................................................................................................................................................... 10 ARTICLE19. ................................................................................................................................................... 10 ARTICLE 20. -INSURANCE.............................................................................................................................. 10 20.3. MEDICAL INSURANCE............................................................................................................................... 10 20.6. GROUP INSURANCE................................................................................................................................. 11 20.7. LIFE INSURANCE...................................................................................................................................... 11 20.9. LONG TERM DISABILITY........................................................................................................................... 11 20.10. DENTAL INSURANCE................................................................................................................................ 12 20.11. VISION INSURANCE.................................................................................................................................. 12 20.12. RETIRING EMPLOYEES............................................................................................................................. 12 ARTICLE 21. -REIMBURSEMENT ACCOUNT................................................................................................. 12 21.2. MEDICAL REIMBURSEMENT ACCOUNT...................................................................................................... 12 21.3. DEPENDENT CARE ASSISTANCE ACCOUNT............................................................................................... 13 Page ARTICLE 22. -EXTRAORDINARY SERVICES COMPENSATION.................................................................. 13 ARTICLE 23. -PROBATIONARY PERIOD....................................................................................................... 14 ARTICLE24. -PROMOTIONS........................................................................................................................... 14 ARTICLE 25. -RETIREMENT............................................................................................................................ 15 25.1.1. EMPLOYEES HIRED PRIOR TOSEPTEMBER 21. 1979................................................................................. 15 25.1.2. EMPLOYEES HIRED ON OR AFTER SEPTEMBER 21, 1979 AND BEFORE OCTOBER 1.2010........................... 15 25.1.3. EMPLOYEES HIRED ON OR AFTER OCTOBER 1.2010................................................................................. 15 ARTICLE 26. -SHIFT DIFFERENTIAL.............................................................................................................. 16 ARTICLE 27. -LEAVE-OF-ABSENCE WITH PAY............................................................................................ 16 27.1. VACATION LEAVE.................................................................................................................................... 16 27.2. SICK LEAVE............................................................................................................................................ 17 27.3. JURY DUTY LEAVE.................................................................................................................................. 19 27.4. WITNESS LEAVE...................................................................................................................................... 19 27.5. MILITARY LEAVE...................................................................................................................................... 19 27.6. BEREAVEMENT LEAVE.............................................................................................................................20 27.7. ADMINISTRATIVE LEAVE...........................................................................................................................20 ARTICLE 28. -LEAVE-OF-ABSENCE WITHOUT PAY....................................................................................21 28.3. SUBSTITUTION OF PAID LEAVE.................................................................................................................21 28.4. PERMISSIBLE USES.................................................................................................................................21 28.5. GENERAL LEAVE.....................................................................................................................................23 28.6. RETURN TO WORK POLICY FOR NON-WORK-RELATED LEAVE...................................................................23 28.7. COMPLIANCE WITH LAW...........................................................................................................................24 ARTICLE 29. -CLASSIFICATION STUDIES.....................................................................................................24 29.4. Y-RATING...............................................................................................................................................25 ARTICLE 30. -DRIVER'S LICENSE..................................................................................................................25 ARTICLE 31. -LAYOFF PROCEDURE.............................................................................................................26 ARTICLE 32. -LIGHT DUTY..............................................................................................................................26 ARTICLE 33. -MEDICAL EXAMINATION.........................................................................................................26 ARTICLE 34. -MILEAGE ALLOWANCE...........................................................................................................26 ARTICLE 35. -ACTING PAY.............................................................................................................................27 ARTICLE36. ......................................................................................................................................................27 ARTICLE 37. -PERSONNEL FILES..................................................................................................................27 ARTICLE 38. -BULLETIN BOARDS.................................................................................................................27 ARTICLE 39. -RELEASE TIME FOR MEET AND CONFER SESSIONS........................................................27 ARTICLE 40. -USE OF DISTRICT FACILITIES................................................................................................27 ARTICLE 41. -SCOPE OF BARGAINING.........................................................................................................28 ARTICLE 42. -IMPASSE PROCEDURES.........................................................................................................28 42.2. IMPASSE PROCEDURES...........................................................................................................................28 ARTICLE43. -SEVERABILITY.........................................................................................................................28 ARTICLE44. -UNIFORMS................................................................................................................................29 ARTICLE 45. -SUBSTANCE ABUSE POLICY.................................................................................................29 45.2. DEPARTMENT OF TRANSPORTATION REGULATIONS...................................................................................29 Page ii ARTICLE 46. - DUES DEDUCTIONS.................................................................................................................29 ARTICLE 47. - MAINTENANCE OF MEMBERSHIP.........................................................................................30 ARTICLE 48. -PEACEFUL RESOLUTION OF DISPUTES.............................................................................. 30 ARTICLE49. ...................................................................................................................................................... 30 ARTICLE 50. -WORKPLACE VIOLENCE AND WEAPONS POLICY............................................................. 30 ARTICLE 51. -RESIGNATION .......................................................................................................................... 30 ARTICLE52. ......................................................................................................................................................30 SIGNATUREPAGE..............................................................................................................................................31 APPENDIX A ...........................................................................................ERROR! BOOKMARK NOT DEFINED. Page iii MEMORANDUM OF UNDERSTANDING BETWEEN THE ORANGE COUNTY SANITATION DISTRICT AND THE EMPLOYEES IN THE PROFESSIONAL GROUP In accordance with the provisions of California Government Code Sections 3500, at seq., and Resolution No. 99-24 of the Joint Boards of Directors,the District's authorized representatives have met and conferred in good faith with representatives of the Professional Group. These meetings have resulted in an agreement and understanding to recommend that the employees represented by the Professional Group accept these terms and conditions, and that the Board of Directors adopt by Resolution the changes and additions to the wages, hours, and conditions of employment for the employees represented by the Professional Group as set forth in this Agreement. ARTICLE 1. - RECOGNITION 1.1. This Agreement, effective July 1,20452016, is entered into between the Orange County Sanitation District, referred to hereinafter as the"District", and the Professional Group, referred to hereinafter as"Group", as a mutual recommendation to the Board of Directors of the District of those wages, hours of work,and terms and conditions of employment. ARTICLE 2. - DURATION 2.1. This Agreement will be binding on the District and the Group when approved and adopted by the District's Board of Directors. This Agreement will terminate on June 30,20162019. Any issue regarding the question of representation shall be brought pursuant to the Employer-Employee Relations Resolutions (EERR), Resolution No. OCSD 99-24. ARTICLE 3. - SUCCESSOR AGREEMENT 3.1. The Group will submit in writing its initial proposal for a successor agreement prior to the expiration date of this Agreement. ARTICLE 4. - GROUP ACCESS 4.1. A Group representative will have access to the District facilities during normal working hours for the purpose of assisting Group employees in processing grievances or investigating matters arising out of the application of provisions of this Agreement. 4.2. The Group will provide the Human Resources Department or designee, with a list of Representatives who are authorized to request access under this article,and will notify the Director of Human Resources, or designee, of any changes in that list. 4.3. Group access will not unreasonably interfere with District operations, or with the work of employees in any manner.The District reserves the right to restrict access in certain areas designated confidential or secure. Page 1 of 31 ARTICLE 5. - GROUP RIGHTS 5.1. The Group may designate up to five(5)employees to act as representatives for employees covered by this Agreement. The Group will furnish the Human Resources Department with the names of employees selected as representatives and will update the list as necessary.An alternate representative may be designated to act in the absence of the regular representative. Employees not listed on the roster of representatives provided to the District by the Group may not act as representatives. 5.2. Representatives will not perform non work-related duties on work time without the prior approval of their immediate supervisor. Neither the District nor the Group will interfere with, intimidate, restrain, coerce or discriminate against employees because of the exercise or non-exercise of their rights to engage in Group activity. ARTICLE 6. - DISTRICT RIGHTS 6.1. District inherent rights, powers,functions,duties, responsibilities and authority related to a managerial or administrative character are reserved to the District in its exercise of management decision-making, except as specifically modified by the express provisions of this Memorandum. District rights include, but are not limited to,the exclusive right to consider the merits, necessity or organization of any service or activity provided by law, or administrative order; determine the mission of its constituent departments, commissions and boards; set standards of service, determine the procedures and standards of selection for employment and promotion; establish and implement performance standards; direct its employees;take disciplinary action for proper cause; layoff employees from duty because of lack of work or lack of funds; maintain the efficiency of District operations; determine the methods, means and personnel by which District operations are to be conducted; determine the content of job classifications; classify and reclassify positions;take all necessary actions to carry out its mission in emergencies; and exercise complete control and discretion over its organization and the technology of performing its work. 6.2. District retains all authority and rights conferred on it by law, or other legal sources, except to the extent that such authority is explicitly waived by the express terms of this agreement. District exercise of its management rights hereunder shall not be subject to appeal or meeting and conferring, however,that the exercise of such rights does not preclude the Group from appealing or meeting and conferring the practical consequences or impacts that District decisions have on wages, hours, and other terms and conditions of employment. ARTICLE 7. - NONDISCRIMINATION IN EMPLOYMENT 7.1. There will be no unlawful discrimination in the application of the provisions of this Agreement with regard to actual or perceived race, color, religion, national origin, ancestry, sex, gender, pander identitfv gender expression sexual orientation, age. physical or mental disability, medical condition, genetic information marital status or military or veteran status or any other lawfully protected class. To the extent required by law or by the DistricPs rules or regulations,this provision of the Agreement will be applied to all members of the Group without regard to mar;tal status,handicap, medical ^^a'''^^ ^ d sab ed veteran, ^^"'^any protected classification. ARTICLE 8. - SMOKE-FREE WORK ENVIRONMENT 8.1. The District endorses and supports the right of all employees to work in a healthy and Page 2 of 31 safe environment free of recognized hazards. In view of the hazards associated with smoking and the potentially harmful effect it has on the health and well being of District employees and their families, smoking and the use of tobacco(cigarettes, cigars e-cigarettes h'vaping"1 and related tobacco products and technologies)is not acceptable within District facilities, and may occur only in areas posted for smoking. ARTICLE 9. -SAFETY 9.1. It is the duty of the District to provide and maintain a safe place of employment.The Group will cooperate by encouraging all employees covered by this Agreement to perform their work in a safe manner. It is the duty of all employees covered by this Agreement, in the course of performing their assigned duties,to be alert to unsafe practices, equipment, and conditions,and to follow the safety regulations and requirements of the District, and to report any unsafe practices or conditions to their immediate supervisor. An employee will not be required to perform work that is unsafe. ARTICLE 10. - DISCIPLINE AND DISMISSAL 10.1. Discipline may occur when any of the following actions are taken for just cause with respect to any employee in the Group: verbal reprimand;written reprimand; suspension without pay; reduction in pay; demotion to a classification with a lower pay grade, or dismissal. 10.2. Dismissal,for purposes of this Article, is the separation of a non-probationary employee initiated by the District forjust cause. 10.3. A Notice of Intent is not required when the disciplinary action involves a verbal reprimand or written reprimand. 10.4. A Notice of Intent is required and will be given to an employee whenever the disciplinary action involves suspension without pay, reduction in pay, demotion to a classification with a lower pay grade, or dismissal.The notice will be given to the affected employee either by delivery in person or by Certified Mail sent to the employee's last known address. Such personal delivery or mailing will be presumed to provide actual notice to the affected employee. The Notice of Intent will indicate the date on which it was personally delivered or deposited in the mail, which will be the date of issuance. 10.5. The Notice of Intent will contain the following: (1)a description of the disciplinary action intended and the effective date of the action; (2)the reasons for the proposed action; (3)a copy of the charges and materials upon which the action is based; and, (4) a statement of the employee's right to respond, either verbally or in writing to the person initially imposing the discipline, or to a District management representative with authority to make an effective recommendation on the proposed action; the person to whom any response must be directed, and the fact that such response must be received within ten (10) business days of the date of issuance of the notice. The Notice will also advise the employee of the right to representation. 10.6. Prior to the effective date of the proposed disciplinary action,the employee will be given an opportunity to respond either verbally or in writing to a management representative with authority to make an effective recommendation on the proposed action. After review of an employee's response,the District will notify the employee in writing of the action that will be taken. Such action may not involve discipline more severe than that described in the Notice of Intent; however,the District may reduce Page 3 of 31 discipline without further notice. Further clarification of the disciplinary policies and procedures are covered in the District's Personnel Policies& Procedures Manual. 10.7. Dismissal will be preceded by at least one (1)written reprimand,except in those situations in which the employee knows or reasonably should have known that the performance or conduct was unsatisfactory. Such performance or conduct may involve, but is not limited to, dishonesty, possession, use, sale or being under the influence of drugs or alcohol, theft or misappropriation of District property or funds, fighting on the job, insubordination, acts endangering people or property, or other serious misconduct.The District may substitute documented suspensions without pay for written reprimands. 10.8. If a Notice of Intent is upheld and the disciplinary action is imposed, the employee may request a post-disciplinary hearing. The request must be submitted to the Assistant General Manager or designee,within ten If 0)business days following the effective date of the disciplinary action (for suspensions,the effective date will be the first business day following the final day of the suspension). The A^^'^. gi ant Gp,"^^^^r- ManagerDirector of Human Resources, or designee,will schedule a post disciplinary hearing with the General Manager or a hearing officer selected by the General Manager.The hearing officer may not be an employee of the District. The hearing officer will provide a written,advisory decision to the General Manager.The General Manager may uphold the disciplinary action that has been taken or may reduce such discipline without the issuance of a further Notice of Intent. The decision of the General Manager will be final. If the hearing officer upholds the disciplinary action, the employee will pay the full cost and expenses of the hearing officer. 10.9. All disciplinary action documentation, except verbal reprimand documentation,will be placed in an employee's Personnel File in the Human Resources Department. Verbal reprimand documentation will be kept in the supervisor's employee files. Supervisors shall inform management staff when a verbal reprimand is to be implemented. If after twenty-four(24) months from implementation there have been no recurrences of similar incidents, the supervisor shall destroy the verbal reprimand documentation. 10.10. Written reprimands may be removed from an employee's personnel file twenty-four (24)months subsequent to the date of the issuance, provided that there has been no recurrence of a similar incident during the period. If the Human Resources Department agrees to remove the written reprimand documentation from an employee's personnel file such documentation will be retained in a separate file by the Human Resources Department for the purpose of showing that progressive discipline has been followed or in support of the District proposed discipline. 10.11. Verbal reprimands and written reprimands may only be reviewed under this Agreement through the Problem Solving Procedure. Nothing in this article will be construed as a waiver of any statutory or constitutional rights. 10.12. A reduction in pay or demotion to a classification with a lower pay grade that is not a result of performance deficiencies (for example, reclassifications, "bumping" associated with layoffs, reasonable accommodation) shall not be considered discipline. ARTICLE 11. - GRIEVANCE PROCEDURE 11.1. A grievance is any complaint that management has violated a specific provision of this Agreement, except that, in accordance with Article 10 above, discipline which Page 4 of 31 requires a Notice of Intent may not be reviewed under this Grievance Procedure. 11.2. A grievance may be brought to the attention of the District by an individual employee within the Group or by the Group.The District may not bring a grievance through this procedure. Grievances brought by two(2)or more employees, and concerning the same incident, issue, or course of conduct,or multiple grievances brought by the same employee may, upon mutual agreement of the District and the Group, be consolidated for the purposes of this procedure. 4 9-:2-.11.3. Employees are encouraged prior to bringing forward a formal grievance to discuss the issue with the Director of Human Resources, or designee in an effort to bring about an informal resolution. 4-4-11.4. An employee maybe self-represented or be represented by the Group at all steps of the Grievance Procedure unless specifically agreed otherwise by the Group and the employee. The District will provide a copy of all written grievance settlements to the Group. Any reference to days in this article implies business days. 113k11.4.1. Step 1. An employee who has a complaint will attempt to resolve it with his/her immediate supervisor within five-()ten 10 days of the occurrence of the event giving rise to the complaint,or within fwe{b)ten 10 days from the time that the employee became aware of such event.The supervisor will attempt to resolve the issues surrounding the complaint, and respond to the employee within five-( en 10)days. 11-32.11.4.2. Step 2. If the grievance is not settled informally at Step 1, it may be submitted in writing to the employee's Department Head, or designee. This request for formal review must be presented on a form provided by the District within five ten (510)days of the conclusion of Step 1. A copy of each written communication on a grievance shall be filed with the Assistant General Manager,or designee. The written grievance must: 41 2 2 1 11.4.2.1. Identify the specific management act to be reviewed; 41 2 2 2.11.4.2.2. Specify how the employee was adversely affected; 41 2 2�.11.4.2.3. List the specific provisions of this agreementthe-M9U that were allegedly violated and state how they were violated; 41 2 2 4 11.4.2.4. Specify the remedy requested; and �2.5.11.4.2.5. Provide the date of attempts at informal resolution and the name of the supervisor or individual involved. 1132 11.4.3. The Department Head will respond in writing to the employee within ten (10)days after the date the grievance is received. 113411.4.4. Step 3. If a grievance is not settled under Step 1 or 2, it may be presented to the Assistant General Manager,or designee, for review and written response.The request for formal review must be presented on a form provided by the District within ten (10)days of the conclusion of Step 1 or 2, and must contain the information specified in Step 2 above. A copy of each written communication on a grievance shall be filed with the Assistant General Manager, or designee.The Assistant General Manager, or designee, will respond in writing to the employee within ten (10)days after Page 5 of 31 the date the grievance is received. 44-3-&11.4.5. Step 4. If the grievance cannot be resolved under Step 3, it may be presented to the General Manager within ten (10)days from the date the Step 3 finding was issued.The General Manager, or designee, will respond in writing to the employee within fifteen (15)days after the date the grievance is received. The decision of the General Manager is final. 44-411.5. General Provisions. An employee will be given reasonable time off without loss of pay to present and process a grievance. If an employee is represented by the Group,the Group may designate one(1)employee to present and process the grievance.The employee representative will be given reasonable time off without loss of pay to perform this responsibility. Absence from work will be approved only if it does not cause disruption to District operations. However, if the time requested cannot be provided, an alternate time will be arranged. 41a11.6. Failure of a supervisor, Department Head or other management representative to respond within the appropriate time limit will provide a basis for the employee appealing to the next step. If a grievance is not presented or appealed within the time limits, it will be considered resolved on the basis of the preceding response. The Human Resources Department may be petitioned in writing to waive the step or time requirements provided sufficient cause exists. Time limits may also be extended at any step upon mutual agreement of the parties. The District agrees to meet face-to- face with the employee at each step of the grievance procedure at the request of the employee. 14-.45-11.7. Resolution may be agreed upon at any stage of the grievance process. However, the Group will be notified prior to the resolution of any formal grievance matter. ARTICLE 12. - PROBLEM SOLVING PROCEDURE 12.1. Employees may bring problems to the attention of District managers through the Problem Solving Procedure. This Procedure was developed to encourage and facilitate the resolution of employee concems in a responsive and fair manner, and may be used to attempt to resolve issues that may not be subjected to the Grievance Procedure. Any reference to days in this article implies business days. 12.2. Employees should discuss concerns regarding issues that are not grevable with their supervisor as soon as possible. The supervisor will review the situation or decision, and provide a written response within five(5)days from the date they were notified of the problem. 12.3. If the problem is not resolved to the employee's satisfaction, the employee may file a written statement concerning the problem with the Human Resources Department within ten (10)days of receipt of the supervisor's decision. Upon request of either party, a meeting will be held to define issues and establish the remedies sought. The employee will be provided a written response within ten (10)days after his/her statement is received. Time limits may be extended for cause upon mutual consent of the parties, and the decision of the Human Resources Department is final. ARTICLE 13. - SALARY ADJUSTMENTS AND COMPENSATION 13.1. Each pay grade is divided into five(5)steps, with an approximate 5.0% difference between each step. Page 6 of 31 13.2. Pay increases will only apply to eligible employees in an active payroll status on the effective date of implementation. Eligible employees will not receive retroactivity if active payroll status becomes effective after the date of implementation. 13.3. Merit Pav 13.3.1. Step Increase Pav—Group employees are eligible for Step Increase Pay based upon receipt of year-end performance appraisal ratings issued by the assigned supervisor. Step Increase Pay will be paid according to the following: 13.3.1.1. Eligible-Employees must have a proficient year-end performance appraisal to receive a one(1)step base-building salary increase until earning placement at step five (5). 13.3.1.2. Ineligible-Employees who are placed on a Performance Improvement Plan (PIP)due to a needs improvement performance review on the year-end appraisal or who are on a PIP at the time of the year-end appraisal period will remain at their current step until the PIP is satisfactorily completed. 13.4. Performance Management Program: The performance management program includes two(2)rating categories (proficient and needs improvement)for performance appraisals. 13.5. Development Pav—Employees under this Agreement are eligible for Development Pay. Development Pay is a non-base building pay type that will be distributed in a lump-sum amount each pay period. Employees must have a proficient year-end performance appraisal to be eligible for the following Development Pay types: 13.5.1. Education—Effective the first pay period in July 2016. €eligible employees who obtain or who have obtained a graduate degree of approved subjects at an accredited college or university will receive $62.2975_00 per pay period. T nt of Fducat an Pay s fixed of$62 nn per nn. n 13.5.2. Certification/License—Effective the first pay period in July 2016 eligible employees who obtain or who have obtained a District approved certification or license will receive$7.62 15.24 per pay period per certificate or license with a maximum of three(3)certificates and/or licenses. The max mum nme nt of nertfiGat on/1 sense pay for any m6'net'n of Gant f'sate And/or Inenses 'n fixed at$22 ac per nn per+od. 13.5.3. Grade V Pay—Employees who receive Grade V pay in accordance with the applicable District policy are ineligible to receive Development Pay for their Grade V California Wastewater Treatment Plant Operator Certificate. Employees who possess a Grade V Certificate and do not meet the criteria for Grade V Pay are eligible for Development Pay in accordance with the Development Pay Program Guidelines. 1266 The overallm Development nnf on ,for eduGat on, an f Gat on andlor I'Parses s faxed at G9515 per pa per i`ad. 43-7- 3.6. Employees who are placed on a PIP due to a needs improvement performance Page 7 of 31 review on the year-end performance appraisal are not eligible for Development Pay until the PIP is satisfactorily completed. 43..&13.7. Employees who are placed on a PIP due to needs improvement performance outside the year-end appraisal will have all Development Pay suspended until the PIP is satisfactorily completed. The return of Development Pay will not be retroactive. 49-9- 3.8. Salary Range Adjustments 13.9.1.13.8.1. Effective the first pay period in July29 ltly 2016, employees under this Agreement will receive salary range adjustments at a flat rate of 28/2.5%. 13.8.2. Effective the first pay period in July-201 qJ 2017, employees under this Agreement will receive salary range adjustments at a flat rate of 2 0%2.50%. 13 9 2 13.8.3. Effective the first pay period in July 2018, employees under this Agreement will receive salary range adjustments at a flat rate of 2.50%. 13,10,13.9. Investment Incentive Salary(IIS) 13 10 1 13.9.1. An additional amount of 4%of base salary will be paid to employees hired or promoted into the Group on or before October 16, 2003 in a lump-sum amount each pay period.This provision continues to make employees whole as a result of the Ventura decision.The above percentages will not be counted toward base salary for the purpose of salary surveys. ,'�13.9.2. In addition, employees hired or promoted into the Group on or before October 16, 2003 will be paid $1250 annually or$48.08 per pay period in HIS to further encourage savings and investment for retirement. 43�8.a13.9.3. IIS amounts are applied to annual, retirement, and termination leave payouts for eligible employees. ARTICLE 14. - SEVERANCE PAY 14.1. Employees are expected to give a minimum of two(2)weeks written notification when terminating employment with the District. Except for disciplinary cause,when a full-time employee is terminated by action of the District,the employee will be notified in writing two (2)weeks prior to the effective separation date. The employee will be entitled to severance pay in accordance with the formula set forth below: 14.1.1. Full-time, regular employees will be entitled to eight(8) hours pay for each full calendar month of continuous employment not to exceed one hundred sixty(160)hours pay. 14.1.2. Employees in limited term or part-time positions, probationary employees and employees who are separated for cause are not eligible for severance pay under any circumstances. ARTICLE 15. - DEFERRED COMPENSATION Page 8 of 31 15.1. Employees may participate in the District approved deferred compensation plan, subject to IRS requirements, and in accordance with all guidelines for voluntary participation established by District management. ARTICLE 16. - HOLIDAYS 16.1. The days listed below are observed by the District as holidays. Employees will receive holiday pay if their entire scheduled work shifts immediately preceding and following the holiday are in a paid payroll status, meaning the employee worked those shifts or utilized paid time off in lieu of working those shifts.When an employee's work schedule requires that they work on an observed holiday,the employee will be paid at the employee's regular rate of pay for the holiday, and will also receive pay at the rate of one and one half(1.5)times his/her regular hourly rate for all hours actually worked. Employees may also elect to receive Holiday Compensatory Time Off on an hour for hour basis rather than receive holiday pay. When a holiday occurs on an employee's regular scheduled day off,the employee will accrue compensatory time off for the amount of hours normally scheduled for that day. Employees with a compensatory time off balance in excess of fifty(50) hours as of the last pay period ending in October will receive a mandatory payout for the hours that exceed fifty(50). Holidays New Year's Day Lincoln's Birthday President's Day Memorial Day Independence Day Labor Day Veteran's Day Thanksgiving Day Day after Thanksgiving Day before Christmas Christmas Day Floating Holiday" 16.2. Floating Holiday: Employees may elect one(1)day during each year as a "Floating Holiday."New employees shall be granted a"Floating Holiday'on a pro rate basis in the first calendar year of service per the following table: Hire Date Percent 1 st Quarter(January-March) 100% 2^d Quarter(April-June) 75% 3'd Quarter(July-September) 50% Page 9 of 31 Hire Date Percent P`Quarter(October-December) 0% 16.3. Employees must use the"Floating Holiday'within the year it is granted. Every effort will be made to approve an employee's request for a"Floating Holiday"off providing sufficient notice is given. 16.4. Part-time employees are eligible for holiday benefits on a pro-rata basis as set forth in applicable District Policy. ARTICLE 17. - HOURS OF WORK 17.1. The work schedule for full-time employees will be eighty(80) hours per biweekly pay period, normally scheduled in shifts of five(5)eight 8-hour days each week.four(4) nine-9-hour days each week and one (1)additional 8-hour day on alternate weeks (9/80),four(4)ten 10-hour days each week(8/80), or three(3)twelve 12-hour days each week and one(1)additional 8-hour day on alternate weeks (7180). However, with the approval of the employee's supervisor, employees may be allowed to flex their schedule within the pay period provided that the business needs,work Flow, and customer service needs of the District are met. 17.2. The District may, at its sole discretion, change an employee's work schedule with thirty(30)days written notice to the affected employee,which may be waived by the employee per written request. 17.2.1. The 30-day notice will not be applicable if the change is a result of a reasonable accommodation. ARTICLE 18. (This article intentionally left blank) ARTICLE 19. (This article intentionally left blank) ARTICLE 20. - INSURANCE 20.1. The District will provide healthcare and welfare insurance benefits. 20.2. All insurance coverage will become effective on the first day of the month following date of hire, regardless of hire date.An open enrollment period will be held annually. on& Hart r., RealpeneF The D StF Gt e couc agree Fxnegis rAninp, A Alhor ty(GSAG FIA), or to another Garr er d reedy, and varied 24.¢20.3. Medical Insurance 20120.3.1. The District will provide medical health insurance coverage Page 10 of 31 through a Health Maintenance Organization(HMO)medical insurance plan,-aad a Preferred Provider Organization(PPO)medical insurance plan,and a High Deductible Health Plan (HDHP). •-•"sud- - h a 28.�20.4. Regular.full-time emolovees The District will contribute 90%of employee only premiums for the HMO medical health plans and 80%of employee only premiums for the PPO medical plan. The District will contribute 80%of the employee +1 dependent and full family premiums for the HMO or PPO medical plans. Any change in insurance rates will be shared equally in same ratio as the District and employees currently pay premiums. Before the renewal of any District sponsored health insurance plan, the parties agree to meet and confer as to changes in the plan. 20.5. Regular, part-time employees Part-time employees are eligible for medical insurance benefits on a pro-rata basis as set forth in the applicable District Policy. 20.6. The HDHP will be accompanied by a Health Savings Account(HSA)to pay for qualified medical expenses. OCSD will use a portion of the cost savings in premiums to fund the HSAAS accounts during active employment only.The HSA will be funded with the savings generated annually by calculating the difference between the District's share of the PPO and HDHP Premiums. Exact HSA account funding will be calculated annually, prior to open enrollment, in an amount up to the difference in deductibles, not to exceed the District's aforementioned annual Premium cost savings. 2B. The District may reopen negotiations at any time during the term of this agreement to address the impact of the Affordable Care Act(ACA). 20.7. 20:7-20.8. Group Insurance Premiums 2 -7-4-20.8.1. Group insurance premiums that are paid by salary redirection can be made on a pre-tax basis. 2B:&20.9. Life Insurance 20.8.1.20.9.1. The District will pay the full premium for$50,000 term life insurance on each employee. 20?.120.10. Short Term Disability 20?9.1.20.10.1. The District will provide a non-work related, short-term disability indemnity plan that provides benefits for employees equal to the maximum weekly amount provided through California's State Disability Insurance(SDI) program for up to twenty-six (26)weeks following a fourteen (14)calendar day waiting period. 20 4&20.11. Long Term Disability 29404-.20.11.1. The District will provide a non-work related, long-term disability indemnity plan that pays two-thirds of the employee's rate of pay in effect at the time of such disability, not to exceed $5,000 per month,following a 90-day waiting period of continuous disability, at such time that an employee completes five (5)years of service. Page 11 of 31 20:44-. -20.11.2. For participants age 64 and younger,the maximum period of payment is based on the Social Security Act retirement age of 65. For participants age 65 and older,the maximum period of payment is specified. The specified periods and additional information about coverage is included in OCSD's long term disability plan contract accessible on the intranet. 20.10.3.20.11.3. No combination of disability or sick leave pay will result in more than an employee's regular rate of pay. Employees may not receive short-term and long-term disability benefits at the same time.An employee who is otherwise not eligible for District paid Long Term Disability may purchase such coverage at their own expense. 20120.12. Dental Insurance 29444-.20.12.1. The District will contribute 80%of employee only and full family premiums for dental insurance. M 12.20.13. Vision Insurance 20.124-.20.13.1. The District will provide a vision insurance plan for regular,full- time employees and eligible dependents. Part-time employees are eligible for vision insurance benefits on a pro-rata basis as set forth in applicable District Policy. 201320.14. Retiring Employees 244414-.20.14.1. The District will pay, for employees hired prior to July 1, 1988, two and one-half(2.5)months' premium for each year of continuous service of a retiring employee towards the premium costs of coverage for the employee and eligible dependents under the District medical plan. 20:32-2-20.14.2. In the event the District adds additional optional insurance plans, the District's share of the premium will be the same as for existing plans as set forth above. In the event the District changes underwriters for existing insurance plans, the District's share of the premium will be the same as for existing insurance plans as set forth above. 20 433-.20.14.3. The District will continue to implement the retiree medical health premium offset program wherein the cost of health premiums are offset by$10 per month for every year of continuous service up to a maximum of 25 years or$250 per month. ARTICLE 21. - REIMBURSEMENT ACCOUNT 21.1. Section 125 of the Internal Revenue Code permits employees to use pre-tax dollars to pay for their portion of the cost of benefits under the Plan through salary redirection arrangements. The options available under the flexible benefits program are listed below. This is a brief overview of the different options. For complete information regarding Flexible Spending Accounts employees must refer to the plan booklet available in the Human Resources Department. 21.2. Medical Reimbursement Account 21.2.1. The purpose of this account is to provide a method through which the Page 12 of 31 employee can accumulate pre-tax funds in a Medical Care Reimbursement Account for purposes of reimbursing himself/herself for payment of health care costs not otherwise covered by his/her medical insurance. 21.3. Dependent Care Assistance Account 21.3.1. The purpose of this account is to provide a method through which the employee can accumulate pre-tax funds in a Dependent Care Assistance Account for purposes of reimbursing himself/herself for child care expenses or day care for a disabled dependent ARTICLE 22. — EXTRAORDINARY SERVICES COMPENSATION 22.1. Employees in the Group are exempt from the overtime provisions of the Fair Labor Standards Act. However,when services are required beyond what is normally expected of a position in this Group, employees will be eligible to receive additional compensation, as defined herein, for the performance Of^U" oertormina extraordinary services, upon approval of r Department Head or des'^^^^ as set forth below. Extraordinary services shall be defined as: 22.1.1. The General Manager declares an emeraencv.A declaration of an emergency is at the sole discretion of the General Manager whose decision is final and not sub act to any other provision of this Agreement. including Article 11 —Grievance Procedure or Article 12—Problem Solving Procedure. 22.1.2. The General Manager determines that there exists a critical event.A critical event is defined as work of a prolonged nature: involving non- emergency related services: major special projects: or when a substantial effort must be expended to meet a compliance date or scheduled deadline. The designation of a critical event is at the sole discretion of the General Manager whose decision is final and not sub act to any other provision of this Agreement, including Article 11 — Grievance Procedure or Article 12—Problem Salvino Procedure. 22.1.3. Written approval of a critical event must be obtained in advance of the work to be performed. The authorization shall set forth the work to be accomplished,the anticipated start and end date and those employees expected to participate in the work. The Department Head or designee will be responsible for determining the actual start and end date as well as those who actually work the event. 22.2. Upon the declaration of an emergency or upon the designation of a critical event employees will be compensated as follows: 22.2.1. Compensation will be restricted to those employees that are assigned to the event, independent from which department they are assigned. 22 1 1 22.2.2. For emergencies, compensation will occur for all hours outside the employee's regularly scheduled work shift. For critical events, compensation will occur for all hours after an initial 10 hours of uncompensated time has elapsed. 22.2.3. Employees in the Operations Supervisors classification will be Page 13 of 31 receive additional compensation at one and one-half(1.5)times their regular rate of pay caused by an emergency declared as such by the General Manager 0 D :a ons, wh an becomes necessary to Cover h ^ regularly,.A.,h an fall, on an othery�e non Work day OF sh .All other classifications shall receive straight time compensation. ARTICLE 23. — PROBATIONARY PERIOD 23.1. All new employees serve an initial probationary period beginning with the date of hire and extending to at least the first day of the pay period following six monthsks of employment without a break in service. Extended absence without pay, short-term and long-term disability and Workers' Compensation leave does not provide an opportunity to judge an employees'capability to meet performance expectations for a position, and thus the time spent on such leaves will not be included towards completion of the probationary period and may result in an extension. 23.2. Employees who are rehired following a break in service must complete a new probationary period whether or not one was previously completed. An employee may be released during his/her Probationary Period at the discretion of the District without recourse to the Grievance Procedure. 23.3. Employees who are reassigned or laterally transferred will serve a probationary period of six monthstwent�eks. The"probationary period"shall not divest an employee of his/her property right in his/her former position. Rejection of probation during this period shall result in the employee reverting to his/her former assignment and/or position. ARTICLE 24. — PROMOTIONS 24.1. A promotion is the appointment of an employee to another classification with a higher maximum rate of pay.The District will determine whether a vacant position will be filled as an open or promotional recruitment.Whenever the District intends to fill a position by promotion, the District will post the opportunity for a minimum of ten (10) business days. Employees must apply during the period of posting. Notices will be posted on the District's intranet. 24.1.1. Wier t^ ,the n..tleast one (1)m n mally qua'fied appl sent,the 6�#Of shall -and-Gtzm .,s,...t.. ..a...t.. t on In the event them ex sts a 24.2. A promoted employee will serve a promotional probationary period lasting at least until the first day of the pay period six months h.errty c:- (.. 26 weekc:.cc!:c after the effective date of the promotion. 24.3. At any time during the promotional probationary period, an employee may be returned to his/her previous position.The promotional probation period may be extended by mutual agreement between the employee and District management for Page 14 of 31 up to ninety(90)days. 24.4. If an employee is promoted during his/her initial probationary period, the period will be extended until at least the first day of the pay period six months 64 weeksafter the effective date of the promotion. 24.5. Promoted employees will receive the equivalent of a one(1)step increase in pay, not to exceed the top of the range for the new classification or the minimum rate of the new classification whichever is greater. ARTICLE 25. — RETIREMENT 25.1. The District will continue participation in the Orange County Employees Retirement System (OCERS),wherein all full-time employees and part-time employees scheduled to work twenty(20)hours per week or more are considered members. The following retirement program is in effect pursuant to the contract between OCERS and the District. 25.1.1. Employees hired prior to September 21, 1979: The District will continue to contract with OCERS to provide the 2.5% @ 55 benefit formula (Plan G)based on the highest consecutive twelve (12) months average earnings, past and future service. 25.1.1.1. The District will continue to pay 4.5%towards the employee's contribution to OCERS for those employees who elected to make a one-time decision to remain in the Plan G program. 25.1.2. Employees hired on or after September 21, 1979 and before October 1. 2010:The District will continue to contract with OCERS to provide the 2.5% @ 55 benefit formula (Plan H) based on the highest consecutive thirty-six(36)months average earnings, past and future service. 25.1.2.1. The District will continue to pay 3.5% of an eligible employee's base salary towards the employee's contribution to OCERS. 25.1.3. Employees hired on or after October 1, 2010 and before January 1, 2013: The District will contract with OCERS to provide the 1.667% @ 57.5 benefit formula (Plan B) based on the highest consecutive thirty-six (36)months average earnings, past and future service. 25.1.3.1. The District will pay 0°% of an eligible employee's base salary towards the employee's contributions to OCERS. 25.1.4. Employees hired on or after January 1. 2013: The District will contract with OCERS to provide the 2.5% @ 67 benefit formula(Plan U - PEPRA) based on the highest consecutive thirty-six(36)months average earnings, past and future service. 25.1.4.1. The District will pay 0% of an eligible employee's base salary towards the employee's contribution to OCERS. 25.2. All monies actually contributed into the retirement system by an employee will be deducted from gross salary for taxation purposes in accordance with Internal Page 15 of 31 Revenue Code provisions. ARTICLE 26. - SHIFT DIFFERENTIAL 26.1. Employees who are assigned to work a night shift that consists of 50%or more of the hours between 6:00 p.m. and 6:00 a.m. and who actually work that shift will receive a shift differential of$2.50 per hour. ARTICLE 27. - LEAVE-OF-ABSENCE WITH PAY 27.1. Vacation Leave 27.1.1. Except as otherwise provided, regular full-time employees accrue vacation leave, beginning with the first day of employment, in accordance with the following schedule: Years of Service Hours-Biweekly Hours-Annual In years 0 through 4 3.08 80 In years 5 through 10 4.62 120 In year 11 4.93 128 In year 12 5.24 136 In year 13 5.54 144 In year 14 5.85 152 In year 15 6.16 160 In year 16 6.46 168 In year 17 6.77 176 In year 18 7.08 184 In year 19 7.39 192 In year 20 and over 7.69 200 27.1.2. Part-time employees accrue vacation leave on a pro-rata basis as set forth in applicable District Policy. 27.1.3. Vacation leave begins after an employee has completed twenty-six (26) weeks of continuous service.After his/her first twenty-six(26)weeks of service, his/her account will be credited with forty(40)hours. After that time,they will accrue vacation hours consistent with the above chart. Vacation leave may only be utilized in increments of one-half hour or more. Vacation leave is accrued for all paid hours, including hours actually worked and hours in a paid-leave payroll status. 27.1.4. When unpaid absences occur,vacation leave accruals will be applied by straight proration of leave accruals based on the number of hours paid within the pay period, and is applicable to all types of leave,whether legally protected or not. 27.1.5. Annual Payoff. Employees may have a maximum accumulation of two hundred (200) hours as of the last day of the final pay period in December of each year. In the event an employee accrues vacation leave in excess of two hundred (200)hours, it must be used prior to said Page 16 of 31 December date,all other remaining hours in excess of two hundred (200) will be paid to the employee in the first pay period in January at the employee's then current hourly rate of compensation. 27.2. Sick Leave 27.2.1. Definition. Sick leave is an insurance or protection provided by the District to be granted to employees in circumstances of adversity to promote the health and welfare of the individual employee. It is not an earned right to take time off from work. Sick leave is defined as the absence from duty of an employee because of a bona fide illness, injury, or pregnancy�r to attend to the illness or injury of a family member as hereinafter defined: or,for an employee who is a victim of domestic violence sexual assault or stalking for the purposes described in Labor Code sections 230(c)and 230.1(a).Temporary employees shall receive are-not ant ided-te sick leave benefits as required by State law..- 27.2.2. Method. -Sick Leave Accrual. Full-time employees hired prior to November 27, 1981, accrue paid sick leave at the rate of three and one- half(3.5)hours for each biweekly pay period of continuous service; ninety-one (91) hours per year. Full-time employees hired on or after November 27, 1981, accrue paid sick leave at the rate of three(3.0) hours for each biweekly pay period of continuous service; (seventy-eight (78) hours per year), beginning with the first day of employment. 27.2.3. Part-time employees accrue sick leave on a pro-rata basis as set forth in applicable District Policy. 27.2.4. When unpaid absences occur,sick leave accruals will be applied by straight proration of leave accruals based on the number of hours paid within the pay period, and is applicable to all types of leave,whether legally protected or not. 27.2.5. Annual Payoff. Employees may elect annually to be paid for any unused sick leave hours accrued through the end of October at their current hourly rate according to the following payoff schedule. Accrued Sick Leave Hours Rate of Payoff 0-100 0% 101-240 25% 241-560 35% Over 560 (mandatory) 50% 27.2.6. Employees who terminate for any reason other than retirement or death will be compensated for any accrued and unused sick leave according to the above schedule. Employees who retire or decease with twenty(20) years or more of service will be paid at the one hundred percent(100%) rate for all accrued and unused sick leave. Employees who retire or decease with less than twenty(20)years of service will be paid at the seventy-five percent(75%)rate for all accrued and unused sick leave. 27.2.7. Permissible Uses. Sick leave may be applied only to: Page 17 of 31 27.2.7.1. Absence due to illness, injury or pregnancy of an employee. 27.2.7.2. Absence due to medical and dental office appointments of an employee when approved by the employee's supervisor. 27.2.7.3. Absence for the care of the employee's father,father-in-law, mother, mother-in-law, brother, sister, husband, wife, domestic partner, child, child of domestic partner, grandparent, grandchild legal guardian,or family member with whom the employee resides. 27.2.7.4. Absence due to a job-related injury. "�'-r.'.".27.2.7.5. Absence related to an employee who is a victim of domestic violence, sexual assault, or stalking,for the purposes described in Labor Code sections 230(c)and 230.1(a). 27.2.8. General Provisions. To qualify for sick leave pay, the employee must notify the District at or in advance of the time the employee is scheduled to report for duty. Minimum charge to the employee's sick leave account will be one-half(0.5)hour increments. 27.2.9. The Human Resources Department and department management will be responsible for controlling the abuse of the sick leave privilege. For absences of ten (10)consecutive working days or more,a request for leave and a medical statement, on prescribed forms, stating expected date of return must be submitted to the Human Resources Department. Upon return to work, a written doctor's release must be submitted to the Human Resources Department. For absences of one (1)or more working days in an unpaid status, a request for leave and a medical statement,on prescribed fors,stating expected date of return must be submitted to the Human Resources Department. 27.2.10. If the need for leave is due to the employee's serious health condition,as defined in the Family and Medical Leave Act("FMLA")or the California Family Rights Act("CFRA"), the certification requirement will comply with the provisions of these Acts. 27.2.11. Sick Leave Incentive Plan. If the average sick leave usage of employees in the Group is under forty(40)hours per year, calculated on annualized actual time off from October to October, based on the last pay periods ending in October, exclusive of catastrophic illness or injury requiring absence in excess of two hundred (200)hours or industrial injury leave in excess of eighty(80)hours,the annual payoff for unused sick leave will be as follows: Accrued Sick Leave Hours Rate of Payoff 0- 100 15% 101 —240 45 241 —560 60 Over 560(mandatory) 75 Page 18 of 31 27.3. Jury Duty Leave 27.3.1. Any full-time, including probationary, employee who is called for jury duty will be entitled to his/her regular pay for those hours of absence due to performance of the jury duty for a period up to twenty-two(22)working days. 27.3.2. Prior to jury duty service, employees must complete an online time off request form.To be entitled to receive regular pay for such jury leave, employees must report for work during their regularly scheduled work shift when they are relieved from jury duty service, unless there is less than one-half(%)of a regular shift remaining. Employees are not compensated forjury duty occurring on scheduled days off. 27.3.3. An employee serving jury duty must obtain an attendance slip from the court to be submitted to his/her supervisor with his/her timesheet in order to be eligible for regular pay for those hours of absence due to jury duty. 27.4. Witness Leave 27.4.1. Any full-time, including probationary, employee,who is required to be absent from work by a subpoena properly issued by a court,agency or commission legally empowered to subpoena witnesses, which subpoena compels his/her presence as a witness, except in a matter wherein he/she is named as a defendant or plaintiff or as an expert witness,will, upon approval of an online time off request, be entitled the time necessary to comply with such subpoena. An employee's regular pay will be reduced by the amount of witness leave pay received, exclusive of mileage. 27.4.2. An employee so subpoenaed must submit a copy of the subpoena to his/her supervisor and complete an online time off request form in order to be eligible for pay for such absence.To be entitled to receive regular pay for such witness leave, the employee must report for work at the District for time not actually retained on witness service of one(1) hour or more prior to and/or upon completion of each days service, exclusive of travel time. 27.5. Military Leave 27.5.1. A request for military leave will be made upon leave-of-absence forms approved by the Human Resources Department and will state the date when it is desired to begin the leave-of-absence and the date of anticipated return.A copy of the orders requiring such military service will be submitted with the request. 27.5.2. Provisions of the Military and Veterans Code of the State of California, Sections 395-395.5 will govern military leave. In general, current law provides that an employee having one (1)year or more service with a public entity is entitled to military leave with pay not exceeding thirty(30) days per year if the employee is engaged in military duty ordered for purposes of active military training or encampment.An employee who is required to attend scheduled service drill periods or perform other inactive duty reserve obligations is entitled to military leave without pay, not exceeding seventeen (17)calendar days per year, although the Page 19 of 31 employee may, at his or her option, elect to use vacation, administrative leave, or personal leave time to attend the scheduled reserve drill periods or to perform other inactive drill period obligations. Employees who participate in weekend military drill duty are not eligible for leave with pay for such activity, but may have their regular work schedule changed to accommodate the required time off. 27.6. Bereavement Leave 27.6.1. Any full-time employee,whether probationary or regular, shall receive a maximum of thirty-six(36) hours off with pay for the death or funeral of an immediate family member. Immediate family member is defined as the employee's father, step-father,father-in-law, mother, step-mother, mother-in-law, brother, step-brother, sister, step-sister, husband, wife, domestic partner, biological child, adopted child, step-child, child of a domestic partner, grandchild, grandparent,foster parent,foster child, legal guardian, or any family member with whom the employee resides. Employees must submit an online time off request form for approval by their supervisor. 27.6.2. Part-time employees are eligible for bereavement leave on a pro-rata basis as set forth in applicable District Policy. 27.7. Administrative Leave 27.7.1. Effective the first pay period in July, regular full-time employees in the Group shall be granted forty(40) hours of Administrative Leave. Employees who are hired or promoted into the Group shall be granted Administrative Leave on a pro-rats basis per the following schedule: Hire Date Percent July-September 100% October-December 75% January-March 50% April-June 0% 27.7.2. Administrative Leave will be administered in accordance with the following guidelines: 27.7.2.1. Administrative Leave may be used in one-quarter-(0.25) hour increments 27.7.2.2. Any unused Administrative Leave,within the fiscal year granted, will not be carried over to the next fiscal year. 27.7.2.3. Any unused Administrative Leave,within the fiscal year granted, is not subject to cash out or eligible for any mandatory payout. Page 20 of 31 27.7.2.4. Employees who cease to be part of the Group for any reason will forfeit any unused Administrative Leave. ARTICLE 28. - LEAVE-OF-ABSENCE WITHOUT PAY 28.1. It is the policy of the District to grant employees leaves-of-absence without pay under certain circumstances and in accordance with state and federal benefit entitlement laws. Except as stated below, employees will not receive compensation during an unpaid leave-of-absence. Employees will not be granted an unpaid leave of absence prior to exhausting all paid leave accrual balances, excluding employees protected by PDL(Pregnancy Disability Leave)/FMLA(Family and Medical Leave Act)/CFRA (California Family Rights Act)for their own serious health condition. 28.2. Using the prescribed forms,approved by District management, any full-time, including probationary, or part-time employees with at least fifty-two(52)weeks of service and at least twelve hundred fifty(1,250)hours of service, may be granted an FMLA or CFRA leave-of-absence without pay, not to exceed twelve(12)weeks in a rolling twelve (12)month calendar period.A"rolling"twelve(12)month period is measured backward from the date the employee uses the leave.A request for leave of absence without pay must be made upon prescribed fors in all instances where an employee is absent without pay for more than five(5)consecutive working days, or for absences of ten(10)working days or more when using paid sick leave accruals. 28.3. Substitution of Paid Leave. 28.3.1. Employees who request FMLA or CFRA Leave for qualifying purposes other than the employee's own serious health condition will be required to use all accruals before unpaid leave is granted. 28.3.2. Vacation, administrative leave or personal leave accruals may be used for the care of the employee's father, step-father,father-in-law, mother, step-mother, mother-in-law, brother, step-brother, sister, step-sister, husband,wife,domestic partner, biological child, adopted child, step- child,foster child, legal ward, child of a domestic partner, grandchild, grandparent, foster parent, legal guardian, or any family member with whom the employee resides. 28.4. Permissible Uses 28.4.1. FMLA Leave. FMLA leave may be used for: 28.4.1.1. The birth of a child or to care for a newbom of an employee; 28.4.1.2. The placement of a child with an employee in connection with the adoption or foster care of a child; 28.4.1.3. The care for the employee's father, step-father,father-in-law, mother, step-mother, mother-in-law, brother, step-brother, sister, step-sister, husband,wife, biological child, adopted child, step-child, foster child, legal ward, child of a domestic partner, grandchild, grandparent, foster parent, legal guardian, or any family member with whom the employee resides, who has a serious health condition, as defined in the Act; Page 21 of 31 28.4.1.4. The employee's own serious health condition that renders the employee unable to perform the essential functions of his or her position, including incapacity due to pregnancy; 28.4.1.5. A qualifying exigency arising out of the fact that an employee's family member is on covered active duty or called to covered active duty status in the Armed Forces. A qualifying exigency may include activities such as making arrangements for childcare, attending counseling relating to the active duty of the service member, or attending to farewell or arrival arrangements for the service member; 28.4.1.6. The care for the employee's family member or"next of kin" service member of the United States Armed Forces who has a serious injury or illness incurred in the line of duty while on active military duty. This leave may consist of up to 26 weeks of unpaid leave during a single 12-month period. 28.4.2. CFRA Leave. CFRA Leave may be used for: 28.4.2.1. The same purposes as FMLA Leave, including the care of a domestic partner or child of a domestic partner, and will run concurrently with FMLA leave. 28.4.2.2. CFRA Leave may not be used for 1)an employee's incapacity due to pregnancy, 2) leave due to a qualifying exigency, or 3) to care for a family member or next of kin with a serious injury or illness incurred in the line of duly. However, incapacity due to pregnancy may entitle an employee to up to four(4)months of pregnancy disability leave under California's Pregnancy Disability Leave(PDL)law. 28.5. General Provisions 28.5.1. Requests for FMLA and CFRA Leave 28.5.1.1. Where the need for Leave is foreseeable,the District requests thirty(30)days advance notice. 28.5.2. Medical Certification 28.5.2.1. As a condition of FMLA or CFRA Leave because of a serious health condition,the District may require certification by the employee's attending physician in accordance with the Department of Labor(DOL)regulations. 28.5.3. Medical and Dental Premiums 28.5.3.1. During FMLA and CFRA Leave, the District will pay for medical and dental benefits at the same level as coverage would have been provided if the employee was not on leave. The employee will be required to pay his or her share of medical and dental premiums. Failure to submit a monthly co-payment, in full,within forty-five (45)days of the invoice date will result in loss of group coverage. Coverage will be reinstated upon Page 22 of 31 return to active employment. 28.5.4. Reinstatement 28.5.4.1. Upon expiration of FMLA or CFRA Leave, the employee will be reinstated to the same or a comparable position unless the employee would not otherwise have been entitled to that position for reasons unrelated to such leave(e.g., lay-off), in which case the District's obligation to continue health and dental or other benefits will cease. 28.5.5. District Employment of Soouses/Domestic Partners 28.5.5.1. FMLA Leave Married employees will be limited to a combined total of twelve(12)weeks FMLA or CFRA Leave in a rolling twelve(12)month calendar period for the care of a parent or newly born or placed child. 28.5.5.2. CFRA Leave Married employees and employees in domestic partnerships will be limited to a combined total of twelve (12) weeks CFRA Leave in a rolling twelve(12)month calendar period for the care of a parent or newly born or placed child. 28.5.6. General Leave 28.5.6.1. Employees who have exhausted all paid time off accruals may request to be granted a general leave-of-absence by District management to attend to personal matters, or for FMLA or CFRA qualifying events after the expirations of previously authorized leave. 28.5.6.2. During a general leave-of-absence, the employee will be required to pay both the District's and the employee's share of medical and dental premiums. 28.5.6.3. Failure to submit a monthly co-payment, in full,within forty-five (45)days of the invoice date will result in loss of group coverage. Coverage will be reinstated upon return to active employment. 28.5.7. Return to Work Policv 28.5.7.1. An employee who has been absent from work due to a medical reason may be subject to a Return-to-Work medical evaluation. 28.5.7.2. If it is determined that the job demands of the position last held by the employee are not compatible with the employee's restrictions(with reasonable accommodation if the employee is disabled within the meaning of the ADA/FEHA)and the employee is willing to return to work, placement in an alternative position, if available, will be considered. The employee will be re-classified as medically disqualified while alternative positions are being considered. Such time off will be without pay; however, the employee may elect to use Page 23 of 31 accrued leave hours, such as vacation, sick or personal,to receive compensation. Placement of an employee in an alternative position requires a pre-placement medical evaluation for the alternative job. 28.5.7.3. If it is determined that the job demands of the position last held by the employee are not compatible with the employee's restrictions(and cannot be reasonably accommodated if the employee is disabled within the meaning of ADA/FEHA)and there is not an alternative position, or the employee's restrictions are not compatible with an alternative position, or the employee is not willing to return to work,the employee will be re-classified as medically disqualified and not permitted to work. Thereafter,the employee will be retired for disability, if eligible, or dismissed. Such dismissal will not imply disciplinary action for cause. If requested,the employee's file will indicate the employee left for personal reasons. 28.5.8. Bridge of Service 28.5.8.1. If an employee is dismissed per Section 28.5.7.3 and then is rehired to a position within the District within one(1)year, the District will bridge the employee's service date. Bridging of service procedures involve adding the total number of days away from work to the employee's original date of hire. 28.5.9. Failure to Return to Work 28.5.9.1. If, upon the expiration of FMLA or CFRA Leave, or any District- approved extension thereof including General Leave, an employee fails to return to work and no additional leave has been authorized, the employee will be considered to have automatically resigned from his/her position. In such cases,the employee will receive advance notification of the District's intent to implement an automatic resignation. 28.5.10. Compliance with Law 28.5.10.1.These Leave-of-Absence provisions will be interpreted and applied in a manner that is consistent with the provisions of FMLA, CFRA,ADA and all other laws. In the event there is a direct conflict between these provisions, as written or applied, the provisions of law will govern. ARTICLE 29. - CLASSIFICATION STUDIES Oren . de a Feipresentat ,e from the Supery or Group and the Profess anal 29.1. The law requires meet and confer over changes to wages, hours,and terms and conditions of employment:the District is committed to complying with the law. 29�29.2. An employee who believes his/her position is not properly classified may submit Page 24 of 31 a written request to the Department Head asking that a classification study be conducted.The Department Head will acknowledge the request in writing and review the request for accuracy, and forward it to the Human Resources Department for consideration and response. Classification studies will only be conducted twice a year in November and during the budget process;therefore, classification study requests shall be submitted October 1'r for the November review and according to the Finance budget schedule which normally requests all information by the end of February. District management may also conduct classification studies at their discretion to ensure that the duties and responsibilities of all employees are appropriately allocated within the classification structure. 29 1 1 29.2.1. All classification study findings regarding existing classifications are subject to approval by the General Manager; findings recommending a new job classification range are subject to approval by the District's Board of Directors.The recommendations of the classification study will be implemented in the first pay period immediately following the completion of the study unless the recommendations require action to be taken by the Board of Directors prior to implementation. In such event, the recommendations will be implemented in the first pay period immediately following authorization by the Board. 29-2-29.3. Y-Ratina 29.2..1.29.3.1. In the event the duties and responsibilities of a position are allocated to a lower paid classification, the salary of the incumbent of that position will remain unchanged. 29.2-2:29.3.2. Y-rating will be granted for all reclassifications where employees are working in a job classification with a lower maximum rate of pay resulting from changes to the District's staffing requirements, organizational structure or"bumping"associated with layoffs.Y-rating shall not apply in cases involving disciplinary actions or voluntary changes to a job classification with a lower maximum rate of pay(unless otherwise authorized by the General Manager). 29.2.2.29.3.3. The Y-rate will remain in effect until the salary range for the new classification equals or exceeds the employee's Y-rated salary. Employees become eligible for merit increases and range adjustments when the Y-rate is no longer in effect. ARTICLE 30. - DRIVER'S LICENSE 30.1. Employees who are required by the District to drive must notify their supervisor and the Risk Management Division immediately upon receipt of any suspension or revocation of their California Driver's License privileges. Failure to do so could result in disciplinary action up to and including separation. 30.2. If an employee whose license is suspended or revoked and is unable to perform his/her regular duties and responsibilities notifies the District in a timely fashion, an attempt will be made to place the employee in an equal or lower level position for which he/she is qualified. Placement in the range of the new classification is subject to District's management discretion. 30.3. The District will continue to pay the license renewals and physical examination costs of Class A and B licenses that are specifically required by the District. Page 25 of 31 ARTICLE 31. - LAYOFF PROCEDURE 31.1. If, in the sole discretion of District's management, personnel reductions are necessary, layoff order and recall lists will be developed based upon job classification, priority of function,job performance, individual qualifications and seniority. The Group and employees subject to lay off will be provided with at least two (2)weeks notification in writing whenever possible. 31.2. Employees in classifications subject to layoff may request a voluntary demotion to any previously held position for which they remain qualified. Such request must be made in writing to the Human Resources Department within five(5)days of receipt of the Layoff Notice.The salary of an employee who voluntarily demotes will be unchanged, except that it may not exceed the top step of the range for the lower level classification. 31.3. Recall lists will be developed for all classifications experiencing personnel reductions, and will be maintained for a period of two (2)years from the date of layoff. Individuals will be placed on the list in the inverse order of layoff, so that the last person laid off is the first recalled.When a vacancy occurs in a classification for which a Recall list exists, an offer of reemployment will be made to the individual on the top of the list. That individual must respond to the offer within five(5)days,or the offer will be made to the next person on the list. An individual who either does not respond or refuses three (3)consecutive offers will have his/her name removed from the list. 31.4. All notification and responses must be in writing and delivered either in person or by Certified Mail. It is the responsibility of all employees to keep the Human Resources Department informed of their current address, or where they may be contacted. ARTICLE 32. - LIGHT DUTY 32.1. An employee who is released by a physician to perform limited duties because of a temporary disability may be assigned to light duty at the discretion of the District. Light duty may consist of duties other than those normally performed by the employee and that are within the employee's medical restrictions.An employee assigned to light duly will be paid the regular wage rate for the job classification to which he or she was assigned prior to being temporarily disabled. ARTICLE 33. - MEDICAL EXAMINATION 33.1. When there is reasonable evidence to suggest that an employee is impaired in a manner that endangers his/her own health or safety, or that of others, the District may require that employee to be examined or evaluated by a health care provider. The purpose of such examination must be job related. Any examination under this provision will be conducted on District time and at District expense. An employee may submit an independent medical opinion regarding his/her condition and addressing his/her ability to competently perform the duties of the position. This information will be reviewed and considered by a competent medical authority in arriving at a decision regarding the individual's continued employment in the position. ARTICLE 34. - MILEAGE ALLOWANCE 34.1. Approved use of a personal vehicle for District business will be reimbursed at the current IRS rate. Page 26 of 31 ARTICLE 35. - ACTING PAY 35.1. Employees who are assigned by District management to perform the duties of an open, budgeted position at a higher level for a period of at least one hundred (100) consecutive hours will be eligible for a one(1)step salary increase, or the first step of the range for the higher level classification,whichever is greater.The higher rate of pay begins with the 101 st hour, and continues until the assignment ends or the six (6) month limitation has been reached at which time a determination will be made as to whether the position should or should not be posted. Requests for acting pay require the approval of the Department Head and the Human Resources Department. The one hundred (100)-hour eligibility period may be waived at the discretion of the General Manager.Time served in higher level assignments shall be credited as qualifying experience for Promotional purposes. ARTICLE 36. (This article intentionally left blank.) ARTICLE 37. - PERSONNEL FILES 37.1. Employees have the right to inspect their Personnel File in the Human Resources Department during the normal office hours of the Human Resources Department by appointment. Employees who wish to correct allegedly erroneous information in their file, or request that items related to disciplinary matters be removed after the indicated time period has elapsed, should submit a request in writing to the Human Resources Department. It is the responsibility of each employee to keep the personal information in his/her files current, including home address, telephone number and person to contact in an emergency. ARTICLE 38. - BULLETIN BOARDS 36.1. The Group may use the bulletin boards located at Plant 1 and Plant 2 which are designated for use by employee Groups to post notices to District employees provided that: (a) no controversial matter which is critical or derogatory of the District, its employees, officers or Directors may be posted; (b)nothing posted by the District may be removed; (c)the Group will remove its notices after a reasonable length of time; and (d)only a reasonable number of notices will be posted. ARTICLE 39. - RELEASE TIME FOR MEET AND CONFER SESSIONS 39.1. A maximum of three (3)employees covered by this Agreement and appointed by the Group will be granted reasonable release time for attending meet and confer sessions at the bargaining table. Release time will not be compensated for any hours that exceed the employee's regularly scheduled hours of work. 39.2. The Group will provide the Human Resources Department with the names of employees requiring meet and confer release time in advance of the meet and confer session. The release time will be granted provided that the needs of the District permit the time away from assigned work. ARTICLE 40. - USE OF DISTRICT FACILITIES 40.1. District facilities may be used by the Group with prior notice to the Human Resources Department for the purpose of holding meetings,to the extent that such use does not Page 27 of 31 interfere with normal District operations.The Group agrees to pay for the cost of any additional custodial or security services. ARTICLE 41. - SCOPE OF BARGAINING 41.1. The District and the Group acknowledge that during the negotiations which resulted in this Agreement, each parry had the unlimited right and opportunity to make demands and proposals with respect to all proper subjects within the scope of representation.Therefore,the District and the Group,for the term of this Agreement, except as otherwise provided herein, each voluntarily and unqualifiedly waive the right, and each agrees that the other will not be obligated to bargain collectively with respect to any subject or matter contained in this Agreement. ARTICLE 42. - IMPASSE PROCEDURES 42.1. If either the District or Group declares that an impasse exists in the meet and confer process,the party so declaring may initiate the impasse procedure by providing the other party with a written request for an impasse meeting,together with a statement of its position on all issues.An impasse meeting will be scheduled and held between the parties within fourteen(14)calendar days or as soon as practicable to: 42.1.1. Review the position of the parties in a final effort to reach agreement on a memorandum of understanding, and if the impasse is not resolved,to discuss the immediate utilization of impasse procedures outlined herein. 42.2. Impasse Procedures are: 42.2.1. Mediation: If the parties mutually agree to submit the dispute to the State Mediator and Conciliation Service all mediation proceedings will be private and as soon as practicable. The mediator will make no public recommendation, nor take any public position at any time concerning the issues. 42.2.2. Fact-Finding: Whether the parties submit the dispute to mediation or not, the Group may request that the parties'differences be submitted to a facifinding panel as soon as practicable.The cost of a fact finder and other mutually incurred costs will be mutually shared by the District and Group. 42.2.3. Board Actions: If the parties fail to resolve the impasse,the dispute will be sent to the District Board of Directors for resolution. Each party will submit its written proposal on all issues to the Board.The Board may take such action to resolve the impasse as it deems appropriate to the public interest.Any action taken by the Board to resolve the impasse will be final and binding. ARTICLE 43. -SEVERABILITY 43.1. Notwithstanding any other provisions in this Agreement, in the event that any article, section or subsection of this Agreement will be declared invalid by any court or by any state or federal law or regulation, or should a decision by any court or any state or federal law or regulation diminish the benefits provided by this Agreement, or impose additional obligations on the District,the District and the Group will meet and confer on the affected article, section or subsection. In such event, all other articles, sections or subsections of this Agreement not affected will continue in full force and Page 28 of 31 effect. ARTICLE 44. - UNIFORMS 44.1. The District will provide and maintain ten (10)uniform pants and shirts, which may include the name of the employee and District seal, at no cost to employees whose duties require that they wear uniforms. The District will also provide lab coats as required by the lab manager. 44.2. All employees who are issued uniforms must wear them during the performance of their regular duties. Other clothing appropriate to the occasion, as determined by District management, may be worn when attending business meetings. Failure to wear required clothing, shoes and safety equipment may be cause for disciplinary action. ARTICLE 45. - SUBSTANCE ABUSE POLICY 45.1. The District's Substance Abuse Policy will apply to all Group members.The District and the Group agree to meet and confer for any proposed revisions to the policy. The District may adopt or implement rules, regulations and policies to be in compliance with federal and state laws. In such cases, notification will be provided to the Group prior to implementation. 45.2. Department of Transportation (DOT) Reaulations 45.2.1. Every driver who operates a commercial motor vehicle in interstate or intrastate commerce, and is subject to the commercial driver's license requirements of the Department of Transportation, Federal Highway Administration CFR Part 382 is subject to the District's Anti-Drug and Alcohol Program. The District will ensure that all alcohol or controlled substances testing conducted under the Substance Abuse and Alcohol Misuse Plan complies with the procedures set forth in CFR Part 40. 45.3. District's Substance Abuse Policv: 45.3.1. Any employee may be subject to discipline, up to and including termination, for any alcohol screen test that indicates an alcohol concentration level of 0.02%or greater. ARTICLE 46. - DUES DEDUCTIONS 46.1. At monthly orientation meetings for new employees, a Group informational packet will be provided to those employees holding Group-represented positions. The informational packet will include Group contact information, a Group Payroll Deduction Authorization Form, and a transmittal indicating: 46.1.1. Management representatives will not encourage or discourage Group membership participation; 46.1.2. The employee belongs to a classification represented by the Group; 46.1.3. The Group is the exclusive recognized employee organization for all employees in the Group; and Page 29 of 31 46.1.4. The employee may complete the Group Payroll Deduction Authorization Form and submit it to the Human Resources Department if he/she would like to join the group. 46.2. The District will deduct from each regular paycheck and remit to Group the dues, initiation fees and assessments for each employee who voluntarily authorizes such deduction in writing. Such authorizations must be fled by the end of the pay period prior to the period for which the deduction is requested. 46.3. The District will provide the Group a quarterly list of the names of those employees for whom it has made deductions. In addition,the District will provide the names of new employees and the names of employees who have terminated within the reporting period. ARTICLE 47. — MAINTENANCE OF MEMBERSHIP 47.1. All employees who—, Gn-JWy�997;are members of the Group, or who thereafter become members of the Group, shall remain members of the Group, except that any employee may withdraw his/her membership by written notice to the Group and the District during the ten day period between ninety(90)and one hundred (100)days preceding the expiration of this agreement. ARTICLE 48. — PEACEFUL RESOLUTION OF DISPUTES 48.1. During the term of this Memorandum, or any subsequent period when impasse resolution procedures are in progress or recommendations resulting from such procedures are being considered by the parties,the District agrees it will not lockout employees in this Group, and Group agrees that it will neither advocate, encourage or participate in any strike, including sympathy strike, or work stoppages, nor encourage employees to refrain in whole or in part from the full, faithful and proper performance of their duties of employment. ARTICLE 49. (This article intentionally left blank) ARTICLE 50. -WORKPLACE VIOLENCE AND WEAPONS POLICY 50.1. The District's Workplace Violence and Weapons Policy will apply to all Group members.The District and the Group agree to meet and confer for any proposed revisions to the policy. ARTICLE 51. - RESIGNATION 51.1. Voluntary written resignation of employment with the District is irrevocable after seventy-two(72)hours from the District's receipt of the resignation except by approval of the Human Resources Department. ARTICLE 52. (This article intentionally left blank) Page 30 of 31 SIGNATURE PAGE 2"3-2016—20196 MEMORANDUM OF UNDERSTANDING BETWEEN THE ORANGE COUNTY SANITATION DISTRICT AND THE EMPLOYEES OF THE PROFESSIONAL GROUP Executed: PROFESSIONAL GROUP ORANGE COUNTY SANITATION DISTRICT CaAes MejaSleve Ko roth, Business oanne;-.-.o.� 'sLaura KaIN, Chief Negotiator Representative, AFSCME Council 36 (Affiliate of SPMG) Marc Brown, Principal Staff Analyst james D. Herberg, GenerakManagerCellia Chandler. Director of Human Resources Natasha Dubrovski, Principal Contracts Administrator ManagerAndrew Nau. Principal Human Resources Analyst 6risiiwa-StanferdLarry Roberson, Senior Accountant ManagerLaura Maravilla Human Resources SupervisoAndrew Nau, PrnG+pal Human Rego-imps; AnalysiJanine Aguilar. Principal Human Resources Analyst AnalyslLaurie Klinger. Senior Human Resources Analyst Page 31 of 31 APPENDIX A Medical Insurance Plan Design Components-� CURRENT STATE _ I High Ded Non-Network Deductible $150/$450 $1 300/$2 600 Annual Out-of- 2,00 $3.000 2500 5000 Pocket Max/Member Annual Out-of- q 000 6 000 5 000 10 000 Pocket Max/Family Physician Office Visit 15 Visit 30% 10% 30% Specialist Off ice Visit 15 Visit 30% 10% 30% Preventive Care No Charge 30% No Charge Not Covered 30%(up to Inpatient Hospitalization 10% 30%+$500 10% $1.000/day,non - emergencyl Outpatient 30% 30% 10% 30%(u to Hospitalization/Surgery $350/admit) Emereencv Room $100/Visit $100/Visit $100/Visit (waived if admitted) (waived if admitted) (waived if admitted) Infertility Benefits Not Covered Not Covered Urgent Care 15 Visit 30% 10% 30% Chiropractic 15 Visit 30% 10% Visit 30% Visit (30 visits/year) (30 visits/year) (30 visits/year) (30 visits/year) Opt-Out from Plan Yes Yes Yes P $5/$20/$3S S10/S25/S40 after Retail (30-day supply) Not Covered deductible Not Covered (30-day supply) $5/$40/$70 $201$501$80 after Mail Order deductible (90-day supply) Not Covered j90-daysupplvl Not Covered Plan Design Components will include any applicable mandated legislative changes. 3 This is not a complete descnption of all benefit Provisions.The information contained in Summary Plan Descriptions(SPDs)and Evidence of Coverage EOC booklets avails. Page 32 of 31 Medical Insurance Plan Design Componentsi� CURRENT STATE Kaiser ze Deductible None None $50001ndividu al $10000 Family Annual Out of1500 $1,500 6250 Pocket Max/Member Annual Out of3000 $3.000 12500 Pocket Max/Family Physician Office Visit 15 Visit 15 Visit 60 Visit specialist Office Visit 15 Visit 15 Visit 70 Visit Preventive Care No Charge No Charge No Charge Inpatient Hospitalization $100 Admit $100 Admit 30% Outpatient 50 Admit 15 Co-Day 30% Hospitalization/Surgery (Per procedure) Emergency Room 100 Visit $100/Visit 300 Visit (waived if admitted) (waived if admitted) (waived if admitted) Infertility Benefits Status Quo Status Quo Not Covered Urgent Care 15 Visit 15 Visit 1wVisit Chiropractic SO Visit 10 Visit Not Covered (30 visits/year) (30 visits/year) Opt-Out from Plan Yes Yes Yes G d S5/$20/$35 s 20 $15/$50 medical Retail (30-day supply) (30-day supply) deductible applies (30-day supplvl $5/$40/$70 g 20 $30/$100 medical Mail Order 100-daysupplvl (100-dav suoolvl deductible applies 1100-day suoolvl Plan Design Components will include any applicable mandated legislative changes. 'This is not a com let.descd lion of all benefit provisims.1ne informOon contained in Summary Plan Descriptions(SPD. and Evidence of Coverage EOC booklets prevails. APPENDIXQ Page 33 of 31 �daEa;�ie 5 Alsne Plene fiber �9 $3,990 439e 4500 $4,000 $F,999 $3,000 $3,000 p 3Q% 3G% PFIVIRtiW QF. N8 ChaFge 391s Mien 10% �t50 $10 dm $ 0 „.. $Io 6------_ tnfe °^^^fm 3Hfes Qua Status Qua h mp:aa;c f39 36% $10/Vsit $10/Vsit visHs{year� a a �9 o m *es Yes ues «��,< «��,_ 0 o (ae-dev supply) (30 day supply) (100 day-seaa4v) (90 day A9ail-e�9eF supply) WA Page 34 of 31 STEERING COMMITTEE MeetingDae TOBd.ofDir. 30/26/16 10/26/16 AGENDA REPORT emNumber Iem2umber 4 21 Orange County Sanitation District FROM: Laura Kalty, Chief Negotiator SUBJECT: SUCCESSOR MEMORANDUMS OF UNDERSTANDING FOR THE ORANGE COUNTY EMPLOYEES ASSOCIATION CHIEF NEGOTIATOR'S RECOMMENDATION A. Adopt Resolution No. OCSD 16-22, entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District approving the Memoranda of Understanding between the Orange County Sanitation District and the Orange County Employees Association (OCEA), for Fiscal Years 2016/2017, 2017/2018 & 2018/2019"; and B. Direct staff to finalize and sign the Memoranda of Understanding (MOUs) between Orange County Sanitation District and the three (3) OCEA bargaining units. BACKGROUND The MOUs between the Orange County Sanitation District (Sanitation District) and the three OCEA bargaining units that became effective on July 1, 2014 expired on June 30, 2016. OCEA submitted its initial proposal for successor MOU(s) on June 15, 2016. OCEA and the Sanitation District have met and conferred in good faith seven (7) times since receiving the initial proposal. As of the last Board meeting on September 28, 2016, two (2) items proposed had either reached tentative agreement or had been withdrawn. On September 28, 2016, the Board of Directors authorized and directed the Chief Negotiator to make a counter proposal to OCEA including a three-year contract with a 2.5% salary increase due in the first pay period in July for each year of the contract. The Sanitation District delivered this counter proposal to OCEA on October 11, 2016. OCEA's membership ratified the proposal by majority vote in October 2016. RELEVANT STANDARDS • Ensure the public's money is wisely spent • Competitive compensation and benefits • Highly qualified, well trained, motivated, and diverse workforce • Negotiate fair and equitable labor agreements • Positive employer, employee relations • Provide professional growth & development Page 1 of 4 PROBLEM The MOUs between the Sanitation District and the OCEA bargaining units that became effective on July 1, 2013 expired on June 30, 2016. PROPOSED SOLUTION Adopt Resolution No. OCSD 16-22, entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District approving the Memoranda of Understanding between the Orange County Sanitation District and the Orange County Employee Association (OCEA), for Fiscal Years 2016/2017, 2017/2018 & 2018/2019". Based on Board direction, the Sanitation District issued a counter proposal to OCEA on October 11, 2016, including three-year contracts with a 2.5% salary increase for each year of the contract. OCEA distributed the proposal to their membership for voting and OCEA's membership ratified the proposal by majority vote in October 2016. RAMIFICATIONS OF NOT TAKING ACTION • Labor instability • Possible impacts to morale • Impasse PRIOR COMMITTEE/BOARD ACTIONS On February 19, 2016, an Ad Hoc Subcommittee of the Steering Committee selected Laura Kalty from Liebert Cassidy Whitmore to serve as the Sanitation District's Chief Negotiator. In preparation for and during the meet and confer process, the Chief Negotiator received direction for labor negotiations with OCEA from the Steering Committee and the Board of Directors. The OCEA meet and confer process was agendized for discussion in Closed Session at the following Committee/Board meetings: • April 27, 2016 - Steering Committee and Board Meeting • June 22, 2016 - Steering Committee • July 27, 2016 - Steering Committee and Board Meeting • August 24, 2016 - Steering Committee Meeting • September 28, 2016 - Steering Committee and Board Meeting ADDITIONAL INFORMATION The OCEA is the recognized employee organization certified to provide exclusive representation overwages, hours of work, and otherterms and conditions of employment for 104 non-exempt District employees spread across three (3) bargaining units: the Page 2 of 4 Administrative and Clerical Unit, the Technical Services Unit, and the Engineering Unit. These employees perform administrative, clerical, and/or para-professional tasks in support of their assigned function or program. The MOUs between the Sanitation District and OCEA expired on June 30, 2016. Based on Board direction, the Sanitation District issued a counter proposal to OCEA on October 11, 2016, including three-year contracts with a 2.5% salary increase for each year of the contract. OCEA distributed the proposal to their membership for voting and OCEA's membership ratified the proposal by majority vote in October 2016. Full reclined versions of each OCEA MOU are attached for review. A summary of the key changes to the MOUs are as follows: 1. Article 1, Recognition: Term of the agreement begins July 1, 2016. 2. Article 2, Duration: Agreement terminates on June 30, 2019. 3. Article 3, Addition of language to specify that initial proposal must be submitted 60 days prior to the expiration of the agreement. 4. Article 11, Grievance Procedure: Language and timing revisions to extend response time periods to ten days. 5. Article 13, Salary Adjustments and Compensation: Salary: Year 1 — 2.5% Salary Increase, retroactive to the first pay period of July 2016; Year 2 — 2.5% Salary Increase, effective the first pay period of July 2017; Year 3—2.5%Salary Increase, effective the first pay period of July 2018. 6. Article 20, Insurance: Addition of Section 20.3.3: Addresses impacts of Affordable Care Act. 7. Article 24, Promotions: language cleanup. 8. Bilingual pay: No language will be added to the MOU; however, the parties agree that if an employee goes through appropriate testing and certification process, bilingual certification is eligible for Development Pay, understanding employee has to go through existing process for District approval of certification. Listed below are articles with proposed housekeeping changes in the tentative agreement by article number: Article 7.0— Nondiscrimination in Employment Article 8.0— Smoke-free Work Environment Article 10.0— Discipline and Dismissal Article 23.0— Probationary Period Article 27.0— Leave of Absence with Pay Article 29.0— Classification Studies FINANCIAL CONSIDERATIONS The total cost is $1.4M over the term of the agreement. Page 3 of 4 This request complies with authority levels of the Sanitation District's Purchasing Ordinance. This item has been budgeted. ATTACHMENT The following attachment(s) are included in hard copy may also be viewed on-line at the OCSD websim (wwwocsd.com) with the complete agenda package: • Resolution No. OCSD 16-22 • OCEA Administrative and Clerical Unit (redlined version) • OCEA Technical Services MOU (redlined version) • OCEA Engineering MOU (redlined version) Page 4 of 4 RESOLUTION NO. OCSD 16-22 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT APPROVING THE MEMORANDA OF UNDERSTANDING BETWEEN THE ORANGE COUNTY SANITATION DISTRICT AND THE ORANGE COUNTY EMPLOYEES ASSOCIATION, FOR FISCAL YEARS 2016/2017, 2017/2018 &2018/2019 WHEREAS, on February 25, 2015, the Board of Directors ("Directors') of the Orange County Sanitation District (the "District") authorized the General Manager to sign the Memoranda of Understanding with the Orange County Employees Association (referred hereinafter as "OCEA"), regarding salaries, benefits and terms and conditions of employment for the period July 1, 2014, through June 30, 2016 ("2014 MOUs"). WHEREAS, prior to the expiration of the 2014 MOUs on June 30, 2016, OCEA requested to meet and confer regarding successor MOUs. WHEREAS, pursuant to Government Code Section 3500, at seq., representatives of OCEA have met and conferred with the representatives of the District and have reached an understanding with regard to certain terms and conditions relative to employment; WHEREAS, at the beginning of negotiations the parties agreed that any salary changes would take effect retroactively to July 8, 2016, the first pay period in the current fiscal year; and WHEREAS, the parties have modified the 2014 MOUs between the District and OCEA to reflect the parties' understanding regarding certain terms and conditions, which include: • Duration of the MOUs has been modified and will be for a 3-year term commencing July 1, 2016, and terminating June 30, 2019, as reflected in the Cover Page and Articles 1 and 2 of the MOUs. • Successor Agreement of the MOUs has been modified as set forth below and as reflected in Article 3 of the MOUs: o The Group shall submit in writing its initial proposal for a successor agreement 60 days prior to the expiration of the current agreement. • Nondiscrimination in Employment has been modified as set forth below and as reflected in Article 7 of the MOUs: o Minor administrative/language changes to align with expanded discrimination law provisions; housekeeping changes. • Smoke-Free Work Environment has been modified as set forth below and as reflected in Article 8 of the MOUs: o Minor administrative/language changes to include current smoking and tobacco products and technologies. OCSD 16-22-1 • Discipline and Dismissal has been modified as set forth below and as reflected in Article 10 of the MOUs: o Housekeeping changes. • Grievance Procedure has been modified as set forth below and as reflected in Article 11 of the MOUs: o Employees are encouraged prior to bringing forward a formal grievance, to discuss the issue with the Director of Human Resources, or designee, in an effort to bring about an informal resolution. o Minor administrative/language changes regarding submission and response timeline requirements at various steps in the process; housekeeping changes. • Salary Adjustments and Compensation has been modified as set forth below and as reflected in Article 13 of the MOUs: o Year 1 —2.5% Salary Increase, retroactive to the first pay period of July 2016. o Year 2—2.5% Salary Increase, effective the first pay period of July 2017. o Year 3—2.5% Salary Increase, effective the first pay period of July 2018. • Insurance has been modified as set forth below and as reflected in Article 20 of the MOUS: o Medical reopener language provides for the District to reopen negotiations if needed due to impacts of the Affordable Care Act (ACA). o Removes the expired language for medical reopener of February 2015. • Probationary Period has been modified as set forth below and as reflected in Article 23 of the MOUs: o Minor updates to language; housekeeping changes. • Promotions has been modified as set forth below and as reflected in Article 24 of the MOUS: o Minor updates to language; housekeeping changes. • Sick Leave has been modified as set forth below and as reflected in Article 27 of the MOUs: o Addition of domestic violence, sexual assault, or stalking as permissible uses of sick time in accordance with labor code. o Addition of sick leave benefits for temporary employees in accordance with State law. o Minor administrative/language changes to align with expanded leave law provisions; housekeeping changes. • Classification Studies has been modified as set forth below and as reflected in Article 29 of the MOUs: o Language cleanup OCSD 16-22-2 NOW, THEREFORE, the Board of Directors of the Orange County Sanitation District, DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1. The aforementioned MOUs between the District and OCEA for the contract period of July 1, 2016 through June 30, 2019 as outlined herein are hereby approved. Section 2. The General Manager is authorized to sign the Memoranda of Understanding with OCEA for the period of July 1, 2016 through June 30, 2019, in a form approved by General Counsel. PASSED AND ADOPTED at a regular meeting held October 26, 2016. John Nielsen Board Chair ATTEST: Kelly A. Lore Clerk of the Board OCSD 16-22-3 STATE OF CALIFORNIA ) ss COUNTY OF ORANGE ) I, Kelly A. Lore, Clerk of the Board of Directors of the Orange County Sanitation District, do hereby certify that the foregoing Resolution No. OCSD 16-22 was passed and adopted at a regular meeting of said Board on the 261h day of October 2016, by the following vote, to wit: AYES: NOES: ABSTENTIONS: ABSENT: IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of Orange County Sanitation District this 2611 day of October 2016. Kelly A. Lore Clerk of the Board of Directors Orange County Sanitation District OCSD 16-22-4 MEMORANDUM OF UNDERSTANDING BETWEEN THE ORANGE COUNTY SANITATION DISTRICT AND THE ORANGE COUNTY EMPLOYEES ASSOCIATION FOR THE ADMINISTRATIVE AND CLERICAL UNIT July 1, 20164-4 through June 30, 201946 TABLE OF CONTENTS ARTICLE 1. -RECOGNITION.................................................................................................................................1 ARTICLE2. -DURATION.......................................................................................................................................1 ARTICLE 3.-SUCCESSOR AGREEMENT...........................................................................................................1 ARTICLE 4.-OCEA ACCESS................................................................................................................................1 ARTICLE 5.-OCEA RIGHTS.................................................................................................................................2 ARTICLE 6.-DISTRICT RIGHTS..........................................................................................................................2 ARTICLE 7.-NONDISCRIMINATION IN EMPLOYMENT.....................................................................................2 ARTICLE S.-SMOKE-FREE WORK ENVIRONMENT..........................................................................................2 ARTICLE9.-SAFETY............................................................................................................................................2 ARTICLE 10. -DISCIPLINE AND DISMISSAL......................................................................................................3 ARTICLE 11. -GRIEVANCE PROCEDURE...........................................................................................................4 ARTICLE 12. -PROBLEM SOLVING PROCEDURE.............................................................................................5 ARTICLE 13. -SALARY ADJUSTMENTS AND COMPENSATION......................................................................5 ARTICLE 14. -SEVERANCE PAY.........................................................................................................................7 ARTICLE 15. -DEFERRED COMPENSATION......................................................................................................7 ARTICLE 16. -HOLIDAYS......................................................................................................................................7 ARTICLE17.-HOURS OF WORK........................................................................................................................8 ARTICLE 18. -CALL-BACK PAY..........................................................................................................................8 ARTICLE 19. -STANDBY PAY..............................................................................................................................8 ARTICLE20.-INSURANCE..................................................................................................................................8 20.4 MEDICAL INSURANCE...............................................................................................................................8 20.5 LIFE INSURANCE......................................................................................................................................9 20.6 SHORT TERM DISABILITY..........................................................................................................................9 20.7 LONG TERM DISABILITY............................................................................................................................9 20.8 DENTAL INSURANCE.................................................................................................................................9 20.9 VISION INSURANCE ..................................................................................................................................9 20.10 RETIRING EMPLOYEES.............................................................................................................................9 ARTICLE 21. -REIMBURSEMENT ACCOUNT...................................................................................................10 21.2 GROUP INSURANCE PREMIUMS...............................................................................................................10 21.3 MEDICAL CARE REIMBURSEMENT ACCOUNT............................................................................................10 21.4 DEPENDENT CARE ASSISTANCE ACCOUNT..............................................................................................10 ARTICLE22. -OVERTIME...................................................................................................................................10 ARTICLE 23. -PROBATIONARY PERIOD..........................................................................................................11 ARTICLE24. -PROMOTIONS..............................................................................................................................11 ARTICLE 25. -RETIREMENT...............................................................................................................................11 ARTICLE 26. -SHIFT DIFFERENTIAL.................................................................................................................12 ARTICLE 27. -LEAVE-OF-ABSENCE WITH PAY..............................................................................................12 27.1 VACATION LEAVE...................................................................................................................................12 27.2 SICK LEAVE...........................................................................................................................................12 27.3 JURY DUTY LEAVE.................................................................................................................................14 27.4 WITNESS LEAVE....................................................................................................................................14 27.5 MILITARY LEAVE....................................................................................................................................14 27.6 BEREAVEMENT LEAVE............................................................................................................................14 27.7 SUPPLEMENTAL LEAVE...........................................................................................................................15 ARTICLE 28. -LEAVE-OF-ABSENCE WITHOUT PAY.......................................................................................15 28.3 SUBSTITUTION OF PAID LEAVE................................................................................................................16 28.4 PERMISSIBLE USES................................................................................................................................16 28.5 GENERAL LEAVE....................................................................................................................................17 28.6 RETURN TO WORK POLICY.....................................................................................................................17 28.7 COMPLIANCE WITH LAW.........................................................................................................................18 ARTICLE 29. -CLASSIFICATION STUDIES.......................................................................................................18 ARTICLE 30. -DRIVER'S LICENSE.....................................................................................................................19 ARTICLE 31. -LAYOFF PROCEDURE................................................................................................................19 ARTICLE 32. -LIGHT DUTY.................................................................................................................................20 ARTICLE 33. -MEDICAL EXAMINATION ...........................................................................................................20 ARTICLE 34. -MILEAGE ALLOWANCE.............................................................................................................20 ARTICLE 35. -ACTING PAY................................................................................................................................20 ARTICLE36...........................................................................................................................................................20 OCEA-Administrative/Clerical MOU July 1, 2014 to June 30, 2016 Pagei ARTICLE 37. -PERSONNEL FILES ....................................................................................................................20 ARTICLE 38.—BULLETIN BOARDS...................................................................................................................21 ARTICLE 39. -RELEASE TIME FOR MEET AND CONFER SESSIONS...........................................................21 ARTICLE 40. -USE OF DISTRICT FACILITIES..................................................................................................21 ARTICLE 41. -SCOPE OF BARGAINING...........................................................................................................21 ARTICLE 42. -IMPASSE PROCEDURES...........................................................................................................21 ARTICLE 43. -SEVERABILITY............................................................................................................................22 ARTICLE 44. -UNIFORMS...................................................................................................................................22 ARTICLE 45. -SUBSTANCE ABUSE POLICY....................................................................................................22 ARTICLE 46. -DUES DEDUCTIONS...................................................................................................................22 ARTICLE47...........................................................................................................................................................22 ARTICLE 48. -PEACEFUL RESOLUTION OF DISPUTES.................................................................................23 ARTICLE49...........................................................................................................................................................23 ARTICLE 50. -WORKPLACE VIOLENCE AND WEAPONS POLICY................................................................23 ARTICLE 51. -RESIGNATION.............................................................................................................................23 ARTICLE52...........................................................................................................................................................23 ARTICLE 53. -LABOR MANAGEMENT COMMITTEE.........................................................................23 SIGNATUREPAGE...............................................................................................................................................24 EXHIBITA.............................................................................................................................................................25 OCEA—Administrative/Clerical MOU July 1, 201644 to June 30, 201936 Page ii MEMORANDUM OF UNDERSTANDING BETWEEN THE ORANGE COUNTY SANITATION DISTRICT AND THE ORANGE COUNTY EMPLOYEES ASSOCIATION FOR THE ADMINISTRATIVE AND CLERICAL UNIT In accordance with the provisions of California Government Code Sections 3500, at seq., and Resolution No. 75-127 of the Joint Board of Directors, the District's authorized representative has met and conferred in good faith with representatives of the Orange County Employees Association (OCEA)for the Administrative and Clerical Unit.These meetings have resulted in an agreement and understanding to recommend that the employees represented by OCEA accept these terms and conditions, and that the Board of Directors adopt by Resolution the changes and additions to the wages, hours, and conditions of employment for the employees represented by OCEA as set forth in this Agreement. ARTICLE 1. - RECOGNITION 1.1 This Agreement, effective July 1, 201644, is entered into between the Orange County Sanitation District, referred to hereinafter as the"District,"and the Orange County Employees Association, referred to hereinafter as"OCEA." 1.2 The District recognizes the Orange County Employees Association as the exclusive recognized employee organization for matters within the scope of representation for the following classifications, as set forth in Exhibit"A" (attached hereto and incorporated by reference), as well as additional classes as may be added hereafter by the District. ARTICLE 2. - DURATION 2.1 This Agreement shall be binding on the District and OCEA when approved and adopted by the District's Board of Directors. This Agreement shall terminate on June 30, 20194&.This Agreement shall act as a bar to the raising of the question of representation during its term, except that the question of representation may be raised during the period between sixty(60)and ninety(90)days prior to its expiration. ARTICLE 3. - SUCCESSOR AGREEMENT 3.1 The Group shall submit in writing its initial proposal for a successor agreement 60�prior to the expiration date of this Agreement. ARTICLE 4. - OCEA ACCESS 4.1 An OCEA Representative shall have access to the District's facilities during working hours for the purpose of assisting Unit employees in processing grievances or investigating matters arising out of the application of provisions of this Agreement. The OCEA Representative must obtain authorization for each visit in advance from the Director of Human Resources,or designee. 4.2 The OCEA shall provide the Director of Human Resources, or designee, with a list of Representatives who are authorized to request access under this article, and shall notify the Director of any changes in that list. 4.3 OCEA access shall not interfere with the District's operations,or with the work of employees in any manner. The District reserves the right to restrict access in certain areas designated as confidential or secure. OCEA—Administrative/Clerical MOU July 1,201644 to June 30, 201946 Page 1 ARTICLE 5. - OCEA RIGHTS 5.1 The OCEA may designate employees to act as representatives for employees covered by this Agreement. The OCEA shall furnish the Director of Human Resources, or designee with the names of employees selected as representatives and shall update the list as necessary. An alternate representative may be designated to act in the absence of the regular representative. Employees not listed on the roster of representatives provided to the District by the OCEA may not act as representatives. 5.2 Representatives shall not perform non work-related duties on work time without the prior approval of their immediate supervisor. Neither the District nor the OCEA shall interfere with, intimidate, restrain, coerce or discriminate against employees because of the exercise or non-exercise of their rights to engage in OCEA activity. ARTICLE 6. - DISTRICT RIGHTS 6.1 District inherent rights, powers, functions, duties, responsibilities and authority related to a managerial or administrative character are reserved to the District in its exercise of management decision-making, except as specifically modified by the express provisions of this Memorandum. District rights include, but are not limited to, the exclusive right to consider the merits, necessity or organization of any service or activity provided by law, or administrative order; determine the mission of its constituent departments, commissions and boards;set standards of service, determine the procedures and standards of selection for employment and promotion; establish and implement performance standards; direct its employees; take disciplinary action for proper cause; layoff employees from duty because of lack of work or lack of funds; maintain the efficiency of District operations; determine the methods, means and personnel by which District operations are to be conducted; determine the content of job classifications; classify and reclassify positions; take all necessary actions to carry out its mission in emergencies; and exercise complete control and discretion over its organization and the technology of performing its work. 6.2 District retains all authority and rights conferred on it by law, or other legal sources, except to the extent that such authority is explicitly waived by the express terms of this agreement. District exercise of its management rights hereunder shall not be subject to appeal or meeting and conferring, however,that the exercise of such rights does not preclude OCEA from appealing or meeting and conferring the practical consequences or impacts that District decisions have on wages, hours, and other terms and conditions of employment. ARTICLE 7. - NONDISCRIMINATION IN EMPLOYMENT 7.1 There shall be no unlawful discrimination in the application of the provisions of this Agreement with regard to actual or perceived race, color, religion, national origin, ancestry, sex, gender. sender identity, gender expression, sexual orientation, age. physical or mental disability, medical condition, genetic information, marital status, or military or veteran status or any other lawfully protected class. To the extent required by law or by the District's rules or regulations, this provision of the Agreement shall be applied to all members of the unit without regard to any protected classification , status ARTICLE B. - SMOKE-FREE WORK ENVIRONMENT 6.1 The District endorses and supports the right of all employees to work in a healthy and safe environment free of recognized hazards. In view of the hazards associated with smoking and the potentially harmful effect it has on the health and well being of District employees and their families, smoking and the use of tobacco (cigarettes cigars e-cigarettes I"vaping"1 and related tobacco products and technologies) is not acceptable within District facilities, and may occur only in areas posted for smoking. ARTICLE 9. - SAFETY 9.1 It is the duty of the District to provide and maintain a safe place of employment. OCEA shall cooperate by encouraging all employees covered by this Agreement to perform their work in a safe manner. It is the duty of all employees covered by this Agreement, in the course of performing their assigned duties, to be alert to unsafe practices, equipment, and conditions, and to follow the safety regulations and requirements OCEA—Administrative/Clerical MOU July 1, 201644 to June 30, 201936 Page 2 of the District, and to report any unsafe practices or conditions to their immediate supervisors. An employee shall not be required to perform work that is unsafe. ARTICLE 10. - DISCIPLINE AND DISMISSAL 10.1 Discipline may occur when any of the following actions are taken for just cause with respect to any employee in the unit:verbal reprimand, written reprimand, suspension without pay; reduction in pay, demotion to a classification with a lower maximum rate of pay or dismissal. 10.2 Dismissal,for purposes of this Article, is the separation of a non-probationary employee initiated by the District for just cause. 10.3 A Notice of Intent is not required when the disciplinary action involves a verbal reprimand or written reprimand. 10.4 A Notice of Intent is required and will be given to an employee whenever the disciplinary action involves a suspension without pay, a reduction in pay,a demotion to a classification with a lower pay grade, or dismissal.The notice will be given to the affected employee either by delivery in person or by Certified Mail sent to the employee's last known address. Such personal delivery or mailing shall be presumed to provide actual notice to the affected employee. The Notice of Intent shall indicate the date on which it was personally delivered or deposited in the mail,which shall be the date of issuance. 10.5 The Notice of Intent shall contain the following: (1)a description of the disciplinary action intended and the effective date of the action; (2)the reasons for the proposed action;(3)a copy of the charges and materials upon which the action is based; and, (4)a statement of the employee's right to respond, either verbally or in writing to the person initially imposing the discipline or to a District management representative with authority to make an effective recommendation on the proposed action,the person to whom any response must be directed, and the fact that such response must be received within ten (10)business days of the date of issuance of the notice. The Notice shall also advise the employee of his or her right to representation. 10.6 Prior to the effective date of the proposed disciplinary action, the employee shall be given an opportunity to respond either verbally or in writing to a management representative with authority to make an effective recommendation on the proposed action. After review of an employee's response, the District shall notify the employee in writing of the action that shall be taken. Such action may not involve discipline more severe than that described in the Notice of Intent; however, the District may reduce discipline without further notice. Further clarification of the disciplinary policies and procedures are covered in the District's Personnel Policies& Procedures Manual. 10.7 Dismissal shall be preceded by at least one(1)written reprimand, except in those situations in which the employee knows or reasonably should have known that the performance or conduct was unsatisfactory. Such performance or conduct may involve, but is not limited to, dishonesty, possession, use, sale or being under the influence of drugs or alcohol,theft or misappropriation of District property or funds,fighting on the job, insubordination,acts endangering people or property,or other serious misconduct.The District may substitute documented suspensions without pay for written reprimands. 10.8 If a Notice of Intent is upheld and the disciplinary action is imposed,the employee may request a post- disciplinary hearing. The request must be submitted to the Director of Human Resources, or designee, within ten (10) business days following the effective date of the disciplinary action (for suspensions,the effective date shall be the first business day following the final day of the suspension).The Director of Human Resources, or designee, shall schedule a post disciplinary hearing with the General Manager or a hearing officer selected by the General Manager. The hearing officer may not be an employee of the District. The hearing officer will provide a written, advisory decision to the General Manager. The General Manager may uphold the disciplinary action that has been taken or may reduce such discipline without the issuance of a further Notice of Intent. The decision of the General Manager shall be final. 10.9 Disciplinary action documentation shall be placed in an employee's personnel file in the Human Resources Department. Documentation regarding verbal and written reprimands may be removed from an employee's personnel file twenty-four(24) months subsequent to the date of issuance, provided that there has been no recurrence of a similar incident during the period. If the Director of Human Resources, or OCEA—Administrative/Clerical MOU July 1, 201644 to June 30, 201946 Page 3 designee, agrees to remove disciplinary action documentation from an employee's personnel file, such documentation shall be retained in a separate file by the Human Resources Department for the purpose of showing that progressive discipline has been followed or in support of the District's proposed discipline. 10.10 Verbal reprimands and written reprimands may only be reviewed under this Agreement through the Problem Solving Procedure. Nothing in this article shall be construed as a waiver of any statutory or constitutional rights. 10.11 A reduction in pay or demotion to a classification with a lower pay grade that is not a result of performance deficiencies (for example, reclassifications, "bumping' associated with layoffs, reasonable accommodation)shall not be considered discipline. ARTICLE 11. - GRIEVANCE PROCEDURE 11.1 A grievance is any complaint that management has violated a specific provision of this Agreement, except that, in accordance with Article 10 above, discipline which requires a Notice of Intent may not be reviewed under this Grievance Procedure. 11.2 A grievance may be brought to the attention of the District by an individual employee within the Unit or by the OCEA. The District may not bring a grievance through this procedure. Grievances brought by two(2) or more employees,and concerning the same incident, issue,or course of conduct, or multiple grievances brought by the same employee may, upon mutual agreement of the District and the OCEA, be consolidated for the purposes of this procedure. 11.3 Employees are encouraged prior to bringing forward a formal grievance, to discuss the issue with the Director of Human Resources, or designee, in an effort to bring about an informal resolution. 11.4 An employee may be self-represented or be represented by the OCEA at all steps of the Grievance Procedure, unless specifically agreed otherwise by the OCEA and the employee. The District shall provide a copy of all written grievance settlements to the OCEA. Any reference to days in this article implies business days. 11.34.1 Step 1. An employee will submit his/her complaint in writing to his/her immediate supervisor or designee within ten 10 five45)days of the occurrence of the event giving rise to the complaint, or within ten 10 fve{5)days from the time that the employee became aware of such event. The supervisor, or designee, shall attempt to resolve the issues surrounding the complaint, and respond in writing to the employee within ten 10 five45)days. 11.24.2 Sleo 2. If the grievance is not settled at Step 1, it maybe submitted in writing to the employee's Division Manager, or designee.This request for formal review must be presented on a form provided by the District within ten 10 flve(5)days of the conclusion of Step 1. A copy of each written communication on a grievance will be filed with the Director of Human Resources,or designee.The written grievance must: a) Identify the specific management act to be reviewed; b) Specify how the employee was adversely affected; c) List the specific provisions of the MOU that were allegedly violated and state how they were violated; d) Specify the remedy requested; and e) Provide the date of attempts at informal resolution and the name of the supervisor or individual involved. 11.34.2.1 The Division Manager, or designee, shall respond in writing to the employee within ten (10)days after the date the grievance is received. OCEA—Administrative/Clerical MOU July 1, 201644 to June 30, 201946 Page 4 11.34.3 Step 3. If a grievance is not settled under Step 1 or 2, it maybe presented to the employee's Department Director, or designee, for review and written response. The request for formal review must be presented on a form provided by the District within five (5)days of the conclusion of Step 1 or 2, and must contain the information specified in Step 2 above. A copy of each written communication on a grievance will be filed with the Director of Human Resources, or designee. The employee's Department Director,or designee, shall respond in writing to the employee within ten (10)days after the date the grievance is received. 11.34.4 SIeD 4. If the grievance cannot be resolved under Step 3, it maybe presented to an Assistant General Manager, or designee, within five(5)days from the dale the Step 3 finding was issued. The Assistant General Manager, or designee, shall respond in writing to the employee within ten (10)days after the date the grievance is received. 11.34.5 Step 5. Appeal to the General Manager,or designee, is the final step in the Grievance Procedure. If the grievance cannot be resolved under Step 4, it may be presented to the General Manager,or designee,within five(5)days from the date the Step 4 finding was issued.The General Manager, or designee, shall respond in writing to the employee within ten (10)days after the date of the grievance is received. 11.45 General Provisions: An employee shall be given reasonable time off without loss of pay to present and process a grievance. If an employee is represented by the OCEA,the OCEA may designate one employee to present and process the grievance. The employee representative shall be given reasonable time off without loss of pay to perform this responsibility. Absence from work shall be approved only if it does not cause disruption to District operations. However, if the time requested cannot be provided, an alternate time shall be arranged. 11.45.1 Failure of a management representative to respond within the appropriate time limit shall provide a basis for the employee appealing to the next step. If a grievance is not presented or appealed within the time limits, it shall be considered resolved on the basis of the preceding response.The Director of Human Resources,or designee, may be petitioned in writing to waive the step or time requirements provided sufficient cause exists. 11.45.2 Resolution maybe agreed upon at any stage of the grievance process. However,the OCEA shall be notified prior to the resolution of any formal grievance matter. ARTICLE 12. - PROBLEM SOLVING PROCEDURE 12.1 Employees may bring problems to the attention of District managers through the Problem Solving Procedure. This Procedure was developed to encourage and facilitate the resolution of employee concerns in a responsive and fair manner, and may be used to attempt to resolve issues that may not be subjected to the Grievance Procedure.Any reference to days in this article implies business days. 12.2 Employees should discuss concerns regarding issues that are not grievable with their supervisor as soon as possible. The supervisor shall review the situation or decision, and provide a written response within five days from the date they were notified of the problem. 12.3 If the problem is not resolved to the employee's satisfaction,the employee may file a written statement concerning the problem with the Director of Human Resources, or designee, within ten (10)days of receipt of the supervisor's decision. Upon request of either party,a meeting shall be held to define issues and establish the remedies sought. The employee shall be provided a written response within ten (10)days after his or her statement is received. Time limits may be extended for cause upon mutual consent of the parties, and the decision of the Director of Human Resources, or designee, is final. ARTICLE 13. - SALARY ADJUSTMENTS AND COMPENSATION 13.1 Each pay grade is divided into five (5)steps,with an approximate 5.0%difference between each step. 13.2 Pay increases will only apply to eligible employees in an active payroll status on the effective date of implementation. Eligible employees will not receive retroactivity if active payroll status becomes effective after the date of implementation. OCEA—Administrative/Clerical MOU July 1, 201644 to June 30, 201946 Page 5 13.3 Merit Pay 13.3.1 Step Increase Pa v—Bargaining unit employees will be eligible for Step Increase Pay based upon receipt of year-end performance appraisal ratings issued by the assigned supervisor. Step Increase Pay will be paid according to the following: 13.3.1.1 Eligible-Employees must have a proficient year-end performance appraisal to receive a one(1)step base-building salary increase until earning placement at step five (5). 13.3.1.2 Ineligible- Employees who are placed on a Performance Improvement Plan (PIP)due to a needs improvement performance review on the year-end appraisal or who are on a PIP at the time of the year-end appraisal period will remain at their current step until the PIP is satisfactorily completed. 13.3.1.3 Performance Management Program: The performance management program includes three(3)rating categories (exceeds, proficient, needs improvement)for performance appraisals. 13.3.2 Development Pav—Employees under this Agreement will be eligible for Development Pay. Development Pay is a non-base building pay type that will be distributed in a lump-sum amount each pay period. Employees must have a proficient year-end performance appraisal to be eligible for the following Development Pay types: • Education—Eligible employees who obtain or who have obtained a degree of approved subjects at an accredited college or university will receive$20.76 per pay period for an associate degree and $41.53 per pay period for an undergraduate degree. The maximum amount of Education pay is fixed at$41.53 per pay period. • Certification/License—Eligible employees who obtain or who have obtained a District approved certification or license will receive$7.62 per pay period per certificate or license with a maximum of three(3)certificates and/or licenses. The maximum amount of certification/license pay for any combination of certificates and/or licenses is fixed at$22.86 per pay period. 13.3.2.1 The overall maximum Development Pay for education, certification and/or licenses is fixed at$64.39 per pay period. 13.3.2.2 Employees who are placed on a PIP due to a needs improvement performance review on the year-end performance appraisal are not eligible for Development Pay until the PIP is satisfactorily completed. 13.3.2.3 Employees who are placed on a PIP due to needs improvement performance outside the year-end appraisal will have all Development Pay suspended until the PIP is satisfactorily completed. The return of Development Pay will not be retroactive. 13.4 Salary Range Adjustments 13.4.1 Effective the first pay period in July 201644, employees under this Agreement will receive salary range adjustments at a flat rate of 2_529%. 13.4.2 Effective the first pay period in July 201715, employees under this Agreement will receive salary range adjustments at a flat rate of 2.52.0%. 13.4.3 Effective the first pay period in July 2018 employees under this Agreement will receive salary range adjustments at a flat rate of 2.5%. OCEA—Administrative/Clerical MOU July 1, 201644 to June 30, 201946 Page 6 ARTICLE 14. - SEVERANCE PAY 14.1 Employees are expected to give a minimum of two(2)weeks written notification when terminating employment with the District. Except for disciplinary cause,when a full-time employee is terminated by action of the District,the employee shall be notified in writing two (2)weeks prior to the effective separation date. In the event the District does not give such notification,the employee shall be entitled to severance pay in accordance with the formula set forth below: 14.1.1 Full-time, regular employees shall be entitled to eight(8) hours pay for each full calendar month of continuous employment not to exceed one hundred sixty(160)hours pay. 14.1.2 Employees in limited term or part-time positions, probationary employees and employees who are separated for cause, are not eligible for severance pay under any circumstances. ARTICLE 15. - DEFERRED COMPENSATION 15.1 Employees may participate in the District's approved deferred compensation plan subject to IRS requirements, and in accordance with all guidelines for voluntary participation established by District management. ARTICLE 16. - HOLIDAYS 16.1 The days listed below are observed by the District as holidays. Employees will receive holiday pay if their entire scheduled work shift immediately preceding and following the holiday are in a paid payroll status, meaning the employee worked those shifts or utilized paid time off in lieu of working those shifts.When an employee's work schedule requires that they work on an observed holiday,the employee will be paid at the employee's regular rate of pay for the holiday, and will also receive overtime pay at the rate of one and one half(1.5)times their regular hourly rate for all hours actually worked. Employees may also elect to receive Holiday Compensatory Time Off on an hour for hour basis rather than receive holiday pay.When a holiday occurs on an employee's regular scheduled day off,the employee will accrue compensatory time off for the amount of hours normally scheduled for that day Employees with a compensatory time off balance in excess of fifty(50) hours as of the last pay period ending in October will receive a mandatory payout for the hours that exceed fifty(50). HOLIDAY New Year's Day Lincoln's Birthday President's Day Memorial Day Independence Day Labor Day Veteran's Day Thanksgiving Day Day after Thanksgiving Day before Christmas Christmas Day Floating Holiday' 16.2 Employees may elect one(1)day during each year as a "Floating Holiday'. New employees shall be granted a"Floating Holiday"on a pro rate basis in the first calendar year of service per the following table: OCEA—Administrative/Clerical MOU July 1, 201644 to June 30, 201946 Page 7 Hire Date Percent 1 r Quarter(January-March) 100% 2^0 Quarter(April-June) 75% 3r0 Quarter(July-September) 50% 41h Quarter(October-December) 0 16.3 Employees must use the"Floating Holiday"within the year it is granted. Every effort will be made to approve an employee's request for a"Floating Holiday"off providing sufficient notice is given. ARTICLE 17. — HOURS OF WORK 17.1 For record keeping and accounting purposes,the"workweek"for full-time employees is 40 hours per 168- hour period, to be paid on a biweekly payroll basis of 80 hours worked. Employee work periods may be scheduled in shifts of four 9-hour days and one 4-hour day each workweek (9/80 schedule), five 8-hour days each workweek(10/80), four 10-hour days each workweek(8/80), or three 12-hour days and one 4- hour day each workweek(7180). The starting and ending times of individual employees'workweeks may vary. 17.2 Employees shall receive ten-minute rest periods twice in a nine-hour shift, and three times for a shift of more than ten hours. Meal and rest periods may not be avoided or accrued for the purpose of obtaining time off or shortening the regular shift. If an employee reports to work as scheduled and was not notified that their hours had been changed, he or she shall receive two hours pay at the overtime rate. 17.3 The District may, at its sole discretion, change an employee's work schedule with thirty(30)days written notice to the affected employee. ARTICLE 18. - CALL-BACK PAY 18.1 When an employee is called back to work by District management without prior notice, and the employee has completed his or her normal work shift and left the work station, or when prior notice is given but the work begins on the same day at least three hours after completion of the regular shift,the employee shall receive a minimum of three hours of call back pay. The three hours minimum,whether or not actually worked,shall be paid at the rate of one and one half times the regular hourly rate. Employees who are called back a second time within a normal shift period are considered to be working for the duration of that shift. ARTICLE 19. - STANDBY PAY 19.1 Standby is time during which an employee is not required to be at the work location or at the employee's residence but is required to be available for immediate return to work. Standby assignments shall first be made on a voluntary basis. A volunteer standby list shall be established by classification and job location. Standby assignments shall be made from the list of employees who are competent and experienced, in alphabetical order,on a rotating basis. In the event that no one volunteers,the District shall assign standby by job classification and work location from employees who are competent and experienced on a rotational basis.An employee placed on standby shall be compensated at the rate of three hundred forty- five(345)dollars per week,and shall receive Call Back pay when they are actually called to work. ARTICLE 20. — INSURANCE 20.1 The District will provide healthcare and welfare insurance benefits. 20.2 All insurance coverage shall become effective on the first day of the month following date of hire, regardless of hire date. An open enrollment period shall be held annually. OCEA—Administrative/Clerical MOU July 1, 201644 to June 30, 201946 Page 8 follow ng rat f Gat on to d sn -qq the bans t on frnm Anthem to Blue Sh eld through Cal fern A State Aqqnn at on of Cn-mil as Excess insuranGe Author ty(GSAC FIA), or to another Garr er d reGfly, and var ad plan des gn changes n order to m t gate exc se taxat on n 2018 Potent al strateg as fe Gans derat an ndude, but are not 1 m ted to, the follow ng: plan des gn changes to off Ge and speG al st GOPaYS, emergency room Gapays, plan deduct bles and GontFbut on rates; and alternatve plan offer Ags Such as a h gh deduct ble health plan w th health savings account fund ng. 3.2 The part as agree that any reGpener shall be subject to Government Code ReGt on 3505 4 and . case law, nclud'nn PERB dad d onn .6'n6 'ntn t that n.n.'n 20.43 Medical Insurance 20.43.1 The District will provide medical health insurance coverage through a Health Maintenance Organization (HMO)medical insurance plan and a Preferred Provider Organization (PPO) medical insurance plan' S •ah t'me that the paFt s agree tG GhaagBS4hF9ug,the medical reopeneNe SeGiea-29.a'. 20.43.2 Reaular.full-time employees: 20.43.2.1 The District shall contribute 90%of employee only premiums for the HMO medical health plan and 80%of employee only premiums for the PPO medical health plan. The District will contribute 80%of the employee+1 dependent and full family premiums for the HMO and PPO medical plans.Any change in insurance rates shall be shared equally in same ratio as the District and employees currently pay premiums. Before the renewal of any District's sponsored health insurance plan, the parties agree to meet and confer as to changes in the plan. 20.3.3 The District may reopen negotiations at anytime during the term of the MOU to address the impact of the Affordable Care Act(ACA), provided that no change may be made by the District unless such change is either(1)mandated by the ACA, or(2) mutually agreed upon by the parties. 20.54 Life Insurance The District shall pay the full premium for$50,000 tens life insurance on each employee. 20.55 Short Term Disability The District shall provide a non-work related, short-term disability indemnity plan that provides benefits for employees equal to California's State Disability Insurance(SDI)program for up to twenty-six(26)weeks following a fourteen (14)calendar day waiting period. 20.76 Lora Term Disability 20.76.1 The District shall provide a non-work related, long-term disability indemnity plan that pays two- thirds of the employee's rate of pay in effect at the time of such disability, not to exceed $5,000 per month, up to age 65, following a 90-day waiting period of continuous disability,at such time that an employee completes five (5)years of service. 20.76.2 For participants age 64 and younger, the maximum period of payment is based on the Social Security Act retirement age of 65. For participants age 65 and older, the maximum period of payment is specified. The specified periods and additional information about coverage is included in the District's long-term disability plan contract accession on the intranet. 20.76.3 No combination of disability or sick leave pay shall result in more than an employee's regular rate of pay. Employees may not receive short-term and long-term disability benefits at the same time.An employee who is otherwise not eligible for District paid Long Term Disability may purchase such coverage at his or her own expense. OCEA—Administrative/Clerical MOU July 1, 201644 to June 30, 201945 Page 9 20.97 Dental Insurance The District will contribute 80%of employee only and 80%of full family premiums for dental insurance. 20.98 Vision Insurance The District shall provide a vision insurance plan for regular,full-time employees and eligible dependents. 20.199 Retiring Employees 20.499.1 The District shall pay,for employees hired prior to July 1, 1988, two and one-half(2.5)months' premium for each year of continuous service of a retiring employee towards the premium costs of coverage for the employee and eligible dependents under the District's medical plan. 20.499.2 In the event the District adds additional optional insurance plans, the District's share of the premium shall be the same as for existing plans as set forth above. In the event the District changes underwriters for existing insurance plans, the District's share of the premium shall be the same as for existing insurance plans as set forth above. 20.409.3 The District will continue to implement the retiree medical health premium offset program wherein the cost of health premiums are offset by$10 per month for every year of continuous service up to a maximum of 25 years or$250 per month. Employees hired on or after August 1, 2011 shall not be eligible for the retiree medical health premium offset. ARTICLE 21. - REIMBURSEMENT ACCOUNT 21.1 Section 125 of the Internal Revenue Code permits employees to use pre-tax dollars to pay for their portion of the cost of benefits under the Plan through salary redirection arrangements. The options available under the flexible benefits program are listed below. This is a brief overview of the different options. For complete information regarding Flexible Spending Accounts, employees must refer to the plan booklet available in the Human Resources Department. 21.2 Group Insurance Premiums Group insurance premiums that are paid by salary redirection can be made on a pre-tax basis. 21.3 Medical Care Reimbursement Account The purpose of this account is to provide a method through which the employee can accumulate pre-tax funds in a Medical Care Reimbursement Account for purposes of reimbursing himself or herself for payment of health care costs not otherwise covered by his or her medical insurance. 21.4 Dependent Care Assistance Account The purpose of this account is to provide a method through which the employee can accumulate pre-tax funds in a Dependent Care Assistance Account for purposes of reimbursing himself or herself for childcare expenses or day care for a disabled dependent. ARTICLE 22. - OVERTIME 22.1 Employees shall be notified as soon as practicable after the District decides upon the need for overtime or additional work. The District may require the performance of overtime. In the event no qualified employee wishes to work overtime, District's management may select employees with the ability to perform the work by inverse seniority. District managers shall attempt to evenly distribute overtime among employees based upon an employee's ability to perform the overtime work. 22.2 For the purposes of overtime calculation, all time charged to unscheduled sick leave shall not be counted as time worked. Pay for overtime time shall not occur until after actual work time of forty(40)hours in a seven (7)day workweek is reached. OCEA—Administrative/Clerical MOU July 1, 201644 to June 30, 201946 Page 10 ARTICLE 23. - PROBATIONARY PERIOD 23.1 All new employees serve an initial probationary period beginning with the date of hire and extending to at least the first day of the pay period following six monthst•e �..�eks of employment without a break in service. Extended absence without pay, short-term and long-term disability and Workers' Compensation leave does not provide an opportunity to judge an employees'capability to meet performance expectations for a position, and thus the time spent on such leaves shall not be included towards completion of the probationary period and may result in an extension. 23.2 Employees who are rehired following a break in service must complete a new probationary period whether or not one was previously completed. An employee may be released during his or her Probationary Period at the discretion of the District without recourse to the Grievance Procedure. 23.3 Employees who are reassigned or laterally transferred will serve a probationary period of sic monthst•--�ecs. The"probationary period"shall not divest an employee of his/her property rights in his/her former position. Rejection of probation during this period shall result in the employee reverting to his/her former assignment and/or position. ARTICLE 24. - PROMOTIONS 24.1 A promotion is the appointment of an employee to another classification with a higher maximum rate of pay.The District will determine whether a vacant position shall be filled as an open or promotional opportunity or recruitment.Whenever the District intends to fill a position by promotion,the District shall post the opportunity for a minimum often(10)business days. Employees must apply during the period of posting. Notices shall be posted on the District's intranet. 24.2 A promoted employee shall serve a promotional probationary period lasting at least until the first day of the pay period six monthst•�eks after the effective date of the promotion. At any time during the promotional probationary period, an employee may be returned to his or her previous position. The promotional probation period may be extended by mutual agreement between the employee and District's management for up to ninety(90)days. If an employee is promoted during his or her initial probationary period,the period shall be extended until at least the first day of the pay period six months&) weeks after the effective date of the promotion. 24.3 Promoted employees will receive the equivalent of a step increase in pay, not to exceed the top of the range for the new classification or the minimum rate of the new classification whichever is greater. ARTICLE 25. - RETIREMENT 25.1 The District shall continue participation in the Orange County Employees Retirement System (OCERS), wherein all full-time employees are considered members. The following retirement program is in effect pursuant to the contract between OCERS and the District. 25.1.1 Employees hired before September 21, 1979: The District will continue to contract with OCERS to provide the 2.5% @ 55 benefit formula(Plan G) based on the highest consecutive twelve(12) months average earnings, past and future service. 25.1.1.1 The District will continue to pay 4.5% toward the employee's contribution to OCERS for those employees who elected to make a one-time decision to remain in the Plan G program. 25.1.2 Employees hired on or after September 21, 1979 and before August 1, 2011:The District will continue to contract with OCERS to provide the 2.5%@ 55 benefit formula(Plan H)based on the highest consecutive thirty-six(36) months average earnings, past and future service. 25.1.2.1 The District will continue to pay 3.5% of an eligible employee's base salary toward the employee's contributions to OCERS. OCEA—Administrative/Clerical MOU July 1, 201644 to June 30, 2019449 Page 11 25.1.3 Employees hired on or after August 1, 2011 and before January 1,2013: The District will contract with OCERS to provide the 1.667% @ 57.5 benefit formula(Plan B)based on the highest consecutive thirty-six(36) months average earnings, past and future service. 25.1.3.1 The District will pay 0% of an eligible employee's base salary towards the employee's contribution to OCERS. 25.1.4 Employees hired on or after January 1, 2013: The District will contract with OCERS to provide the 2.5% @ 67 benefit formula (Plan U- PEPRA)based on the highest consecutive thirty-six(36) months average earnings, past and future service. 25.1.4.1 The District will pay 0% of an eligible employee's base salary towards the employee's contribution to OCERS. 25.2 All monies actually contributed into the retirement system by an employee shall be deducted from gross salary for taxation purposes in accordance with Internal Revenue Code provisions. ARTICLE 26. - SHIFT DIFFERENTIAL 26.1 Employees who are regularly assigned to work a night shift that consists of 50%or more of their hours between 6:00 p.m. and 6:00 a.m. and who actually work that shift shall receive a shift differential of$2.50 per hour. ARTICLE 27. - LEAVE-OF-ABSENCE WITH PAY 27.1 Vacation Leave 27.1.1 Except as otherwise provided, regular full-time employees accrue vacation leave, beginning with the first day of employment, in accordance with the following schedule: Years of Service Hours-Biweekly Hours-Annual In years 0 through 1 3.08 80 In years 2 through 4 3.08 80 In years 5 through 10 4.62 120 In year 11 4.93 128 In year 12 5.24 136 In year 13 5.54 144 In year 14 5.85 152 In year 15 6.16 160 In year 16 6.46 168 In year 17 6.77 176 In year 18 7.08 184 In year 19 7.39 192 In year 20 and over 7.69 200 27.1.2 Part-time employees accrue vacation leave on a pro-rata basis as set forth in District Policy. 27.1.3 Vacation leave begins after an employee has completed twenty-six (26)weeks of continuous service. After the individual's first twenty-six(26)weeks of service, his or her account will be credited with 40 hours.After that time, he or she will accrue vacation hours consistent with the above chart.Vacation leave may only be utilized in increments of one-half hour or more. Vacation leave is accrued for all paid hours, including hours actually worked and hours in a paid-leave payroll status. OCEA—Administrative/Clerical MOU July 1, 201644 to June 30, 20194@ Page 12 27.1.4 When unpaid absences occur,vacation leave accruals will be applied by straight proration of leave accruals based on the number of hours actually worked, and is applicable to all types of leave, whether legally protected or not. 27.1.5 Employees may have a maximum accumulation of 200 hours as of the last day of the final pay period in December of each year. In the event an employee accrues vacation leave in excess of 200 hours, it must be used prior to said December date, all other remaining hours in excess of 200 will be paid to the employee in the first pay period in January at the employee's then current hourly rate of compensation. 27.2 Sick Leave 27.2.1 Definition:Sick leave is an insurance or protection provided by the District to be granted to employees in circumstances of adversity to promote the health and welfare of the individual employee. It is not an earned right to take time off from work. Sick leave is defined as the absence from duty of an employee because of a bona fide illness, injury, or pregnancy, or to attend to the illness or injury of a family member as hereinafter defined or,for an employee who is a victim of domestic violence sexual assault or stalking for the purposes described in Labor Code sections 230(c)and 230.1(a). Temporary employees shall receiveaFe not ant tiedto sick leave benefits as required by State law. 27.2.2 Method-Sick Leave Accrual. Full-time employees hired prior to November 27, 1981, accrue paid sick leave at the rate of three point five(3.5) hours for each biweekly pay period of continuous service (ninety-one (91) hours per year). Full-time employees hired on or after November 27, 1981,accrue paid sick leave at the rate of three(3.0)hours for each biweekly pay period of continuous service (seventy-eight(78) hours per year), beginning with the first day of employment. 27.2.3 Part-time employees accrue sick leave on a pro-rata basis as set forth in applicable District Policy. 27.2.4 When unpaid absences occur,sick leave accruals will be applied by straight proration for leave accruals based on the number of hours actually worked, and is applicable to all types of leave, whether legally protected or not. 27.2.5 Annual Pavoff- Employees may elect annually to be paid for any unused sick leave hours accrued through the end of October at their current hourly rate according to the following payoff schedule or as specified in a Memoranda of Understanding. Accrued Sick Leave Hours Rate of Payoff 0-100 0 101-240 25 241-560 35% Over 560(mandatory) 50% 27.2.6 Employees who terminate for any reason other than retirement or death shall be compensated for any accrued and unused sick leave according to the above schedule. Employees who retire or decease with twenty(20)years or more of service shall be paid at the one hundred percent (100%) rate for all accrued and unused sick leave. Employees who retire or decease with less than twenty(20)years of service will be paid at the seventy-five percent(75%)rate for all accrued and unused sick leave. 27.2.7 Permissible Uses-Sick leave maybe applied only to: A. Absence due to illness, injury or pregnancy of an employee. B. Absence due to medical and dental office appointments of an employee when approved by the employee's supervisor. OCEA—Administrative/Clerical MOU July 1, 201644 to June 30, 201946 Page 13 C. Absence for the care of the employee's father, father-in-law, mother, mother-in-law, brother, sister, husband,wife, domestic partner, child, child of domestic partner, grandparent, grandchild, legal guardian, or any family member with whom the employee resides. D_Absence due to a job-related injury. IXE. Absence related to an employee who is a victim of domestic violence, sexual assault, or stalking,for the purposes described in Labor Code sections 230(c)and 230.1(a). 27.2.8 General Provisions-To qualify for sick leave pay, the employee must notify the District at or in advance of the time the employee is scheduled to report for duty. Minimum charge to the employee's sick leave account shall be one-half hour and thereafter in one-half hour increments. Human Resources and department management shall be responsible for control of abuse of the sick leave privilege. If notified in advance, the employee may be required, at any time, to furnish a certificate issued by a licensed physician or nurse, or other satisfactory evidence of illness; however,for absences of ten consecutive working days or more, a request for leave and a medical statement, on prescribed forms, stating expected date of return must be submitted to Human Resources. Upon return to work, a written doctors release must be submitted to Human Resources. For absences of one or more working days in an unpaid status,a request for leave and a medical statement, on prescribed forms, stating expected date of return must be submitted to Human Resources. If the need for leave is due to the employee's serious health condition,as defined in the Family and Medical Leave Act("FMLA")or the California Family Rights Act("CFRA"),the certification requirement shall comply with the provisions of these Acts. 27.3 Jury Duty Leave 27.3.1 Any full-time, including probationary, employee who is called for jury duty shall, upon request on prescribed forms, be entitled to his or her regular pay for those hours of absence due to performance of the jury duty for a period up to twenty-two(22)working days. 27.3.2 Prior to jury duty service, each employee must complete a time off request through the District's timesheet system and provide a copy of the summons to his or her supervisor.To be entitled to receive regular pay for such jury leave, the employee must report for work at the District for time not actually retained on jury unless there is less than 1/2 of their regular shift remaining. Employees are not compensated for jury duty occurring on scheduled days off. 27.4 Witness Leave 27.4.1 Any full-time, including probationary, employee,who is required to be absent from work by a subpoena properly issued by a court, agency or commission legally empowered to subpoena witnesses,which subpoena compels his or her presence as a witness, except in a matter wherein he or she is named as a defendant or plaintiff or as an expert witness, shall, upon approval of an online time off request, be entitled the time necessary to comply with such subpoena, provided any fees received for such service, exclusive of mileage, are submitted to the District for deposit in the General Fund of the District. 27.4.2 An employee so subpoenaed must submit a copy of the subpoena to his or her supervisor and complete an online time off request form in order to be eligible for pay for such absence. To be entitled to receive regular pay for such witness leave,the employee must report for work at the District for time not actually retained on witness service of one hour or more prior to and/or upon completion of each day's service, exclusive of travel time. 27.5 Military Leave 27.5.1 A request for military leave shall be made upon leave-of-absence forms approved by the Human Resources Department and shall state the date when it is desired to begin the leave-of-absence OCEA—Administrative/Clerical MOU July 1, 201644 to June 30, 201936 Page 14 and the date of anticipated return. A copy of the orders requiring such military service shall be submitted with the request. 27.5.2 Provisions of the Military and Veterans Code of the State of California, Sections 395-395.5 shall govern military leave. In general, current law provides that an employee having one(1)year or more service with a public entity is entitled to military leave with pay not exceeding thirty(30)days per year if the employee is engaged in military duty ordered for purposes of active military training or encampment. An employee who is required to attend scheduled service drill periods or perform other inactive duty reserve obligations is entitled to military leave without pay, not exceeding seventeen (17)calendar days per year, although the employee may, at his or her option, elect to use accrued leave time to attend the scheduled reserve drill periods or to perform other inactive drill period obligations. Employees who participate in weekend military drill duty are not eligible for leave with pay for such activity, but may have their regular work schedule changed to accommodate the required time off. 27.6 Bereavement Leave 27.6.1 Using the online time off request system, any full-time employee,whether probationary or regular, shall receive a maximum of thirty-six(36)hours of paid time for the death or funeral of an immediate family member. Immediate family member is defined as the employee's father, step- father, father-in-law, mother, step-mother, mother-in-law, brother, step-brother, sister,step-sister, husband,wife,domestic partner, biological child, adopted child, step-child, child of a domestic partner, grandchild, grandparent,foster parent,foster child, legal guardian, or any family member with whom the employee resides. 27.7 Supplemental Leave 27.7.1 Regular full-time employees in the bargaining unit shall be granted Supplemental Leave in accordance with the following schedule in the first pay period in July: Years of Service 5-9 10- 14 15- 19 20-24 25, Supplemental Leave Hours 5 10 15 20 25 27.7.3 Supplemental Leave will be administered in accordance with the following guidelines: 27.7.3.1 Supplemental Leave may be used in one-quarter(0.25)hour increments. 27.7.3.2 Any unused Supplemental Leave, within the fiscal year granted,will not be carried over to the next fiscal year. 27.7.3.4 Any unused Supplemental Leave, within the fiscal year granted, is not subject to cash out or eligible for any mandatory payout. 27.7.3.5 Employees who cease to be part of the bargaining unit for any reason will forfeit any unused Supplemental Leave. 27.7.3.6 Employees who are hired or transferred into the bargaining unit shall be granted Supplemental Leave on a pro-rata basis per the following schedule: HireRransfer Date Percent July—September 100% October—December 75% January—March 50% April—June 25% OCEA—Administrative/Clerical MOU July 1, 201644 to June 30, 201916 Page 15 ARTICLE 28. - LEAVE-OF-ABSENCE WITHOUT PAY 28.1 It is the policy of the District to grant employees leave-of-absences without pay under certain circumstances and in accordance with state and federal benefit entitlement laws. Except as stated below, employees shall not receive compensation during an unpaid leave-of-absence. Employees will not be granted an unpaid leave of absence prior to exhausting all paid leave accrual balances, excluding employees protected by PDL(Pregnancy Disability Leave)/FMLA(Family and Medical Leave Act)/CFRA (California Family Rights Act)for their own serious health condition. 28.2 Using the prescribed forms, approved by District management, any full-time, including probationary, or part-time employees with at least fifty-two (52)weeks of service and at least twelve hundred fifty(1,250) hours of service, may be granted an FMLA or CFRA leave-of-absence without pay, not to exceed twelve (12)weeks in a rolling twelve(12)month calendar period. A"rolling"twelve(12)month period is measured backward from the date the employee uses the leave.A request for leave of absence without pay must be made upon prescribed forms in all instances where an employee is absent without pay for more than five (5)consecutive working days, or for absences of ten (10)working days or more when using paid sick leave accruals. 28.3 Substitution of Paid Leave 28.3.1 Employees who request FMLA or CFRA Leave for qualifying purposes other than the employee's own serious health condition shall be required to use all accruals, before unpaid leave is granted. Paid time off will not accrue during any pay period that an employee is absent without pay for more than one (1)day. 28.3.2 Paid time off accruals may be used for the care of the employee's father, step-father,father-in-law, mother, step-mother, mother-in-law, brother, step-brother, sister, step-sister, husband, wife, domestic partner, biological child, adopted child, step-child, foster child, legal ward, child of a domestic partner, grandchild, grandparent,foster parent, legal guardian, or any family member with whom the employee resides. 28.4 Permissible Uses 28.4.1 FMLA Leave. FMLA leave maybe used for: 28.4.1.1 The birth of a child or to care for a newborn of an employee; 28.4.1.2 The placement of a child with an employee in connection with the adoption or foster care of a child; 28.4.1.3 The care for the employee's father, step-father,father-in-law, mother, step-mother, mother-in-law, brother, step-brother, sister, step-sister, husband, wife, biological child, adopted child, step-child, foster child, legal ward, child of a domestic partner, grandchild, grandparent, legal guardian,or any family member with whom the employee resides who has a serious health condition, as defined in the Act; 28.4.1.4 The employee's own serious health condition that renders the employee unable to perform the essential functions of his or her position, including incapacity due to pregnancy; 28.4.1.5 A qualifying exigency arising out of the fact that an employee's family member is on covered active duty or called to covered active duty status in the Armed Forces.A qualifying exigency may include activities such as making arrangements for childcare, attending counseling relating to the active duty of the service member, or attending to farewell or arrival arrangements for the service member. 28.4.1.6 The care for the employee's family member or"next of kin'service member of the United States Armed Forces who has a serious injury or illness incurred in the line OCEA—Administrative/Clerical MOU July 1, 201644 to June 30, 2019445 Page 16 of duty while on active military duty. This leave may consist of up to twenty-six (26) weeks of unpaid leave during a single twelve(12)month period. 28.4.2 CFRA Leave. CFRA Leave may be used for: 28.4.2.1 The same purposes as FMLA Leave, including the care of a domestic partner or child of a domestic partner, and shall run concurrently with FMLA leave. 28.4.2.2 CFRA may not be used for 1)an employee's incapacity due to pregnancy,. 2)leave due to a qualifying exigency, or 3)to care for a family member or next of kin with a serious injury or illness incurred in the line of duty. However, incapacity due to pregnancy may entitle an employee to up to four(4)months of pregnancy disability leave under California's Pregnancy Disability Leave(PDL) law. 28.4.3 General Provisions: Reauests for FMLA and CFRA Leave Where the need for Leave is foreseeable,the District requests thirty(30)days advance notice. 28.4.4 Medical Certification As a condition of FMLA or CFRA Leave because of a serious health condition,the District may require certification by the employee's attending physician in accordance with Department of Labor(DOL) regulations. 28.4.5 Medical and Dental Premiums During FMLA and CFRA Leave,the District shall pay for medical and dental benefits at the same level as coverage would have been provided if the employee was not on leave. The employee shall be required to pay his or her share of medical and dental premiums. Failure to submit a monthly co-payment, in full, within sixty(60)days of the invoice date will result in loss of group coverage. Coverage will be reinstated upon return to active employment. 28.4.6 Reinstatement Upon expiration of FMLA or CFRA Leave, the employee shall be reinstated to the same or a comparable position, unless the employee would not otherwise have been entitled to that position for reasons unrelated to such leave(e.g., layoff), in which case the District's obligation to continue health and dental or other benefits shall cease. 28.4.7 District Employment of Spouses/Domestic Partners 28.4.7.1 FMLA Leave. Married employees shall be limited to a combined total of twelve(12) weeks FMLA or CFRA Leave in a rolling twelve(12)month calendar period for the care of a parent or newly born or placed child. 28.4.7.2 CFRA Leave. Married employees and employees in domestic partnerships will be limited to a combined total of twelve (12)weeks CFRA leave in a rolling twelve(12) month calendar period for the care of a parent or newly born or placed child. 28.5 General Leave 28.5.1 Employees who have exhausted all paid time off accruals may request to be granted a general leave-of-absence by District management to attend to personal matters or for FMLA or CFRA qualifying events after the expirations of previously authorized leave. 28.5.2 During a general leave-of-absence,the employee will be required to pay both the District's and the employee's share of medical and dental premiums. 28.5.3 Failure to submit a monthly co-payment, in full,within sixty(60)days of the invoice date will result in loss of group coverage. Coverage will be reinstated upon return to active employment. 28.6 Return to Work Policy 28.6.1 An employee who has been absent from work due to a medical reason may be subject to a Return-to-Work medical evaluation. OCEA—Administrative/Clerical MOU July 1, 201644 to June 30, 201946 Page 17 28.6.2 If it is determined that the job demands of the position last held by the employee are not compatible with the employee's restrictions(with reasonable accommodation if the employee is disabled within the meaning of the ADA/FEHA)and the employee is willing to return to work, placement in an alternative position, if available, shall be considered. The employee shall be re- classified as medically disqualified while alternative positions are being considered. Such time off shall be without pay; however, the employee may elect to use accrued leave hours, such as vacation, sick or personal, to receive compensation. Placement of an employee in an alternative position requires a pre-placement medical evaluation for the alternative job. 28.6.3 If it is determined that the job demands of the position last held by the employee are not compatible with the employee's restrictions(and cannot be reasonably accommodated if the employee is disabled within the meaning of ADA/FEHA)and there is not an alternative position, or the employee's restrictions are not compatible with an alternative position, or the employee is not willing to return to work, the employee shall be re-classified as medically disqualified and not permitted to work. Thereafter, the employee shall be retired for disability, if eligible,or dismissed. Such dismissal will not imply disciplinary action for cause. If requested,the employee's file will indicate the employee left for personal reasons. 28.6.4 Bridoe of Service If an employee is dismissed per Section 28.6.3, and then is rehired to a position within the District within one(1)year,the District shall bridge the employee's service date. Bridging of service procedures involve adding the total number of days away from work to the employee's original date of hire. 28.6.5 Failure to Return to Work If, upon the expiration of FMLA or CFRA Leave, or any District approved extension thereof including General Leave,an employee fails to return to work and no additional leave has been authorized, the employee shall be considered to have automatically resigned from his or her position. In such cases,the employee will receive advance notification of the District's intent to implement an automatic resignation. 28.7 Compliance with Law These Leave-of-Absence provisions shall be interpreted and applied in a manner that is consistent with the provisions of FMLA, CFRA, ADA and all other laws. In the event there is a direct conflict between these provisions, as written or applied, the provisions of law shall govern. ARTICLE 29. - CLASSIFICATION STUDIES 2q.1 QC;SD'A" 'Rclude a represeRlatve from OCEA W part c pate as a partner n the agency w dp nla�s f naton and compensation study. 29.21 An employee who believes his/her position is not properly classified may submit a written request to the-Department Director asking that a classification study be conducted. The Department Director will acknowledge the request in writing and review the request for accuracy, and forward it to the Director of Human Resources, or designee,for consideration and response. Classification studies will only be conducted twice a year in November and during the budget process; therefore, classification study requests shall be submitted October V for the November review and according to the Finance budget schedule. District's management may also conduct classification studies at their discretion to ensure that the duties and responsibilities of all employees are appropriately allocated within the classification structure. 29.32 Y-Rating 29.32.1 All classification study findings regarding existing classifications are subject to approval by the General Manager;findings recommending a new job classification range are subject to approval by the District's Board of Directors. The recommendations of the classification study shall be implemented in the first pay period immediately following the completion of the study, unless the OCEA—Administrative/Clerical MOU July 1, 201644 to June 30, 201946 Page 18 recommendations require action betaken by the Board of Directors prior to implementation. In such event,the recommendations shall be implemented in the first pay period immediately following authorization by the Board. 29.32.2 In the event the duties and responsibilities of a position are allocated to a lower paid classification, the salary of the incumbent of that position shall remain unchanged (Y-rated)in accordance with the following table: Years of Service Term of Y-Rate 0-3 1 year 4-5 2 years 6-10 3 years 11-20 4 years 20 or more 5 years 29.32.3 Y-rating based on the above schedule shall be granted for all reclassifications where employees are working in a job classification with a lower maximum rate of resulting from changes to the District's staffing requirements, organizational structure or"bumping"associated with layoffs. Y- rating shall not apply in cases involving disciplinary actions or voluntary changes to a job classification with a lower maximum rate of pay. 29.32.4 The Y-rate shall remain in effect until the salary range for the new classification equals or exceeds the employee's Y-rated salary, or until the term of the Y-rate expires in accordance with the table above. If the Y-rate expires before the employee's salary falls within the range of the new classification, the employee shall be placed at the top of the range. Employees become eligible for merit increases and range adjustments when the Y-rate is no longer in effect. 29.43 Z-Rating 29.43.1 Employees allocated to classifications with a lower range maximum than their current salary as a result of the District's comprehensive Classification Study results implemented effective July 12, 2002 will have their salary remain unchanged (z-rated) until such time that the range maximum of their salary range exceeds or equals their current salary. 29.43.2 If a position is allocated to a higher paid classification, and the incumbent is promoted to that level, his or her salary will be placed at the step of the new range that is nearest a one-step increase, not to exceed the maximum rate of pay. ARTICLE 30. - DRIVER'S LICENSE 30.1 Employees who are required by the District to drive must notify their supervisor and the Human Resources Risk Management Division immediately upon receipt of any suspension or revocation of their California Driver's License privileges. Failure to do so could result in disciplinary action up to and including separation. 30.2 If an employee whose license is suspended or revoked and is unable to perform his or her regular duties and responsibilities notifies the District in a timely fashion,an attempt shall be made to place the employee in an equal or lower level position for which he or she is qualified. Placement in the range of the new classification is subject to District management's discretion. 30.3 The District will continue to pay the license renewals and physical examination costs of Class A& B licenses that are specifically required by the District. OCEA—Administrative/Clerical MOU July 1, 201644 to June 30, 201946 Page 19 ARTICLE 31. - LAYOFF PROCEDURE 31.1 Nothing herein shall be construed to require the District to fill vacant, budgeted positions nor to prohibit the District from eliminating vacant positions from the budget. The District reserves the right to reassign staff to other positions in instances involving job restructuring, reorganization or due to lack of work. 31.2 The layoff procedure outlined below shall be followed if the District finds it necessary to layoff personnel who were hired after January 1, 2000 and for any layoffs which occur after November 1, 2002. 31.3 If, in the sole discretion of District management, personnel reductions are necessary, layoff order and recall lists shall be developed based upon job classification, priority of function,job performance, individual qualifications and seniority. The OCEA and employees subject to layoff shall be provided with at least two weeks notification in writing,whenever possible. 31.4 Employees in classifications subject to layoff may request a voluntary demotion to any previously held position for which they remain qualified. Such requests must be made in writing to the Human Resources Department within five (5)days of receipt of the Layoff Notice. The salary of an employee who voluntarily demotes shall be unchanged,except that it may not exceed the maximum rate of the range for the lower level classification. 31.5 Recall lists shall be developed for all classifications experiencing personnel reductions, and shall be maintained for a period of two years from the date of layoff. Individuals shall be placed on the list in the inverse order of layoff, so that the last person laid off is the first recalled.When a vacancy occurs in a classification for which a Recall list exists,an offer of reemployment shall be made to the individual on the top of the list. That individual must respond to the offer within five days, or the offer shall be made to the next person on the list. An individual who either does not respond or refuses three consecutive offers shall have their name removed from the list. 31.6 All notification and responses must be in writing and delivered either in person or by Certified Mail. It is the responsibility of all employees to keep the Human Resources Department informed of their current address, or where they may be contacted. ARTICLE 32. - LIGHT DUTY 32.1 An employee who is released by a physician to perform limited duties because of a temporary disability may be assigned to light duty at the discretion of the District. Light duty may consist of duties other than those normally performed by the employee and that are within the employee's medical restrictions.An employee assigned to light duty will be paid the regular wage rate for the job classification to which he or she was assigned prior to being temporarily disabled. ARTICLE 33. - MEDICAL EXAMINATION 33.1 When there is reasonable evidence to suggest that an employee is impaired in a manner that endangers their own health or safety, or that of others,the District may require that employee to be examined or evaluated by a health care provider. The purpose of such examination must be job related. Any examination under this provision shall be conducted on District time and at District expense. An employee may submit an independent medical opinion regarding the individual's condition and addressing his or her ability to competently perform the duties of the position. This information shall be reviewed and considered by a competent medical authority in arriving at a decision regarding the individual's continued employment in the position. ARTICLE 34. - MILEAGE ALLOWANCE 34.1 Approved use of a personal vehicle for District business shall be reimbursed at the current IRS rate. ARTICLE 35. -ACTING PAY 35.1 Employees who are assigned by District management to perform the duties of a position at a higher level for a period of at least eighty(80)consecutive hours shall be eligible for a one step salary increase, or the OCEA—Administrative/Clerical MOU July 1, 201644 to June 30, 201946 Page 20 first step of the range for the higher level classification,whichever is greater.The higher rate of pay begins with the hour eighty-one(81),and continues until the assignment ends or the six(6)month limitation has been reached at which time a determination will be made as to whether the position should or should not be posted. Requests for acting pay require the approval of the Department Director and the Director of Human Resources, or designee. The eighty(80)hour eligibility period may be waived at the discretion of the General Manager. ARTICLE 36. (This Article intentionally left blank.) ARTICLE 37. - PERSONNEL FILES 37.1 Employees have the right to inspect their personnel file in the Human Resources Department during the normal office hours of the Human Resources Department, by appointment. Employees who wish to correct allegedly erroneous information in their file, or request that items related to disciplinary matters be removed after the indicated time period has elapsed, should submit a request in writing to the Director of Human Resources, or designee. It is the responsibility of each employee to keep the personal information in his or her file current, including home address, telephone number and person to contact in an emergency. ARTICLE 38. - BULLETIN BOARDS 38.1 The OCEA may use the bulletin boards located at Plant 1 and Plant 2,which are designated for use by employee groups to post notices to District employees, provided that: (a) no controversial matter which is critical of or derogatory to the District, its employees, officers or Directors may be posted; (b) nothing posted by the District may be removed; (c)the OCEA shall remove its notices after a reasonable length of time; and (d)only a reasonable number of notices shall be posted. ARTICLE 39. - RELEASE TIME FOR MEET AND CONFER SESSIONS 39.1 A maximum of three(3)employees covered by this Agreement and appointed by the OCEA shall be granted reasonable release time for attending meet and confer sessions at the bargaining table. Release time shall not be compensated for any hours that exceed the employee's regularly scheduled hours of work. 39.2 The OCEA shall provide the Director of Human Resources, or designee, with the names of employees requiring meet and confer release time in advance of the meet and confer session. The release time shall be granted provided that the needs of the District permits the time away from assigned work. ARTICLE 40. - USE OF DISTRICT FACILITIES 40.1 District facilities may be used by the OCEA with prior notice to the Director of Human Resources, or designee,for the purpose of holding meetings,to the extent that such use does not interfere with normal District operations. The OCEA agrees to pay for the cost of any additional custodial or security services. ARTICLE 41. - SCOPE OF BARGAINING 41.1 The District and the OCEA acknowledge that during the negotiations, which resulted in this Agreement, each party had the unlimited right and opportunity to make demands and proposals with respect to all proper subjects within the scope of representation. Therefore,the District and the OCEA, for the term of this Agreement, except as otherwise provided herein, each voluntarily and unqualifiedly waive the right, and each agrees that the other shall not be obligated to bargain collectively with respect to any subject or matter contained in this Agreement. OCEA—Administrative/Clerical MOU July 1, 201644 to June 30, 201946 Page 21 ARTICLE 42. - IMPASSE PROCEDURES 42.1 If either the District or OCEA declares that an impasse exists in the meet and confer process, the party so declaring may initiate the impasse procedure by providing the other party with a written request for an impasse meeting,together with a statement of its position on all issues. An impasse meeting shall be scheduled and held between the parties within fourteen (14)calendar days or as soon as practicable to: 42.2 Review the position of the parties in a final effort to reach agreement on a memorandum of understanding, and if the impasse is not resolved, to discuss the immediate utilization of impasse procedures outlined herein. 43.3 Impasse Procedures are: 43.3.1 Mediation: If the parties mutually agree to submit the dispute to the State Mediator and Conciliation Service, all mediation proceedings shall be private and occur as soon as practicable. The mediator shall make no public recommendation, nor take any public position at any time concerning the issues. 43.3.2 Fact-Finding: If the parties fail to resolve the dispute through mediation,the parties may agree to submit the impasse to fact finding as soon as practicable. The cost of a fact finder and other mutually incurred costs shall be mutually shared by the District and OCEA. 43.3.3 Board Actions: If the parties fail to resolve the impasse,the dispute shall be sent to the District's Board of Directors for resolution. Each party shall submit its written proposal on all issues to the Board. The Board may take such action to resolve the impasse as it deems appropriate to the public interest. Any action taken by the Board to resolve the impasse shall be final and binding. ARTICLE 43. - SEVERABILITY 43.1 Notwithstanding any other provisions in this Agreement, in the event that any article, section or subsection of this Agreement shall be declared invalid by any court or by any state or federal law or regulation, or should a decision by any court or any state or federal law or regulation diminish the benefits provided by this Agreement, or impose additional obligations on the District,the District and OCEA shall meet and confer on the affected article, section or subsection. In such event, all other articles, sections or subsections of this Agreement not affected shall continue in full force and effect. ARTICLE 44. - UNIFORMS 44.1 The District shall provide and maintain ten (10) uniform pants and shirts, which may include the name of the employee and District's seal, at no cost to employees whose duties require that they wear uniforms. The District will also provide lab coats as required by the lab manager. 44.2 All employees who are issued uniforms must wear them during the performance of their regular duties. Other clothing appropriate to the occasion, as determined by District management, may be worn when attending business meetings. Failure to wear required clothing, shoes and safety equipment may be cause for disciplinary action. ARTICLE 45. - SUBSTANCE ABUSE POLICY 45.1 The District's Substance Abuse Policy will apply to all unit members. The District may adopt or implement rules, regulations and policies to be in compliance with federal and state laws. In such cases, notification will be provided to the bargaining unit prior to implementation. 45.2 Department of Transportation (DOT) Regulations 45.2.1 Every driver who operates a commercial motor vehicle in interstate or intrastate commerce, and is subject to the commercial driver's license requirements of the Department of Transportation, Federal Highway Administration CFR Part 382 is subject to the District's Anti-Drug and Alcohol Program. The District will ensure that all alcohol or controlled substances testing conducted under OCEA—Administrative/Clerical MOU July 1, 201644 to June 30, 201946 Page 22 the Substance Abuse and Alcohol Misuse Plan complies with the procedures set forth in CFR Part 40. 45.3 District's Substance Abuse Policv 45.3.1 Any employee may be subject to discipline, up to and including termination,for any alcohol screen test that indicates an alcohol concentration level of 0.02% or greater. ARTICLE 46. - DUES DEDUCTIONS 46.1 The District shall deduct from each regular paycheck and remit to OCEA the dues, initiation fees and assessments for each employee who voluntarily authorizes such deduction in writing. Such authorizations must be fled by the end of the pay period prior to the period for which the deduction is requested. 46.2 The District shall provide the OCEA a quarterly list of the names of those employees for whom it has made deductions. In addition, the District shall provide the names and addresses of new employees and the names of employees who have terminated within the previous quarter. ARTICLE 47. (This Article intentionally left blank) ARTICLE 48. - PEACEFUL RESOLUTION OF DISPUTES 48.1 During the term of this Memorandum, or any subsequent period when impasse resolution procedures are in progress or recommendations resulting from such procedures are being considered by the parties,the District agrees it shall not lockout employees in this bargaining unit, and OCEA agrees that it shall neither advocate, encourage or participate in any strike, including sympathy strike, or work stoppages, nor encourage employees to refrain in whole or in part from the full,faithful and proper performance of their duties of employment. ARTICLE 49. (This Article intentionally left blank) ARTICLE 50. -WORKPLACE VIOLENCE AND WEAPONS POLICY 50.1 The District's Workplace Violence and Weapons Policy will apply to all unit members. ARTICLE 51. - RESIGNATION 51.1 Voluntary written termination of employment with the District is irrevocable after seventy-two(72)hours from the receipt of the resignation, except by approval of the Director of Human Resources, or designee. ARTICLE 52. (This Article intentionally left blank) ARTICLE 53. - LABOR MANAGEMENT COMMITTEE 53.1 Orange County Employees Association (OCEA) and the Orange County Sanitation District(OCSD) hereby agree to meet within two(2)months from the OCSD Board approval of this MOU to discuss the structure and process of a Labor Management Committee at OCSD.Absent mutual agreement regarding the structure and process of a Labor Management Committee,the parties will defer discussions to the time when a successor MOU is raised. OCEA—Administrative/Clerical MOU July 1, 201644 to June 30, 201946 Page 23 SIGNATURE PAGE 201644—2019U MEMORANDUM OF UNDERSTANDING BETWEEN THE ORANGE COUNTY SANITATION DISTRICT AND THE ORANGE COUNTY EMPLOYEES ASSOCIATION FOR THE ADMINISTRATIVE AND CLERICAL UNIT Executed: OCEA ADMINISTRATIVE &CLERICAL UNIT ORANGE COUNTY SANITATION DISTRICT Bo Gutierrez, Labor Relations Representative Steve-FitarskyLaura Kalty, Chief Negotiator Jan Orel, Administrative Assistant James Herber^ General Manag^Celia Chandler, Director of Human Resources Beatrice Mitchell, Administrative Assistant ManagerAndrew Nau. Princioal Human Resources Analyst Andrew Na o:no pal Human Rego -rose AnaWLaura Maravilla_Human Resources Supervisor AnalystJanine Aguilar, Princioal Human Resources Analyst Laurie Klinger, Senior Human Resources Analyst OCEA—Administrative/Clerical MOU July 1, 201644 to June 30, 201936 Page 24 Exhibit A UNIT E4kctWe r=rrear�e �, 11Ju1-SO 104ul-15 Gassificatiea Grade MIN MAX MIN MAX 69 $31..89 $4241 $3339 $Q,26 Ait. atrative AasiMart 6Z $2220 140.36 $32.86 S4416 67 $33-20 $40.35 $33.86 $4 t46 PayreN3eehrtieian 67 $2220 S49.a6 S22.$6 $41-.16 GrePh'G6 Goerdiaater 66 $3240 $39.38 $33.05 $4 117 Lead Storekeeper62 $2924 S2$:67 $29.93 $36.38 Pgseiird% A 'ada.1 - 58 $2658 $32.311 $2741 $3296 58 $26.68 $3231 $2741 $3296 Program-Assisam 56 $25.81 $3035 IN Account n9-Assistant! s4 $24.08 S2&26$2203 527,Ese $21.82 S2652 ADMINISTRATIVE AND CLERICAL UNIT Effective Effective Effective P1a, 8Jul-16 74uI-17 64u1-18 Classification Grade MIN MAX MIN MAX MIN MAX Executive Assistant 69 3 A 44. $37.3 $45.45 $38.3 44.559 Administrative Assistant 67 38 4111 S42.19 $35.58 3.24 $36.47 .32 Contracts/Purchasing Assistant 67 $34.71 $42.19 $35.58 3.24 $36.47 .32 Pavroll Technician 67 3$ 4.71 S42.19 $35.58 3.24 $36.47 .32 Graphics Coordinator 66 $33.88 $41.17 $34.7 $42.20 $35..6 $43.26 Lead Storekeeper 62 $30.68 $37.29 $31.45 38.22 $32.24 39.18 Accounting Assistant ll $27.79 $33.78 $28.48 M.62 $29.19 36.49 Senior Storekeeper 58 $27.79 $33.78 $28.48 34.62 $29.19 35.49 Proaam Assistant 56 $26.47 $32.15 $27.13 32.95 $27.81 $33.77 Accountina Assistant l 54 $25.17 $25.80 31.37 26.45 32.15 OCEA-Administrative/Clerical MOU July 1, 201644 to June 30, 201946 Page 25 Storekeeper 52 23.97 29.15 24.57 29.88 25.18 30.83 Office Assistant 50 22.82 7.73 23.39 8.42 23.97 9.13 OCEA—Administrative/Clerical MOU July 1, 201644 to June 30, 201936 Page 26 MEMORANDUM OF UNDERSTANDING BETWEEN THE ORANGE COUNTY SANITATION DISTRICT AND THE ORANGE COUNTY EMPLOYEES ASSOCIATION FOR THE TECHNICAL SERVICES UNIT July 1, 20164-4 through June 30, 201946 TABLE OF CONTENTS ARTICLE 1. -RECOGNITION.................................................................................................................................1 ARTICLE2. -DURATION.......................................................................................................................................1 ARTICLE 3.-SUCCESSOR AGREEMENT...........................................................................................................1 ARTICLE 4.-OCEA ACCESS................................................................................................................................1 ARTICLE 5.-OCEA RIGHTS.................................................................................................................................2 ARTICLE 6.-DISTRICT RIGHTS..........................................................................................................................2 ARTICLE 7.-NONDISCRIMINATION IN EMPLOYMENT.....................................................................................2 ARTICLE S.-SMOKE-FREE WORK ENVIRONMENT..........................................................................................2 ARTICLE9.-SAFETY............................................................................................................................................2 ARTICLE 10. -DISCIPLINE AND DISMISSAL......................................................................................................3 ARTICLE 11. -GRIEVANCE PROCEDURE...........................................................................................................4 ARTICLE 12. -PROBLEM SOLVING PROCEDURE.............................................................................................5 ARTICLE 13. -SALARY ADJUSTMENTS AND COMPENSATION......................................................................5 ARTICLE 14. -SEVERANCE PAY.........................................................................................................................7 ARTICLE 15. -DEFERRED COMPENSATION......................................................................................................7 ARTICLE 16. -HOLIDAYS......................................................................................................................................7 ARTICLE17.-HOURS OF WORK........................................................................................................................8 ARTICLE 18. -CALL-BACK PAY..........................................................................................................................8 ARTICLE 19. -STANDBY PAY..............................................................................................................................8 ARTICLE20.-INSURANCE..................................................................................................................................8 20.4 MEDICAL INSURANCE...............................................................................................................................8 20.5 LIFE INSURANCE......................................................................................................................................9 20.6 SHORT TERM DISABILITY..........................................................................................................................9 20.7 LONG TERM DISABILITY............................................................................................................................9 20.8 DENTAL INSURANCE.................................................................................................................................9 20.9 VISION INSURANCE ..................................................................................................................................9 20.10 RETIRING EMPLOYEES.............................................................................................................................9 ARTICLE 21. -REIMBURSEMENT ACCOUNT...................................................................................................10 21.2 GROUP INSURANCE PREMIUMS...............................................................................................................10 21.3 MEDICAL CARE REIMBURSEMENT ACCOUNT............................................................................................10 21.4 DEPENDENT CARE ASSISTANCE ACCOUNT..............................................................................................10 ARTICLE22. -OVERTIME...................................................................................................................................10 ARTICLE 23. -PROBATIONARY PERIOD..........................................................................................................11 ARTICLE24. -PROMOTIONS..............................................................................................................................11 ARTICLE 25. -RETIREMENT...............................................................................................................................11 ARTICLE 26. -SHIFT DIFFERENTIAL.................................................................................................................12 ARTICLE 27. -LEAVE-OF-ABSENCE WITH PAY..............................................................................................12 27.1 VACATION LEAVE...................................................................................................................................12 27.2 SICK LEAVE...........................................................................................................................................12 27.3 JURY DUTY LEAVE.................................................................................................................................14 27.4 WITNESS LEAVE....................................................................................................................................14 27.5 MILITARY LEAVE....................................................................................................................................14 27.6 BEREAVEMENT LEAVE............................................................................................................................14 27.7 SUPPLEMENTAL LEAVE...........................................................................................................................15 ARTICLE 28. -LEAVE-OF-ABSENCE WITHOUT PAY.......................................................................................15 28.3 SUBSTITUTION OF PAID LEAVE................................................................................................................16 28.4 PERMISSIBLE USES................................................................................................................................16 28.5 GENERAL LEAVE....................................................................................................................................17 28.6 RETURN TO WORK POLICY.....................................................................................................................17 28.7 COMPLIANCE WITH LAW.........................................................................................................................18 ARTICLE 29. -CLASSIFICATION STUDIES.......................................................................................................18 ARTICLE 30. -DRIVER'S LICENSE.....................................................................................................................19 ARTICLE 31. -LAYOFF PROCEDURE................................................................................................................19 ARTICLE 32. -LIGHT DUTY.................................................................................................................................20 ARTICLE 33. -MEDICAL EXAMINATION ...........................................................................................................20 ARTICLE 34. -MILEAGE ALLOWANCE.............................................................................................................20 ARTICLE 35. -ACTING PAY................................................................................................................................20 ARTICLE36...........................................................................................................................................................20 OCEA-Technical Services MOU July 1, 2014 to June 30, 2016 Pagei ARTICLE 37. -PERSONNEL FILES ....................................................................................................................20 ARTICLE 38.—BULLETIN BOARDS...................................................................................................................21 ARTICLE 39. -RELEASE TIME FOR MEET AND CONFER SESSIONS...........................................................21 ARTICLE 40. -USE OF DISTRICT FACILITIES..................................................................................................21 ARTICLE 41. -SCOPE OF BARGAINING...........................................................................................................21 ARTICLE 42. -IMPASSE PROCEDURES...........................................................................................................21 ARTICLE 43. -SEVERABILITY............................................................................................................................22 ARTICLE 44. -UNIFORMS...................................................................................................................................22 ARTICLE 45. -SUBSTANCE ABUSE POLICY....................................................................................................22 ARTICLE 46. -DUES DEDUCTIONS...................................................................................................................22 ARTICLE47...........................................................................................................................................................22 ARTICLE 48. -PEACEFUL RESOLUTION OF DISPUTES.................................................................................23 ARTICLE49...........................................................................................................................................................23 ARTICLE 50. -WORKPLACE VIOLENCE AND WEAPONS POLICY................................................................23 ARTICLE 51. -RESIGNATION.............................................................................................................................23 ARTICLE52...........................................................................................................................................................23 ARTICLE 53. -LABOR MANAGEMENT COMMITTEE.........................................................................23 SIGNATUREPAGE...............................................................................................................................................24 EXHIBITA.............................................................................................................................................................25 OCEA—Technical Services MOU July 1, 201644 to June 30, 201936 Page ii MEMORANDUM OF UNDERSTANDING BETWEEN THE ORANGE COUNTY SANITATION DISTRICT AND THE ORANGE COUNTY EMPLOYEES ASSOCIATION FOR THE TECHNICAL SERVICES UNIT In accordance with the provisions of California Government Code Sections 3500, at seq., and Resolution No. 75-127 of the Joint Board of Directors, the District's authorized representative has met and conferred in good faith with representatives of the Orange County Employees Association (OCEA)for the Technical Services Unit. These meetings have resulted in an agreement and understanding to recommend that the employees represented by OCEA accept these terms and conditions, and that the Board of Directors adopt by Resolution the changes and additions to the wages, hours, and conditions of employment for the employees represented by OCEA as set forth in this Agreement. ARTICLE 1. - RECOGNITION 1.1 This Agreement, effective July 1, 20164-4, is entered into between the Orange County Sanitation District, referred to hereinafter as the"District,"and the Orange County Employees Association, referred to hereinafter as"OCEA." 1.2 The District recognizes the Orange County Employees Association as the exclusive recognized employee organization for matters within the scope of representation for the following classifications, as set forth in Exhibit"A" (attached hereto and incorporated by reference),as well as additional classes as may be added hereafter by the District. ARTICLE 2. - DURATION 2.1 This Agreement shall be binding on the District and OCEA when approved and adopted by the District's Board of Directors. This Agreement shall terminate on June 30, 201946.This Agreement shall act as a bar to the raising of the question of representation during its term, except that the question of representation may be raised during the period between sixty(60)and ninety(90)days prior to its expiration. ARTICLE 3. - SUCCESSOR AGREEMENT 3.1 The Group shall submit in writing its initial proposal for a successor agreement 60�prior to the expiration date of this Agreement. ARTICLE 4. - OCEA ACCESS 4.1 An OCEA Representative shall have access to the District's facilities during working hours for the purpose of assisting Unit employees in processing grievances or investigating matters arising out of the application of provisions of this Agreement. The OCEA Representative must obtain authorization for each visit in advance from the Director of Human Resources,or designee. 4.2 The OCEA shall provide the Director of Human Resources, or designee, with a list of Representatives who are authorized to request access under this article, and shall notify the Director of any changes in that list. 4.3 OCEA access shall not interfere with the District's operations,or with the work of employees in any manner. The District reserves the right to restrict access in certain areas designated as confidential or secure. OCEA—Technical Services MOU July 1,201644 to June 30, 201946 Page 1 ARTICLE 5. - OCEA RIGHTS 5.1 The OCEA may designate employees to act as representatives for employees covered by this Agreement. The OCEA shall furnish the Director of Human Resources, or designee with the names of employees selected as representatives and shall update the list as necessary. An alternate representative may be designated to act in the absence of the regular representative. Employees not listed on the roster of representatives provided to the District by the OCEA may not act as representatives. 5.2 Representatives shall not perform non work-related duties on work time without the prior approval of their immediate supervisor. Neither the District nor the OCEA shall interfere with, intimidate, restrain, coerce or discriminate against employees because of the exercise or non-exercise of their rights to engage in OCEA activity. ARTICLE 6. - DISTRICT RIGHTS 6.1 District inherent rights, powers, functions, duties, responsibilities and authority related to a managerial or administrative character are reserved to the District in its exercise of management decision-making, except as specifically modified by the express provisions of this Memorandum. District rights include, but are not limited to, the exclusive right to consider the merits, necessity or organization of any service or activity provided by law, or administrative order; determine the mission of its constituent departments, commissions and boards;set standards of service, determine the procedures and standards of selection for employment and promotion; establish and implement performance standards; direct its employees; take disciplinary action for proper cause; layoff employees from duty because of lack of work or lack of funds; maintain the efficiency of District operations; determine the methods, means and personnel by which District operations are to be conducted; determine the content of job classifications; classify and reclassify positions; take all necessary actions to carry out its mission in emergencies; and exercise complete control and discretion over its organization and the technology of performing its work. 6.2 District retains all authority and rights conferred on it by law, or other legal sources, except to the extent that such authority is explicitly waived by the express terms of this agreement. District exercise of its management rights hereunder shall not be subject to appeal or meeting and conferring, however,that the exercise of such rights does not preclude OCEA from appealing or meeting and conferring the practical consequences or impacts that District decisions have on wages, hours, and other terms and conditions of employment. ARTICLE 7. - NONDISCRIMINATION IN EMPLOYMENT 7.1 There shall be no unlawful discrimination in the application of the provisions of this Agreement with regard to actual or perceived race, color, religion, national origin, ancestry, sex, gender, gender identity, gender expression, sexual orientation, age, physical or mental disability, medical condition, genetic information, marital status, or military or veteran status or any other lawfully protected class. To the extent required by law or by the District's rules or regulations, this provision of the Agreement shall be applied to all members of the unit without regard to any protected classification , status _tie. veteran, age or e t nshp ARTICLE B. - SMOKE-FREE WORK ENVIRONMENT 6.1 The District endorses and supports the right of all employees to work in a healthy and safe environment free of recognized hazards. In view of the hazards associated with smoking and the potentially harmful effect it has on the health and well being of District employees and their families, smoking and the use of tobacco (cigarettes cigars e-cigarettes I"vaoina'1 and related tobacco products and technologies) is not acceptable within District facilities, and may occur only in areas posted for smoking. ARTICLE 9. - SAFETY 9.1 It is the duty of the District to provide and maintain a safe place of employment. OCEA shall cooperate by encouraging all employees covered by this Agreement to perform their work in a safe manner. It is the duty of all employees covered by this Agreement, in the course of performing their assigned duties, to be alert to unsafe practices, equipment, and conditions, and to follow the safety regulations and requirements OCEA—Technical Services MOU July 1, 201644 to June 30, 201936 Page 2 of the District, and to report any unsafe practices or conditions to their immediate supervisors. An employee shall not be required to perform work that is unsafe. ARTICLE 10. - DISCIPLINE AND DISMISSAL 10.1 Discipline may occur when any of the following actions are taken for just cause with respect to any employee in the unit:verbal reprimand, written reprimand, suspension without pay; reduction in pay, demotion to a classification with a lower maximum rate of pay or dismissal. 10.2 Dismissal,for purposes of this Article, is the separation of a non-probationary employee initiated by the District for just cause. 10.3 A Notice of Intent is not required when the disciplinary action involves a verbal reprimand or written reprimand. 10.4 A Notice of Intent is required and will be given to an employee whenever the disciplinary action involves a suspension without pay, a reduction in pay, a demotion to a classification with a lower pay grade, or dismissal. The notice will be given to the affected employee either by delivery in person or by Certified Mail sent to the employee's last known address. Such personal delivery or mailing shall be presumed to provide actual notice to the affected employee. The Notice of Intent shall indicate the date on which it was personally delivered or deposited in the mail,which shall be the date of issuance. 10.5 The Notice of Intent shall contain the following: (1)a description of the disciplinary action intended and the effective date of the action; (2)the reasons for the proposed action;(3)a copy of the charges and materials upon which the action is based; and, (4)a statement of the employee's right to respond, either verbally or in writing to the person initially imposing the discipline or to a District management representative with authority to make an effective recommendation on the proposed action,the person to whom any response must be directed, and the fact that such response must be received within ten If 0)business days of the date of issuance of the notice. The Notice shall also advise the employee of his or her right to representation. 10.6 Prior to the effective date of the proposed disciplinary action, the employee shall be given an opportunity to respond either verbally or in writing to a management representative with authority to make an effective recommendation on the proposed action. After review of an employee's response,the District shall notify the employee in writing of the action that shall be taken. Such action may not involve discipline more severe than that described in the Notice of Intent; however, the District may reduce discipline without further notice. Further clarification of the disciplinary policies and procedures are covered in the District's Personnel Policies& Procedures Manual. 10.7 Dismissal shall be preceded by at least one(1)written reprimand, except in those situations in which the employee knows or reasonably should have known that the performance or conduct was unsatisfactory. Such performance or conduct may involve, but is not limited to, dishonesty, possession, use, sale or being under the influence of drugs or alcohol,theft or misappropriation of District property or funds,fighting on the job, insubordination,acts endangering people or property,or other serious misconduct. The District may substitute documented suspensions without pay for written reprimands. 10.8 If a Notice of Intent is upheld and the disciplinary action is imposed,the employee may request a post- disciplinary hearing. The request must be submitted to the Director of Human Resources, or designee, within ten (10) business days following the effective date of the disciplinary action (for suspensions,the effective date shall be the first business day following the final day of the suspension). The Director of Human Resources, or designee, shall schedule a post disciplinary hearing with the General Manager or a hearing officer selected by the General Manager. The hearing officer may not be an employee of the District. The hearing officer will provide a written, advisory decision to the General Manager. The General Manager may uphold the disciplinary action that has been taken or may reduce such discipline without the issuance of a further Notice of Intent. The decision of the General Manager shall be final. 10.9 Disciplinary action documentation shall be placed in an employee's personnel file in the Human Resources Department. Documentation regarding verbal and written reprimands may be removed from an employee's personnel file twenty-four(24) months subsequent to the date of issuance, provided that there has been no recurrence of a similar incident during the period. If the Director of Human Resources, or OCEA—Technical Services MOU July 1, 201644 to June 30, 201946 Page 3 designee, agrees to remove disciplinary action documentation from an employee's personnel file, such documentation shall be retained in a separate file by the Human Resources Department for the purpose of showing that progressive discipline has been followed or in support of the District's proposed discipline. 10.10 Verbal reprimands and written reprimands may only be reviewed under this Agreement through the Problem Solving Procedure. Nothing in this article shall be construed as a waiver of any statutory or constitutional rights. 10.11 A reduction in pay or demotion to a classification with a lower pay grade that is not a result of performance deficiencies (for example, reclassifications, "bumping' associated with layoffs, reasonable accommodation)shall not be considered discipline. ARTICLE 11. - GRIEVANCE PROCEDURE 11.1 A grievance is any complaint that management has violated a specific provision of this Agreement, except that, in accordance with Article 10 above, discipline which requires a Notice of Intent may not be reviewed under this Grievance Procedure. 11.2 A grievance may be brought to the attention of the District by an individual employee within the Unit or by the OCEA. The District may not bring a grievance through this procedure. Grievances brought by two(2) or more employees,and concerning the same incident, issue,or course of conduct, or multiple grievances brought by the same employee may, upon mutual agreement of the District and the OCEA, be consolidated for the purposes of this procedure. 11.3 Employees are encouraged prior to bringing forward a formal grievance, to discuss the issue with the Director of Human Resources,or designee, in an effort to bring about an informal resolution. 11.4 An employee may be self-represented or be represented by the OCEA at all steps of the Grievance Procedure, unless specifically agreed otherwise by the OCEA and the employee. The District shall provide a copy of all written grievance settlements to the OCEA. Any reference to days in this article implies business days. 11.34.1 Step 1. An employee will submit his/her complaint in writing to his/her immediate supervisor or designee within ten 10 five-(5)days of the occurrence of the event giving rise to the complaint, or within ten 10 Nve4&)days from the time that the employee became aware of such event. The supervisor, or designee, shall attempt to resolve the issues surrounding the complaint, and respond in writing to the employee within ten Ll0 five{5)days. 11.34.2 Step 2. If the grievance is not settled at Step 1, it maybe submitted in writing to the employee's Division Manager, or designee.This request for formal review must be presented on a form provided by the District within ten 10 days of the conclusion of Step 1. A copy of each written communication on a grievance will be filed with the Director of Human Resources,or designee.The written grievance must: a) Identify the specific management act to be reviewed; b) Specify how the employee was adversely affected; c) List the specific provisions of the MOU that were allegedly violated and state how they were violated; d) Specify the remedy requested; and e) Provide the date of attempts at informal resolution and the name of the supervisor or individual involved. 11.34.2.1 The Division Manager, or designee, shall respond in writing to the employee within ten (10)days after the date the grievance is received. OCEA—Technical Services MOU July 1, 201644 to June 30, 201946 Page 4 11.34.3 Step 3. If a grievance is not settled under Step 1 or 2, it maybe presented to the employee's Department Director, or designee, for review and written response. The request for formal review must be presented on a form provided by the District within five (5)days of the conclusion of Step 1 or 2, and must contain the information specified in Step 2 above. A copy of each written communication on a grievance will be filed with the Director of Human Resources, or designee. The employee's Department Director,or designee, shall respond in writing to the employee within ten (10)days after the date the grievance is received. 11.34.4 SIeD 4. If the grievance cannot be resolved under Step 3, it maybe presented to an Assistant General Manager, or designee, within five(5)days from the dale the Step 3 finding was issued. The Assistant General Manager, or designee, shall respond in writing to the employee within ten (10)days after the date the grievance is received. 11.34.5 Step 5. Appeal to the General Manager,or designee, is the final step in the Grievance Procedure. If the grievance cannot be resolved under Step 4, it may be presented to the General Manager,or designee,within five(5)days from the date the Step 4 finding was issued.The General Manager, or designee, shall respond in writing to the employee within ten (10)days after the date of the grievance is received. 11.45 General Provisions: An employee shall be given reasonable time off without loss of pay to present and process a grievance. If an employee is represented by the OCEA,the OCEA may designate one employee to present and process the grievance. The employee representative shall be given reasonable time off without loss of pay to perform this responsibility. Absence from work shall be approved only if it does not cause disruption to District operations. However, if the time requested cannot be provided, an alternate time shall be arranged. 11.45.1 Failure of a management representative to respond within the appropriate time limit shall provide a basis for the employee appealing to the next step. If a grievance is not presented or appealed within the time limits, it shall be considered resolved on the basis of the preceding response.The Director of Human Resources,or designee, may be petitioned in writing to waive the step or time requirements provided sufficient cause exists. 11.45.2 Resolution maybe agreed upon at any stage of the grievance process. However,the OCEA shall be notified prior to the resolution of any formal grievance matter. ARTICLE 12. - PROBLEM SOLVING PROCEDURE 12.1 Employees may bring problems to the attention of District managers through the Problem Solving Procedure. This Procedure was developed to encourage and facilitate the resolution of employee concerns in a responsive and fair manner, and may be used to attempt to resolve issues that may not be subjected to the Grievance Procedure.Any reference to days in this article implies business days. 12.2 Employees should discuss concerns regarding issues that are not grievable with their supervisor as soon as possible. The supervisor shall review the situation or decision, and provide a written response within five days from the date they were notified of the problem. 12.3 If the problem is not resolved to the employee's satisfaction,the employee may file a written statement concerning the problem with the Director of Human Resources, or designee, within ten (10)days of receipt of the supervisor's decision. Upon request of either party, a meeting shall be held to define issues and establish the remedies sought. The employee shall be provided a written response within ten (10)days after his or her statement is received. Time limits may be extended for cause upon mutual consent of the parties, and the decision of the Director of Human Resources, or designee, is final. ARTICLE 13. - SALARY ADJUSTMENTS AND COMPENSATION 13.1 Each pay grade is divided into five (5)steps,with an approximate 5.0%difference between each step. 13.2 Pay increases will only apply to eligible employees in an active payroll status on the effective date of implementation. Eligible employees will not receive retroactivity if active payroll status becomes effective after the date of implementation. OCEA—Technical Services MOU July 1, 201644 to June 30, 201946 Page 5 13.3 Merit Pay 13.3.1 Step Increase Pa v—Bargaining unit employees will be eligible for Step Increase Pay based upon receipt of year-end performance appraisal ratings issued by the assigned supervisor. Step Increase Pay will be paid according to the following: 13.3.1.1 Eligible-Employees must have a proficient year-end performance appraisal to receive a one(1)step base-building salary increase until earning placement at step five (5). 13.3.1.2 Ineligible- Employees who are placed on a Performance Improvement Plan (PIP)due to a needs improvement performance review on the year-end appraisal or who are on a PIP at the time of the year-end appraisal period will remain at their current step until the PIP is satisfactorily completed. 13.3.1.3 Performance Management Program: The performance management program includes three(3)rating categories (exceeds, proficient, needs improvement)for performance appraisals. 13.3.2 Development Pav—Employees under this Agreement will be eligible for Development Pay. Development Pay is a non-base building pay type that will be distributed in a lump-sum amount each pay period. Employees must have a proficient year-end performance appraisal to be eligible for the following Development Pay types: • Education—Eligible employees who obtain or who have obtained a degree of approved subjects at an accredited college or university will receive$20.76 per pay period for an associate degree and $41.53 per pay period for an undergraduate degree. The maximum amount of Education pay is fixed at$41.53 per pay period. • Certification/License—Eligible employees who obtain or who have obtained a District approved certification or license will receive$7.62 per pay period per certificate or license with a maximum of three(3)certificates and/or licenses. The maximum amount of certification/license pay for any combination of certificates and/or licenses is fixed at$22.86 per pay period. 13.3.2.1 The overall maximum Development Pay for education, certification and/or licenses is fixed at$64.39 per pay period. 13.3.2.2 Employees who are placed on a PIP due to a needs improvement performance review on the year-end performance appraisal are not eligible for Development Pay until the PIP is satisfactorily completed. 13.3.2.3 Employees who are placed on a PIP due to needs improvement performance outside the year-end appraisal will have all Development Pay suspended until the PIP is satisfactorily completed. The return of Development Pay will not be retroactive. 13.4 Salary Range Adjustments 13.4.1 Effective the first pay period in July 201644, employees under this Agreement will receive salary range adjustments at a flat rate of 2_52:0%. 13.4.2 Effective the first pay period in July 2017445, employees under this Agreement will receive salary range adjustments at a flat rate of 2_52.0%. 13.4.3 Effective the first pay period in July 2018, employees under this Agreement will receive salary range adjustments at a flat rate of 2.5%. OCEA—Technical Services MOU July 1, 201644 to June 30, 201946 Page 6 ARTICLE 14. - SEVERANCE PAY 14.1 Employees are expected to give a minimum of two(2)weeks written notification when terminating employment with the District. Except for disciplinary cause,when a full-time employee is terminated by action of the District,the employee shall be notified in writing two (2)weeks prior to the effective separation date. In the event the District does not give such notification,the employee shall be entitled to severance pay in accordance with the formula set forth below: 14.1.1 Full-time, regular employees shall be entitled to eight(8) hours pay for each full calendar month of continuous employment not to exceed one hundred sixty(160)hours pay. 14.1.2 Employees in limited term or part-time positions, probationary employees and employees who are separated for cause, are not eligible for severance pay under any circumstances. ARTICLE 15. - DEFERRED COMPENSATION 15.1 Employees may participate in the District's approved deferred compensation plan subject to IRS requirements, and in accordance with all guidelines for voluntary participation established by District management. ARTICLE 16. - HOLIDAYS 16.1 The days listed below are observed by the District as holidays. Employees will receive holiday pay if their entire scheduled work shift immediately preceding and following the holiday are in a paid payroll status, meaning the employee worked those shifts or utilized paid time off in lieu of working those shifts.When an employee's work schedule requires that they work on an observed holiday, the employee will be paid at the employee's regular rate of pay for the holiday, and will also receive overtime pay at the rate of one and one half(1.5)times their regular hourly rate for all hours actually worked. Employees may also elect to receive Holiday Compensatory Time Off on an hour for hour basis rather than receive holiday pay.When a holiday occurs on an employee's regular scheduled day off,the employee will accrue compensatory time off for the amount of hours normally scheduled for that day Employees with a compensatory time off balance in excess of fifty(50) hours as of the last pay period ending in October will receive a mandatory payout for the hours that exceed fifty(50). HOLIDAY New Year's Day Lincoln's Birthday President's Day Memorial Day Independence Day Labor Day Veteran's Day Thanksgiving Day Day after Thanksgiving Day before Christmas Christmas Day Floating Holiday' 16.2 Employees may elect one(1)day during each year as a "Floating Holiday'. New employees shall be granted a"Floating Holiday"on a pro rate basis in the first calendar year of service per the following table: OCEA—Technical Services MOU July 1, 201644 to June 30, 201946 Page 7 Hire Date Percent 1 r Quarter(January-March) 100% 2^0 Quarter(April-June) 75% 3r0 Quarter(July-September) 50% 41h Quarter(October-December) 0 16.3 Employees must use the"Floating Holiday"within the year it is granted. Every effort will be made to approve an employee's request for a"Floating Holiday"off providing sufficient notice is given. ARTICLE 17. — HOURS OF WORK 17.1 For record keeping and accounting purposes,the"workweek"for full-time employees is 40 hours per 168- hour period, to be paid on a biweekly payroll basis of 80 hours worked. Employee work periods may be scheduled in shifts of four 9-hour days and one 4-hour day each workweek(9/80 schedule), five 8-hour days each workweek(10/80), four 10-hour days each workweek(8/80), or three 12-hour days and one 4- hour day each workweek(7180). The starting and ending times of individual employees'workweeks may vary. 17.2 Employees shall receive ten-minute rest periods twice in a nine-hour shift, and three times for a shift of more than ten hours. Meal and rest periods may not be avoided or accrued for the purpose of obtaining time off or shortening the regular shift. If an employee reports to work as scheduled and was not notified that their hours had been changed, he or she shall receive two hours pay at the overtime rate. 17.3 The District may, at its sole discretion, change an employee's work schedule with thirty(30)days written notice to the affected employee. ARTICLE 18. - CALL-BACK PAY 18.1 When an employee is called back to work by District management without prior notice,and the employee has completed his or her normal work shift and left the work station, or when prior notice is given but the work begins on the same day at least three hours after completion of the regular shift,the employee shall receive a minimum of three hours of call back pay. The three hours minimum,whether or not actually worked,shall be paid at the rate of one and one half times the regular hourly rate. Employees who are called back a second time within a normal shift period are considered to be working for the duration of that shift. ARTICLE 19. - STANDBY PAY 19.1 Standby is time during which an employee is not required to be at the work location or at the employee's residence but is required to be available for immediate return to work. Standby assignments shall first be made on a voluntary basis. A volunteer standby list shall be established by classification and job location. Standby assignments shall be made from the list of employees who are competent and experienced, in alphabetical order,on a rotating basis. In the event that no one volunteers,the District shall assign standby byjob classification and work location from employees who are competent and experienced on a rotational basis.An employee placed on standby shall be compensated at the rate of three hundred forty- five(345)dollars per week,and shall receive Call Back pay when they are actually called to work. ARTICLE 20. — INSURANCE 20.1 The District will provide healthcare and welfare insurance benefits. 20.2 All insurance coverage shall become effective on the first day of the month following date of hire, regardless of hire date. An open enrollment period shall be held annually. OCEA—Technical Services MOU July 1, 201644 to June 30, 201946 Page 8 follow ng rat f Gat on to d sn -qq the trnng non frnm Anthem to Blue Sh eld through CAI fern A StAte Aggon at on of Cn--nt Ps Excess insuranGe Author ty(GSAC FIA), or to another Garr er d reedy, and var ad plan des gn changes n order to m t gate exc se taxat on n 418 Potent al strateg as fe Gans derat an nG!ude, but are not 1 m ted to, the follow ng: plan des gn changes to Off Ge and spec al st Gapays, emergency room repays, plan deduct bles and Gontr but on Fates; and alteFnat ve plan offer ngs Such as a h gh deduct ble health plan w th health sav ngs account fund ng. 3.2 The part as agree that any reopener shall be subject to Government Code Rest on 3505 4 and . case law, nGlud'nn PERB des de'onn .h'nh 'ntn t that prov :on. 20.43 Medical Insurance 20.43.1 The District will provide medical health insurance coverage through a Health Maintenance Organization (HMO)medical insurance plan and a Preferred Provider Organization (PPO) medical insurance plan, SeGiea-204. 20.43.2 Reaular.full-time employees: 20.43.2.1 The District shall contribute 90%of employee only premiums for the HMO medical health plan and 80%of employee only premiums for the PPO medical health plan. The District will contribute 80%of the employee+1 dependent and full family premiums for the HMO and PPO medical plans.Any change in insurance rates shall be shared equally in same ratio as the District and employees currently pay premiums. Before the renewal of any District's sponsored health insurance plan, the parties agree to meet and confer as to changes in the plan. 20.3.3 The District may reopen negotiations at anytime during the term of the MOU to address the impact of the Affordable Care Act(ACA), provided that no change may be made by the District unless such chance is either(1)mandated by the ACA, or(2) mutually agreed upon by the Parties. 20.54 Life Insurance The District shall pay the full premium for$50,000 tens life insurance on each employee. 20.55 Short Term Disability The District shall provide a non-work related, short-term disability indemnity plan that provides benefits for employees equal to California's State Disability Insurance(SDI)program for up to twenty-six(26)weeks following a fourteen (14)calendar day waiting period. 20.76 Lora Term Disability 20.76.1 The District shall provide a non-work related, long-term disability indemnity plan that pays two- thirds of the employee's rate of pay in effect at the time of such disability, not to exceed $5,000 per month, up to age 65, following a 90-day waiting period of continuous disability,at such time that an employee completes five (5)years of service. 20.76.2 For participants age 64 and younger, the maximum period of payment is based on the Social Security Act retirement age of 65. For participants age 65 and older, the maximum period of payment is specified. The specified periods and additional information about coverage is included in the District's long-term disability plan contract accession on the intranet. 20.76.3 No combination of disability or sick leave pay shall result in more than an employee's regular rate of pay. Employees may not receive short-term and long-term disability benefits at the same time.An employee who is otherwise not eligible for District paid Long Term Disability may purchase such coverage at his or her own expense. OCEA—Technical Services MOU July 1, 201644 to June 30, 201946 Page 9 20.87 Dental Insurance The District will contribute 80%of employee only and 80%of full family premiums for dental insurance. 20.98 Vision Insurance The District shall provide a vision insurance plan for regular,full-time employees and eligible dependents. 20.499 Retiring Employees 20.409.1 The District shall pay,for employees hired prior to July 1, 1988, two and one-half(2.5)months' premium for each year of continuous service of a retiring employee towards the premium costs of coverage for the employee and eligible dependents under the District's medical plan. 20.409.2 In the event the District adds additional optional insurance plans, the District's share of the premium shall be the same as for existing plans as set forth above. In the event the District changes underwriters for existing insurance plans, the District's share of the premium shall be the same as for existing insurance plans as set forth above. 20.499.3 The District will continue to implement the retiree medical health premium offset program wherein the cost of health premiums are offset by$10 per month for every year of continuous service up to a maximum of 25 years or$250 per month. Employees hired on or after August 1, 2011 shall not be eligible for the retiree medical health premium offset. ARTICLE 21. - REIMBURSEMENT ACCOUNT 21.1 Section 125 of the Internal Revenue Code permits employees to use pre-tax dollars to pay for their portion of the cost of benefits under the Plan through salary redirection arrangements. The options available under the flexible benefits program are listed below. This is a brief overview of the different options. For complete information regarding Flexible Spending Accounts, employees must refer to the plan booklet available in the Human Resources Department. 21.2 Group Insurance Premiums Group insurance premiums that are paid by salary redirection can be made on a pre-tax basis. 21.3 Medical Care Reimbursement Account The purpose of this account is to provide a method through which the employee can accumulate pre-tax funds in a Medical Care Reimbursement Account for purposes of reimbursing himself or herself for payment of health care costs not otherwise covered by his or her medical insurance. 21.4 Dependent Care Assistance Account The purpose of this account is to provide a method through which the employee can accumulate pre-tax funds in a Dependent Care Assistance Account for purposes of reimbursing himself or herself for childcare expenses or day care for a disabled dependent. ARTICLE 22. - OVERTIME 22.1 Employees shall be notified as soon as practicable after the District decides upon the need for overtime or additional work. The District may require the performance of overtime. In the event no qualified employee wishes to work overtime, District's management may select employees with the ability to perform the work by inverse seniority. District managers shall attempt to evenly distribute overtime among employees based upon an employee's ability to perform the overtime work. 22.2 For the purposes of overtime calculation, all time charged to unscheduled sick leave shall not be counted as time worked. Pay for overtime time shall not occur until after actual work time of forty(40)hours in a seven (7)day workweek is reached. OCEA—Technical Services MOU July 1, 201644 to June 30, 201936 Page 10 ARTICLE 23. - PROBATIONARY PERIOD 23.1 All new employees serve an initial probationary period beginning with the date of hire and extending to at least the first day of the pay period following six monthst�•emy�eks of employment without a break in service. Extended absence without pay, short-term and long-term disability and Workers' Compensation leave does not provide an opportunity to judge an employees'capability to meet performance expectations for a position, and thus the time spent on such leaves shall not be included towards completion of the probationary period and may result in an extension. 23.2 Employees who are rehired following a break in service must complete a new probationary period whether or not one was previously completed. An employee may be released during his or her Probationary Period at the discretion of the District without recourse to the Grievance Procedure. 23.3 Employees who are reassigned or laterally transferred will serve a probationary period of six monthsf•ent•s "° .s. The"probationary period"shall not divest an employee of his/her property rights in his/her former position. Rejection of probation during this period shall result in the employee reverting to his/her former assignment and/or position. ARTICLE 24. - PROMOTIONS 24.1 A promotion is the appointment of an employee to another classification with a higher maximum rate of pay.The District will determine whether a vacant position shall be filled as an open or promotional opportunity or recruitment.Whenever the District intends to fill a position by promotion,the District shall post the opportunity for a minimum often(10)business days. Employees must apply during the period of posting. Notices shall be posted on the District's intranet. 24.2 A promoted employee shall serve a promotional probationary period lasting at least until the first day of the pay period six monthsf•^�eks after the effective date of the promotion. At any time during the promotional probationary period, an employee may be returned to his or her previous position. The promotional probation period may be extended by mutual agreement between the employee and District's management for up to ninety(90)days. If an employee is promoted during his or her initial probationary period,the period shall be extended until at least the first day of the pay period six months 6) weeks after the effective date of the promotion. 24.3 Promoted employees will receive the equivalent of a step increase in pay, not to exceed the top of the range for the new classification or the minimum rate of the new classification whichever is greater. ARTICLE 25. - RETIREMENT 25.1 The District shall continue participation in the Orange County Employees Retirement System (OCERS), wherein all full-time employees are considered members. The following retirement program is in effect pursuant to the contract between OCERS and the District. 25.1.1 Employees hired before September 21, 1979: The District will continue to contract with OCERS to provide the 2.5% @ 55 benefit formula(Plan G) based on the highest consecutive twelve(12) months average earnings, past and future service. 25.1.1.1 The District will continue to pay 4.5% toward the employee's contribution to OCERS for those employees who elected to make a one-time decision to remain in the Plan G program. 25.1.2 Employees hired on or after September 21, 1979 and before August 1, 2011:The District will continue to contract with OCERS to provide the 2.5%@ 55 benefit formula(Plan H)based on the highest consecutive thirty-six(36) months average earnings, past and future service. 25.1.2.1 The District will continue to pay 3.5% of an eligible employee's base salary toward the employee's contributions to OCERS. OCEA—Technical Services MOU July 1, 201644 to June 30, 201946 Page 11 25.1.3 Employees hired on or after August 1, 2011 and before January 1,2013: The District will contract with OCERS to provide the 1.667% @ 57.5 benefit formula(Plan B)based on the highest consecutive thirty-six(36) months average earnings, past and future service. 25.1.3.1 The District will pay 0% of an eligible employee's base salary towards the employee's contribution to OCERS. 25.1.4 Employees hired on or after January 1, 2013: The District will contract with OCERS to provide the 2.5% @ 67 benefit formula (Plan U- PEPRA) based on the highest consecutive thirty-six(36) months average earnings, past and future service. 25.1.4.1 The District will pay 0% of an eligible employee's base salary towards the employee's contribution to OCERS. 25.2 All monies actually contributed into the retirement system by an employee shall be deducted from gross salary for taxation purposes in accordance with Internal Revenue Code provisions. ARTICLE 26. - SHIFT DIFFERENTIAL 26.1 Employees who are regularly assigned to work a night shift that consists of 50%or more of their hours between 6:00 p.m. and 6:00 a.m. and who actually work that shift shall receive a shift differential of$2.50 per hour. ARTICLE 27. - LEAVE-OF-ABSENCE WITH PAY 27.1 Vacation Leave 27.1.1 Except as otherwise provided, regular full-time employees accrue vacation leave, beginning with the first day of employment, in accordance with the following schedule: Years of Service Hours-Biweekly Hours-Annual In years 0 through 1 3.08 80 In years 2 through 4 3.08 80 In years 5 through 10 4.62 120 In year 11 4.93 128 In year 12 5.24 136 In year 13 5.54 144 In year 14 5.85 152 In year 15 6.16 160 In year 16 6.46 168 In year 17 6.77 176 In year 18 7.08 184 In year 19 7.39 192 In year 20 and over 7.69 200 27.1.2 Part-time employees accrue vacation leave on a pro-rata basis as set forth in District Policy. 27.1.3 Vacation leave begins after an employee has completed twenty-six (26)weeks of continuous service. After the individual's first twenty-six(26)weeks of service, his or her account will be credited with 40 hours.After that time, he or she will accrue vacation hours consistent with the above chart.Vacation leave may only be utilized in increments of one-half hour or more. Vacation leave is accrued for all paid hours, including hours actually worked and hours in a paid-leave payroll status. OCEA—Technical Services MOU July 1, 201644 to June 30, 201946 Page 12 27.1.4 When unpaid absences occur,vacation leave accruals will be applied by straight proration of leave accruals based on the number of hours actually worked, and is applicable to all types of leave, whether legally protected or not. 27.1.5 Employees may have a maximum accumulation of 200 hours as of the last day of the final pay period in December of each year. In the event an employee accrues vacation leave in excess of 200 hours, it must be used prior to said December date, all other remaining hours in excess of 200 will be paid to the employee in the first pay period in January at the employee's then current hourly rate of compensation. 27.2 Sick Leave 27.2.1 Definition:Sick leave is an insurance or protection provided by the District to be granted to employees in circumstances of adversity to promote the health and welfare of the individual employee. It is not an earned right to take time off from work. Sick leave is defined as the absence from duty of an employee because of a bona fide illness, injury, or pregnancy, or to attend to the illness or injury of a family member as hereinafter defined or,for an employee who is a victim of domestic violence, sexual assault, or stalking for the purposes described in Labor Code sections 230(c)and 230.1(a). Temporary employees shall receiveaRe not ant tiedto sick leave benefits as required by State law. 27.2.2 Method-Sick Leave Accrual. Full-time employees hired prior to November 27, 1981, accrue paid sick leave at the rate of three point five(3.5) hours for each biweekly pay period of continuous service (ninety-one (91) hours per year). Full-time employees hired on or after November 27, 1981,accrue paid sick leave at the rate of three(3.0)hours for each biweekly pay period of continuous service (seventy-eight(78) hours per year), beginning with the first day of employment. 27.2.3 Part-time employees accrue sick leave on a pro-rata basis as set forth in applicable District Policy. 27.2.4 When unpaid absences occur,sick leave accruals will be applied by straight proration for leave accruals based on the number of hours actually worked, and is applicable to all types of leave, whether legally protected or not. 27.2.5 Annual Pavoff- Employees may elect annually to be paid for any unused sick leave hours accrued through the end of October at their current hourly rate according to the following payoff schedule or as specified in a Memoranda of Understanding. Accrued Sick Leave Hours Rate of Payoff 0-100 0% 101-240 25% 241-560 35% Over 560(mandatory) 50% 27.2.6 Employees who terminate for any reason other than retirement or death shall be compensated for any accrued and unused sick leave according to the above schedule. Employees who retire or decease with twenty(20)years or more of service shall be paid at the one hundred percent (100%) rate for all accrued and unused sick leave. Employees who retire or decease with less than twenty(20)years of service will be paid at the seventy-five percent(75%)rate for all accrued and unused sick leave. 27.2.7 Permissible Uses-Sick leave maybe applied only to: A. Absence due to illness, injury or pregnancy of an employee. B. Absence due to medical and dental office appointments of an employee when approved by the employee's supervisor. OCEA—Technical Services MOU July 1, 201644 to June 30, 201946 Page 13 C. Absence for the care of the employee's father, father-in-law, mother, mother-in-law, brother, sister, husband,wife, domestic partner, child, child of domestic partner, grandparent, grandchild, legal guardian, or any family member with whom the employee resides. D_Absence due to a job-related injury. IXE. Absence related to an employee who is a victim of domestic violence, sexual assault, or stalking,for the purposes described in Labor Code sections 230(c)and 230.1(a). 27.2.8 General Provisions-To qualify for sick leave pay, the employee must notify the District at or in advance of the time the employee is scheduled to report for duty. Minimum charge to the employee's sick leave account shall be one-half hour and thereafter in one-half hour increments. Human Resources and department management shall be responsible for control of abuse of the sick leave privilege. If notified in advance, the employee may be required, at any time, to furnish a certificate issued by a licensed physician or nurse, or other satisfactory evidence of illness; however,for absences of ten consecutive working days or more, a request for leave and a medical statement, on prescribed forms, stating expected date of return must be submitted to Human Resources. Upon return to work, a written doctors release must be submitted to Human Resources. For absences of one or more working days in an unpaid status,a request for leave and a medical statement, on prescribed forms, stating expected date of return must be submitted to Human Resources. If the need for leave is due to the employee's serious health condition,as defined in the Family and Medical Leave Act("FMLA")or the California Family Rights Act("CFRA"),the certification requirement shall comply with the provisions of these Acts. 27.3 Jury Duty Leave 27.3.1 Any full-time, including probationary, employee who is called for jury duty shall, upon request on prescribed forms, be entitled to his or her regular pay for those hours of absence due to performance of the jury duty for a period up to twenty-two(22)working days. 27.3.2 Prior to jury duty service, each employee must complete a time off request through the District's timesheet system and provide a copy of the summons to his or her supervisor.To be entitled to receive regular pay for such jury leave, the employee must report for work at the District for time not actually retained on jury unless there is less than 1/2 of their regular shift remaining. Employees are not compensated forjury duty occurring on scheduled days off. 27.4 Witness Leave 27.4.1 Any full-time, including probationary, employee,who is required to be absent from work by a subpoena properly issued by a court, agency or commission legally empowered to subpoena witnesses,which subpoena compels his or her presence as a witness, except in a matter wherein he or she is named as a defendant or plaintiff or as an expert witness, shall, upon approval of an online time off request, be entitled the time necessary to comply with such subpoena, provided any fees received for such service, exclusive of mileage, are submitted to the District for deposit in the General Fund of the District. 27.4.2 An employee so subpoenaed must submit a copy of the subpoena to his or her supervisor and complete an online time off request form in order to be eligible for pay for such absence. To be entitled to receive regular pay for such witness leave, the employee must report for work at the District for time not actually retained on witness service of one hour or more prior to and/or upon completion of each day's service, exclusive of travel time. 27.5 Military Leave 27.5.1 A request for military leave shall be made upon leave-of-absence forms approved by the Human Resources Department and shall state the date when it is desired to begin the leave-of-absence OCEA—Technical Services MOU July 1, 201644 to June 30, 201936 Page 14 and the date of anticipated return. A copy of the orders requiring such military service shall be submitted with the request. 27.5.2 Provisions of the Military and Veterans Code of the State of California, Sections 395-395.5 shall govern military leave. In general, current law provides that an employee having one(1)year or more service with a public entity is entitled to military leave with pay not exceeding thirty(30)days per year if the employee is engaged in military duty ordered for purposes of active military training or encampment. An employee who is required to attend scheduled service drill periods or perform other inactive duty reserve obligations is entitled to military leave without pay, not exceeding seventeen (17)calendar days per year, although the employee may, at his or her option, elect to use accrued leave time to attend the scheduled reserve drill periods or to perform other inactive drill period obligations. Employees who participate in weekend military drill duty are not eligible for leave with pay for such activity, but may have their regular work schedule changed to accommodate the required time off. 27.6 Bereavement Leave 27.6.1 Using the online time off request system, any full-time employee,whether probationary or regular, shall receive a maximum of thirty-six(36)hours of paid time for the death or funeral of an immediate family member. Immediate family member is defined as the employee's father, step- father, father-in-law, mother, step-mother, mother-in-law, brother, step-brother, sister,step-sister, husband,wife,domestic partner, biological child, adopted child, step-child, child of a domestic partner, grandchild, grandparent,foster parent,foster child, legal guardian, or any family member with whom the employee resides. 27.7 Supplemental Leave 27.7.1 Regular full-time employees in the bargaining unit shall be granted Supplemental Leave in accordance with the following schedule in the first pay period in July: Years of Service 5-9 10- 14 15- 19 20-24 25, Supplemental Leave Hours 5 10 15 20 25 27.7.3 Supplemental Leave will be administered in accordance with the following guidelines: 27.7.3.1 Supplemental Leave may be used in one-quarter(0.25)hour increments. 27.7.3.2 Any unused Supplemental Leave, within the fiscal year granted,will not be carried over to the next fiscal year. 27.7.3.4 Any unused Supplemental Leave, within the fiscal year granted, is not subject to cash out or eligible for any mandatory payout. 27.7.3.5 Employees who cease to be part of the bargaining unit for any reason will forfeit any unused Supplemental Leave. 27.7.3.6 Employees who are hired or transferred into the bargaining unit shall be granted Supplemental Leave on a pro-rata basis per the following schedule: HireRransfer Date Percent July—September 100% October—December 75% January—March 50% April—June 25% OCEA—Technical Services MOU July 1, 201644 to June 30, 201946 Page 15 ARTICLE 28. - LEAVE-OF-ABSENCE WITHOUT PAY 28.1 It is the policy of the District to grant employees leave-of-absences without pay under certain circumstances and in accordance with state and federal benefit entitlement laws. Except as stated below, employees shall not receive compensation during an unpaid leave-of-absence. Employees will not be granted an unpaid leave of absence prior to exhausting all paid leave accrual balances, excluding employees protected by PDL(Pregnancy Disability Leave)/FMLA(Family and Medical Leave Act)1CFRA (California Family Rights Act)for their own serious health condition. 28.2 Using the prescribed forms, approved by District management, any full-time, including probationary, or part-time employees with at least fifty-two (52)weeks of service and at least twelve hundred fifty(1,250) hours of service, may be granted an FMLA or CFRA leave-of-absence without pay, not to exceed twelve (12)weeks in a rolling twelve(12)month calendar period. A"rolling"twelve(12)month period is measured backward from the date the employee uses the leave.A request for leave of absence without pay must be made upon prescribed forms in all instances where an employee is absent without pay for more than five (5)consecutive working days, or for absences of ten (10)working days or more when using paid sick leave accruals. 28.3 Substitution of Paid Leave 28.3.1 Employees who request FMLA or CFRA Leave for qualifying purposes other than the employee's own serious health condition shall be required to use all accruals, before unpaid leave is granted. Paid time off will not accrue during any pay period that an employee is absent without pay for more than one (1)day. 28.3.2 Paid time off accruals may be used for the care of the employee's father, step-father,father-in-law, mother, step-mother, mother-in-law, brother, step-brother, sister, step-sister, husband, wife, domestic partner, biological child, adopted child, step-child, foster child, legal ward, child of a domestic partner, grandchild, grandparent,foster parent, legal guardian, or any family member with whom the employee resides. 28.4 Permissible Uses 28.4.1 FMLA Leave. FMLA leave maybe used for: 28.4.1.1 The birth of a child or to care for a newborn of an employee; 28.4.1.2 The placement of a child with an employee in connection with the adoption or foster care of a child; 28.4.1.3 The care for the employee's father, step-father,father-in-law, mother, step-mother, mother-in-law, brother, step-brother, sister, step-sister, husband, wife, biological child, adopted child,step-child, foster child, legal ward, child of a domestic partner, grandchild, grandparent, legal guardian,or any family member with whom the employee resides who has a serious health condition, as defined in the Act; 28.4.1.4 The employee's own serious health condition that renders the employee unable to perform the essential functions of his or her position, including incapacity due to pregnancy; 28.4.1.5 A qualifying exigency arising out of the fact that an employee's family member is on covered active duty or called to covered active duty status in the Armed Forces.A qualifying exigency may include activities such as making arrangements for childcare, attending counseling relating to the active duty of the service member, or attending to farewell or arrival arrangements for the service member. 28.4.1.6 The care for the employee's family member or"next of kin"service member of the United States Armed Forces who has a serious injury or illness incurred in the line OCEA—Technical Services MOU July 1, 201644 to June 30, 201946 Page 16 of duty while on active military duty. This leave may consist of up to twenty-six (26) weeks of unpaid leave during a single twelve(12)month period. 28.4.2 CFRA Leave. CFRA Leave may be used for: 28.4.2.1 The same purposes as FMLA Leave, including the care of a domestic partner or child of a domestic partner, and shall run concurrently with FMLA leave. 28.4.2.2 CFRA may not be used for 1)an employee's incapacity due to pregnancy,. 2)leave due to a qualifying exigency, or 3)to care for a family member or next of kin with a serious injury or illness incurred in the line of duty. However, incapacity due to pregnancy may entitle an employee to up to four(4)months of pregnancy disability leave under California's Pregnancy Disability Leave(PDL) law. 28.4.3 General Provisions: Reauests for FMLA and CFRA Leave Where the need for Leave is foreseeable,the District requests thirty(30)days advance notice. 28.4.4 Medical Certification As a condition of FMLA or CFRA Leave because of a serious health condition,the District may require certification by the employee's attending physician in accordance with Department of Labor(DOL) regulations. 28.4.5 Medical and Dental Premiums During FMLA and CFRA Leave,the District shall pay for medical and dental benefits at the same level as coverage would have been provided if the employee was not on leave. The employee shall be required to pay his or her share of medical and dental premiums. Failure to submit a monthly co-payment, in full, within sixty(60)days of the invoice date will result in loss of group coverage. Coverage will be reinstated upon return to active employment. 28.4.6 Reinstatement Upon expiration of FMLA or CFRA Leave, the employee shall be reinstated to the same or a comparable position, unless the employee would not otherwise have been entitled to that position for reasons unrelated to such leave(e.g., layoff), in which case the District's obligation to continue health and dental or other benefits shall cease. 28.4.7 District Employment of Spouses/Domestic Partners 28.4.7.1 FMLA Leave. Married employees shall be limited to a combined total of twelve(12) weeks FMLA or CFRA Leave in a rolling twelve(12)month calendar period for the care of a parent or newly born or placed child. 28.4.7.2 CFRA Leave. Married employees and employees in domestic partnerships will be limited to a combined total of twelve (12)weeks CFRA leave in a rolling twelve(12) month calendar period for the care of a parent or newly born or placed child. 28.5 General Leave 28.5.1 Employees who have exhausted all paid time off accruals may request to be granted a general leave-of-absence by District management to attend to personal matters or for FMLA or CFRA qualifying events after the expirations of previously authorized leave. 28.5.2 During a general leave-of-absence,the employee will be required to pay both the District's and the employee's share of medical and dental premiums. 28.5.3 Failure to submit a monthly co-payment, in full,within sixty(60)days of the invoice date will result in loss of group coverage. Coverage will be reinstated upon return to active employment. 28.6 Return to Work Policy 28.6.1 An employee who has been absent from work due to a medical reason may be subject to a Return-to-Work medical evaluation. OCEA—Technical Services MOU July 1, 201644 to June 30, 201946 Page 17 28.6.2 If it is determined that the job demands of the position last held by the employee are not compatible with the employee's restrictions(with reasonable accommodation if the employee is disabled within the meaning of the ADA/FEHA)and the employee is willing to return to work, placement in an alternative position, if available,shall be considered. The employee shall be re- classified as medically disqualified while alternative positions are being considered. Such time off shall be without pay; however, the employee may elect to use accrued leave hours, such as vacation, sick or personal, to receive compensation. Placement of an employee in an alternative position requires a pre-placement medical evaluation for the alternative job. 28.6.3 If it is determined that the job demands of the position last held by the employee are not compatible with the employee's restrictions(and cannot be reasonably accommodated if the employee is disabled within the meaning of ADA/FEHA)and there is not an alternative position, or the employee's restrictions are not compatible with an alternative position, or the employee is not willing to return to work, the employee shall be re-classified as medically disqualified and not permitted to work. Thereafter, the employee shall be retired for disability, if eligible, or dismissed. Such dismissal will not imply disciplinary action for cause. If requested,the employee's file will indicate the employee left for personal reasons. 28.6.4 Bridoe of Service If an employee is dismissed per Section 28.6.3, and then is rehired to a position within the District within one(1)year,the District shall bridge the employee's service date. Bridging of service procedures involve adding the total number of days away from work to the employee's original date of hire. 28.6.5 Failure to Return to Work If, upon the expiration of FMLA or CFRA Leave, or any District approved extension thereof including General Leave,an employee fails to return to work and no additional leave has been authorized, the employee shall be considered to have automatically resigned from his or her position. In such cases,the employee will receive advance notification of the District's intent to implement an automatic resignation. 28.7 Compliance with Law These Leave-of-Absence provisions shall be interpreted and applied in a manner that is consistent with the provisions of FMLA, CFRA, ADA and all other laws. In the event there is a direct conflict between these provisions, as written or applied, the provisions of law shall govern. ARTICLE 29. - CLASSIFICATION STUDIES 2q.1 OGSD, 9,i r n6lude a RepResenlative from OCEA to part o pate as a partner n the agency w dp glagg f naton and Gampensat on study. 29.21 An employee who believes his/her position is not properly classified may submit a written request to the-Department Director asking that a classification study be conducted. The Department Director will acknowledge the request in writing and review the request for accuracy, and forward it to the Director of Human Resources, or designee,for consideration and response. Classification studies will only be conducted twice a year in November and during the budget process; therefore, classification study requests shall be submitted October V for the November review and according to the Finance budget schedule. District's management may also conduct classification studies at their discretion to ensure that the duties and responsibilities of all employees are appropriately allocated within the classification structure. 29.32 Y-Rating 29.32.1 All classification study findings regarding existing classifications are subject to approval by the General Manager;findings recommending a new job classification range are subject to approval by the District's Board of Directors. The recommendations of the classification study shall be implemented in the first pay period immediately following the completion of the study, unless the OCEA—Technical Services MOU July 1, 201644 to June 30, 201936 Page 18 recommendations require action betaken by the Board of Directors prior to implementation. In such event,the recommendations shall be implemented in the first pay period immediately following authorization by the Board. 29.32.2 In the event the duties and responsibilities of a position are allocated to a lower paid classification, the salary of the incumbent of that position shall remain unchanged (Y-rated)in accordance with the following table: Years of Service Term of Y-Rate 0-3 1 year 4-5 2 years 6-10 3 years 11-20 4 years 20 or more 5 years 29.32.3 Y-rating based on the above schedule shall be granted for all reclassifications where employees are working in a job classification with a lower maximum rate of resulting from changes to the District's staffing requirements, organizational structure or"bumping"associated with layoffs. Y- rating shall not apply in cases involving disciplinary actions or voluntary changes to a job classification with a lower maximum rate of pay. 29.32.4 The Y-rate shall remain in effect until the salary range for the new classification equals or exceeds the employee's Y-rated salary, or until the term of the Y-rate expires in accordance with the table above. If the Y-rate expires before the employee's salary falls within the range of the new classification, the employee shall be placed at the top of the range. Employees become eligible for merit increases and range adjustments when the Y-rate is no longer in effect. 29.43 Z-Rating 29.43.1 Employees allocated to classifications with a lower range maximum than their current salary as a result of the District's comprehensive Classification Study results implemented effective July 12, 2002 will have their salary remain unchanged (z-rated) until such time that the range maximum of their salary range exceeds or equals their current salary. 29.43.2 If a position is allocated to a higher paid classification, and the incumbent is promoted to that level, his or her salary will be placed at the step of the new range that is nearest a one-step increase, not to exceed the maximum rate of pay. ARTICLE 30. - DRIVER'S LICENSE 30.1 Employees who are required by the District to drive must notify their supervisor and the Human Resources Risk Management Division immediately upon receipt of any suspension or revocation of their California Driver's License privileges. Failure to do so could result in disciplinary action up to and including separation. 30.2 If an employee whose license is suspended or revoked and is unable to perform his or her regular duties and responsibilities notifies the District in a timely fashion,an attempt shall be made to place the employee in an equal or lower level position for which he or she is qualified. Placement in the range of the new classification is subject to District management's discretion. 30.3 The District will continue to pay the license renewals and physical examination costs of Class A& B licenses that are specifically required by the District. OCEA—Technical Services MOU July 1, 201644 to June 30, 201946 Page 19 ARTICLE 31. - LAYOFF PROCEDURE 31.1 Nothing herein shall be construed to require the District to fill vacant, budgeted positions nor to prohibit the District from eliminating vacant positions from the budget. The District reserves the right to reassign staff to other positions in instances involving job restructuring, reorganization or due to lack of work. 31.2 The layoff procedure outlined below shall be followed if the District finds it necessary to layoff personnel who were hired after January 1, 2000 and for any layoffs which occur after November 1, 2002. 31.3 If, in the sole discretion of District management, personnel reductions are necessary, layoff order and recall lists shall be developed based upon job classification, priority of function,job performance, individual qualifications and seniority. The OCEA and employees subject to layoff shall be provided with at least two weeks notification in writing,whenever possible. 31.4 Employees in classifications subject to layoff may request a voluntary demotion to any previously held position for which they remain qualified. Such requests must be made in writing to the Human Resources Department within five (5)days of receipt of the Layoff Notice. The salary of an employee who voluntarily demotes shall be unchanged, except that it may not exceed the maximum rate of the range for the lower level classification. 31.5 Recall lists shall be developed for all classifications experiencing personnel reductions, and shall be maintained for a period of two years from the date of layoff. Individuals shall be placed on the list in the inverse order of layoff, so that the last person laid off is the first recalled.When a vacancy occurs in a classification for which a Recall list exists,an offer of reemployment shall be made to the individual on the top of the list. That individual must respond to the offer within five days, or the offer shall be made to the next person on the list. An individual who either does not respond or refuses three consecutive offers shall have their name removed from the list. 31.6 All notification and responses must be in writing and delivered either in person or by Certified Mail. It is the responsibility of all employees to keep the Human Resources Department informed of their current address, or where they may be contacted. ARTICLE 32. - LIGHT DUTY 32.1 An employee who is released by a physician to perform limited duties because of a temporary disability may be assigned to light duty at the discretion of the District. Light duty may consist of duties other than those normally performed by the employee and that are within the employee's medical restrictions.An employee assigned to light duty will be paid the regular wage rate for the job classification to which he or she was assigned prior to being temporarily disabled. ARTICLE 33. - MEDICAL EXAMINATION 33.1 When there is reasonable evidence to suggest that an employee is impaired in a manner that endangers their own health or safety, or that of others,the District may require that employee to be examined or evaluated by a health care provider. The purpose of such examination must be job related. Any examination under this provision shall be conducted on District time and at District expense. An employee may submit an independent medical opinion regarding the individual's condition and addressing his or her ability to competently perform the duties of the position. This information shall be reviewed and considered by a competent medical authority in arriving at a decision regarding the individual's continued employment in the position. ARTICLE 34. - MILEAGE ALLOWANCE 34.1 Approved use of a personal vehicle for District business shall be reimbursed at the current IRS rate. ARTICLE 35. -ACTING PAY 35.1 Employees who are assigned by District management to perform the duties of a position at a higher level for a period of at least eighty(80)consecutive hours shall be eligible for a one step salary increase, or the OCEA—Technical Services MOU July 1, 201644 to June 30, 201946 Page 20 first step of the range for the higher level classification,whichever is greater.The higher rate of pay begins with the hour eighty-one(81),and continues until the assignment ends or the six(6)month limitation has been reached at which time a determination will be made as to whether the position should or should not be posted. Requests for acting pay require the approval of the Department Director and the Director of Human Resources, or designee. The eighty(80)hour eligibility period may be waived at the discretion of the General Manager. ARTICLE 36. (This Article intentionally left blank.) ARTICLE 37. - PERSONNEL FILES 37.1 Employees have the right to inspect their personnel file in the Human Resources Department during the normal office hours of the Human Resources Department, by appointment. Employees who wish to correct allegedly erroneous information in their file, or request that items related to disciplinary matters be removed after the indicated time period has elapsed, should submit a request in writing to the Director of Human Resources, or designee. It is the responsibility of each employee to keep the personal information in his or her file current, including home address, telephone number and person to contact in an emergency. ARTICLE 38. - BULLETIN BOARDS 38.1 The OCEA may use the bulletin boards located at Plant 1 and Plant 2,which are designated for use by employee groups to post notices to District employees, provided that: (a) no controversial matter which is critical of or derogatory to the District, its employees, officers or Directors may be posted; (b) nothing posted by the District may be removed; (c)the OCEA shall remove its notices after a reasonable length of time; and (d)only a reasonable number of notices shall be posted. ARTICLE 39. - RELEASE TIME FOR MEET AND CONFER SESSIONS 39.1 A maximum of three(3)employees covered by this Agreement and appointed by the OCEA shall be granted reasonable release time for attending meet and confer sessions at the bargaining table. Release time shall not be compensated for any hours that exceed the employee's regularly scheduled hours of work. 39.2 The OCEA shall provide the Director of Human Resources, or designee, with the names of employees requiring meet and confer release time in advance of the meet and confer session. The release time shall be granted provided that the needs of the District permits the time away from assigned work. ARTICLE 40. - USE OF DISTRICT FACILITIES 40.1 District facilities may be used by the OCEA with prior notice to the Director of Human Resources, or designee,for the purpose of holding meetings,to the extent that such use does not interfere with normal District operations. The OCEA agrees to pay for the cost of any additional custodial or security services. ARTICLE 41. - SCOPE OF BARGAINING 41.1 The District and the OCEA acknowledge that during the negotiations,which resulted in this Agreement, each party had the unlimited right and opportunity to make demands and proposals with respect to all proper subjects within the scope of representation. Therefore,the District and the OCEA, for the term of this Agreement, except as otherwise provided herein, each voluntarily and unqualifiedly waive the right, and each agrees that the other shall not be obligated to bargain collectively with respect to any subject or matter contained in this Agreement. OCEA—Technical Services MOU July 1, 201644 to June 30, 201936 Page 21 ARTICLE 42. - IMPASSE PROCEDURES 42.1 If either the District or OCEA declares that an impasse exists in the meet and confer process, the party so declaring may initiate the impasse procedure by providing the other party with a written request for an impasse meeting,together with a statement of its position on all issues. An impasse meeting shall be scheduled and held between the parties within fourteen (14)calendar days or as soon as practicable to: 42.2 Review the position of the parties in a final effort to reach agreement on a memorandum of understanding, and if the impasse is not resolved, to discuss the immediate utilization of impasse procedures outlined herein. 43.3 Impasse Procedures are: 43.3.1 Mediation: If the parties mutually agree to submit the dispute to the State Mediator and Conciliation Service, all mediation proceedings shall be private and occur as soon as practicable. The mediator shall make no public recommendation, nor take any public position at any time concerning the issues. 43.3.2 Fact-Finding: If the parties fail to resolve the dispute through mediation,the parties may agree to submit the impasse to fact finding as soon as practicable. The cost of a fact finder and other mutually incurred costs shall be mutually shared by the District and OCEA. 43.3.3 Board Actions: If the parties fail to resolve the impasse,the dispute shall be sent to the District's Board of Directors for resolution. Each party shall submit its written proposal on all issues to the Board. The Board may take such action to resolve the impasse as it deems appropriate to the public interest. Any action taken by the Board to resolve the impasse shall be final and binding. ARTICLE 43. - SEVERABILITY 43.1 Notwithstanding any other provisions in this Agreement, in the event that any article, section or subsection of this Agreement shall be declared invalid by any court or by any state or federal law or regulation, or should a decision by any court or any state or federal law or regulation diminish the benefits provided by this Agreement, or impose additional obligations on the District,the District and OCEA shall meet and confer on the affected article, section or subsection. In such event, all other articles, sections or subsections of this Agreement not affected shall continue in full force and effect. ARTICLE 44. - UNIFORMS 44.1 The District shall provide and maintain ten (10) uniform pants and shirts,which may include the name of the employee and District's seal, at no cost to employees whose duties require that they wear uniforms. The District will also provide lab coats as required by the lab manager. 44.2 All employees who are issued uniforms must wear them during the performance of their regular duties. Other clothing appropriate to the occasion, as determined by District management, may be worn when attending business meetings. Failure to wear required clothing, shoes and safety equipment may be cause for disciplinary action. ARTICLE 45. - SUBSTANCE ABUSE POLICY 45.1 The District's Substance Abuse Policy will apply to all unit members. The District may adopt or implement rules, regulations and policies to be in compliance with federal and state laws. In such cases, notification will be provided to the bargaining unit prior to implementation. 45.2 Department of Transportation (DOT) Regulations 45.2.1 Every driver who operates a commercial motor vehicle in interstate or intrastate commerce, and is subject to the commercial driver's license requirements of the Department of Transportation, Federal Highway Administration CFR Part 382 is subject to the District's Anti-Drug and Alcohol Program. The District will ensure that all alcohol or controlled substances testing conducted under OCEA—Technical Services MOU July 1, 201644 to June 30, 201946 Page 22 the Substance Abuse and Alcohol Misuse Plan complies with the procedures set forth in CFR Part 40. 45.3 District's Substance Abuse Policv 45.3.1 Any employee may be subject to discipline, up to and including termination,for any alcohol screen test that indicates an alcohol concentration level of 0.02% or greater. ARTICLE 46. - DUES DEDUCTIONS 46.1 The District shall deduct from each regular paycheck and remit to OCEA the dues, initiation fees and assessments for each employee who voluntarily authorizes such deduction in writing. Such authorizations must be fled by the end of the pay period prior to the period for which the deduction is requested. 46.2 The District shall provide the OCEA a quarterly list of the names of those employees for whom it has made deductions. In addition, the District shall provide the names and addresses of new employees and the names of employees who have terminated within the previous quarter. ARTICLE 47. (This Article intentionally left blank) ARTICLE 48. - PEACEFUL RESOLUTION OF DISPUTES 48.1 During the term of this Memorandum, or any subsequent period when impasse resolution procedures are in progress or recommendations resulting from such procedures are being considered by the parties,the District agrees it shall not lockout employees in this bargaining unit, and OCEA agrees that it shall neither advocate, encourage or participate in any strike, including sympathy strike, or work stoppages, nor encourage employees to refrain in whole or in part from the full,faithful and proper performance of their duties of employment. ARTICLE 49. (This Article intentionally left blank) ARTICLE 50. -WORKPLACE VIOLENCE AND WEAPONS POLICY 50.1 The District's Workplace Violence and Weapons Policy will apply to all unit members. ARTICLE 51. - RESIGNATION 51.1 Voluntary written termination of employment with the District is irrevocable after seventy-two(72)hours from the receipt of the resignation, except by approval of the Director of Human Resources, or designee. ARTICLE 52. (This Article intentionally left blank) ARTICLE 53. - LABOR MANAGEMENT COMMITTEE 53.1 Orange County Employees Association (OCEA) and the Orange County Sanitation District(OCSD) hereby agree to meet within two(2)months from the OCSD Board approval of this MOU to discuss the structure and process of a Labor Management Committee at OCSD.Absent mutual agreement regarding the structure and process of a Labor Management Committee,the parties will defer discussions to the time when a successor MOU is raised. OCEA—Technical Services MOU July 1, 201644 to June 30, 201936 Page 23 SIGNATURE PAGE 201644—201916 MEMORANDUM OF UNDERSTANDING BETWEEN THE ORANGE COUNTY SANITATION DISTRICT AND THE ORANGE COUNTY EMPLOYEES ASSOCIATION FOR THE TECHNICAL SERVICES UNIT Executed: OCEA TECHNICAL SERVICES UNIT ORANGE COUNTY SANITATION DISTRICT So Gutierrez, Labor Relations Representative S'^ '^f^ Laura Kaltv, Chief Negotiator Dean Carrico, SOURGe Joe James Herb^.^ General Manag^.Celia Vallone, Information Technology Technician II Chandler. Director of Human Resources Bryce Dragan, Source Control Inspector II Robert P. Gh4re" , Ass stant General ManagerAndrew Nau. Principal Human Resources Analyst ARdFew Nau, Pr no pal Human Rego -rose AnaWl-aura Maravilla. Human Resources Supervisor AnalystJanine Aguilar, Principal Human Resources Analyst Laurie Klinger, Senior Human Resources Analyst OCEA—Technical Services MOU July 1, 201644 to June 30, 201946 Page 24 Exhibit A TCru\ rn eCRVICES UNIT Effective Effective pal, 74-du1-14 76-du1-15 ClassiNoaHen Gratle MIN MAX MIN MAY Data Management 75 $40.45 $49-17 $4126 $50.15 Seu Fee-Contra'-InsaeNer11 33 $38.48 $46•Z9 $39..26 $47 72 Data Management Teshn a an74 $36..63 $4442 $37.36 $45.41 source Contra'InsaesteN 69 $34.89 $42.11 $35..5s $43.26 65 $31.60 $38..40 $32.23 $39A Fry iwaneMaFTachneiaa 61 $28.62 $34.7 $29.19 $35.49 64 $2862 $3479 $29.19 $3549 I abonate"-66'Ha. 57 $25-94 $34 54 $26.46 $32.4 TECHNICAL SERVICES UNIT Effective Effective Effective Pev 84u'-16 74u'-17 64u'-18 Classification Grade MIN MAX MIN MAX MIN MAX Data Management Technician 11 75 $4Z29 $51.40 $43.35 $52.69 544.4 $54.01 Source Central'nsoector II 73 UU $48.92 S41.24 50.14 S42.27 51.39 Data Management Technician' 71 38.29 $46.55 $39.25 7.71 S40.23 8.90 Source Control Inspector 1 69 36A S44.34 $37.39 AS $38.32 46_59 Information Technology 65 $33.04 $40.15 $33.87 1.15 $34.72 2.18 Technician II Environmental Technician 61 2$ 9.92 36.38 $30.67 37.29 $31.44 38.22 Information Technology 61 $29.92 36.38 $30.67 37.29 $31.44 38.22 Technician Laboratory Assistant 57 2Z12 1 122.97 127.80 1 133.79 1 128.50 1 jM63 OCEA-Technical Services MOU July 1, 201644 to June 30, 201946 Page 25 MEMORANDUM OF UNDERSTANDING BETWEEN THE ORANGE COUNTY SANITATION DISTRICT AND THE ORANGE COUNTY EMPLOYEES ASSOCIATION FOR THE ENGINEERING UNIT July 1 , 201644 through June 30, 201946 TABLE OF CONTENTS ARTICLE 1. -RECOGNITION.................................................................................................................................1 ARTICLE2. -DURATION.......................................................................................................................................1 ARTICLE 3.-SUCCESSOR AGREEMENT...........................................................................................................1 ARTICLE 4.-OCEA ACCESS................................................................................................................................1 ARTICLE 5.-OCEA RIGHTS.................................................................................................................................2 ARTICLE 6.-DISTRICT RIGHTS..........................................................................................................................2 ARTICLE 7.-NONDISCRIMINATION IN EMPLOYMENT.....................................................................................2 ARTICLE S.-SMOKE-FREE WORK ENVIRONMENT..........................................................................................2 ARTICLE9.-SAFETY............................................................................................................................................2 ARTICLE 10. -DISCIPLINE AND DISMISSAL......................................................................................................3 ARTICLE 11. -GRIEVANCE PROCEDURE...........................................................................................................4 ARTICLE 12. -PROBLEM SOLVING PROCEDURE.............................................................................................5 ARTICLE 13. -SALARY ADJUSTMENTS AND COMPENSATION......................................................................5 ARTICLE 14. -SEVERANCE PAY.........................................................................................................................7 ARTICLE 15. -DEFERRED COMPENSATION......................................................................................................7 ARTICLE 16. -HOLIDAYS......................................................................................................................................7 ARTICLE17.-HOURS OF WORK........................................................................................................................8 ARTICLE 18. -CALL-BACK PAY..........................................................................................................................8 ARTICLE 19. -STANDBY PAY..............................................................................................................................8 ARTICLE20.-INSURANCE..................................................................................................................................8 20.4 MEDICAL INSURANCE...............................................................................................................................8 20.5 LIFE INSURANCE......................................................................................................................................9 20.6 SHORT TERM DISABILITY..........................................................................................................................9 20.7 LONG TERM DISABILITY............................................................................................................................9 20.8 DENTAL INSURANCE.................................................................................................................................9 20.9 VISION INSURANCE ..................................................................................................................................9 20.10 RETIRING EMPLOYEES.............................................................................................................................9 ARTICLE 21. -REIMBURSEMENT ACCOUNT...................................................................................................10 21.2 GROUP INSURANCE PREMIUMS...............................................................................................................10 21.3 MEDICAL CARE REIMBURSEMENT ACCOUNT............................................................................................10 21.4 DEPENDENT CARE ASSISTANCE ACCOUNT..............................................................................................10 ARTICLE22. -OVERTIME...................................................................................................................................10 ARTICLE 23. -PROBATIONARY PERIOD..........................................................................................................11 ARTICLE24. -PROMOTIONS..............................................................................................................................11 ARTICLE 25. -RETIREMENT...............................................................................................................................11 ARTICLE 26. -SHIFT DIFFERENTIAL.................................................................................................................12 ARTICLE 27. -LEAVE-OF-ABSENCE WITH PAY..............................................................................................12 27.1 VACATION LEAVE...................................................................................................................................12 27.2 SICK LEAVE...........................................................................................................................................12 27.3 JURY DUTY LEAVE.................................................................................................................................14 27.4 WITNESS LEAVE....................................................................................................................................14 27.5 MILITARY LEAVE....................................................................................................................................14 27.6 BEREAVEMENT LEAVE............................................................................................................................14 27.7 SUPPLEMENTAL LEAVE...........................................................................................................................15 ARTICLE 28. -LEAVE-OF-ABSENCE WITHOUT PAY.......................................................................................15 28.3 SUBSTITUTION OF PAID LEAVE................................................................................................................16 28.4 PERMISSIBLE USES................................................................................................................................16 28.5 GENERAL LEAVE....................................................................................................................................17 28.6 RETURN TO WORK POLICY.....................................................................................................................17 28.7 COMPLIANCE WITH LAW.........................................................................................................................18 ARTICLE 29. -CLASSIFICATION STUDIES.......................................................................................................18 ARTICLE 30. -DRIVER'S LICENSE.....................................................................................................................19 ARTICLE 31. -LAYOFF PROCEDURE................................................................................................................19 ARTICLE 32. -LIGHT DUTY.................................................................................................................................20 ARTICLE 33. -MEDICAL EXAMINATION ...........................................................................................................20 ARTICLE 34. -MILEAGE ALLOWANCE.............................................................................................................20 ARTICLE 35. -ACTING PAY................................................................................................................................20 ARTICLE36...........................................................................................................................................................20 OCEA-Engineering MOU July 1, 2014 to June 30, 2016 Pagei ARTICLE 37. -PERSONNEL FILES ....................................................................................................................20 ARTICLE 38.—BULLETIN BOARDS...................................................................................................................21 ARTICLE 39. -RELEASE TIME FOR MEET AND CONFER SESSIONS...........................................................21 ARTICLE 40. -USE OF DISTRICT FACILITIES..................................................................................................21 ARTICLE 41. -SCOPE OF BARGAINING...........................................................................................................21 ARTICLE 42. -IMPASSE PROCEDURES...........................................................................................................21 ARTICLE 43. -SEVERABILITY............................................................................................................................22 ARTICLE 44. -UNIFORMS...................................................................................................................................22 ARTICLE 45. -SUBSTANCE ABUSE POLICY....................................................................................................22 ARTICLE 46. -DUES DEDUCTIONS...................................................................................................................22 ARTICLE47...........................................................................................................................................................22 ARTICLE 48. -PEACEFUL RESOLUTION OF DISPUTES.................................................................................23 ARTICLE49...........................................................................................................................................................23 ARTICLE 50. -WORKPLACE VIOLENCE AND WEAPONS POLICY................................................................23 ARTICLE 51. -RESIGNATION.............................................................................................................................23 ARTICLE52...........................................................................................................................................................23 ARTICLE 53. -LABOR MANAGEMENT COMMITTEE.........................................................................23 SIGNATUREPAGE...............................................................................................................................................24 EXHIBITA.............................................................................................................................................................25 OCEA—Engineering MOU July 1, 201644 to June 30, 201936 Page ii MEMORANDUM OF UNDERSTANDING BETWEEN THE ORANGE COUNTY SANITATION DISTRICT AND THE ORANGE COUNTY EMPLOYEES ASSOCIATION FOR THE ENGINEERING UNIT In accordance with the provisions of California Government Code Sections 3500, at seq., and Resolution No. 75-127 of the Joint Board of Directors, the District's authorized representative has met and conferred in good faith with representatives of the Orange County Employees Association (OCEA)for the Engineering Unit.These meetings have resulted in an agreement and understanding to recommend that the employees represented by OCEA accept these terms and conditions, and that the Board of Directors adopt by Resolution the changes and additions to the wages, hours,and conditions of employment for the employees represented by OCEA as set forth in this Agreement. ARTICLE 1. - RECOGNITION 1.1 This Agreement, effective July 1, 201644, is entered into between the Orange County Sanitation District, referred to hereinafter as the"District,"and the Orange County Employees Association, referred to hereinafter as"OCEA." 1.2 The District recognizes the Orange County Employees Association as the exclusive recognized employee organization for matters within the scope of representation for the following classifications, as set forth in Exhibit"A" (attached hereto and incorporated by reference), as well as additional classes as may be added hereafter by the District. ARTICLE 2. - DURATION 2.1 This Agreement shall be binding on the District and OCEA when approved and adopted by the District's Board of Directors. This Agreement shall terminate on June 30, 20194S.This Agreement shall act as a bar to the raising of the question of representation during its term, except that the question of representation may be raised during the period between sixty(60)and ninety(90)days prior to its expiration. ARTICLE 3. - SUCCESSOR AGREEMENT 3.1 The Group shall submit in writing its initial proposal for a successor agreement 60�prior to the expiration date of this Agreement. ARTICLE 4. - OCEA ACCESS 4.1 An OCEA Representative shall have access to the District's facilities during working hours for the purpose of assisting Unit employees in processing grievances or investigating matters arising out of the application of provisions of this Agreement. The OCEA Representative must obtain authorization for each visit in advance from the Director of Human Resources,or designee. 4.2 The OCEA shall provide the Director of Human Resources, or designee, with a list of Representatives who are authorized to request access under this article, and shall notify the Director of any changes in that list. 4.3 OCEA access shall not interfere with the District's operations,or with the work of employees in any manner. The District reserves the right to restrict access in certain areas designated as confidential or secure. OCEA—Engineering MOU July 1,20164-4 to June 30, 20194& Page 1 ARTICLE 5. - OCEA RIGHTS 5.1 The OCEA may designate employees to act as representatives for employees covered by this Agreement. The OCEA shall furnish the Director of Human Resources, or designee with the names of employees selected as representatives and shall update the list as necessary. An alternate representative may be designated to act in the absence of the regular representative. Employees not listed on the roster of representatives provided to the District by the OCEA may not act as representatives. 5.2 Representatives shall not perform non work-related duties on work time without the prior approval of their immediate supervisor. Neither the District nor the OCEA shall interfere with, intimidate, restrain, coerce or discriminate against employees because of the exercise or non-exercise of their rights to engage in OCEA activity. ARTICLE 6. - DISTRICT RIGHTS 6.1 District inherent rights, powers, functions, duties, responsibilities and authority related to a managerial or administrative character are reserved to the District in its exercise of management decision-making, except as specifically modified by the express provisions of this Memorandum. District rights include, but are not limited to, the exclusive right to consider the merits, necessity or organization of any service or activity provided by law, or administrative order; determine the mission of its constituent departments, commissions and boards;set standards of service, determine the procedures and standards of selection for employment and promotion; establish and implement performance standards; direct its employees; take disciplinary action for proper cause; layoff employees from duty because of lack of work or lack of funds; maintain the efficiency of District operations; determine the methods, means and personnel by which District operations are to be conducted;determine the content of job classifications; classify and reclassify positions; take all necessary actions to carry out its mission in emergencies; and exercise complete control and discretion over its organization and the technology of performing its work. 6.2 District retains all authority and rights conferred on it by law, or other legal sources, except to the extent that such authority is explicitly waived by the express terms of this agreement. District exercise of its management rights hereunder shall not be subject to appeal or meeting and conferring, however,that the exercise of such rights does not preclude OCEA from appealing or meeting and conferring the practical consequences or impacts that District decisions have on wages, hours, and other terms and conditions of employment. ARTICLE 7. - NONDISCRIMINATION IN EMPLOYMENT 7.1 There shall be no unlawful discrimination in the application of the provisions of this Agreement with regard to actual or perceived race, color, religion, national origin, ancestry, sex, gender, sender identity, gender expression, sexual orientation, age. physical or mental disability, medical condition, genetic information, marital status, or military or veteran status or any other lawfully protected class. To the extent required by law or by the District's rules or regulations, this provision of the Agreement shall be applied to all members of the unit without regard to any protected classificationmar tal status, hand Gap, med Gal Gond t on, status ARTICLE B. - SMOKE-FREE WORK ENVIRONMENT 6.1 The District endorses and supports the right of all employees to work in a healthy and safe environment free of recognized hazards. In view of the hazards associated with smoking and the potentially harmful effect it has on the health and well being of District employees and their families, smoking and the use of tobacco (cigarettes cigars e-cigarettes I"vaping"1 and related tobacco products and technologies) is not acceptable within District facilities, and may occur only in areas posted for smoking. ARTICLE 9. - SAFETY 9.1 It is the duty of the District to provide and maintain a safe place of employment. OCEA shall cooperate by encouraging all employees covered by this Agreement to perform their work in a safe manner. It is the duty of all employees covered by this Agreement, in the course of performing their assigned duties, to be alert to unsafe practices, equipment, and conditions, and to follow the safety regulations and requirements OCEA—Engineering MOU July 1, 201644 to June 30, 201936 Page 2 of the District, and to report any unsafe practices or conditions to their immediate supervisors. An employee shall not be required to perform work that is unsafe. ARTICLE 10. - DISCIPLINE AND DISMISSAL 10.1 Discipline may occur when any of the following actions are taken for just cause with respect to any employee in the unit:verbal reprimand, written reprimand, suspension without pay; reduction in pay, demotion to a classification with a lower maximum rate of pay or dismissal. 10.2 Dismissal,for purposes of this Article, is the separation of a non-probationary employee initiated by the District for just cause. 10.3 A Notice of Intent is not required when the disciplinary action involves a verbal reprimand or written reprimand. 10.4 A Notice of Intent is required and will be given to an employee whenever the disciplinary action involves a suspension without pay, a reduction in pay, a demotion to a classification with a lower pay grade, or dismissal. The notice will be given to the affected employee either by delivery in person or by Certified Mail sent to the employee's last known address. Such personal delivery or mailing shall be presumed to provide actual notice to the affected employee. The Notice of Intent shall indicate the date on which it was personally delivered or deposited in the mail,which shall be the date of issuance. 10.5 The Notice of Intent shall contain the following: (1)a description of the disciplinary action intended and the effective date of the action; (2)the reasons for the proposed action;(3)a copy of the charges and materials upon which the action is based; and, (4)a statement of the employee's right to respond, either verbally or in writing to the person initially imposing the discipline or to a District management representative with authority to make an effective recommendation on the proposed action,the person to whom any response must be directed, and the fact that such response must be received within ten If 0)business days of the date of issuance of the notice. The Notice shall also advise the employee of his or her right to representation. 10.6 Prior to the effective date of the proposed disciplinary action, the employee shall be given an opportunity to respond either verbally or in writing to a management representative with authority to make an effective recommendation on the proposed action. After review of an employee's response,the District shall notify the employee in writing of the action that shall be taken. Such action may not involve discipline more severe than that described in the Notice of Intent; however, the District may reduce discipline without further notice. Further clarification of the disciplinary policies and procedures are covered in the District's Personnel Policies& Procedures Manual. 10.7 Dismissal shall be preceded by at least one(1)written reprimand, except in those situations in which the employee knows or reasonably should have known that the performance or conduct was unsatisfactory. Such performance or conduct may involve, but is not limited to, dishonesty, possession, use, sale or being under the influence of drugs or alcohol,theft or misappropriation of District property or funds,fighting on the job, insubordination,acts endangering people or property,or other serious misconduct. The District may substitute documented suspensions without pay for written reprimands. 10.8 If a Notice of Intent is upheld and the disciplinary action is imposed,the employee may request a post- disciplinary hearing. The request must be submitted to the Director of Human Resources, or designee, within ten (10) business days following the effective date of the disciplinary action (for suspensions,the effective date shall be the first business day following the final day of the suspension). The Director of Human Resources, or designee, shall schedule a post disciplinary hearing with the General Manager or a hearing officer selected by the General Manager. The hearing officer may not be an employee of the District. The hearing officer will provide a written, advisory decision to the General Manager. The General Manager may uphold the disciplinary action that has been taken or may reduce such discipline without the issuance of a further Notice of Intent. The decision of the General Manager shall be final. 10.9 Disciplinary action documentation shall be placed in an employee's personnel file in the Human Resources Department. Documentation regarding verbal and written reprimands may be removed from an employee's personnel file twenty-four(24) months subsequent to the date of issuance, provided that there has been no recurrence of a similar incident during the period. If the Director of Human Resources, or OCEA—Engineering MOU July 1, 201644 to June 30, 201946 Page 3 designee, agrees to remove disciplinary action documentation from an employee's personnel file, such documentation shall be retained in a separate file by the Human Resources Department for the purpose of showing that progressive discipline has been followed or in support of the District's proposed discipline. 10.10 Verbal reprimands and written reprimands may only be reviewed under this Agreement through the Problem Solving Procedure. Nothing in this article shall be construed as a waiver of any statutory or constitutional rights. 10.11 A reduction in pay or demotion to a classification with a lower pay grade that is not a result of performance deficiencies (for example, reclassifications, "bumping' associated with layoffs, reasonable accommodation)shall not be considered discipline. ARTICLE 11. - GRIEVANCE PROCEDURE 11.1 A grievance is any complaint that management has violated a specific provision of this Agreement, except that, in accordance with Article 10 above, discipline which requires a Notice of Intent may not be reviewed under this Grievance Procedure. 11.2 A grievance may be brought to the attention of the District by an individual employee within the Unit or by the OCEA. The District may not bring a grievance through this procedure. Grievances brought by two(2) or more employees,and concerning the same incident, issue,or course of conduct, or multiple grievances brought by the same employee may, upon mutual agreement of the District and the OCEA, be consolidated for the purposes of this procedure. 11.3 Employees are encouraged prior to bringing forward a formal grievance, to discuss the issue with the Director of Human Resources, or designee, in an effort to bring about an informal resolution. 11.4 An employee may be self-represented or be represented by the OCEA at all steps of the Grievance Procedure, unless specifically agreed otherwise by the OCEA and the employee. The District shall provide a copy of all written grievance settlements to the OCEA. Any reference to days in this article implies business days. 11.34.1 Step 1. An employee will submit his/her complaint in writing to his/her immediate supervisor or designee within ten 10 five45)days of the occurrence of the event giving rise to the complaint, or within ten 10 fve{5)days from the time that the employee became aware of such event. The supervisor, or designee, shall attempt to resolve the issues surrounding the complaint, and respond in writing to the employee within ten 10 five45)days. 11.24.2 Sleo 2. If the grievance is not settled at Step 1, it maybe submitted in writing to the employee's Division Manager, or designee.This request for formal review must be presented on a form provided by the District within ten 10 flve(5)days of the conclusion of Step 1. A copy of each written communication on a grievance will be filed with the Director of Human Resources,or designee.The written grievance must: a) Identify the specific management act to be reviewed; b) Specify how the employee was adversely affected; c) List the specific provisions of the MOU that were allegedly violated and state how they were violated; d) Specify the remedy requested; and e) Provide the date of attempts at informal resolution and the name of the supervisor or individual involved. 11.34.2.1 The Division Manager, or designee, shall respond in writing to the employee within ten (10)days after the date the grievance is received. OCEA—Engineering MOU July 1, 201644 to June 30, 201946 Page 4 11.34.3 Step 3. If a grievance is not settled under Step 1 or 2, it maybe presented to the employee's Department Director, or designee, for review and written response. The request for formal review must be presented on a form provided by the District within five (5)days of the conclusion of Step 1 or 2, and must contain the information specified in Step 2 above. A copy of each written communication on a grievance will be filed with the Director of Human Resources, or designee. The employee's Department Director,or designee, shall respond in writing to the employee within ten (10)days after the date the grievance is received. 11.34.4 SIeD 4. If the grievance cannot be resolved under Step 3, it maybe presented to an Assistant General Manager, or designee, within five(5)days from the dale the Step 3 finding was issued. The Assistant General Manager, or designee, shall respond in writing to the employee within ten (10)days after the date the grievance is received. 11.34.5 Step 5. Appeal to the General Manager,or designee, is the final step in the Grievance Procedure. If the grievance cannot be resolved under Step 4, it may be presented to the General Manager,or designee,within five(5)days from the date the Step 4 finding was issued.The General Manager, or designee, shall respond in writing to the employee within ten (10)days after the date of the grievance is received. 11.45 General Provisions: An employee shall be given reasonable time off without loss of pay to present and process a grievance. If an employee is represented by the OCEA,the OCEA may designate one employee to present and process the grievance. The employee representative shall be given reasonable time off without loss of pay to perform this responsibility. Absence from work shall be approved only if it does not cause disruption to District operations. However, if the time requested cannot be provided, an alternate time shall be arranged. 11.45.1 Failure of a management representative to respond within the appropriate time limit shall provide a basis for the employee appealing to the next step. If a grievance is not presented or appealed within the time limits, it shall be considered resolved on the basis of the preceding response.The Director of Human Resources,or designee, may be petitioned in writing to waive the step or time requirements provided sufficient cause exists. 11.45.2 Resolution maybe agreed upon at any stage of the grievance process. However,the OCEA shall be notified prior to the resolution of any formal grievance matter. ARTICLE 12. - PROBLEM SOLVING PROCEDURE 12.1 Employees may bring problems to the attention of District managers through the Problem Solving Procedure. This Procedure was developed to encourage and facilitate the resolution of employee concerns in a responsive and fair manner, and may be used to attempt to resolve issues that may not be subjected to the Grievance Procedure.Any reference to days in this article implies business days. 12.2 Employees should discuss concerns regarding issues that are not grievable with their supervisor as soon as possible. The supervisor shall review the situation or decision, and provide a written response within five days from the date they were notified of the problem. 12.3 If the problem is not resolved to the employee's satisfaction,the employee may file a written statement concerning the problem with the Director of Human Resources, or designee, within ten (10)days of receipt of the supervisor's decision. Upon request of either party,a meeting shall be held to define issues and establish the remedies sought. The employee shall be provided a written response within ten (10)days after his or her statement is received. Time limits may be extended for cause upon mutual consent of the parties, and the decision of the Director of Human Resources, or designee, is final. ARTICLE 13. - SALARY ADJUSTMENTS AND COMPENSATION 13.1 Each pay grade is divided into five (5)steps,with an approximate 5.0%difference between each step. 13.2 Pay increases will only apply to eligible employees in an active payroll status on the effective date of implementation. Eligible employees will not receive retroactivity if active payroll status becomes effective after the date of implementation. OCEA—Engineering MOU July 1, 201644 to June 30, 201946 Page 5 13.3 Merit Pay 13.3.1 Step Increase Pa v—Bargaining unit employees will be eligible for Step Increase Pay based upon receipt of year-end performance appraisal ratings issued by the assigned supervisor. Step Increase Pay will be paid according to the following: 13.3.1.1 Eligible-Employees must have a proficient year-end performance appraisal to receive a one(1)step base-building salary increase until earning placement at step five (5). 13.3.1.2 Ineligible- Employees who are placed on a Performance Improvement Plan (PIP)due to a needs improvement performance review on the year-end appraisal or who are on a PIP at the time of the year-end appraisal period will remain at their current step until the PIP is satisfactorily completed. 13.3.1.3 Performance Management Program: The performance management program includes three(3)rating categories (exceeds, proficient, needs improvement)for performance appraisals. 13.3.2 Development Pav—Employees under this Agreement will be eligible for Development Pay. Development Pay is a non-base building pay type that will be distributed in a lump-sum amount each pay period. Employees must have a proficient year-end performance appraisal to be eligible for the following Development Pay types: • Education—Eligible employees who obtain or who have obtained a degree of approved subjects at an accredited college or university will receive$20.76 per pay period for an associate degree and $41.53 per pay period for an undergraduate degree. The maximum amount of Education pay is fixed at$41.53 per pay period. • Certification/License—Eligible employees who obtain or who have obtained a District approved certification or license will receive$7.62 per pay period per certificate or license with a maximum of three(3)certificates and/or licenses. The maximum amount of certification/license pay for any combination of certificates and/or licenses is fixed at$22.86 per pay period. 13.3.2.1 The overall maximum Development Pay for education, certification and/or licenses is fixed at$64.39 per pay period. 13.3.2.2 Employees who are placed on a PIP due to a needs improvement performance review on the year-end performance appraisal are not eligible for Development Pay until the PIP is satisfactorily completed. 13.3.2.3 Employees who are placed on a PIP due to needs improvement performance outside the year-end appraisal will have all Development Pay suspended until the PIP is satisfactorily completed. The return of Development Pay will not be retroactive. 13.4 Salary Range Adjustments 13.4.1 Effective the first pay period in July 201644, employees under this Agreement will receive salary range adjustments at a flat rate of 2_529%. 13.4.2 Effective the first pay period in July 201715, employees under this Agreement will receive salary range adjustments at a flat rate of 2.52.0%. 13.4.3 Effective the first pay period in July 2018 employees under this Agreement will receive salary range adjustments at a flat rate of 2.5%. OCEA—Engineering MOU July 1, 201644 to June 30, 201946 Page 6 ARTICLE 14. - SEVERANCE PAY 14.1 Employees are expected to give a minimum of two(2)weeks written notification when terminating employment with the District. Except for disciplinary cause,when a full-time employee is terminated by action of the District,the employee shall be notified in writing two (2)weeks prior to the effective separation date. In the event the District does not give such notification,the employee shall be entitled to severance pay in accordance with the formula set forth below: 14.1.1 Full-time, regular employees shall be entitled to eight(8) hours pay for each full calendar month of continuous employment not to exceed one hundred sixty(160)hours pay. 14.1.2 Employees in limited term or part-time positions, probationary employees and employees who are separated for cause, are not eligible for severance pay under any circumstances. ARTICLE 15. - DEFERRED COMPENSATION 15.1 Employees may participate in the District's approved deferred compensation plan subject to IRS requirements, and in accordance with all guidelines for voluntary participation established by District management. ARTICLE 16. - HOLIDAYS 16.1 The days listed below are observed by the District as holidays. Employees will receive holiday pay if their entire scheduled work shift immediately preceding and following the holiday are in a paid payroll status, meaning the employee worked those shifts or utilized paid time off in lieu of working those shifts.When an employee's work schedule requires that they work on an observed holiday,the employee will be paid at the employee's regular rate of pay for the holiday, and will also receive overtime pay at the rate of one and one half(1.5)times their regular hourly rate for all hours actually worked. Employees may also elect to receive Holiday Compensatory Time Off on an hour for hour basis rather than receive holiday pay.When a holiday occurs on an employee's regular scheduled day off,the employee will accrue compensatory time off for the amount of hours normally scheduled for that day Employees with a compensatory time off balance in excess of fifty(50) hours as of the last pay period ending in October will receive a mandatory payout for the hours that exceed fifty(50). HOLIDAY New Year's Day Lincoln's Birthday President's Day Memorial Day Independence Day Labor Day Veteran's Day Thanksgiving Day Day after Thanksgiving Day before Christmas Christmas Day Floating Holiday' 16.2 Employees may elect one(1)day during each year as a "Floating Holiday'. New employees shall be granted a"Floating Holiday"on a pro rate basis in the first calendar year of service per the following table: OCEA—Engineering MOU July 1, 201644 to June 30, 201946 Page 7 Hire Date Percent 1 r Quarter(January-March) 100% 2n0 Quarter(April-June) 75% V Quarter(July-September) 50% 4'h Quarter(October-December) 0 16.3 Employees must use the"Floating Holiday"within the year it is granted. Every effort will be made to approve an employee's request for a"Floating Holiday"off providing sufficient notice is given. ARTICLE 17. — HOURS OF WORK 17.1 For record keeping and accounting purposes,the"workweek"for full-time employees is 40 hours per 168- hour period, to be paid on a biweekly payroll basis of 80 hours worked. Employee work periods may be scheduled in shifts of four 9-hour days and one 4-hour day each workweek (9/80 schedule), five 8-hour days each workweek(10/80), four 10-hour days each workweek(8/80), or three 12-hour days and one 4- hour day each workweek(7180). The starting and ending times of individual employees'workweeks may vary. 17.2 Employees shall receive ten-minute rest periods twice in a nine-hour shift, and three times for a shift of more than ten hours. Meal and rest periods may not be avoided or accrued for the purpose of obtaining time off or shortening the regular shift. If an employee reports to work as scheduled and was not notified that their hours had been changed, he or she shall receive two hours pay at the overtime rate. 17.3 The District may, at its sole discretion, change an employee's work schedule with thirty(30)days written notice to the affected employee. ARTICLE 18. - CALL-BACK PAY 18.1 When an employee is called back to work by District management without prior notice, and the employee has completed his or her normal work shift and left the work station, or when prior notice is given but the work begins on the same day at least three hours after completion of the regular shift,the employee shall receive a minimum of three hours of call back pay. The three hours minimum,whether or not actually worked,shall be paid at the rate of one and one half times the regular hourly rate. Employees who are called back a second time within a normal shift period are considered to be working for the duration of that shift. ARTICLE 19. - STANDBY PAY 19.1 Standby is time during which an employee is not required to be at the work location or at the employee's residence but is required to be available for immediate return to work. Standby assignments shall first be made on a voluntary basis. A volunteer standby list shall be established by classification and job location. Standby assignments shall be made from the list of employees who are competent and experienced, in alphabetical order,on a rotating basis. In the event that no one volunteers,the District shall assign standby by job classification and work location from employees who are competent and experienced on a rotational basis.An employee placed on standby shall be compensated at the rate of three hundred forty- five(345)dollars per week,and shall receive Call Back pay when they are actually called to work. ARTICLE 20. — INSURANCE 20.1 The District will provide healthcare and welfare insurance benefits. 20.2 All insurance coverage shall become effective on the first day of the month following date of hire, regardless of hire date. An open enrollment period shall be held annually. OCEA—Engineering MOU July 1, 201644 to June 30, 201946 Page 8 follow ng rat f Gat on to d sn -qq the bans t on frnm Anthem to Blue Sh eld through Cal fern A State Aqqnn at on of Cn-mil as Excess insuranGe Author ty(GSAC FIA), or to another Garr er d reGfly, and var ad plan des gn changes n order to m t gate exc se taxat on n 2018 Potent al strateg as fe Gans derat an ndude, but are not 1 m ted to, the follow ng: plan des gn changes to off Ge and speG al st GOPaYS, emergency room Gapays, plan deduct bles and GontFbut on rates; and alternatve plan offer Ags Such as a h gh deduct ble health plan w th health savings account fund ng. 3.2 The part as agree that any reGpener shall be subject to Government Code ReGt on 3505 4 and . case law, nclud'nn PERB dad d onn .6'n6 'ntn t that n.n.'n 20.43 Medical Insurance 20.43.1 The District will provide medical health insurance coverage through a Health Maintenance Organization (HMO)medical insurance plan and a Preferred Provider Organization (PPO) medical insurance plan' S •ah t'me that the paFt s agree tG GhaagBS4hF9ug,the medical reopeneNe SeGiea-29.a'. 20.43.2 Reaular.full-time employees: 20.43.2.1 The District shall contribute 90%of employee only premiums for the HMO medical health plan and 80%of employee only premiums for the PPO medical health plan. The District will contribute 80%of the employee+1 dependent and full family premiums for the HMO and PPO medical plans.Any change in insurance rates shall be shared equally in same ratio as the District and employees currently pay premiums. Before the renewal of any District's sponsored health insurance plan, the parties agree to meet and confer as to changes in the plan. 20.3.3 The District may reopen negotiations at anytime during the term of the MOU to address the impact of the Affordable Care Act(ACA), provided that no change may be made by the District unless such change is either(1)mandated by the ACA, or(2) mutually agreed upon by the parties. 20.54 Life Insurance The District shall pay the full premium for$50,000 tens life insurance on each employee. 20.55 Short Term Disability The District shall provide a non-work related, short-term disability indemnity plan that provides benefits for employees equal to California's State Disability Insurance(SDI)program for up to twenty-six(26)weeks following a fourteen (14)calendar day waiting period. 20.76 Lora Term Disability 20.76.1 The District shall provide a non-work related, long-term disability indemnity plan that pays two- thirds of the employee's rate of pay in effect at the time of such disability, not to exceed $5,000 per month, up to age 65, following a 90-day waiting period of continuous disability,at such time that an employee completes five (5)years of service. 20.76.2 For participants age 64 and younger, the maximum period of payment is based on the Social Security Act retirement age of 65. For participants age 65 and older, the maximum period of payment is specified. The specified periods and additional information about coverage is included in the District's long-term disability plan contract accession on the intranet. 20.76.3 No combination of disability or sick leave pay shall result in more than an employee's regular rate of pay. Employees may not receive short-term and long-term disability benefits at the same time.An employee who is otherwise not eligible for District paid Long Term Disability may purchase such coverage at his or her own expense. OCEA—Engineering MOU July 1, 201644 to June 30, 201936 Page 9 20.97 Dental Insurance The District will contribute 80%of employee only and 80%of full family premiums for dental insurance. 20.98 Vision Insurance The District shall provide a vision insurance plan for regular,full-time employees and eligible dependents. 20.199 Retiring Employees 20.499.1 The District shall pay,for employees hired prior to July 1, 1988, two and one-half(2.5)months' premium for each year of continuous service of a retiring employee towards the premium costs of coverage for the employee and eligible dependents under the District's medical plan. 20.499.2 In the event the District adds additional optional insurance plans, the District's share of the premium shall be the same as for existing plans as set forth above. In the event the District changes underwriters for existing insurance plans, the District's share of the premium shall be the same as for existing insurance plans as set forth above. 20.409.3 The District will continue to implement the retiree medical health premium offset program wherein the cost of health premiums are offset by$10 per month for every year of continuous service up to a maximum of 25 years or$250 per month. Employees hired on or after August 1, 2011 shall not be eligible for the retiree medical health premium offset. ARTICLE 21. - REIMBURSEMENT ACCOUNT 21.1 Section 125 of the Internal Revenue Code permits employees to use pre-tax dollars to pay for their portion of the cost of benefits under the Plan through salary redirection arrangements. The options available under the flexible benefits program are listed below. This is a brief overview of the different options. For complete information regarding Flexible Spending Accounts, employees must refer to the plan booklet available in the Human Resources Department. 21.2 Group Insurance Premiums Group insurance premiums that are paid by salary redirection can be made on a pre-tax basis. 21.3 Medical Care Reimbursement Account The purpose of this account is to provide a method through which the employee can accumulate pre-tax funds in a Medical Care Reimbursement Account for purposes of reimbursing himself or herself for payment of health care costs not otherwise covered by his or her medical insurance. 21.4 Dependent Care Assistance Account The purpose of this account is to provide a method through which the employee can accumulate pre-tax funds in a Dependent Care Assistance Account for purposes of reimbursing himself or herself for childcare expenses or day care for a disabled dependent. ARTICLE 22. - OVERTIME 22.1 Employees shall be notified as soon as practicable after the District decides upon the need for overtime or additional work. The District may require the performance of overtime. In the event no qualified employee wishes to work overtime, District's management may select employees with the ability to perform the work by inverse seniority. District managers shall attempt to evenly distribute overtime among employees based upon an employee's ability to perform the overtime work. 22.2 For the purposes of overtime calculation, all time charged to unscheduled sick leave shall not be counted as time worked. Pay for overtime time shall not occur until after actual work time of forty(40)hours in a seven (7)day workweek is reached. OCEA—Engineering MOU July 1, 201644 to June 30, 201946 Page 10 ARTICLE 23. - PROBATIONARY PERIOD 23.1 All new employees serve an initial probationary period beginning with the date of hire and extending to at least the first day of the pay period following six monthst•e �..�eks of employment without a break in service. Extended absence without pay, short-term and long-term disability and Workers' Compensation leave does not provide an opportunity to judge an employees'capability to meet performance expectations for a position, and thus the time spent on such leaves shall not be included towards completion of the probationary period and may result in an extension. 23.2 Employees who are rehired following a break in service must complete a new probationary period whether or not one was previously completed. An employee may be released during his or her Probationary Period at the discretion of the District without recourse to the Grievance Procedure. 23.3 Employees who are reassigned or laterally transferred will serve a probationary period of sic monthst•--�ecs. The"probationary period"shall not divest an employee of his/her property rights in his/her former position. Rejection of probation during this period shall result in the employee reverting to his/her former assignment and/or position. ARTICLE 24. - PROMOTIONS 24.1 A promotion is the appointment of an employee to another classification with a higher maximum rate of pay.The District will determine whether a vacant position shall be filled as an open or promotional opportunity or recruitment.Whenever the District intends to fill a position by promotion,the District shall post the opportunity for a minimum often(10)business days. Employees must apply during the period of posting. Notices shall be posted on the District's intranet. 24.2 A promoted employee shall serve a promotional probationary period lasting at least until the first day of the pay period six monthst•�eks after the effective date of the promotion. At any time during the promotional probationary period, an employee may be returned to his or her previous position. The promotional probation period may be extended by mutual agreement between the employee and District's management for up to ninety(90)days. If an employee is promoted during his or her initial probationary period,the period shall be extended until at least the first day of the pay period six months&) weeks after the effective date of the promotion. 24.3 Promoted employees will receive the equivalent of a step increase in pay, not to exceed the top of the range for the new classification or the minimum rate of the new classification whichever is greater. ARTICLE 25. - RETIREMENT 25.1 The District shall continue participation in the Orange County Employees Retirement System (OCERS), wherein all full-time employees are considered members. The following retirement program is in effect pursuant to the contract between OCERS and the District. 25.1.1 Employees hired before September 21, 1979: The District will continue to contract with OCERS to provide the 2.5% @ 55 benefit formula(Plan G) based on the highest consecutive twelve(12) months average earnings, past and future service. 25.1.1.1 The District will continue to pay 4.5% toward the employee's contribution to OCERS for those employees who elected to make a one-time decision to remain in the Plan G program. 25.1.2 Employees hired on or after September 21, 1979 and before August 1, 2011:The District will continue to contract with OCERS to provide the 2.5%@ 55 benefit formula(Plan H)based on the highest consecutive thirty-six(36) months average earnings, past and future service. 25.1.2.1 The District will continue to pay 3.5% of an eligible employee's base salary toward the employee's contributions to OCERS. OCEA—Engineering MOU July 1, 201644 to June 30, 2019449 Page 11 25.1.3 Employees hired on or after August 1, 2011 and before January 1,2013: The District will contract with OCERS to provide the 1.667% @ 57.5 benefit formula(Plan B)based on the highest consecutive thirty-six(36) months average earnings, past and future service. 25.1.3.1 The District will pay 0% of an eligible employee's base salary towards the employee's contribution to OCERS. 25.1.4 Employees hired on or after January 1, 2013: The District will contract with OCERS to provide the 2.5% @ 67 benefit formula (Plan U- PEPRA)based on the highest consecutive thirty-six(36) months average earnings, past and future service. 25.1.4.1 The District will pay 0% of an eligible employee's base salary towards the employee's contribution to OCERS. 25.2 All monies actually contributed into the retirement system by an employee shall be deducted from gross salary for taxation purposes in accordance with Internal Revenue Code provisions. ARTICLE 26. - SHIFT DIFFERENTIAL 26.1 Employees who are regularly assigned to work a night shift that consists of 50%or more of their hours between 6:00 p.m. and 6:00 a.m. and who actually work that shift shall receive a shift differential of$2.50 per hour. ARTICLE 27. - LEAVE-OF-ABSENCE WITH PAY 27.1 Vacation Leave 27.1.1 Except as otherwise provided, regular full-time employees accrue vacation leave, beginning with the first day of employment, in accordance with the following schedule: Years of Service Hours-Biweekly Hours-Annual In years 0 through 1 3.08 80 In years 2 through 4 3.08 80 In years 5 through 10 4.62 120 In year 11 4.93 128 In year 12 5.24 136 In year 13 5.54 144 In year 14 5.85 152 In year 15 6.16 160 In year 16 6.46 168 In year 17 6.77 176 In year 18 7.08 184 In year 19 7.39 192 In year 20 and over 7.69 200 27.1.2 Part-time employees accrue vacation leave on a pro-rata basis as set forth in District Policy. 27.1.3 Vacation leave begins after an employee has completed twenty-six (26)weeks of continuous service. After the individual's first twenty-six(26)weeks of service, his or her account will be credited with 40 hours.After that time, he or she will accrue vacation hours consistent with the above chart.Vacation leave may only be utilized in increments of one-half hour or more. Vacation leave is accrued for all paid hours, including hours actually worked and hours in a paid-leave payroll status. OCEA—Engineering MOU July 1, 201644 to June 30, 20194@ Page 12 27.1.4 When unpaid absences occur,vacation leave accruals will be applied by straight proration of leave accruals based on the number of hours actually worked, and is applicable to all types of leave, whether legally protected or not. 27.1.5 Employees may have a maximum accumulation of 200 hours as of the last day of the final pay period in December of each year. In the event an employee accrues vacation leave in excess of 200 hours, it must be used prior to said December date, all other remaining hours in excess of 200 will be paid to the employee in the first pay period in January at the employee's then current hourly rate of compensation. 27.2 Sick Leave 27.2.1 Definition:Sick leave is an insurance or protection provided by the District to be granted to employees in circumstances of adversity to promote the health and welfare of the individual employee. It is not an earned right to take time off from work. Sick leave is defined as the absence from duty of an employee because of a bona fide illness, injury, or pregnancy, or to attend to the illness or injury of a family member as hereinafter defined or,for an employee who is a victim of domestic violence sexual assault or stalking for the purposes described in Labor Code sections 230(c)and 230.1(a). Temporary employees shall receiveaFe not ant tiedto sick leave benefits as required by State law. 27.2.2 Method-Sick Leave Accrual. Full-time employees hired prior to November 27, 1981, accrue paid sick leave at the rate of three point five(3.5) hours for each biweekly pay period of continuous service (ninety-one (91) hours per year). Full-time employees hired on or after November 27, 1981,accrue paid sick leave at the rate of three(3.0)hours for each biweekly pay period of continuous service (seventy-eight(78) hours per year), beginning with the first day of employment. 27.2.3 Part-time employees accrue sick leave on a pro-rata basis as set forth in applicable District Policy. 27.2.4 When unpaid absences occur,sick leave accruals will be applied by straight proration for leave accruals based on the number of hours actually worked, and is applicable to all types of leave, whether legally protected or not. 27.2.5 Annual Pavoff- Employees may elect annually to be paid for any unused sick leave hours accrued through the end of October at their current hourly rate according to the following payoff schedule or as specified in a Memoranda of Understanding. Accrued Sick Leave Hours Rate of Payoff 0-100 0 101-240 25 241-560 35% Over 560(mandatory) 50% 27.2.6 Employees who terminate for any reason other than retirement or death shall be compensated for any accrued and unused sick leave according to the above schedule. Employees who retire or decease with twenty(20)years or more of service shall be paid at the one hundred percent (100%) rate for all accrued and unused sick leave. Employees who retire or decease with less than twenty(20)years of service will be paid at the seventy-five percent(75%)rate for all accrued and unused sick leave. 27.2.7 Permissible Uses-Sick leave maybe applied only to: A. Absence due to illness, injury or pregnancy of an employee. B. Absence due to medical and dental office appointments of an employee when approved by the employee's supervisor. OCEA—Engineering MOU July 1, 201644 to June 30, 201946 Page 13 C. Absence for the care of the employee's father, father-in-law, mother, mother-in-law, brother, sister, husband,wife, domestic partner, child, child of domestic partner, grandparent, grandchild, legal guardian, or any family member with whom the employee resides. D_Absence due to a job-related injury. IXE. Absence related to an employee who is a victim of domestic violence, sexual assault, or stalking,for the purposes described in Labor Code sections 230(c)and 230.1(a). 27.2.8 General Provisions-To qualify for sick leave pay, the employee must notify the District at or in advance of the time the employee is scheduled to report for duty. Minimum charge to the employee's sick leave account shall be one-half hour and thereafter in one-half hour increments. Human Resources and department management shall be responsible for control of abuse of the sick leave privilege. If notified in advance, the employee may be required, at any time, to furnish a certificate issued by a licensed physician or nurse, or other satisfactory evidence of illness; however,for absences of ten consecutive working days or more, a request for leave and a medical statement, on prescribed forms, stating expected date of return must be submitted to Human Resources. Upon return to work, a written doctors release must be submitted to Human Resources. For absences of one or more working days in an unpaid status,a request for leave and a medical statement, on prescribed forms, stating expected date of return must be submitted to Human Resources. If the need for leave is due to the employee's serious health condition,as defined in the Family and Medical Leave Act("FMLA")or the California Family Rights Act("CFRA"),the certification requirement shall comply with the provisions of these Acts. 27.3 Jury Duty Leave 27.3.1 Any full-time, including probationary, employee who is called for jury duty shall, upon request on prescribed forms, be entitled to his or her regular pay for those hours of absence due to performance of the jury duty for a period up to twenty-two(22)working days. 27.3.2 Prior to jury duty service, each employee must complete a time off request through the District's timesheet system and provide a copy of the summons to his or her supervisor.To be entitled to receive regular pay for such jury leave, the employee must report for work at the District for time not actually retained on jury unless there is less than 1/2 of their regular shift remaining. Employees are not compensated for jury duty occurring on scheduled days off. 27.4 Witness Leave 27.4.1 Any full-time, including probationary, employee,who is required to be absent from work by a subpoena properly issued by a court, agency or commission legally empowered to subpoena witnesses,which subpoena compels his or her presence as a witness, except in a matter wherein he or she is named as a defendant or plaintiff or as an expert witness, shall, upon approval of an online time off request, be entitled the time necessary to comply with such subpoena, provided any fees received for such service, exclusive of mileage, are submitted to the District for deposit in the General Fund of the District. 27.4.2 An employee so subpoenaed must submit a copy of the subpoena to his or her supervisor and complete an online time off request form in order to be eligible for pay for such absence. To be entitled to receive regular pay for such witness leave,the employee must report for work at the District for time not actually retained on witness service of one hour or more prior to and/or upon completion of each day's service, exclusive of travel time. 27.5 Military Leave 27.5.1 A request for military leave shall be made upon leave-of-absence forms approved by the Human Resources Department and shall state the date when it is desired to begin the leave-of-absence OCEA—Engineering MOU July 1, 201644 to June 30, 201936 Page 14 and the date of anticipated return. A copy of the orders requiring such military service shall be submitted with the request. 27.5.2 Provisions of the Military and Veterans Code of the State of California, Sections 395-395.5 shall govern military leave. In general, current law provides that an employee having one(1)year or more service with a public entity is entitled to military leave with pay not exceeding thirty(30)days per year if the employee is engaged in military duty ordered for purposes of active military training or encampment. An employee who is required to attend scheduled service drill periods or perform other inactive duty reserve obligations is entitled to military leave without pay, not exceeding seventeen (17)calendar days per year, although the employee may, at his or her option, elect to use accrued leave time to attend the scheduled reserve drill periods or to perform other inactive drill period obligations. Employees who participate in weekend military drill duty are not eligible for leave with pay for such activity, but may have their regular work schedule changed to accommodate the required time off. 27.6 Bereavement Leave 27.6.1 Using the online time off request system, any full-time employee,whether probationary or regular, shall receive a maximum of thirty-six(36)hours of paid time for the death or funeral of an immediate family member. Immediate family member is defined as the employee's father, step- father, father-in-law, mother, step-mother, mother-in-law, brother, step-brother, sister,step-sister, husband,wife,domestic partner, biological child, adopted child, step-child, child of a domestic partner, grandchild, grandparent,foster parent,foster child, legal guardian, or any family member with whom the employee resides. 27.7 Supplemental Leave 27.7.1 Regular full-time employees in the bargaining unit shall be granted Supplemental Leave in accordance with the following schedule in the first pay period in July: Years of Service 5-9 10- 14 15- 19 20-24 25, Supplemental Leave Hours 5 10 15 1 20 25 27.7.3 Supplemental Leave will be administered in accordance with the following guidelines: 27.7.3.1 Supplemental Leave may be used in one-quarter(0.25)hour increments. 27.7.3.2 Any unused Supplemental Leave, within the fiscal year granted,will not be carried over to the next fiscal year. 27.7.3.4 Any unused Supplemental Leave, within the fiscal year granted, is not subject to cash out or eligible for any mandatory payout. 27.7.3.5 Employees who cease to be part of the bargaining unit for any reason will forfeit any unused Supplemental Leave. 27.7.3.6 Employees who are hired or transferred into the bargaining unit shall be granted Supplemental Leave on a pro-rata basis per the following schedule: Hire/Transfer Date Percent July—September 100% October—December 75% January—March 50% April—June 25% OCEA—Engineering MOU July 1, 201644 to June 30, 201916 Page 15 ARTICLE 28. - LEAVE-OF-ABSENCE WITHOUT PAY 28.1 It is the policy of the District to grant employees leave-of-absences without pay under certain circumstances and in accordance with state and federal benefit entitlement laws. Except as stated below, employees shall not receive compensation during an unpaid leave-of-absence. Employees will not be granted an unpaid leave of absence prior to exhausting all paid leave accrual balances, excluding employees protected by PDL(Pregnancy Disability Leave)/FMLA(Family and Medical Leave Act)/CFRA (California Family Rights Act)for their own serious health condition. 28.2 Using the prescribed forms, approved by District management, any full-time, including probationary, or part-time employees with at least fifty-two (52)weeks of service and at least twelve hundred fifty(1,250) hours of service, may be granted an FMLA or CFRA leave-of-absence without pay, not to exceed twelve (12)weeks in a rolling twelve(12)month calendar period. A"rolling"twelve(12)month period is measured backward from the date the employee uses the leave.A request for leave of absence without pay must be made upon prescribed forms in all instances where an employee is absent without pay for more than five (5)consecutive working days, or for absences of ten (10)working days or more when using paid sick leave accruals. 28.3 Substitution of Paid Leave 28.3.1 Employees who request FMLA or CFRA Leave for qualifying purposes other than the employee's own serious health condition shall be required to use all accruals, before unpaid leave is granted. Paid time off will not accrue during any pay period that an employee is absent without pay for more than one (1)day. 28.3.2 Paid time off accruals may be used for the care of the employee's father, step-father,father-in-law, mother, step-mother, mother-in-law, brother, step-brother, sister, step-sister, husband, wife, domestic partner, biological child, adopted child, step-child, foster child, legal ward, child of a domestic partner, grandchild, grandparent,foster parent, legal guardian, or any family member with whom the employee resides. 28.4 Permissible Uses 28.4.1 FMLA Leave. FMLA leave maybe used for: 28.4.1.1 The birth of a child or to care for a newborn of an employee; 28.4.1.2 The placement of a child with an employee in connection with the adoption or foster care of a child; 28.4.1.3 The care for the employee's father, step-father,father-in-law, mother, step-mother, mother-in-law, brother, step-brother, sister, step-sister, husband, wife, biological child, adopted child, step-child, foster child, legal ward, child of a domestic partner, grandchild, grandparent, legal guardian,or any family member with whom the employee resides who has a serious health condition, as defined in the Act; 28.4.1.4 The employee's own serious health condition that renders the employee unable to perform the essential functions of his or her position, including incapacity due to pregnancy; 28.4.1.5 A qualifying exigency arising out of the fact that an employee's family member is on covered active duty or called to covered active duty status in the Armed Forces.A qualifying exigency may include activities such as making arrangements for childcare, attending counseling relating to the active duty of the service member, or attending to farewell or arrival arrangements for the service member. 28.4.1.6 The care for the employee's family member or"next of kin'service member of the United States Armed Forces who has a serious injury or illness incurred in the line OCEA—Engineering MOU July 1, 201644 to June 30, 201946 Page 16 of duty while on active military duty. This leave may consist of up to twenty-six (26) weeks of unpaid leave during a single twelve(12)month period. 28.4.2 CFRA Leave. CFRA Leave may be used for: 28.4.2.1 The same purposes as FMLA Leave, including the care of a domestic partner or child of a domestic partner, and shall run concurrently with FMLA leave. 28.4.2.2 CFRA may not be used for 1)an employee's incapacity due to pregnancy,. 2)leave due to a qualifying exigency, or 3)to care for a family member or next of kin with a serious injury or illness incurred in the line of duty. However, incapacity due to pregnancy may entitle an employee to up to four(4)months of pregnancy disability leave under California's Pregnancy Disability Leave(PDL) law. 28.4.3 General Provisions: Reauests for FMLA and CFRA Leave Where the need for Leave is foreseeable,the District requests thirty(30)days advance notice. 28.4.4 Medical Certification As a condition of FMLA or CFRA Leave because of a serious health condition,the District may require certification by the employee's attending physician in accordance with Department of Labor(DOL) regulations. 28.4.5 Medical and Dental Premiums During FMLA and CFRA Leave,the District shall pay for medical and dental benefits at the same level as coverage would have been provided if the employee was not on leave. The employee shall be required to pay his or her share of medical and dental premiums. Failure to submit a monthly co-payment, in full, within sixty(60)days of the invoice date will result in loss of group coverage. Coverage will be reinstated upon return to active employment. 28.4.6 Reinstatement Upon expiration of FMLA or CFRA Leave, the employee shall be reinstated to the same or a comparable position, unless the employee would not otherwise have been entitled to that position for reasons unrelated to such leave(e.g., layoff), in which case the District's obligation to continue health and dental or other benefits shall cease. 28.4.7 District Employment of Spouses/Domestic Partners 28.4.7.1 FMLA Leave. Married employees shall be limited to a combined total of twelve(12) weeks FMLA or CFRA Leave in a rolling twelve(12)month calendar period for the care of a parent or newly born or placed child. 28.4.7.2 CFRA Leave. Married employees and employees in domestic partnerships will be limited to a combined total of twelve (12)weeks CFRA leave in a rolling twelve(12) month calendar period for the care of a parent or newly born or placed child. 28.5 General Leave 28.5.1 Employees who have exhausted all paid time off accruals may request to be granted a general leave-of-absence by District management to attend to personal matters or for FMLA or CFRA qualifying events after the expirations of previously authorized leave. 28.5.2 During a general leave-of-absence,the employee will be required to pay both the District's and the employee's share of medical and dental premiums. 28.5.3 Failure to submit a monthly co-payment, in full,within sixty(60)days of the invoice date will result in loss of group coverage. Coverage will be reinstated upon return to active employment. 28.6 Return to Work Policy 28.6.1 An employee who has been absent from work due to a medical reason may be subject to a Return-to-Work medical evaluation. OCEA—Engineering MOU July 1, 201644 to June 30, 201946 Page 17 28.6.2 If it is determined that the job demands of the position last held by the employee are not compatible with the employee's restrictions(with reasonable accommodation if the employee is disabled within the meaning of the ADA/FEHA)and the employee is willing to return to work, placement in an alternative position, if available, shall be considered. The employee shall be re- classified as medically disqualified while alternative positions are being considered. Such time off shall be without pay; however, the employee may elect to use accrued leave hours, such as vacation, sick or personal, to receive compensation. Placement of an employee in an alternative position requires a pre-placement medical evaluation for the alternative job. 28.6.3 If it is determined that the job demands of the position last held by the employee are not compatible with the employee's restrictions(and cannot be reasonably accommodated if the employee is disabled within the meaning of ADA/FEHA)and there is not an alternative position, or the employee's restrictions are not compatible with an alternative position, or the employee is not willing to return to work, the employee shall be re-classified as medically disqualified and not permitted to work. Thereafter, the employee shall be retired for disability, if eligible,or dismissed. Such dismissal will not imply disciplinary action for cause. If requested,the employee's file will indicate the employee left for personal reasons. 28.6.4 Bridoe of Service If an employee is dismissed per Section 28.6.3, and then is rehired to a position within the District within one(1)year,the District shall bridge the employee's service date. Bridging of service procedures involve adding the total number of days away from work to the employee's original date of hire. 28.6.5 Failure to Return to Work If, upon the expiration of FMLA or CFRA Leave, or any District approved extension thereof including General Leave,an employee fails to return to work and no additional leave has been authorized, the employee shall be considered to have automatically resigned from his or her position. In such cases,the employee will receive advance notification of the District's intent to implement an automatic resignation. 28.7 Compliance with Law These Leave-of-Absence provisions shall be interpreted and applied in a manner that is consistent with the provisions of FMLA, CFRA, ADA and all other laws. In the event there is a direct conflict between these provisions, as written or applied, the provisions of law shall govern. ARTICLE 29. - CLASSIFICATION STUDIES 2q.1 QC;SD'A" 'Rclude a represeRlatve from OCEA W part c pate as a partner n the agency w dp nla�s f naton and compensation study. 29.21 An employee who believes his/her position is not properly classified may submit a written request to the-Department Director asking that a classification study be conducted. The Department Director will acknowledge the request in writing and review the request for accuracy, and forward it to the Director of Human Resources, or designee,for consideration and response. Classification studies will only be conducted twice a year in November and during the budget process; therefore, classification study requests shall be submitted October V for the November review and according to the Finance budget schedule. District's management may also conduct classification studies at their discretion to ensure that the duties and responsibilities of all employees are appropriately allocated within the classification structure. 29.32 Y-Rating 29.32.1 All classification study findings regarding existing classifications are subject to approval by the General Manager;findings recommending a new job classification range are subject to approval by the District's Board of Directors. The recommendations of the classification study shall be implemented in the first pay period immediately following the completion of the study, unless the OCEA—Engineering MOU July 1, 201644 to June 30, 201946 Page 18 recommendations require action betaken by the Board of Directors prior to implementation. In such event,the recommendations shall be implemented in the first pay period immediately following authorization by the Board. 29.32.2 In the event the duties and responsibilities of a position are allocated to a lower paid classification, the salary of the incumbent of that position shall remain unchanged (Y-rated)in accordance with the following table: Years of Service Tenn of Y-Rate 0-3 1 year 4-5 2 years 6-10 3 years 11-20 4 years 20 or more 5 years 29.32.3 Y-rating based on the above schedule shall be granted for all reclassifications where employees are working in a job classification with a lower maximum rate of resulting from changes to the District's staffing requirements, organizational structure or"bumping"associated with layoffs. Y- rating shall not apply in cases involving disciplinary actions or voluntary changes to a job classification with a lower maximum rate of pay. 29.32.4 The Y-rate shall remain in effect until the salary range for the new classification equals or exceeds the employee's Y-rated salary, or until the term of the Y-rate expires in accordance with the table above. If the Y-rate expires before the employee's salary falls within the range of the new classification, the employee shall be placed at the top of the range. Employees become eligible for merit increases and range adjustments when the Y-rate is no longer in effect. 29.43 Z-Rating 29.43.1 Employees allocated to classifications with a lower range maximum than their current salary as a result of the District's comprehensive Classification Study results implemented effective July 12, 2002 will have their salary remain unchanged (z-rated) until such time that the range maximum of their salary range exceeds or equals their current salary. 29.43.2 If a position is allocated to a higher paid classification, and the incumbent is promoted to that level, his or her salary will be placed at the step of the new range that is nearest a one-step increase, not to exceed the maximum rate of pay. ARTICLE 30. - DRIVER'S LICENSE 30.1 Employees who are required by the District to drive must notify their supervisor and the Human Resources Risk Management Division immediately upon receipt of any suspension or revocation of their California Driver's License privileges. Failure to do so could result in disciplinary action up to and including separation. 30.2 If an employee whose license is suspended or revoked and is unable to perform his or her regular duties and responsibilities notifies the District in a timely fashion,an attempt shall be made to place the employee in an equal or lower level position for which he or she is qualified. Placement in the range of the new classification is subject to District management's discretion. 30.3 The District will continue to pay the license renewals and physical examination costs of Class A& B licenses that are specifically required by the District. OCEA—Engineering MOU July 1, 201644 to June 30, 201946 Page 19 ARTICLE 31. - LAYOFF PROCEDURE 31.1 Nothing herein shall be construed to require the District to fill vacant, budgeted positions nor to prohibit the District from eliminating vacant positions from the budget. The District reserves the right to reassign staff to other positions in instances involving job restructuring, reorganization or due to lack of work. 31.2 The layoff procedure outlined below shall be followed if the District finds it necessary to layoff personnel who were hired after January 1, 2000 and for any layoffs which occur after November 1, 2002. 31.3 If, in the sole discretion of District management, personnel reductions are necessary, layoff order and recall lists shall be developed based upon job classification, priority of function,job performance, individual qualifications and seniority. The OCEA and employees subject to layoff shall be provided with at least two weeks notification in writing,whenever possible. 31.4 Employees in classifications subject to layoff may request a voluntary demotion to any previously held position for which they remain qualified. Such requests must be made in writing to the Human Resources Department within five (5)days of receipt of the Layoff Notice. The salary of an employee who voluntarily demotes shall be unchanged,except that it may not exceed the maximum rate of the range for the lower level classification. 31.5 Recall lists shall be developed for all classifications experiencing personnel reductions, and shall be maintained for a period of two years from the date of layoff. Individuals shall be placed on the list in the inverse order of layoff, so that the last person laid off is the first recalled.When a vacancy occurs in a classification for which a Recall list exists,an offer of reemployment shall be made to the individual on the top of the list. That individual must respond to the offer within five days, or the offer shall be made to the next person on the list. An individual who either does not respond or refuses three consecutive offers shall have their name removed from the list. 31.6 All notification and responses must be in writing and delivered either in person or by Certified Mail. It is the responsibility of all employees to keep the Human Resources Department informed of their current address, or where they may be contacted. ARTICLE 32. - LIGHT DUTY 32.1 An employee who is released by a physician to perform limited duties because of a temporary disability may be assigned to light duty at the discretion of the District. Light duty may consist of duties other than those normally performed by the employee and that are within the employee's medical restrictions.An employee assigned to light duty will be paid the regular wage rate for the job classification to which he or she was assigned prior to being temporarily disabled. ARTICLE 33. - MEDICAL EXAMINATION 33.1 When there is reasonable evidence to suggest that an employee is impaired in a manner that endangers their own health or safety, or that of others,the District may require that employee to be examined or evaluated by a health care provider. The purpose of such examination must be job related. Any examination under this provision shall be conducted on District time and at District expense. An employee may submit an independent medical opinion regarding the individual's condition and addressing his or her ability to competently perform the duties of the position. This information shall be reviewed and considered by a competent medical authority in arriving at a decision regarding the individual's continued employment in the position. ARTICLE 34. - MILEAGE ALLOWANCE 34.1 Approved use of a personal vehicle for District business shall be reimbursed at the current IRS rate. ARTICLE 35. -ACTING PAY 35.1 Employees who are assigned by District management to perform the duties of a position at a higher level for a period of at least eighty(80)consecutive hours shall be eligible for a one step salary increase, or the OCEA—Engineering MOU July 1, 201644 to June 30, 201946 Page 20 first step of the range for the higher level classification,whichever is greater.The higher rate of pay begins with the hour eighty-one(81),and continues until the assignment ends or the six(6)month limitation has been reached at which time a determination will be made as to whether the position should or should not be posted. Requests for acting pay require the approval of the Department Director and the Director of Human Resources, or designee. The eighty(80)hour eligibility period may be waived at the discretion of the General Manager. ARTICLE 36. (This Article intentionally left blank.) ARTICLE 37. - PERSONNEL FILES 37.1 Employees have the right to inspect their personnel file in the Human Resources Department during the normal office hours of the Human Resources Department, by appointment. Employees who wish to correct allegedly erroneous information in their file, or request that items related to disciplinary matters be removed after the indicated time period has elapsed, should submit a request in writing to the Director of Human Resources, or designee. It is the responsibility of each employee to keep the personal information in his or her file current, including home address, telephone number and person to contact in an emergency. ARTICLE 38. - BULLETIN BOARDS 38.1 The OCEA may use the bulletin boards located at Plant 1 and Plant 2,which are designated for use by employee groups to post notices to District employees, provided that: (a) no controversial matter which is critical of or derogatory to the District, its employees, officers or Directors may be posted; (b) nothing posted by the District may be removed; (c)the OCEA shall remove its notices after a reasonable length of time; and (d)only a reasonable number of notices shall be posted. ARTICLE 39. - RELEASE TIME FOR MEET AND CONFER SESSIONS 39.1 A maximum of three(3)employees covered by this Agreement and appointed by the OCEA shall be granted reasonable release time for attending meet and confer sessions at the bargaining table. Release time shall not be compensated for any hours that exceed the employee's regularly scheduled hours of work. 39.2 The OCEA shall provide the Director of Human Resources, or designee, with the names of employees requiring meet and confer release time in advance of the meet and confer session. The release time shall be granted provided that the needs of the District permits the time away from assigned work. ARTICLE 40. - USE OF DISTRICT FACILITIES 40.1 District facilities may be used by the OCEA with prior notice to the Director of Human Resources, or designee,for the purpose of holding meetings,to the extent that such use does not interfere with normal District operations. The OCEA agrees to pay for the cost of any additional custodial or security services. ARTICLE 41. - SCOPE OF BARGAINING 41.1 The District and the OCEA acknowledge that during the negotiations, which resulted in this Agreement, each party had the unlimited right and opportunity to make demands and proposals with respect to all proper subjects within the scope of representation. Therefore,the District and the OCEA, for the term of this Agreement, except as otherwise provided herein, each voluntarily and unqualifiedly waive the right, and each agrees that the other shall not be obligated to bargain collectively with respect to any subject or matter contained in this Agreement. OCEA—Engineering MOU July 1, 201644 to June 30, 201946 Page 21 ARTICLE 42. - IMPASSE PROCEDURES 42.1 If either the District or OCEA declares that an impasse exists in the meet and confer process, the party so declaring may initiate the impasse procedure by providing the other party with a written request for an impasse meeting,together with a statement of its position on all issues. An impasse meeting shall be scheduled and held between the parties within fourteen (14)calendar days or as soon as practicable to: 42.2 Review the position of the parties in a final effort to reach agreement on a memorandum of understanding, and if the impasse is not resolved, to discuss the immediate utilization of impasse procedures outlined herein. 43.3 Impasse Procedures are: 43.3.1 Mediation: If the parties mutually agree to submit the dispute to the State Mediator and Conciliation Service, all mediation proceedings shall be private and occur as soon as practicable. The mediator shall make no public recommendation, nor take any public position at any time concerning the issues. 43.3.2 Fact-Finding: If the parties fail to resolve the dispute through mediation,the parties may agree to submit the impasse to fact finding as soon as practicable. The cost of a fact finder and other mutually incurred costs shall be mutually shared by the District and OCEA. 43.3.3 Board Actions: If the parties fail to resolve the impasse,the dispute shall be sent to the District's Board of Directors for resolution. Each party shall submit its written proposal on all issues to the Board. The Board may take such action to resolve the impasse as it deems appropriate to the public interest. Any action taken by the Board to resolve the impasse shall be final and binding. ARTICLE 43. - SEVERABILITY 43.1 Notwithstanding any other provisions in this Agreement, in the event that any article, section or subsection of this Agreement shall be declared invalid by any court or by any state or federal law or regulation, or should a decision by any court or any state or federal law or regulation diminish the benefits provided by this Agreement, or impose additional obligations on the District,the District and OCEA shall meet and confer on the affected article, section or subsection. In such event, all other articles, sections or subsections of this Agreement not affected shall continue in full force and effect. ARTICLE 44. - UNIFORMS 44.1 The District shall provide and maintain ten (10) uniform pants and shirts, which may include the name of the employee and District's seal, at no cost to employees whose duties require that they wear uniforms. The District will also provide lab coats as required by the lab manager. 44.2 All employees who are issued uniforms must wear them during the performance of their regular duties. Other clothing appropriate to the occasion, as determined by District management, may be worn when attending business meetings. Failure to wear required clothing, shoes and safety equipment may be cause for disciplinary action. ARTICLE 45. - SUBSTANCE ABUSE POLICY 45.1 The District's Substance Abuse Policy will apply to all unit members. The District may adopt or implement rules, regulations and policies to be in compliance with federal and state laws. In such cases, notification will be provided to the bargaining unit prior to implementation. 45.2 Department of Transportation (DOT) Regulations 45.2.1 Every driver who operates a commercial motor vehicle in interstate or intrastate commerce, and is subject to the commercial driver's license requirements of the Department of Transportation, Federal Highway Administration CFR Part 382 is subject to the District's Anti-Drug and Alcohol Program. The District will ensure that all alcohol or controlled substances testing conducted under OCEA—Engineering MOU July 1, 201644 to June 30, 201946 Page 22 the Substance Abuse and Alcohol Misuse Plan complies with the procedures set forth in CFR Part 40. 45.3 District's Substance Abuse Policv 45.3.1 Any employee may be subject to discipline, up to and including termination,for any alcohol screen test that indicates an alcohol concentration level of 0.02% or greater. ARTICLE 46. - DUES DEDUCTIONS 46.1 The District shall deduct from each regular paycheck and remit to OCEA the dues, initiation fees and assessments for each employee who voluntarily authorizes such deduction in writing. Such authorizations must be fled by the end of the pay period prior to the period for which the deduction is requested. 46.2 The District shall provide the OCEA a quarterly list of the names of those employees for whom it has made deductions. In addition, the District shall provide the names and addresses of new employees and the names of employees who have terminated within the previous quarter. ARTICLE 47. (This Article intentionally left blank) ARTICLE 48. - PEACEFUL RESOLUTION OF DISPUTES 48.1 During the term of this Memorandum, or any subsequent period when impasse resolution procedures are in progress or recommendations resulting from such procedures are being considered by the parties,the District agrees it shall not lockout employees in this bargaining unit, and OCEA agrees that it shall neither advocate, encourage or participate in any strike, including sympathy strike, or work stoppages, nor encourage employees to refrain in whole or in part from the full,faithful and proper performance of their duties of employment. ARTICLE 49. (This Article intentionally left blank) ARTICLE 50. -WORKPLACE VIOLENCE AND WEAPONS POLICY 50.1 The District's Workplace Violence and Weapons Policy will apply to all unit members. ARTICLE 51. - RESIGNATION 51.1 Voluntary written termination of employment with the District is irrevocable after seventy-two(72)hours from the receipt of the resignation, except by approval of the Director of Human Resources, or designee. ARTICLE 52. (This Article intentionally left blank) ARTICLE 53. - LABOR MANAGEMENT COMMITTEE 53.1 Orange County Employees Association (OCEA) and the Orange County Sanitation District(OCSD) hereby agree to meet within two(2)months from the OCSD Board approval of this MOU to discuss the structure and process of a Labor Management Committee at OCSD.Absent mutual agreement regarding the structure and process of a Labor Management Committee,the parties will defer discussions to the time when a successor MOU is raised. OCEA—Engineering MOU July 1, 201644 to June 30, 201946 Page 23 SIGNATURE PAGE 201644—2019U MEMORANDUM OF UNDERSTANDING BETWEEN THE ORANGE COUNTY SANITATION DISTRICT AND THE ORANGE COUNTY EMPLOYEES ASSOCIATION FOR THE ENGINEERING UNIT Executed: OCEA ENGINEERING UNIT ORANGE COUNTY SANITATION DISTRICT Bo Gutierrez, Labor Relations Representative S'^ 'ansk;Laura Kaltv, Chief Negotiator Robert(Mickey)Whitney, Construction James Herber^ General Manager elia InsoectorRisdard-6pappe1l.Senior Chandler, Director of Human Resources Construction Inspem Roberto Gh rell , Ass scant r nem ManagerAndrew Nau. Principal Human Resources Analyst AnaWt_aura Maravilla. Human Resources SupervisoStephan a Good, Human RAgnumAg AnalystJanine Aouilar Principal Human Resources Analyst Laurie Klinger, Senior Human Resources Analyst OCEA—Engineering MOU July 1, 201644 to June 30, 201936 Page 24 Exhibit A ENGINEERING UNIT E4fe6tve Effeo4ve �, a4-de1.44 ae-dul-4s 6lassifisatiea Grade M84 MAX M1N MAX Seak�saeNer 78 543=66 S62.94 544.42 S6400 Eng neorng8ssooate 76 - $414a 550.29 - $1227 $5340 seustwstien-Insbester u - 53847 54797 - $4036 $45.93 Ern;-".ss:s:a:" 76 535.76 $43.46 - $36.48 $44.33 Eng neeirn9-Ass istanW 66 $32.48 $39.38 - $33.85 $40.17 Effective Effective Effective Pay 8-Jul-16 7-Jul-17 6Jul-18 Classification Grade MIN MAX MIN MAX MIN MAX Senior Construction lnscector 78 _ 45.53 55.35 _ 46.6] 56]3 47.84 58.15 Enaineerinp Associate 76 _ 43.33 52.69 _ 4.41 54.01 5.52 55.36 Constuction Inspector 74 _ 41.27 50.15 _ 2.30 51.40 3.36 52.69 Enaineerino Assistant ll 70 37.39 5.44 _ 38.32 6.58 39.28 7.74 Enaineerino Assistant l 66 33.88 1.17 34.73 2.20 35.60 3.26 OCEA-Engineering MOU July 1, 201644 to June 30, 201936 Page 25 STEERING COMMITTEE MeetingDae TOBd.ofDir. 30/26/16 10/26/16 AGENDA REPORT IternNumber Iem2umber s zz Orange County Sanitation District FROM: Laura Kalty, Chief Negotiator SUBJECT: SUCCESSOR MEMORANDUM OF UNDERSTANDING FOR THE INTERNATIONAL UNION OF OPERATING ENGINEERS — LOCAL 501 CHIEF NEGOTIATOR'S RECOMMENDATION A. Adopt Resolution No. OCSD 16-23, entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District approving the Memoranda of Understanding between the Orange County Sanitation District and the International Union of Operating Engineers Local 501 for Fiscal Years 2016/2017, 2017/2018 & 2018/2019";and B. Direct staff to finalize and sign the Memoranda of Understanding (MOU) between Orange County Sanitation District and the Local 501 bargaining unit. BACKGROUND The MOU between the Orange County Sanitation District (Sanitation District) and the International Union of Operating Engineers Local 501 (Local 501) bargaining unit that became effective on July 1, 2014 expired on June 30, 2016. Local 501 submitted its initial proposal for a successor MOU on July 5, 2016. Local 501 and the Sanitation District have met and conferred in good faith nine (9) times since receiving the initial proposal. As of the last Board meeting on September 28, 2016, approximately eleven items proposed had either reached tentative agreement or had been withdrawn. On September 28, 2016, the Board of Directors authorized and directed the Chief Negotiator to make a counter proposal to Local 501 including a three-year contract with a 3.0% salary increase due in the first pay period in July for each year of the contract. The Sanitation District delivered this counter proposal to Local 501 on October 10, 2016. Local 501's membership ratified the proposal by majority vote in October 2016. RELEVANT STANDARDS • Ensure the public's money is wisely spent. • Competitive compensation and benefits • Highly qualified, well trained, motivated, and diverse workforce • Negotiate fair and equitable labor agreements • Positive employer, employee relations • Provide professional growth & development Page 1 of 4 PROBLEM The MOU between the Sanitation District and the Loral 501 bargaining unit that became effective on July 1, 2014 expired on June 30, 2016. PROPOSED SOLUTION Adopt Resolution No. OCSD 16-23, entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District approving the Memoranda of Understanding between the Orange County Sanitation District and the International Union of Operating Engineers Local 501 (Local 501), for Fiscal Years 2016/2017, 2017/2018 & 2018/2019". Based on Board direction, the Sanitation District issued a counter proposal to Local 501 on October 10, 2016, including three-year contracts with a 3.0% salary increase for each year of the contract. Local 501 distributed the proposal to its membership for voting and Local 501's membership ratified the proposals by majority vote in October 2016. RAMIFICATIONS OF NOT TAKING ACTION • Labor instability • Possible impacts to morale • Impasse PRIOR COMMITTEE/BOARD ACTIONS On February 19, 2016, an Ad Hoc Subcommittee of the Steering Committee selected Laura Kalty from Liebert Cassidy Whitmore to serve as the Sanitation District's Chief Negotiator. In preparation for and during the meet and confer process, the Chief Negotiator received direction for labor negotiations with Local 501 from the Steering Committee and the Board of Directors. The Local 501 meet and confer process was agendized for discussion in Closed Session at the following Committee/Board meetings: • April 27, 2016 - Steering Committee and Board Meeting • June 22, 2016 - Steering Committee • July 27, 2016 - Steering Committee and Board Meeting • August 24, 2016 - Steering Committee Meeting • September 28, 2016 - Steering Committee and Board Meeting ADDITIONAL INFORMATION Local 501 is the recognized employee organization certified to provide exclusive representation over wages, hours of work, and other terms and conditions of employment for the Sanitation District's 188 non-exempt Operations and Maintenance employees. Page 2 of 4 The MOU between the Sanitation District and Local 501 expired on June 30, 2016. Based on Board direction, the Sanitation District issued a counter proposal to Local 501 on October 10, 2016, including three-year contracts with a 3.0% salary increase for each year of the contract. Local 501 distributed the proposal to their membership for voting and Local 501's membership ratified the proposals by majority vote in October 2016. A full redlined version of the Local 501 MOU is attached for review. A summary of the key changes to the MOU are as follows: 1. Article 1, Recognition: Term of the agreement begins July 1, 2016. 2. Article 2, Duration: Agreement terminates on June 30, 2019. 3. Article 3, Successor Agreement: Language addition - ...initial proposal for a successor agreement 60 days prior to the expiration date of this Agreement. 4. Article 11, Grievance Procedure: Language and timing revisions to extend response time periods to ten days. 5. Article 13, Salary Adjustments and Compensation: Salary: Year 1 — 3.0% Salary Increase, retroactive to the first pay period of July 2016; Year 2 — 3.0% Salary Increase, effective the first pay period of July 2017; Year 3—3.0%Salary Increase, effective the first pay period of July 2018. 6. Article 19, Standby Pay: Addition of side-letter language. 7. Article 20, Insurance: language cleanup, strike 20.3 Medical Reopener. Incorporate HDHP/HSA side letter dated October 8, 2015. Add language regarding Affordable Care Act. 8. Article 35, Acting Pay: language revision to include: language change from cumulative to consecutive hours. Addition of Director of Human Resources or designee pre-approval. 9. Article 49, Shift Changes: Language cleanup — strike reopener language. New Section 49.3.4: When an employee is awarded a shift via bid said employee shall begin the new shift within 30 days of accepting the bid. 10.Bilingual pay: No language will be added to the MOU; however, the parties agree that if an employee goes through appropriate testing and certification process, bilingual certification is eligible for Development Pay, understanding employee has to go through existing process for District approval of certification. Listed below are articles with proposed housekeeping changes in the tentative agreement by article number: Article 7.0— Nondiscrimination in Employment Article 8.0— Smoke-free Work Environment Article 10.0— Discipline and Dismissal Article 23.0— Probationary Period Article 26.0—Shift Differential Article 27.0— Leave of Absence with Pay Article 29.0— Classification Studies Page 3 of 4 FINANCIAL CONSIDERATIONS The total cost is $3.6M over the term of the agreement. This request complies with authority levels of the Sanitation District's Purchasing Ordinance. This item has been budgeted. ATTACHMENT The following attachment(s)are included in hard copy and may also be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: • Resolution No. OCSD 16-23 • Local 501 MOU (redlined version) Page 4 of 4 RESOLUTION NO. OCSD 16-23 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT APPROVING THE MEMORANDUM OF UNDERSTANDING BETWEEN THE ORANGE COUNTY SANITATION DISTRICT AND THE INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL 501, FOR FISCAL YEARS 2016/2017, 2017/2018 & 2018/2019 WHEREAS, on April 22, 2015, the Board of Directors ("Directors") of the Orange County Sanitation District (the "District") authorized the General Manager to sign the Memoranda of Understanding with the International Union of Operating Engineers Local 501 (referred hereinafter as"Local 501"), regarding salaries, benefits and terms and conditions of employment for the period July 1, 2014 through June 30, 2016 ("2014 MOU"). WHEREAS, prior to the expiration of the 2014 MOU on June 30, 2016, Local 501 requested to meet and confer regarding successor MOUs. WHEREAS, pursuant to Government Code Section 3500, at seq., representatives of LOCAL 501 have met and conferred with the representatives of the District and have reached an understanding with regard to certain terms and conditions relative to employment; WHEREAS, at the beginning of negotiations the parties agreed that any salary changes would take effect retroactively to July 8, 2016, the first pay period in the current fiscal year; and WHEREAS, the parties have modified the 2016 MOU between the District and Local 501 to reflect the parties' understanding regarding certain terms and conditions, which include: • Duration of the MOUs has been modified and will be for a 3-year term commencing July 1, 2016, and terminating June 30, 2019, as reflected in the Cover Page and Articles 1 and 2 of the MOUs. • Successor Agreement of the MOUs has been modified as set forth below and as reflected in Article 3 of the MOUs: o The Group shall submit in writing its initial proposal for a successor agreement 60 days prior to the expiration of the current agreement. • Nondiscrimination in Employment has been modified as set forth below and as reflected in Article 7 of the MOUs: o Minor administrative/language changes to align with expanded discrimination law provisions; housekeeping changes. OCSD 16-23-1 • Smoke-Free Work Environment has been modified as set forth below and as reflected in Article 8 of the MOUs: o Minor administrative/language changes to include current smoking and tobacco products and technologies. • Discipline and Dismissal has been modified as set forth below and as reflected in Article 10 of the MOUs: o Housekeeping changes. • Grievance Procedure has been modified as set forth below and as reflected in Article 11 of the MOUs: o Employees are encouraged prior to bringing forward a formal grievance, to discuss the issue with the Director of Human Resources, or designee, in an effort to bring about an informal resolution. o Minor administrative/language changes regarding submission and response timeline requirements at various steps in the process; housekeeping changes. • Salary Adjustments and Compensation has been modified as set forth below and as reflected in Article 13 of the MOUs: o Year 1 — 3.0% Salary Increase, retroactive to the first pay period of July 2016. o Year 2— 3.0% Salary Increase, effective the first pay period of July 2017. o Year 3— 3.0% Salary Increase, effective the first pay period of July 2018. • Standby Pay has been modified as set forth below and as reflected in Article 19 of the MOUs: o Addition of side-letter language. • Insurance has been modified as set forth below and as reflected in Article 20 of the MOUs: o Medical reopener language provides for the District to reopen negotiations if needed due to impacts of the Affordable Care Act (ACA). o Side-letter language to include the addition of the High Deductible Health Plan (HDHP) and Health Savings Account (HSA) o Removes the expired language for medical reopener of February 2015. • Probationary Period has been modified as set forth below and as reflected in Article 23 of the MOUs: o Minor updates to language; housekeeping changes. • Shift Differential has been modified as set forth below and as reflected in Article 26 of the MOUs: o Housekeeping changes. • Sick Leave has been modified as set forth below and as reflected in Article 27 of the MOUS: o Addition of domestic violence, sexual assault, or stalking as permissible uses of sick time in accordance with labor cede. OCSD 16-23-2 o Addition of sick leave benefits for temporary employees in accordance with State law. o Minor administrative/language changes to align with expanded leave law provisions; housekeeping changes. • Classification Studies has been modified as set forth below and as reflected in Article 29 of the MOUs: o Language cleanup. • Acting Pay has been modified asset forth below and as reflected in Article 35 of the MOUs: o Language revision to include: Change from cumulative to consecutive hours and addition of pre-approval by the Director of Human Resources. • Shift Changes has been modified as set forth below and as reflected in Article 49 of the MOU: o When an employee is awarded a shift via bid said employee shall begin the new shift within 30 days of accepting the bid. NOW, THEREFORE, the Board of Directors of the Orange County Sanitation District, DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1. The aforementioned MOUs between the District and Local 501 for the contract period of July 1, 2016 through June 30, 2019 as outlined herein are hereby approved. Section 2. The General Manager is authorized to sign the Memoranda of Understanding with Local 501 for the period of July 1, 2016 through June 30, 2019, in a form approved by General Counsel. PASSED AND ADOPTED at a regular meeting held October 26, 2016. John Nielsen Board Chairman ATTEST: Kelly A. Lore Clerk of the Board OCSD 16-23-3 STATE OF CALIFORNIA ) ss COUNTY OF ORANGE ) I, Kelly A. Lore, Clerk of the Board of Directors of the Orange County Sanitation District, do hereby certify that the foregoing Resolution No. OCSD 16-23 was passed and adopted at a regular meeting of said Board on the 261h day of October 2016, by the following vote, to wit: AYES: NOES: ABSTENTIONS: ABSENT: IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of Orange County Sanitation District this 2611 day of October 2016. Kelly A. Lore Clerk of the Board of Directors Orange County Sanitation District OCSD 16-23-4 MEMORANDUM OF UNDERSTANDING BETWEEN THE ORANGE COUNTY SANITATION DISTRICT AND THE INTERNATIONAL UNION OF OPERATING ENGINEERS LOCAL 501 FOR THE OPERATIONS AND MAINTENANCE UNIT July 1 , 201644 through June 30, 201946 7QO86614 TABLE OF CONTENTS ARTICLE1. RECOGNITION.............................................................................................................................3 ARTICLE2. DURATION ...................................................................................................................................3 ARTICLE 3. SUCCESSOR AGREEMENT.......................................................................................................3 ARTICLE 4. LOCAL 501 ACCESS...................................................................................................................3 ARTICLE 5. LOCAL 501 RIGHTS....................................................................................................................4 ARTICLE 6. DISTRICT RIGHTS.......................................................................................................................4 ARTICLE 7. NONDISCRIMINATION IN EMPLOYMENT.................................................................................4 ARTICLE S. SMOKE-FREE WORK ENVIRONMENT......................................................................................4 ARTICLE9. SAFETY........................................................................................................................................ 5 ARTICLE 10. DISCIPLINE AND DISMISSAL..................................................................................................... 5 ARTICLE 11. GRIEVANCE PROCEDURE......................................................................................................... 6 ARTICLE 12. PROBLEM SOLVING PROCEDURE...........................................................................................8 ARTICLE 13. SALARY ADJUSTMENTS AND COMPENSATION ....................................................................8 ARTICLE 14. SEVERENCE PAY........................................................................................................................ 9 ARTICLE 15. DEFERRED COMPENSATION.................................................................................................. 10 ARTICLE16. HOLIDAYS.................................................................................................................................. 10 ARTICLE17. HOURS OF WORK..................................................................................................................... 11 ARTICLE18. CALL-BACK PAY....................................................................................................................... 12 ARTICLE19. STANDBY PAY........................................................................................................................... 13 ARTICLE20. INSURANCE............................................................................................................................... 14 ARTICLE 21. REIMBURSEMENT ACCOUNT................................................................................................. 16 ARTICLE22. OVERTIME................................................................................................................................. 16 ARTICLE 23. PROBATIONARY PERIOD........................................................................................................ 16 ARTICLE24. PROMOTIONS............................................................................................................................ 17 ARTICLE25. RETIREMENT............................................................................................................................. 17 ARTICLE 26. SHIFT DIFFERENTIAL............................................................................................................... 18 ARTICLE 27. LEAVE-OF-ABSENCE WITH PAY............................................................................................. 18 ARTICLE 28. LEAVE-OF-ABSENCE WITHOUT PAY.....................................................................................21 ARTICLE 29. CLASSIFICATION STUDIES......................................................................................................24 ARTICLE 30. DRIVER'S LICENSE...................................................................................................................25 ARTICLE 31. LAYOFF PROCEDURE..............................................................................................................25 ARTICLE32. LIGHT DUTY...............................................................................................................................26 ARTICLE 33. MEDICAL EXAMINATION..........................................................................................................26 ARTICLE 34. MILEAGE ALLOWANCE............................................................................................................26 ARTICLE35. ACTING PAY..............................................................................................................................26 ARTICLE 36. PERFORMANCE REVIEWS.......................................................................................................27 ARTICLE 37. PERSONNEL FILES...................................................................................................................27 ARTICLE 38. BULLETIN BOARDS..................................................................................................................27 ARTICLE 39. RELEASE TIME FOR MEET AND CONFER SESSIONS..........................................................27 ARTICLE 40. USE OF DISTRICT FACILITIES.................................................................................................28 ARTICLE 41. SCOPE OF BARGAINING..........................................................................................................28 ARTICLE 42. IMPASSE PROCEDURES..........................................................................................................28 ARTICLE 43. SEVERABILITY..........................................................................................................................28 ARTICLE44. UNIFORMS.................................................................................................................................29 ARTICLE 45. SUBSTANCE ABUSE POLICY..................................................................................................29 7908661.4 Loml 501 MOU Page 1 ARTICLE 46. DUES DEDUCTIONS.................................................................................................................29 ARTICLE 47. AGENCY SHOP..........................................................................................................................29 ARTICLE 48. PEACEFUL RESOLUTION OF DISPUTES...............................................................................31 ARTICLE 49. SHIFT CHANGES.......................................................................................................................31 ARTICLE 50. WORKPLACE VIOLENCE AND WEAPONS POLICY...............................................................33 ARTICLE 51. RESIGNATION...........................................................................................................................33 ARTICLE 52. OPERATOR CERTIFICATION...................................................................................................33 SIGNATUREPAGE..............................................................................................................................................34 EXHIBITA.............................................................................................................................................................34 7908661.4 Loml 501 MOU Page 2 MEMORANDUM OF UNDERSTANDING BETWEEN THE ORANGE COUNTY SANITATION DISTRICT AND THE INTERNATIONAL UNION OF OPERATING ENGINEERS LOCAL 501 FOR THE OPERATIONS AND MAINTENANCE UNIT In accordance with the provisions of California Government Code Sections 3500, at seq.,and Resolution No.99- 24 of the Joint Board of Directors, the District's authorized representatives have met and conferred in good faith with representatives of the International Union of Operating Engineers, Local 501,for the District's Operations and Maintenance Unit. These meetings have resulted in an agreement and understanding to recommend that the employees represented by Local 501 accept these terms and conditions, and that the Board of Directors adopt by Resolution the changes and additions to the wages, hours, and conditions of employment for the employees represented by Local 501 as set forth in this Agreement. ARTICLE 1. RECOGNITION 1.1.This Agreement is entered into between the Orange County Sanitation District,referred to hereinafter as the District,and the International Union of Operating Engineers, Loral 501,AFL-CIO,referred to hereinafter as Local 501, as a mutual recommendation to the Board of Directors of the District of those wages, hours of work, and terms of conditions of employment which are to be in effect at 12:01 a.m. on July 1,201644. 1.2.The District recognizes the International Union of Operating Engineers, Local 501, AFL-CIO, which was certified on October 10, 1985, as the exclusive recognized employee organization for matters within the scope of representation for the following classifications, as set forth in Exhibit A (attached hereto and incorporated by reference), as well as additional classes as may be added hereafter by the District. ARTICLE 2. DURATION 2.1.This Agreement will be binding on the District and Local 501 when approved and adopted by the District's Board of Directors. This Agreement will terminate on June 30,201946. Any issue regarding the question of representation shall be brought pursuant to the Employer-Employee Relations Resolution (EERR), Resolution No. OCSD 99-24. ARTICLE 3. SUCCESSOR AGREEMENT 3.1.Local 501 will submit in writing its initial proposal for a successor agreement 60 days prior to the expiration date of this Agreement. ARTICLE 4. LOCAL 501 ACCESS 4.1.The Local 501 representative will have access to the District's facilities during working hours for the purpose of assisting Unit employees in processing grievances or investigating matters arising out of the application of provisions of this Agreement. The Local 501 representative must obtain authorization for each visit in advance from the Director of Human Resources, or designee. 4.2.Local 501 will provide the Director of Human Resources,or designee,with a list of Representatives who are authorized to request access under this Article, and will notify the Director of Human Resources, or designee, of any changes in that list. 7908661.4 Loml 501 MOU Page 3 4.3.Local 501 access will not interfere with District operations, or with the work of employees in any manner. The District reserves the right to restrict access in certain areas designated confidential or secure. ARTICLE 5. LOCAL 501 RIGHTS 5.1.Local 501 may designate fourteen (14) employees to act as stewards for employees covered by this Agreement. Local 501 will furnish the Director of Human Resources, or designee, with the names of employees selected as stewards and will update the list as necessary. An alternate steward may be designated to act in the absence of the regular steward. Employees not listed on the roster of stewards provided to the District by the Local 501 may not act as representatives. 5.2.For purposes of meeting and conferring, Local 501 will be allowed to designate two(2)stewards to attend (additional stewards may be added by mutual agreement of the parties).An additional employee,who may or may not be a designated steward, may be invited to attend to provide subject matter knowledge. 5.3.Stewards will not perform non work-related duties on work time without the prior approval of their immediate supervisor. Neither the District nor the Local 501 will interfere with, intimidate, restrain, coerce or discriminate against employees because of the exercise or non-exercise of their rights to engage in Local 501 activity. ARTICLE 6. DISTRICT RIGHTS 6.1.District inherent rights, powers, functions, duties, responsibilities and authority related to a managerial or administrative character are reserved to the District in its exercise of management decision-making,except as specifically modified by the express provisions of this Memorandum. District rights include, but are not limited to, the exclusive right to consider the merits, necessity or organization of any service or activity provided by law,or administrative order;determine the mission of its constituent departments,commissions and boards;set standards of service,determine the procedures and standards of selection for employment and promotion; establish and implement performance standards; direct its employees; take disciplinary action for proper cause; layoff employees from duty because of lack of work or lack of funds; maintain the efficiency of District operations;determine the methods,means and personnel by which District operations are to be conducted; determine the content of job classifications;classify and reclassify positions;take all necessary actions to carryout its mission in emergencies;and exercise complete control and discretion over its organization and the technology of performing its work. 6.2.District retains all authority and rights conferred on it by law,or other legal sources,except to the extent that such authority is explicitly waived by the express terms of this Agreement. District exercise of its management rights hereunder shall not be subject to appeal or meeting and conferring, however,that the exercise of such rights does not preclude Local 501 from appealing or meeting and conferring the practical consequences or impacts that District decisions have on wages, hours,and other terms and conditions of employment. ARTICLE 7. NONDISCRIMINATION IN EMPLOYMENT 7.1.There will be no unlawful discrimination in the application of the provisions of this Agreement with regard to actual or perceived race, color, religion, national origin, ancestry, sex, gender, gender identity, gender expression, sexual orientation, age, physical or mental disability, medical condition, genetic information, marital status,or military or veteran status,or any other lawfully protected class. To the extent required by law or by the District's rules or regulations,this provision of the Agreement will be applied to all members of the Unit without regard to any protected classification martal status,hand Gap,med Gal Gond ton,status as a ARTICLE 8. SMOKE-FREE WORK ENVIRONMENT 6.1.The District endorses and supports the right of all employees to work in a healthy and safe environment free of recognized hazards. In view of the hazards associated with smoking,and the potentially harmful effect it 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 4 has on the health and well being of District employees and their families, smoking and the use of tobacco (cigarettes cigars e-cigarettes f"vapinc"1 and related tobacco products and technolocies)is not acceptable within District facilities, and may occur only in areas posted for smoking. ARTICLE 9. SAFETY 9.1.It is the duty of the District to provide and maintain a safe place of employment. Local 501 will cooperate by encouraging all employees covered by this Agreement to perform their work in a safe manner. It is the duty of all employees covered by this Agreement,in the course of performing their assigned duties,to be alert to unsafe practices, equipment, and conditions, and to follow the safety regulations and requirements of the District,and to report any unsafe practices or conditions to their immediate supervisor. An employee will not be required to perform work that is unsafe. 9.2.The District will establish a Safety Committee that will include up to six (6) members of Local 501. The committee's recommendations are advisory. The committee will meet at least quarterly;however,additional meetings may be scheduled by either Local 501 or the District. ARTICLE 10.DISCIPLINE AND DISMISSAL 10.1. Discipline may occur when any of the following actions are taken for just cause with respect to any employee in the Unit: verbal reprimand; written reprimand; suspension without pay; reduction in pay, demotion to a classification with a lower pay grade, or dismissal. 10.2. Dismissal,for purposes of this Article,is the separation of a non-probationary employee initiated by the District for just cause. 10.3. A Notice of Intent is not required when the disciplinary action involves a verbal reprimand or written reprimand. 10.4. A Notice of Intent is required and will be given to an employee whenever the disciplinary action involves suspension without pay, reduction in pay, demotion to a classification with a lower pay grade, or dismissal. The notice will be given to the affected employee either by delivery in person or by Certified Mail sent to the employee's last known address. Such personal delivery or mailing will be presumed to provide actual notice to the affected employee. The Notice of Intent will indicate the date on which it was personally delivered or deposited in the mail, which will be the date of issuance. 10.5. The Notice of Intent will contain the following:(1)a description of the disciplinary action intended and the effective date of the action; (2) the reasons for the proposed action; (3) a copy of the charges and materials upon which the action is based;and,(4)a statement of the employee's right to respond,either verbally or in writing to the person initially imposing the discipline, or to a District management representative with authority to make an effective recommendation on the proposed action,the person to whom any response must be directed, and the fact that such response must be received within ten (10)business days of the date of issuance of the notice. The Notice will also advise the employee of the right to representation. 10.6. Prior to the effective date of the proposed disciplinary action,the employee will be given an opportunity to respond either verbally or in writing to a management representative with authority to make an effective recommendation on the proposed action. After review of an employee's response,the District will notify the employee in writing of the action that will betaken. Such action may not involve discipline more severe than that described in the Notice of Intent; however, the District may reduce discipline without further notice.Further clarification of the disciplinary policies and procedures are covered in the District's Personnel Policies and Procedures Manual. 10.7. Dismissal will be preceded by at least one(1)written reprimand,except in those situations in which the employee knows or reasonably should have known that the performance or conduct was unsatisfactory. Such performance or conduct may involve, but is not limited to, dishonesty, possession, use, sale or being under the influence of drugs or alcohol, theft or misappropriation of District property or funds, 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 5 fighting on the job, insubordination,acts endangering people or property,or other serious misconduct. The District may substitute documented suspensions without pay for written reprimands. 10.8. If a Notice of Intent is upheld and the disciplinary action is imposed,the employee may request a post- disciplinary hearing. The request must be submitted to the Director of Human Resources,or designee, within ten(10)business days following the effective date of the disciplinary action(for suspensions,the effective date will be the first business day following the final day of the suspension). The Director of Human Resources,or designee,will schedule a post disciplinary hearing with the General Manager or hearing officer selected by the General Manager. The hearing officer may not be an employee of the District. The hearing officer will provide a written, advisory decision to the General Manager. The General Manager may uphold the disciplinary action that has been taken or may reduce such discipline without the issuance of a further Notice of Intent. The decision of the General Manager will be final. 10.9. Disciplinary actions will be recorded in employee performance reviews. All disciplinary action documentation,except verbal reprimand documentation,will be maintained in an employee's Personnel File in the Human Resources Department. Verbal reprimand documentation will be maintained in the supervisor's employee files. Supervisors shall inform management staff when a verbal reprimand is to be implemented. If after twenty-four(24)months from implementation,there have been no recurrences of similar incidents; supervisors shall destroy the verbal reprimand documentation. 10.10. Written reprimands may be removed from an employee's personnel file twenty-four (24) months subsequent to the date of the issuance if there has been no recurrence of a similar incident during the period. If management agrees to remove the disciplinary action documentation from an employee's personnel file, such documentation will be retained in a separate file by the Human Resources Department for the purpose of showing that progressive discipline has been followed or in support of District proposed discipline. 10.11. Verbal reprimands and written reprimands may only be reviewed under this Agreement through the Problem Solving Procedure. Nothing in this Article will be construed as a waiver of any statutory or constitutional rights. 10.12. A reduction in pay or a demotion to a classification with a lower pay grade that is not a result of performance deficiencies(for example,reclassifications,"bumping'associated with layoffs,reasonable accommodation)will not be considered discipline. ARTICLE I(.GRIEVANCE PROCEDURE 11.1. A grievance is any complaint that management has violated a specific provision of this Agreement, except that,in accordance with Article 10 above,discipline,which requires a Notice of Intent,may not be reviewed under this Grievance Procedure. 11.2. A grievance may be broughtto the attention of the District by an individual employeewithin the Unitor by the Local 501.The District may not bring a grievance through this procedure. Grievances brought by two(2)or more employees,and concerning the same incident,issue,or course of conduct,or multiple grievances brought by the same employee may, upon mutual agreement of the District and the Local 501, be consolidated for the purposes of this procedure. 4 -...2-11.3. Employees are encouraged prior to bringing forward a formal grievance,to discuss the issue with the Director of Human Resources, or designee, in an effort to bring about an informal resolution. 11.3.11.4. An employee may be self-represented or be represented by the Local 501 at all steps of the Grievance Procedure unless specifically agreed otherwise by the Local 501 and the employee. The District will provide a copy of all written grievance settlements to the Local 501. Any reference to days in this Article means business days Monday through Friday, excluding recognized holidays. 414.4-11.4.1. Step 1. An employee will submit his/her complaint in writing to his/her immediate supervisor, or designee,within ten 1010 twe-(55}days of the occurrence of the event giving rise to the complaint,or within ten five{5}days from the time that the employee became aware of such event. The supervisor, or designee, will attempt to resolve the issues 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 6 surrounding the complaint, and respond in writing to the employee within ten 10 five45) days. 443311.4.2. Step 2. If the grievance is not settled at Step 1, it may be submitted in writing to the employee's Division Manager, or designee. This request for formal review must be presented on a form provided by the District within ten 10 4ve4&}days of the conclusion of Step 1.A copy of each written communication on a grievance will be filed with the Director of Human Resources, or designee. The written grievance must: 14.3.2.4.11.4.2.1. Identify the specific management act to be reviewed; �2-11.4.2.2. Specify how the employee was adversely affected; 4t1-.2-2211.4.2.3. List the specific provisions of the MOU that were allegedly violated and state how they were violated; t4.�4.11.4.2.4. Specify the remedy requested; and �P11.4.2.5. Provide the date of attempts at informal resolution and the name of the supervisor or individual involved. 11:33.11.4.3. The Division Manager,or designee,will respond in writing to the employee within ten (10)days after the date the grievance is received. 44-.34:11.4.4. Step 3. If a grievance is not settled under Step 1 or Step 2,it may be presented to the employee's Department Director, or designee, for review and written response. The request for formal review must be presented on a form provided by the District within five (5)days of the conclusion of Step 1 or 2,and must contain the information specified in Step 2 above. A copy of each written communication on a grievance will be filed with the Director of Human Resources, or designee. The Department Director, or designee, will respond in writing to the employee within ten (10) days after the date the grievance is received. 442511.4.5. Step 4. If the grievance cannot be resolved under Step 3, it may be presented to an Assistant General Manager,or designee, within five(5)days from the date the Step 3 finding was issued. The Assistant General Manager,or designee,will respond in writing to the employee within ten (10)days after the date the grievance is received. 443.611.4.6. Step 5. Appeal to the General Manager, or designee, is the final step in the Grievance Procedure. If the grievance cannot be resolved under Step 4, it may be presented to the General Manager,or designee,within five(5)days from the date the Step 4 finding was issued. The General Manager, or designee, shall respond in writing to the employee within ten(10)days after the date the grievance is received. The decision of the General Manager, or designee, is final. 11,411.5. General Provisions. An employee will be given reasonable time off without loss of pay to present and process a grievance. If an employee is represented by a Local 501 steward, the employee representative will be given reasonable time off without loss of pay to perform this responsibility. Absence from work will be approved only if it does not cause disruption to District operations. However, if the time requested cannot be provided, an alternate time will be arranged. 41-311.6. Failure of a management representative to respond within the appropriate time limit will provide a basis for the employee appealing to the next step. If a grievance is not presented or appealed within the time limits, it will be considered resolved on the basis of the preceding response. The Director of Human Resources, or designee, may be petitioned in writing to waive the step or time requirements provided sufficient cause exists. Time limits may also be extended at any step upon mutual agreement of the parties. 44§11.7. Resolution may be agreed upon at any stage of the grievance process. However,the Local 501 will be notified prior to the resolution of any formal grievance matter. 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 7 ARTICLE 12.PROBLEM SOLVING PROCEDURE 12.1. Employees may bring problems to the attention of District managers through the Problem Solving Procedure. This procedure was developed to encourage and facilitate the resolution of employee concerns in a responsive and fair manner,and maybe used to attempt to resolve issues that may not be subjected to the Grievance Procedure. Any reference to days in this Article means business days. 12.2. Step 1:An employee will submit his/her issue that is not subject to the Grievance Procedure in writing to his/her supervisor, or designee, within ten (10)days of the occurrence of the event giving rise to the complaint or within ten (10)days from the time that the employee became aware of such event. The supervisor,or designee,will review the situation or decision,and provide a written response within five (5)days from the date they were notified of the problem. 12.3. Step 2: if the problem is not resolved to the employee's satisfaction,a written statement concerning the problem may be filed with the employee's Division Manager or designee,within ten(10)days of receipt of the supervisor's decision. The employee raising the issue will be provided a written response from the Division Manager, or designee, within ten (10)days after their statement is received. 12.4. Step 3: If a problem is not settled under Step 1 or Step 2,it may be presented within ten(10)days to the Director of Human Resourcesaa-Aaslstant GeneFal or designee,who at their discretion,may will form an adhes-Work Issues Committee, comprised of the employee's Department Director, or designee,another management representative and two(2)Local 501 representatives. The Work Issues Committee ma convene to cooperatively review and develop recommendations for solutions)to the problem.The-Director of Human Resources,or designee,mayw4utilize the committee's recommendation(s)to respond in writing to the employee within fifteen(15)days after the date the problem is received. 12.5. Time limits may be extended for cause upon mutual consent of the parties, and the decision of the Director of Human ResourcesAssi 3enera4Manager, or designee, is final. ARTICLE 13.SALARYADJUSTMENTS AND COMPENSATION 13.1. Merit Pay Step System 13.1.1. Each pay grade is divided into five(5)steps,with an approximate 5.0%difference between each step. 13.1.2. Pay increases will only apply to eligible employees in an active payroll status on the effective date of implementation. Eligible employees will not receive retroactivity if active payroll status becomes effective after the date of implementation. 13.2. Merit Pav 13.2.1. Stepincrease Pav—Bargaining unit employees will be eligible for Step Increase Pay based upon receipt of year-end performance appraisal ratings issued by the assigned supervisor. Step Increase Pay will be paid according to the following: 13.2.1.1. Eligible-Employees must have a proficient year-end performance appraisal to receive a one(1)step base-building salary increase until earning placementat step five(5). 13.2.1.2. Ineligible- Employees who are placed on a Performance Improvement Plan (PIP) due to a needs improvement performance review on the year-end appraisal or who are on a PIP at the time of the year-end appraisal period will remain at their current step until the PIP is satisfactorily completed. 7908661.4 Loca1501 MOU July 1,20164 to June 30,20196 Page 8 13.2.1.3. Performance Management Program:The performance management program includes three (3) rating categories (exceeds, proficient, and needs improvement)for performance appraisals. 13.2.2. Development Pav—Employees under this Agreement will be eligible for Development Pay. Development Pay is a non-base building pay type that will be distributed in a lump-sum amount each pay period. Employees must have a proficient year-end performance appraisal to be eligible for the following Development Pay types: 13.2.2.1. Education — Eligible employees who have completed a degree of approved subjects at an accredited college or university will receive $20.76 per pay period for an associate degree and $41.53 per pay period for an undergraduate degree. The maximum amount of Education pay is fixed at $41.53 per pay period. 13.2.2.2. Certification/License — Eligible employees who obtain a District approved certification or license will receive $7.62 per pay period per certificate or license with a maximum of three(3)certificates and/or licenses.The maximum amount of certification/license pay for any combination of certificates and/or licenses is fixed at$22.86 per pay period. 13.2.2.2.1. The overall maximum Development Pay for any combination of education,certification and/or licenses is fixed at$64.39 per pay period. 13.2.2.2.2. Grade V Pa v — Employees who receive Grade V pay in accordance with the applicable District policy are ineligible to receive Development Pay fortheir Grade V California Wastewater Treatment Plant Operator Certificate. Employees who possess Grade V Certificate and do not meet the criteria for Grade V Pay are eligible for Development Pay in accordance with the Development Pay Program Guidelines. 13.2.2.2.3. Employees who are placed on a PIP due to a needs improvement performance review on the year-end performance appraisal are not eligible for Development Pay until the PIP is satisfactorily completed. 13.2.2.2.4. Employees who are placed on a PIP due to needs improvement performance outside the year-end appraisal will have all Development Pay suspended until the PIP is satisfactorily completed. The return of Development Pay will not be retroactive. 13.3. Salary Range Adjustments 13.3.1. Effective the first pay period in July 201644, employees under this Agreement will receive salary range adjustments at a flat rate of 103.00%. 13.3.2. Effective the first pay period in July 201715, employees under this Agreement will receive salary range adjustments at a flat rate of 2-03_0%. 13.3.3. Effective the first pay period in July 2018, employees under this Agreement will receive salary range adjustments at a flat rate of 3.0%. ARTICLE U.SEVERENCE PAY 14.1. Employees are expected to give a minimum of two (2) weeks written notification when terminating employment with the District. Except for disciplinary cause,when a full-time employee is terminated by action of the District, the employee will be notified in writing two (2) weeks prior to the effective 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 9 separation date. In the event the District does not give such notification,the employee will be entitled to severance pay in accordance with the formula set forth below: 14.1.1. Full-time, regular employees will be entitled to eight(8) hours pay for each full calendar month of continuous employment not to exceed one hundred sixty(160)hours pay. 14.1.2. Employees in limited term or part-time positions, probationary employees and employees who are separated for cause are not eligible for severance pay under any circumstances. ARTICLE 15.DEFERRED COMPENSATION 15.1. Employees may participate in the District approved deferred compensation plan subject to IRS requirements, and in accordance with all guidelines for voluntary participation established by District management. ARTICLE 16.HOLIDAYS 16.1. For the purpose of the District's business calendar,the days listed below are observed by the District as holidays. Employees who are assigned to eight(8), nine (9)or ten (10) hour shifts, Monday through Friday,will observe the holidays listed in Schedule A. Employees who are assigned to twelve(12)hour shifts will observe the holidays as listed in Schedule B. Employees shall receive holiday pay if their entire scheduled work shifts immediately preceding and following the holidayare in a paid payroll status, meaning the employee worked those shifts or utilized paid time off in lieu of working those shifts. When an employee's work schedule requires that they work on an observed holiday, the employee shall be paid at his/her regular rate of pay for the holiday, or receive an equivalent amount of Holiday Compensatory Time Off. Employees shall also receive premium pay at the rate of one and one half (1.5)times their regular hourly rate for all hours actually worked. Employees with a compensatory time off balance in excess of fifty (50) hours as of the last pay period ending in October will receive a mandatory payout for the hours that exceed fifty(50). SCHEDULE HOLIDAY 2015 2016 New Year's Day January 1 January 1 Lincoln's Birthday February 12 February 12 President's Day February 15 Memorial Day May 30 Independence Day July 4 Labor Day September 7 September 5 Veteran's Day November 11 November 11 Thanksgiving Day November 26 November 24 Day after Thanksgiving November 27 November 25 Day before Christmas December 24 December 23 Christmas December 25 December 26 Floating Holiday See 16.2 See 16.2 SCHEDULE HOLIDAY 2015 2013 New Year's Day January 1 Janus 1 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 10 SCHEDULE HOLIDAY 2015 2016 Lincoln's Birthday Februa 12 February 12 President's Day February 15 Memorial Day May 30 Independence Day July 4 July 4 Labor Day September 5 Veteran's Day November 11 November 11 Thanksgiving Day November 26 November 24 Day after Thanksgiving November 27 November 25 Day before Christmas December 24 December 24 Christmas December 25 December 25 Floating Holiday See 16.2 See 16.2 16.2. Floating Holiday: Employees may elect one (1) day during each year as a "Floating Holiday". New employees shall be granted a"Floating Holiday'on a pro-rata basis in the first calendaryear of service per the following table: Hire Date Percent 1at Quarter(January-March) 100% 2nd Quarter(April-June) 75% 3'd Quarter(July-September) 50% 4t^Quarter(October-December) 0% 16.3. Employees must use the "Floating Holiday' within the calendar year it is granted. Every effort will be made to approve an employee's request for a"Floating Holiday"off providing sufficient notice is given. ARTICLE 17.HOURS OF WORK 17.1. For record keeping and accounting purposes,the"workweek"for full-time employees is forty(40)hours per 168-hour period,to be paid on a biweekly payroll basis of eighty(80)hours worked. Employee work periods may be scheduled in shifts of four 9-hour days and one 4-hour day each workweek(9180),five 8-hour days each workweek (10180),four 10-hour days each workweek(8/80), or three 12-hour days and one 4-hour day each workweek(7180). The starting and ending times of employees'workweeks may vary but will be subject to a bid agreement based on seniority.The regular hours of work for each shift will be consecutive and will be posted. Current practices regarding hours of work for Maintenance personnel and meals for Operations personnel will continue. The regular hours of work for each shirt will be consecutive,divided only by normal breaks or rest periods. Work schedule and shift start and stop times will not be adjusted to avoid payment of overtime. 17.2. The District may, in accordance with Article 6—District Rights, change an employee's work schedule and/or work location with a thirty(30)day written notice to the affected employee. The change will not be made as a disciplinary action or to avoid payment of overtime. The thirty(30)day written notice will not apply to shift changes pursuant to Article 49. 17.3. Employees will be allowed a fifteen(15)minute cleanup period prior to the end of each work shift. Ifthe employee's work shift is extended,the fifteen (15)minute cleanup period shall occur at the end of the 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 11 extended period. Employees may not avoid the cleanup period and end their shift before its scheduled ending time. 17.4. Employees will receive paid rest periods not to exceed ten(10)minutes no more than twice in an eight (8),nine(9)orten(10)hourshift or three(3)times fora shift of more than ten(10)hours. Eachshiftwill contain a minimum thirty(30)minute meal period for every six(6)hours of work. Meal and rest periods may not be avoided or accrued for the purpose of obtaining time off or shortening the regular shift. If an employee reports to work as scheduled and was not notified that his/her hours had been changed, he/she will receive two(2) hours pay at the overtime rate. 17.5. Operations 17.5.1. For purposes of this Article,the day shift is defined as an assigned work shift of at least seven (7)consecutive hours, between 0600 hours and 1800 hours. The night shift is defined as an assigned work shift of at least seven (7)consecutive hours,between 1800 and 0600 hours. 17.5.2. Any employee who declares that an individual hardship exists should submit a request,to be excluded from the twelve(12)hour workweek,to the Human Resources Department. Human Resources will determine if there is a valid employee hardship,on a case by case basis,and notify the Local 501 representative of the decision. 17.6. Maintenance 17.6.1. Maintenance: Except where otherwise provided below, the official workweek for full-time represented personnel in Maintenance will be forty(40)hours per week. The workweek will consist of a four(4)consecutive day work schedule with ten(10)consecutive daily hours in a workday with a one-half(%) hour unpaid lunch. 17.6.2. The workday will be 6:00 a.m. to 4:30 p.m. The workweek will begin on a Monday or a Tuesday and end on the corresponding Thursday or Friday. All hours greater than 40-hours in an individual's assigned workweek will be considered overtime and paid at one and one- half(1.5)times the regular rate of pay. 17.6.3. Any employee who declares that an individual hardship exists should submit a request,to be excluded from the 4110 workweek,to the Human Resources Department. Human Resources will determine if there is a valid employee hardship, on a case-by-case basis, and notify the Local 501 representative of the decision. 17.6.4. Co-Generation: For purposes of this Article,the day shift is defined as an assigned work shift of at least seven (7) consecutive hours, between 0600 and 1800 hours. The night shift is defined as an assigned work shift of at least seven(7)consecutive hours,between 1800 and 0600 hours. 17.6.5. Any employee who declares that an individual hardship exists should submit a requestto be excluded from the twelve (12) hour shift to Human Resources. Human Resources will determine if there is a valid employee hardship,on a case-by-case basis,and notify the local 501 bargaining unit representative of the decision. 17.6.6. Disputes over days off will be handled on the basis of seniority except when the District can demonstrate a business necessity. ARTICLE 18.CALL-BACK PAY 18.1. When an employee is called back to work by District management without prior notice, and the employee has completed his/her normal work shift and left the work station;when prior notice is given but the work begins on the same day at least three (3) hours after completion of the regular shift; or when an employee assigned to standby is actually called to work,the employee will receive a minimum of three(3)hours of call back pay. The three(3)hour minimum,whether or not actually worked,will be paid at the rate of one and one half(1.5)times the regular hourly rate. 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 12 18.2. The call back period shall begin when the standby employee has been informed by the District to return to work. The call back period shall end when either the employee arrives at his or her residence or the original destination; in either case, the employee must inform the District upon arrival. 18.3. If the call back period has ended and the employee is called back to work(whether within or outside of the 3-hour minimum timeframe),a new call back period will be started and the employee will be eligible for at least the 3-hour minimum call back pay. 18.4. If the call back period has not ended and the employee is called back to work(whether within or outside of the 3-hour minimum timeframe), the call back period and associated pay will continue but the employee will not be eligible for another 3-hour minimum call back pay. 18.5. Call back pay is applied per call back and not per work assignment or work order. 18.6. Call back work performed by employees on standby assignments is intended for activities that are imperative and not routine in nature,as determined by the applicable on-duty Operations Supervisor or designee. 18.6.1. In some instances, if call back work can be postponed for several hours, the Operations Supervisor or designee will do so as a courtesy to the employee and to allow for the work to be performed during daylight or day shift. For instance,a breakdown occurs at 3:00 a.m.but work can be postponed a few hours so the standby employee can be called in at 6:00 a.m. ARTICLE 19.STANDBY PAY 19.1. Treatment Plant: Standby is time durina which an employee is not required to be at the work location or at the employee's residence but is required to be available for immediate return to work. Each plant maintenance craft may create a standby list of a minimum of three(3)employees. Standby lists shall first be populated by volunteers. If,after allowing for volunteers,the standby list still does not meet the three (3) employee minimum. OCSD shall populate the remaining vacant slots of the standby list by means of reverse seniority within the division. Employees who volunteer or are mandated to be on the standby list shall be comp etent ex erieneed oum level ern to es. Employees who are on their initial probation shall not be eli ible for tandb k1 . 19.1.1. Each craft may create additional standby lists if anticipated work requires a specific skill set that may not be readily available on the existing standby list. If additional standby lists are required, affected employees will be notified. Standby s t me during wh Gh an employee s not required to he at the work Innat on or atthe employee's Fes dense but 6 Fequ red to be avalabe for mmpd ate return to Work. Standby ass gnments w 11 first be Standby ass gnments w 11 be made from the I st of employees who are competent and expeF enGed, n alphabetical order, on a rotat ng basis. in the event that no one volunteers, the D Str Gt w 11 ass gn standby byjab class f Gat on and work lanat on from employees who are competent and exper enGed on fifty five (355) dollars Per Week, and W 11 FeGe ve Call Back pay when he/she 5 actually called to Work. 19.2. Collections Svstem; Standby is time during which an employee is not required to be at the work location or at the employee's residence but is required to be available for immediate return to work. The standby list for the Collections division will contain a minimum of six(6)employees:three(3)employees for primary standby and three (31 employees for secondary standby. The standby list shall first be populated by volunteers. If after allowing for volunteers,the standby list still does not meet the six(6) employee minimum. OCSD shall populate the remaining vacant slots of the standby list by means of reverse seniority within the division. Employees who volunteer or are mandated to be on the standby list shall be competent and experienced, havina at least two (2) years of experience as a Mechanic on rotation within the Collections Division. Employees who are on their initial probation shall not be eligible for standby. 19.3. Employees shall not complete more than two(2)consecutive weeks of standby without a seven(7)day break between standby assignments. 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 13 19.4. Employees on standby will be compensated at the rate of$400 per week. ^Ts;T19.4.1. Employees whose standby assignment include an OCSD recognized Holiday will be compensated with two(2)hours of straight time pay. 199 The D Rtr Gt and I sea! 501 agree to reopen th s Agreement follow ng ratf Gat an to d so ss Art Gle 19 19.2.1.The parties acknowledge •R�,:sfeepeReF does not ae.igate the D StF Ot OF o change and/or modify any prov nons of the MOUduring theerm of th'n MOU. An r nhnnnnn/m f !.I/1 M' nnlnns fn the of th s reopener must be by mutual Th..f .... pFaGProcee R.d... pngse.f6.. O Board; and/or proceed ngs n the Super or Court. ARTICLE 20.INSURANCE 20.1. The District will provide healthcare and welfare insurance benefits. 20.2. All insurance coverage will become effective on the first day of the month following date of hire, regardless of hire date. An open enrollment period will be held annually. o0 o ak;��n from Anthem to Rke Sh-'d through Gal fern a State Asses-t on of Cc int--� ExGess insurance Author )m er d reGtly,andivar ad plan des gn changes n order to in t gate exi;se taxat an n 90�8 Patent a' strateg es for Gone derat on nducle, but are not Plan deduct Was and GORIF but on Fates;and altennalve plan Offer ngs such as a h gh deduct ble health plan .'th health sa 'n account fund ng 20.3.1. The part es agree that th s reopener shall be subject to Government Code S;P.Gt on 3505 4 and 249-.tk20.3. Medical Insurance 20:41 20.3.1. The District will provide medical health insurance coverage through a Health Maintenance Organization (HMO) medical insurance plan, awA--a Preferred Provider Organization(PPO)medical insurance plan and a High Deductible Health Plan(HDHP1,u -t--h t me that the parties agree to changes through the med Gal FeOpen-F n Seer on 20 2. 20.r..20.4. Regular,full-time emplovees: 20.4.1. The District will contribute 90%of employee only premiums for the HMO medical health plans and 80% of employee only premiums for the PPO medical health plan. The District will contribute 80% for employee +1 dependent and full family premiums for the HMO or PPO medical plans. Any change in insurance rates will be shared equally in same ratio as the District and employees currently pay premiums. Before the renewal of any District's sponsored health insurance plan,the parties agree to meet and confer as to changes in the plan. 20.4.2. The HDHP will be accompanied by a Health Savings Account(HSA)to Pavfor qualified medical expenses. OCSD will use a portion of the cost savings in premiums to fund the HSA accounts during active employment only.The HSA will be funded with the savings generated annually by calculating the difference between the District's share of the PPO and HDHP premiums.Exact HSA account funding will be calculated annually, prior to open enrollment, in an amount up to the difference in deductibles, not to exceed the District's aforementioned annual premium cost savings. 20.6.1.20.4.3. The District may reopen negotiations at any time during the term of the MOU to address the impact of the Affordable Care Act(ACA),provided that no change may be made by the District unless such change is either(1)mandated by the ACA or.(2)mutually agreed upon by the parties. 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 14 20,G20.5. Group Insurance Premiums 20,64.20.5.1. Group insurance premiums that are paid by salary redirection can be made on a pre-tax basis. 20-A20.6. Life Insurance 24.7-.4-.20.6.1. The District will pay the full premium for $50,000 term life insurance on each employee. 29$20.7. Short Term Disability 20 8 1 20.7.1. The District will provide a non-work related,short-term disability indemnity plan that provides benefits for employees equal to California's State Disability Insurance(SDI)program for up to twenty-six(26)weeks following a fourteen (14)calendar day waiting period. 29320.8. Long Term Disability 20 9 1 20.8.1. The District will provide a non-work related,long-term disability indemnity plan that pays two-thirds of the employee's rate of pay in effect at the time of such disability, not to exceed $5,000 per month, up to age 65, following a 90-day waiting period of continuous disability, at such time that an employee completes five(5)years of service. 20.8�.20.8.2. For participants age 64 and younger,the maximum period of payment is based on the Social Security Act retirement age of 65. For participants age 65 and older,the maximum period of payment is specified. The specified periods and additional information about coverage is included in the District's long-term disability plan contract accession on the intranet. 20.9 3:20.8.3. No combination of disability or sick leave pay will result in more than an employee's regular rate of pay. Employees may not receive short-term and long-term disability benefits at the same time. An employee who is otherwise not eligible for District paid Long Term Disability may purchase such coverage at his or her own expense. 20 40 0.9. Dental Insurance 2944.4-.20.9.1. The District will contribute 8O%of employee only and 80%of full family premiums for dental insurance. 2011 0.10. Vision Insurance 20444-20.10.1. The Districlwill provide a vision insurance plan for regular,full-time employees and eligible dependents. 2042-.20.11. Retiring Employees 20424,20.11.1. The District will pay, for employees hired prior to July 1, 1988, two and one-half (2.5)months'premium for each year of continuous service of a retiring employee towards the premium costs of coverage for the employee and eligible dependents under the District's medical plan. 29,1��20.11.2. In the event the District adds additional optional insurance plans,the District's share of the premium will be the same as for existing plans as set forth above. In the event the District changes underwriters for existing insurance plans,the District's share of the premium will be the same as for existing insurance plans as set forth above. 2942-.3.20.11.3. The District will continue to implement the retiree medical health premium offset program wherein the cost of health premiums are offset by ten dollars($10)per month for every year of continuous service up to a maximum of 25 years or two hundred fifty dollars($250)per month. 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 15 ARTICLE 21.REIMBURSEMENT ACCOUNT 21.1. Section 125 of the Internal Revenue Code permits employees to use pre-tax dollars to pay for their portion of the cost of benefits under the Plan through salary redirection arrangements. The options available under the flexible benefits program are listed below. This is a brief overview of the different options. For complete information regarding Flexible Spending Accounts employees must referto the plan booklet available in the Human Resources Department. 21.2. Medical Care Reimbursement Account 21.2.1. The purpose of this account is to provide a method through which the employee can accumulate pre-tax funds in a Medical Care Reimbursement Account for purposes of reimbursing himself/herself for payment of health care costs not otherwise covered by his/her medical insurance. 21.3. Dependent Care Assistance Account 21.3.1. The purpose of this account is to provide a method through which the employee can accumulate pre-tax funds in a Dependent Care Assistance Account for purposes of reimbursing himself/herself for childcare expenses or day care for a disabled dependent. ARTICLE 22.OVERTIME 22.1. Employees will be notified as soon as practicable after the District decides upon the need for overtime or additional work. The District may require the performance of overtime. In the event no qualified employee wishes to work overtime, District's management may select employees with the ability to perform the work by inverse seniority. District managers will attempt to evenly distribute overtime among employees based upon an employee's ability to perform the overtime work. For the purposes of overtime calculation, all time charged to unscheduled leave will not be counted as time worked. Pay for overtime will not occur until after work time(which includes scheduled leave)of forty(40) hours in a seven (7)day workweek is reached. ARTICLE 21PROBATIONARY PERIOD 23.1. All new employees and employees who are reassigned or laterally transferred serve an initial probationary period beginning with the date of hire, reassignment or transfer and extending to at least the first day of the pay period following six months t•^^ ^'� '�sof employment without a break in service. Extended absence without pay,short-term and long-temt disability and Workers' Compensation leave does not provide an opportunity to judge an employee's capability to meet performance expectations for a position, and thus the time spent on such leaves will not be included towards completion of the probationary period and may result in an extension. 234-23.2. All new employees who are hired in apprenticeship and/or trainee positions shall serve an initial probationary period beginning with the date of hire and extending to at least the first day of the pay period following the complete oeriod of trainina for the position,without a break in service. Extended absence without pay. short-term and long-term disability and Workers'Compensation leave does not Provide an opportunity to fudge an employee's capability to meet performance expectations for a position,and thus the time spent on such leaves will not be included towards completion of the probationary period and may result in an extension. 23.?23.3. Employees who are rehired following a break in service must complete a new probationary period whether or not one was previously completed. An employee may be released during his/her Probationary Period at the discretion of the District without recourse to the Grievance Procedure. 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 16 ARTICLE 24.PROMOTIONS 24.1. A promotion is the appointment of an employee to another classification with a higher maximum rate of pay. The District will determine whether a vacant position will be filled as an open or promotional opportunity or recruitment. Whenever the District intends to fill a position by promotion,the District will post the opportunity for a minimum often (10)business days. Employees must apply during the period of posting. Notices will be posted on the District's intranet. 24.2. A promoted employee will serve a promotional probationary period lasting at least until the first day of the pay period six months wafter the effective date of the promotion. At any time during the promotional probationary period, an employee may be returned to his/her previous position. If the employee does not pass the probationary period,the District shall return the employee to his or her previous position or an equivalent position.The promotional probation period may be extended by mutual agreement between the employee and District's management for up to ninety(90)days. If an employee is promoted during his/her initial probationary period, the period will be extended until at least the first day of the pay period six months t,_ewt ^�k, after the effective date of the promotion. 24.3. Promoted employees will receive the equivalent of a one(1)step increase in pay, not to exceed the top of the range for the new classification or the minimum rate of the new classification whichever is greater. ARTICLE 25.RETIREMENT 25.1. The District will continue participation in the Orange County Employees Retirement System (OCERS),wherein all full-time employees are considered members. The following retirement program is in effect pursuant to the contract between OCERS and the District. 25.1.1. Employees hired before September21, 1979:The Districtwill continue to contractwith OCERS to provide the 2.5%@ 55 benefit formula(Plan G)based on the highest consecutive twelve(12) months average earnings, past and future service. 25.1.1.1. The District will continue to pay 4.5%toward the employee's contributions to OCERS for those employees who elected to make a one-time decision to remain in the Plan G program. 25.1.2. Employees hired on or after September 21, 1979 and before July 1, 2011, The District will continue to contract with OCERS to provide the 2.5%@ 55 benefit formula(Plan H)based on the highest consecutive thirty-six(36) months average earnings, past and future service. 25.1.2.1. The District will continue to pay 3.5%of an eligible employee's base salary towards the employee's contributions to OCERS. 25.1.3. Employees hired on or after July 1.2011 and before January 1.2013:The District will contract with OCERS to provide the 1.667% @ 57.5 benefit formula (Plan B) based on the highest consecutive thirty-six(36) months average earnings, past and future service. 25.1.3.1. The District will pay 0%of an eligible employee's base salary towards the employee's contributions to OCERS. 25.1.4. Employees hired on or after January 1,2013:The District will contract with OCERS to provide the 2.5% @ 67 benefit formula(Plan U-PEPRA) based on the highest consecutive thirty-six (36)months average earnings, past and future service. 25.1.4.1. The District will pay 0%of an eligible employee's base salary towards the employee's contribution to OCERS. 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 17 25.1.5. All monies actually contributed into the retirement system by an employee will be deducted from gross salary for taxation purposes in accordance with Internal Revenue Code provisions. ARTICLE 26.SHIFT DIFFERENTIAL 26.1. Employees who are assigned to work a night shift that consists of fifty percent(50%)or more of the hours between 6:00 p.m.and 6:00 a.m. and who actually work that shift will receive a shift differential of$3.00 per hour. 269 The D qtr at and Loss! 501 agree to reopen th a Agreement follow ng ratf Gaten to d sGuss Arle's 26 Sp4F 26.2.1. The part as a6knowledge that th S FeGPeReF does not abi gate the D StF Ot OF Lose' 501 to change and/or modify any prov sons of the MO during the \Ill of fh'a An r nhannnn/m M f' nnlnns to the !.I/1 of th S FeapeneF must be by mutual Th..I .... PFaGPFUGee h.d... pngse.f6.. O Board; and/or proceed ngs n the Super or Court. ARTICLE 27.LEAVE-OF-ABSENCE WITH PAY 27.1. Personal Leave 27.1.1. Personal leave is provided to allow employees time off with pay for vacation,personal business and illness or injury. Personal leave is accrued by full-time employees for all paid hours, including hours actuallyworked and hours in a paid-leave payroll status,on a biweekly basis as follows: Years of Service Hours- Hours- Biweekly Annual In years 0 through 1 3.082.31 80' In years 2 through 4 5.38 140 In years 5 through 10 6.92 180 In year 11 7.23 188 In year 12 7.54 196 In year 13 7.85 204 In year 14 8.15 212 In year 15 8.46 220 In year 16 8.69 226 In ear 17 8.92 232 In ear 18 9.15 238 In ear 19 9.38 244 In ear 20 and over 9.62 250 JK2] 27 1 3,27.1.2. When unpaid absences occur, personal leave accruals will be applied by straight proration of leave accruals based on the number of hours actuallyworked,and is applicable to all types of leave,whether legally protected or not. 27.2. Scheduled Time Off 27.2.1. Management will make reasonable effort, considering the operational needs of the District,to accommodate all employee requests for time off. Scheduled time off should normally be 7908661.4 Loca1501 MOU July 1,20164 to June 30,20196 Page 18 requested at least two (2) weeks in advance to increase the likelihood of those dates being approved. 27.2.2. Employees with at least one(1)year's service must requestand take at leastforty(40)hours off each year. 27.2.3. Supervisor absences will not affect an employee's ability to schedule time off unless the time off request is submitted within two(2)weeks of the date requested. 27.2.4. Requests for time off that are submitted beyond six(6)months shall not be approved unless the request is for at least one (1)week in duration. These requests shall be approved based on seniority. Requests for time off that are less than one(1)week in duration must be submitted within six(6)months of the date requested. Time off requests that are submitted within six(6) months shall be approved on a first-come,first-serve basis based on staffing requirements. Excessive single or partial day requests for time off may be cause for denial if the absence(s)is found to negatively impact the effectiveness of work teams, scheduling of work, training,and the ability to take multiple days off by other staff. 27.2.5. Full-day time off requests with less than twenty-three (23) hours' notice shall be considered unscheduled. All other time off requests, including partial day time off requests, must be requested in accordance with the provisions of this Article and may be considered scheduled at management's discretion based on business needs. 27.3. Unscheduled Time Off 27.3.1. Personal leave provides income protection to an employee unable to work due to illness,injury or pregnancy, caring for an ill or injured member of his/her immediate family or other personal emergency. Unscheduled time off must be accounted for by completion of an Unscheduled Time Off Report upon the employee's return to work. It is the responsibility of District's management to control the potential abuse of unscheduled time off privileges. Tardiness less than fifteen (15) minutes will not be deducted from the employees pay, but numerous occurrences will be addressed through the progressive discipline procedures.Employees who are more than fifteen (15) minutes tardy to work must use accrued time off to offset the time away from work. Tardiness of more than fifteen(15)minutes may be considered unscheduled time off based on excessive occurrences. 27.3.2. Employees must notifytheir supervisor priorto the starttime of their shift when theyare unable to report to work.Any absence that is requested within twenty-three(23)hours of the start of an employee's work schedule, excluding protected leaves of absence and bereavement leave, shall be considered unscheduled time off. 27.3.3. An employee's attendance record will be reviewed with an employee after five (5) separate occurrences of unscheduled time off to provide an opportunity to assess problems that could potentially lead to disciplinary action. The accumulation of the sixth and seventh occurrence within a twelve (12) month period will result in a verbal warning. The eighth occurrence will result in a written warning. Employees who are charged with ten occurrences of unscheduled time off within a calendar twelve(12)month period will be subject to termination.A rolling It 2) month calendar period will be utilized to measure absence occurrences.A"rolling"twelve(12) month calendar period is measured backward from the date the employee uses the leave. Absences of multiple consecutive days involving the same injury or illness will be considered a single occurrence.The District also has the right to discipline employees on the basis of total absences away from work. 27.3.4. Employees returning from an extended leaveshould notify their supervisor as soon as possible to facilitate personnel scheduling. 27.3.5. The employee may be required, at any time, to furnish a certificate issued by a licensed physician or nurse,or other satisfactory evidence of illness;however,for unscheduled absences of ten (10) consecutive days or more, a request for leave and a medical statement, on prescribed forms,stating expected date of return must be submitted to Human Resources. For absences of one (1) or more working days in an unpaid status, a request for leave and a 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 19 medical statement on prescribed forms, stating expected date of return must be submitted to Human Resources. 27.4. Personal Leave and Workers' Compensation Leave 27.4.1. Employees who are injured in the course of their employment are placed on Workers' Compensation Leave, and receive wage loss benefits to which they are entitled under the Workers'Compensation Act. Employees may request to receive prorated Personal Leave pay to supplement their Workers'Compensation payments in an amount such that the sum of both is equal to the employee's regular base pay. 27.5. Personal Leave Payoff 27.5.1. Employees who terminate, retire ordecease will be paid in full at their current rate of payforall Personal Leave hours accrued. 27.6. Maximum Accrual 27.6.1. Employees may have a maximum accumulation of four hundred forty(440)hours of personal leave as of the last day of the final pay period in December of each year. In the event an employee accrues personal leave in excess of four hundred forty(440)hours, it must be used prior to said December date. All other remaining hours in excess of four hundred forty(440)will be paid to the employee in the first pay period in January at the employee's then current hourly rate of compensation. 27.7. Sick Leave Bank 27.7.1. Employees who elected to bank sick leave accrued prior to the implementation of Personal Leave provisions may elect to use such time off for absence due to a bona fide illness,injury or pregnancy„ a to attend to the illness or injury of an immediate family member: or, for an employee who is a victim of domestic violence, sexual assault, or stalking, for the purposes described in Labor Code sections 230(c)and 230.1(a). Employees who retire or decease will be paid at the fifty percent (50%) rate for all banked sick leave hours; an employee who terminates will be compensated for banked sick leave as follows: Banked Sick Leave Rate of Payoff Hours 0—100 0 percent 101 -240 25 percent 241 -560 35 percent Over 560 50 percent 27.7.2. If the need for leave is due to the employee's own serious health condition, as defined in the Family and Medical Leave Act (FMLA) or the California Family Rights Act (CFRA), the certification requirement will comply with the provisions of these Acts. 27.8. Jury Duty Leave 27.8.1. Anyfull-time employee,including probationary,who is called forjury duty shall be entitled to his or her regular pay for those hours of absence due to performance of jury dutyfor a period up to twenty-two(22)working days. 27.8.2. Priortojury duty service,each employee mustcomplete a time off requestthrough the District's timesheet system and provide a copy of the summons to his or her supervisor. 27.8.3. Employees who work otherthan the day shift who are called forjury dutywill be considered on day shift for the duration of theirjury service for purposes of this provision. If a portion of that shift should fall on a weekend or other daythe employee is not required to be present in court, the employee will be expected to work. 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 20 27.8.4. A copy of the jury notice must be provided to the employee's supervisor. Employees must report for work during their regularly scheduled work shift when they are relieved from jury duty, unless there is less than one-half(%)of their regular shift remaining. 27.9. Witness Leave 27.9.1. Any full-time, including probationary, employee, who is required to be absent from work by a subpoena properly issued by a court, agency or commission legally empowered to subpoena witnesses,which subpoena compels his/her presence as a witness,except in a matterwherein he/she is named as a defendant or plaintiff or as an expert witness, will, upon approval of an online time off request, be entitled to the time necessary to comply with such subpoena, provided anyfees received for such service,exclusive of mileage,are submitted to the District for deposit in the General Fund of the District. 27.9.2. An employee so subpoenaed must submit a copy of the subpoena to his/her supervisor and complete an online time off request form in orderto be eligible for payfor such absence. To be entitled to receive regular pay for such witness leave,the employee must report for work at the District for time not actually retained on witness service of one(1)hour or more priorto and/or upon completion of each day's service, exclusive of travel time. 27.10. Military Leave 27.10.1.A requestfor military leave will be made upon leave-of-absence forms approved bythe Human Resources Department and will state the date when it is desired to begin the leave-of-absence and the date of anticipated return. A copy of the orders requiring such military service will be submitted with the request. 27.10.2.Provisions of the Military and Veterans Code of the State of California,Sections 395-395.5 will govern military leave. In general,current law provides that an employee having one(1)year or more service with a public entity is entitled to military leave with pay not exceeding thirty(30) days per year if the employee is engaged in military duty ordered for purposes of active military training or encampment. An employee who is required to attend scheduled service drill periods or perform other inactive duty reserve obligations is entitled to military leave without pay, not exceeding seventeen (17) calendar days per year, although the employee may, at his or her option, elect to use accrued leave time to attend the scheduled reserve drill periods or to perform other inactive drill period obligations. Employees who participate in weekend military drill duty are not eligible for leave with pay for such activity, but may have their regular work schedule changed to accommodate the required time off. 27.11. Bereavement Leave 27.11.1.Any full-time employee,whether probationary or regular, will receive a maximum of thirty-six (36) hours of paid time for the death or funeral of an immediate family member. Immediate family member is defined as the employee's father, step-father, father-in-law, mother, step- mother, mother-in-law, brother, step-brother, sister, step-sister, husband, wife, domestic partner, biological child, adopted child, step-child, child of a domestic partner, grandchild, grandparent, foster parent, foster child, legal guardian, or any family member with whom the employee resides. ARTICLE 28.LEAVE-OF-ABSENCE WITHOUT PAY 28.1. It is the policy of the District to grant employees leaves-of-absence without pay under certain circumstances and in accordance with state and federal benefit entitlement laws. Except as stated below, employees will not receive compensation during an unpaid leave-of-absence. Employees will not be granted an unpaid leave of absence prior to exhausting all paid leave accrual balances, excluding employees protected by PDL(Pregnancy Disability Leave)/FMLA(Family and Medical Leave Act)/CFRA(California Family Rights Act)for their own serious health condition. 28.2. Using the prescribed fors, approved by District management, any full-time, including probationary, or part-time employees with at least fifty-two (52)weeks of service and at least twelve hundred fifty 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 21 (1,250) hours of service, may be granted an FMLA or CFRA leave-of-absence without pay, not to exceed twelve(12)weeks in a rolling twelve(12) month calendar period.A"rolling"twelve (12) month period is measured backward from the date the employee uses the leave.A request for leave of absence without pay must be made upon prescribed forms in all instances where an employee is absent without pay for more than five(5)consecutive working days, or for absences of ten (10) working days or more when using paid sick leave accruals. 28.3. Substitution of Paid Leave 28.3.1. Employees who request FMLA or CFRA Leave for qualifying purposes other than the employee's own serious health condition will be required to use all accruals before unpaid leave is granted. Paid time off will not accrue during any pay period that an employee is absent without pay for more than one(1)day. 28.3.2. Personal leave accruals may be used for the care of the employee's father,step-father,father- in-law,mother,step-mother, mother-in-law, brother,step-brother,sister,step-sister,husband, wife,domestic partner,biological child,adopted child,step-child,foster child,legal ward,child of a domestic partner, grandchild, grandparent, foster parent, legal guardian, or any family member with whom the employee resides. 28.4. Permissible Uses 28.4.1. FMLA Leave. FMLA Leave may be used for: 28.4.1.1. The birth of a child or to care for a newborn of an employee; 28.4.1.2. The placement of a child with an employee in connection with the adoption or foster care of a child; 28.4.1.3. The care for the employee's father,step-father,father-in-law,mother, step-mother, mother-in-law, brother, step-brother, sister, step-sister, husband, wife, registered domestic partner,biological child, adopted child,step-child,foster child, legal ward, child of a domestic partner, grandchild,grandparent,foster parent,legal guardian,or any family member with whom the employee resides who has a serious health condition, as defined in the Act; 28.4.1.4. The employee's own serious health condition that renders the employee unable to perform the essential functions of his or her position, including incapacity due to pregnancy; 28.4.1.5. A qualifying exigency arising out of the fact that an employee's family member is on covered active duty or called to covered active duty status in the Armed Forces. A qualifying exigency may include activities such as making arrangements for childcare,attending counseling relating to the active duty of the service member,or attending to farewell or arrival arrangements for the service member; 28.4.1.6. The care for the employee's family member or"next of kin' service member of the United States Armed Forces who has a serious injury or illness incurred in the line of duty while on active military duty. This leave may consist of up to twenty-six (26) weeks of unpaid leave during a single 12-month period. 28.4.2. CFRA Leave. CFRA Leave may be used for: 28.4.2.1. The same purposes as FMLA Leave,including the care of a domestic partner or child of a domestic partner, and will run concurrently with FMLA Leave. 28.4.2.2. CFRA Leave may not be used for 1)an employee's incapacity due to pregnancy,2) leave due to a qualifying exigency, or 3)to care for a family member or next of kin with a serious injury or illness incurred in the line of duty.However,incapacity due to pregnancy may entitle an employee to up to four(4)months of pregnancy disability leave under California's Pregnancy Disability Leave (PDL) law. 7908661.4 Loca1501 MOU July 1,20164 to June 30,20196 Page 22 28.5. General Provisions 28.5.1. Requests for FMLA and CFRA Leave 28.5.1.1. Where the need for Leave is foreseeable, the District requests thirty (30) days advance notice. 28.5.2. Medical Certification 28.5.2.1. As a condition of FMLA or CFRA Leave because of a serious health condition, the District may require certification by the employee's attending physician in accordance with the Department of Labor(DOL)regulations. 28.5.3. Medical and Dental Premiums 28.5.3.1. During FMLA and CFRA Leave,the District will pay for medical and dental benefits at the same level as coverage would have been provided if the employee was not on leave. The employee will be required to pay his or her share of medical and dental premiums. Failure to submit a monthly co-payment, in full,within forty-five(45)days of the invoice date will result in loss of group coverage. Coverage will be reinstated upon return to active employment. 28.5.4. Reinstatement 28.5.4.1. Upon expiration of FMLA or CFRA Leave, the employee will be reinstated to the same or a comparable position unless the employee would not otherwise have been entitled to that position for reasons unrelated to such leave (e.g., lay-off), in which case the District's obligation to continue health and dental or other benefits will cease. 28.5.5. District Employment of Spouses/Domestic Partners 28.5.5.1. FMLA Leave. Married employees will be limited to a combined total of twelve(12) weeks FMLA or CFRA Leave in a rolling twelve(12)month calendar period for the care of a parent or newly born or placed child. 28.5.5.2. CFRA Leave. Married employees and employees in domestic partnerships will be limited to a combined total of twelve(12)weeks CFRA Leave in a rolling twelve(12) month calendar period for the care of a parent or newly born or placed child. 28.5.6. General Leave 28.5.6.1. Employees who have exhausted all paid time off accruals may request to be granted a general leave-of-absence by District management to attend to personal matters or for FMLA or CFRA qualifying events after the expirations of previously authorized leave. 28.5.6.2. During a general leave-of-absence, the employee will be required to pay both the District's and the employee's share of medical and dental premiums. 28.5.6.3. Failure to submit a monthly co-payment, in full, within forty-five (45) days of the invoice date will result in loss of group coverage. Coverage will be reinstated upon return to active employment. 28.5.7. Return to Work Policy 28.5.7.1. An employee who has been absent from work due to a medical reason may be subject to a Return-to-Work medical evaluation. 28.5.7.2. If it is determined that the job demands of the position last held by the employee are not compatible with the employee's restrictions(with reasonable accommodation if 7908661.4 Loca1501 MOU July 1,20164 to June 30,20196 Page 23 the employee is disabled within the meaning of the ADA/FEHA)and the employee is willing to return to work, placement in an alternative position, if available, will be considered. The employee will be re-classified as medically disqualified while alternative positions are being considered. Such time off will be without pay; however,the employee mayelectto use accrued leave hours,such as vacation,sick or personal,to receive compensation. Placement of an employee in an alternative position requires a pre-placement medical evaluation for the alternative job. 28.5.7.3. If it is determined that the job demands of the position last held by the employee are not compatible with the employee's restrictions (and cannot be reasonably accommodated if the employee is disabled within the meaning of ADA/FEHA)and there is not an alternative position,or the employee's restrictions are not compatible with an alternative position, or the employee is not willing to return to work, the employee will be re-classified as medically disqualified and not permitted to work. Thereafter,the employee will be retired for disability, if eligible,or dismissed. Such dismissal will not imply disciplinary action for cause. If requested,the employee's file will indicate the employee left for personal reasons. 28.5.8. Bridge of Service 28.5.8.1. If an employee is dismissed per Section 28.5.7.3 and then is rehired to a position within the District within one(1)year, the District will bridge the employee's service date. Bridging of service procedures involve adding the total number of days away from work to the employees original date of hire. 28.5.9. Failure to Return to Work 28.5.9.1. If, upon the expiration of FMLA or CFRA Leave,or any District-approved extension thereof including General Leave, an employee fails to return to work and no additional leave has been authorized, the employee will be considered to have automatically resigned from his/her position. In such cases, the employee will receive advance notification of the District's intent to implement an automatic resignation. 28.5.10.Comoliance with Law 28.5.10.1.These leave-of-absence provisions will be interpreted and applied in a mannerthat is consistent with the provisions of FMLA,CFRA,ADA and all other laws. In the event there is a direct conflict between these provisions, as written or applied, the provisions of law will govern. ARTICLE 29.CLASSIFICATION STUDIES 291 The D Str Gt W 11 rolude a representatve from LGGal 501 to part G pate as a partner n the agePGY w de class f net an and Gompensat on study. 29-2-29.1. An employee who believes his/her position is not properly classified may submit a written request to the Department Director asking that a classification study be conducted. The Department Director will acknowledge the request in writing and review the request for accuracy, and forward it to the Director of Human Resources, or designee,for consideration and response. Classification studies will only be conducted twice a year in November and during the budget process;therefore, classification study requests shall be submitted October 1st for the November review and according to the Finance budget schedule. District's management may also conduct classification studies at their discretion to ensure that the duties and responsibilities of all employees are appropriately allocated within the classification structure. 29.2.1.29.1.1. All classification study findings regarding existing classifications are subject to approval by the General Manager;findings recommending a new job classification range are subject to approval by the District's Board of Directors. The recommendations of the classification study will be implemented in the first pay period immediately following the 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 24 completion of the study unless the recommendations require action by the Board of Directors prior to implementation. In such event, the recommendations will be implemented in the first pay period immediately following authorization by the Board. 29329.2. Y-Rating 2Q.2..1k29.2.1. In the event the duties and responsibilities of a position are allocated to a lower paid classification,the salary of the incumbent of that position will remain unchanged. 2932:29.2.2. Y-rating will be granted for all reclassifications where employees are working in a job classification with a lower maximum rate of pay. 2932.29.2.3. The Y-rate will remain in effect until the salary range for the new classification equals or exceeds the employee's Y-rated salary. Employees become eligible for merit increases and range adjustments when the Y-rate is no longer in effect. 293429.2.4. Career Change — Operator-in-Training: Y-rating will occur when an existing employee is selected as a candidate for an Operator-in-Training classification when the employee's hourly rate is higher than the applicable hourly rate for the Operator-in-Training classification. The Y-rating shall begin with the effective date of the new classification and continue for eighteen (18) months. The employee must obtain a Grade I Plant Operator certificate within this eighteen(18)month period. The employee will serve a probationary period for the first twelve (12)months of this eighteen (18) month period. If the employee does not obtain a Grade I Plant Operator certificate or does not pass probation, the employee will be returned to his/her prior position or an equivalent position. 29-3-r29.2.5. Career Change — Power Plant Operator I: Y-rating will occur when an existing employee is selected as a candidate for a Power Plant Operator I classification when the employee's hourly rate is higher than the applicable hourly rate for the Power Plant Operator I classification. The Y-rating shall begin with the effective date of the new classification and continue for twenty-four(24)months. The employee will serve a probationary period for the first twelve (12) months of this twenty-four (24) month period. If the employee does not pass probation, the employee will be returned to hislher prior position or an equivalent position. ARTICLE 30.DRIVER'S LICENSE 30.1. Employees who are required by the District to drive must notify their supervisor and the Risk Management Division immediately upon receipt of any suspension or revocation of their California Driver's License privileges. Failure to do so could result in disciplinary action up to and including separation. 30.2. If an employee whose license is suspended or revoked and is thus unable to perform his/her regular duties and responsibilities notifies the District in a timely fashion,an attempt will be made to place the employee in an equal or lower level position for which he/she is qualified. Placement in the range of the new classification is subject to District's management discretion. 30.3. The District will continue to pay the license renewals and physical examination costs of Class A&B licenses that are specifically required by the District. ARTICLE 31.LAYOFF PROCEDURE 31.1. Nothing herein will be construed to require the District to fill vacant, budgeted positions nor to prohibit the District from eliminating vacant positions from the budget. The District reserves the right to reassign staff to other positions in instances involving job restructuring, reorganization or due to lack of work. 31.2. If, in the sole discretion of District's management, personnel reductions are necessary, layoff order and recall lists will be developed based upon job classification, priority of function,job performance, 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 25 individual qualifications and seniority. The Local 501 and employees subject to lay off will be provided with at least two (2)weeks notification in writing whenever possible. 31.3. Employees in classifications subject to layoff may request a voluntary demotion to any previously held position for which they remain qualified. Such request must be made in writing to the Human Resources Department within five(5)days of receipt of the Layoff Notice. The salary of an employee who voluntarily demotes will be unchanged, except that it may not exceed the top of the range for the lower level classification. 31.4. Recall lists will be developed for all classifications experiencing personnel reductions, and will be maintained for a period of two(2)years from the date of layoff. Individuals will be placed on the list in the inverse order of layoff, so that the last person laid off is the first recalled. When a vacancy occurs in a classification for which a Recall list exists, an offer of reemployment will be made to the individual on the top of the list. That individual must respond to the offer within five(5)days,or the offer will be made to the next person on the list. An individual who either does not respond or refuses three(3)consecutive offers will have his/her name removed from the list. 31.5. All notification and responses must be in writing and delivered either in person or by Certified Mail. It is the responsibility of all employees to keep the Human Resources Department informed of their current address, or where they may be contacted. ARTICLE 32.LIGHT DUTY 32.1. An employee who is released by a physician to perform limited duties because of a temporary disability may be assigned to light duty at the discretion of the District. Light duty may consist of duties other than those normally performed by the employee and that are within the employee's medical restrictions. An employee assigned to light duty will be paid the regular wage rate for the job classification to which he or she was assigned prior to being temporarily disabled. ARTICLE 33.MEDICAL EXAMINATION 33.1. When there is reasonable evidence to suggest that an employee is impaired in a manner that endangers his/her own health or safety, or that of others,the District may require that employee to be examined or evaluated by a health care provider. The purpose of such examination must be job related. Any examination under this provision will be conducted on District's time and at District's expense. An employee may submit an independent medical opinion regarding his/her condition and addressing his/her ability to competently perform the duties of the position. This information will be reviewed and considered by a competent medical authority in arriving at a decision regarding the individual's continued employment in the position. ARTICLE 34.MILEAGE ALLOWANCE 34.1. Approved use of a personal vehicle for District business will be reimbursed at the current IRS rate. ARTICLE 35.ACTING PAY 35.1. Employees who are assigned by District's management to perform the duties of a_n-open, budgeted position at a higher level for a period of at least forty(40)consecutive eumu6atwe-hours in a pay period will be eligible for a one (1)step salary increase, or the first step of the range for the higher level classification,whichever is greater. The higher rate of pay begins with hour forty-one (41)and continues until the assignment ends or the six(6) month limitation has been reached at which time a determination will be made as to whether the position should or should not be posted. Requests for acting pay require the pre-approval of the employee's Department Director and the Director of Human Resources, or designeeLs). The forty(40)hour eligibility period may be waived at the discretion of the General Manager. 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 26 35.2. Substitution Pav 35.2.1. Employees in the Operations and Maintenance Departments who are assigned by District's management to perform the duties of an absent Supervisor shall be eligible for Substitution Pay which shall begin with the first hour of assignment. 35.3. Operations 35.3.1. If a Lead Plant Operator or Senior Plant Operator is assigned to perform the work of an Operations Supervisor because of the absence of the regularly assigned Operations Supervisor and the unavailability of an alternate Operations Supervisor for an entire shift,the Lead Plant Operator or Senior Plant Operator will be paid equal to a one(1)step salary increase or the first step of the Operations Supervisor pay range, whichever is greater. 35.4. Maintenance 35.4.1. If an employee in any of the "Lead" classifications is assigned to perform the work of a Maintenance Supervisor because of the absence of the regularly assigned Maintenance Supervisor and the unavailability of an alternate Maintenance Supervisor for a period of at least two(2)weeks,the"Lead"worker will be paid equal to a one step salary increase or the first step of the Maintenance Supervisor pay range, whichever is greater. ARTICLE 36.PERFORMANCE REVIEWS (This Article intentionally left blank. Information related to performance reviews is included in Article 13.) ARTICLE 37.PERSONNEL FILES 37.1. Employees have the right to inspect their Personnel File in the Human Resources Department during the normal office hours of the Human Resources Department by appointment. Employees who wish to correct allegedly erroneous information in their file, or request that items related to disciplinary matters be removed after the indicated time period has elapsed,should submit a request in writing to the Director of Human Resources, or designee. It is the responsibility of each employee to keep the personal information in his/her file current, including home address, telephone number and person to contact in an emergency. ARTICLE 38.BULLETIN BOARDS 38.1. The Local 501 may use the bulletin boards located at Plant 1 (10844 Ellis Avenue, Fountain Valley, CA 92708)and Plant 2(22212 Brookhurst Street, Huntington Beach, CA 92646)which are designated for use by employee groups to post notices to the District employees provided that: (a) no controversial matter which is critical or derogatory of the District, its employees,officers or Directors may be posted; (b) nothing posted by the District may be removed; (c)the Loral 501 will remove its notices after a reasonable length of time; and (d)only a reasonable number of notices will be posted. ARTICLE 39.RELEASE TIME FOR MEET AND CONFER SESSIONS 39.1. A maximum of six(6)employees covered by this Agreement and appointed by the Local 501 will be granted reasonable release time for attending meet and confer sessions at the bargaining table. Release time will not be compensated for any hours that exceed the employee's regularly scheduled hours of work. 39.2. The Local 501 will provide the Director of Human Resources,or designee, with the names of employees requiring meet and confer release time in advance of the meet and confer process. 7908661.4 Loca1501 MOU July 1,20164 to June 30,20196 Page 27 Release time will be limited exclusively to the six (6)employees. The release time will be granted provided that the needs of the District permit the time away from assigned work. ARTICLE 40.USE OF DISTRICT FACILITIES 40.1. District facilities may be used by the Local 501 with prior notice to the Director of Human Resources, or designee,for the purpose of holding meetings, to the extent that such use does not interfere with normal District operations. The Loral 501 agrees to pay for the cost of any additional custodial or security services. ARTICLE 41.SCOPE OF BARGAINING 41.1. The District and Local 501 acknowledge that during the negotiations which resulted in this Agreement, each party had the unlimited right and opportunity to make demands and proposals with respect to all proper subjects within the scope of representation. Therefore, the District and Local 501,for the term of this Agreement, except as otherwise provided herein,each voluntarily and unqualifiedly waive the right, and each agrees that the other will not be obligated to bargain collectively with respect to any subject or matter contained in this Agreement. ARTICLE 42.IMPASSE PROCEDURES 42.1. If either the District or Local 501 declares that an impasse exists in the meet and confer process,the party so declaring may initiate the impasse procedure by providing the other party with a written request for an impasse meeting,together with a statement of its position on all issues. An impasse meeting will be scheduled and held between the parties within fourteen (14)calendar days or as soon as practicable to: 42.2. Review the position of the parties in a final effort to reach agreement on a memoranda of understanding,and 42.3. If the impasse is not resolved, to discuss the immediate utilization of impasse procedures outlined herein. 42.4. Impasse procedures are: 42.4.1. Mediation: If the parties mutually agree to submit the dispute to the State Mediation and Conciliation Service all mediation proceedings will be private and as soon as practicable. The mediator will make no public recommendation, nor take any public position at any time concerning the issues. 42.4.2. Fact-Finding: Whether the parties submit the dispute to mediation or not, Local 501 may request that the parties'differences be submitted to a factfinding panel as soon as practicable. The cost of a fact finder and other mutually incurred costs will be mutually shared by the District and Local 501. 42.4.3. Board Actions: If the parties fail to resolve the impasse,the dispute will be sent to the District's Board of Directors for resolution. Each party will submit its written proposal on all issues to the Board. The Board may take such action to resolve the impasse as it deems appropriate to the public interest. Any action taken by the Board to resolve the impasse will be final and binding. ARTICLE 43.SEVERABILITY 43.1. Notwithstanding any other provisions in this Agreement, in the event that any Article, Section or Subsection of this Agreement will be declared invalid by any court or by any State or Federal law or regulation, or should a decision by any court or any State or Federal law or regulation diminish the benefits provided by this Agreement, or impose additional obligations on the District, the District and 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 28 Local 501 will meet and confer on the affected Article, Section or Subsection. In such event, all other Articles, Sections or Subsections of this Agreement not affected will continue in full force and effect. ARTICLE 44.UNIFORMS 44.1. The District will provide and maintain twelve(12)uniform pants and shirts,which may include the name of the employee and District's seal, at no cost to appropriate personnel. 44.2. The District will also provide each field employee with one (1)jacket. The District will provide for the cleaning of the jacket,and will determine when the jacket needs to be replaced. 44.3. District's management may establish specific appearance guidelines. All employees who are issued uniforms must wear them during the performance of their regular duties. Failure to wear required clothing,shoes and safety equipment may be cause for disciplinary action. ARTICLE 45.SUBSTANCE ABUSE POLICY 45.1. The District's Drug and Alcohol Policy will apply to all unit members. The District may adopt or implement rules, regulations and policies to be in compliance with federal and state laws. In such cases, notification will be provided to the bargaining unit prior to implementation. 45.2. Department of Transportation(DOT) Reaulations 45.2.1. Every driver who operates a commercial motor vehicle in interstate or intrastate commerce,and is subject to the commercial driver's license requirements of the Department of Transportation, Federal Highway Administration CFR Part 362 is subject to the District's Anti-Drug and Alcohol Program. The District will ensure that all alcohol or controlled substances testing conducted under the Substance Abuse and Alcohol Misuse Plan complies with the procedures set forth in CFR Part 40. 45.3. District's Substance Abuse Policv: 45.3.1. Any employee may be subject to discipline, up to and including termination, for any alcohol screen test that indicates an alcohol concentration level of 0.02% or greater. ARTICLE 46.DUES DEDUCTIONS 46.1. The District will deduct from each regular paycheck and remit to Local 501 the dues, initiation fees and assessments including Agency Shop associated service fees or religious exemptions,for each employee who authorizes such deduction in writing. Such authorizations must be filed by the end of the pay period prior to the period for which the deduction is requested. 46.2. The District will provide the Local 501 a quarterly list of the names of employees for whom it has made deductions,the names of new employees,and the names of employees who have terminated. ARTICLE 47.AGENCY SHOP 47.1. Legislative Authority 47.1.1. The parties mutually understand and agree that in accordance with California Government Code Sections 3500,eLseq.,all full-time Unit employees represented by the International Union of Operating Engineers, Local 501 (hereinafter"Union") have the right to join or not join the Union. However, the enactment of a local "Agency Shop" requires that as a condition of continuing employment,employees must eitherjoin the Union or pay to the Union a service fee 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 29 in lieu thereof. Such service fee shall be established by the Union, and shall not exceed the standard initiation fee, periodic dues and general assessments of the Union. 47.2. Union Dues/Service Fees 47.2.1. The Human Resources Department shall provide all current employees and any employees hired thereafterwith an authorization notice advising them that the District has entered into an Agency Shop agreement with the Union,and that all employees subject to the Agreement must eitherjoin the Union,pay a service fee to the Union,or execute a written declaration claiming a religious exemption from this requirement.Such notice shall include a form for the employee's signature authorizing payroll deduction of Union dues or a service fee, or a charitable contribution equal to the service fee. Said employees shall have fourteen (14)calendar days from the date they receive the form to fully execute it and return it to the Human Resources Department. 47.2.2. If the form is not completed properly and returned within fourteen (14) calendar days, the District shall commence and continue a payroll deduction of service fees from the regular biweekly paychecks of such employee. The effective date of Union dues, service fee, or charitable contribution shall begin no later than the first full pay period after receipt of the authorization form. 47.2.3. The employee's earnings must be sufficient after the other legal and required deductions are made to cover the amount of the dues or fees authorized. When an employee is in a non-pay status for an entire pay period, no withholding will be made to cover the pay period from future earnings. In the case of an employee in a non-pay status only during part of the pay period, whose salary is not sufficient to cover the full withholding, no deduction shall be made. In the case of an employee who is receiving catastrophic leave benefits during a pay period, no deductions shall be made. In this connection,all other legal and required deductions(including health care and insurance deductions)have priority over Union dues and services fees. 47.3. Religious Exemption 47.3.1. Any employee who is a member of a bona fide religion, body,or sect that has historically held conscientious objections to joining or financially supporting public employee organizations shall not be required to join or financially support any public employee organization as a condition of employment. The employee may be required,in lieu of periodic dues,initiation fees,orAgency Shop fees,to pay sums equal to the dues, initiation fees,or Agency Shop fees to a nonreligious, nonlabor charitable fund exempt from taxation under Section 501(c)(3)of the Internal Revenue Code, chosen by the employee from a list of at least three of these funds, designated in a memorandum of understanding between the District and the Union,or if the memorandum of understanding fails to designate the funds, then to any such fund chosen by the employee. Charitable contributions shall be by regular payroll deductions only in order to qualify as a condition of continued exemption from the requirement of financial support to the Union. 47.3.2. Declarations of or applications for religious exemption and any other supporting documentation shall be forwarded to the Union within fourteen(14)calendar days of receipt by the District. The Union shall have fourteen(14)calendar days after receipt of a request for religious exemption to challenge any exemption granted by the District. If challenged,the deduction to the charity of the employee's choice shall commence but shall be held in escrow pending resolution of the challenge. 47.4. Rescission 47.4.1. The Agency Shop provision in this memorandum of understanding may be rescinded by a majority vote of all the employees in the Unit covered by the memorandum of understanding, provided that: 47.4.1.1. A request for such a vote is supported by a petition containing the signatures of at least thirty percent(30%)of the employees in the Unit. 47.4.1.2. The vote is by secret ballot. 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 30 47.4.1.3. The vote may be taken at any time during the term of the memorandum of understanding, but in no event shall there be more than one (1)vote taken during that term. Notwithstanding the above,the District and the Union may negotiate,and by mutual agreement provide for,an alternative procedure or procedures regarding a vote on an Agency Shop agreement. 47.4.2. If a"rescission vote"is approved by unit members during the term of a current MOU,the Union agrees not to petition for or seek Agency Shop status for the remainder of the current MOU. 47.5. Records 47.5.1. The Union shall keep an adequate itemized record of its financial transactions and shall make available annually,to the District,and to the employees who are members of the organization, within sixty(60)days after the end of its fiscal year,a detailed written financial report thereof in the form of a balance sheet and an operating statement,certified as to accuracy by its president and treasurer or corresponding principal officer, or by a certified public accountant. An employee organization required to file financial reports under the Labor-Management Disclosure Act of 1959 covering employees governed by this provision,or required to file financial reports under California Government Code Section 3546.5, may satisfy the financial reporting requirement of this section by providing the District with a copy of the financial reports. 47.6. Indemnification 47.6.1. The Union shall indemnify, defend and hold the District harmless against any liability arising from any claims,demands,or other action relating to the District's compliance with the Agency Shop fee obligation,including claims relating to the Union's use of monies collected under these provisions. The District reserves the right to select and direct legal counsel in the case of any challenge to the District's compliance with the Agency Shop fee obligation, and the Union agrees to pay any attorney, arbitrator or court fees related thereto. ARTICLE 48.PEACEFUL RESOLUTION OF DISPUTES 48.1. During the term of this Memorandum, or any subsequent period when impasse resolution procedures are in progress or recommendations resulting from such procedures are being considered by the parties, the District agrees it shall not lockout employees in this Unit, and Local 501 agrees that it shall neither advocate, encourage or participate in any strike, including sympathy strike, or work stoppages, nor encourage employees to refrain in whole or in part from the full, faithful and proper performance of their duties of employment. ARTICLE 49.SHIFT CHANGES 49.1. The shift change provision is intended to provide an opportunity for employees to bid for open positions based on their job knowledge, experience and seniority. An open position is considered an unencumbered position, or vacancy, resulting from a transfer, promotion,separation, or retirement. Shift changes will be handled on the basis of seniority except when the District can demonstrate a business necessity. 49.2. Relief Operator 49.2.1. When Plant Operators,Senior Plant Operators or Power Plant Operator series are assigned to Relief Operator positions, they will be entitled to$1.75 per hour premium. 49.2.2. Except in emergencies, an employee will be notified of a change in his/her work schedule at least forty-eight(48) hours in advance of such change, preferably seven (7)calendar days in advance of such change. In the event that notice is under forty-eight(48)hours, management will first try to fill vacancy from the overtime list. Failure to fill from the overtime list will result in payment equivalent to call back pay in addition to any pay received from the shift worked for the Relief Operator. 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 31 49.2.3. It will be the intent of Management that relief employees will receive two(2)consecutive days off and will only be subject to split days off when schedule changes occur. 49 � 4 The D qtrnt And I oGal 501 agree to reopen th a Agreement fellow ng rat F f nAt an to d sn Jss Art c n 49 2 Re'"nf Operator. An Ghannnn/mod f'Gat onn to the MO as n consequence of th a reopennr must An 6 agreement. The fn' reach m subject to the Employment Relat ans Board; and!UF proceed ngs n the Super OF Court. 49.3. Shift change-bidding procedure 49.3.1. The District will mail (e-mail is acceptable) a Shift Change Request Form to employees in appropriate classifications every six(6)months. Any employee who wishes to be assigned to different shift, and who is qualified for that shift, may indicate his/her preference for reassignment on the Shift Change Request Form. The Shift Change Request Form must be returned within thirty (30) days for an employee to be placed on a shift bid list. The list of requests will be used for a period of six(6)months to fill vacant positions. A new employee or a promoted employee may request through the Human Resources Department to be added to the current list within two(2)weeks of his/her start date(new employee)or of being notified of the promotion. 49.3.2. When the District intends to fill an open position, the following steps will be followed: 49.3.2.1. The District will notify the most senior employee on the Shift Change Request list of the availability of the open position. 49.3.2.2. Within two(2)business days of the shift change offer,the employee must notify the District in writing (e-mail is acceptable) of his/her decision to accept or reject the position. 49.3.2.3. If the most senior employee rejects the position, the position will be offered to the next most senior employee on the list. 49.3.2.4. The process will be repeated until the position is filled or the list is exhausted. 49.3.3. If an employee declines a shift change offer, or does not notify the Human Resources Department within the two(2)business days, his/her name will remain on the list unless they request in writing to have it removed. An employee who accepts a shift change offer will be notified of the effective date of the shift change within seven (7)business days. 49.3-:3.49.3.4. When an employee is awarded a shift bid,the employee shall beam the new shift within 30 days of accepting the bid. 49.4. Requests for urgency transfer 49.4.1. On occasion,an employee maywish to initiate a transfer to a different shift or plant in response to a personal situation beyond his/her immediate control. Management will make a reasonable effort to accommodate such requests, considering the operational needs of the District, in accordance with the following guidelines: 49.4.2. The requirement to work any shift is considered an essential job function. An employee who requests a transfer due to health reasons that are supported by competent medical findings will be considered disabled and an effort will be made to explore reasonable accommodations. If such accommodations cannot be made, or if the accommodation would result in an undue business hardship on the District,the employee will have the option of remaining in the position unless his/her presence would pose a threat to the safety and welfare of others. 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 32 49.4.3. Transfer requests for non-medically related reasons will be considered only when the health or well being of the employee or a member of his/her immediate family is involved. In such events, the transfer would normally be of a temporary nature and limited to the duration of the emergency. 49.4.4. Employees who wish to submit a Request for Transfer must do so in writing to their supervisor. The request should contain sufficient information to allow full consideration of the nature of the emergency or medical condition, and include medical documentation. ARTICLE 50.WORKPLACE VIOLENCE AND WEAPONS POLICY 50.1. The District's Workplace Violence and Weapons Policy will apply to all unit members. ARTICLE 51.RESIGNATION 51.1. Voluntary written termination of employment with the District is irrevocable after seventy-two (72) hours from the receipt of the resignation except by approval of the Director of Human Resources, or designee. ARTICLE 52. OPERATOR CERTIFICATION 52.1. All employees assigned to the Lead Plant Operator, Senior Plant Operator, Plant Operator or Operator-in-Training classifications will comply with the certification requirements of Chapter 4, Title 23, Subchapter 14 of the California Administrative Code. Failure to maintain a valid certificate will be grounds for dismissal. This provision will not be subject to the Grievance Procedure. 52.2. The District will notify the Office of Operator Certification in writing within thirty(30)days of a final disciplinary action resulting in suspension, demotion or discharge of a certified operator if the discipline is the result of commission of any of the acts defined as grounds for discipline within the Operator Certification Regulations. 52.3. As a condition of employment, newly hired Operator-in-Training employees who do not possess a Certificate of Competence will apply for an Operator-in-Training Certificate and pay any applicable fee to the State Water Resources Control Board and submit proof of such application to the Human Resources Department within ten (10)business days of employment. Operators-in-Training who do not receive their Grade I Certificate within three(3)years from their date of hire will be released from District's employment. The District agrees to continue its current policy of reimbursing Operations and Maintenance employees for required certifications. 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 33 SIGNATURE PAGE 201644•201946 MEMORANDUM OF UNDERSTANDING BETWEEN THE ORANGE COUNTY SANITATION DISTRICT AND THE INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL 501 FOR THE OPERATIONS AND MAINTENANCE GROUP Executed LOCAL 501 ORANGE COUNTY SANITATION DISTRICT Deric Barre s€dward-d-6eAy, Business Steve-F arskyLaura Kaltv, Chief Negotiator Manager Business Representative Thomas O'Ma,_, Pres dent Thomas O' Celia Chandler. Director of Human Mahar, President Resources amen Heiberg General Manage Edward Curly Business Manager Andrew Nau. Principal Human Resources Analyst Gar^ Keen Business Representat•a Laura Maravilla&iahard-Speneer, Human Resources SupervisorManeW Charles Close, Steward Analyst Janine Aguilar Principalle Human Resources Analyst Jason Biedermann, ""^"... b'a C Crane Laurie KlingerStephanie-Geed, Senior Human QperaterSteward Resources Analyst Luis Gasca, E^^'.�. Te ch Steward Jorge Mendocal, StewardT-hemas HGRdy, San or Plant operater Gilbert Barela, Stewarddehn-Mirkovicl�Senier Meehan c Gary Tuiasosopo-Kemper, I eadPla�-n 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 34 Gperat- teward EXHIBIT A LOCAL 501 -OPERATIONS AND MAINTENANCE UNIT Effe-tov�e 1O4u1-15 Glass4wate Gra ayde MIN MAJ4 MIN MAJF n to rerun.. Dn 'nmt nnn'nn.n 1 O652 $23.49 $28.66 $23.96 $9.13 p .n ' ,n/unn. Dn 'nmt TeGhnnnn LOC67 $33A9 $40.35 $33.85 $41.16 CQRkB46eRtRFTA&44idaR LADC53 $26.57 $32.30 $27...10 $32.95 €JesidsaFTeshn n anA LOC65 $31-.60 $38.40 $32.23 $39.47 CP.Gtr nn Tenhn+n+An-H gC71 $36.63 $4452 $37.36 $455..41 Dnn ras Workn./R i"w"An, L C62 $29.35 $35.O7 $29.94 $36.38 LADG62 $29..35 $35..97 $29.94 $36.39 IR-tF_m,nt,t an n 6 an 9665 $31-.60 $38.40 $32.23 $39.17 nn Tenhn'n An LOC71 $36.63 $44.52 $37.36 $45,41 Lead€eskisal-Teshaician IOC75 $40,45 $49A6 $41.26 $50.14 bead-6asi0tie, WlAFkc LAD666 $32.40 $39.37 $33.95 $404 L9675 $40.45 $49.16 $41.26 $50.14 nail MenhAnnn LOC71 $36.63 $44.52 $37.36 $45.41 Lead Plant OpeFatar 1OC75 $40.45 $4916 $41.26 $50.14 bead-ReweRRlaRtOperater LAD675 $4O.45 $4946 $41.26 $50.14 .-A ./ChF Gate 19671 $36.63 $44.52 $37.36 $45.41 Mashlnlst LOG68 $34.01 $44.34 $34.69 $42.17 n a nten, ,�,nn\Nn,Ln, 1 OC69 $27.94 $33.96 $28.50 $34.64 Mesha LADC64 $29.62 $34.79 $29.19 $35.49 Mal)Oa-Crane-Operater L9f,67 p. $33.1199 $40.35 $$33.85� $41.16 Operator mTraining I 0056 Per $32.30 P2^o $32..95 Plant - 1 OC66 $32.40 $39.37 $33.05 $40.16 LOG" $32.40 $39.37 O33.95 p$4O046 ReweWJan49peratsr-II 1OG71 $36.63 $44.52 $37W $45,41 Re'ab 1 t Me ntenannn TP.Gh n.:an LOC75 $40.45 $49.16 $41.26- $60.14 San OF McGhann IOC67 $33'l9 $40.35 $33.35 $4116 68Ri9F PlaRt Qperater L�674 $36.63 $44.52 $37.36 $45-44 W�elder/€ahAsater LOC67 $33:19 $40.35 $33-:65 $4116 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 35 Effective Effective Effective 8-Jul-16 7-Jul-17 "UI-1a Classification Gratle MIN MAX MIN MAX MIN MAX Automotive/Heavy Eauipmt Assistant L0053 $24.68 $30.00 $25.42 $30.90 26.1 $31.83 Automotive/Heald EGuipmt Technician LOC67 34.87 S4239 $35.92 $43.66 $37.00 S44.98 Control Center Technician L0058 $27.91 $33.94 $28.75 $34.96 29.61 $36.01 Electrical Technician I LOC65 $33.20 0.35 34.20 $41.56 $35.23 S42.81 Electrical Technician 11 LOC71 38.48 M6.77 $39.63 $4B.17 40.8 M9.63 Facilities Worker/Builder LOC62 30.84 3747 3177 $38.59 32.7 $39.76 Facilities Worker/Painter LOC62 $30.84 37.4] $31.77 $3B.59 32.72 39.76 Instrumentation Technician I LOC65 3320 S40.35 34.20 $41.56 $35.23 S42.81 Instrumentation Technician 11 LOC71 $38.48 M6.77 $39.63 $4B.17 40.8 M9.63 Lead Electrical Technician LOC75 42 50 51.64 43.78 $53.19 $45.09 $54.79 Lead Facilities Worker LOC66 $34.04 W.36 $35.06 $42.60 36.11 W.89 Lead Instrumentation Technician LOC75 $42.50 51.64 4378 5$ 319 45 50 $64.79 Lead Mechanic LOC71 $38.48 6.7] $39.63 $48.17 40.82 9.63 Lead Plant Operator LOC75 4250 51.64 4378 5g 319 $45.09 $64.79 Lead Power Plant Operator LOC75 $42.50 $51.64 $43.78 $53.1s 45.09 54.79 Lead Welder/Fabricator LOC71 3848 S4677 $39.63 $48.17 40.82 149.63 Machinist LOC6$ $35.73 W.44 $36.BO 44.74 37.9 M6.08 Maintenance Planner/Scheduler LOC75 4250 51.64 43.78 $53.19 45.0 $54.79 Maintenance Worker LOC60 29.36 $35.68 $30.24 $36.75 31.1 $37.85 Mechanic LOC61 3$ 0.07 36.54 30.97 $37.64 $31.90 $38.77 Mobile Crane Operator LOC67 34.87 M2.39 $35.92 $43.66 37.00 .98 Operator-In-Training L0058 27.91 33.94 28.75 $34.96 $29.61 36.01 Plant Operator LOC66 34.04 W.36 $35.06 $42.60 36.11 3.89 Power Plant Operator I LOC66 $34.04 S41.36 35.06 $42.60 36.11 3.89 Power Plant Operator II LOC71 38.48 6.7] 39.63E4B7 40.8963 Reliability Maintenance Technician LOC75 4250 51.64 4378 45.09 54Senior Mechanic LOC67 34.87 2.39 35.92 37.00 4.98 Senior Plant Operator LOC71 38.48 67] 3963 40.82 963Welder/Fabricator LOO67 34.8] 2.39 35.92 37.00 4.98 7908661.4 Local 501 MOU July 1,20164 to June 30,20196 Page 36 BOARD OF DIRECTORS Meeting Date TOBd.Of Dir. -- 10/26/16 AGENDA REPORT ItemNumber Iem2umber zs Orange County Sanitation District FROM: James D. Herberg, General Manager Originator: Rob Thompson, Director of Engineering SUBJECT: PROPERTY ACQUISITION FOR 18475 PACIFIC AND 18480 BANDILIER CIRCLE, FOUNTAIN VALLEY, CA GENERAL MANAGER'S RECOMMENDATION A. Approve a Standard Offer, Agreement And Escrow Instructions For Purchase Of Real Estate (Purchase Agreement) with Bender Properties for the property at 18475 Pacific Street and 18484 Bandilier Circle for $10,619,180; and B. Approve AIR Commercial Real Estate Association Standard Industrial/Commercial Single-Tenant Lease -- Net (Lease Agreement) with Bender Properties for the property at 18475 Pacific Street and 18484 Bandilier Circle for$35,000 per month as stipulated in the Purchase Agreement. BACKGROUND The existing administration building, trailers, and laboratory at Plant 1 are outdated and, in some cases, fail to meet applicable code requirements. Thus, the Orange County Sanitation District(Sanitation District)is planning to demolish those buildings and relocate employees to a new administration building and a new laboratory. The Board of Directors designated the Southwest comer of Plant No. 1 as the preferred alternative for the new administration and laboratory buildings in October 2015. The Sanitation District is considering various other alternatives, including the following: (1) construction of a new administration building and/or laboratory on the north side of Plant 1, in the area of the existing administration building; (2) construction of a new administration building and/or laboratory across Ellis Avenue from Plant 1, on one or more properties currently owned by Bender Properties; (3) acquisition or lease of existing buildings in the area for administrative and/or laboratory operations; and (4) continued use of the existing buildings and laboratory. In order to construct either an administration building or a laboratory on the Bender property, the Sanitation District would need to acquire the property. Even if the Sanitation District pursues other options for the administration building and laboratory, it could potentially use the Bender property as a construction staging area, an automobile repair shop, a warehouse, or any other use that does not involve treatment of wastewater. The Sanitation District has an opportunity to acquire the Bender property and this opportunity could be lost if the Sanitation District does not act now. Thus, in order to preserve various options that involve different uses of the Bender property, Sanitation District staff has negotiated a Purchase Agreement with the owner. The Bender property Page 1 of 3 1198055.1 consists of a single parcel with two connected buildings and two street addresses, 18475 Pacific Street and 18484 Bandilier Circle. This parcel is currently occupied by Hobby People, a retail business. The following are the key terms of the agreement: • A purchase price of $10,619,180 for 48,269 square feet of building area, with a cost of$220 per square foot of building area. • The agreement includes a 30-day due diligence period from opening of escrow to review title issues and conduct building inspections, an environmental audit, and seismic evaluation. • Escrow shall close 30-days after Bender Properties has exercised a "Put" option, but not later than 8 months after expiration of the due diligence period. This provision was negotiated to allow the seller to acquire another property for a tax exchange. • Starting on March 1, 2017, when the lease with Hobby People expires, the Sanitation District shall lease the property for $35,000 per month plus $4276 per month for property taxes and insurance until the close of escrow. This provision was negotiated to provide the seller with an income during the period when the current tenant leaves and escrow closes. RELEVANT STANDARDS • Maintain collaborative and cooperative relationships with neighboring agencies • Protection of Orange County Sanitation District assets PROBLEM Board approval of the Purchase Agreement and associated Lease Agreement is required to acquire the property. PROPOSED SOLUTION Approve the Purchase Agreement and associated Lease Agreement. TIMING CONCERNS Bender Properties has indicated that if the Sanitation District does not purchase this property now, they will either list the property for sale or pursue a long-term lease with another tenant. RAMIFICATIONS OF NOT TAKING ACTION Space on Plant No. 1 may need to be used for non-process related facilities. Page 2 of 3 1198055.1 PRIOR COMMITTEE/BOARD ACTIONS July 2016 - Approve a Broker Representation Agreement with Cushman & Wakefield to give exclusive authority to represent the Sanitation District, at no cost,for the investigation and potential negotiation to acquire existing office building and/or land for a new Administration Building in an area near Plant No. 1. August 2016 - Approve actions to issue Letters of Interest to Purchase and sign confidentiality agreements regarding purchase of real estate. September 2016 - Ratify Letter of Interest to Purchase dated September 2, 2016 and Counter-Offer to Purchase dated September 16, 2016,for 18475 Pacific Street and 18484 Bandilier Circle, Fountain Valley, CA from Bender Properties and Authorize the General Manager to sign Letter of Interest to Sell dated September 21, 2016 for 18475 Pacific Street and 18484 Bandilier Circle, Fountain Valley, CA from Bender Properties. ADDITIONAL INFORMATION N/A CEQA The Sanitation District is currently preparing an environmental impact report that will consider various onsite and offsite options for a new administration building and/or a new laboratory, including options for the Bender property. As explained above, however, the Sanitation District has other potential uses for the Bender property. The Sanitation District's Board of Directors has not approved any particular use of the Bender property and will not do so unless and until the Sanitation District performs all environmental review required under the California Environmental Quality Act. The Sanitation District's acquisition of the Bender property shall not foreclose any alternatives or mitigation measures that might reduce or avoid any significant impacts associated with any particular use of the Bender property. FINANCIAL CONSIDERATIONS This item was not included in the FY 2016-17 Budget. Staff will reallocate funds from the current Capital Improvement Program (CIP). If funds are not available in the current CIP, staff will request that the Board direct staff to allocate funds from Sanitation District reserves in a separate agenda report. ATTACHMENT The following attachment(s) may be viewed on-line at the OCSD website (www.ocsd.coml with the complete agenda package: • Standard Offer, Agreement and Escrow Instructions for Purchase of Real Estate (Purchase Agreement) • AIR Commercial Real Estate Association Standard Industrial/Commercial Single- Tenant Lease -- Net (Lease Agreement) Page 3 of 3 1198055.1 STANDARD OFFER, AGREEMENT AND ESCROW INSTRUCTIONS FOR PURCHASE OF REAL ESTATE (Non-Residential) AIR Commercial Real Estate Association September 29, 2016 (Date for Reference Purposes) 1. Buyer. 1.1 Orange County Sanitation District ,("Buyer") hereby offers to purchase the real property,hereinafter described,from the owner thereof("Seller')(collectively,the"Parties"or individually,a"Parry"), through an escrow('Escrow")to close 30 r days after Seller exerdsoo "Put Option"to Buyer or Buyer proceeds to close escrow In accordance with the terms provided In Paragraph 266 below. 6eagageasie6-('Expected Closing Date")to be held by First American Title Insurance Company (Ryan Hahn) ("Escrow HOIdeY') whose address is 18500 Von Korman Avenue, Suite 600, Irvine, CA 92612 ,Phone No. (949) 885-2472 , Facsimile No. (877) 372-0261 upon the terms and conditions set forth in this agreement("Agreemeorl Buyer shall have the right to assign Buyers rights hereunder, but any such assignment shall not relieve Buyer of Buyer's obligations herein unless Seller expressly releases Buyer. 1.2 The term"Date of Agreement"as used herein shall be the date when by execution and delivery(as defined in paragraph 20.2)of this document or a subsequent counteroffer thereto,Buyer and Seller have reached agreement in writing whereby Seller agrees to sell,and Buyer agrees to purchase,the Property upon terms accepted by both Parties. 2. Property. 2.1 The real property("Property')that is the subject of this offer consists of(insert a brief physical description) An approximately 48,269 square foot building on an approximately 2.13 acre parcel of land is located in the City of Fountain Valley , County of Orange Staleof California ,is commonly known by the street address of 18475 Pacific Street and 18484 Bandilier Circle and is legally described as: Will be provided by Escrow Holder (APN: 156-163-06, 08 & LL-01-01 ). 2.2 If the legal description of the Property Is not complete or Is Inaccurate,this Agreement shall not be Invalid and the legal description shall be completed or corrected to meet the requirements of First American Title- Mike Williams/Ed Lugue (*Title Company'),which shall issue the title policy hereinafter described. 2.3 The Property, includes, at no additional cost to Buyer, the permanent improvements thereon, including those items which pursuant to applicable law are a part of the property, as well as the following Items, If any, owned by Seller and at present located on the Property: electrical distribution systems (power panel, bus ducting, conduits, disconnects, lighting fixtures); telephone distribution systems (lines,jacks and connections only); space heaters; heating, ventilating, air conditioning equipment ("HVAC'); air lines; fire sprinkler systems; security and fire detection systems; carpets; window coverings; wall coverings: and (collectively,the'Improvemems"). 2.4 The fire sprinkler monilor:0 is owned by Seller and included in the Purchase Price, O is leased by Seller,and Buyer will need to negotiate a new lease with the fire monitoring company, ❑ ownership will be determined during Escrow,or❑there Is no fire sprinkler monitor. 2.5 Except as provided In Pamgmph 2.3,the Purchase Price does not Include Seller's personal property,furniture and furnishings,and all of which shall be removed by Seller prior to Closing. 3. Purchase Price. 3.1 The purchase price("Purchase Price")to be paid by Buyer to Seller for the Property shall be$10, 619, 180.00 payable as follows: (a) Cash down payment,including the Deposit as defined in paragraph 4.3(or H an all cash transaction,the Purchase Price): $10, 619, 180.00 (Strike if not applicable) (a) Buyer shall take t de to the PROPEFLY Subject to and!BF assume the follow ng ex at Rg deefis)of trust("Fir at all Deedfis)Of Truer')seGUF Rg the exist ng Prom.Seery hotels)("EX at all Pistols)")- A n Fx M ng Not.("R...nal Nor,").th An urns d cons pal IhM,n.,as at the (&4.9 apt (d) BUYBF Shall 9 Ye Seller a deed Of trust(qPUFGha88 Money need ofTrust')onths Property,to SOGUFe the PFGrmSs9W note Of BUYEFtO Seller desedilbed In paragraph 6 - Total Purchase Price: $10, 619, 180.00 PAGE 1 OF 9 INITIALS INITIALS 02003-AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM OFA-19-06/16E 3.2 If Buyer Is taking title to the Property subject to, or assuming, an Existing Deed of Trust and such dead of trust perks the beneficiary to demand payment of fees including, but not limited to, points, processing fees, and appraisal fees as a condition to the transfer of the Property, Buyer agrees to pay such fees up to a maximum of 1.5%of the unpaid principal balance of the applicable Existing Note. 4. Deposits. 4.1 ❑ Buyer has delivered to Broker a check in the sum of$ N/A payable to Escrow Holder,to be delivered by Broker to Escrow Holder within 2 or_business days after both Parties have executed this Agreement and the executed Agreement has been delivered to Escrow Holder, or Id within 2 or business days after both Parties have executed this Agreement and the executed Agreement has been delivered to Escrow Holder Buyer shall deliver to Escrow Holder a check In the sum of$250,000.00 . If said check is not received by Escrow Holder within said time period then Seller may elect to unilaterally terminate this transaction by giving written notice of such election to Escrow Holder whereupon neither Party shall have any further liability to the other under this Agreement. Should Buyer and Seller not enter Into an agreement for purchase and sale,Buyer's check or funds shall,upon request by Buyer,be promptly returned to Buyer. 4.2 Additional deposits: (a) Within 5 business days after the Date of Agreement, Buyer shall deposit with Escrow Holder the additional sum of $ N/A to be applied to the Purchase Price at the Closing. (b)Within 3 5 business days after the contingencies discussed in paragraph 9.1 (a)through(m)are approved or waived, Buyer shall deposit with Escrow Holder the additional sum of$250,000.00 to be applied to the Purchase Price at the Closing. (c)If an Additional Deposit is not received by Escrow Holder within the time period provided then Seller may notify Buyer, Escrow Holder, and Brokers,in writing that, unless the Additional Deposit is received by Escrow Holder within 2 business days following said notice,the Escrow shell be deemed terminated without further notice or Instructions. 4.3 Escrow Holder shall deposit the Ponds deposited with It by Buyer pursuant to paragraphs 4.1 and 4.2(collectively the"Deposit'),In a State or Federally chartered bank in an interest bearing account whose term is appropriate and consistent with the timing requirements of this transaction.The interest therefrom shall seems to the benefit of Buyer, who hereby acknowledges that there may be penalties or interest formilures if the applicable Instrument is redeemed prior to Its specified maturity. Buyers Federal Tax Identification Number Is 95-6003940 .NOTE: Such interest bearing account cannot be opened until Buyers Federal Tax Identification Number is provided. 4.4 Notwithstanding the foregoing,within 5 days after Escrow Holder receives the monies described in paragraph 4.1 above,Escrow Holder shall release$100 of said monies to Seller as and for Independent consideration for Seller's'execution of this Agreement and the granting of the contingency period to Buyer as herein provided. Such independent consideration is non-refundable to Buyer but shall be credited to the Purchase Price in the event that the purchase of the Property is completed. 4.5 Upon waiver of all of Buyers contingencies the Deposit shall become non-refundable but applicable to the Purchase Price except in the event of a Seller breach,or in the event that the Escrow is terminated pursuant to the provisions of Paragraph 9.1(n)(Destruction, Damage or Loss)or 9.1(0) (Material Change). 5, F Rana off Cent agency.(SPoke at net alepAsab! 5 1 Th s offer a cant agent wpeR Bayer more n ag from an no more company finame gi not let an or other lender a comm finnest to lend to Buy, a sum equal to at least % he Partings PF 08, OR terms reasonably acceptable to Buyer Such 'Ban ("Now Loan") shall be SeGUFad by a it Ist deed of trust or mortgage an I des far Seller to may back jun or f man er ng,men Seller shall Im a the F ant is approve the terms of the Nise I can Seller shall he'. 7 day. from .a.N of the a.m.tor.at im#.9 forth the prop...d forms of the Na,.as, I- approve a, d impipra,a ef such proposed terms If Seller to Is to netify Fmmev Heider, n war ng, of the d sappreval win n so d 7 days I shall be mmolus vely presumed t at Seiler has approved the terms of the N,,e 52 Ruyewhema, .9 the New I can If Buyer shall fail to notify'is ifirolume lismeow,Holder and Seiler, writ n 9 with n days falh�wmj the Data of Agreement,that the N,.I --m has nor has. -bl,mad, I-mll le, �.... ..v-ly pr---.-d 5j3 If,after due d I goads, Buyer shall roffy Is Rocker,Fmose Holder and Seller n war ag,wth n the t me aped fled n paragraph 662 hereof the BUY8F has at btar ned so J Plow Loan th r a Agreement she" be term noted, and Buyer shall be a trtl,d is the prompt return of the Dopes i, plus any 6, 38118F FiRams ng (Purchase Money Plate). (Sense front a pal and FteFeSt A 2 The P reffiviioe Money Note smile,the Purchase Money Deed of Trust shot mom. peovis ons regarding the Amid irg (see also pam9mph 10.3{bfk (a) �vapayvmhf Pr no pal may be press J n whole or n pan at any I me wthout penalty,at the opt on ofthe Royer, (b) Los Gimrgs9 A'ate change of 694 shall be payable with respect to any payment Of Pane pal, merest, or other offiNges, not made win a 40 day-Aff t .it % (G) Due On Safe. Is the event the Buyer sells Brthansfers t tle to the PROPEFly or any part on thereof,then the Seiler may,at Sellees opt on, 6 3 If the P r.h,.a Money need of T, at a to be a-bard note to other fimmm ng Escrow Holder shall,of Rovers expense prepare and record a Sellers behalf a request far not gA of deral-it shelter"Is v th regard to each mortgage or des-of tr-0 to ch Gh I -,11 he s -hard mh, DETAIN TS ON THE I CAN, RFI I RR's SO'F REMEDY Is TO FnRFal nsF ON THE PROPERTY - 6 5 Sellers us get OR to PROV do fi 8 met Figere Upon Sellers reasonable approval of Ruyegs financial condition Buyer to provide a G mert f....I,statement and cap..of to Fathom-tax m1mr.far the-set 3 yswe 1.Sale, uhr n 10 day.follow.9 the Data of Agresomm! he. 10 days fulose'.9 mGeildt of such dmurrematio.to satisfy itself.'in regard to Ruyers fireiriGial sermitie.and to notify Fmm- Holder ,�1,whether or Hot BUYEF rS fi no mor a' send did, 9. acceptable r If Seller fa re to notify Escrow Hadee R Wom1g, of the d SaPPFOVal of th a cent ngenoy Wr th a so d t me F.F ad I hall �. ..R.I.."MY Pose ad the-F.Wl has PPm9r.d R Y."�FiMs al iN.ad- f R,ys,is is to d.-,or the man ad mmm,not an than Sn"Pr may natty Fsrmw Haider n war ng that Seller F mass ng w 11 not he ave lahle and Rwye Sho, have the mg4mr with" 10 days of the mGeipt of such net Ge, to a ther terminate this transaction or to purchase the Property without Sells finano ng. If Buyer to Is to notify Escrow Holder wd;P so r d t me peded of to elect on to term note th g thmRAGIAR than R .YeF shall be sondes vely pres; ad 1. have elected to purchase the Property without 94,,in...ng lf Buyer ols.l.1.term nam, Rovers Mems Lehal be refunded less Tire Company and Femov,Holder Gondolier on fees and costs,all of wh Gh shall be Buyer's mi gafim. 7. Real Estate Brokers. 7.1 The following real estate brokers) ("Broken") and brokerage relationships exist in this transaction and are consented to by the Parties (check the applicable boxes): ® Lee & Associates®—Newport Beach (Jim Snyder/Pat Lacey) represents Seller exclusively("Settees Broker'); Cushman & Wakefield (Kevin Turner/John Gallivan) represents Buyer exclusively("Buyers Broker');or ❑ represents both Seller and Buyer("Dual Agency"). The Parties acknowledge that other than the Brokers listed above, there are no other brokers representing the Parties or due any fees and/or commissions under this Agreement See paragraph 24 regarding the nature of a real estate agency relationship.Buyer shall use the services of Buyer's Broker exclusively in connection with any and all negotiations and otters with respect to the Property for a Period of 1 year from the date inserted for reference purposes at the lop of page 1. 7.2 Buyer and Seller each represent and warrant to the other that me/shaft has had no dealings with any person, firm, broker or finder In connection with the negotiation of this Agreement andlor the consummation of the purchase and sale contemplated herein, other than the Brokers named in paragraph 7.1, and no broker or other person, firm or entity, other than said Brokers Were entitled to any commission or finders fee in PAGE 2 OF 9 INITIALS INITIALS 02003-AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM OFA-1945/16E connection with this transaction as the result of any dealings or acts of such Party.Buyer and Seller do each hereby agree to indemnify,defend,protect and hold the other harmless from and against any costs, expenses or liability for compensation, commission or charges which may be claimed by any broker,finder or other similar party,other Man said named Brokers by reason of any dealings or act of the indemnifying Party. 8. Escrow and Closing. 8.1 Upon acceptance hereof by Seller,this Agreement, including any counteroffers incorporated herein by the Parties, shall constitute not only the agreement of purchase and sale between Buyer and Seller,but also instructions to Escrow Holder for the consummation of Me Agreement through the Escrow. Escrow Holder shall not prepare any further escrow instructions restating or amending the Agreement unless specifically so instructed by the Parties or a Broker herein. Subject to Me reasonable approval of the Parties, Escrow Holder may, however, include its standard general escrow provisions. In the event that there is any conflict between the provisions of Me Agreement and the provisions of any additional escrow instructions the provisions of the Agreement shall prevail as to the Parties and the Escrow Holder, 8.2 As soon as practical after the receipt of this Agreement and any relevant counteroffers, Escrow Holder shall ascertain the Date of Agreement as defined in paragraphs 1.2 and 20.2 and advise the Parties and Brokers,in writing,of the date ascertained. 8.3 Escrow Holder is hereby authorized and instructed to conduct the Escrow in accordance with this Agreement,applicable law and custom and practice of the community in which Escrow Holder is located, including any reporting requirements of the Internal Revenue Code, In the event of a conflict between the law of the state where the Property Is located and the law of the state where the Escrow Holder Is located,the law of the state where the Property is located shall prevail. 8.4 Subject to satisfaction of the contingencies herein described, Escrow Holder shall close this escrow(Me"Closing)by recording a general warranty deed(a grant deed in California)and the other documents required to be recorded,and by disbursing the funds and documents in accordance with this Agreement. 8.5 Buyer and Seller shall each pay one-half of Me Escrow Holders charges and Seller shall pay the usual recording fees and any required documentary transfer taxes. Seller shall pay the premium for a standard coverage owners or joint protection policy of title insurance. (See also paragraph 11) 8.6 Escrow Holder shall verify that all of Buyers contingencies have been satisfied or waived prior to Closing. The matters contained in paragraphs 9.1 subparagraphs (b), (c), (d), (a), (g), (i), (n), and (a), 9.4, 12, 13, 14, 16, 18, 20, 21, 22, and 24 are, however, matters of agreement between the Parties only and are not instructions to Escrow Holder. 8.7 If this transaction is laminated for non-satisfaction and non-waiver of a Buyers Contingency,as defined in paragraph 9.2,then neither of the Parties shall thereafter have any liability to Me other under his Agreement, except to the extent of a breach of any affirmative covenant or warranty In this Agreement. In the event of such termination, Buyer shall,subject to the previsions of paragraph 8.10, be promptly refunded all funds deposited by Buyer with Escrow Holder,less only the$100 provided for in paragraph 4.4 and the Title Company and Escrow Holder cancellation fees and costs,all of which shall be Buyers obligation. If this transaction is terminated as a result of Sellers breach of this Agreement then Seller shall pay the This Company and Escrow Holder cancellation fees and costs. 8.8 The Closing shall occur on the Expected Closing Dale, or as soon thereafter as the Escrow is in condition for Closing; provided, however, that if the Closing does not occur by the Expected Closing Date and said Date is not extended by mutual instructions of Me Parties,a Party not then in default under this Agreement may notify the other Party, Escrow Holder,and Brokers, in writing Mat, unless the Closing occurs within 5 business days following said notice,the Escrow shall be deemed terminated without further notice or instructions. 8.9 Except as otherwise provided herein, Me termination of Escrow shall not relieve or release either Party from any obligation to pay Escrow Holder's fees and costs or constitute a waiver, release or discharge of any breach or default that has occurred in the performance of the obligations, agreements,covenants or warranties contained therein. 8.10 If this sale of the Property, is not consummated for any reason other Man Sellers breach or default, then at Sellers request, and as a condition to any obligation to return Buyer's deposit(see paragraph 21), Buyer shall within 5 days after written request deliver to Seller,at no charge, copies of all surveys, engineering studies, soil reports, maps, master plans, feasibility studies and other similar items prepared by or for Buyer that pertain to the Property. Provided, however, that Buyer shall not be required to deliver any such report if the written contract which Buyer entered into with Me consultant who prepared such report spec0ically forbids the dissemination of Me report to others. 9. Contingencies to Closing. 9.1 The Closing of this transaction is contingent upon the satisfaction or waiver of the following contingencies. IF BUYER FAILS TO NOTIFY ESCROW HOLDER, IN WRITING, OF THE DISAPPROVAL OF ANY OF SAID CONTINGENCIES WITHIN THE TIME SPECIFIED THEREIN, IT SHALL BE CONCLUSIVELY PRESUMED THAT BUYER HAS APPROVED SUCH ITEM, MATTER OR DOCUMENT. Buyers conditional approval shall constitute disapproval, unless provision is made by the Seller within the time specified therefore by the Buyer in such conditional approval or by this Agreement, whichever is later, for the satisfaction of Me condition imposed by the Buyer. Escrow Holder shall promptly provide all Parties with copies of any written disapproval or conditional approval which it receives. With regard to subparagraphs (a)through(m)the pre-printed time periods shall control unless a different number of days is inserted in the spaces provided. (a) Disclosure. Seller shall make to Buyer, through Escrow, all of the applicable disclosures required by law (See AIR Commercial Real Estate Association("AIR")standard forth entitled"Sellers Mandatory Disclosure Statement")and provide Buyer with a completed Property Information Sheet ("Property Information Sheet") concerning the Property, duly executed by or on behalf of Seller in the current form or equivalent to that published by the AIR within 10 or days following the Date of Agreement.Buyer has 10 days from the receipt of said disclosures to approve or disapprove the matters disclosed. (b)Physical inspection/5e/smlc Evaluatlan.Buyer has 10 err 30 days from opening of escrow fellow mg the FeGe at of A Property Information Sheet or the Date Of A gFwalliffli W11 Mawr 15 Issue,to satisfy itself wlth regard to the physical aspects and size of the Property.. bid Hazardous Substance Conditions Report. Buyer has 30 ec days from opening of escrow following tha rem pt of the,Poperty Informal an She-' -1 th a Date at A 9%9.60, wh Mover a later, to satisfy itself with regard to the environmental aspects of the Property. Seller recommends Mat Buyer obtain a Hazardous Substance Conditions Report concerning the Property and relevant adjoining properties. Any such report shall be paid for by Buyer. A"Hazardous Substance"for purposes of this Agreement Is defined as any substance whose nature and/or quantity of existence,use,manufacture,disposal or effect,render 4 subject to Federal,state or local regulation,investigation,remediation or removal as potentially injurious to public health or welfare. A"Hazardous Substance Condition'for purposes of this Agreement is defined as the existence on, under or relevantly adjacent to the Properly of a Hazardous Substance that would require remediation andlor removal under applicable Federal, state or local law. (it)Soil Inspection.Buyer has 30 ori days from opening of escrow follow ng the rose at of th 9 Property Infarm at on Sheet or the to satisfy itself with regard to the condition of the soils on the Property. Seller recommends that Buyer obtain a soil test report.Any such report shall be paid for by Buyer. Seller shall provide Buyer copies of any soils report that Seller may have within 10 days of the Date of Agreement. (a)Governmental Approvals.Buyer has 30 err—days to"ewimg-the from opening of escrow Date-ef-A gas ement to satisfy itself with regard to approvals and permits from governmental agencies or departments which have or may have jurisdiction over the Property and which Buyer deems necessary or desirable in connection with its intended use of the Property, including, but not limited to, permits and approvals required with respect to zoning, planning, building and safety, fire, police, handicapped and Americans with Disabilities Act requirements, transportation and environmental matters. (f) Conditions of Title. Escrow Holder shall cause a current commitment for title insurance ("Title Commitment") concerning the Property issued by the Title Company,as well as legible copies of all documents referred to in the Title Commitment("Underlying Documents"),and a scaled and dimensioned plot showing the location of any easements to be delivered to Buyer within 10 or days feitswting from the opening of escrow gain-ef,4greemex6 Buyer has 40 30 days from Opening of escrow pint pigsto satisfy itself with regard to Me condition of title. The disapproval by Buyer of any monetary encumbrance, which by the terms of this Agreement is not to remain against the Property after the Closing, shall not be considered a failure of this contingency, as Seller shall have Me obligation,at Seller's expense,to satisfy and remove such disapproved monetary encumbrance at or before the Closing. (g) Sunray, Buyer has 30 or days from opening of escrow fellowng Me face pt of the Ttle Cermotiment and Underlying 9ertxaeeW to satisfy itself with regard to any ALTA title supplement based upon a survey prepared to American Land Title Association standards for an owner's policy by a licensed surveyor,showing the legal description and boundary lines of the Property,any easements of record,and any Improvements, poles, structures and things located within 10 feet of either side of the Property boundary lines.Any such survey shall be prepared at Buyer's direction and expense.If Buyer has obtained a survey and approved the ALTA title supplement,Buyer may elect within the period allowed far Buyer's approval of a survey to have an ALTA extended coverage owners form of title policy, in which event Buyer shall pay any additional premium attributable thereto. gh)&sseng janaws and T�snandxv Statements. Seller shall sh fib n 19 as days fellow ng the Date of AgMER11811i PRY Its bath A.y- and 966FOW Hed@F W th leg ble ,Pr as of a"'eases, subleases OF rental arrantlemeals(sales!wily, 'Ex st ng Leases")affect up the PROPedy, and var th PAGE 3 OF 9 INITIALS INITIALS 02003-AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM OFA-1945/16E a tenancy statement ("Estoppel CurtfiGal in the latest farm or sup valent to that pub'shed by the AIR, in stated by Seiler add'-,--an lament add imhamuffit of the Property sailer i ,, r is beat iffimm 1. have each larmffit complete and shment, An Perhaps. Ced,flind. If any tenant M is . refuses W poi its an Estoppel Cert fiesta then Seller shall samplers and execute an Estoppel Cert f Gate for that tenancy Buyer has 10 days from the race pt of as J Fx st i Leases and Estoppel Cart fiestas W sat sty aniff W th regard to the Ex at ng Leases and any other tenancy — — () phvym� A medallion Saill an,-- - th n 10 or days follow i the Des at dgmenright pm,,its Buyer w In g Massmaird and transfer Package mom a.,e.heirs association serviGing;the Property Such transfer pasi shall at a muramen Aside copies Of the imSOdatimill'S bylaws, ad ales of noorpol on, moment budget and from al Stahifflel Buyer has 10 days from the miss pt of such documents to Satisfy Itself Wr th regard to 0)Other Agreements.Seller shall within 10 or days following the Date of Agreement provide Buyer with legible copies of all other agreements ("Other Agreements") known to Seller that will affect the Property after Closing. Buyer has 10 days from the receipt of said Other Agreements to satisfy itself with regard to such Agreements. (Ii Financing, if immagraph 5 h....f ties i w th.I nam,ng Gent rigency mr, not hinin air clean the sid aii On Or -ii;�at 4 a ch Ng- I can contingency. Buyer Wr th 1 sififfil, a up e 9 of the Exist i P Islas,Ex at up Doe ds of Trust and re'ate I agre e ments(calla at 9 sty,"Loan D a ournal to wh an the Prop e 411 re at,subject after the Class g. Esoxna I!Older shall promptly request from the holders Of the Ex st ing Plates a beneficiary statement("Benefil;a Statement") oonfirrump (1) the amount at the unma J pr I.a pal balance, the Burrs in r pretest Fare, and fire date tg with ch r MeReSt a pa r d, and (2)the hat he arm AMA Rt of any impipurds; held by the ber9f 0 any R GermalEtWill Wth Such'Gain Buyer has 10 GF days following the receipt of the I-an D-- red, add Renefi a any Statements to sat Sty Itself Wr th regard to such finme per BUYBF'S otel gat on to close s send I oned UPOR Buyer be up th a Agreement or appre,ed by Buyer, prov tied, however, Buyer i pay the transfer fee started to . paragraph 362 theirsof I my,�. f in carry back a Purchase Money Plate then Seller shall wit proposed Purchase Money Note and Purchase Money Deed of TK;W-�— r has 40 or days &am the rem pt of such documents to sat sfi belf w th regard to the term end content thereof (in) Personal Prop", In thin event that any peremmil property a ral -dad n the Purchase Pr Ge Buyer has 10 or==day-faffinamig the Date of 6 greement to sat sty malf is th regard to the I fle send t on ef such personal property Seller recommends that Buyer We in a UCC I import Any Such FOPO4 shall be pa d 1OF by Buyer Seiler iffiall Prov do Buyer GOP ES of any I ems OF mouniffiFaRGAIS attest Ag Such Personal Property that I a (n)Destruction,Damage or Loss. Subsequent to the Date of Agreement and prior to Closing there shall not have occurred a destruction,or damage or lass to,the Property or any portion thereof,from any cause whatsoever,which would cost more than$10,000.00 to repair or cure.If the cost of repair or cure is$10,000.00 or less,Seller shall repair or cure the loss prior to the Closing.Buyer shall have the option,within 10 days after receipt of written notice of a loss costing more than$10,000.00 to repair or cure,to either terminate this Agreement or to purchase the Property notwithstanding such loss,but without deduction or offset against the Purchase Price. If the cost to repair or cure is more than$10,000.00,and Buyer does not elect to terminate this Agreement, Buyer shall be entitled to any insurance proceeds applicable to such loss. Unless otherwise notified in writing,Escrow Holder shall assume no such destruction,damage or loss has occurred prior to Closing. hi Material Change.Buyer shall have 10 days following receipt of written notice of a Material Change within which to satisfy itself with regard to such change. "Material Change" shall mean a substantial adverse change In the use, occupancy, tenants, title, or condition of the Property that occurs after the date of this offer and prior to the Closing.Unless otherwise notified in writing,Escrow Holder shall assume that no Material Change has Occurred prior to the Closing. (p)Seller Performance.The delivery of all documents and the due performance by Seller of each and every undertaking and agreement to be performed by Seller under this Agreement. (q)Brokerage Fee. Payment at the Closing of such brokerage fee as is specified in this Agreement or later written instructions to Escrow Holder executed by Seller and Brokers ("Brokerage Fee"). It is agreed by the Parties and Escrow Holder that Brokers are a third party beneficiary of this Agreement insofar as the Brokerage Fee is concerned, and that no change shall be made with respect to the payment of the Brokerage Fee specified in this Agreement,without the written consent of Brokers. 9.2 All of the contingencies specifed in subparagraphs(a)through(m)of paragraph 9.1 are for the benefit of,and may be waived by,Buyer,and may be elsewhere herein referred to as"Buyer's Congngencles." 9.3 If any of Buyer's Contingencies or any other matter subject to Buyers approval Is disapproved as provided for herein In a timely manner ('Disapproved Item"), Seller shall have the right within 10 days following the receipt of notice of Buyers disapproval to elect to cure such Disapproved Item prior to the Expected Closing Date("Seller's Election") Sellers failure to give to Buyer within such period,written notice of Sellers commiment to cure such Disapproved Item on or before the Expected Closing Dale shall be conclusively presumed to be Sellers Election not to cure such Disapproved Item. If Seller elects, either by written notice or failure to give written notice, not to cure a Disapproved Item, Buyer shall have the right, within 10 days after Sellers Election to either accept title to the Property subject to such Disapproved Item, or to terminate this Agreement. Buyers failure to notify Seller In writing of Buyer's election to accept title to the Property subject to the Disapproved Item without deduction or offset shall constitute Buyers election to terminate this Agreement. The above time periods only apply once for each Disapproved Item. Unless expressly provided otherwise herein,Sellers right to cure shall not apply to the remediation of Hazardous Substance Conditions or to the Financing Contingency. Unless the Parties mutually instruct otherwise, if the time periods for the satisfaction of contingencies or for Seller's and Buyers elections would expire on a date after the Expected Closing Date, the Expected Closing Date shall be deemed extended for 3 business days following the expiration of: (a)the applicable contingency period(s), (b)the period within which the Seller may elect to cure the Disapproved Item, or ha)if Seller elects not to cure, the period within which Buyer may elect to proceed with this transaction,whichever is later. 9.4 The Parties acknowledge that extensive local,state and Federal legislation establish broad liability upon owners and/or users of real property for the investigation and remedial of Hazardous Substances. The determination of the existence of a Hazardous Substance Condition and the evaluation of the impact of such a condition are highly technical and beyond the expertise of Brokers. The Parties acknowledge that they have been advised by Brokers to consult their own technical and legal experts with respect to the possible presence of Hazardous Substances on the Property or adjoining properties, and Buyer and Seller are not relying upon any Investigation by or statement of Brokers with respect thereto. The Pal hereby assume all responsibility for the impact of such Hazardous Substances upon their respective interests herein. 10. Documents Required at or Before Closing: 10.1 Five days prior to the Closing date Escrow Holder shall obtain an updated Tire Commitment concerning the Property from the Tire Company and provide copies thereof to each of the Parties. 10.2 Seller shall deliver to Escrow Holder in time for delivery to Buyer at the Closing: (a) Grant or general warranty dead,duly executed and in recordable form,conveying fee title to the Property to Buyer. (b) If applicable,the Beneficiary Statements concerning Existing Note(s). (c) If applicable, the Existing Leases and Other Agreements together with duly executed assignments thereof by Seller and Buyer. The assignment of Existing Leases shall be on the most recent Assignment and Assumption of Lessors Interest in Lease form published by the AIR or its equivalent. (d)If applicable,Estoppel Certificates executed by Seller and/or the tenants)of the Property. (a)An affidavit executed by Seller to the effect that Seller is not a"foreign person"within the meaning of Internal Revenue Code Section 1445 or successor statutes. If Seller does not provide such affidavit in form reasonably satisfactory to Buyer at least 3 business days prior to the Closing, Escrow Holder shall at the Closing deduct from Sellers proceeds and remit to the Internal Revenue Service such sum as is required! by applicable Federal law with respect to purchases from foreign sellers. (f)If the Property is located in California,an affidavit executed by Seller to the effect that Seller is not a"nonresident"within the meaning of California Revenue and Tax Code Section 18662 or successor statutes.If Seller does not provide such affidavit in form reasonably satisfactory to Buyer at least 3 business days prior to the Closing, Escrow Holder shall at the Closing deduct from Sellers proceeds and remit to the Franchise Tax Board such sum as Is required by such statute. (g)If applicable,a bill of sale,duly executed,conveying title to any included personal property to Buyer. (h) If the Seller is a corporation, a duly executed corporate resolution authorizing the execution of this Agreement and the sale of the Property. 10.3 Buyer shall deliver to Seller through Escrow: (a)The cash portion of the Purchase Price and such additional sums as are required of Buyer under this Agreement shall be deposked by Buyer with Escrow Holder, by federal funds wire transfer,or any other method acceptable to Escrow Holder in immediately collectable funds, no later than 2:00 P.M.on the business day prior to the Expected Closing Date provided,however,that Buyer shall not be required to dapped such monies into Escrow If at the time set for the deposit of such monies Seller is In default or has Indicated that It will not perform any of its obligations hereunder. Instead, in such circumstances in order to reserve its rights to proceed! Buyer need only provide Escrow with evidence establishing that the required PAGE 4 OF 9 INITIALS INITIALS @2003-AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM OFA-18-06/16E monies were available. (b) If a Purchase Money Note and Purchase Money Deed of Trust are called for by this Agreement, the duly executed originals of those documents,the Purchase Money Deed of Trust being In recordable form,together with evidence of fire Insurance on the improvements in the amount of the full replacement cost naming Seller as a mortgage loss payee,and areal estate tax service contract(at Buyer's expense),assuring Seller of notice of the status of payment of real property taxes during the life of the Purchase Money Note. (c)The Assignment and Assumption of Lessor's Interest in Lease form specified in paragraph 10.2(c)above,duly executed by Buyer. (d)Assumptions duly executed by Buyer of the obligations of Seller that accrue after Closing under any Other Agreements. (a)If applicable,a written assumption duly executed by Buyer of the loan documents with respect to Existing Notes. (f) If the Buyer is a corporation, a duly executed corporate resolution authorizing the execution of this Agreement and the purchase of the Property. 10A At Closing, Escrow Holder shall cause to be issued to Buyer a standard coverage(or ALTA extended,d elected pursuant to 9A(g))owners form policy of title insurance effective as of the Closing, issued by the Title Company in the full amount of the Purchase Price, insuring title to the Property vested in Buyer, subject only to the exceptions approved by Buyer. In the event there is a Purchase Money Deed of Trust in this transaction, the policy of title insurance shall be ajoint protection policy insuring both Buyer and Seller. IMPORTANT: IN A PURCHASE OR EXCHANGE OF REAL PROPERTY,IT MAY BE ADVISABLE TO OBTAIN TITLE INSURANCE IN CONNECTION WITH THE CLOSE OF ESCROW SINCE THERE MAY BE PRIOR RECORDED LIENS AND ENCUMBRANCES WHICH AFFECT YOUR INTEREST IN THE PROPERTY BEING ACQUIRED. A NEW POLICY OF TITLE INSURANCE SHOULD BE OBTAINED IN ORDER TO ENSURE YOUR INTEREST IN THE PROPERTY THAT YOU ARE ACQUIRING. 11. Proration and Adjustments. 11.1 Taxes. Applicable real property taxes and special assessment bonds shall be prorated through Escrow,as of the date of the Closing, based upon the latest tax bill available.The Parties agree to prorate as of the Closing any taxes assessed against the Property by supplemental bill levied by reason of events occurring prior to the Closing. Payment of the prorated amount shall be made promptly in cash upon receipt of a copy of any supplemental bill. 11.2 Insurance. WARNING: Any insurance which Seller may have maintained will terminate on the Closing. Buyer is advised to obtain appropriate insurance to cover the Property. 11.3 Rentals, Interest and Expenses. Scheduled rentals, interest on Existing Notes, utilities,and operating expenses shall be prorated as of the date of Closing.The Parties agree to promptly adjust between themselves outside of Escrow any rents received after the Closing. 11.4 Security Deposd.Security Deposits held by Seller shall be given to Buyer as a credit to the cash required of Buyer at the Closing. 11.5 Post Closing Matters.Any item to be prorated that is not determined or determinable at the Closing shall be promptly adjusted by the Parties by appropriate cash payment outside of the Escrow when the amount due is determined. 11.6 Variations in Existing Note Balances. In the event that Buyer is purchasing the Property subject to an Existing Deed of Thistle),and In the event that a Beneficiary Statement as to the applicable Existing Hotels) discloses that the unpaid principal balance of such Existing Notes) at the closing will be more or less than the amount set forth in paragraph 3.1(c)hereof("Existing Note Variation"),then the Purchase Money Notes)shall be reduced or increased by an amount equal to such Existing Note Variation. If there is to be no Purchase Money Note,the cash required at the Closing per paragraph 3.1(a)shall be reduced or increased by the amount of such Existing Note Variation. 11.7 Variations in New Loan Balance. In the event Buyer is obtaining a New Loan and the amount ultimately obtained exceeds the amount set forth in paragraph 5.1,then the amount of the Purchase Money Note,if any,shall be reduced by the amount of such excess. 11.8 Owner's Association Fees. Escrow Holder shall:(i)bring Sellers account with the association current and pay any delinquencies or transfer fees from Sellers proceeds,and(it)pay any up front fees required by the association from Buyers funds. 12. Representations and Warranties of Seller and Disclaimers. 12.1 Seller's warranties and representations shall survive the Closing and delivery of the deed for a period of 3 years, and any lawsuit or action based upon them must be commenced within such time period. Seller's warranties and representations are true,material and relied upon by Buyer and Brokers in all respects.Seller hereby makes the following warranties and representations to Buyer and Brokers: (a)Authority of Seller. Seller is the owner of the Property and/or has the full right, power and authority to sell, convey and transfer the Property to Buyer as provided herein,and to perform Seller's obligations hereunder. M)Maintenance During Escrow and Equipment Condition At Closing. Except as otherwise provided in paragraph 9.1(n)hereof, Seller shall maintain the Property until the Closing in its present condition,ordinary wear and tear excepted. (c)Hazardous Substances/Storage Tanks. Seller has no knowledge, except as otherwise disclosed to Buyer in writing, of the existence or prior existence on the Property of any Hazardous Substance,nor of the existence or prior existence of any above or below ground storage tank. (d)Compliance.Seller has no knowledge of any aspect or condition of the Property which violates applicable lama rules,regulations,codes or covenants, conditions or restrictions, or of improvements or alterations made to the Property without a Permit where one was required, or of any unfulfilled order or directive of any applicable governmental agency or casualty insurance company requiring any investigation, remediation, repair, maintenance or improvement be performed on the Property. (a)Changes in Agreements.Prior to the Closing.Seller will not violate or modify any Existing Lease or Other Agreement,or create any new leases or other agreements affecting the Property,without Buyers written approval,which approval wall not be unreasonably withheld. (f) Possessory Rights. Seller has no knowledge that anyone will, at the Closing, have any right to possession of the Property, except as disclosed by this Agreement or otherwise in writing to Buyer. (g)Mechanics'Liens.There are no unsatisfied mechanics'or materialmens'lien rights concerning the Property. M) Actions, Suds or Proceedings. Seller has no knowledge of any actions, suits or proceedings pending or threatened before any commission,board,bureau,agency,arbitrator,court or tribunal that would affect the Property or the right to occupy or utilize same. (i) Notice of Changes. Seller will promptly notify Buyer and Brokers in writing of any Material Change (see paragraph 9.1(0))affecting the Property that becomes known to Seller prior to the Closing. 0)No Tenant Bankruptcy Proceedings. Seller has no notice or knowledge that any tenant of the Property is the subject of a bankruptcy or insolvency proceeding. (k)No Seller Bankruptcy Proceedings.Seller is not the subject of a bankruptcy,insolvency or probate proceeding. (I) Personal Property. Seller has no knowledge that anyone will, at the Closing, have any right to Possession of any personal property included in the Purchase Price nor knowledge of any liens or encumbrances affecting such personal property,except as disclosed by this Agreement or otherwise in writing to Buyer. 12.2 Buyer hereby acknowledges that,except as otherwise stated in this Agreement,Buyer is purchasing the Property in its existing condition and will,by the time called for herein,make or have waived all inspections of the Property Buyer believes are necessary to protect its own interest in,and its contemplated use of, the Property. The Parties acknowledge that, except as otherwise stated in this Agreement, no representations, inducements, promises, agreements, assurances, oral or written, concerning the Property, or any aspect of the occupational safety and health laws, Hazardous Substance laws,or any other act,ordinance or law,have been made by either Party or Brokers,or relied upon by either Parry hereto. 12.3 In the event that Buyer learns that a Seller representation or warranty might be untrue prior to the Closing,and Buyer elects to purchase the Property anyway then,and in that event, Buyer waives any right that it may have to bring an action or proceeding against Seller or Brokers regarding said representation or warranty. 12.4 Any environmental reports,soils reports,surveys,and other similar documents which were prepared by third party consultants and provided to Buyer by Seller or Seller's representatives,have been delivered as an accommodation to Buyer and without any representation or warranty as to the sufficiency,accuracy,completeness,andlor validity of said documents,all of which Buyer relies on at its own risk.Seller believes said documents to be accurate,but Buyer is advised to retain appropriate consultants to review said documents and investigate the Property. 13. Possession. Possession of the Property shall b,given to Buyer at the Closing subject to the rights of tenants under Existing Leases. 14. Buyer's Entry. Al any time during the Escrow period, Buyer, and its agents and representatives, shall have the right at reasonable times and subject to rights of tenants, to enter upon the Property, for the purpose of making inspections and tests specified in this Agreement. No destructive testing shall be conducted, however, without Seller's prior approval which shall not be unreasonably withheld. Following any such entry or work, unless otherwise directed In writing by Seller, Buyer shall return the Property to the condition it was In prior to such entry or work, Including the recompactlon or removal of any disrupted soil or material as Seller may reasonably direct. All such inspections and tests and any other work conducted or materials furnished with respect to the Property by or for Buyer shall be paid for by Buyer as and when due and Buyer shall indemnify,defend,protect and hold harmless Seller and the Property of and from any and all claims, liabilities,losses,expenses(including reasonable attorneys'fees),damages,including those for injury to person or property, arising out of or relating to any such work or materials or the acts or omissions of Buyer, its agents or employees in connection therewith. 15. Further Documents and Assurances. The Parties shall each, diligently and in good faith, undertake all actions and procedures reasonably required to place the Escrow in condition for PAGE 5 OF 9 INITIALS INITIALS @2003-AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM OFA-18-06/16E Closing as and when required by this Agreement.The Parties agree to provide all further information,and to execute and deliver all further documents, reasonably required by Escrow Holder or the Title Company. 16. Attorneys'Fees. If any Party or Broker brings an action or proceeding (including arbitration) Involving the Property whether founded In tort, contract or equity, or to declare rights hereunder,the Prevailing Party(as hereafter defined)in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys'fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision or judgment. The team "Prevailing Party' shall include, without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be,whether by compromise,settlement,judgment, or the abandonment by the other Party or Broker of Its claim or defense. The attorneys'fees award shall not be computed in accordance wish any court fee schedule, but shall be such as to fully reimburse all attorneys'fees reasonably incurred. 17. Prior Agreements/Amendments. 17A This Agreement supersedes any and all prior agreements between Seller and Buyer regarding the Property. 17.2 Amendments to this Agreement are effective only if made in writing and executed by Buyer and Seller. 19. Brokees Rights. 18.1 If this sale is not consummated due to the default of either the Buyer or Seller,the defaulting Party shall be liable to and shall pay to Brokers the Brokerage Fee that Brokers would have received had the sale been consummated. If Buyer is the defaulting party, payment of said Brokerage Fee is in addition to any obligation with respect to liquidated or other damages. 18.2 Upon the Closing,Brokers are authorized to publicize the facts of this transaction. 19. Notices. 19.1 Whenever any Party, Escrow Holder or Brokers herein shall desire to give or serve any notice, demand, request, approval, disapproval or other communication,each such communication shall be in writing and shall be delivered personally,by messenger,or by mail,postage prepaid,to the address set forth in this agreement or by facsimile transmission,electronic signature,digital signature,or email. 19.2 Service of any such communication shall be deemed made on the date of actual receipt if personally delivered,or transmitted by facsimile transmission,electronic signature, digital signature,or email. Any such communication sent by regular mail shall be deemed given 48 hours after the same is mailed. Communications sent by United States Express Mail or overnight courier that guarantee next day delivery shall be deemed delivered 24 hours after delivery of the same to the Postal Service or courier. If such communication is received on a Saturday, Sunday or legal holiday, it shall be deemed received on the next business day. 19.3 Any Party or Broker hereto may from time to time, by notice in writing, designate a different address to which, or a different person or additional persons to whom,all communications are thereafter to be made. 20. Duration of Offer. 20.1 If this offer is not accepted by Seller on or before 5:00 P.M.according to the time standard applicable to the city of Fountain Valley onthedate of October 28, 2016 It shall be deemed automatically revoked. 20.2 The acceptance of this offer, or of any subsequent counteroffer hereto, that creates an agreement between the Parties as described in paragraph 1.2, shall be deemed made upon delivery to the other Parry or either Broker herein of a duly executed writing unconditionally accepting the last outstanding otter or counteroffer. 21. LIQUIDATED DAMAGES. (This Liquidated Damages paragraph is applicable only if initialed by both Partiesl. THE PARTIES AGREE THAT IT WOULD BE IMPRACTICABLE OR EXTREMELY DIFFICULT TO FIX, PRIOR TO SIGNING THIS AGREEMENT, THE ACTUAL DAMAGES WHICH WOULD BE SUFFERED BY SELLER IF BUYER FAILS TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT. THEREFORE, IF, AFTER THE SATISFACTION OR WAIVER OF ALL CONTINGENCIES PROVIDED FOR THE BUYER'S BENEFIT, BUYER BREACHES THIS AGREEMENT, SELLER SHALL BE ENTITLED TO LIQUIDATED DAMAGES IN THE AMOUNT OF $500,000.00 . UPON PAYMENT OF SAID SUM TO SELLER, BUYER SHALL BE RELEASED FROM ANY FURTHER LIABILITY TO SELLER, AND ANY ESCROW CANCELLATION FEES AND TITLE COMPANY CHARGES SHALL BE PAID BY SELLER. Also,see Paragraph 264.heroin. Buyer Initials Seller Initials 22. ARBITRATION OF DISPUTES. (This Arbitration of Disputes paragraph is applicable only ifiniishad by both Parties.) 22.1 ANY CONTROVERSY AS TO WHETHER SELLER IS ENTITLED TO THE LIQUIDATED DAMAGES AND/OR BUYER IS ENTITLED TO THE RETURN OF DEPOSIT MONEY, SHALL BE DETERMINED BY BINDING ARBITRATION BY,AND UNDER THE COMMERCIAL RULES OF THE AMERICAN ARBITRATION ASSOCIATION ("COMMERCIAL RULES"). ARBITRATION HEARINGS SHALL BE HELD IN THE COUNTY WHERE THE PROPERTY IS LOCATED.ANY SUCH CONTROVERSY SHALL BE ARBITRATED BY 3 ARBITRATORS WHO SHALL BE IMPARTIAL REAL ESTATE BROKERS WITH AT LEAST 5 YEARS OF FULL TIME EXPERIENCE IN BOTH THE AREA WHERE THE PROPERTY IS LOCATED AND THE TYPE OF REAL ESTATE THAT IS THE SUBJECT OF THIS AGREEMENT.THEY SHALL BE APPOINTED UNDER THE COMMERCIAL RULES.THE ARBITRATORS SHALL HEAR AND DETERMINE SAID CONTROVERSY IN ACCORDANCE WITH APPLICABLE LAW, THE INTENTION OF THE PARTIES AS EXPRESSED IN THIS AGREEMENT AND ANY AMENDMENTS THERETO, AND UPON THE EVIDENCE PRODUCED AT AN ARBITRATION HEARING. PRE-ARBITRATION DISCOVERY SHALL BE PERMITTED IN ACCORDANCE WITH THE COMMERCIAL RULES OR STATE LAW APPLICABLE TO ARBITRATION PROCEEDINGS. THE AWARD SHALL BE EXECUTED BY AT LEAST 2 OF THE 3 ARBITRATORS, BE RENDERED WITHIN 30 DAYS AFTER THE CONCLUSION OF THE HEARING, AND MAY INCLUDE ATTORNEYS' FEES AND COSTS TO THE PREVAILING PARTY PER PARAGRAPH 16 HEREOF. JUDGMENT MAY BE ENTERED ON THE AWARD IN ANY COURT OF COMPETENT JURISDICTION NOTWITHSTANDING THE FAILURE OF A PARTY DULY NOTIFIED OF THE ARBITRATION HEARING TO APPEAR THEREAT. 22.2 BUYER'S RESORT TO OR PARTICIPATION IN SUCH ARBITRATION PROCEEDINGS SHALL NOT BAR SUIT IN A COURT OF COMPETENT JURISDICTION BY THE BUYER FOR DAMAGES AND/OR SPECIFIC PERFORMANCE UNLESS AND UNTIL THE ARBITRATION RESULTS IN AN AWARD TO THE SELLER OF LIQUIDATED DAMAGES, IN WHICH EVENT SUCH AWARD SHALL ACT AS A BAR AGAINST ANY ACTION BY BUYER FOR DAMAGES AND/OR SPECIFIC PERFORMANCE. 22.3 NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE"ARBITRATION OF DISPUTES" PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL.BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE"ARBITRATION OF DISPUTES"PROVISION TO NEUTRAL ARBITRATION. Buyer Initials Seller Initials PAGE 6 OF 9 INITIALS INITIALS @2003-AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM OFA-19-06/16E 23. Miscellaneous. 23T Binding Effect. This Agreement shall be binding on the Parties without regard to whether or not paragraphs 21 and 22 are initialed by both of the Parties. Paragraphs 21 and 22 are each incorporated into this Agreement only if initialed by both Parties at the time that the Agreement is executed. 23.2 Applicable Law. This Agreement shall be goverment by, and paragraph 22.3 is amended to refer to, the laws of the state in which the Property is located. Any litigation or arbitration between the Parties hereto concerning this Agreement shall be Initiated in the county In which the Property is located. 23.3 Time of Essence. Time is of the essence of this Agreement. 23.4 Counterparts. This Agreement may be executed by Buyer and Seller in counterparts,each of which shall be deemed an original,and all of which together shall constitute one and the same instrument. Escrow Holder, after verifying that the counterparts are identical except for the signatures,is authorized and instructed to combine the signed signature pages on one of the counterparts,which shall then constitute the Agreement, 23.5 Walverof Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT. 23.6 Conflict. Any conflict between the printed provisions of this Agreement and the typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions.Seller and Buyer must Initial any and all handwritten Provisions. 23.7 1031 Exchange. Both Seller and Buyer agree to cooperate with each other in the event that either or both wish to participate in a 1031 exchange. Any party initiating an exchange shall bear all costs of such exchange. The cooperating Party shall not have any liability (special or otherwise)for damages to the exchanging Party in the event that the sale is delayed anchor that the sale otherwise fails to qualify as a 1031 exchange. 23.8 Days. Unless otherwise specifically indicated to the contrary,the word"days"as used in this Agreement shall mean and refer to calendar days. 24. Disclosures Regarding The Nature of a Real Estate Agency Relationship. 24.1 The Parties and Brokers agree that their relationships) shall be governed by the principles set forth in the applicable sections of the California Civil Code,as summarized in paragraph 24.2. 24.2 When entering into a discussion with a real estate agent regarding areal estate transaction, a Buyer or Seller should from the outset understand what type of agency relationship or representation it has with the agent or agents in the transaction. Buyer and Seller acknowledge being advised by the Brokers in this transaction,as follows: (a)Se//ees Agent.A Seller's agent under a listing agreement with the Seller acts as the agent for the Seller only.A Sellers agent or subagent has the following affirmative obligations: (1) To the Seller:A fiduciary duty of utmost care, Integrity, honesty,and loyalty In dealings with the Seller. (2) To the Buyer and the Seller a.Diligent exercise of reasonable skills and care in performance of the agent's duties. b.A duty of honest and fair dealing and good faith. c.A duty to disclose all facts known to the agent materially affecting the value or desirability of Me property that are not known to, or within the diligent attention and observation of,the Parties.An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above. (b)Buye/s Agent.A selling agent can,with a Buyer's consent,agree to act as agent for the Buyer only. In these situations,the agent is not the Sellers agent, even if by agreement the agent may receive compensation for services rendered, either in full or in part from the Seller. An agent acting only for a Buyer has the following affirmative obligations. (1) To the Buyer A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Buyer. (2) To the Buyer and the Seller a. Diligent exercise of reasonable skills and care in performance of the agent's duties. It.A duty of honest and fair dealing and good faith. c. A duty to disclose all facts known to the agent materially affecting the value or desirability of Me property,that are not known to, or within the diligent attention and observation of, the Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative tluties set forth above. (c)Agent Representing Both Seller and Buyer. A real estate agent, either acting directly or through one or more associate licenses, can legally be the agent of both the Seller and the Buyer in a transaction,but only with the knowledge and consent of both the Seller and the Buyer.(1)In a dual agency situation,the agent has the following affirmative obligations to both the Seller and the Buyer: a.A fiduciary duty of utmost care, integrity, honesty and loyalty In the dealings with either Seller or the Buyer. L. Other duties to the Seller and the Buyer as stated above In their respective sections(a)or(b)of this paragraph 24.2.(2)In representing both Seller and Buyer,the agent may not without the express permission of the respective Party, disclose to the other Party that the Seller will accept a price less than the listing price or that the Buyer will pay a price greater than the price offered. (3) The above duties of the agent in a reel estate transaction do not relieve a Seller or Buyer from the responsibility to protect their own interests. Buyer and Seller should carefully mad all agreements to assure that they adequately express their understanding of the transaction.A real estate agent is a person qualified to advise about real estate.If legal or tax advice is desired,consult a competent professional. (d)Further Disclosures. Throughout this transaction Buyer and Seller may receive more than one disclosure,depending upon the number of agents assisting in the transaction.Buyer and Seller should each read its contents each time it is presented,considering the relationship between them and the real estate agent in this transaction and that disclosure. Buyer and Seller each acknowledge receipt of a disclosure of the possibility of multiple representation by the Broker representing that principal. This disclosure may be part of a listing agreement, buyer representation agreement or separate document. Buyer understands that Broker representing Buyer may also represent other potential buyers,who may consider, make offers on or ultimately acquire the Property. Seller understands that Broker representing Seller may also represent other sellers with competing properties that may be of interest to this Buyer. Brokers have no responsibility with respect to any default or breach hereof by either Party.The Parties agree that no lawsuit or other legal proceeding involving any breach of duty,error or omission relating to this transaction may be brought against Broker more than one year after the Date of Agreement and that the liability(Including court costs and attorneys'fees), of any Broker with respect to any breach of duty, error or omission relating to this Agreement shall not exceed the fee received by such Broker pursuant to this Agreement; provided, however,Mat the foregoing limitation on each Brokers liability shall not be applicable to any gross negligence or willful misconduct of such Broker. 24.3 Confidential Information:Buyer and Seller agree to identify to Brokers as"Confidential"any communication or information given Brokers that is considered by such Party to be confidential. 25. Construction of Agreement. In construing this Agreement, all headings and titles are for the convenience of the Parties only and shall not be considered a part of this Agreement.Whenever required by Me context, the singular shall include the plural and viva versa. This Agreement shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole,as if both Parties had prepared It. 26 Additional Provisions: Additional provisions of this offer,ff any,are as follows or are attached hereto by an addendum or addenda consisting of paragraphs 26a. through 26e. . (If there are no additional provisions mite"NONE".) 26a. Condition: Buyer is purchasing the property in "as-is" condition. 26b. Put Option: After the expiration of the contingency period described herein, Seller shall search for a property or properties to purchase to satisfy its 1031 deferred exchange requirement. At any time, the Seller can "Put Option" to the Buyer, in writing, that it has identified its exchange property and Buyer shall close within thirty (30) days thereafter. In the event Seller has not exercised •'Put Option" to Buyer within eight (8) months after the expiration of the contingency period, the Buyer may proceed to close the escrow by providing a thirty (30) days' written notice to Seller. In the event Seller "Put Options" to Buyer and Buyer does not close within thirty (30) days, the Seller may elect to cancel the escrow and the Buyer's Five Hundred Thousand Dollar ($500,000.00)deposit shall be considered liquidated damages in favor to the Seller. 26c. If Seller has not "Put Option" to Buyer prior to March 1, 2017, and if Seller has already vacated the premises (it is the intention of the Seller to vacate the property by February 28, 2017) , Buyer shall lease the premises at a monthly lease rate of Thirty-Five Thousand Dollars ($35,000.00) per month NNN until the sale is completed, or until August 31, 2017, or until escrow is canceled, whichever occurs first. Buyer shall maintain the buildings in first class condition and shall not demolish or make any modification to the premises until after the close of escrow. Seller and Buyer shall PAGE 7 OF 9 INITIALS INITIALS ©2003-AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM OFA-18-06/16E execute an AIR Single Tenant Lease-NNN concurrently with this Purchase Contract. In the event escrow closes prior to February 28, 2017, the Seller shall be permitted to occupy the premises free of rent until February 28, 2017 and Seller will be responsible for all operating expenses for the building, including Property Taxes, Property Insurance, utilities and maintenance. 26d. Liquidated Damages: The Buyer contingency period shall expire on November 27, 2016 or thirty (30) days after escrow opening, whichever is later. If Buyer has not provided notice of cancellation to Seller or Escrow by this date and then either defaults or elects to cancel the escrow, Buyer's deposit is considered non-refundable liquidated damages in favor of Seller and Escrow is hereby authorized to immediately and automatically release said deposits in the amount of Five Hundred Thousand Dollars ($500,000.00) on the next business day to Seller. This shall also satisfy the requirements for damages described in paragraph 21 above. 26e. 1031 Exchange: Buyer shall cooperate with Seller in its 1031 tax deferred exchange at no additional expense to Buyer. 27. Acceptance. 27.1 Seller accepts the foregoing offer to purchase the Property and hereby agrees to sell the Property to Buyer on the terms and conditions therein specified. 27.2 In consideration of real estate brokerage carries rendered by Brokers. Seller agrees to pay Brokers a real aetata Brokerage Fee In a sum equal to 3.5% of the Purchase Price to be divided between the Brokers as follows: 5eller'e Broker 1.75% and Buyers Broker 1.75 %.This Agreement shall same as an Irrevocable Instruction to Escrow Holder to pay such Brokerage Fee to Brokers out of the proceeds accruing to the account of Seller at the Closing. 27.3 Seller acknowledges receipt of a copy hereof and authorizes Brokers to deliver a signed copy to Buyer. TTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR COMMERCIAL REAL ESTATE ASSOCIATION OR BY AN BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS AGREEMENT OR THE TRANSACTION TO HIGH IT RELATES.THE PARTIES ARE URGED TO: 1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS AGREEMENT. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PROPERTY. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO:THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES,THE ZONING OF HE PROPERTY, THE INTEGRITY AND CONDITION OF ANY STRUCTURES AND OPERATING SYSTEMS, AND THE SUITABILITY OF THE PROPERTY FOR BUYER'S INTENDED USE. ARNING: IF THE PROPERTY IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THIS AGREEMENT MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED. NOTE: 1. THIS FORM IS NOT FOR USE IN CONNECTION WITH THE SALE OF RESIDENTIAL PROPERTY. 2. IF EITHER PARTY IS A CORPORATION,IT IS RECOMMENDED THAT THIS AGREEMENT BE SIGNED BY TWO CORPORATE OFFICERS. The undersigned Buyer offers and agrees to buy the Property on the terms and conditions stated and acknowledges receipt of a copy hereof. BROKER: BUYER: Cushman & Wakefield Orange County Sanitation District By: Attn:Kevin Turner/John Gallivan Date: Ti0e: Name Printed: John Nielsen Address: 2020 Main Street, Suite 1000 Title: Chairman of the Board, Orange County Irvine, CA 92614 Sanitation District Telephone:(949) 955-7647 Telephone:(_) Facsimile:(_) Facsimile:( ) Email: kevin.turner@cushwake.com Email: john.gallivan@cushwake.com Federal ID No. By: Date: Broker/Agent BRE License#: Name Printed: Kelly Lore Title: Clerk of the Board, Orange County Sanitation District Approved as to form By: Date: Name Printed: Bradley R.Hag'n Address: 10844 Ellis Avenue Fountain Valley, CA 92708 Telephone:(714) 962-2411 Facsimile:( Email: Federal ID No. PAGE S OF 9 INITIALS INITIALS @2003-AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM OFA-18-06/16E 27 Acceptance. 271 Sells,a...ch; the f.mg.rg far 1. p .hase the Property and hereby agrees W sell the Property to Rwyer on the terms and send tons there n ayes f ad 272 in OR Of real estate @ MikeFage SOW As FeRdered by Brokers, SOW aixe ES to Pay Brokers a real estate BMIRKBI)e Fee n a sum 27.2 Rp"Pr�nlm-wledqes race pt of g copy hereof and a tharizes Rrolkem to del, r s.gnsd copy In Rwygr, NOTE:A PROPERTY INFORMATION SHEET IS REQUIRED TO BE DELIVERED TO BUYER BY SELLER UNDER THIS AGREEMENT. BROKER: SELLER: Lee & Associates®-Newport Beach Bender Properties a California Limited Partnership Attn: Jim Snyder/Pat Lacey By: Title: SVP/Principal / SVP/Principal Date: Address: 100 Bayview Circle, Suite 600 Name Printed: Matt Pales Newport Beach, CA 92660 Title: Telephoner) 724-1000 Telephone:(714 ) 318-5799 Facsimile:(949 ) 623-6360 Facsimile:(_) Email: jsnyder@lee-associates.com Email novegis@gmail.com placey@lee-associates.com Federal ID No.: By: Date: Broker/Agent BRIE License#: 00872220/00988663 Name Printed: Title: Address: 35 Burning Tree Rd. Newport Beach, CA 92660 Telephone:( ) Facsimile:( ) Email: Federal ID No.: NOTICE: These forms are often modified to meet changing requirements of law and Industry needs. Always write or call to make sure you are utilizing the most current form: AIR Commercial Real Estate Association, 500 N Brand Blvd,Suite 900,Glendale,CA 91203. Telephone No.(213)687-8777. Fax No.:(213)687-0616. Lacey/Orange County 5anitatlon Pletrlct-184/5 Pacd,18484 Banditer-Purchase A, O Copyright 2003 By AIR Commercial Real Estate Association. All rights reserved. No part of these works may be reproduced in any form without permission in writing. PAGE 9 OF 9 INITIALS INITIALS 02003-AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM OFA-18-06/16E AIR COMMERCIAL REAL ESTATE ASSOCIATION STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE -- NET (DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS) 1. Basic Provisions("Basic Provisions"). 1.1 Parties: This Lease("Lea""),dated for reference purposes only September 29, 2016 Is made brand between Bender Properties, a California limited partnership ("Lessor") and Orange County Sanitation District ("Lessee"), (collectively the"Parties;'or Individually a"Party'). 1.2 Premises: That certain real property,Including all Improvements therein or to be provided by Lessor under the terms of this Lease, andcommonlyknownas 18975 Pacific Street & 18484 Bandilier Circle, Fountain Valley located in the County of Orange State of California and generally described as(describe briefly the nature of the property and,if applicable,the'Project",if the property is located within a Project) an approximately 48,269 square foot industrial building on an approximately 2.13 acre parcel of land ('Premises"). (See also Paragraph 2) 1.3 Term: years and months("Original Tom")commencing March 1, 2017 ('Commencement Date")and ending upon the purchase of the property by Lessee or the cancellation of escrow per paragraph 51 herein. In no event shall the Lease term exceed August 31, 2017 ('Expiration Date'). (See also Paragraph 3) 1.4 Early Possession: If Me Premises are available Lessee may have nonexclusive possession of the Premises commencing N/A ("Early Possession Date"). (See also Paragraphs 3.2 and 3.3) 1.5 Base Rent: $35,000.00 per month ("Base Rent"),payable on the first (1st) day of each month commencing March 1, 2017 not to exceed August 31, 2017 .(See also Paragraph 4) ❑If this box is checked,there are provisions in this Lease for the Base Rent to be adjusted.See Paragraph 1.6 Base Rent and Other Monies Paid Upon Execution: (a) Base Rent: $35,000.00 forthe period March 1-31, 2017 (b) Security Deposit:$ ("Security Deposit"). (See also Paragraph 5) (c) Association Fees:$ for the period (d) Other: $4,275.55 for Monthly prorated property taxes & property insurance for March 2017 (a) Total Due by March 1,2017 upon Exesurien of this Leases$39,275.55 1.7 Agreed Use: General office and related uses for the Lessee's operation (no hazardous materials will be stored on the premises) . (See also Paragraph 6) 1.8 Insuring Party: Lessor is the"Insuring Party'unless otherwise stated herein. (See also Paragraph 8) 1.9 Real Estate Brokers:(See also Paragraph 15 and 25) (a) Representation: The following real estate brokers (the"Brokers")and brokerage relattonships exist in this transaction (check applicable boxes): 0 Lee & Associates®-Newport Beach (Jim Snyder/Pat Lacey) represents Lessor exclusively("Lessor's Broker'); 0 Cushman & Wakefield (Kevin Turner/John Gallivan) represents Lessee exclusively("Lessee's Broker');or ❑ represents both Lessor and Lessee("Dual Agency"). (h) Patinsint t, Sme-1- Upix� -x-, pan -.d 4,111 of thip I nose by bath Part as, LeS6QF She" Pay 10 use Broken the bFi3kisege fe. agreed to �,p,mfie wir then agreement (or f there s no PuGh agreement this sun of of Ms koW R�i,- Rent)far the brokerage sew see rendered by the BF01sem. 1.10 Guarantor.The obligations of the Lessee under this Lease are to be guaranteed by N/A ("Guarantor"). (See also Paragraph 37) 1.11 Attachments. Attached hereto are the following,all of which constitute a part of this Lease: 0 an Addendum consisting of Paragraphs 51 through 58 ❑ a plot plan depicting the Premises; ❑ a current set of the Rules and Regulations; ❑ a Work Leff en 0 other(spedfy): Arbitration Agreement (57) , Uniform Disclaimer Lease form (58) and Site Plan. 2. Premises. 2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor,the Premises,for the term, at the rental, and PAGE 1 OF 18 INITIALS INITIALS 02001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM STN-24.05/16E upon all of the terms,covenants and conditions set forth in this Lease. While the approximate square footage of the Premises may have been used in the marketing of the Premises for purposes of comparison,the Base Rent stated herein is NOT tied to square footage and is not subject to adjustment should the actual size be determined to be deferent. Note: Lessee is advised to verify the actual size prior to executing this Lease. 2.2 Condition - hn-,deliver the Pro.sei,to- heard owan Add free of dilb,,ad the Commerce th ant Date a,the Early Possess on Date, wh Ghi f FBI GGGure (natal igal add, so long as the add ad son�G, small deep,had d Paragraph 7A fibu below are code me J by Less as an J in effe at w in n thr my days allowing the Stan Date,warrants that the ex St log 018 air Cal,P lill Rug,f M SPF older,fighting,basing, ,,.at-of ng add ,r.,ad I a fig eyseare ("Hi lend ng rose, slump mel f any, and all other , -Gh elements n the Prelim sea older th an the.. constructed by I lasses, shall be in good operating condition on said date, that the structure' elements of the reef, bee ing wells and foundation of am Ift, droge an the From a..(the -R,It ri h.--he free of fid,hsl detach,and that the From a..do net contain hazards re Isis-.of say rapid.'eng def ned a do.G use,appi cable state a,federal lay, If a non Gial adds w th so J warranty id,she as of the Stag Date or f one of Such systems or elements she Id mark i an or to I w th in Ins nipprepir she worady par ad,I easier shall as I nusare enin ahl get an w th respect In such Manor,icesial se Whom,a prai do I in In a I a gap pumed pfly after race fit at wr non not Go from I Passe soft ng inch w In shoo f c ty the hot-in and extent of e sch non deal see i net on or or.,re, rest fy earn a at .iissuars expense The warranty prince shall he as follows () 6 months as for the HVAG expense.68i also warrants,that unless sib am as sp a a tied n wr I ng,Lessor S drawers of any handed P lot be a of Default affect or!he Pre M r s e 2.3 Compliance. Lessor warron4s that to the best of its knowledge the improvements on the Premises comply with the building codes, applicable laws,covenants or restrictions of record, regulations,and ordinances("Applicable Requirements")that were in effect at the time that each improvement,or portion thereof,was constructed. Said warranty does not apply to the use to which Lessee will put the Premises, modifications which may be required by the Americans with Disabilities Act or any similar laws as a result of Lessee's use(see Paragraph 50),or to any Alterations or Utility Installations (as defined in Paragraph 7.3(a)) made or to be made by Lessee. NOTE: Lessee is responsible for determining whether or not the Applicable Requirements, and especially the zoning, are appropriate for Lessee's intended use, and acknowledges that past uses of the Premises may no longer be allowed. If the Premises do not comply with said mostly, Lessor shall, except as otherwise provided, promptly after receipt of written notice from Lessee setting forth with specificity the nature and extent of such non-compliance,rectify the same at Lessor's expense. If Lessee does not give Lessor written notice of a noncompliance with this wananty within 6 months following the Start Date, correction of that noncompliance shall be the obligation of Lessee at Lessee's sole cost and expense. If the Applicable Requirements are hereafter changed so as to require during the term of this Lease the construction of an addition to or an alteration of the Premises and/or Building, the remedial of any Hazardous Substance, or the reinforcement or other physical modification of the Unit, Premises and/or Building('Capital Expenditure"), Lessor and Lessee shall allocate the cost of such work as follows: (a)Subject to Paragraph 2.3(c)below, a such Capital Expenditures are required as a result of the specific and unique use of the Premises by Lessee as compared with uses by tenants in general, Lessee shall b r fully responsible for the cost thereof,provided,however that H such Capital Expenditure is required during the last 2 years of this Lease and the cost thereof exceeds 6 months'Base Rent, Lessee may Instead terminate this Lease unless Lessor notifies Lessee, in writing, within 10 days after receipt of Lessee's termination notice that Lessor has elected to pay the difference between the actual cost thereof and an amount equal to 6 months'Base Rent. If Lessee elects termination, Lessee shall immediately cease the use of the Premises which requires such Capital Expenditure and deliver to Lessor written notice specifying a termination date at least 90 days thereafter. Such termination date shall, however, in no event be earlier than the last day that Lessee could legally ublize the Premises without commencing such Capital Expenditure. (b)If such Capital Expenditure is not the result of the specific and unique use of the Premises by Lessee(such as,governmentally mandated seismic modifications),then Lessor shall pay for such Capital Expenditure and Lessee shall only be obligated to pay,each month during the remainder of the term of this Lease or any extension thereof,on the date that on which the Base Rent is due,an amount equal to 1114,41,of the portion of such costs reasonably attributable to the Premises. Lessee shall pay Interest on the balance but may prepay its obligation at any time. If,however, such Capital Expenditure is required during the last 2 years of this Lease or if Lessor reasonably determines that it is not economically feasible to pay its share thereof, Lessor shall have the option to terminate this Lease upon 90 days poor written notice to Lessee unless Lessee notifies Lessor, in writing, within 10 days after receipt of Lessors termination notice that Lessee will pay for such Capital Expenditure. If Lessor does not elect to terminate, and fails to tender its share of any such Capital Expenditure, Lessee may advance such funds and deduct same,with Interest,from Rent until Lessor's share of such costs have been fully paid. If Lessee is unable to finance Lessors share,or if the balance of the Rent due and payable for the remainder of this Lease is not sufficient to fully reimburse Lessee on an offset basis, Lessee shall have the right to terminate this Lease upon 30 days written notice to Lessor. (c) Notwithstanding the above, the provisions concerning Capital Expenditures are intended to apply only to non-voluntary, unexpected, and new Applicable Requirements. If the Capital Expenditures are instead triggered by Lessee as a result of an actual or proposed change in use, change in intensity of use, or modification to the Premises then, and in that event, Lessee shall either: (1) immediately cease such changed use or intensity of use and/or take such other steps as may be necessary to eliminate the requirement for such Capital Expenditure, or(ii) complete such Capital Expenditure at its own expense.Lessee shall not,however,have any ought to terminate this Lease. 24 Acknowledgements. Lessee acknowledges that: (a)it has been given an opportunity to inspect and measure the Premises,(b)it has been advised by Lessor and/or Brokers to satisfy itsee with respect to the size and condition of the Premises (including but not limited to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance with Applicable Requirements and the Americans with Disabilities Act), and their suitability for Lessee's intended use, (c)Lessee has made such investigation as it deems necessary with reference to such matters and assumes all responsibility therefor as the same relate to its occupancy of the Promises, (d)it is not relying on any representation as to the size of the Premises made by Brokers or Lessor, (a)the square footage of the Premises was not material to Lessee's decision to lease the Premises and pay the Rent stated herein,and(f)neither Lessor, Lessors agents, nor Brokers have made any oral or written representations or warranties with respect to said matters other than as set forth in this Lease. In addition, Lessor acknowledges that: (i) Brokers have made no representations, promises or warranties concerning Lessee's ability to honor the Lease or suitability to occupy the Premises,and(ih it is Lessor's sole responsibility to investigate the financial capability and/or suitability of all proposed tenants. 2 9 ...... so Fri.,Ovarmirinninparat The wool as made by I el n Paragraph 2 Shall he At no fares Ar Ai f broad stay Poor to the Sisk Date Lessee was the owner OF QUOUtual of the Preal in , an ,,act, Lessee shall be respords ble far any necessairy correct we PAGE 2 OF IS INITIALS INITIALS ©2001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM STN-2445116E wegc 3. Term. 3.1 Term. The Commencement Date,Expiration Date and Original Term of this Lease are as specified In Paragraph 1.3. 3.2 Early Possession. Any provision herein granting Lessee Early Possession of the Premises is subject to and conditioned upon the Premises being available for such possession prior to the Commencement Date. Any grant of Early Possession only conveys a non-exclusive right to occupy the Premises. If Lessee totally or partially occupies the Premises prior to the Commencement Date,the obligation to pay Base Rent shall be abated for the period of such Early Possession. All other terms of this Lease(Including but not limited to the obligations to pay Real Property Taxes and insurance premiums and to maintain the Premises)shall be in effect during such period. Any such Early Possession shall not affect the Expiration Dale, 3.3 Delay In Possession. Lessor agrees to use its best commercially reasonable efforts to deliver Possession of the Premises to Lessee by the Commencement Dale. If,despite said efforts, Lessor is unable to deliver possession by such date, Lessor shall not be subject to any liability therefor,nor shall such failure affect the validity of this Lease or change Me Expiration Date.Lessee shall not,however,be obligated to pay Rent or perform its other obligations until Lessor delivers possession of the Premises and any Period of rent abatement that Lessee would otherwise have enjoyed shall run from the date of delivery of Possession and continue for a period equal to what Lessee would otherwise have enjoyed under the terms hereof, but minus any days of delay caused by the acts or omissions of Lessee. If possession is not delivered within 60 days after the Commencement Dale, as the same may be extended under the terms of any Work Letter executed by Parties, Lessee may,at its option,by notice in writing within 10 days after Me end of such 60 day period, cancel this Lease, in which event the Parties shall be discharged from all obligations hereunder. If such written notice is not received by Lessor within said 10 day period, Lessee's right to cancel shall terminate. If possession of the Premises is not delivered within 120 days after the Commencement Date,this Lease shall terminate unless other agreements are reached between Lessor and Lessee, in writing. 3.4 Lessee Compliance. Lessor shall not he required to deliver possession of the Premises to Lessee until Lessee complies with its obligation to provide evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee shall be required to perform all of its obligations under this Lease from and after the Start Date, including the payment of Rent, notwithstanding Lessors election to withhold possession Pending receipt of such evidence of insurance. Further, if Lessee is required to perform any other conditions prior to or concurrent with the Stan Dale. the Stan Date shall occur but Lessor may elect to withhold possession until such conditions are satisfied. 4. Rent. 4.1. Rent Defined. All monetary obligations of Lessee to Lessor under the terms of this Lease(except for the Security Deposit)are deemed to be rent("Rent"). 4.2 Payment. Lessee shall cause payment of Rent to be received by Lessor in lawful money of the United States,without offset or deduction(except as specifically permitted in this Lease),on or before the day on which it is due,All monetary amounts shall be rounded to the nearest whole dollar. In the event that any Invoice prepared by Lessor is inaccurate such inaccuracy shall not constitute a waiver and Lessee shall be obligated to pay the amount set forth in this Lease. Rent for any period during the term hereof which is for less than one full calendar month shall be prorated based upon the actual number of days of said month. Payment of Rent shall be made to Lessor at its address stated herein or to such other persons or place as Lessor may from time to time designate in writing. Acceptance of a payment which is less than the amount then due shall not be a waiver of Lessor's rights to Me balance of such Rent, regardless of Lessors endorsement of any check so stating. In the event that any check, draft, or other instrument of payment given by Lessee to Lessor is dishonored for any reason, Lessee agrees to pay to Lessor the sum of$25 in addition to any Late Charge and Lessor, at its option, may require all future Rent be paid by cashiers check. Payments will be applied first to accrued late charges and attorneys fees,second to accrued interest,then to Base Rent, Insurance and Real Property Taxes,and any remaining amount to any other outstanding charges or costs. 4 2 Assinninflim Fain, In add Ion to the Rase Rent, I isume shall pay to I asset each month an shown, equal to any w-'ri ......inch um fees leved or assessed age net the Prani Reid hi-hall be padatthe sametme and the 5 R....ty Data,Ij I seems an,--term t Wrlh ider upon examt an hereof the Serum ty Defors t as racer ty far I painews he Into performance of is olel gat the under th a I ease6 If I slums he Is to pay Rent,at othem as Defaults under In a I ease,I essor may use,apply or role n all at any Pon on of as of Seemly Dames I for the payment at any amount already due I seser, for Rents wh Gh w 11 be due n the future, nnW or In he orruirsie or compensate I eiewt,far any I eh I ly svp..... ..as .,damage wh th I ..a,may imffier or n.,,by mawt.thereof. If I es.., .a.or spiel as ell or am Diapm 1 1,'he full ..,nt man had by th x I sees If the Be.. Rent muriens. do,of the term of ho .a,.. .ineres hen Pon will mquind fm. remained Ross Rent -a the hill a' Securty De Pren 1 bore to the nt a' Rase Rent Rho It the Agreed Use be amended to arrommome a Mali, a' change in the bus ness of L-mpp or t, a...numdon, a subleases or a arge so, Lessor shall have the debt to r norease the Seourty De Print to the intent necessary, n Lessee's reasonable judgment,to @80GUm for any released wear and fear that the Prem sea may suffiff-- - IF— it thereof if- change R GGRb@1 of Lessee adders per ing th a Lease and following such change the fraud a'must on of Lessee s, in Lessors Winimalble judgment, a on f mintly reduced, Lessee shall depers I such add t on-' hi vth --ix — shut be - ffi-iPrt t, -- -- the Red my Depute t to be at R minerva'ally reasonable level based so Such change h fin,rhdA partial ",,an,-- at be required to keep the Semirty Deposit separate from Its general aGmunts W th n 90 days after the exp el,on a,term net a. of th is I ease, I asset shall return that peg on of the Saturn,peace ,not used a appi ad by I esser. I asset shall upon wrimn request prov de I same won an aGGount ing show ng how that peg on of the Sisterly Deters t that was no returned was applied Ple Pak of the Sete ity Deposit shall It.mosid.red m h.had I.In at to bear initenest a,to be prepayment far any raories to be pa I by I sales rear in , I ease THE SRGI RIT4r DEPOSIT SHAI I NOT WR SPID BY I RSSR� ffi I IR OF PAYMENT OF THE I AST MONTH'S R€Nj 6. Use. 6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use,or any other legal use which Is reasonably comparable thereto, and for no other purpose. Lessee shall not use or permit the use of the Premises in a manner that is unlawful, creates damage,waste or a nuisance,or that disturbs occupants of or causes damage to neighboring Premises or properties.Other than guide,signal and seeing eye dogs, Lessee PAGE 3 OF 18 INITIALS INITIALS ©2001-AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM STN-2445116E shall not keep or allow in the Premises any pets, animals, birds, fish, or reptiles. Lessor shall not unreasonably withhold or delay its consent to any request for a modification of the Agreed Use, so long as the same will not impair the structural integrity of the improvements on the Premises or the mechanical or electrical systems therein, and/or is not significantly more burdensome to the Premises. If Lessor elects to withhold consent, Lessor shall within T days after such request give written notification of same,which notice shall include an explanation of Lessor's objections to the change in the Agreed Use. 6.2 Hazardous Substances. (a) Reportable Uses Require Consent. The term "Hazardous Substance" as used in this Lease shall mean any product, substance, or waste whose presence, use, manufacture, disposal, transportation, or release, either by Itself or In combination with other materials expected to be on the Premises, is either: (I)potentially injurious to the public health, safety or welfare,the environment or the Premises, (II)regulated or monitored by any governmental authority,or(iii)a basis for potential liability of Lessor to any governmental agency or third party under any applicable statute or common law theory. Hazardous Substances shall include, but not be limited to, hydrocarbons, petroleum,gasoline,and/or crude oil or any products, by-products or fractions thereof. Lessee shall not engage in any activity in or on the Premises which constitutes a Reportable Use of Hazardous Substances without the express prior written consent of Lessor and timely compliance (at Lessee's expense) with all Applicable Requirements. "Reportable Use"shall mean (i)the installation or use of any above or below ground storage tank, (if the generation, possession, storage, use,transportation,or disposal of a Hazardous Substance that requires a permit from,or with respect to which a report,notice,registration or business plan is required to be filed with,any governmental authority,and/or(III)the presence at the Premises of a Hazardous Substance with respect to which any Applicable Requirements requires that a notice be given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the foregoing, Lessee may use any ordinary and customary materials reasonably required to be used in the normal course of the Agreed Use, ordinary office supplies (copier toner, liquid paper, glue, etc.) and common household cleaning materials, so long as such use is in compliance with all Applicable Requirements, is not a Reportable Use,and does not expose the Premises or neighboring property to any meaningful risk of contamination or damage or expose Lessor to any liability therefor. In addition, Lessor may condition its consent to any Reportable Use upon receiving such additional assurances as Lessor reasonably deems necessary to protect itself,the public,the Premises and/or the environment against damage,contamination,injury and/or liability, including, but not limited to,the installation (and removal on or before Lease expiration or termination)of protective modifications(such as concrete encasements)and/or increasing the Security Deposit. (b)Duty to Inform Lessor. If Lessee knows, or has reasonable cause to believe, that a Hazardous Substance has come to be located in,on,under or about the Premises,other than as previously consented to by Lessor, Lessee shall immediately give written notice of such fact to Lessor,and provide Lessor with a copy of any report,notice,claim or other documentation which it has concerning the presence of such Hazardous Substance. (c)Lessee Remediation. Lessee shall not cause or permit any Hazardous Substance to be spilled or released in,on, under, or about the Premises (including through the plumbing or sanitary sewer system) and shall promptly, at Lessee's expense, comply with all Applicable Requirements and take all investigatory and/or remedial action reasonably recommended,whether or not formally ordered or required,for the cleanup of any contamination of,and for the maintenance,security and/or monitoring of the Premises or neighboring propertles,that was caused or materially contributed to by Lessee, or pertaining to or Involving any Hazardous Substance brought onto the Premises during the term of this Lease, by or for Lessee,or any third party. (d)Lessee Indemnification. Lessee shall indemnify, defend and hold Lessor, its agents,employees,lenders and ground lessor, if any, harmless from and against any and all loss of rents and/or damages, liabilities, judgments, claims, expenses, penalties, and attorneys' and consultants' fees arising out of or involving any Hazardous Substance brought onto the Premises by or for Lessee, or any third party (provided, however,that Lessee shall have no liability under this Lease with respect to underground migration of any Hazardous Substance under the Premises from adjacent properties not mused or contributed to by Lessee). Lessee's obligations shall include, but not be limited to, the effects of any contamination or injury to person, property or the environment created or suffered by Lessee, and the cost of investigation, removal, remediation, restoration and/or abatement, and shall survive the expiration or termination of this Lease. No termination, cancellation or release agreement entered Into by Lessor and Lessee shall release Lessee from Its obligations under this Lease with respect to Hazardous Substances,unless specifically so agreed by Lessor in writing at the time of such agreement. (a) Lessor Indemnification. Except as otherwise provided in paragraph 8.7, Lessor and its successors and assigns shall Indemnify, defend, reimburse and hold Lessee, its employees and lenders, harmless from and against any and all environmental damages, Including the cost of remediation, which result from Hazardous Substances which existed on the Premises prior to Lessee's occupancy or which are caused by the gross negligence or willful misconduct of Lessor, its agents or employees. Lessor's obligations, as and when required by the Applicable Requirements, shall include, but not be limited to, the cost of investigation, removal, remediation, restoration and/or abatement, and shall survive the expiration or termination of this Lease. (f) Investigalt one and Remendation, I e—, an,'- rate'. the aspens b I ty and pay for any RVEKA gat OHS OF earned at on Lessee's occupancy, unless- -h riened a,on mass re a Fequ red as a FeeUlt of Lessee's use nalud ng"Alterat ans", as defined n paRatimph 7.3(a) below)of the Poem ses, a mi an event I P—e--h-11 he ei ble for such payment. Lessee shall cooperate fully n MY 611611 all 111-Fee -- of Less9e eclud ng allowing Lessor and Lassoes agents to ho'-a—mm I.......h-the Pher— At he A R A issue t miss R Wake IQ easy Mid 1 P A AMON (g)Lessor Termination Option. If a Hazardous Substance Condition(see Paragraph 9.1(e))occurs during the term of this Lease, unless Lessee is legally responsible therefor (in which case Lessee shall make the Investigation and remediation thereof required by the Applicable Requirements and this Lease shall continue in full force and effect, but subject to Lessor's rights under Paragraph 6.2(d)and Paragraph 13), Lessor may, at Lessors option, either it investigate and remediate such Hazardous Substance Condition, if required, as soon as reasonably possible at Lessor's expense, in which event this Lease shall continue in full force and effect,or fill if the estimated cost to remediate such condition exceeds 12 times the then monthly Base Rent or$100,000,whichever is greater,give written notice to Lessee,within 30 days after receipt by Lessor of knowledge of the occumence of such Hazardous Substance Condition,of Lessors desire to terminate this Lease as of the date 60 days following the date of such notice. In the event Lessor elects to give a termination notice, Lessee may, within 10 days thereafter, give written notice to Lessor of Lessee's commitment to pay the amount by which the cost of the remediation of such Hazardous Substance Condition exceeds an amount equal to 12 times the then monthly Base Rent or$100,000, whichever is greater. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within 30 PAGE 4 OF 18 INITIALS INITIALS 02001-AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM STN-2446/16E days following such commitment. In such event,this Lease shall continue in full force and effect,and Lessor shall proceed to make such remediation as soon as reasonably possible after the required funds are available. If Lessee does not give such notice and provide the required funds or assurance thereof within the time provided,this Lease shall terminate as of the date specified in Lessors notice of termination. 6.3 Lessee's Compliance with Applicable Requirements. Except as otherwise provided In this Lease, Lessee shall, at Lessee's sole expense, fully, diligently and in a timely manner, materially comply with all Applicable Requirements, the requirements of any applicable fire Insurance underwriter or rating bureau,and the recommendations of Lessors engineers and/or consultants which relate in any manner to the Premises, without regard to whether said Applicable Requirements are now in effect or become effective after the Start Date. Lessee shall,within 10 days after receipt of Lessor's written request, provide Lessor with copies of all permits and other documents, and other information evidencing Lessee's compliance with any Applicable Requirements specified by Lessor, and shall immediately upon receipt, notify Lessor in writing (with copies of any documents involved)of any threatened or actual claim,notice,citation,warning,complaint or report pertaining to or involving the failure of Lessee or the Premises to comply with any Applicable Requirements.Likewise,Lessee shall immediately give written notice to Lessor of:(i)any water damage to the Premises and any suspected seepage,pooling,dampness or other condition conducive to the production of mold; or fin)any mustiness or other Odom that might indicate the presence of mold in the Premises. In addition,Lessee shall provide copies of all relevant material safety data sheets(MSDS)to Lessor within 10 days of the receipt of a written request therefor. In addition, Lessee shall provide Lessor with copies of its business license,certificate of occupancy and/or any similar document within 10 days of the receipt of a written request therefor. 6.4 Inspection;Compliance. Lessor and Lessor"s"Lender"(as defined In Paragraph 30)and consultants authorized by Lessor shall have the right to enter into Premises at any time, in the case of an emergency, and otherwise at reasonable times after reasonable notice, for the purpose of inspecting andlor testing the condition of the Premises slipper for verifying compliance by Lessee with this Lease. The cost of any such inspections shall be paid by Lessor,unless a violation of Applicable Requirements,or a Hazardous Substance Condition(see paragraph 9.1)is found to exist or be imminent,or the Inspection Is requested or ordered by a governmental authority. In such case,Lessee shall upon request reimburse Lessor for the cost of such inspection, so long as such inspection is reasonably related to the violation or contamination. In addition, Lessee shall provide copies of all relevant material safely data sheens(MSDS)to Lessor within 10 days of the receipt of a written request therefore. Lessee acknowledges that any failure on its part to allow such inspections or testing will expose Lessor to risks and potentially cause Lessor to incur costs not contemplated by this Lease,the extent of which will be extremely difficult to ascertain. A rGrindfingly,should the I..a,.fin-to .,on i an.and',,testing . , I eirily fai am the Base Rest shall he smeared mily increased without any man rammint for not as 1. 1 ease. by a amount q,a-to 101; of the than and reasonable eximpereat on par the add t onal F al"mi-19 that Lessor W 11 near by reason of I ansim's fial re to alle,,a an mistreat an andim test Rg.- s an cam.s- 0 Base Rest-Ifiel 0 be event-.net t t,a'v-v-F of I--SP-'- Data It.1 absorb�N r th respect to such calure nor proven!the areas as at 7. Maintenance; Repairs,Utility Installations;Trade Fixtures and Alterations. 7.1 Lessee's Obligations. (a)In General. Subject to the provisions of Paragraph 2.2(Condition),2.3(Compliance),6.3(Lessee's Compliance with Applicable Requirements), 7.2 (Lessor's Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at Lessee's sole expense, keep the Premises, Utility Installations (intended for Lessee's exclusive use, no matter where located), and Alterations in good order, condition and repair (whether or not the portion of the Premises requiring repairs,or the means of repairing the same, are reasonably or readily accessible to Lessee,and whether or not the need for such repairs occurs as a result of Lessee's use, any prior use,the elements or the age of such portion of the Premises), including, but not limited to, all equipment or facilities, such as plumbing, WAC equipment, electrical, lighting facilities, boilers, pressure vessels,fire protection system, fixtures, walls (interior and exterior), foundations, ceilings, roofs, roof drainage systems, floors, Windows, doom, plate glass, skylights, landscaping, driveways, parking lots, fences, retaining walls, signs, sidewalks and parkways located in, on, or adjacent to the Premises. Lessee, in keeping the Premises in good order,condition and repair,shall exercise and perform good maintenance practices,specifically including the procurement and maintenance of the service contacts required by Paragraph 7.1(b) below Lessee's Obliged onsshe rna,ands ,restera".,ans; replacements BFnernewe's when necessary to peepthe Premises and a" HIPFaVeMeRtS theism We oak thereof it good Order, motion and state a repair. Lessee shall,during the term of this Lease,keep the exterior appearance of the Building in a first-class condition(including,e.g.graffiti removal) consistent with the exterior appearance of other similar facilities of comparable age and size in the vicinity, Including, when necessary, the exterior repainting of the Building. (b) Service Contacts. Lessee shall, at Lessee's sole expense, procure and maintain contracts, with copies to Lessor, in customary form and substance for, and with contractors specializing and experienced in the maintenance of the following equipment and improvements, g any, if and when installed on the Premises: (i) Hi equipment, (it)boiler, and pressure vessels, (III)fire extinguishing systems, including fire alarm and/or smoke detection, (iv)landscaping and irrigation systems, (v)roof covering and drains, and (vi)clarifiers. However, Lessor reserves the right, upon notice to Lessee, to procure and maintain any or all of such service contracts, , 9emaad.is,th. —4themsi. (c) Failure to Perform. If Lessee falls to perform Lessee's obligations under this Paragraph 7.1, Lessor may enter upon the Premises after 10 days' prior written notice to Lessee (except in the case of an emergency, in which case no notice shall be required), perform such obligations on Lessee's behalf,and put the Premises In good order,condition and repair,and Lessee shall promptly pay to Lessor a sum equal to 115% of the cost thereof. (d)Replacement. Subject to Lessee's indemnification of Lessor as set forth in Paragraph 8.7 below,and without relieving Lessee of liability resulting from Lessee's failure to exercise and perform good maintenance practices, g an item described in Paragraph 7.1(b) cannot be repaired other than at a cost which is in excess of 50% of the cost of replacing such item, then such item shall be replaced by Lessor, and the cost thereof shall be prorated between the Parties and Lessee shall only be obligated to pay,each month during the remainder of the tern of this Lease,on the date on which Base Rent is due,an amount equal to the product of multiplying the cost of such replacement by a fraction,the numerator of which is one,and the denominator of which is 144 fie. 1/144th of the cost per month). Lessee shall pay Interest on the unamortized balance but may prepay its obligation at any time. 7.2 Lessor's Obligations. Subject to the provisions of Paragraphs 2.2(Condition),2.3(Compliance),9(Damage or Destruction)and 14(Condemnation),it is intended by the Parties hereto that Lessor have no obligation,in any manner whatsoever,to repair and maintain the Premises, or the equipment therein, all of which obligations are intended to be that of the Lessee. It is the intention of the Parties that the terms of this Lease PAGE 5 OF 18 INITIALS INITIALS 02001-AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM STN-24415/16E govern the respecfive obligations of the Parties as to maintenance and repair of the Premises,and they expressly waive the benefit of any statute now or hereafter in effect to the extent it is inconsistent with the terms of this Lease. 7.3 Utility Installations;Trade Fixtures;Alterations. (a)Definitions. The term "Utility Installations' refers to all Boor and window coverings, air and/or vacuum lines, power panels, electrical distribution, security and fire protection systems, communication cabling, lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises. The term "Trade Fixtures"shall mean Lessee's machinery and equipment that can be removed without doing material damage to the Premises. The term "Alterations" shall mean any modification of the improvements, other than Utility Installations or Trade Fixtures, whether by addition or deletion. "Lessee Owned Alterations and/or UBlity Installations' are defined as Alterations and/or Utility Installations made by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a). (b)Consent. Lessee shall not make any Alterations or Utility Installations to the Premises without Lessor's prior written consent. Lessee may,however,make non-structural Alterations or Utility Installations to the interior of the Premises(excluding the roof)without such consent but upon notice to Lessor,as long as they are not visible from the outside,do not involve puncturing,relocating or removing the roof or any existing walls, will not affect the electrical,plumbing,Hi and/or life safety systems,do not trigger the requirement for additional modifications antl/or improvements to the Premises resulting from Applicable Requirements, such as compliance with Title 24, and the cumulative cost thereof during this Lease as extended does not exceed a sum equal to 3 month's Base Rent in the aggregate or a sum equal to one month's Base Rent in any one year. Notwithstanding the foregoing, Lessee shall not make or permit any roof penetrations and/or install anything on the mot without the prior written approval of Lessor. Lessor may,as a precondition to granting such approval, require Lessee to utilize a contractor chosen and/or approved by Lessor. Any Alterations or Utility Installations that Lessee shall desire to make and which require the consent of the Lessor shall be presented to Lessor in written form with detailed plans. Consent shall be deemed conditioned upon Lessee's: (i)acquiring all applicable governmental permits,(ill furnishing Lessor with copies of both the permits and the plans and specifications prior to commencement of the work, and (III)compliance with all conditions of said permits and other Applicable Requirements In a prompt and expeditious manner. Any Alterations or Utility Installations shall be performed in a workmanlike manner with good and sufficient materials. Lessee shall promptly upon completion furnish Lessor with es-built plans and specificationsFe, -an,-h Gh costs an .a int .excess of one randn's Rase Rent I ismir may Gond t on Is consent upon I simee prey J ng a I on and sampler on biaid . a am...t equal 1. 169-A of the estimated beat of such Alaralmn , Wily mder upon I irinviar. pi an iddl,mil S...Or) 13s6et;t.th I imi- (c)Liens; Bonds. Lessee shall pay,when due,all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use on the Premises,which claims are or may be secured by any mechanic's or materalmen's lien against the Premises or any interest therein. Lessee shall give Lessor not less than 10 days notice prior to the commencement of any work in, on or about the Premises, and Lessor shall have the right to post notices of non-responsibility. If Lessee shall contest the validity of any such lien, claim or demand,then Lessee shall,at its sole expense defend and protect itself,Lessor and the Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof. If Lessor shall require, Lessee shall furnish a surety bond In an amount equal to 150%of the amount of such contested lien, claim or demand, indemnifying Lessor against liability for the same. If Lessor elects to participate In any such action, Lessee shall pay Lessor's attorneys'fees and costs. 7.4 Ownership; Removal;Surrender;and Restoration. (a)Ownership. Subject to Lassoes right to require removal or elect ownership as hereinafter provided, all Alterations and Utility Installations made by Lessee shall be the property,of Lessee,but considered a part of the Premises. Lessor may,at any time,elect in writing to be the owner of all or any specifed part of the Lessee Owned Alterations and Utility Installations. Unless otherwise instructed per paragraph 7.4(b)hereof,all Lessee Owned Alterations and Utility Installations shall, at the expiration or termination of this Lease, become the property of Lessor and be surrendered by Lessee with the Premises. (b)Removal. By delivery to Lessee of written notice from Lessor not earler than 90 and not later than 30 days prior to the end of the term of this Lease,Lessor may require that any or all Lessee Owned Altemmons or Utility Installations be removed by the expiration or termination of this Lease. Lessor may require the removal at any time of all or any part of any Lessee Owned Alterations or Utility Installations made without the required consent. (c)Surrender; Restoration. Lessee shall surrender the Premises by the Expiration Dale or any carrier termination date,with all of the Improvements,parts and surfaces thereof broom clean and free of debris,and In good operating order,condition and state of repair,ordinary wear and tear excepted. "Ordinary wear and tear' shall not include any damage or deterioration that would have been prevented by good maintenance practice. Notwithstanding the foregoing, if the Lessee occupies the Premises for 12 months or less,then Lessee shall surrender the Premises in the same condition as delivered to Lessee on the Start Date with NO allowance for ordinary wear and tear. Lessee shall repair any damage occasioned by the installation, maintenance or removal of Trade Fixtures,Lessee owned Alterations and/or Utility Installations,furnishings,and equipment as well as the removal of any storage tank installed by or for Lessee. Lessee shall remove tram the Premises any and all Hazardous Substances brought onto the Premises by or for Lessee,or any third party(except Hazardous Substances which were deposited via underground migration firm areas outside of the Premises)to the level specified in Applicable Requirements. Trade Fixtures shall remain the property of Lessee and shall be removed by Lessee. Any personal property of Lessee not removed on or before the Expiration Date or any earlier termination dale shall be deemed to have been abandoned by Lessee and may be disposed of or retained by Lessor as Lessor may desire.The failure by Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c)without the express written consent of Lessor shall constitute a holdover under the previsions of Paragraph 26 below. 8. Insurance;Indemnity. 8.1 Payment For Insurance. Lessee shall pay for all insurance required under Paragraph 8 except to the extent of the cost attributable to liability insurance carried by Lessor under Paragraph 8.2(b) in excess of$2,000,000 per occurrence. Premiums for policy periods commencing prior to or extending beyond the Lease term shall be prorated to correspond to the Lease term. Payment shall be made by Lessee to Lessor within 10 days following receipt of an invoice. 8.2 Liability Insurance. (a)Carried by Lessee.Lessee shall obtain and keep in force a Commercial General Liability Policy of insurance protecting Lessee and Lessor as an additional insured against claims for bodily injury, personal injury and property damage based upon or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than$1,000,000 per occurrence with an annual aggregate of not less than$2,000,000.Lessee shall add Lessor as PAGE 6 OF 18 INITIALS INITIALS 02001-AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM STN-24-05116E an additional insured by means of an endorsement at least as broad as the Insurance Service Organizalion's'Additional Insured-Managers or Lessors of Premises" Endorsement. The policy shall not contain any intro-insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Lease as an"Insured contract"for the performance of Lessee's indemnity obligations under this Lease. The limits of said insurance shall not, however, limit the liability of Lessee nor relieve Lessee of any obligation hereunder. Lessee shall provide an endorsement on its liability policy(ies)which provides that its insurance shall be primary to and not contributory with any similar insurance carried by Lessor,whose Insurance shall be considered excess Insurance only. (b)Carded by Lessor. Lessor shall maintain liability insurance as described in Paragraph 8.2(a),in addition to, and not in lieu of, the Insurance required to be maintained by Lessee. Lessee shall not be named as an additional Insured therein. 8.3 Property Insurance-Building,Improvements and Rental Value. (a)Building and Improvements. The Insuring Party shall obtain and keep in force a policy or policies in the name of Lessor,with loss payable to Lessor,any ground-lessor,and to any Lender insuring loss or damage to the Premises. The amount of such insurance shall be equal to the full insurable replacement cost of the Premises, as the same shall exist from time to time,or the amount required by any Lender, but in no event more than the commercially reasonable and available insurable value thereof. Lessee Owned Alienations and Utility Installations,Trade Fixtures,and Lessee's personal property,shall be insured by Lessee not by Lessor. If the coverage is available and commercially appropriate,such policy or policies shall insure against all risks of direct physical loss or damage (except the perils of flood antler earthquake unless required by a Lender), including coverage for cards removal and the enforcement of any Applicable Requirements requiring the upgrading,demolition,reconstruction or replacement of any portion of the Premises as the result of a covered loss. Said policy or policies shall also contain an agreed valuation provision in lieu of any coinsurance clause,waiver of subrogation, and inflation guard protection causing an increase in the annual property insurance coverage amount by a factor of not less than the adjusted U.S. Department of Labor Consumer Price Index for All Urban Consumers for the city nearest to where the Premises are located. If such insurance coverage has a deductible clause,the deductible amount shall not exceed$5,000 per occurrence,and Lessee shall be liable for such deductible amount in the event of an Insured Loss. (b)Rental Value. The Insuring Party shall obtain and keep in force a policy or policies in the name of Lessor with loss payable to Lessor and any Lender, insuring the loss of the full Rent for one year with an extended period of indemnity for an additional 180 days("Rental Value insurance"), Said insurance shall contain an agreed valuation provision in lieu of any coinsurance clause, and the amount of coverage shall be adjusted annually to reflect the projected Rent otherwise payable by Lessee, for the next 12 month period. Lessee shall be liable for any deductible amount in the event of such loss. (c)Adjacent Premises. If the Premises are part of a larger building,or of a group of buildings owned by Lessor which are adjacent to the Premises, the Lessee shall pay for any increase in the premiums for the property insurance of such building or buildings if said increase is caused by Lessee's ads,omissions,use or occupancy of the Premises. 8.4 Lessee's Property; Business Interruption Insurance;Worker's Compensation Insurance. (a)Property Damage. Lessee shall obtain and maintain insurance coverage on all of Lessee's personal property,Trade Fixtures, and Lessee Owned Alterations and Utility Installations. Such Insurance shall be full replacement cost coverage with a deductible of not to exceed $1,000 per occurrence. The proceeds from any such insurance shall be used by Lessee for the replacement of personal property,Trade Fixtures and Lessee Owned Alterations and UOlity Installations. (b) Business Interruption. Lessee shall obtain and maintain loss of income and extra expense insurance in amounts as will reimburse Lessee for direct or opined loss of earnings attributable to all perils commonly insured against by prudent lessees in the business of Lessee or diabutable to prevention of access to the Premises as a result of such perils. (c)Workers Compensation Insurance. Lessee shall obtain and maintain Workers Compensation Insurance in such amount as may be required by Applicable Requirements. Such policy shall include a 'Waiver of Subrogation' endorsement. Lessee shall provide Lessor with a copy of such endorsement along with the callificate of insurance or copy of the policy required by paragraph 8.5. (d)No Representation of Adequate Coverage. Lessor makes no representation that the limits or forms of coverage of insurance specified herein are adequate to cover Lessee's property,business operations or obligations under this Lease. 8.5 Insurance Policies. Insurance required herein shall be by companies maintaining during the policy term a"General Policyholders Rating' of at least A-, VII, as set forth in the most current issue of"Best's Insurance Guide', or such other rating as may be required by a Lender. Lessee shall not do or permit to be done anything which invalidates the required insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor certified copies of policies of such insurance or certificates with copies of the required endorsements evidencing the existence and amounts of the required insurance. No such policy shall be cancelable or subject to modification except after 30 days prior written notice to Lessor. Lessee shall, at least 10 days poor to the expiration of such policies,furnish Lessor with evidence of renewals or"insurance binders'evidencing renewal thereof,or Lessor may Increase his liability Insurance coverage and charge the cost thereof to Lessee,which amount shall be payable by Lessee to Lessor upon demand. Such policies shall be for a term of at least one year,or the length of the remaining ten of this Lease,whichever Is less. If either Party shall fail to procure and maintain the insurance required to be carried by it,the other Parry may,but shall not be required to,procure and maintain the same. 8.6 Waiver of Subrogation. Without affecting any other rights or remedies, Lessee and Lessor each hereby release and relieve the other, and waive their entire right to recover damages against the other, for loss of or damage to its property arising out of or incident to the perils required to be insured against herein. The effect of such releases and waivers is not limited by the amount of insurance wined or required,or by any deductibles applicable hereto. The Parties agree to have their respective property damage insurance carriers waive any right to subrogation that such companies may have against Lessor or Lessee,as the case may be,so long as the insurance is not invalidated thereby. 8.7 Indemnity. Except for Lessor's gross negligence or willful misconduct, Lessee shall Indemnify,prated,defend and hold harmless the Premises,Lessor and its agents, Lessees master or ground lessor,partners and Lenders,from and against any and all claims, loss of rents all damages,liens,judgments,penalties,attorneys'and consultants'fees,expenses and/or liabilities arising out of,involving,or in connection with,the use and/or occupancy of the Premises by Lessee. If any action or proceeding is brought against Lessor by reason of any of the foregoing matters, Lessee shall upon notice defend the same at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any such claim in order to be defended or indemnified. 8.8 Exemption of Lessor and its Agents from Liability. Notwithstanding the negligence or breach of this Lease by Lessor or its agents, neither Lessor nor its agents shall be liable under any circumstances for: (i)injury or damage to the person or goods,wares, merchandise or other property of Lessee, Lessee's employees,contractors,invitees,customers,or any other person in or about the Premises,whether such damage or injury is mused by or results from fire, steam, electricity, gas, water or rain, indoor air quality, the presence of mold or from the breakage. leakage, PAGE 7 OF 18 INITIALS INITIALS 02001-AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM STN-24-05116E obstruction or other defects of pipes,fire sprinklers,wires, appliances, plumbing, HVAC or lighfing fixtures, or from any other cause,whether the said injury or damage results from cond8ions arising upon the Premises or upon other portions of the building of which the Premises are a part,or from other sources or places, (it)any damages arising from any act or neglect of any other tenant of Lessor or from the failure of Lessor or its agents to enforce the provisions of any other lease in the Project, or(tit)injury to Lessee's business or for any loss of income or profit therefrom. Instead, it is intended that Lessee's sole recourse in the event of such damages or injury be to file a claim on the insurance policy(ies)that Lessee is required to maintain pursuant to the provisions of paragraph 8. 8A Failure to Provide Insurance. Lessee acknowledges that any failure on its part to obtain or maintain the insurance required herein will expose Lessor to risks and potentially cause Lessor to Incur costs not contemplated by this Lease, the extent of which will be extremely difficult to ascertain. Accordingly,for any month or portion thereof Nat Lessee does not maintain the required insurance and/or does not provide Lessor with the required binders or certificates evidencing the existence of the required insurance,the Base Rent shall be automatically increased,without any requirement for notice to Lessee,by an amount equal to 10%of the then existing Base Rent or$100,whichever is greater.The parties agree that such increase in Base Rent represents fair and reasonable compensation for the additional risk/costs that Lessor will incur by reason of Lessee's failure to maintain the required insurance. Such increase in Base Rent shall in no event constitute a waiver of Lessee's Default or Breach with respect to the failure to maintain such insurance,prevent the exercise of any of the other rights and remedies granted hereunder,nor relieve Lessee of its obligation to maintain the insurance specified in this Lease. 9. Damage or Destruction. 9.1 Definitions. (a) "Premises Partial Damage" shall mean damage or destntclion to the improvements on the Premises, other than Lessee Owned Alterations and Utility Installations,which can reasonably be repaired in 6 months or less from the date of the damage or destruction. Lessor shall notify Lessee In writing within 30 days from the date of the damage or destruction as to whether or not the damage is Partial or Total. (b)"Premises Total Destruction"shall mean damage or destruction to the Premises,other than Lessee Owned Alterations and Utility Installations and Trade Figures,which cannot reasonably be repaired In 6 months or less from the date of the damage or destruction. Lessor shall notify Lessee in writing within 30 days from the date of the damage or destruction as to whether or not the damage is Partial or Total. (c)"Insured Loss"shall mean damage or destruction to improvements on the Premises,other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which was caused by an event required to be covered by the insurance described in Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits involved. (d)"Replacement Cost"shall mean the at to repair or rebuild the improvements owned by Lessor at the time of the occurrence to their condition existing immediately prior thereto, including demolition, debris removal and upgrading required by the operation of Applicable Requirements,and without deduction for depreciation. (a) "Hazardous Substance Council shall mean the occurrence or discovery of a condition involving the presence of, or a contamination by,a Hazardous Substance,in,on,or under the Premises which requires remediation. 9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is an Insured Loss occurs, then Lessor shall, at Lessors expense, repair such damage(but not Lessee's Trade Figures or Lessee Owned Alterations and Utility Installations)as soon as reasonably possible and this Lease shall continue in full force and effect; provided, however, that Lessee shall, at Lessor's election, make the repair of any damage or destruction the total cost to repair of which is $10,000 or less, and, in such event, Lessor shall make any applicable insurance proceeds available to Lessee on a reasonable basis for that purpose. Notwithstanding the foregoing,if the required insurance was not in force orthe insurance proceeds are not sufficient to effect such repair, the Insuring Party shall promptly contribute the shortage in proceeds(except as to the deductible which is Lessees responsibility)as and when required to complete said repairs. In the event,however,such shortage was due to the fact that, by reason of the unique nature of the improvements,full replacement cost insurance coverage was not commercially reasonable and available, Lessor shall have no obligation to pay for the shortage in insurance proceeds or to fully restore the unique aspects of the Premises unless Lessee provides Lessor with the funds to cover same,or adequate assurance thereof,within 10 days following receipt of written notice of such shortage and request therefor. If Lessor receives said funds or adequate assurance thereof within said 10 day period, the party responsible for making the repairs shall complete them as soon as reasonably possible and this Lease shall remain in full force and effect. If such funs or assurance are not received, Lessor may nevertheless elect by written notice to Lessee within 10 days thereafter to: it make such restoration and repair as Is commercially reasonable with Lessor paying any shortage In proceeds, in which case this Lease shall remain in full force and effect,or(II)have this Lease terminate 30 days thereafter. Lessee shall not be entitled to reimbursement of any funds contributed by Lessee to repair any such damage or destruction. Premises Partial Damage due to good or earthquake shall be subject to Paragraph 9.3, notwithstanding that there may be some insurance coverage, but the net proceeds of any such insurance shall be made available for the repairs if made by either Party. 9.3 Partial Damage - Uninsured Loss. If a Premises Partial Damage that is not an Insured Loss occurs, unless caused by a negligent or wilful act of Lessee (in which event Lessee shall make the repairs at Lessee's expense), Lessor may either: (i)repair such damage as soon as reasonably possible at Lessors expense, in which event this Lease shall continue in full force and effect, or(it)terminate this Lease by giving written notice to Lessee within 30 days after receipt by Lessor of knowledge of the occurrence of such damage. Such termination shall be effective 60 days following the date of such notice. In the event Lessor elects to terininate this Lease,Lessee shall have the right within 10 days after receipt of the termination notice to give written notice to Lessor of Lessee's commitment to pay for the repair of such damage without reimbursement from Lessor. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within 30 days after making such commitment. In such event this Lease shall continue in full force and effect, and Lessor shall proceed to make such repairs as soon as reasonably possible after the required funds are available. If Lessee does not make the required commitment,this Lease shall terminate as of the date specified in the termination notice. 9.4 Total Destruction. Notwithstanding any other provision hereof,if a Premises Total Destruction occurs,this Lease shall terminate 60 days following such Destmction. If the damage or destruction was caused by the gross negligence or willful misconduct of Lessee, Lessor shall have the right to recover Lassoes damages from Lessee,except as provided in Paragraph 8.6. 9.5 Damage Near End of Term. If at any time during the last 6 months of this Lease there is damage for which the cost to repair exceeds one month's Base Rent,whether or not an Insured Loss, Lessor may terminate this Lease effective 60 days fallowing the date of occurrence of such damage by giving a written termination notice to Lessee within 30 days after the date of occurrence of such damage. Notwithstanding the foregoing,if Lessee at that time has an exercisable option to extend this Lease or to purchase the Premises,then Lessee may preserve this Lease by, (a)exercising such option and (b) providing Lessor with any shortage in insurance proceeds (or adequate assurance thereof) needed to make the PAGE 8 OF 18 INITIALS INITIALS 02001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM STN-24-05/16E repairs on or before the earlier of(i)the date which is 10 days after Lessee's receipt of Lessors written notice purporting to terminate this Lease,or(ii) the day prior to the date upon which such option expires. If Lessee duly exercises such option during such period and provides Lessor with funds(or adequate assurance thereof)to cover any shortage in insurance proceeds, Lessor shall, at Lessors commercially reasonable expense, repair such damage as soon as reasonably Possible and this Lease shall continue in full force and effect. If Lessee fails to exercise such option and provide such funds or assurance during such period, then this Lease shall terminate on the date specified in the termination notice and Lessee's option shall be extinguished. 9.6 Abatement of Rent;Lessee's Remedies. (a)Abatement. In the event of Premises Partial Damage or Premises Total Destruction or a Hazardous Substance Condition for which Lessee is not responsible under this Lease,the Rent Payable by Lessee for the period required for the repair, remediation or restoration of such damage shall be abated in proportion to the degree to which Lessee's use of the Premises is impaired, but not to exceed the proceeds received from the Rental Value insurance. All other obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall have no liability for any such damage,destruction,remediation,repair or restoration except as provided herein. (b)Remedies. If Lessor is obligated to repair or restore the Premises and does not commence, in a substantial and meaningful way,such repair or restoration within 90 days after such obligation shall accrue, Lessee may, at any time prior to the commencement of such repair or restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice,of Lessee's election to terminate this Lease on a dale not less than 60 days following the giving of such notice. If Lessee gives such notice and such repair or restoration is not commenced within 30 days thereafter,this Lease shall terminate as of the dale specified in said notice. If the repair or restoration is commenced within such 30 days,this Lease shall continue in full force and effect. "Commence"shall mean either the unconditional authorization of the preparation of the required plans, or the beginning of the actual work on the Premises,whichever first occurs. 9.7 Termination; Advance Payments. Upon termination of this Lease pursuant to Paragraph 6.2(g)or Paragraph 9, an equitable adjustment shall be made concerning advance Base Rent and any other advance payments made by Lessee to Lessor. Lessor shall,in addition,return to Lessee so much of Lessee's Security Deposit as has not been,or is not then required to be,used by Lessor. 10. Real Property Taxes. 10.1 Definition. As used herein,the term"Real Property Taxes"shall include any form of assessment; real estate,general,special, ordinary or extraordinary,or rental levy or tax(other than inheritance,personal income or estate taxes);improvement bond and/or license fee imposed upon or levied against any legal or equitable interest of Lessor in the Premises or the Project,Lessors right to other income therefrom,endear Lessors business of leasing, by any authority having the direct or indirect power to tax and where the funds are generated with reference to the Building address. Real Property Taxes shall also include any tax,fee, levy, assessment or charge, or any increase therein: if imposed by reason of events occurring during the term of this Lease, including but not limited to, a change in the ownership of the Premises, and (ii) Ievietl or assessed on machinery or equipment provided by Lessor to Lessee pursuant to this Lease. 10.2 Payment of Taxes. In addition to Base Rent, Lessee shall pay to Lessor an amount equal to the Real Property Tax installment due at least 20 days prior to the applicable delinquency date. If any such installment shall cover any period of time prior to or after the expiation or termination of this Lease,Lessee's share of such installment shall be prorated. In the event Lessee incurs a late charge on any Rent payment, Lessor may estimate the current Real Property Taxes, and require that such taxes be paid in advance to Lessor by Lessee monthly in advance with the payment of the Base Rent. Such monthly payments shall be an amount equal to the amount of the estimated installment of taxes divided by the number of months remaining before the month in which said installment becomes delinquent. When the actual amount of the applicable tax bill is known,the amount of such equal monthly advance payments shall be adjusted as required to provide the funds needed to pay the applicable taxes. If the amount collected!by Lessor is insufficient to pay such Real Property Taxes when due,Lessee shall pay Lessor,upon demand,such additional sum as is necessary. Advance payments may be intermingled with other moneys of Lessor and shall not bear interest. In the event of a Breach by Lessee in the performance of its obligations under this Lease,then any such advance payments may be heated by Lessor as an additional Security Deposit. 10.3 Joint Assessment. If the Premises are not separately assessed, Lessee's liability shall be an equitable proportion of the Real Property Taxes for all of the land and improvements included within the tax parcel assessed,such proportion to be conclusively determined by Lessor from the respective valuations assigned in the assessors work sheets or such other information as may be reasonably available. 10.4 Personal Property Taxes. Lessee shall pay, prior to delinquency, all taxes assessed against and levied upon Lessee Owned Alterations, Utility Installations, Trade Fixtures, furnishings, equipment and all personal property of Lessee. When Possible, Lessee shall cause its Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Lessor. If any of Lessee's said property shall be assessed with Lessors real property,Lessee shall pay Lessor the taxes attributable to Lessee's property within 10 days after receipt of a written statement setting forth the taxes applicable to Lessee's property. it. Utilities and Services. Lessee shall pay for all water, gas, heat, light, Power, telephone, trash disposal and other utilities and services supplied to the Premises,together with any taxes thereon. If any such services are not separately metered or billed to Lessee, Lessee shall pay a reasonable proportion,to be determined by Lessor,of all charges jointly metered or billed. There shall be no abatement of rent and Lessor shall not be liable in any respect whatsoever for the inadequacy, stoppage, interruption or discontinuance of any utility or service due to riot, strike, labor dispute, breakdown,accident,repair or other cause beyond Lessors reasonable control or in cooperation with governmental request or directions. 12. Assignment and Subletting. 12.1 Lessors Consent Required. (a) Lessee shall not voluntarily or by operation of law assign, transfer, mortgage or encumber (collectively, "assign or assignment")or sublet all or any part of Lessee's interest in this Lease or in the Premises without Lessors prior written consent. (b)Unless Lessee is a corporation and its stock is publicly traded on a national stock exchange,a change in the control of Lessee shall constitute an assignment requiring consent.The transfer,on a cumulative basis,of 25%or more of the voting control of Lessee shall constitute a change in control for this purpose. (c) The involvement of Lessee or its assets in any transaction, or series of transactions (by way of merger, sale, acquisition, financing, transfer, leveraged buy-out or otherwise), whether or not a formal assignment or hypothecation of this Lease or Lessees assets occurs, which results or will result in a reduction of the Net Worth of Lessee by an amount greater than 25%of such Net Worth as it was represented at the time of the execution of this Lease or at the time of the most recent assignment to which Lessor has consented,or as it exists immediately prior to said transaction or transactions constituting such reduction,whichever was or is greater,shall be considered an assignment of this Lease to which Lessor PAGE 9 OF 18 INITIALS INITIALS ©2001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM STN.2445116E may withhold its consent. "Net Worth of Lessee"shall mean the net worth of Lessee(excluding any guarantors)established under generally accepted accounting principles. (d)An assignment or subletting without consent shall,at Lessor's option,be a Default curable after notice per Paragraph 13.1(d),or a noncurable Breach without the necessity of any notice and grace period. If Lessor elects to treat such unapproved assignment or subletting as a noncurable Breach,Lessor may either:(i)terminate this Lease,or(it)upon 30 days written notice,increase the monthly Base Rent to 110%of the Base Rent then in effect. Further,in the event of such Breach and rental adjustment, (i)the purchase price of any option to purchase the Premises held by Lessee shall be subject to similar adjustment to 110% of the price previously in effect, and fif) all fixed and non-fixed rental adjustments scheduled during the remainder of the Lease term shall be Increased to 110%of the scheduled adjusted rent. (a)Lessee's remedy for any breach of Paragraph 12.1 by Lessor shall be limited to compensatory damages andlor injunctive relief. f)Lessor may reasonably withhold consent to a proposed assignment or subletting if Lessee is in Default at the time consent is requested. fig)Notwithstanding the foregoing,allowing a de minimis portion of the Premises, is. 20 square feet or less,to be used by a third party vendor in connection with the installation of a vending machine or payphone shall not constitute a subletting. 12.2 Terms and Conditions Applicable to Assignment and Subletting. (a)Regardless of Lessors consent, no assignment or subletting shall: (i) be effective without the express mitten assumption by such assignee or sublessee of the obligations of Lessee under this Lease, III)release Lessee of any obligations hereunder, or(III) alter the primary liability of Lessee for the payment of Rent or for the performance of any other obligations to be performed by Lessee. (b) Lessor may accept Rent or performance of Lessee's obligations from any person other than Lessee pending approval or disapproval of an assignment. Neither a delay in the approval or disapproval of such assignment nor the acceptance of Rent or performance shall constitute a walver or estoppel of Lessors right to exercise its remedies for Lessee's Default or Breach. (c)Lessors consent to any assignment or subletting shall not constitute a consent to any subsequent assignment or subletting. (d) In the event of any Default or Breach by Lessee, Lessor may proceed directly against Lessee, any Guarantors or anyone else responsible for the performance of Lessee's obligations under this Lease, including any assignee or sublessee, without first exhausting Lessor's remedies against any other person or entity responsible therefor to Lessor,or any security held by Lessor. (a)Each request for consent to an assignment or subletting shall be in writing, accompanied by information relevant to Lessors determination as to the financial and operational responsibility and appropriateness of the proposed assignee or sublessee, including but not limited to the intended use andlor required modification of the Premises, if any, together with a fee of$500 as consideration for Lessor's considering and processing said request. Lessee agrees to provide Lessor with such other or additional information and/or documentation as may be reasonably requested.(See also Paragraph 36) (f)Any assignee of,or sublessee under,this Lease shall,by reason of accepting such assignment,entering into such sublease,or entering into Possession of the Premises or any portion thereof, be deemed to have assumed and agreed to conform and comply with each and every term,covenant,condition and obligation herein to be observed or performed by Lessee during the term of said assignment or sublease,other than such obligations as are contrary to or Inconsistent with provisions of an assignment or sublease to which Lessor has specifically consented to in writing. (g) Lessors consent to any assignment or subletting shall not transfer to the assignee or sublessee any Option granted to the original Lessee by this Lease unless such transfer is specifically consented to by Lessor in writing.(See Paragraph 39.2) 12.3 Additional Terms and Conditions Applicable to Subletting. The following terms and conditions shall apply to any subletting by Lessee of all or any part of the Premises and shall be deemed included in all subleases under this Lease whether or not expressly incorporated therein: (a)Lessee hereby assigns and transfers to Lessor all of Lessee's interest in all Rent payable on any sublease, and Lessor may collect such Rent and apply same toward Lessee's obligations under this Lease; provided, however,that until a Breach shall occur in the performance of Lessee's obligations, Lessee may collect said Rent. In the event that the amount collected by Lessor exceeds Lessee's then outstanding obligations any such excess shall be refunded to Lessee. Lessor shall not, by reason of the foregoing or any assignment of such sublease, nor by reason of the collection of Rent, be deemed liable to the sublessee for any failure of Lessee to Perform and comply with any of Lessee's obligations to such sublessee. Lessee hereby irrevocably authorizes and directs any such sublessee, upon receipt of a written notice from Lessor stating that a Breach exists in the performance of Lessee's obligations under this Lease,to pay to Lessor all Rent due and to become due under the sublease. Sublessee shall rely upon any such notice from Lessor and shall pay all Rents to Lessor without any obligation or right to inquire as to whether such Breach exists, notwithstanding any claim from Lessee to the contrary. (b)In the event of a Breach by Lessee,Lessor may,at its option,require sublessee to attom to Lessor,in which event Lessor shall undertake the obligations of the sublessor under such sublease from the time of the exercise of said option to the expiration of such sublease;provided, however, Lessor shall not be liable for any prepaid rents or security deposit paid by such sublessee to such sublessor or for any prior Defaults or Breaches of such sublessor. (c)Any matter requiring the consent of the sublessor under a sublease shall also require the consent of Lessor. (d)No sublessee shall further assign or sublet all or any part of the Premises without Lessor's prior written consent. (a)Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee,who shall have the right to cure the Default of Lessee within the grace period, 0 any, specked in such notice. The sublessee shall have a right of reimbursement and offset from and against Lessee for any such Defaults cured by the sublessee. 13. Default; Breach; Remedies. 13.1 Default; Breach. A "Default" is defined as a failure by the Lessee to comply with or perform any of the terms, covenants, conditions or Rules and Regulations under this Lease. A"Breach" is defined as the occurrence of one or more of the following Defaults, and the failure of Lessee to cure such Default within any applicable grace period: (a) The abandonment of the Premises; or the vacating of the Premises without providing a commercially reasonable level of security,or where the coverage of the property insurance described in Paragraph 8.3 is jeopardized as a result thereof,or without providing reasonable assurances to minimize potential vandalism. (b)The failure of Lessee to make any Payment of Rent or any Security Deposit required to be made by Lessee hereunder,whether to Lessor or to a third party,when due,to provide reasonable evidence of insurance or surety bond, or to fulfill any obligation under this Lease which endangers or threatens life or property, where such failure continues for a period of 3 business days following written notice to Lessee. THE PAGE 10 OF 18 INITIALS INITIALS 02001 .AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM STN-2445116E ACCEPTANCE BY LESSOR OF A PARTIAL PAYMENT OF RENT OR SECURITY DEPOSIT SHALL NOT CONSTITUTE A WAIVER OF ANY OF LESSOR'S RIGHTS, INCLUDING LESSOR'S RIGHT TO RECOVER POSSESSION OF THE PREMISES. (c) The failure of Lessee to allow Lessor and/or its agents access to the Premises or the commission of waste, act or acts constituting public or private nuisance,andlor an illegal activity on the Premises by Lessee,where such actions continue fora period of 3 business days following written notice to Lessee. In the event that Lessee commits waste,a nuisance or an illegal activity a second time then,the Lessor may elect to treat such conduct as a non-curable Breach rather than a Default. (d)The failure by Lessee to provide (i) reasonable written evidence of compliance with Applicable Requirements, (it)the service contracts, (Ili) the rescission of an unauthorized assignment or subletting, (iv) an Estoppel Certificate or financial statements, (v) a requested subordination, (vi) evidence concerning any guaranty and/or Guarantor, (vii)any document requested under Paragraph 42, (viii) materiel safety data sheets(MSDS), or(ix)any other documentation or information which Lessor may reasonably require of Lessee under the terms of Nis Lease, where any such failure continues for a period of 10 days following written notice to Lessee, (e)A Default by Lessee as to the terms,covenants,conditions or provisions of this Lease,or of the rules adopted under Paragraph 40 hereof,other than those described in subparagraphs 13.1(a),(b),(c)or(d),above,where such Default continues for a period of 30 days after written notice;provided,however,that it the nature of Lessee's Default is such that more than 30 days are reasonably required for 0s cure,then it shall not be deemed to be a Breach if Lessee commences such cure within said 30 day period and thereafter diligently prosecutes such cure to completion. (f) The occurrence of any of the following events: (i)the making of any general arrangement or assignment for the benefit of creditors;(it)becoming a"debtor"as defined in 11 U.S.C.§101 or any successor statute thereto(unless,in the case of a petition filed against Lessee, the same is dismissed within 60 days); (III)the appointment of a trustee or receiver to take possession of substantially all of Lessee's assets located at the Premises or of Lessee's interest in this Lease,where possession is not restored to Lessee within 30 days;or hi the attachment,execution or other judicial seizure of substantially all of Lessee's assets located at the Premises or of Lessee's Interest in this Lease,where such seizure is not discharged within 30 days; provided, however, in the event that any provision of this subparagraph is contrary to any applicable law, such provision shall be of no force or effect,and not affect the validity of the remaining provisions. (g)The discovery that any financial statement of Lessee or of any Guarantor given to Lessor was materially false. (h)If the performance of Lessee's obligations under this Lease is guaranteed: (i)the death of a Guarantor, (it)the termination of a Guarantor's liability with respect to this Lease other than in accordance with the terms of such guaranty, (III)a Guarantor's becoming insolvent or the subject of a bankruptcy fling, (iv)a Guarantors refusal to honor the guaranty,or(v)a Guarantors breach of its guaranty obligation on an anticipatory basis, and Lessee's failure,within 60 days following written notice of any such event,to provide written alternative assurance or security,which,when coupled with the then existing resources of Lessee, equals or exceeds the combined financial resources of Lessee and the Guarantors that existed at the time of execution of this Lease. 13.2 Remedies. If Lessee fails to perform any of its affirmative duties or obligations,within 10 days after written notice(or in case of an emergency,without notice), Lessor may, at its option, perform such duty or obligation on Lessee's behalf, including but not limited to the obtaining of reasonably required bonds,insurance pollcies,or governmental licenses,permits or approvals. Lessee shall pay to Lessor an amount equal to 115%of the costs and expenses incurred by Lessor In such performance upon recelpt of an invoice therefor. In the event of a Breach, Lessor may, with or without further notice or demand,and without limiting Lessor In the exercise of any right or remedy which Lessor may have by reason of such Breach: (a)Terminate Lessee's right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession to Lessor. In such event Lessor shall be entitled to recover from Lessee: (i)the unpaid Rent which had been earned at the time of termination;(it)the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that the Lessee proves could have been reasonably avoided;(III)the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that the Lessee proves could be reasonably secured;and(iv)any other amount necessary to compensate Lessor for all the detriment proximately caused by the Lessee's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom,including but not limited to the cost of recovering possession of the Premises,expenses of missing, including necessary renovation and alteration of the Premises, reasonable attorneys'fees,and that portion of any leasing commission paid by Lessor in connection with this Lease applicable to the unexpired term of this Lease. The worth at the time of award of the amount retained to in provision (iii)of the immediately preceding sentence shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of the District within which the Premises are located at the time of award plus one percent. Efforts by Lessor to mitigate damages caused by Lessee's Breach of this Lease shall not waive Lessors right to recover any damages to which Lessor is otherwise entitled. If termination of this Lease is obtained through the provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding any unpaid Rent and damages as are recoverable therein,or Lessor may reserve the right to recover all or any part thereof in a separate suit. If a notice and grace period required under Paragraph 13.1 was not previously given,a notice to pay rent or quit,or to perform or quit given to Lessee under the unlawful retainer statute shall also constitute the notice required by Paragraph 13.1. In such case,the applicable grace period required by Paragraph 13A and the unlawful detainer statute shall run concurrently, and the failure of Lessee to cure the Default within the greater of the two such grace periods shall constitute both an unlawful detainer and a Breach of this Lease entitling Lessor to the remedies provided for in this Lease andlor by said statute. (b)Continue the Lease and Lessee's right to possession and recover the Rent as it becomes due, in which event Lessee may sublet or assign, subject only to reasonable limitations. Acts of maintenance, efforts to hall and/or the appointment of a receiver to protect the Lessor's Interests,shall not constitute a termination of the Lessee's right to possession. (c)Pursue any other remedy now or hereafter available under the laws or judicial decisions of the state wherein the Premises are located. The expiration or termination of this Lease and/or the termination of Lessee's right to possession shall not relieve Lessee from liability under any indemnity provisions of Nis Lease as to matters occurring or accruing during the term hereof or by reason of Lessee's occupancy of the Premises. 13.3 Inducement Recapture. Any agreement for free or abated rent or other charges,the cost of tenant improvements for Lessee paid for or performed by Lessor,or for the giving or paying by Lessor to or for Lessee of any cash or other bonus,inducement or consideration for Lessee's entering into this Lease,all of which concessions are hereinafter referred to as"Inducement Provisions;shall be deemed conditioned upon Lessee's full and faithful performance of all of the terms, covenants and conditions of this Lease. Upon Breach of this Lease by Lessee, any such Inducement Provision shall automatically be deemed deleted from this Lease and of no further force or effect, and any rent, other charge, bonus, inducement or consideration Heretofore abated, given or paid by Lessor under such an inducement Provision shall be immediately due and payable by Lessee to PAGE 11 OF 18 INITIALS INITIALS 02001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM STN-24-05/116E Lessor, notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by Lessor of rent or the cure of the Breach which initiated the operation of this paragraph shall not be deemed a waiver by Lessor of the previsions of this paragraph unless specifically so stated in writing by Lessor at the time of such acceptance. 13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee of Rent will cause Lessor to Incur costs not contemplated by this Lease,the exact amount of which will be extremely difficult to ascertain. Such costs include,but are not limited to,processing and accounting charges, and late charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent shall not be received by Lessor within 5 days after such amount shall be due,then, without any requirement for notice to Lessee, Lessee shall immediately pay to Lessor a one-time late charge equal to 10%of each such overdue amount or$100,whichever Is greater. The Parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of such late payment. Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee's Default or Breach with respect to such overdue amount,nor prevent the exercise of any of the other rights and remedies granted hereunder. In the event that a late charge is payable hereunder, whether or not collected,for 3 consecutive installments of Base Rent,then notwithstanding any provision of this Lease to the contrary,Base Rent shall,at Lessor's option,become due and payable quarterly in advance. 13.5 Interest. Any monetary payment due Lessor hereunder, other than late charges, not received by Lessor, when due shall bear interest from the 31 at day after it was due.The interest('Interest")charged shall be computed at the rate of 10%per annum but shall not exceed the maximum rate allowed by law. Interest Is payable In addition to the potential late charge provided for In Paragraph 13.4. 13.6 Breach by Lessor. (a)Notice of Breach. Lessor shall not be deemed in breach of this Lease unless Lessor fails within a reasonable time to perform an obligation required to be performed by Lessor. For purposes of this Paragraph, a reasonable time shall in no event be less than 30 days after receipt by Lessor, and any Lender whose name and address shall have been furnished Lessee in writing for such purpose,of written notice specifying wherein such obligation of Lessor has not been performed, provided, however, that if the nature of Lessor's obligation is such that more than 30 days are reasonably required for its performance,then Lessor shall not be in breach if performance is commenced within such 30 day period and thereafter diligently pursued to completion. (b)Performance by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender cures said breach within 30 days after receipt of said notice,or if having commenced said cure they do not diligently pursue it to completion,then Lessee may elect to cure said breach at Lessee's expense and offset from Rent the actual and reasonable cost to perform such cure,provided,however,that such offset shall not exceetl an amount equal to the greater of one month's Base Rent or the Security Deposit, reserving Lessee's right to seek reimbursement from Lessor for any such expense in excess of such offset. Lessee shall document the cost of said cure and supply said documentation to Lessor. 14. Condemnation. If the Premises or any portion thereof are taken under the power of eminent domain or sold under the threat of the exercise of said power (collectively "Condemnation"), this Lease shall terminate as to the part taken as of the date the condemning authority takes title or possession,whichever first occurs. If more than 10%of the Bu iltling,or more than 25%of that portion of the Premises not occupied by any building,is taken by Condemnation,Lessee may,at Lessee's option,to be exercised in writing within 10 days after Lessor shall have given Lessee written notice of such taking(or in the absence of such notice,within 10 days after the condemning authority shall have taken possession)terminate this Lease as of the date the condemning authority takes such possession. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining,except that the Base Rent shall be reduced in proportion to the reduction in utility of the Premises caused by such Condemnation. Condemnation awards and/or payments shall be the property of Lessor,whether such award shall be made as compensation for diminution in value of the leasehold,the value of the part taken,or for severance damages;provided,however,that Lessee shall be entitled to any compensation paid by the condemnor for Lessee's relocation expenses,loss of business goodwill and/or Trade Fixtures, without regard to whether or not this Lease is terminated pursuant to the provisions of this Paragraph. All Alterations and Utility Installations made to the Premises by Lessee,for purposes of Condemnation only,shall be considered the property of the Lessee and Lessee shall be entitled to any and all compensation which is payable therefor. In the event that this Lease is not terminated by reason of the Condemnation,Lessor shall repair any damage to the Premises caused by such Condemnation. 15. Brokerage Fees. 15A Additional Commission. In addition to the payments owed pursuant to Paragraph 1.9 above, Lessor agrees that: (a)if Lessee exercises any Option,M)if Lessee or anyone affiliated with Lessee acquires any rights to the Premises or other premises owned by Lessor and located within the same Project, if any,within which the Premises is located, (a)if Lessee remains in possession of the Premises, with the consent of Lessor, after the expiration of this Lease,or(d)if Base Rent is increased,whether by agreement or operation of an escalation clause herein,then, Lessor shall pay Brokers a fee in accordance with the fee schedule of the Brokers in effect at the time the Lease was executed. 15.2 Assumption of Obligations. Any buyer or transferee of Lessors interest in this Lease shall be deemed to have assumed Lessor's obligation hereunder. Brokers shall be third party beneficiaries of the provisions of Paragraphs 1.9, 15,22 and 31. If Lessor fails to pay to Brokers any amounts due as and for brokerage fees pertaining to this Lease when due,then such amounts shall seems Interest. In addition, if Lessor fails to pay any amounts to Lessee's Broker when due, Lessee's Broker may send written notice to Lessor and Lessee of such failure and if Lessor fails to pay such amounts within 10 days after said notice, Lessee shall pay said monies to its Broker and offset such amounts against Rent. In addition, Lessee's Broker shall be deemed to be a third party beneficiary of any commission agreement entered into by and/or between Lessor and Lessors Broker for the limited purpose of collecting any brokerage fee owed. 15.3 Representations and Indemnities of Broker Relationships. Lessee and Lessor each represent and warrant to the other that it has had no dealings with any person,firm,broker or finder(other than the Brokers,if any)in connection with this Lease,and that no one other than said named Brokers is entitled to any commission or finders fee in connection herewith. Lessee and Lessor do each hereby agree to indemnify, protect, defend and hold the other harmless from and against liability for compensation or charges which may be claimed by any such unnamed broker,finder or other similar party by reason of any dealings or actions of the indemnifying Party,including any costs,expenses,attorneys'fees reasonably incurred with respect thereto. 16. Estoppel Certificates. (a)Each Party(as"Responding Party')shall within 10 days after written notice from the other Party(the "Requesting Party") execute,acknowledge and deliver to the Requesting Parry a statement In writing in form similar to the then most current"Estoppel Certificate"form published by the AIR Commercial Real Estate Association, plus such additional information, confirmation and/or statements as may be reasonably requested by the Requesting Party. PAGE 12 OF 18 INITIALS INITIALS 02001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM STN-2445/16E (b)If the Responding Party shall fail to execute or deliver the Estoppel Certificate within such 10 day period,the Requesting Party may execute an Estoppel Certificate staling that: (i) the Lease is in full force and effect without modification except as may be represented by the Requesting Party,(II)there are no uncured defaults In the Requesting Parry's performance,and(ill)If Lessor Is the Requesting Party,not more than one month's rent has been paid in advance.Prospective purchasers and encumbancers may rely upon the Requesting Party's Estoppel Certificate,and the Responding Party shall be estopped from denying the truth of the facts contained in said Certificate. In addition, Lessee acknowledges that any failure on its part to provide such an Estoppel Certificate will expose Lessor to risks and potentially muse Lessor to incur cents not contemplated by this Lease,the extent of which will be extremely difficult to ascertain. Accordingly, should the Lessee fail to execute and/or deliver a requested Estoppel Certificate In a timely fashion the monthly Base Rent shall be automatically Increased, without any requirement for notice to Lessee, by an amount equal to 10%of the then exdsting Base Rent or$100,whichever is greater for remainder of the Lease. The Parties agree that such increase in Base Rent represents fair and reasonable compensation for the additional Heidi that Lessor will incur by reason of Lessee's failure to provide the Estoppel Certificate. Such increase in Base Rent shall in no event constitute a waiver of Lessee's Default or Breach with respect to the failure to provide the Estoppel Certificate nor prevent the exercise of any of the other rights and remedies granted hereunder. (c)If Lessor desires to finance,refinance,or sell the Premises,or any part thereof,Lessee and all Guarantors shall within 10 days after written notice from Lessor deliver to any potential lender or purchaser designated by Lessor such financial statements as may he reasonably required by such lender or purchaser,including but not limited to Lessee's financial statements for the past 3 years. All such financial statements shall be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth. 17. Definition of Lessor. The term "Lessol as used herein shall mean the owner or owners at the time in question of the fee title to the Premises,or,if this is a sublease,of the Lessee's interest in the prior lease. In the event of a transfer of Lessors tills or interest in the Premises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit) any unused Security Deposit held by Lessor. Upon such transfer or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be believed of all liability with respect to the obligations anchor covenants under this Lease thereafter to be performed by the Lessor. Subject to the foregoing, the obligations and/or covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as hereinabove defined. 18. Severebllity. The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof. 19. Days. Unless otherwise specifically indicated to the contrary,the word"days"as used in this Lease shall mean and refer to calendar days, 20. Limitation on Liability. The obligations of Lessor under this Lease shall not constitute personal obligations of Lessor or its partners, members,directors,officers or shareholders,and Lessee shall look to the Premises,and to no other assets of Lessor,for the satisfaction of any liability of Lessor with respect to this Lease,and shall not seek recourse against Lessors partners, members,directors,officers or shareholders,or any of their personal assets for such satisfaction. 21. Time of Essence. Time is of the essence with respect to the performance of all obligations to be Performed or observed by the Parties under this Lease. 22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements between the Parties with respect to any matter mentioned herein, and no other prior or contemporaneous agreement or understanding shall be effective. Lessor and Lessee each represents and warrants to the Brokers that it has made,and is relying solely upon,its own investigation as to the nature,quality, character and financial responsibility of the other Party to this Lease and as to the use,nature,quality and character of the Premises. Brokers have no responsibility with respect thereto or with respect to any default or breach hereof by either Party. 23. NoBces. 23A Notice Requirements. All notices required or permitted by this Lease or applicable law shall be in writing and may be delivered in person(by hand or by courier)or may be sent by regular, certified or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or by facsimile transmission, or by email, and shall be deemed sufficiently given if served in a manner specified in this Paragraph 23. The addresses noted adjacent to a Partys signature on this Lease shall be that Party's address for delivery or mailing of notices. Either Party may by written notice to the other specify a different address for notice, except that upon Lessee's taking possession of the Premises, the Premises shall constitute Lessee's address for notice. A copy of all notices to Lessor shall be concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter designate in writing. 23.2 Date of Notice. Any notice sent by registered or certified mall, return receipt requested, shall be deemed given on the date of delivery shown on the receipt mind, or 8 no delivery date is shown,the postmark thereon. If sent by regular mail the notice shall be deemed given 72 hours after the same is addressed as required herein and mailed with postage prepaid. Notices delivered by United States Express Mail or overnight couner Mat guarantees next day delivery shall be deemed given 24 hours after delivery of the same to the Postal Service or courier. Notices delivered by hand, or transmitted by facsimile transmission or by email shall be deemed delivered upon actual receipt. If notice is received on a Saturday, Sunday or legal holiday,It shall be deemed received on the next business day. 24. Waivers. (a) No waiver by Lessor of the Default or Breach of any term,covenant or condition hereof by Lessee, shall be deemed a waiver of any other team,covenant or condition hereof,or of any subsequent Default or Breach by Lessee of the same or of any other term,covenant or condition hereof. Lassoes consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Lessors consent to, or approval of,any subsequent or similar act by Lessee,or be construed as the basis of an estoppel to enforce the provision or provisions of this Lease requiring such consent. (b) The acceptance of Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of moneys or damages due Lessor,notwithstanding any qualifying statements or conditions made by Lessee in connection therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Lessor at or before the time of deposit of such payment. (c) THE PARTIES AGREE THAT THE TERMS OF THIS LEASE SHALL GOVERN WITH REGARD TO ALL MATTERS RELATED THERETO AND HEREBY WAIVE THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE TO THE EXTENT THAT SUCH STATUTE IS INCONSISTENT WITH THIS LEASE. 25. Disclosures Regarding The Nature of a Real Estate Agency Relationship. (a) When entering into a discussion with a real estate agent regarding a real estate transaction,a Lessor or Lessee should from the outset understand what type of agency relationship or representation it has with the agent or agents in the transaction. Lessor and Lessee PAGE 13 OF 18 INITIALS INITIALS ©2001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM STN-24-05/16E acknowledge being advised by the Brokers in this transaction,as follows: (i) Lessor's Agent. A Lessor's agent under a listing agreement with the Lessor acts as the agent for the Lessor only. A Lessor's agent or subagent has the following affirmative obligations: To the Lessor: A fiduciary duty of utmost care, integrity, honesty,and loyalty in dealings with the Lessor. To the Lessee and the Lessor: a. Diligent exercise of reasonable skills and care in performance of the agent's duties. b.A duty of honest and fair dealing and good faith. c.A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to,or within the diligent attention and observation of,the Parties. An agent is not obligated to reveal to either Party any confidential Information obtained from the other Party which does not involve the affirmative duties set forlh above. (II) Lessee's Aaent. An agent can agree to act as agent for Me Lessee only. In these situations,the agent is not the Lessor's agent,even If by agreement the agent may receive compensation for services rendered,either In full or in part from the Lessor. An agent acting only for a Lessee has the following affirmative obligations. To the Lessee: A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Lessee. To the Lessee and the Lessor: a.Diligent exemise of reasonable skills and care in performance of the agent's duties. b.A duty of honest and fair dealing and good faith. c. A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above. (III) Agent Representing Both Lessor and Lessee. Areal estate agent,either acting directly or through one or more associate licenses, can legally be the agent of both the Lessor and the Lessee in a transaction, but only with the knowledge and consent of both the Lessor and the Lessee. In a dual agency situation,the agent has the following affirmative obligations to both the Lessor and the Lessee:a.A fiduciary duty of utmost care, integrity, honesty and loyally in the dealings with either Lessor or the Lessee. L. Other duties to the Lessor and the Lessee as stated above in subparagraphs(i)or(ii). In representing both Lessor and Lessee, the agent may not without the express permission of the respective Party,disclose to the other Party that Me Lessor will accept rent in an amount less than that indicated in the listing or that the Lessee is willing to pay a higher rem Man that offered. The above duties of the agent in a real estate transaction do not relieve a Lessor or Lessee from the responsibility to protect their own interests. Lessor and Lessee should carefully read all agreements to assure that they adequately express their understanding of Me transaction. A real estate agent is a person qualified to advise about real estate. If legal or tax advice is desired,consult a competent professional. M) Brokers have no responsibility with respect to any default or breach hereof by either Party. The Parties agree that no lawsuit or other legal proceeding involving any breach of duty,error or omission relating to this Lease may be brought against Broker more than one year after the Start Date and that the liability(including court costs and attorneys'fees), of any Broker with respect to any such lawsuit and/or legal proceeding shall not exceed the fee received by such Broker pursuant to this Lease; provided, however,that the foregoing limitation on each Broker's liability shall not be applicable to any gross negligence or willful misconduct of such Broker. (c) Lessor and Lessee agree to identify to Brokere as"Confidential"any communication or information given Brokers that is considered by such Party to be confidential. 26. N R 914 T, 14-id-vis, I Base,mi, so r ght 1. .is. pri on of the Pre.s as .,say paid th.,set hayand th. xii at ren.,term net a.. this- as, .the ,,,at that- essee holds ever,th a.the R--Real dell h,imsel In 450% of th 9 Rase Rert apsisalb-a isman ediately preceding th 8 e pini or termination HA1i`APF Base RPm Shall his GAIGU18ted OR monthly basis Nothing dull herein Shall be GlErStmed as Bomsert by' es so 27. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity. 28. Covenants and Conditions; Construction of Agreement. All provisions of this Lease to be observed or performed by Lessee are both covenants and conditions. In construing this Lease, all headings and titles are for the convenience of the Parties only and shall not be considered a pad of this Lease. Whenever required by the context, the singular shall include the pluml and vice versa. This Lease shall not be construed as if prepared by one of the Parties,but rather according to its fair meaning as a whole,as if both Parties had prepared it. 29. Binding Effect; Choice of Law. This Lease shall be binding upon the Parties,their personal representatives,successors and assigns and be governed by the laws of the State in which Me Premises are located. Any litigation between Me Parties hereto concerning this Lease shall be Initiated in the county In which the Premises are located. 30. Subordination;Adornment;Non-Disturbance. 30.1 Subordination. This Lease and any Option granted hereby shall be subject and subordinate to any ground lease,mortgage,deed of trust,or other hypothecation or security device(collectively,"Security Device"),now or hereafter placed upon Me Premises,to any and all advances made on the security thereof,and to all renewals,modifications,and extensions thereof. Lessee agrees that the holders of any such Security Devices (in this Lease together referred to as"Lender")shall have no liability or obligation to perform any of the obligations of Lessor under this Lease. Any Lender may elect to have this Lease and/or any Option granted hereby superior to the lien of he Security Device by giving written notice thereof to Lessee, whereupon this Lease and such Options shall be deemed prior to such Security Device, notwithstanding the relative dales of the documentation or recordation thereof. 30.2 Attomment. In the event that Lessor transfers title to the Premises,or the Premises are acquired by another upon Me foreclosure or termination of a Security Device to which this Lease is subordinated (1) Lessee shall, subject to the non-disturbance provisions of Paragraph 30.3, aftom to such new owner,and upon request, enter into a new lease,containing all of the terms and provisions of this Lease,with such new owner for the remainder of the term hereof,or,at the election of the new owner,this Lease will automatically become a new lease between Lessee and such new owner, and (ii) Lessor shall thereafter be relieved of any further obligations hereunder and such new owner shall assume all of Lessor's obligations, except that such new owner shall not: (a)be liable for any act or omission of any prior lessor or with respect to events occurring prior to acquisition of ownership;M)be subject to any offsets or defenses which Lessee might have against any prior lessor, (c)be bound by prepayment of more than one month's rent,or(d)be liable for Me return of any security deposit paid to any prior lessor which was not paid or credited to such new owner. 30.3 NoriZisturbance. With respect to Security Devices entered Into by Lessor after the execution of this Lease, Lessee's subordination of this Lease shall be subject to receiving a commercially reasonable non-disturbance agreement(a "Non-Disturbance Agreement") from the Lender which Non-Disturbance Agreement provides that Lessee's possession of the Premises,and this Lease,including any options to extend the term hereof, will not be disturbed so long as Lessee is not in Breach hereof and alloms to the record owner of the Premises. Further, within 60 days after the execution of this Lease, Lessor shall, If requested by Lessee, use Its commercially reasonable efforts to obtain a Non-Disturbance Agreement from the holder of any pre-existing Security Device which Is secured by the Premises. In the evert that Lessor Is unable to provide the Non-Disturbance Agreement within said 60 days, then Lessee may, at Lessee's option, directly contact Lender and attempt to negotiate for the PAGE 14 OF 18 INITIALS INITIALS @2001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM STN-24405116E execution and delivery of a Non-Disturbance Agreement. 30.4 Self-Executing. The agreements contained In this Paragraph 30 shall be effective without the execution of any further documents; provided, however,that, upon written request from Lessor or a Lender in connection with a sale,financing or refinancing of the Premises, Lessee and Lessor shall execute such further writings as may be reasonably required to separately document any subordination, adornment and/or Non-Disturbance Agreement provided for herein. 31. Attorneys'Fees. If any Party or Broker brings an action or proceeding involving the Premises whether founded in tort,contract or equity,or to declare rights hereunder,the Prevailing Party(as hereafter defined)In any such proceeding,action,or appeal thereon,shall be entitled to reasonable attorneys'fees. Such fees may be awarded in the same suit or recovered In a separate suit,whether or not such action or proceeding is pursued to decision or judgment. The term, "Prevailing Party"shall include, without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be,whether by compromise, settlement,judgment,or the abandonment by the other Party or Broker of its claim or defense. The attorneys'fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all allomeys'fees reasonably incurred. In addition, Lessor shall be entitled to attorneys'fees, costs and expenses incurred in the preparation and service of notices of Default and consultations in connection therewith,whether or not a legal action is subsequently commenced in connection with such Default or resulting Breach($200 is a reasonable minimum per occurrence for such services and consultation). 32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents shall have the right to enter the Premises at any time,In the case of an emergency,and otherwise at reasonable times after reasonable prior notice for the purpose of showing the same to prospective purchasers, lenders,or tenants,and making such alterations, repairs,improvements or additions to the Premises as Lessor may deem necessary or desirable and the erecting,using and maintaining of utilities,services, pipes and conduits through the Premises and/or other premises as long as there is no material adverse effect to Lessee's use of the Premises. All such activities shall be without abatement of rent or liability to Lessee. 33. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction upon the Premises without Lessors prior written consent. Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to Permit an auction. 34. Signs. Lessor may place on the Premises ordinary"For Sale"signs at anytime and ordinary"For Lease"signs during the last 6 months of the term hereof. Except for ordinary"for sublease"signs.Lessee shall not place any sign upon the Premises without Lessors prior written consent.All signs must comply with all Applicable Requirements. 35. Termination;Merger. Unless specifically stated otherwise in writing by Lessor,the voluntary or other surrender of this Lease by Lessee,the mutual termination or cancellation hereof,or a termination hereof by Lessor for Breach by Lessee,shall automatically terminate any sublease or lesser estate in the Premises; provided, however, that Lessor may elect to continue any one or all existing subtenancies. Lessors failure within 10 days following any such event to elect to the contrary by written notice to the holder of any such lesser interest, shall constitute Lessor's election to have such event constitute the termination of such interest. 36. Consents. All requests for consent shall be in writing. Except as otherwise provided herein,wherever in this Lease the consent of a Party is required to an ad by or for the other Party, such consent shall not be unreasonably withheld or delayed. Lessor's actual reasonable costs and expenses (Including but not limited to archdects', attorneys', engineers'and other consultants'fees)incurred in the consideration of,or response to,a request by Lessee for any Lessor consent,including but not limited to consents to an assignment,a subletting or the presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt of an invoice and supporting documentation therefor. Lessor's consent to any act, assignment or subletting shall not constitute an acknowledgment that no Default or Breach by Lessee of this Lease exists,nor shall such consent be deemed a waiver of any then existing Default or Breach,except as may be otherwise specifically stated in writing by Lessor at the time of such consent. The failure to specify herein any particular condition to Lessors consent shall not preclude the imposition by Lessor at the time of consent of such further or other conditions as are then reasonable with reference to the particular matter for which consent is being given. In the event that either Party deepness with any determination made by the other hereunder and reasonably requests the reasons for such determination, the determining party shall furnish its reasons in writing and in reasonable detail within 10 business days fallowing such request. 37. Guarantor. 37.1 Execution. The Guarantors,if any,shall each execute a guaranty in the form most recently published by the AIR Commercial Real Estate Association,and each such Guarantor shall have the same obligations as Lessee under this Lease. 37.2 Default. It shall constitute a Default of the Lessee if any Guarantor fails or refuses,upon request to provide: (a)evidence of the execution of the guaranty, including the authority of the party signing on Guarantors behalf to obligate Guarantor, and in the use of a corporate Guarantor, a certBed copy of a resolution of its board of directors authorizing the making of such guaranty, fits) current financial statements, (c)an Estoppel Certificate,or(d)wnllen confirmation that the guaranty is still in effect. 38. Quiet Possession. Subject to payment by Lessee of the Rent and performance of all of the covenants, conditions and provisions on Lessee's part to be observed and performed under this Lease,Lessee shall have quiet possession and quiet enjoyment of the Premises during thereon hereof. 39. Options. If Lessee is granted any Option,as defined below,then the following provisions shall apply: 39.1 Definition. "Option"shall mean: (a)the right to extend or reduce the term of or renew this Lease or to extend or reduce the term of or renew any lease that Lessee has on other property of Lessor;(b)the right of first refusal or first offer to lease either the Premises or other property of Lessor;(c)the right to purchase,the right of first offer to purchase or the right of first refusal to purchase the Premises or other property of Lessor. 39.2 Options Personal To Original Lessee. Any Option granted to Lessee in this Lease is personal to the original Lessee,and cannot be assigned or exercised by anyone other than said original Lessee and only while the original Lessee is in full possession of the Premises and, if requested by Lessor,with Lessee certgying that Lessee has no intention of thereafter assigning or subletting. 39.3 Multiple Options. In the event that Lessee has any multiple Options to extend or renew this Lease, a later Option cannot be exercised unless the prior Options have been validly exercised. 39.4 Effect of Default on Options. (a)Lessee shall have no right to exercise an Option: (i)during the period commencing with the giving of any notice of Default and continuing unfit said Default is cured, (it)during the period of time any Rent is unpaid (without regard to whether notice thereof is given Lessee), (III) during the time Lessee is in Breach of this Lease,or(iv)in the event that Lessee has been given 3 or more notices of separate Default,whether or not the Defaults are cured,during the 12 month period immediately preceding the exercise of the Option. (b)The period of time within which an Option may be exercised shall not be extended or enlarged by reason of Lessee's inability to PAGE 15 OF 18 INITIALS INITIALS ©2001-AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM STN-34-05116E exercise an Option because of the provisions of Paragraph 39.4(a). (c)An Option shall terminate and be of no further force or effect,notwithstanding Lessee's due and timely exercise of the Option,if, after such exercise and prior to the commencement of the extended term or completion of the purchase, (i)Lessee fails to pay Rent for a period of 30 days after such Rent becomes due(without any necessity of Lessor to give notice thereof),or(ill if Lessee commits a Breach of this Lease. 40. Multiple Buildings. If the Promises are a part of a group of buildings controlled by Lessor,Lessee agrees that it will abide by and conform to all reasonable rules and regulations which Lessor may make from time to time for the management, safety,and care of said properties, including the care and cleanliness of the grounds and including the parking, loading and unloading of vehicles, and to cause Its employees, suppliers, shippers, customers,contractors and invitees to so abide and conform. Lessee also agrees to pay its fair share of common expenses incurred In connection with such rules and regulations. 41. Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder does not include the cost of guard service or other security measures,and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the Premises.Lessee,its agents and invitees and their property from the acts of third parties. 42. Reservations. Lessor reserves to itself the right, from time to time, to grant, without the consent or joinder of Lessee, such easements, rights and dedications that Lessor deems necessary,and to cause the recordation of parcel maps and res0ictions,so long as such easements,rights, dedications, maps and restrictions do not unreasonably interfere with the use of the Premises by Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate any such easement rights,dedication,map or restrictions. 43. Performance Under Protest If at any time a dispute shall arise as to any amount or sum of money to be paid by one Party to the other under the provisions hereof,the Party against whom the obligation to pay the money is asserted shall have the right to make payment"under protest" and such payment shall not be regarded as a voluntary payment and there shall survive the right on the part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said Parry to pay such sum or any part thereof, said Party shall be entitled to recover such sum or so much thereof as it was not legally required to pay.A Party who does not Initiate suit for the recovery of sums paid "under protest"with 6 months shall be deemed to have waived its right to protest such payment. 44. Authority; Multiple Parties;Execution. (a) If either Pally hereto is a corporation, trust, limited liability company, partnership, or similar entity, each individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and deliver this Lease on its behalf. Each Party shall,within 30 days after request,deliver to the other Party satisfactory evidence of such authority. (b) If this Lease is executed by more than one person or entity as"Lessee", each such person or entity shall be jointly and severally liable hereunder. It is agreed that any one of the named Lessees shall be empowered to execute any amendment to this Lease, or other document ancillary thereto and bind all of the named Lessees, and Lessor may rely on the same as If all of the named Lessees had executed such document. (c) This Lease may be executed by the Parties in counterparts,each of which shall be deemed an original and all of which together shall constitute one and the same instrument. 45. Conflict. Any conflict between the panted provisions of this Lease and typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions. 46. Offer. Preparation of this Lease by either Party or their agent and submission of same to the other Party shall not be deemed an offer to lease to the other Party. This Lease is not intended to be binding until executed and delivered by all Parties hereto. 47. Amendments. This Lease may be modified only in writing,signed by the Parties in interest at the time of the modification. As long as they do not materially change Lessee's obligations hereunder,Lessee agrees to make such reasonable non-monetary modifications to this Lease as may be reasonably required by a Lender in connection with the obtaining of normal financing or refinancing of the Premises. 48. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT. 49. Arbitration of Disputes. An Addendum requiring the Arbitration of all disputes between the Parties and/or Brokers arising out of this Lease m Is ❑ Is not attached to this Lease. 50. Accessibility;Americans with Disabilities Act. (a) The Premises: 0 have not undergone an inspection by a Certified Access Specialist (CASp). O have undergone an inspection by a Certified Access Specialist (CASp) and it was determined Nat the Premises met all applicable construction-related accessibility standards pursuant to California Civil Code §55.51 at seq. O have undergone an inspection by a Certified Access Specialist (CASp) and it was determined that the Premises did not meet all applicable construction-related accessibility standards pursuant to California Civil Code§55.51 at seq. (b) Since compliance with the Americans with Disabilities Act (ADA) is dependent upon Lessee's specific use of the Premises, Lessor makes no warranty or representation as to whether or not the Premises comply with ADA or any similar legislation. In the event that Lessee's use of the Premises requires modifications or additions to the Premises in order to be in ADA compliance, Lessee agrees to make any such necessary modifications and/or additions at Lessee's expense. 51. This Lease shall automatically terminaU upon the cancellation of escrow or the successful close of escrow for the subject property. This Is further described In the Standard Offer, Agreement and Escrow Instructions for Purchase of Real Eetate dated September 29, 2016 between Bender Propertles, a California limited partnership (seller) and Orange County Sanitation District (Buyar) 52, Lessee shall lease the property In Its"As-Is"condition with no renovatlone or warranties provided by Lessor. 53. In addition to the monthly base rent, Lessee shall pay$4,275.55 per month for the prorated property taxes and property Insurance As described In paragraph 1.6 above. These estimated expenses shall be paid by Lessee on the first day of each month. Lessee acknowledges that this Is an estimate and that Lessee will be required to pay the actual expenses. 64. Rent checks hall be payable to: Bender Properties 35 Burning Tree Road Newport Beach,CA 92060 Attn: Matt False PAGE 16 OF 18 INITIALS INITIALS ©2001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM STN-24415116E 55. Leeaee shall maintain the buildinge A first close conditlon and shall not demolish or make any modifications to the Premises until after the close of escrow. 56. Should a contradiction "lot between this Lease Agreement and the Parties Purchase Agreement for the property,the Purchase Agreement controls. LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN,AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT,AT THE TIME THIS LEASE IS EXECUTED,THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES. ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR COMMERCIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY,LEGAL EFFECT,OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO: 1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. 2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO:THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES,THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY,THE CONDITION OF THE ROOF AND OPERATING SYSTEMS,AND THE SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE. WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA,CERTAIN PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES IS LOCATED. The parties hereto have executed this Lease at the place and on the Oates specified above their respective signatures. Executed at: Executed at: On: On: By LESSOR: BY LESSEE: Bender Properties, Orange County Sanitation District a California limited partnership By: By: Name Printed: Matt Fales Name Printed: John Nielsen Title: Title: Chairman of the Board, Orange County By: Sanitation District Name Printed: By. Title: Name Printed: Kelly Lore Title: Clerk of the Board, Orange County Address: 35 Burning Tree Road Sanitation District Newport Beach, CA 92660 Telephone:(714) 318-5799 Approved as to Form Facsimill Email: By: Email: Date: Federal ID No. Name Printed: Bradlay R. Hogin Address: 10844 Ellis Avenue Fountain Valley, CA 92708 Telephone: 7( 14) 962-2411 Facsimile:( ) Email: Email: Federal ID No. BROKER: BROKER: Lee & Associates®-Newport Beach Cushaman & Wakefield Alin: Pat LaCey/Jim Snyder Attn: Kevin Turner/John Gallivan Time: SVP/Principal Title: Address: 100 Bayview Circle, Suite 600 Address: 2020 Main Street, Suite 1000 Newport Beach, CA 92660 Irvine, CA 92614 Telephone:(949) 724-4760/724-4731 Telephone:(9 4 9) 955-7647 Facslmlle:(959) 623-6360/623-6331 Facsimile:( ) Email: placey@lee-associates.com/ Email: john.gallivan@cuahwake.com/ jsnyder@lee-associates.com kevin.turner@cushwake.com Federal ID No. Federal ID No. Broker/Agent ERE License#: 00988663/00872220 Broker/Agent BRE License#: PAGE 17 OF 18 INITIALS INITIALS 02001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM STN-24-05/116E NOTICE: These forms are often modified to meet changing requirements of law and industry needs. Always write or call to make sure you are utilizing the most cumenlform: AI R Commercial Real Estate Association, 500 N Brand Blvd,Suite 900,Glendale,CA91203. Telephone No.(213)687-8777. Fax No.:(213)6874616.Lacey/Orange County Sanleatfon 46475 eaclflc A 18464 Bandlller-Nee Lease Copyright 2001 -By AIR Commercial Real Estate Association. All rights rese"d.No part of these works may be reproduced In any form without permission in writing. PAGE 18 OF 18 INITIALS INITIALS ©2001 -AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM STN-24-06116E ARBITRATION AGREEMENT Standard Lease Addendum Dated September 29, 2016 By and Between (Lessor) Bender Properties, a Califoria limited partnership (Lessee) Orange County Sanitation District Address Of Premises: 18475 Pacific Street & 18484 Bandilier Circle Fountain Valley, CA Paragraph 57 A. ARBITRATION OF DISPUTES: Except as provitled in Paragraph B below, the Parties agree to resolve any and all claims, disputes or disagreements arising under this Lease, Including,but not limited to any matter relating to Lessor's failure to approve an assignment,sublease or other transfer of Lessee's Interest In the Lease under Paragraph 12 of this Lease,any other defaults by Lessor,or any defaults by Lessee by and through arbitration as provided below and irrevocably waive any and all rights to the contrary. The Parties agree to at all times conduct themselves in strict full, complete and timely accordance with the terms hereof and that any attempt to circumvent the terms of this Arbitration Agreement shall be absolutely null and void and of no force or effect whatsoever. S. DISPUTES EXCLUDED FROM ARBITRATION: The following claims, disputes or disagreements under this Lease are expressly excluded from the arbitration procedures set forth herein: 1. Disputes for which a different resolution determination is specifically set forth In this Lease, 2. All claims by either party which (a) seek anything other than enforcement or determination of rights under this Lease, or(b)are primarily founded upon matters of fraud,willful misconduct, bad faith or any other allegations of lodous action,and seek the award of punitive or exemplary damages, 3.Claims relating to(a)Lessors exercise of any unlawful detainer rights pursuant to applicable law or(b)rights or remedies used by Lessor to gain possession of the Premises or terminate Lessee's right of possession to the Premises,all of which disputes shall be resolved by suit Bled In the applicable could of jurisdiction,the decision of which could shall be subject to appeal pursuant to applicable law 4. Any claim or dispute that is within the jurisdiction of the Small Claims Court and 5. Al claims arising under Paragraph 39 of this Lease. C. APPOINTMENT OF AN ARBITRATOR: All disputes subject to this Arbitration Agreement, shall be determined by binding arbitration before: 0 a retired judge of the applicable court of jurisdiction(e.g.,the Superior Court of the State of California)affiliated with Judicial Arbitration&Mediation Services, Inc. ("JAMS"), ❑ Me American Arbitration Association ("AAA") under its commercial arbitration miss, ❑ or as may be otherwise mutually agreed by Lessor and Lessee(the'Arbitrator"). In the event that the parties elect to use an arbitrator other than one affiliated with JAMS or AAA then such arbitrator shall b, obligated to comply with the Code of Ethics for Arbitrators in Commercial Disputes (see: Into.M . r.or /aaa/Sh wPr 7n -/ M ADR T 7 . Such arbitration shall be initiated by the Parties, or either of them,within ten (10)days after either party sends written notice(the'Arbitration Notice")of a demand to arbitrate by registered or certified mail to the other party and to the Arbitrator. The Arbitration Notice shall contain a description of the subject matter of the arbitration,the dispute with respect thereto, Me amount involved, if any, and the remedy or determination sought. If the Parties have agreed to use JAMS they may agree on a retired judge from the JAMS panel. If they are unable to agree within ten days, JAMS will provide a list of three available judges and each party may strike one. The remaining judge(or If there are two,Me one selected by JAMS)will serve as the Arbitrator. If the Parties have elected to utilize AAA or some other organization, the Arbitrator shall be selected in accordance with said organization's miss. In the event the Arbitrator is not selected as provided for above for any reason,the party initiating arbitration shall apply to the appropriate Court for the appointment of a qualified retired judge to act as the Arbitrator. D. ARBITRATION PROCEDURE: 1. PRE-HEARING ACTIONS. The Arbitrator shall schedule a pre-hearing conference to resolve procedural matters, arrange for the exchange of information, obtain stipulations, and narrow the Issues. The Parties will submit proposed discovery schedules to the Arbitrator at the pre-hearing conference. The scope and duration of discovery will be within the sole discretion of the Arbitrator. The Arbitrator shall have the discretion to order a pre-hearing exchange of information by the Parties,including,without limitation,production of requested documents,exchange of summaries of testimony of proposed witnesses, and examination by deposition of parties and third-party witnesses. This discretion shall be exercised in favor of discovery reasonable under the circumstances. The Arbitrator shall issue subpoenas and subpoenas duces tecum as provided for in the applicable statutory or case law(e.g.,in California Code of Civil Procedure Section 1282.6). 2. THE DECISION. The arbitration shall be conducted in the city or county within which the Premises are located at a reasonably convenient site. Any Parry may be represented by counsel or other authorized representative. In rendering a decision(s),Me Arbitrator shell determine the rights and obligations of the Parties according to the substantive laws and the terms and provisions of this Lease. The Arbitrators decision shall be based on the evidence introduced at the hearing,including all logical and reasonable inferences therefrom. The Arbitrator may make any determination and/or grant any remedy or relief that is just and equitable. The decision must be based on, and accompanied by, a written statement of decision explaining the factual and legal basis for the decision as to each of the principal controverted issues. The decision shall be conclusive and binding,and it may thereafter be confirmed as a judgment by the court of applicable jurisdiction,subject only to challenge on the grounds set forth in the applicable statutory or case law(e.g., in California Cade of Civil Procedure Section 1286.2). The validity and enforceability of the Arbitrator's decision is to be determined exclusively by the court of appropriate jurisdiction pursuant to the provisions of this Lease. The Arbitrator may award costs, including without limitation, Arbitrators fees and costs, attorneys' fees, and expert and witness costs, to the prevailing party, If any, as determined by the Arbitrator in his discretion. Whenever a matter which has been submitted to arbitration involves a dispute as to whether or not a particular act or omission(other than a failure to pay money)constitutes a Default, Me time to commence or cease such action shall be tolled from the date that the Notice of Arbitration is served through and until the date the Arbitrator renders his or her decision. Provided, however,that this provision shall NOT apply in the event that the PAGE 1 OF 2 INITIALS INITIALS 01997-AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM ARB-2-2113E Arbitrator determines that the Arbitration Notice was prepared in bad faith. Whenever a dispute arises between the Parties concerning whether or not the failure to make a payment of money constitutes a default,the service of an Arbitration Notice shall NOT toll the time period in which to pay the money. The Party allegedly obligatetl to pay the money may,however, elect to pay the money"under praiser by accompanying said payment with a written statement setting forth the reasons for such protest. If thereafter, the Arbitrator detem nines that the Party who received said money was not entitled to such payment,said money shall be promptly returned to the Party who paid such money under protest together with Interest thereon as defined in Paragraph 13.5. If a Party makes a payment"under protest, but no Notice of Arbitration is fled within thirty days,then such protest shall be deemed waived. (See also Paragraph 42 or 43) NOTICE: These forms are often modified to meet changing requirements of law and industry needs. Always write or call to make sure you are utilizing the most current form: AIR Commercial Real Estate Association, 500 N Brand Blvd,Suite 900,Glendale,CA 91203. Telephone No.(213)6874777. Fax No.:(213)687-8616.Lacey/Orange County Samtatlon-1B495 fac.flc&1B464 BandillerArblSratlon PAGE 2 OF 2 INITIALS INITIALS 01997-AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM ARB-2-2113E LLEE X ASSOCIATES- UNIFORM DISCLAIMER COMMERCIAL REAL ESTATE SERVICES LEASE FORM Paragraph 58 1. LEGAL EFFECT. =e558F and Lessee aE'inBwledgp that the PFBPBSa' IRS Lease ERRta Red heFe R s net a lease, inteRded selely tB estalal sh dea'points wh Eh w 11 be used as the basis fBF the PFepaFatisR Bf a lease by -The lease shall be subject to Lessor's and Lessee's approval, and only a fully executed and delivered lease shall constitute a legally binding lease for the Premises. Broker makes no warranty or representation to Lessor or Lessee that acceptance of this Proposal to Lease will guaranty the execution of a lease for the Premises. Lessor and Lessee acknowledge that Broker is not qualified to practice law, nor authorized to give legal advice or counsel you as to any legal matters affecting this document. Broker hereby advises Lessor and Lessee to consult with their respective attorneys in connection with any questions each may have as to legal ramifications or effects of this document, prior to its execution. 2. FORM OF PURCHASE CONTRACT AND DEPOSIT RECEIPT.This proposed document is a standard form document and Broker makes no representations or warranties with respect to the adequacy of this document for either Lessor's or Seller's particular purposes. Broker has, at the direction of Lessor and/or Lessee, filled in the blanks-from information provided to Broker based on prior correspondence, discussions of the parties with respect to the Proposal to Lease, and subsequent counteroffers between the parties hereto. By initialing this paragraph, Lessor and Lessee acknowledge and agree that this document is delivered to each subject to the express condition that Broker has merely followed the instructions of the parties in preparing this document and does not assume any responsibility for its accuracy completeness or form. Lessor and Lessee acknowledge and agree that in providing this document. Broker has acted to expedite this transaction on behalf of Lessor and Lessee,and has functioned within the scope of professional ethics by doing so. Lessor's Initials: Lessee's Initials: 3. NO INDEPENDENT INVESTIGATION. Lessor and Lessee acknowledge and understand that any financial statements, information, reports, or written materials of any nature whatsoever. as provided by the parties to Broker, and thereafter submitted by Broker to either Lessor and/or Lessee,are so provided without any independent investigation by Broker,and as such Broker assumes no responsibility or liability for the accuracy or validity of the same.Any verification of such submitted documents is solely and completely the responsibility of the partyto whom such documents have been submitted. 4. NO WARRANTY. Lessor and Lessee acknowledge and agree that no warranties, recommendations, or representations are made by the broker as to the accuracy,the legal sufficiency,the legal effect of the tax consequences of any of the documents submitted by Broker to Lessor and/or Lessee referenced in Paragraph 3 above,nor of the legal sufficiency,legal effect,or tax consequences of the transactions contemplated thereby.Furthermore, Lessor and Lessee acknowledge and agree that Broker has made no representations concerning the ability of the Lessee to use the Premises as intended, nor of the sufficiency or adequacy of the Premises for their intended use, and Lessee is relying solely on its own investigation of the Premises in accepting this Proposal to Lease. 5. NOTICE REGARDING HAZARDOUS WASTES OR SUBSTANCES AND UNDERGROUND STORAGE TANKS. Although Broker will disclose any knowledge it actually possesses with respect to the existence of any hazardous wastes, substances, or underground storage tanks at the Premises, Broker has not made any independent investigations or obtained reports with respect thereto,except as may be described in a separate written document signed by Broker.All parties hereto acknowledge and understand that Broker makes no representations regarding the existence or nonexistence of hazardous wastes, substances,or underground storage tanks at the Premises. Each party should contact a professional,such as a civil engineer, geologist,industrial hygienist or other persons with experience in these matters to advise you concerning the property. 6. DISCLOSURE RESPECTING AMERICANS WITH DISABILITIES ACT. The United State Congress has recently enacted the Americans with Disabilities Act. Among other things, this act is intended to make many business establishments equally accessible to persons with a variety of disabilities; modifications to real property may be required. State and local laws also may mandate changes.Broker is not qualified to advise you as to what,if any,changes may be requi red now or in the future. Broker recommends that you consult the attorneys and qualified design professionals of your choice for information regarding these matters. 7. ATTORNEYS'FEES.In any action,proceeding or arbitration arising out of this Agreement,the prevailing party shall be entitled to reasonable attorneys'fees and costs. 8. ENTIRE AGREEMENT. This document constitutes the entire agreement between parties with respect to the subject matter contained herein and supersedes all prior or contemporaneous agreements, representations, negotiations and understandings of the parties,other than such writings as may be executed and/or delivered by the parties pursuant hereto. There are no oral agreements or implied covenants by the Seller or Buyer, or by their respective employees, or other representatives. AGREED&ACCEPTED: LESSEE AGREED&ACCEPTED: LESSOR By: By: Date: Date: CSG LLac AWo*\Leases\Orange County Sanitatron-lU75 Pacific&IUU Bandilier-Unirorm Disclaimer.doc SITE PLAN 18475 Pacific Street & 18484 Bandilier Circle, Fountain Valley, CA Ll I I I I I I I I I I I I I I I I I U I I I I I I I I I I I I I I I I LJ �x �4I�I R� g®VK LLLH JEJ a C14X9CM10GIIOR� m � �3 Y/il J T o y A n () gFIDWE y A 1 P m m m � �� 0'j ELLIS AVENUE INITIALS INITIALS The Inroremim mmamed berem bad bee.obtained M1om the prevent,rawer or other th,rd wary and b prouiha be verb whom vermiwnonu to amnq.we lee&Psonalte,Its brokers,eirme,.es. ., iplvel Is.aXlceRdrettars a.a1011aVslmaNe no separation or representation regarding the lydwmatbry popeM.or baboattlon Yauand your dearness.mines"and Woreubants should mndunt yourown Investigation&the proteM am trzndesson. CSG,Uo r,,1WorkL4ddendalprnnge County Sdellon iod-1&75 PacFc&18181 robbolier-Site Plando[e ORANGE COUNTY SANITATION DISTRICT Agenda Terminology Glossary Glossary of Terms and Abbreviations AQMD Air Quality Management District ASCE American Society of Civil Engineers BOD Biochemical Oxygen Demand CARB California Air Resources Board CASA California Association of Sanitation Agencies CCTV Closed Circuit Television CEQA California Environmental Quality Act CIP Capital Improvement Program CRWQCB California Regional Water Quality Control Board CWA Clean Water Act CWEA California Water Environment Association EIR Environmental Impact Report EMT Executive Management Team EPA U.S. Environmental Protection Agency FOG Fats, Oils, and Grease gpd Gallons per day GWR System Groundwater Replenishment System (also called GWRS) ICS Incident Command System IERP Integrated Emergency Control Plan LOS Level of Service MGD Million gallons per day NACWA National Association of Clean Water Agencies NPDES National Pollutant Discharge Elimination System NWRI National Water Research Institute O&M Operations and Maintenance OCCOG Orange County Council of Governments OCHCA Orange County Health Care Agency OCSD Orange County Sanitation District OCWD Orange County Water District COBS Ocean Outfall Booster Station OSHA Occupational Safety and Health Administration PCSA Professional Consultant Services Agreement POTW Publicly Owned Treatment Works ppm Parts per million PSA Professional Services Agreement RFP Request For Proposal Glossary of Terms and Abbreviations RWQCB Regional Water Quality Control Board SARFPA Santa Ana River Flood Protection Agency SARI Santa Ana River Inceptor SARWQCB Santa Ana Regional Water Quality Control Board SAWPA Santa Ana Watershed Project Authority SCADA Supervisory Control and Data Acquisition system SCAP Southern California Alliance of Publicly Owned Treatment Works SCAQMD South Coast Air Quality Management District SOCWA South Orange County Wastewater Authority SRF State Revolving Fund SSMP Sanitary Sewer Management Plan SSO Sanitary Sewer Overflow SWRCB State Water Resources Control Board TDS Total Dissolved Solids TMDL Total Maximum Daily Load TSS Total Suspended Solids WDR Waste Discharge Requirements WEF Water Environment Federation WERF Water Environment Research Foundation WIFIA Water Infrastructure Financing and Innovation Act Activated-sludge process — A secondary biological wastewater treatment process where bacteria reproduce at a high rate with the introduction of excess air or oxygen, and consume dissolved nutrients in the wastewater. Benthos—The community of organisms, such as sea stars, worms, and shrimp, which live on, in, or near the seabed, also known as the benthic zone. Biochemical Oxygen Demand (BOD) —The amount of oxygen used when organic matter undergoes decomposition by microorganisms. Testing for BOD is done to assess the amount of organic matter in water. Blogas — A gas that is produced by the action of anaerobic bacteria on organic waste matter in a digester tank that can be used as a fuel. Biosolids — Biosolids are nutrient rich organic and highly treated solid materials produced by the wastewater treatment process. This high-quality product can be recycled as a soil amendment on farm land or further processed as an earth-like product for commercial and home gardens to improve and maintain fertile soil and stimulate plant growth. Capital Improvement Program (CIP) — Projects for repair, rehabilitation, and replacement of assets. Also includes treatment improvements, additional capacity, and projects for the support facilities. Coliform bacteria —A group of bacteria found in the intestines of humans and other animals, but also occasionally found elsewhere used as indicators of sewage pollution. E. coil are the most common bacteria in wastewater. Glossary of Terms and Abbreviations Collections system — In wastewater, it is the system of typically underground pipes that receive and convey sanitary wastewater or storm water. Certificate of Participation (COP) — A type of financing where an investor purchases a share of the lease revenues of a program rather than the bond being secured by those revenues. Contaminants of Potential Concern (CPC) — Pharmaceuticals, hormones, and other organic wastewater contaminants. Dilution to Threshold (D/T) — the dilution at which the majority of the people detect the odor becomes the D/T for that air sample. Greenhouse gases — In the order of relative abundance water vapor, carbon dioxide, methane, nitrous oxide, and ozone gases that are considered the cause of global warming ("greenhouse effect"). Groundwater Replenishment (GWR) System — A joint water reclamation project that proactively responds to Southern California's current and future water needs. This joint project between the Orange County Water District and the Orange County Sanitation District provides 70 million gallons a day of drinking quality water to replenish the local groundwater supply. Levels of Service(LOS)—Goals to support environmental and public expectations for performance. NDMA— N-Nitrosodimethylamine is an N-nitrosoamine suspected cancer-causing agent. It has been found in the Groundwater Replenishment System process and is eliminated using hydrogen peroxide with extra ultra-violet treatment. National Biosolids Partnership (NBP) — An alliance of the National Association of Clean Water Agencies (NACWA) and Water Environment Federation (WEF), with advisory support from the U.S. Environmental Protection Agency (EPA). NBP is committed to developing and advancing environmentally sound and sustainable biosolids management practices that go beyond regulatory compliance and promote public participation in order to enhance the credibility of local agency biosolids programs and improved communications that lead to public acceptance. Plume—A visible or measurable concentration of discharge from a stationary source or fixed facility. Publicly-owned Treatment Works(POTW)— Municipal wastewater treatment plant. Santa Ana River Interceptor (SARI) Line — A regional brine line designed to convey 30 million gallons per day of non-reclaimable wastewater from the upper Santa Ana River basin to the ocean for disposal, after treatment. Sanitary sewer — Separate sewer systems specifically for the carrying of domestic and industrial wastewater. Combined sewers carry both wastewater and urban run-off. South Coast Air Quality Management District (SCAQMD) — Regional regulatory agency that develops plans and regulations designed to achieve public health standards by reducing emissions from business and industry. Secondary treatment — Biological wastewater treatment, particularly the activated-sludge process, where bacteria and other microorganisms consume dissolved nutrients in wastewater. Sludge— Untreated solid material created by the treatment of wastewater. Total suspended solids (TSS)—The amount of solids floating and in suspension in wastewater. Glossary of Terms and Abbreviations Trickling filter — A biological secondary treatment process in which bacteria and other microorganisms, growing as slime on the surface of rocks or plastic media, consume nutrients in wastewater as it trickles over them. Urban runoff — Water from city streets and domestic properties that carry pollutants into the storm drains, rivers, lakes, and oceans. Wastewater—Any water that enters the sanitary sewer. Watershed —A land area from which water drains to a particular water body. OCSD's service area is in the Santa Ana River Watershed.