7.9

To the Honorable Council December 22, 2020 City of Norfolk, Virginia

From: Robert Carteris Subject: Commonwealth Railway Director of Utilities Marshalling Yard Agreement

Reviewed: Ward/Superward: N/A

Wynter C. Benda, Chief Deputy City Manager

Approved: Item Number:

Dr. Larry H. Filer II, City Manager

I. Recommendation: Adopt Ordinance

II. Applicant: City of Norfolk Department of Utilities

III. Description: This agenda item is an ordinance authorizing the City of Norfolk to enter into a sub- agreement with the Virginia Port Authority for relocation of municipal water lines in Suffolk, Virginia out of railroad property.

IV. Analysis: The Virginia Port Authority received a grant from the Virginia Department of Rail and Public Transportation to expand rail service to the Virginia International Gateway Terminal in Portsmouth, Virginia. The area designated for the track expansion is encumbered by two water lines belonging to Norfolk and Portsmouth. This sub- agreement with the Virginia Port Authority allows them to use grant funding to reimburse Norfolk for 70% of the cost of the water main relocation.

V. Financial Impact: The Department of Utilities will use existing authorizations to pay for the design and construction; 30% of the total project costs or approximately $5.8M will be funded by Norfolk.

Packet Pg. 462 7.9 VI. Environmental: There may impacts to wetlands during construction; applicable permits and mitigations will be determined during the design process.

VII. Community Outreach/Notification: Public notification for this agenda item was conducted through the City’s agenda notification process.

VIII. Board/Commission Action: N/A

IX. Coordination/Outreach: This letter and ordinance have been coordinated with the City Attorney’s Office.

Supporting Material: • Exhibit A to Ordinance (PDF)

Packet Pg. 463 7.9

Form and Correctness Approved: BAP Contents Approved:

By: By: Office of the City Attorney DEPT. Utilities NORFOLK, VIRGINIA

Ordinance No.

AN ORDINANCE AUTHORIZING THE CITY OF NORFOLK TO ENTER INTO A SUB-AGREEMENT FOR RELOCATION OF MUNICIPAL WATER LINES AT THE COMMONWEALTH RAILWAY MARSHALLING YARD WITH THE VIRGINIA PORT AUTHORITY; AND AUTHORIZING THE EXPENDITURE OF THE TOTAL SUM OF $19,512,119.00 PREVIOUSLY APPROPRIATED FOR THIS PROJECT, SUBJECT TO AND IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE AFORESAID AGREEMENTS.

- - -

WHEREAS, Virginia International Gateway (“VIG”) is a

privately owned marine container terminal located along the

Elizabeth River in Portsmouth, Virginia, being commissioned in

July 2007, and is the largest privately-owned container terminal

in the United States; and

WHEREAS, in July 2010, the Virginia Port Authority

(“VPA”) and VIG entered into a multi-year lease agreement under

which the VPA operates VIG; and

WHEREAS, presently, rail service to VIG is provided by

Commonwealth Railway, Incorporated (“CWRY”), a Class III

railroad that owns and operates a rail corridor between the

terminal and the main lines of two Class I railroads; and

Packet Pg. 464 7.9 WHEREAS, in order to ensure the VPA can fully utilize

VIG rail capacity, CWRY’s marshalling yard in the City of

Suffolk, Virginia (“Marshalling Yard”) must be expanded; and

WHEREAS, on January 6, 2016, CWRY applied for a Rail

Enhancement Fund (“REF”) grant pursuant to § 33.2-1601 of the

Code of Virginia (1950), as amended, to fund an expansion of the

Marshalling Yard; and

WHEREAS, in its application, CWRY proposed to design and construct two (2) storage tracks approximately eight thousand (8,000) feet long north of the Marshalling Yard’s existing main line and storage tracks (“Trackwork Project”), and to relocate utilities to accommodate construction of the storage tracks, namely two municipal water lines owned by the City of

Norfolk (“Norfolk”) and the City of Portsmouth (“Portsmouth”), respectively; and

WHEREAS, the Commonwealth of Virginia’s

(“Commonwealth”) Department of Rail and Public Transportation

(“Department”) evaluated CWRY’s REF application and determined that the REF Project would benefit the Commonwealth by increasing the amount of freight on the Commonwealth’s rail system, thereby reducing congestion on, and maintenance of, the

Commonwealth’s highways, promoting fuel efficiency, and establishing a viable statewide integrated transportation system, which will contribute to the Commonwealth’s continued economic growth, vitality, and competitiveness in national and

Packet Pg. 465 7.9 world markets; and

WHEREAS, on June 14, 2016, the Commonwealth

Transportation Board (“CTB”) determined that CWRY’s REF application satisfied the requirements of § 33.2-1601 and approved funding for the REF Project, including paying for part of the relocation of the utilities, as part of the Department’s

Fiscal Years 2017-2022 Six Year Improvement Program; and

WHEREAS, the Department added Norfolk as an applicant to the CWRY REF grant in the Department’s Fiscal Years 2018-2023

Six Year Improvement Program and, on September 17, 2018, with consent from CWRY, Norfolk, and the VPA, the Department notified the CTB that the VPA would replace CWRY and Norfolk as grantee for the REF grant; and

WHEREAS, on February 6, 2019, the VPA received a revised Preliminary Cost Estimate from Norfolk which showed an increase in cost for the utility relocation and, as a result, the VPA requested additional REF funding for the REF Project from the Department; in response thereto, the Department requested additional REF funding from the CTB, and, on June 19,

2019, the CTB approved the Department’s request as part of the

Fiscal Years 2020-2025 Six Year Improvement Program; and

WHEREAS, the VPA and the Department have entered into

Rail Enhancement Fund Multiple Year Grant Agreement No. 76517-14 for the design and construction of the REF Project and, with the

Department’s consent, the VPA is entering into separate sub-

Packet Pg. 466 7.9 agreements with CWRY and Norfolk for execution of the work required for the REF Project; and

WHEREAS, under the sub-agreement between the VPA and

CWRY, CWRY is responsible for the design and construction of the

Trackwork Project; Norfolk is responsible for the utility relocation necessary for the construction of the Trackwork

Project (“Utility Relocation Project”), which includes the removal and relocation of the waterlines of both Norfolk and

Portsmouth, as well as the acquisition of fee title ownership of new lands, or appropriate utility easements over new lands, within which the waterlines may be relocated at an estimated cost of Nineteen Million Five Hundred Twelve Thousand One

Hundred Nineteen Dollars ($19,512,119.00), with Norfolk’s anticipated total contribution, after reimbursement from the

VPA, being Five Million Eight Hundred Fifty-Three Thousand Six

Hundred Thirty-Six Dollars ($5,853,636.00); and

WHEREAS, the VPA and Norfolk desire to set forth the requirements of the Utility Relocation Project, the responsibilities of each of entity, the manner of performing the necessary work, the method and time of payment, and additional conditions associated with the Utility Relocation Project, all as is memorialized in the sub-agreement, a copy of which is attached hereto as Exhibit A, with any appropriate appendices

(“Agreement”); now, therefore,

BE IT ORDAINED by the Council of the City of Norfolk:

Packet Pg. 467 7.9 Section 1:- That the terms and conditions of the Agreement between VPA and Norfolk, a copy of which is attached as Exhibit A, are hereby approved.

Section 2:- That the sum of $19,512,119.00, being previously appropriated, is hereby authorized to be expended for the Project, subject to and in accordance with the terms and conditions of the Agreement.

Section 3:- That the City Manager and other proper officers of the City are authorized to execute the Agreement and to do all things necessary and proper to carry out the terms of the Agreement.

Section 4:- That the City Manager, with the advice and counsel of the City Attorney, is further authorized to correct, amend or revise the Agreement as may be necessary to carry out the intent of the Council as expressed herein.

Section 5:- That this ordinance shall be in effect from and after the date of its adoption.

Attachments: Exhibit A – Agreement (33 pages)

Packet Pg. 468 7.9.a EXHIBIT A TO ORDINANCE

SUB-AGREEMENT FOR RELOCATION OF MUNICIPAL WATER LINES AT COMMONWEALTH RAILWAY MARSHALLING YARD Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement)

Packet Pg. 469 7.9.a

SUB-AGREEMENT FOR RELOCATION OF MUNICIPAL WATER LINES AT COMMONWEALTH RAILWAY MARSHALLING YARD

This Sub-Agreement for Relocation of Municipal Water Lines at Commonwealth Railway Marshalling Yard (“Sub-Agreement”), is between the Virginia Port Authority (“VPA”) and the City of Norfolk, Virginia (“Norfolk”) (the VPA and Norfolk individually are a “Party” and collectively are the “Parties”).

RECITALS

1. Virginia International Gateway (“VIG”) is a privately owned marine container terminal located along the Elizabeth River in Portsmouth, Virginia. The facility was commissioned in July 2007, and is the largest privately-owned container terminal in the United States. In July 2010, the VPA and VIG entered into a multi-year lease agreement under which the VPA operates VIG.

2. Rail service to VIG is provided by Commonwealth Railway, Incorporated (“CWRY”), a Class III railroad that owns and operates a rail corridor between the terminal and the main lines of two Class I railroads. CWRY is a subsidiary of Genesee & Wyoming Inc. To ensure the VPA can fully utilize VIG rail capacity, CWRY’s marshalling yard in Suffolk, Virginia (the “Marshalling Yard”) must be expanded.

3. On January 6, 2016, CWRY applied for a Rail Enhancement Fund (“REF”) grant pursuant to § 33.2-1601 of the Code of Virginia (1950), as amended, to fund an expansion of the Marshalling Yard. In its application, CWRY proposed to design and construct two ~8,000 foot storage tracks north of the Marshalling Yard’s existing main line and storage tracks, and related utility relocation necessary for the construction of the storage tracks (the “REF Project,” as further defined in § 1.28). The utilities requiring relocation are two water lines owned by Norfolk and the City of Portsmouth, respectively.

4. The Commonwealth of Virginia Department of Rail and Public Transportation (“Department”) evaluated CWRY’s REF application and determined that the REF Project would benefit the Commonwealth of Virginia (“Commonwealth”) by increasing the amount of freight on the Commonwealth’s rail system thereby reducing congestion on, and maintenance of, the Commonwealth’s highways, promoting fuel efficiency, and establishing a viable statewide integrated transportation system which will contribute to the Commonwealth’s continued economic growth, vitality, and competitiveness in national and world markets (the “Public Benefit”).

5. On June 14, 2016, the Commonwealth Transportation Board (“CTB”) determined Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) that CWRY’s REF application satisfied the requirements of § 33.2-1601 and approved funding for the REF Project as part of the Department’s Fiscal Years 2017-2022 Six Year Improvement Program.

6. The Department added Norfolk as an applicant to the CWRY REF grant in the Department’s Fiscal Years 2018-2023 Six Year Improvement Program.

Virginia Port Authority-City of Norfolk Sub-Agreement Page 2 of 33 Packet Pg. 470 7.9.a

7. On September 17, 2018, with consent from CWRY, Norfolk, and the VPA, the Department notified the CTB that the VPA would replace CWRY and Norfolk as grantee for the REF grant.

8. On February 6, 2019, the VPA received a revised Preliminary Cost Estimate from Norfolk which showed an increase in cost for the utility relocation. As a result, the VPA requested additional REF funding for the REF Project from the Department.

9. As a result of the VPA’s request, the Department requested additional REF funding from the CTB. On June 19, 2019, the CTB approved the Department’s request as part of the Fiscal Years 2020-2025 Six Year Improvement Program.

10. The VPA and the Department have entered into Rail Enhancement Fund Multiple Year Grant Agreement No. 76517-14 for the design and construction of the REF Project (“Prime Agreement”). With the Department’s consent, the VPA is entering into separate sub-agreements with CWRY and Norfolk for execution of the work required for the REF Project. Under its sub- agreement with the VPA, CWRY is responsible for the design and construction of the two ~8,000 foot storage tracks (“Trackwork Project”). Under this Sub-Agreement, Norfolk is responsible for the utility relocation necessary for the construction of the Trackwork Project (“Utility Relocation Project”).

11. The Parties wish to set forth the requirements of the Utility Relocation Project, the responsibilities of each Party, the manner of performing the necessary Work, the method and time of payment, and additional conditions associated with the Utility Relocation Project, and therefore agree as follows.

ARTICLE 1 DEFINITIONS

The Sub-Agreement includes the following defined terms as may be further defined by other terms of the Sub-Agreement. Additional terms are defined as they occur in the Sub-Agreement.

§ 1.1 Commonwealth means the Commonwealth of Virginia.

§ 1.2 Contract means a contract between Norfolk and a Contractor.

§ 1.3 Contractor means a person or entity, including consultants, who has entered into a Contract with Norfolk to perform a portion or all of the Work.

§ 1.4 CTB means the Commonwealth Transportation Board. Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement)

§ 1.5 CWRY means Commonwealth Railway, Incorporated.

§ 1.6 Day means calendar day.

§ 1.7 Department means the Virginia Department of Rail and Public Transportation.

Virginia Port Authority-City of Norfolk Sub-Agreement Page 3 of 33 Packet Pg. 471 7.9.a

§ 1.8 Director means the Director of the Department.

§ 1.9 Effective Date means the date set forth in § 2.1.

§ 1.10 Eligible Project Cost means a cost directly associated with Work authorized by a Notice to Proceed, which has been paid for by Norfolk, and for which reimbursement is allowed under this Sub-Agreement as further set forth in Article 12.

§ 1.11 Final Budget means Norfolk’s final budget for completion of the Utility Relocation Project as further set forth in § 4.2.3.

§ 1.12 Final CDs means the completed construction documents for construction of the Utility Relocation Project prepared by or on behalf of Norfolk.

§ 1.13 Final Project Schedule means the final schedule for completion of the Utility Relocation Project that incorporates and integrates final schedules for all Work required to complete the Final Scope, as further set forth in § 5.3.

§ 1.14 Final Scope means the final scope for completion of the Utility Relocation Project as further set forth in § 3.1.2.

§ 1.15 Fiscal Year means the Commonwealth’s Fiscal Year beginning July 1 and ending June 30.

§ 1.16 Grant Expiration Date means the date by which unused REF Funding shall cease to be available to Norfolk as further set forth in § 4.4.1.

§ 1.17 Marshalling Yard means CWRY’s marshalling yard in Suffolk, Virginia.

§ 1.18 Maximum REF Funding means the maximum REF Funding available under this Sub- Agreement as further set forth in §§ 4.3.2 and 4.3.3.

§ 1.19 Norfolk means the City of Norfolk.

§ 1.20 Norfolk Contribution means a matching contribution provided by Norfolk as further set forth in § 4.3.1.

§ 1.21 Notice to Proceed means a written notice issued by the VPA authorizing Norfolk to commence Work after or upon execution of the Sub-Agreement as further set forth in § 2.2.1.1. Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) § 1.22 Party means a party to this Sub-Agreement. The VPA and Norfolk individually are a Party and collectively are the Parties.

§ 1.23 Prime Agreement means the Rail Enhancement Fund Multiple Year Grant Agreement, Agreement No. 76517-14, between the Department and the VPA. The Prime Agreement is attached as Attachment A and made a part of this Sub-Agreement as further set forth in § 2.3.

Virginia Port Authority-City of Norfolk Sub-Agreement Page 4 of 33 Packet Pg. 472 7.9.a

§ 1.24 Property Acquisition means the acquisition of all land ownership and/or property rights necessary to accomplish the Utility Relocation Project as further set forth in § 3.1.1.2.

§ 1.25 Public Benefit means the benefit to the Commonwealth caused by increasing the amount of freight on the Commonwealth’s rail system thereby reducing congestion on, and the maintenance of, the Commonwealth’s highways, promoting fuel efficiency, and establishing a viable statewide integrated transportation system which will contribute to the Commonwealth’s continued economic growth, vitality, and competitiveness in national and world markets.

§ 1.26 REF Application means the January 6, 2016 Rail Enhancement Fund Application #8932, as updated on February 1, 2016, including all documentation submitted in support of the application. The 4-page Rail Enhancement Fund Application document is included as Attachment B. The entire REF Application, including all supporting documentation, as supplemented by Norfolk’s February 6, 2019 revised Preliminary Cost Estimate and the CTB’s Fiscal Years 2020- 2025 Six Year Improvement Program, is incorporated and made a part of this Sub-Agreement.

§ 1.27 REF Funding means Rail Enhancement Fund funds appropriated and allocated pursuant to § 33.2-1601 of the Code of Virginia (1950), as amended.

§ 1.28 REF Project means the design and construction of two ~8,000 foot storage tracks on CWRY property north of the Marshalling Yard’s existing main line and storage tracks, and related work such as property acquisition and water utility relocation, as more specifically set forth in the REF Application and Article 3 of the Prime Agreement.

§ 1.29 Re-work means work required to correct deficiencies in the Utility Relocation Project brought about by incomplete Work, incorrect Work, or failure to comply with the provisions of this Sub-Agreement.

§ 1.30 Sub-Agreement means this Sub-Agreement between the VPA and Norfolk for relocation of municipal water lines at the Marshalling Yard.

§ 1.31 Subcontract means a contract between a Contractor and a Subcontractor, or a higher tier Subcontractor and a lower tier Subcontractor.

§ 1.32 Subcontractor means a person or entity, including consultants, who has entered into a contract with a Contractor or another Subcontractor to perform a portion of the Work.

§ 1.33 Total Utility Relocation Project Funding means total funding for the Utility Relocation

Project under this Sub-Agreement as set forth in § 4.3.2. Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement)

§ 1.34 Trackwork Project means the design and construction of two ~8,000 foot storage tracks as further set forth in the Prime Agreement and sub-agreement between the VPA and CWRY.

§ 1.35 Utility Relocation Improvements means all improvements to real property constructed, installed, or placed using REF Funding provided by this Sub-Agreement, including a new 48” raw

Virginia Port Authority-City of Norfolk Sub-Agreement Page 5 of 33 Packet Pg. 473 7.9.a

water main for Norfolk north of the CWRY Marshalling Yard, a new 30” finished water main for the City of Portsmouth north of the CWRY Marshalling Yard, and incidental improvements required by construction, installation, and/or placement of the two water lines.

§ 1.36 Utility Relocation Project means the relocation of two water lines as further set forth in § 3.1.1.

§ 1.37 VPA means the Virginia Port Authority.

§ 1.38 Work means all, or a specified portion of, the labor, materials, equipment, tasks, duties, obligations, services, requirements, and activities of whatever kind or nature, express or implied, direct or incidental, and all items tangible and intangible, required for Norfolk to fulfill its obligations under this Sub-Agreement.

§ 1.39 Working Budget means the initial and updated budgets prior to the Final Budget as further set forth in § 4.2.

ARTICLE 2 GENERAL PROVISIONS

§ 2.1 Effective Date of Sub-Agreement This Sub-Agreement is effective as of the date when all of the following agreements have been fully executed by each agreement’s respective contracting parties: (i) the Sub-Agreement; (ii) the Prime Agreement; and (iii) the sub-agreement between the VPA and CWRY for the Trackwork Project (“Effective Date”).

§ 2.2 Commencement of Work § 2.2.1 Definitions § 2.2.1.1 Notice to Proceed means a written notice issued by the VPA after or upon execution of the Sub-Agreement authorizing Norfolk to commence Work.

§ 2.2.1.2 Letter of No Prejudice (“LONP”) means a document written by the VPA to Norfolk prior to the issuance of a Notice to Proceed authorizing Norfolk to perform Work as specified in the LONP at its own risk.

After execution of the Sub-Agreement and issuance of a Notice to Proceed for Work identified in an LONP, Eligible Project Costs incurred by Norfolk pursuant to the LONP will be eligible for reimbursement in accordance with Article 12. However, if for any reason such a Notice to Proceed is not issued, the VPA has no obligation to reimburse any costs incurred by Norfolk pursuant to Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) the LONP.

§ 2.2.2 Authorization to Commence Work Norfolk shall not commence any Work without first receiving a Notice to Proceed or LONP from the VPA, and only shall perform the Work specifically authorized by such Notice to Proceed or LONP.

Virginia Port Authority-City of Norfolk Sub-Agreement Page 6 of 33 Packet Pg. 474 7.9.a

§ 2.2.3 Initial Notice to Proceed By execution of this Sub-Agreement, the VPA provides Notice to Proceed for the Work identified in §§ 3.1.2 and 5.1, and Articles 7 and 8.

§ 2.3 Incorporation of the Prime Agreement The Prime Agreement is included as Attachment A and made a part of this Sub-Agreement. Norfolk acknowledges that the Utility Relocation Project is a portion of the REF Project. To the extent the provisions of the Prime Agreement apply to the Utility Relocation Project, Norfolk shall assume toward the VPA all obligations and responsibilities that the VPA assumes toward the Department under the Prime Agreement. To the extent applicable to this Sub-Agreement, the VPA shall have the benefits of all rights, remedies, and redress against Norfolk that the Department, under the Prime Agreement, has against the VPA. In the event a provision of this Sub-Agreement is inconsistent with a provision of the Prime Agreement, the Sub-Agreement shall govern, unless there is an express statement to the contrary in the Sub-Agreement.

ARTICLE 3 UTILITY RELOCATION PROJECT SCOPE

§ 3.1 Utility Relocation Project Scope § 3.1.1 As of the Effective Date, the scope for completion of the Utility Relocation Project is defined by the portion of the REF Application applicable to the Utility Relocation Project. As set forth in more detail in the REF Application, the initial scope of the Utility Relocation Project consists of: .1 environmental planning and mitigation, design, and completion of Final CDs for, and construction of, the termination and relocation of an existing 48” raw water main owned by Norfolk, and an existing 30” finished water main owned by the City of Portsmouth, both of which must be moved off of CWRY property to allow for the new storage tracks; and .2 acquisition of all land ownership, easements, or other property rights necessary to accomplish the Utility Relocation Project.

§ 3.1.2 Norfolk shall prepare and submit for review and acceptance by the VPA a final scope for completion of the Utility Relocation Project (“Final Scope”). Norfolk shall not vary from the accepted Final Scope without good cause and the VPA’s consent, which the VPA shall not unreasonably withhold. Among other reasonable bases, the VPA’s inability to obtain the Department’s consent for such a variance constitutes a reasonable basis for the VPA to withhold consent. Any change to the Final Scope shall be accomplished by execution of a Change Order pursuant to Article 11 of this Sub-Agreement or other form of an amendment pursuant to § 21.20 of this Sub-Agreement. Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement)

§ 3.1.3 The VPA’s review and acceptance of the Final Scope shall be for the limited purpose of checking its compatibility with the general intent of the REF Project. The VPA’s review and acceptance is not for the purpose of determining accuracy and completeness which remains the responsibility of Norfolk. The VPA’s review and acceptance of the Final Scope shall not be deemed to transfer any liability for it from Norfolk, Contractors, and/or Subcontractors to the VPA.

Virginia Port Authority-City of Norfolk Sub-Agreement Page 7 of 33 Packet Pg. 475 7.9.a

ARTICLE 4 ESTIMATED COST, BUDGET, AND FUNDING

§ 4.1 Estimated Cost As of the February 1, 2016 update to the REF Application, Norfolk’s estimated cost for completion of the Utility Relocation Project was $15,203,200, as set forth in more detail in the REF Application. As of the Effective Date, however, the estimated cost for completion of the Utility Relocation Project has increased by $4,308,906, as detailed by the Preliminary Cost Estimate, attached as Attachment C and made a part of this Sub-Agreement. Accordingly, as of the Effective Date, the estimated cost for completion of the Utility Relocation Project is $19,512,106.

§ 4.2 Budget § 4.2.1 Initial Working Budget As of the February 1, 2016 update to the REF Application, Norfolk’s budget for completion of the Utility Relocation Project was $15,203,200, as set forth in the REF Application. Due to the increase in costs for the Utility Relocation Project, however, the budget has increased. Accordingly, as of the Effective Date, the budget for completion of the Work is $19,512,106 (“Working Budget”).

§ 4.2.2 Working Budget Updates Through design development at 90% completion, Norfolk shall prepare and submit for review and acceptance by the VPA, updated Working Budgets based upon, and at the same time as, the updated cost estimates required by § 8.4. In addition to providing these Working Budget updates, Norfolk shall provide budget tracking data as part of its Progress Report requirements under § 20.1.1. Further, Norfolk shall monitor its actual and projected costs in comparison to its Working Budget during its performance of the Work. If, at any time, Norfolk has reason to believe the Working Budget is materially insufficient for completion of the Work, Norfolk shall promptly notify the VPA in writing. Norfolk’s notice shall include a proposed resolution to the budget shortfall.

Norfolk shall not vary from the VPA-accepted Working Budget without good cause and the VPA’s consent, which the VPA shall not unreasonably withhold. Among other reasonable bases, the VPA’s inability to obtain the Department’s consent for such a variance constitutes a reasonable basis for the VPA to withhold consent. Any change to the Working Budget shall be accomplished by execution of a Change Order pursuant to Article 11 of this Sub-Agreement or other form of amendment pursuant to § 21.20 of this Sub-Agreement.

§ 4.2.3 Final Budget Norfolk shall prepare and submit for review and acceptance by the VPA an updated budget based on the Final CDs and completed land valuations for the Property Acquisition (“Final Budget”). Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) Norfolk shall monitor its actual and projected costs in comparison to the Final Budget during its performance of the Work. If, at any time, Norfolk has reason to believe the Final Budget is materially insufficient for completion of the Work, Norfolk shall promptly notify the VPA in writing. Norfolk’s notice shall include a proposed resolution to the budget shortfall.

Virginia Port Authority-City of Norfolk Sub-Agreement Page 8 of 33 Packet Pg. 476 7.9.a

Norfolk shall not vary from the VPA-accepted Final Budget without good cause and the VPA’s consent, which the VPA shall not unreasonably withhold. Among other reasonable bases, the VPA’s inability to obtain the Department’s consent for such a variance constitutes a reasonable basis for the VPA to withhold consent. Any change to the Final Budget shall be accomplished by execution of a Change Order pursuant to Article 11 of this Sub-Agreement or other form of amendment pursuant to § 21.20 of this Sub-Agreement.

§ 4.2.4 The VPA’s review and acceptance of any Working Budget and/or the Final Budget shall be for the limited purpose of checking their compatibility with the general intent of the REF Project. The VPA’s review and acceptance is not for the purpose of determining accuracy and completeness which remains the responsibility of Norfolk. The VPA’s review and acceptance of any Working Budget and/or the Final Budget shall not be deemed to transfer any liability for them from Norfolk, Contractors, and/or Subcontractors to the VPA.

§ 4.3 Funding § 4.3.1 Funding for the Utility Relocation Project is a combination of REF Funding and a matching contribution provided by Norfolk (“Norfolk Contribution”). The Norfolk Contribution shall be cash from Norfolk, or on behalf of Norfolk from a private source which may include a railroad, a regional authority, a local government source, federal funds for freight rail projects, or a combination of such sources. The value of the Norfolk Contribution shall be 30 percent of the total Eligible Project Costs accepted as reimbursable by the VPA and for which the VPA receives reimbursement from the Department.

§ 4.3.2 As of the Effective Date, the Total Utility Relocation Project Funding under this Sub- Agreement, broken down by maximum available REF Funding (“Maximum REF Funding”) and the required Norfolk Contribution, is:

Maximum REF Funding: $13,658,483 Norfolk Contribution $5,853,636 Total Utility Relocation Project Funding $19,512,119

§ 4.3.3 As of the Effective Date, the Maximum REF Funding and required Norfolk Contribution by Fiscal Year are:

Through Fiscal Year 2019 Maximum REF Funding: $9,896,740 Norfolk Contribution: $4,241,460

Fiscal Year 2020

Maximum REF Funding: $745,500 Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) Norfolk Contribution: $319,500

Fiscal Year 2021 Maximum REF Funding: $3,016,243 Norfolk Contribution: $1,292,676

Virginia Port Authority-City of Norfolk Sub-Agreement Page 9 of 33 Packet Pg. 477 7.9.a

§ 4.3.4 Norfolk shall be solely responsible for the Norfolk Contribution and all costs in excess of the Total Utility Relocation Project Funding. If, at any time, Norfolk has reason to believe that the Total Utility Relocation Project Funding is insufficient for completion of the Work, Norfolk shall promptly notify the VPA in writing. In such case, Norfolk may request an increase in REF Funding. Upon such a request from Norfolk, the VPA may request that the Department seek approval from the CTB for such an increase. Neither the VPA nor the Department, however, is under any obligation to obtain CTB approval or provide such an increase in REF Funding. Any change to the REF Funding or the Total Utility Relocation Project Funding shall be accomplished by execution of a Change Order pursuant to Article 11 of this Sub-Agreement or other form of amendment pursuant to § 21.20 of this Sub-Agreement.

§ 4.4 Funding Purpose, Limitations, and Potential Decreases § 4.4.1 REF Funding under this Sub-Agreement shall be for the reimbursement of Eligible Project Costs and no other purpose. The availability of REF Funding under this Sub-Agreement is governed by the availability of REF Funding under the Prime Agreement. Accordingly, the expiration date for REF Funding under this Sub-Agreement is the Grant Expiration Date identified in § 4.4.1 of the Prime Agreement. Available REF Funding not used to reimburse Norfolk for Eligible Project Costs by the close of any Fiscal Year shall be carried over and made available during the next Fiscal Year, up to the Grant Expiration Date, unless Norfolk requests and receives an extension in writing from the VPA prior to the Grant Expiration Date. In the absence of an extension in writing from the VPA, all unused REF Funding shall cease to be available to Norfolk as of the Grant Expiration Date.

§ 4.4.2 At all times, REF Funding is subject to change, including decrease or elimination, based on the availability of appropriation from the Virginia General Assembly and allocation by the CTB to the Department for the REF Project, which are subject to deappropriation and deallocation respectively.

§ 4.4.3 If deappropriation and/or deallocation occurs or statutory changes negatively impact the availability of the REF Funding provided by the Department to the VPA under the Prime Agreement, and the VPA, in its sole discretion, determines that achievement of the Public Benefit is at risk, the VPA may terminate this Agreement, in whole or in part, pursuant to § 17.2.

§ 4.5 Subsequent Funding In the event Norfolk receives a subsequent award of state or federal funds from a source other than REF Funding (“Subsequent Funds”), the Maximum REF Funding shall be reduced by the amount of the Subsequent Funds. Norfolk shall notify the VPA of any such Subsequent Funds within 30 Days of its award. This Section shall not apply if .1 the Maximum REF Funding has been obligated in its entirety;

.2 the amount of the Total Utility Relocation Project Funding is insufficient to fund the Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) reasonable cost of the Work necessary to complete the Final Scope; and .3 Norfolk’s sole purpose for obtaining the Subsequent Funds is to fund the completion of the Final Scope.

Virginia Port Authority-City of Norfolk Sub-Agreement Page 10 of 33 Packet Pg. 478 7.9.a

ARTICLE 5 PROJECT SCHEDULE

§ 5.1 Initial Schedule The Parties agree that the initial schedule for completion of the Utility Relocation Project included in the REF Application is outdated and inapplicable. Upon execution of the Sub-Agreement, and in collaboration with the VPA and CWRY, Norfolk shall promptly revise and update the schedule for completion of the Utility Relocation Project (“Project Schedule”) for the VPA’s review and acceptance.

§ 5.2 Interim Schedules During the course of the Work, Norfolk shall provide schedule tracking data as part of its Progress Report requirements under § 20.1.1. Norfolk also shall monitor is actual and projected progress in comparison to the Project Schedule. If, at any time, Norfolk has reason to believe it cannot meet the Project Schedule’s completion date and/or the schedule for Norfolk’s activities might negatively impact the work of other REF Project stakeholders such as CWRY and the VPA, Norfolk shall promptly notify the VPA in writing. Norfolk’s notice shall include a proposed resolution to the Project Schedule issue.

Norfolk shall not vary from the VPA-accepted Project Schedule without good cause and the VPA’s consent, which the VPA shall not unreasonably withhold. Among other reasonable bases, the VPA’s inability to obtain the Department’s consent for such a variance constitutes a reasonable basis for the VPA to withhold consent. Any change to the Project Schedule shall be accomplished by execution of a Change Order pursuant to Article 11 of this Sub-Agreement or other form of amendment pursuant to § 21.20 of this Sub-Agreement.

§ 5.3 Final Project Schedule § 5.3.1 After completion of the Final CDs and the award of all contracts necessary for construction of the Utility Relocation Project, Norfolk shall prepare and submit the Final Project Schedule for review and acceptance by the VPA. If, at any time, Norfolk has reason to believe it cannot meet the Final Project Schedule’s completion date, and/or the schedule for Norfolk’s activities might negatively impact the work of other REF Project stakeholders such as CWRY and the VPA, Norfolk shall promptly notify the VPA in writing. Norfolk’s notice shall include a proposed resolution to the Schedule issue.

§ 5.3.2 Norfolk shall not vary from the accepted Final Project Schedule without good cause and the VPA’s consent, which the VPA shall not unreasonably withhold. Among other reasonable bases, the VPA’s inability to obtain the Department’s consent for such a variance constitutes a reasonable basis for the VPA to withhold consent. Any change to the Final Project Schedule shall be accomplished by execution of a Change Order pursuant to Article 11 of this Sub-Agreement or Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) other form of amendment pursuant to § 21.20 of this Sub-Agreement.

§ 5.4 The VPA’s review and acceptance of any updated or interim Project Schedule and/or the Final Project Schedule shall be for the limited purpose of checking their compatibility with the general intent of the REF Project. The VPA’s review and acceptance is not for the purpose of determining accuracy and completeness which remains the responsibility of Norfolk. The VPA’s

Virginia Port Authority-City of Norfolk Sub-Agreement Page 11 of 33 Packet Pg. 479 7.9.a

review and acceptance of any updated or interim Project Schedule and/or the Final Project Schedule shall not be deemed to transfer any liability for them from Norfolk, Contractors, and/or Subcontractors to the VPA.

§ 5.5 Force Majeure Events § 5.5.1 Force Majeure Event means fire, flood, war, rebellion, terrorism, riots, strikes, epidemics, diseases or acts of God, which may affect or prevent Norfolk from timely or properly performing its obligations under this Sub-Agreement. A Force Majeure Event may constitute good cause for Norfolk’s variance from the accepted Final Project Schedule.

§ 5.5.2 Within fifteen Days of an alleged Force Majeure Event, Norfolk shall provide the VPA written notice and documentation of the occurrence and a request for the relief Norfolk feels is necessary, including whether additional investigation and analysis are necessary for Norfolk to determine the complete relief it believes is necessary. The VPA, in its reasonable discretion, shall determine whether a Force Majeure Event has occurred and whether Norfolk is entitled to the requested relief. The VPA shall provide Norfolk its determination in writing within 20 Days of receiving Norfolk’s request. Unless Norfolk requests the VPA reconsider its written determination pursuant to § 5.5.4, the VPA’s written determination shall be final.

§ 5.5.3 If Norfolk requests additional investigation and analysis to determine the complete relief it believes is necessary, and the VPA grants such a request, Norfolk shall make a final request for relief at the conclusion of such investigation and analysis in conformance with whatever deadlines and other terms the VPA may require when it grants Norfolk’s initial request for relief. Upon receipt of Norfolk’s final request for relief, the VPA, in its reasonable discretion, shall determine whether a Force Majeure Event has occurred and whether Norfolk is entitled to the requested relief. Unless Norfolk requests the VPA reconsider its written determination pursuant to § 5.5.4, the VPA’s written determination shall be final.

§ 5.5.4 Within 25 Days of receiving a written determination from the VPA denying, in whole or in part, a request for relief, Norfolk may request that the VPA reconsider its denial. Such a request for reconsideration shall include Norfolk’s basis for the request and any supporting documentation not already provided to the VPA. The VPA shall provide Norfolk its determination in writing within 20 Days of receiving Norfolk’s request for reconsideration. The VPA’s written decision shall be final.

§ 5.5.5 If Norfolk believes a Force Majeure Event has occurred that does not render completion of construction of the Utility Relocation Project impossible or impractical, Norfolk may request a time extension not to exceed the time lost due to the Force Majeure Event.

§ 5.5.6 If Norfolk believes a Force Majeure Event has occurred that renders completion of Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) construction of the Utility Relocation Project impossible or impractical, Norfolk may request termination of the Sub-Agreement. If the VPA concurs with Norfolk’s request, or if the VPA independently determines that completion of construction of the REF Project or achievement of the Public Benefit is impossible or impractical due to a Force Majeure Event, the VPA may terminate the Sub-Agreement pursuant to § 17.2.

Virginia Port Authority-City of Norfolk Sub-Agreement Page 12 of 33 Packet Pg. 480 7.9.a

ARTICLE 6 CONTRACTS AND SUBCONTRACTS

§ 6.1 Award of Contracts Norfolk may enter into a Contract or Contracts for performance of all or portions of the Work. As soon as practicable and prior to execution of any Contract, Norfolk shall notify the VPA of the persons or entities Norfolk proposes to use as a Contractor and their respective scope. Norfolk shall not enter into a Contract with a person or entity against whom the VPA has made a reasonable and timely objection. Among other reasonable objections, an objection by the Department to the VPA regarding a proposed Contractor constitutes a reasonable basis for the VPA to object. The VPA, however, has no obligation to object to a Contractor proposed by Norfolk, and Norfolk remains solely responsible for selecting Contractors with sufficient financial and human resources, and technical ability and expertise, to fulfill its obligations under Contracts awarded by Norfolk.

§ 6.2 Norfolk/Contractor Relations For each Contract between Norfolk and a Contractor, Norfolk shall include terms requiring the Contractor to assume toward Norfolk all obligations and responsibilities of this Sub-Agreement that Norfolk assumes toward the VPA, to the extent the obligations and responsibilities apply to the Contractor’s scope of work under its contract with Norfolk.

§ 6.3 Contractor/Subcontractor Relations For each Subcontract between a Contractor and Subcontractor, Norfolk shall require that the Contractor require its Subcontractors to assume toward the Contractor all obligations and responsibilities of this Sub-Agreement that the Contractor assumes toward Norfolk, to the extent the obligations and responsibilities apply to the Subcontractor’s scope of work under its Subcontract with the Contractor.

ARTICLE 7 LAND OWNERSHIP AND ACQUISITION

§ 7.1 Land Acquisition Norfolk shall complete all Work necessary for the Property Acquisition.

ARTICLE 8 PLANNING AND DESIGN

§ 8.1 Environmental Planning § 8.1.1 Norfolk shall perform environmental planning as required for the Utility Relocation Project to conform to all applicable federal, state, and local environmental laws and regulations. Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) § 8.1.2 Norfolk shall provide a proposed environmental plan (“Environmental Plan”), including any necessary mitigation and protection measures, to the VPA for the VPA’s review and acceptance prior to Norfolk’s implementation of it.

Virginia Port Authority-City of Norfolk Sub-Agreement Page 13 of 33 Packet Pg. 481 7.9.a

§ 8.2 Geotechnical Investigation and Recommendations Norfolk shall perform geotechnical investigations by boring, sampling, and testing of soil and rock strata to establish the soil and rock foundation characteristics as necessary for the design and construction of the Utility Relocation Project. Norfolk shall provide the VPA a comprehensive geotechnical engineering report (“Geotech Report”) based on the investigations for the VPA’s review and acceptance. The Geotech Report shall provide information regarding site conditions, engineering recommendations for the design and construction of the Utility Relocation Project, and any anticipated problems, such as slope stability, along with proposed solutions for such problems.

§ 8.3 Surveying Norfolk shall perform all surveying necessary to complete the Work required by the Sub- Agreement.

§ 8.4 Design & Engineering § 8.4.1 Design Development Throughout Norfolk’s development of the Final CDs, Norfolk’s design and engineering for the Utility Relocation Project shall: .1 conform to the information in the REF Application for the Utility Relocation Project; .2 incorporate the VPA-accepted Environmental Plan; .3 conform to applicable provisions of the most up-to-date edition of the Manual for Railway Engineering published by the American Railway Engineering and Maintenance-of-Way Association; .4 conform to applicable federal, state, and local law and regulations; .5 conform to applicable CWRY standards and specifications; and .6 conform to the most recent VPA-accepted budget for the Utility Relocation Project.

§ 8.4.2 Design Development at 30% Completion Based on the information contained in the REF Application for the Utility Relocation Project, Norfolk shall develop 30% complete design development documents and provide them to the VPA for its review and acceptance. Norfolk shall provide an updated cost estimate and Working Budget based on the 30% design development documents as part of its 30% design development submission to the VPA.

§ 8.4.3 Design Development at 60% Completion Based on the VPA-accepted 30% design development documents and any adjustments to the requirements for the Utility Relocation Project authorized by the VPA, Norfolk shall develop 60% complete design development documents and provide them to the VPA for its review and acceptance. Norfolk shall provide an updated cost estimate and Working Budget based on the 60% design development documents as part of its 60% design development submission to the VPA. Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement)

§ 8.4.4 Design Development at 90% Completion Based on the VPA-accepted 60% design development documents and any adjustments to the requirements for the Utility Relocation Project authorized by the VPA, Norfolk shall develop 90% complete design development documents and provide them to the VPA for its review and

Virginia Port Authority-City of Norfolk Sub-Agreement Page 14 of 33 Packet Pg. 482 7.9.a

acceptance. Norfolk shall provide an updated cost estimate and Working Budget based on the 90% design development documents as part of its 90% design development submission to the VPA.

§ 8.4.5 Norfolk’s Final CDs Based on the VPA-accepted 90% design development documents and any adjustments to the requirements for the Utility Relocation Project authorized by the VPA, Norfolk shall develop Final CDs and provide them to the VPA for its review and acceptance. Norfolk shall provide an updated cost estimate and Final Budget based on the Final CDs as part of its Final CDs submission to the VPA. The Final CDs shall provide sufficient information and detail for a general contractor to use for pricing and constructing the Utility Improvements.

§ 8.4.6 If, at any time, the Department, the VPA, or an authority having jurisdiction over any portion of the Utility Relocation Project determine that the Final CDs are not in accordance with applicable federal, state, and local law and regulations or other requirements of this Sub- Agreement, Norfolk shall undertake the Re-work necessary to correct the deficiency.

§ 8.4.7 Norfolk shall not revise the Final CDs to materially deviate from the VPA-accepted Final CDs without the VPA’s prior written consent.

§ 8.4.8 The VPA’s review and acceptance of Norfolk’s planning and design submittals, including but not limited to, plans, reports, surveys, design development documents, Final CDs, estimates, Working Budgets, and Final Budget (“Planning & Design Submittals”) shall be for the limited purpose of checking for the Planning & Design Submittals’ compatibility with the general intent of the Utility Relocation Project. The VPA’s review and acceptance is not for the purpose of determining accuracy and completeness which remains the responsibility of Norfolk. The VPA’s review and acceptance of the Planning & Design Submittals shall not be deemed to transfer any design professional liability from Norfolk, Contractors, and/or Subcontractors, to the VPA.

§ 8.4.9 Norfolk shall provide the VPA with reliable as-designed record documents that incorporate everything designed for the Utility Relocation Project, and include the original Construction Documents plus all addenda, and any supplemental instructions, Change Orders, construction change directives and minor changes in the Work (“As-Designed Record Documents”).

§ 8.4.10 By execution of this Sub-Agreement, Norfolk conveys to the Commonwealth and the VPA a nonexclusive and irrevocable license to use the Final CDs and As-Designed Record Documents for any public purpose. If the Commonwealth or the VPA uses the Final CDs or As- Designed Record Documents for a purpose other than the purpose for which this Sub-Agreement has been executed, such use shall be at the risk of the user.

ARTICLE 9 Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) CONSTRUCTION

§ 9.1 Permitting Norfolk shall obtain all permits and certifications required for construction of the Utility Relocation Project in conformance with applicable federal, state, and local law and regulations.

Virginia Port Authority-City of Norfolk Sub-Agreement Page 15 of 33 Packet Pg. 483 7.9.a

§ 9.2 Construction of the Utility Relocation Project § 9.2.1 Norfolk shall construct the Utility Relocation Project in accordance with .1 the most recent VPA-accepted Final CDs, Final Project Schedule, and Final Budget; .2 applicable provisions of the most up-to-date edition of the Manual for Railway Engineering published by the American Railway Engineering and Maintenance-of-Way Association; .3 applicable federal, state, and local law and regulations; and .4 applicable CWRY standards and specifications.

§ 9.2.2 Norfolk shall be solely responsible for the construction means, methods, techniques, sequences, and procedures, and the safety precautions and programs in connection with the Work. If, at any time, the Department, the VPA, or an authority having jurisdiction determine that construction of Work is not in accordance with applicable federal, state, and local law and regulations or other requirements of this Sub-Agreement, Norfolk shall undertake the Re-work necessary to correct the deficiency. Neither the Department nor the VPA, however, shall have an obligation to identify Work that is not in accordance with applicable federal, state, and local law and regulations or other requirements of this Sub-Agreement during Norfolk’s construction of the Utility Relocation Project.

§ 9.3 Record Documents § 9.3.1 Norfolk shall provide the VPA with reliable as-constructed record documents kept in good order, including the CDs as modified by addenda, Change Orders, change directives, supplemental instructions, and any other modifications and marked to indicate field changes, other minor changes, and selections made during construction, and one copy of approved shop drawings, product data, samples, and similar required submittals (“As-Constructed Record Documents”).

§ 9.3.2 By execution of this Sub-Agreement, Norfolk conveys to the Commonwealth and the VPA a nonexclusive and irrevocable license to use the As-Constructed Record Documents for any public purpose. If the Commonwealth or the VPA uses the As-Constructed Record Documents for a purpose other than the purpose for which this Sub-Agreement has been executed, such use shall be at the risk of the user.

§ 9.4 The parties acknowledge and agree that there is to be no change in the status of the currently existing City water pipes & facilities, and no construction shall proceed on the expansion of the railyard in or around the currently existing city water pipes & facilities, until after the completion of construction of, final satisfactory testing of, and transfer of service from current existing City water pipes and facilities to, the new City water pipes and facilities.

ARTICLE 10 PROCUREMENT OF SERVICES Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) § 10.1 For procurement of Work not directly performed by forces of Norfolk, Norfolk shall comply with all applicable provisions of the Virginia Public Procurement Act and all other federal, state, and local laws, regulations, ordinances, orders, and decrees applicable to Norfolk’s procurement of the Work.

Virginia Port Authority-City of Norfolk Sub-Agreement Page 16 of 33 Packet Pg. 484 7.9.a

ARTICLE 11 CHANGES IN THE WORK

§ 11.1 Change Orders § 11.1.1 The Parties may accomplish agreed-upon changes in the Work after execution of this Sub-Agreement without invalidating the Sub-Agreement by use of a Change Order.

§ 11.1.2 A Change Order is a written instrument signed by the VPA and Norfolk stating their agreement upon all of the following: .1 the change, if any, in the Final Scope; .2 the amount of the adjustment, if any, in Total Utility Relocation Project Funding; and .3 the extent of the adjustment, if any, in the Final Project Schedule.

§ 11.1.3 The Parties shall use the Change Order form attached to this Sub-Agreement as Attachment D, or a substantially similar form agreed to by the Parties. For changes requiring CTB approval, the Parties shall attach to the Change Order a copy of the CTB action providing such approval. A properly executed Change Order shall constitute an amendment to this Agreement pursuant to § 21.20.

ARTICLE 12 REIMBURSEMENT OF ELIGIBLE PROJECT COSTS

§ 12.1 Eligible Project Costs § 12.1.1 Norfolk shall be responsible for paying for the Work. The VPA shall reimburse Norfolk for properly submitted Eligible Project Costs to the extent the VPA receives reimbursement from the Department for those costs, and subject to the limitations and potential changes to the REF Funding as set forth in §§ 4.3, 4.4, and 4.5.

§ 12.1.2 To constitute an Eligible Project Cost, an expenditure must meet all of the following conditions: .1 be necessary in order to accomplish the Work for which the cost was incurred; .2 be reasonable for the goods or services purchased based on industry standard pricing; .3 be actual net costs to Norfolk (e.g., no markups, the price paid must be minus any refunds, rebates, or other items of value received by Norfolk that have the effect of reducing the cost actually incurred); .4 be for Work performed pursuant to a Notice to Proceed; .5 be documented to the VPA’s satisfaction; .6 be treated uniformly and consistently under generally accepted accounting principles; and .7 there must be sufficient funds remaining under the Maximum REF Funding to make the

requested reimbursement. Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement)

§ 12.2 Disallowed Costs In addition to other costs that do not conform to the requirements for Eligible Project Costs, the following expenditures also are not Eligible Project Costs: .1 any cost associated with Re-work; and .2 any cost incurred by Norfolk that is not included in the VPA-accepted Final Budget.

Virginia Port Authority-City of Norfolk Sub-Agreement Page 17 of 33 Packet Pg. 485 7.9.a

§ 12.3 Construction Project Management Costs Upon prior approval from the VPA, Norfolk’s reasonable construction project management employee payroll and indirect costs may be treated as Eligible Project Costs when Norfolk acts as overall project manager for construction of the Utility Relocation Project. The VPA’s reimbursement of such construction project management costs shall be limited to a maximum of 5% of the VPA-accepted Final Budget.

§ 12.4 Costs in Excess of the Maximum Department Funding Norfolk shall be solely responsible for all costs in excess of the Maximum REF Funding.

§ 12.5 Invoicing § 12.5.1 Unless directed otherwise by the VPA, Norfolk shall render invoices for reimbursement of Eligible Project Costs no more frequently than once every 30 Days.

§ 12.5.2 Invoices shall be submitted XXX. Invoices shall be accompanied by the most recent Progress Report required by § 20.1.1 and documentation showing that Norfolk has paid the costs for which reimbursement is sought.

§ 12.5.3 For each invoice, Norfolk shall record the Norfolk Contribution of 30 percent of the total amount of Eligible Project Costs reflected in the invoice. The VPA shall not reimburse Norfolk for more than 70 percent of the Eligible Project Costs recorded in each invoice received from Norfolk.

§ 12.6 VPA Review & Payment § 12.6.1 The VPA shall have the right to request an accounting and/or more detailed statements of invoices. Upon such a request, Norfolk shall provide the requested information within 30 Days.

§ 12.6.2 The VPA will reimburse properly submitted invoices within 30 Days of receipt of the Department’s approval of such an invoice. The VPA shall have the right, in its sole discretion, to withhold payment for invoices or line items in invoices it finds not to be complete as to form or not in conformance with the requirements of this Sub-Agreement. The VPA will notify Norfolk of the basis for withholding total or partial payment and work with Norfolk to resolve disputed items.

§ 12.6.3 Reimbursement of a cost by the VPA does not constitute .1 a final decision by the VPA or the Department that the cost constitutes an Eligible Project Cost, or .2 a waiver of any violation of the terms of this Sub-Agreement by Norfolk.

§ 12.6.4 The VPA will not make a final determination about the eligibility of any cost for Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) reimbursement until each Auditing Party has performed its final audit of the Work and Norfolk’s records as set forth in Article 14, or the VPA notifies Norfolk that no further audit shall be performed by either Auditing Party.

Virginia Port Authority-City of Norfolk Sub-Agreement Page 18 of 33 Packet Pg. 486 7.9.a

ARTICLE 13 COMPLETION AND ACCEPTANCE

§ 13.1 Upon Norfolk’s proper completion of all Work required for completion of the Utility Relocation Project, Norfolk shall provide the VPA written certification stating that all Work necessary for completion of the Utility Relocation Project has been completed in conformance with the requirements of the Sub-Agreement (the “Certificate of Completion”). The VPA shall provide Norfolk its written acceptance or rejection of the Certificate of Completion within 75 Days of receiving it. Any acceptance by the VPA of the submitted Certificate of Completion shall be subject to the Department’s acceptance of such Certificate of Completion pursuant to the Prime Agreement. The Certificate of Completion form to be used by Norfolk is included as Attachment E and is made a part of this Sub-Agreement.

§ 13.2 If the VPA rejects the Certificate of Completion, in whole or in part, it shall specify the detailed basis for its rejection.

§ 13.3 If the basis for the VPA’s rejection is the Department’s rejection of the Certificate of Completion, the VPA shall so notify Norfolk and provide the detailed basis given by the Department for the rejection, and Norfolk shall provide all assistance necessary for the VPA to comply with Article 12 of the Prime Agreement.

§ 13.4 If the basis for the VPA’s rejection is a deficiency other than the Department’s rejection of the Certificate of Completion, Norfolk shall have 30 Days from receipt of the VPA’s rejection to submit a corrective action plan to the VPA addressing the deficiencies identified in the VPA’s rejection. The VPA shall accept or reject Norfolk’s corrective action plan within 15 Days of receiving it. If the VPA rejects the corrective action plan, the Parties shall meet within 30 Days of the rejection to develop a mutually acceptable path forward. The Department may attend and directly participate in any such meeting. Once Norfolk has corrected all deficiencies, as determined in the sole discretion of the VPA, Norfolk shall resubmit a Certificate of Completion.

§ 13.5 Norfolk shall provide a final invoice for reimbursement to the VPA within 30 Days of the VPA’s acceptance of the Certificate of Completion. The final invoice shall be processed pursuant to Article 12. Norfolk must obtain the VPA’s acceptance of Norfolk’s final invoice no later than 90 Days prior to the Grant Expiration Date.

§ 13.6 The VPA’s acceptance of the Certificate of Completion and its reimbursement of Norfolk’s final invoice shall not alter or constitute a waiver of: .1 Norfolk’s obligation to return any funds due to the VPA as a result of later refunds, corrections, or other transactions;

.2 the VPA’s right to disallow costs and recover funds on the basis of a later audit or other Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) review, whether conducted by the VPA or the Department; .3 any other rights of the VPA under this Sub-Agreement; or .4 any other obligations of Norfolk under this Sub-Agreement.

Virginia Port Authority-City of Norfolk Sub-Agreement Page 19 of 33 Packet Pg. 487 7.9.a

ARTICLE 14 DOCUMENTATION OF COSTS AND AUDIT RIGHTS

§ 14.1 Documentation of Eligible Project Costs Norfolk shall support all Eligible Project Costs with accurate records such as properly executed payrolls, time records, invoices, contracts, vouchers, and other documentation describing in detail the nature and propriety of the charges. Norfolk shall clearly identify and keep all records relating to the Work separate from records not relating to the Work. Norfolk shall maintain accounting records in accordance with generally accepted accounting principles and project records in accordance with generally accepted business and industry principles.

§ 14.2 Audit Rights § 14.2.1 The VPA and the Department, separately and jointly, shall have the right to audit the Work and Norfolk’s records relating to the Work to determine if Norfolk has complied with the terms of the Sub-Agreement and applicable terms of the Prime Agreement. For purposes of this Section, the VPA and the Department are each an “Auditing Party” and collectively are the “Auditing Parties.”

§ 14.2.2 During Norfolk’s execution of the Work and upon reasonable advance notice by an Auditing Party, Norfolk shall provide the Auditing Party access to the Utility Relocation Project, the construction site, and stored materials. Protection from train movements required for the access shall be provided by CWRY. Norfolk shall request such protection from CWRY and coordinate the access with CWRY and the Auditing Party.

§ 14.2.3 Norfolk shall make its records available for inspection and audit at Norfolk’s offices upon reasonable notice by an Auditing Party during Norfolk’s execution of the Work and for a period of three years from the date of the VPA’s payment of Norfolk’s final invoice pursuant to § 13.5. Any and all audits must be completed within three (3) years of VPA’s payment of Norfolk’s final invoice. Copies of such information shall be furnished to the Auditing Party upon request.

§ 14.2.4 Norfolk shall repay the VPA any reimbursement for Work the VPA or the Department finds not to be in accordance with the requirements of the Sub-Agreement as a result of an audit. Norfolk shall repay the VPA within 60 Days of receipt of the results of the audit specifying the amount of and basis for repayment.

§ 14.2.5 Norfolk shall include language consistent with Article 14 in its Contracts to provide the VPA and the Department the same level of access for audits of Contractor Work and records. Norfolk shall require Contractors and Subcontractors to include language consistent with Article 14 in their Subcontracts to provide the VPA and the Department the same level of access for audits of Subcontractors’ Work and records. Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement)

§ 14.2.6 The Department’s and the VPA’s audit rights and right to repayment by Norfolk shall survive any termination of the Sub-Agreement under Article 17.

Virginia Port Authority-City of Norfolk Sub-Agreement Page 20 of 33 Packet Pg. 488 7.9.a

ARTICLE 15 USE AND MAINTENANCE OF THE UTILITY RELOCATION IMPROVEMENTS

§ 15.1 Useful Life Useful Life means the useful life of the REF Project as defined by § 15.1 of the Prime Agreement.

§ 15.2 Use and Maintenance of the Improvements At no cost to the VPA or the Department, Norfolk shall ensure that the Utility Relocation Improvements are operated and used for their intended purpose and kept in a properly maintained condition for the Useful Life. Maintenance of the Utility Relocation Improvements shall conform to all applicable standards and regulations.

§ 15.3 Failure to Properly Use and Maintain the Improvements If, during the Useful Life, for any reason other than a Force Majeure Event, the Utility Relocation Improvements cease to be operated and used for their intended purpose and/or kept in a properly maintained condition (“Abandoned Improvements”), Norfolk shall reimburse the Department the value of the Commonwealth’s investment for the Abandoned Improvements as of the date such a cessation occurs. For purposes of this Section, the value of the Commonwealth’s investment to be reimbursed shall be the net REF Funds paid by the VPA to Norfolk for the Abandoned Improvements multiplied by the percentage of the Useful Life remaining on the day the Abandoned Improvements cease to be operated and used for their intended purpose. Calculation of the net REF Funds paid by the VPA to Norfolk shall eliminate double counting of any refunds paid or required to be paid to the Department.

§ 15.4 Prohibition on Modifications and Conveyances From commencement of construction of the Utility Relocation Improvements until the expiration of the Useful Life, Norfolk shall not expand, modify, rearrange, remove, sell, transfer, encumber, convey, or dispose of, in whole or in part, the Utility Relocation Improvements in any way that detracts from, compromises, or jeopardizes achievement of the Public Benefit without the Department’s written consent which may be conditioned on any terms the Department deems appropriate.

ARTICLE 16 INSURANCE

§ 16.1 Commercial Liability Insurance Norfolk shall procure and maintain, at its own expense, for the duration of the performance of the Work, commercial liability insurance. Norfolk may satisfy the commercial liability insurance requirements set forth in this Section through either: (i) Virginia’s Division of Risk Management;

(ii) private Commercial General Liability Insurance; or (iii) a Self-Insurance Program, as further Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) defined in this Article.

§ 16.1.1 The DRM Plan Norfolk may satisfy the requirements of § 16.1 by procuring and maintaining a comprehensive liability self-insurance plan administered by Virginia’s Division of Risk Management providing protection against liability and claims pursuant to § 2.2-1839 of the Code of Virginia (1950), as

Virginia Port Authority-City of Norfolk Sub-Agreement Page 21 of 33 Packet Pg. 489 7.9.a

amended (the “DRM Plan”). If Norfolk chooses to satisfy its obligations by procuring the DRM Plan: .1 The Commonwealth, the Department, the VPA, and their respective officers, agents, and employees shall be “additional covered parties” under the DRM Plan; and .2 Norfolk shall provide the VPA a Certificate of Liability Coverage that states, “The Commonwealth of Virginia, the Virginia Department of Rail and Public Transportation, the Virginia Port Authority, and their respective officers, agents, and employees shall be indemnified to the extent permitted by law in terms of being added as additional covered parties pursuant to and specific to this Certificate.”

§ 16.1.2 Commercial General Liability Insurance Norfolk may satisfy the requirements of § 16.1 by procuring and maintaining private Commercial General Liability insurance (“CGL Insurance”) as follows: .1 CGL Insurance shall have liability limits not less than $3,000,000 per occurrence and general aggregate covering bodily injury, death and property damage including but not limited to, products/completed operations coverage. The liability limits may be met with a combination of a primary CGL policy and an Excess/Umbrella Liability policy(ies) that must “follow form” and afford no less coverage than the primary CGL policy. .2 CGL Insurance shall be written on ISO occurrence form CG 00 01 or a substitute acceptable to the VPA providing equal coverage. .3 CGL Insurance shall include Contractual Liability Coverage and ISO form CG 24 17 “Contractual Liability Railroads” endorsement, to cover all liabilities assumed by Norfolk under the Sub-Agreement. .4 The policy shall be endorsed to waive subrogation rights against the Department and the VPA. .5 The policy shall name the Commonwealth, the Department, the VPA, and their respective officers, agents, and employees as Additional Insureds, for liabilities arising out of both ongoing operations and completed operations of Norfolk, using ISO Additional Insured Endorsement forms CG 20 10 and CG 20 37 or a substitute acceptable to the VPA providing equal coverage.

§ 16.1.3 Self-Insurance Program Norfolk may satisfy the requirements of § 16.1 by procuring and maintaining a liability self- insurance program acceptable to the VPA providing equal or better coverage than the DRM Plan (“Self-Insurance Program”) as follows: .1 Norfolk shall provide evidence of the authority for such Self-Insurance Program, evidence of the limits of the Self-Insurance Program, and evidence that the Self-Insurance Program is funded to an actuarially sound level. .2 Norfolk shall provide the VPA with a certificate or letter from an authorized Norfolk

official confirming the Self-Insurance Program coverage. Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) .3 The Self-Insurance Program shall name the Commonwealth, the Department, the VPA, and their respective officers, agents, and employees as Additional Insureds, and waive subrogation against them.

Virginia Port Authority-City of Norfolk Sub-Agreement Page 22 of 33 Packet Pg. 490 7.9.a

§ 16.2 Commercial Automobile Liability Insurance Norfolk shall procure and maintain, at its own expense, for the duration of the performance of the Work, Commercial Automobile Liability Insurance (“Commercial Auto Insurance”) as follows: .1 The Commercial Auto Insurance shall be written on an “any auto” basis with liability limits not less than $3,000,000 per occurrence combined single limit covering bodily injury, death and property damage. The liability limits may be met with a combination of a primary Commercial Auto Insurance policy and an Excess/Umbrella Liability policy(ies) that must “follow form” and afford no less coverage than the primary Commercial Auto Insurance policy. .2 The Commercial Auto Insurance policy shall be endorsed to waive subrogation against the Department and the VPA. .3 The Commercial Auto Insurance policy shall name the Commonwealth, the Department, the VPA, and their respective officers, agents, and employees as Additional Insureds. .4 Norfolk may satisfy the requirements of this Section through a DRM Plan or Self-Insurance Program with comparable coverage and endorsements acceptable to the VPA.

§ 16.3 Workers’ Compensation and Employers’ Liability Insurance Norfolk shall procure and maintain, at its own expense, for the duration of the performance of the Work, Workers’ Compensation and Employers’ Liability Insurance for all of its employees engaged in the Work in an amount not less than the minimum required by § 2.2-4332 of the Code of Virginia (1950), as amended, and the Virginia Workers’ Compensation Act, § 65.2-100 et seq. of the Code of Virginia (1950), as amended.

§ 16.4 Professional Liability Insurance Norfolk shall require any person or business performing professional services in the practice of architecture, engineering, land surveying, landscape architecture, interior design, construction management, or environmental consulting (“Professional Services”), to procure and maintain or otherwise be covered by Professional Liability Insurance for architects, engineers, and consultants (“PLI”), or Contractor’s Professional Liability Insurance for contractors (“CPLI”), as follows: .1 The policy shall have limits not less than $2,000,000. .2 The policy shall be endorsed to waive subrogation rights against the Department and the VPA. .3 Coverage shall be effective (retroactively, if necessary) from the date of commencement of the Professional Services until five years following completion of the Work.

§ 16.5 Contractor’s Pollution Liability Insurance Norfolk shall require any Contractor or Subcontractor performing Work to procure and maintain, at its own expense, for the duration of the performance of the Work, Contractor’s Pollution Liability Insurance as follows:

.1 The policy shall have limits not less than $3,000,000 on a claims-made basis. Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) .2 The policy shall be endorsed to waive subrogation rights against the Department and the VPA. .3 The policy shall name the Commonwealth, the Department, the VPA, and their respective officers, agents, and employees as Additional Insureds. .4 Coverage shall be effective from the date of commencement of the Work until five years following completion of the Work.

Virginia Port Authority-City of Norfolk Sub-Agreement Page 23 of 33 Packet Pg. 491 7.9.a

.5 The policy shall cover transportation of hazardous substances from the Work site to a properly certified disposal facility.

§ 16.6 Railroad Protective Liability Insurance Norfolk shall procure and maintain, at its own expense, for the duration of the performance of the Work, Railroad Protective Liability Insurance as follows: .1 The policy shall have limits not less than $3,000,000 per occurrence. .2 The policy shall name the Commonwealth, the Department, the VPA, and their respective officers, agents, and employees as Additional Insureds. .3 The policy shall be issued on a standard ISO form CG 35 12 03 or, if available, the coverage may be obtained from CWRY.

§ 16.7 Property Insurance Norfolk shall require any Contractor or Subcontractor performing Work to procure and maintain, at its own expense, for the duration of the performance of the Work, property insurance for their equipment, tools, materials, and supplies used in performance of the Work. The property insurance shall extend to equipment, tools, materials, and supplies stored off the Utility Relocation Project site or in transit to the Utility Relocation Project site.

§ 16.8 Notice of Cancellation None of the insurance coverages required by this Article shall be subject to cancellation, nonrenewal or material adverse changes to the insurance contract without 30-Days prior written notice being mailed to the VPA.

§ 16.9 Contracts & Subcontracts Norfolk shall require that each Contract or Subcontract for performance of Work require each Contractor or Subcontractor to procure and maintain, at its own expense, for the duration of the performance of the Work, or as otherwise stated herein, insurance coverages and liability limits identical to those requirements of the VPA on Norfolk.

§ 16.10 Certificates of Insurance Not less than seven Days prior to the commencement of any Work, Norfolk shall provide to the VPA Certificates of Insurance evidencing the insurance coverages required herein. Certificates shall be provided to the VPA’s Grant Administrator as identified in § 18.2.

§ 16.11 Deductibles and Self-Insured Retentions Norfolk shall be responsible to pay the full amount of any deductibles or self-insured retentions for any coverages required under this Article.

§ 16.12 Noncontributory Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) All liability policies required by this Article shall be primary and noncontributory to any other insurance.

§ 16.13 No Limitation of Liability The requirements of this Article shall not be deemed to limit any other obligations or liabilities of Norfolk.

Virginia Port Authority-City of Norfolk Sub-Agreement Page 24 of 33 Packet Pg. 492 7.9.a

§ 16.14 Bonds § 16.14.1 Norfolk shall require that in all contracts for performance of construction services required under this Sub-Agreement (“Construction Contracts”) in excess of $250,000, the Contractor or Subcontractor awarded the Construction Contract shall furnish the following bonds at least 15 Days prior to commencing Work under the Construction Contract: .1 A performance bond in the sum of the Construction Contract amount, conditioned upon the faithful performance of the Construction Contract in strict conformity with the plans, specifications, and requirements of the Construction Contract, and .2 A payment bond in the sum of the Construction Contract amount, conditioned upon the prompt payment for all labor, materials, public utility services, and rental of equipment used in the execution of the Work under the Construction Contract.

§ 16.14.2 Norfolk shall not award an unbonded Construction Contract when the contract amount plus the balance of other unbonded Construction Contracts to the same Contractor exceeds $250,000.

§ 16.14.3 The bonds shall be made on official forms furnished by the VPA.

§ 16.15 Insurer and Surety Ratings § 16.15.1 Insurance required by this Article shall be placed with insurers authorized to conduct business and sell insurance in the Commonwealth by the Virginia State Corporation Commission who are rated by A.M. Best as “A-” or better and “Size Class VII” or larger.

§ 16.15.2 Bonds required by this Article shall be placed with sureties authorized to conduct business and sell insurance in the Commonwealth by the Virginia State Corporation Commission who are rated by A.M. Best as “A-” or better and “Size Class VII” or larger.

ARTICLE 17 TERMINATION

§ 17.1 Norfolk’s Termination of the Sub-Agreement for Cause § 17.1.1 Upon the VPA’s material breach of the Sub-Agreement, Norfolk may terminate the Sub- Agreement for cause by providing written notice to the VPA.

§ 17.1.2 The VPA shall have 90 Days from its receipt of Norfolk’s notice, or such longer time as agreed to by the Parties, to cure the breach and avoid termination (the “VPA’s Cure Period”). If the VPA fails to cure such breach by the expiration of the VPA’s Cure Period, the termination shall be effective the Day after the expiration. Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) § 17.1.3 The VPA may request that Norfolk reconsider a termination for cause by notifying Norfolk within 10 Days of receipt of Norfolk’s written notice of termination. Norfolk shall make a final determination within 20 Days of receipt of the VPA’s request for reconsideration, or such longer time as agreed to by the Parties, not to exceed the VPA’s Cure Period.

Virginia Port Authority-City of Norfolk Sub-Agreement Page 25 of 33 Packet Pg. 493 7.9.a

§ 17.1.4 If Norfolk validly terminates the Sub-Agreement under § 17.1, it will not be required to repay funds provided to it by the VPA prior to the date of Norfolk’s termination notice, but only to the extent such funds are determined to have been provided as reimbursement for valid Eligible Project Costs pursuant to § 12.6.4.

§ 17.2 VPA’s Termination of the Sub-Agreement for Convenience § 17.2.1 The VPA may terminate the Sub-Agreement in whole without cause at any time by providing written notice of such termination to Norfolk. The VPA may terminate the Sub- Agreement in part with Norfolk’s consent by providing written notice of such termination to Norfolk. Upon receipt of a notice of termination for convenience from the VPA, Norfolk immediately shall do the following: .1 Stop Work as directed in the Notice. .2 Place no further Contracts or orders for materials, services, or equipment related to the Work, unless necessary for any part of the Work not terminated. .3 Terminate all Contracts or orders to the extent related to the terminated Work. .4 Complete performance of Work not terminated. .5 Inventory along with the VPA any acceptable materials obtained for terminated Work, but not incorporated into the Work. .6 Take any action the VPA may direct for the protection and preservation of the site or other property that is in Norfolk’s possession or control in which the VPA has or may acquire an interest. .7 Deliver to the VPA any drawings, plans, information, or other property required to be provided to the VPA on completion of the Sub-Agreement.

§ 17.2.2 Within 30 days after Norfolk receives the VPA’s notice of termination for convenience, or within such time as the VPA and Norfolk mutually agree, Norfolk shall submit a request for reimbursement for Eligible Project Costs due to: .1 Work performed prior to the date of termination for which Norfolk has not yet submitted a request for reimbursement; and .2 Work performed as a result of the termination as specified in § 17.2.3.

Norfolk shall not be entitled to any compensation or damages for lost profits or for any other type of contractual compensation or damages due to the VPA’s termination for convenience, other than the reimbursement of Eligible Project Costs as provided in this Section. Norfolk waives all claims against the VPA for any consequential damages that may arise from, or relate to, the VPA’s termination for convenience including, but not limited to, damages for loss of revenue, income, profit, business, reputation, or bonding capacity.

§ 17.2.3 The following expenditures, when incurred pursuant to a termination for convenience by the VPA, and when in conformance with § 12.1.2, constitute Eligible Project Costs for which Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) reimbursement is allowed: .1 Actual costs incurred as result of the requirements of § 17.2.1.5 - § 17.2.1.7. .2 Reasonable compensation for the actual cost of demobilization incurred by Norfolk as a direct result of the VPA’s termination. .3 Actual costs incurred by Norfolk to terminate Contracts or purchase orders, as shown by receipted bills, bills of lading, paid invoices, or other similar actual cost records.

Virginia Port Authority-City of Norfolk Sub-Agreement Page 26 of 33 Packet Pg. 494 7.9.a

.4 Actual costs incurred by Norfolk for materials received that have not been incorporated into the Work and cannot be returned, and that have been inspected and accepted by Norfolk as conforming to the requirements of the construction documents, as shown by receipted bills, purchase orders, bills of lading, paid invoices, or other similar actual cost records.

§ 17.2.4 If the VPA terminates the Agreement pursuant to § 17.2, Norfolk will not be required to repay funds provided to it by the VPA prior to the date of the VPA’s termination notice, but only to the extent such funds are determined to have been provided as reimbursement for valid Eligible Project Costs pursuant to § 12.6.4.

§ 17.2.5 Norfolk shall include terms similar to § 17.2 in all its Contracts adjusted as necessary to allow Norfolk to terminate for convenience in the event the Department terminates the Sub- Agreement for convenience, and shall require all Subcontracts to include similar terms adjusted as required for the appropriate Subcontract tier.

§ 17.3 VPA’s Termination of the Sub-Agreement for Cause § 17.3.1 Upon Norfolk’s material breach of the Sub-Agreement, the VPA may terminate the Sub- Agreement for cause by providing written notice to Norfolk.

§ 17.3.2 Norfolk shall have 30 Days from its receipt of the notice, or such longer time as agreed to by the Parties, to cure the breach and avoid termination (“Norfolk’s Cure Period”). If Norfolk fails to cure such breach by the expiration of Norfolk’s Cure Period, the termination shall be effective the Day after the expiration.

§ 17.3.3 Norfolk may request the VPA reconsider a termination for cause by notifying the VPA within 10 Days of receipt of the VPA’s written notice of termination. The VPA shall make a final determination within 20 Days of receipt of Norfolk’s request for reconsideration, or such longer time as agreed to by the Parties, not to exceed Norfolk’s Cure Period.

§ 17.3.4 If the VPA terminates the Sub-Agreement for cause due to a material breach by Norfolk of Article 15, Norfolk shall repay the VPA pursuant to the requirements of Article 15. Norfolk shall make such payment within 60 Days following its receipt of the VPA’s notice of repayment due.

§ 17.3.5 If the VPA terminates the Sub-Agreement for cause due to a material breach by Norfolk of a term other than Article 15, Norfolk shall repay the VPA all funds received from the VPA under the Sub-Agreement, and shall not be entitled to further reimbursement. Norfolk shall make such payment within 60 Days following its receipt of the VPA’s notice of repayment due. Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) ARTICLE 18 NOTICE AND DESIGNATED REPRESENTATIVES

§ 18.1 Notice Where this Sub-Agreement requires one Party to notify or give notice to the other Party or to the Department, such notice shall be provided in writing to the Designated Representative(s) of the

Virginia Port Authority-City of Norfolk Sub-Agreement Page 27 of 33 Packet Pg. 495 7.9.a

entity to whom notice is addressed. Notice shall be deemed delivered upon delivery by hand, upon the next business day if sent prepaid overnight delivery service, or on the third business day following mailing by U.S. Mail, certified, postage prepaid, return receipt requested.

§ 18.2 Designated Representatives The Parties’ respective Designated Representatives are listed below. The Parties may change or add to their respective list of Designated Representatives by providing notice of such change in conformance with this Article.

VPA: Virginia Port Authority 600 World Trade Center Norfolk, VA 23510 Attention: Chief Engineer Grant Administrator General Counsel

Norfolk: Norfolk Department of Utilities 401 Monticello Avenue Norfolk, VA 23510 Attention: Director

Norfolk City Attorney 810 Union Street, Suite 900 Norfolk, VA 23510

City of Norfolk – Grant Administrator Office of Budget & Strategic Planning (Grants Office) 810 Union Street, Suite 607 Norfolk, VA 23510

ARTICLE 19 GENERAL REQUIREMENTS

§ 19.1 Small, Women, and Minority Norfolk is encouraged to seek and use Small, Women, and Minority (“SWaM”) enterprises in relation to this Sub-Agreement. The SWaM achievement goal for this Sub-Agreement is to exceed 42 percent of total eligible grant expenditures. Information regarding the Commonwealth’s commitment to SWaM enterprises can be found in § 2.2-4310 of the Code of Virginia (1950), as amended. Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) § 19.2 Non-Discrimination § 19.2.1 In the solicitation or awarding of any contracts directly related to this Sub-Agreement, Norfolk shall not discriminate against a bidder or offeror because of race, religion, color, sex, national origin, age, disability, or any other basis prohibited by Virginia law.

Virginia Port Authority-City of Norfolk Sub-Agreement Page 28 of 33 Packet Pg. 496 7.9.a

§ 19.2.2 During the performance of this Sub-Agreement, Norfolk shall not discriminate against any employee or applicant for employment because of race, religion, color, sex, national origin, age, disability, or other basis prohibited by Virginia law relating to discrimination in employment. Norfolk agrees to post in conspicuous places, available to employees and applicants for employment, notices setting forth the provisions of this nondiscrimination clause. All solicitations or advertisements for employees placed by or on behalf of Norfolk, will state that Norfolk, where applicable, is an equal opportunity employer. Notices, advertisements and solicitations placed in accordance with federal law, rule or regulation shall be deemed sufficient for the purpose of meeting the requirements of this Section.

§ 19.3 Unauthorized Aliens Norfolk certifies that it does not, and that it and its Contractors shall not, during the performance of this Sub-Agreement, knowingly employ an unauthorized alien as defined in the federal Immigration Reform and Control Act of 1986 (the “Act”). Unauthorized alien means, with respect to the employment of an alien (which is defined as any person not a citizen or national of the United States), at a particular time, that the alien is not at that time either (a) an alien lawfully admitted for permanent residence, or (b) authorized to be so employed by the Act or by the United States Attorney General.

§ 19.4 Drug-Free Workplace § 19.4.1 During the performance of this Sub-Agreement, Norfolk shall: .1 provide a drug-free workplace for its employees; .2 post in conspicuous places, available to employees and applicants for employment, a statement notifying employees that the unlawful manufacture, sale, distribution, dispensation, possession, or use of a controlled substance or marijuana is prohibited in the workplace and specifying the actions that will be taken against employees for violations of such prohibition; .3 state in all solicitations or advertisements for employees placed by or on behalf of Norfolk that Norfolk maintains a drug-free workplace; and .4 include the provisions of the foregoing clauses in every contract or purchase order of over $10,000, so that the provisions will be binding upon each Contractor or vendor.

§ 19.4.2 For the purposes of this Article, “drug-free workplace” means any site used for the performance of Work.

ARTICLE 20 REPORTING REQUIREMENTS

§ 20.1 Reports Required by the Department

Norfolk shall provide completed reports to the VPA as follows: Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) § 20.1.1 Progress Report Norfolk shall submit a Progress Report to the VPA with each invoice that Norfolk seeks to have paid by the VPA. Norfolk shall use the Progress Report form included as Attachment F and made a part of this Sub-Agreement.

Virginia Port Authority-City of Norfolk Sub-Agreement Page 29 of 33 Packet Pg. 497 7.9.a

§ 20.1.2 Quarterly SWaM Expenditure Reports On a quarterly basis, Norfolk shall provide documentation of its efforts to achieve the SWaM enterprises goal identified in § 19.1 of this Sub-Agreement. Norfolk shall report its efforts by providing a completed Quarterly SWaM Expenditure Report and such supporting documentation as the VPA may reasonably require by the 15th Day following the closing of each quarter of the Fiscal Year. The Quarterly SWaM Expenditure Report is attached as Attachment G and made a part of this Sub-Agreement.

ARTICLE 21 MISCELLANEOUS PROVISIONS

§ 21.1 Norfolk shall at all times comply with, and ensure compliance with, federal, state, and local laws, regulations, ordinances, orders, and decrees applicable to the Work and/or the terms of the Sub-Agreement. The obligations of this Section shall survive the completion or termination of the Sub-Agreement and completion of the Utility Relocation Project.

§ 21.2 Norfolk shall be responsible for initiating, maintaining, and supervising all site safety precautions and programs in connection with performance of the Work, including, as necessary, arranging with CWRY for protection from train movements.

§ 21.3 The VPA reserves the right to reject any design, construction documents, estimated cost, budget, or schedule submitted by Norfolk if the VPA concludes significant cost or schedule savings can be achieved through other means while still conforming to applicable design and performance standards and regulations. If the VPA rejects such a submittal, Norfolk may request a meeting to address and resolve the rejection within 15 Days of receipt of the VPA’s rejection. The Parties shall meet within 30 Days of the VPA’s receipt of a written request for such a meeting.

§ 21.4 In no event shall Norfolk’s total repayment of REF Funds for breaches of Article 15 exceed the sums paid by the VPA to Norfolk under this Sub-Agreement, excluding any interest Norfolk may owe on such repayments pursuant to § 21.17.

§ 21.5 Norfolk shall be responsible to the VPA for acts and omissions of Norfolk’s employees and Contractors, the agents and employees of Norfolk’s Contractors, and any other persons or entities performing Work for, or on behalf of, Norfolk and any of its Contractors.

§ 21.6 Norfolk certifies that it has sufficient financial and human resources, and technical ability and expertise, on its own or through its hiring of Contractors, to fulfill its obligations under this Sub-Agreement.

§ 21.7 Insolvency Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) § 21.7.1 If Norfolk becomes insolvent or files for bankruptcy, Norfolk immediately shall notify the VPA and the Department in writing of the occurrence and ensure that the VPA and the Department are listed in any bankruptcy proceeding as creditors pursuant to the VPA and the Commonwealth’s interest in the Utility Relocation Improvements and Property Acquisition under this Sub-Agreement and the Prime Agreement.

Virginia Port Authority-City of Norfolk Sub-Agreement Page 30 of 33 Packet Pg. 498 7.9.a

§ 21.7.2 Upon receipt of a notice of insolvency and/or bankruptcy from Norfolk or upon the VPA’s discovery of such an occurrence through other means, the VPA shall be entitled to terminate this Sub-Agreement, in whole or in part, pursuant to § 17.3. Norfolk consents to relief from the automatic stay of 11 U.S.C. § 362(a) with respect to any reconsideration proceeding and the VPA’s authorizations related thereto.

§ 21.7.3 Norfolk shall include terms analogous to § 21.7.1 and § 21.7.2 in its Contracts, and also shall require that its Contractors require analogous terms in any Subcontracts.

§ 21.8 Norfolk shall require all Contractors to indemnify and hold harmless the Commonwealth, the Department, the VPA, and their respective officers, agents, and employees (“Indemnitees”) from and against all damages, claims, suits, judgments, losses, expenses, actions and costs of every kind, including but not limited to reasonable attorneys’ fees and costs, arising out of, resulting from, or in any way relating to the Contractor’s performance of the Work or operation of the Utility Relocation Improvements, or the performance of the Work or operation of the Utility Relocation Improvements by anyone directly or indirectly employed by the Contractor, or anyone for whose acts the Contractor may be liable. The obligations of this Section shall survive the termination or completion of this Sub-Agreement. Norfolk shall further require that all Subcontracts require all Subcontractors to obligate their respective downstream contracting party to indemnify and hold harmless the Indemnitees according to the same terms as this Section, adjusted as required for the appropriate Subcontract tier.

§ 21.9 This Sub-Agreement and all adversarial proceedings arising out of this Sub-Agreement shall be governed by the law of the Commonwealth without giving effect to its principles of conflicts of law. Nothing in this Sub-Agreement shall constitute a waiver of sovereign immunity. Any legal action concerning this Sub-Agreement shall be brought in a court of the Commonwealth with jurisdiction and where venue is proper.

§ 21.10 If any term or provision of this Sub-Agreement is determined to be invalid, illegal, or unenforceable, it shall not affect the legality, validity, or enforceability of any other part of this Sub-Agreement.

§ 21.11 This Sub-Agreement shall be binding upon the Parties and their respective successors and assigns.

§ 21.12 The VPA does not make any warranty as to the accuracy or suitability of any information it provides to Norfolk, and its provision of such information to Norfolk does not relieve Norfolk of any liability under this Sub-Agreement.

§ 21.13 Norfolk shall be liable to the VPA whether Norfolk performs its obligations directly or Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) through a Contractor, Subcontractor, agent, or any other party for whom Norfolk may be liable.

§ 21.14 Except as otherwise specifically provided, this Sub-Agreement is made solely for the benefit of the VPA and Norfolk, and no other person or entity shall have any right, benefit, or interest under or because of this Sub-Agreement.

Virginia Port Authority-City of Norfolk Sub-Agreement Page 31 of 33 Packet Pg. 499 7.9.a

§ 21.15 Neither Party shall hold or attempt to hold any director, officer, member, manager, agent, or employee of the other Party acting within the scope of their employment personally liable for a breach of this Sub-Agreement.

§ 21.16 All rights and remedies provided pursuant to this Sub-Agreement or by law shall be cumulative, and no such right or remedy shall be exclusive of any other. A Party may pursue any one or more rights or remedies or may seek damages or specific performance in the event of the other Party’s breach or may pursue any other remedy by law or equity, whether or not stated in this Sub-Agreement.

§ 21.17 Whenever Norfolk is required under the Sub-Agreement to repay the VPA funds previously paid to Norfolk by the VPA, Norfolk also shall be required to pay interest on such repayment using the prevailing statutory legal rate of interest established by the Virginia General Assembly, calculated from the date payment was made by the VPA to date of repayment by Norfolk.

§ 21.18 Norfolk may not assign any portion of this Sub-Agreement without the prior written consent of the VPA.

§ 21.19 This Sub-Agreement and any amendments pursuant to § 21.20 constitute the entire and exclusive agreement between the Parties relating to all specific matters covered herein. All other prior or contemporaneous verbal or written agreements, understandings, representations, and/or practices relative to the foregoing are hereby superseded, revoked and rendered ineffective for any purpose.

§ 21.20 Other than termination pursuant to Article 17, this Sub-Agreement may be altered, amended, or revoked only by an instrument in writing signed by the Parties.

IN TESTIMONY THEREOF, the Parties have caused this Sub-Agreement to be executed, each by its duly authorized officer.

VIRGINIA PORT AUTHORITY

BY:

NAME: Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement) TITLE:

DATE: ______

Virginia Port Authority-City of Norfolk Sub-Agreement Page 32 of 33 Packet Pg. 500 7.9.a

CITY OF NORFOLK

BY:

NAME:

TITLE:

DATE: ______Attachment: Exhibit A to Ordinance (Commonwealth Railway Marshalling Yard Agreement)

Virginia Port Authority-City of Norfolk Sub-Agreement Page 33 of 33 Packet Pg. 501