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for any expense or cost whatsoever incurred by Contractor in rendering services pursuant to this Agreement. City shall make no payment for any extra, further or additional service pursuant to this Agreement unless such extra service and the price therefore is agreed to in writing executed by the City Manager or other designated official of City authorized to obligate City thereto prior to the time such extra service is rendered and in no event shall such change order exceed twenty- five (25%) of the initial contract price. Fees for work performed by Contractor shall not exceed the amounts shown on the Fee Schedule listed below. SB2: The State of California has adopted legislation (SB2) mandating the provision of medical insurance for all employees in the State of California starting January 1, 2006. This legislation is currently under court challenge and furthermore, the State of California has not published the mandated costs for this medical coverage. Due to the uncertainty involving this new law, CONTRACTOR has not included in the proposal the potential fiscal impacts, if any, of this legislation on the cost of transportation beyond December 31, 2005. It is likely that the true costs, if any, wilt not be known until the year 2005. Should SB2 be implemented, CONTRACTOR may either. i) increase payment rates to recover the additional cost imposed by SB2, or ii) terminate the Agreement if the additional costs cannot be recovered. The CITY acknowledges that CONTRACTOR'S termination due to inability to recover additional costs imposed by SB2 is reasonable. The services to be provided under this Agreement may be terminated without cause at any point in time in the sole and exclusive discretion of City. In this event, City shall compensate the Contractor for all outstanding costs incurred for work satisfactorily completed as of the date of Exhibit B Page 2 of 3 G_\Oliver\Paratransit\FY 2004-051MV Contract FY 2004-05