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Tools & Programs: SEP-15

Texas Toll Roads Statewide Open-Road Toll Collection System Project (TX Toll Collection System)

Comprehensive Development Agreement TxDot Statewide Open-Road Toll Collection System

SECTION 21. DOCUMENTS AND RECORDS, INSPECTION AND TESTING

21.1 Escrowed Proposal Documents

Prior to execution of this Agreement, Developer delivered into escrow one copy of all documentary information used in preparation of any Price submitted with the Proposal (the "EPDs"). Upon execution of this Agreement, the EPDs shall be transferred from escrow and held in locked fireproof cabinet(s) supplied by Developer and located in TxDOT's project office with the key held only by Developer. Concurrently with the issuance of each NTP other than Pilot System NTP 1 and with the approval of each Change Order or amendment to any Contract Document, one copy of all documentary information used in preparation of the Change Order or amendment shall be added to the cabinet to be held with the other EPDs. The EPDs will be held in such cabinet or otherwise maintained until all of the following have occurred: (a) 180 Days have elapsed from the later of expiration of the last Maintenance Term (including any Maintenance Option Term exercised by TxDOT) or termination of this Agreement, as applicable; (b) all disputes regarding the Work have been settled; and (c) Final Payment of the Maintenance Price has been made and accepted with respect to each Pilot System and Project Segment.

21.1.1 Availability for Review

The EPDs shall be available during business hours for joint review by Developer, TxDOT and any dispute resolver in accordance with Section 19, in connection with approval of any Project Schedule(s), negotiation of Change Orders and resolution of Disputes under the Contract Documents, and also as described in Section 21.1.6. TxDOT shall be entitled to review all or any part of the EPDs in order to satisfy itself regarding the applicability of the individual documents to the matter at issue.

21.1.2 Proprietary Information

The EPDs are, and shall always remain, the property of Developer and shall be considered to be in Developer's possession, subject to TxDOT's right to review the EPDs as provided in this Section 21.1. Developer will have and control the keys to the filing cabinet containing the EPDs. TxDOT acknowledges that Developer may consider that the EPDs constitute trade secrets or proprietary information.

21.1.3 Representation

Developer represents and warrants that the EPDs constitute (or in the case of Pilot Systems and Project Segments other than that which is covered by Pilot System NTP 1, will constitute) all documentary information used in the preparation of the applicable Price. Developer agrees that no other price proposal preparation information will be considered in resolving Disputes or Claims. Developer further agrees that the EPDs are not part of the Contract Documents and that nothing in the EPDs shall change or modify any Contract Document.

21.1.4 Contents of EPDs

The EPDs shall, inter alia, clearly detail how each price included in the Proposal (and, in the case of the Pilot Systems and Project Segments other than that which is covered by Pilot System NTP 1) has been determined and shall show prices and price elements in sufficient detail as is adequate to enable TxDOT to understand how Developer calculated the applicable Price. The EPDs provided in connection with quotations and Change Orders shall, inter alia, clearly detail how the total price and individual components of that price were determined. The EPDs shall itemize the estimated costs of performing the required work separated into usual and customary items and cost categories and sub-items and cost categories to present a detailed estimate of costs, such as direct labor; repair labor; equipment ownership and operation, maintenance, refurbishment/repair/replacement; Hardware; Software; expendable materials, supplies and spares; permanent materials;, Subcontract costs; plant and equipment; indirect costs; contingencies; mark-up; overhead and profit. The EPDs shall itemize the estimated annual costs of insurance premiums, bonds and letters of credit for each coverage required to be provided by Developer under Section 9. The EPDs shall include all assumptions, detailed quantity takeoffs, price reductions and discounts, rates of production and progress calculations, and quotes from Subcontractors used by Developer to arrive at the applicable Price, amendment price or Change Order price.

21.1.5 Form of EPDs

Except as otherwise provided in the RFDP, Developer shall submit the EPDs in such format as is used by Developer in connection with its Proposal and in the calculation of each Price other than that which is covered by Pilot System NTP - 1. Developer represents and warrants that all EPDs provided were or will be personally examined by an authorized officer of Developer prior to delivery, and that the EPDs meet the requirements of Section 21.1.4. Developer further represents and warrants that the EPDs provided in connection with quotations and Change Orders will be personally examined prior to delivery by an authorized officer of Developer, and that they shall meet the requirements of Section 21.1.4.

21.1.6 Review by TxDOT

TxDOT may at any time conduct a review of the EPDs to determine whether they are complete. If TxDOT determines that any data is missing from an EPD, Developer shall provide such data within three business days after delivery of TxDOT's request for such data. At that time of its submission to TxDOT, such data will be date stamped, labeled to identify it as supplementary EPD information and added to the EPD. Developer shall have no right to add documents to the EPDs except upon TxDOT's request. The EPDs associated with any Pilot System or Project Segment other than that which is covered by Pilot System NTP - 1 or with any Change Order or amendment to this Agreement shall be reviewed, organized and indexed in the same manner described in Section 6 of the RFDP.

21.2 Subcontract Pricing Documents

For each Pilot System and Project Segment, Developer shall require the principal design Subcontractor and each Major Subcontractor to submit to Developer a copy of all documentary information used in determining its Subcontract price (or the price for Subcontract Work included in any Change Order), immediately prior to executing the Subcontract and each change order and Subcontract amendment, to be held in the same manner as the EPDs and which shall be accessible by Developer and its successors and assigns (including TxDOT) and dispute resolvers, on terms substantially similar to those contained herein. Each such Subcontract shall include a representation and warranty from the Subcontractor, for the benefit of Developer and TxDOT, stating that its EPDs constitute all the documentary information used in establishing its Subcontract price, and agreeing to provide a sworn certification in favor of Developer and TxDOT together with each supplemental set of EPDs, stating that the information contained therein is complete, accurate and current. Each Subcontract that is not subject to the foregoing requirement shall include a provision requiring the Subcontractor to preserve all documentary information used in establishing its Subcontract price and to provide such documentation to Developer and/or TxDOT in connection with any claim made by such Subcontractor.

21.3 Reporting Requirements

21.3.1 Developer shall deliver to TxDOT financial and narrative reports, statements, certifications, budgets and information as and when required under this Agreement.

21.3.2 Developer shall furnish, or cause to be furnished, to TxDOT such information and statements as TxDOT may reasonably request from time to time for any purpose related to the Project, this Agreement or the other Contract Documents. In addition, Developer shall deliver to TxDOT the following financial statements for each Guarantor, at the times specified below:

21.3.2.1 Within 60 Days after the end of each fiscal quarter, duplicate copies of the balance sheet and a consolidated statement of earnings of the Guarantor and its consolidated subsidiaries for such quarter and for the period from the beginning of the then current fiscal year to the end of such quarter, setting forth in comparative form the figures for the corresponding periods during the previous fiscal year, all in reasonable detail and certified as complete and correct, subject to changes resulting from year-end adjustments, by the chief financial officer of the Guarantor;

21.3.2.2 Within 120 Days after the end of each fiscal year, duplicate copies of the balance sheet and a consolidated statement of financial condition of the Guarantor and its consolidated subsidiaries at the end of such year, and statements of earnings, changes in financial position of the Guarantor and its consolidated subsidiaries for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and accompanied by an opinion thereon of an independent public accountant of recognized national standing selected by the Guarantor, which opinion shall state that such financial statements have been prepared in accordance with generally accepted accounting principles consistently applied (except for changes in application in which such accountants concur), and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and accordingly, included such tests of the accounting records and such other auditing procedures as were considered necessary in the circumstances; and

21.3.2.3 Upon request of TxDOT for particular fiscal quarters, copies of all other financial statements and information reported by the Guarantor to its shareholders generally and of all reports filed by the Guarantor with the Securities Exchange Commission under Sections 13, 14 or 15(d) of the Exchange Act, to be provided to TxDOT as soon as practicable after furnishing such information to the Guarantor's shareholders or filing such reports with the Securities and Exchange Commission, as the case may be.

21.3.3 Developer shall cooperate and provide, and shall cause the Subcontractors to cooperate and provide, such information as determined necessary or desirable by TxDOT in connection with any Project financing. Without limiting the generality of the foregoing, Developer shall provide such information deemed necessary or desirable by TxDOT for inclusion in TxDOT's securities disclosure documents and in order to comply with Securities and Exchange Commission Rule 15c2-12 regarding certain periodic information and notice of material events. Developer shall provide customary representations and warranties to TxDOT and the capital markets as to the correctness, completeness and accuracy of any information furnished.

21.3.4 Developer shall cooperate and provide, and shall cause the Subcontractors to cooperate and provide, such information as is necessary or requested by TxDOT to assist or facilitate the submission by TxDOT of any documentation, reports or analysis required by the State, UST, FHWA and/or any other Governmental Entity with jurisdiction over the Project.

21.3.5 All reports and information delivered by Developer under Sections 21.3.3 and 21.3.4 shall also be delivered electronically, to the extent electronic files exist, and be suitable for posting on the web.

21.4 Maintenance of, Access to and Audit of Records

21.4.1 Developer shall maintain at a Project administration office in Austin, Texas a complete set of all books and records prepared or employed by Developer in its management, scheduling, cost accounting and other activities related to the Work and the Project. Developer shall grant to TxDOT such audit rights and shall allow TxDOT such access to and the right to copy such books and records as TxDOT may request in connection with the issuance of any NTP or with respect to any Change Orders, the resolution of Disputes, and such other matters as TxDOT reasonably deems necessary for purposes of verifying compliance with this Agreement and applicable law.

21.4.2 Where the payment method for any Work is on a time and materials basis, such examination and audit rights shall include all books, records, documents and other evidence and accounting principles and practices sufficient to reflect properly all direct and indirect costs of whatever nature claimed to have been incurred and anticipated to be incurred for the performance of such Work. If an audit indicates Developer has been overpaid under a previous progress report or progress payment, the excess payment will be credited against current progress reports or payments.

21.4.3 For cost and pricing data submitted in connection with Pilot Systems or Project Segments other than that which is covered by Pilot System NTP - 1 or with any Change Orders, TxDOT and its representatives shall have the right to examine all books, records, documents and other data of Developer related to the negotiation of or performance of such Work for the purpose of evaluating the accuracy, completeness and currency of the cost or pricing data submitted; provided, however, that the foregoing shall not apply to pricing based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the public or prices set by law or regulation, in each case, as determined by TxDOT. Such right of examination shall extend to all documents deemed necessary by TxDOT and its representative to permit adequate evaluation of the cost or pricing data submitted, along with the computations and projections used therein.

21.4.4 All claims filed against TxDOT shall be subject to audit at any time following the filing of the claim. The audit may be performed by employees of TxDOT or by an auditor under contract with TxDOT. No notice is required before commencing any audit before 60 Days after the later of (i) the expiration of the Maintenance Term (including any Maintenance Option Periods), or (ii) the termination of this Agreement. Thereafter, TxDOT shall provide 10 Days notice to Developer, any Subcontractors or their respective agents before commencing an audit. Developer, Subcontractors or their agents shall provide adequate facilities, acceptable to TxDOT, for the audit during normal business hours. Developer, Subcontractors or their agents shall cooperate with the auditors. Failure of Developer, Subcontractors or their agents to maintain and retain sufficient records to allow the auditors to verify all or a portion of the claim or to permit the auditor access to the books and records of Developer, Subcontractors or their agents shall constitute a waiver of the claim and shall bar any recovery thereunder.

21.4.5 At a minimum, the auditors shall have available to them the following documents:

1. Daily time sheets and supervisor's daily reports;

2. Union agreements;

3. Insurance, welfare, and benefits records;

4. Payroll registers;

5. Earnings records;

6. Payroll tax forms;

7. Material invoices and requisitions;

8. Material cost distribution work sheet;

9. Equipment records (list of company equipment, rates, etc.);

10. Subcontractors' (including Suppliers) invoices;

11. Subcontractors' and agents' payment certificates;

12. Canceled checks (payroll and Suppliers);

13. Job cost report;

14. Job payroll ledger;

15. General ledger;

16. Cash disbursements journal;

17. All documents that relate to each and every claim together with all documents that support the amount of damages as to each claim; and

18. Work sheets used to prepare the claim establishing the cost components for items of the claim including labor, benefits and insurance, materials, equipment, subcontractors, all documents that establish the time periods, individuals involved, the hours for the individuals, and the rates for the individuals.

21.4.6 Full compliance by Developer with the provisions of this Section 21.4 is a contractual condition precedent to Developer's right to seek relief under Section 19.

21.4.7 Developer represents and warrants the completeness and accuracy of all information it or its agents provides in connection with this Section 21.4.

21.5 Retention of Records

Developer shall maintain all records and documents relating to the Work, including copies of all original documents delivered to TxDOT, and the Project in Austin, Texas until five years after the later of (i) the expiration of the Maintenance Term, or (ii) the termination of this Agreement. Developer shall notify TxDOT where such records and documents are kept. Notwithstanding the foregoing, all records which relate to Claims being processed or actions brought under the dispute resolution provisions hereof shall be retained and made available until such actions and Claims have been finally resolved. Records to be retained include all books, electronic information and files and other evidence bearing on Developer's costs under the Contract Documents. Developer shall make these records and documents available for audit and inspection to TxDOT, at Developer's offices in Austin, Texas, at all reasonable times, without charge, and shall allow such Persons to make copies of such documents, at no expense to Developer. If approved by TxDOT, photographs, microphotographs or other authentic reproductions may be maintained instead of original records and documents.

21.6 Public Information Act

21.6.1 Developer acknowledges and agrees that, except as provided by Section 361.3023 of the Texas Transportation Code, all records, documents, drawings, plans, specifications and other materials in TxDOT's possession, including materials submitted by Developer, are subject to the provisions of the Public Information Act. If Developer believes information or materials submitted to TxDOT constitute trade secret, proprietary information or other information excepted from disclosure, Developer shall be solely responsible for specifically and conspicuously designating that information by placing "CONFIDENTIAL" in the center header of each such page affected, as it determines to be appropriate. Any specific proprietary information, trade secrets or confidential commercial and financial information shall be clearly identified as such, and shall be accompanied by a concise statement of reasons supporting the claim. Nothing contained in this provision shall modify or amend requirements and obligations imposed on TxDOT by the Public Information Act or other applicable law, and the provisions of the Act or other laws shall control in the event of a conflict between the procedures described above and the applicable law. Developer is advised to contact legal counsel concerning such law and its application to Developer.

21.6.2 If TxDOT receives a request for public disclosure of materials marked "CONFIDENTIAL," TxDOT will use reasonable efforts to notify Developer of the request and give Developer an opportunity to assert, in writing and at its sole expense, a claimed exception under the Public Information Act or other applicable law within the time period specified in the notice issued by TxDOT and allowed under the Public Information Act. Under no circumstances, however, will TxDOT be responsible or liable to Developer or any other Person for the disclosure of any such labeled materials, whether the disclosure is required by law, or court order, or occurs through inadvertence, mistake or negligence on the part of TxDOT or its officers, employees, contractors or consultant.

21.6.3 In the event of any proceeding or litigation concerning the disclosure of any material submitted by Developer to TxDOT, TxDOT's sole involvement will be as a stakeholder retaining the material until otherwise ordered by a court or such other authority having jurisdiction with respect thereto, and Developer shall be fully responsible for otherwise prosecuting or defending any action concerning the materials at its sole cost and risk; provided, however, that TxDOT reserves the right, in its sole discretion, to intervene or participate in the litigation in such manner as it deems necessary or desirable. All costs and fees, including attorneys' fees and costs, incurred by TxDOT in connection with any litigation, proceeding or request for disclosure shall be reimbursed and paid by Developer. Nothing in this Agreement is intended to prejudice the rights of Developer to protect from disclosure information of Developer that, under applicable law, is entitled to protection from disclosure.

21.7 Ownership and Use of Documents

As between TxDOT and Developer, except as set forth in Section 21.8, all services and products provided under this Agreement, including all copyright interests and any other intellectual property, in and to the Software (including both object code and source code) and any other programs, systems, data, sketches, charts, calculations, plans, specifications, deliverables, electronic files, correspondence and other documents created or collected under the terms of the Contract Documents produced or provided by Developer, alone or in combination with TxDOT and/or its employees, under this Agreement shall be the property of TxDOT. Developer agrees that, except as otherwise provided in Section 21.8 hereof, any contribution by Developer or its employees to the creation of such works, including all copyright interest therein, shall be considered works made for hire by Developer for TxDOT and that such works shall, upon their creation, be owned exclusively by TxDOT. To the extent that any such works may not be considered works made for hire for TxDOT under applicable law, Developer agrees to assign and, upon their creation, automatically assigns to TxDOT the ownership of such works, including copyright interests and any other intellectual property therein, without the necessity of any further consideration. Design Documents shall become TxDOT's property upon preparation; Construction Documents shall become TxDOT's property upon delivery to TxDOT; and other documents prepared or obtained by Developer in connection with the performance of its obligations under the Contract Documents, including studies, manuals, as-built drawings, technical and other reports and the like, shall become the property of TxDOT upon Developer's preparation or receipt thereof. Copies of all Design Documents and Construction Documents shall be furnished to TxDOT upon preparation or receipt thereof by Developer. Developer shall maintain all other documents described in this Section 21.7 in accordance with the requirements of Section 21.5 and shall deliver copies to TxDOT as required by the Contract Documents or upon request if not otherwise required to be delivered, with an indexed set delivered to TxDOT as a condition to Final Acceptance.

21.8 Intellectual Property Rights; Licensing

21.8.1 Preexisting Works by Developer

Notwithstanding anything to the contrary in Section 21.7 above, Developer may include in the Software pre-existing work or materials only if either they are provided by TxDOT or if they are owned or licensable without restriction by Developer. To the extent that pre-existing work or materials owned or licensed by Developer are included in the Software, Developer shall identify any such work or materials prior to commencement of the Work involving such work or materials. Developer grants to TxDOT (as an exception to the transfer and assignment provided in Section 21.7) an irrevocable, nonexclusive, world-wide royalty-free right and license to use, execute, reproduce, display, perform, and distribute internally copies of, and prepare derivative works based upon, such work and materials, and the right to authorize others to do any of the foregoing, subject to the terms of this Agreement and any separate and specific licensing agreement entered into between TxDOT and the Developer; but this license shall be solely as needed to operate and support (1) the System in which such Software is licensed by the Developer to be used by TxDOT (2) in the toll traffic lanes that utilize such System (3) at the Project Sites specified in this Agreement and Project Segment Supplements issued incident to TxDOT's acquisition of the System, and, (4) in the event of an Event of Default or the failure, unwillingness or inability of Developer to perform its obligations under this Agreement, at any other toll traffic lanes or facility owned, operated or managed by TxDOT or by a developer under contract with TxDOT.

21.8.2 Residuals

It is mutually acknowledged that, during the normal course of its dealings with TxDOT and the Work under this Agreement, Developer and its personnel and agents may become acquainted with ideas, concepts, know-how, methods, techniques, processes, skills, and adaptations pertaining to the Software, including those which TxDOT considers to be proprietary or secret. Notwithstanding anything in this Agreement to the contrary, and regardless of any termination of this Agreement, Developer shall be entitled to use, disclose, and otherwise employ any ideas, concepts, know-how, methods, techniques, processes, and skills, and adaptations, including generalized features of the sequence, structure and organization of any works of authorship, in conducting its business (including providing Work or creating programming or materials for other customers), and TxDOT shall not assert against Developer or its personnel any prohibition or restraint from so doing.

21.8.3 Third Party Interests

TxDOT's interest in and obligations with respect to any Software, documentation, or data to be obtained from third-party vendors, whether or not obtained with the assistance of Developer, shall be determined in accordance with the agreements and policies of such vendors.

21.8.4 Source Code Escrow

(a) TxDOT and Developer acknowledge that Developer and/or Developer's Software suppliers may not wish to disclose directly to TxDOT the Source Code of Software which is pre-existing works (not for Software owned by TxDOT pursuant to Section 21.7), as public disclosure could deprive Developer and/or Developer's Software suppliers of commercial value, but that TxDOT must be ensured access to such Source Code in certain circumstances to permit it to realize the benefits contemplated by this Agreement. Therefore, if required by a Software developer, Source Code for such software and computer programs may be placed in a Source Code Escrow with a mutually acceptable escrow company ("Code Escrow Agent") engaged in the business of receiving and maintaining escrows of Source Code, related documentation, and other technology. The terms of the Source Code Escrow shall be as agreed by the parties thereto, provided that TxDOT shall be assured access to the Source Code in the event either (i) a business failure (including cessation of business, bankruptcy, or insolvency) of the Developer and/or Software supplier has occurred or (ii) the Developer and/or Software supplier has failed to provide or is unable or unwilling to provide the services as necessary to permit continued use of the Software by TxDOT as contemplated by this Agreement. Developer shall require the Software supplier to keep the Source Code up-to-date by depositing all enhancements and modifications into the Source Code Escrow during the term of its existence.

(b) For purposes hereof, the "Source Code" of software means the software written in programming languages, such as C and Fortran, including all comments and procedural code, such as job control language statements, in a form intelligible to trained programmers and capable of being translated into object or machine readable code for operation on computer equipment through assembly or compiling, and accompanied by documentation, including flow charts, schematics, statements of principles of operations, and architectural standards, describing the data flows, data structures, and control logic of the Software in sufficient detail to enable a trained programmer through study of such documentation to maintain and/or modify the Software without undue experimentation.

21.9 Inventions

21.9.1 Invention Defined.

An "Invention" shall mean any idea, design, concept, technique, invention, discovery or improvement, whether or not patentable, made solely or jointly by Developer and/or Developer's employees, or jointly by Developer and/or Developer's employees with one or more employees of TxDOT, during the term of this Agreement and in the performance of any Work under any NTP issued hereunder, provided that either the conception or reduction to practice thereof occurs during the term of this Agreement and in the performance of Work under an NTP issued hereunder.

21.9.2 Vesting of Rights.

Developer hereby assigns to TxDOT, its successors and assigns, all Inventions, together with the right to seek protection by obtaining patent rights therefore and to claim all rights or priority thereunder, and the same shall become and remain TxDOT's property whether or not such protection is sought. Developer shall promptly make a complete written disclosure to TxDOT of each Invention not otherwise clearly disclosed to TxDOT in the pertinent Deliverables, specifically pointing out features or concepts that Developer believes to be new or different. Developer shall, upon TxDOT's request and at TxDOT's expense, cause patent applications to be filed thereon, through lawyers designated by TxDOT, and shall forthwith sign all such applications over to TxDOT, its successors, and assigns. Developer shall give TxDOT and its lawyers all reasonable assistance in connection with the preparation and prosecution of any such patent applications and shall cause to executed all such assignments or other instruments or documents as TxDOT may consider necessary or appropriate to carry out the intent of this Agreement.

21.10 Inspection and Testing

21.10.1 If the Contract Documents or any Law requires any portion of the Work to be inspected, tested or approved, Developer shall give TxDOT timely notice of its readiness so TxDOT may observe such inspection, testing or approval. Developer shall bear all costs of such inspections, tests or approvals unless otherwise provided.

21.10.2 If TxDOT determines that any Work requires special inspection, testing or approval which Section 21.10.1 does not include, it will instruct Developer to order such special inspection, testing or approval and Developer shall give notice as in Section 21.10.1. If such special inspection or testing reveals a failure of the Work to comply with the requirements of the Contract Documents, Developer shall bear all costs thereof, including compensation for TxDOT's additional services made necessary by such failure. If the Work complies, TxDOT shall bear such costs and an appropriate Change Order shall be issued.

21.10.3 Developer shall permit all reasonable inspection and testing TxDOT may desire to conduct. Such inspection and testing shall not relieve Developer of any of its obligations under this Agreement.

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