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725-030-06 PUBLIC TRANSPORTATION OGC-1114 12.40 How Agreement Is Affected by Provisions Being Held Invalid: If any provision of this Agreement is Page 11 of 14 held invalid,the remainder of this Agreement shall not be affected. In such an instance the remainder would then continue to conform to the terms and requirements of applicable law 12.60 Bonus or Commission: By execution of the Agreement the Agency represents that it has not paid and, also,agrees not to pay, any bonus or commission for the purpose of obtaining an approval of its application for the financing hereunder 12.60 State or Territorial Law: Nothing in the Agreement shall require the Agency to observe or enforce compliance with any provision thereof, perform any other act or do any other thing in contravention of any applicable State law- Provided,that if any of the provisions of the Agreement violate any applicable State law,the Agency will at once notify the Department in writing in order that appropriate changes and modifications may be made by the Department and the Agency to the end that the Agency may proceed as soon as possible with the project. 12.70 Use and Maintenance of Project Facilities and Equipment:The Agency agrees that the project facilities and equipment will be used by the Agency to provide or support public transportation for the period of the useful life of such facilities and equipment as determined in accordance with general accounting principles and approved by the Department. The Agency further agrees to maintain the project facilities and equipment in good working order for the useful life of said facilities or equipment. 1 12.71 Property Records:The Agency agrees to maintain property records, conduct physical inventories and develop control systems as required by 49 CFR Part 18,when applicable 12.80 Disposal of Project Facilities or Equipment: If the Agency disposes of any project facility or equipment during its useful life for any purpose except its replacement with like facility or equipment for public transportation use,the Agency will comply with the terms of 49 CFR Part 18 relating to property management standards.The Agency agrees to remit to the Department a proportional amount of the proceeds from the disposal of the facility or equipment. Said proportional amount shall be determined on the basis of the ratio of the Department financing of the facility or equipment as provided in this Agreement. 12.90 Contractual Indemnity:To the extent provided by law,the Agency shall indemnify, defend, and hold harmless the Department and all of its officers, agents,and employees from any claim, loss, damage, cost, charge, or expense arising out of any act,error, omission, or negligent act by the Agency, its agents, or employees,during the performance of the Agreement,except that neither the Agency, its agents,or its employees will be liable under this paragraph for any claim, loss, damage, cost,charge,or expense arising out of any act,error, omission, or negligent act by the Department or any of its officers, agents, or employees during the performance of the Agreement. When the Department receives a notice of claim for damages that may have been caused by the Agency in the performance of services required under this Agreement,the Department will immediately forward the claim to the Agency The Agency and the Department will evaluate the claim and report their findings to each other within fourteen (14)working days and will jointly discuss options in defending the claim.After reviewing the claim,the Department will determine whether to require the participation of the Agency in the defense of the claim or to require that the Agency defend the Department in such claim as described in this section.The Department's failure to promptly notify the Agency of a claim shall not act as a waiver of any right herein to require the participation in or defense of the claim by Agency The Department and the Agency will each pay its own expenses for the evaluation,settlement negotiations,and trial, if any However, if only one party participates in the defense of the claim at trial,that party is responsible for all expenses at trial. Page 11 of 14