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2020-05-26 - AGENDA REPORTS - FRANCHISE WASTE HAULER ANNUAL RATE ADJUSTMENT (2)
O Agenda Item: 5 P CITY OF SANTA CLARITA AGENDA REPORT CONSENT CALENDAR CITY MANAGER APPROVAL:1 DATE: May 26, 2020 SUBJECT: FRANCHISED WASTE HAULER ANNUAL RATE ADJUSTMENT DEPARTMENT: Neighborhood Services PRESENTER: Darin Seegmiller RECOMMENDED ACTION City Council adopt a resolution approving the Ninth Amendment to the Amended and Restated Agreement between the City of Santa Clarita and USA Waste of California, Inc. (Waste Management) for residential solid waste management services, allowing the adjustments: (1) Single-family residential standard service rates based on Sections 6.5.1. Annual Rate Cap and 6.5.2, Santa Clarita Valley Rate Cap, as outlined in the Residential Franchise Agreement; and (2) Multi -family residential rates and special services by 4.23 percent, based on both the formula outlined in the Residential Franchise Agreement and extraordinary adjustments, subject to City Attorney approval. BACKGROUND In November 2003, the City Council selected USA Waste of California, Inc. (Waste Management) as the exclusive hauler for residential solid waste management services. Pursuant to the Franchise Agreement, the hauler may request a rate adjustment each year. The "Annual Rate Adjustment" is calculated using a formula that is based on price indexes, including labor, fuel, equipment, and disposal. In addition, the Franchise Agreement contains provisions that allow the hauler to request an "Extraordinary Adjustment" in the event of extraordinary changes in the cost of providing service. Such changes may include an increase in tipping or processing fees for solid waste or recycling, as a result of new fees imposed by federal, state, or local regulatory agencies. While consideration is afforded for extraordinary circumstances, the Franchise Agreement includes an "Annual Rate Cap" that limits the total adjustment to five percent per year. Furthermore, the agreement contains a "Santa Clarita Valley Rate Cap," which states that the City of Santa Clarita (City) single family residential rates shall remain below the rates of franchised collection services provided by Los Angeles County (County) in unincorporated Page 1 Packet Pg. 22 O Santa Clarita Valley. Any unrealized increases as a result of these caps may be carried forward until they are fully applied. Waste Management has submitted a request for an Annual Rate Adjustment in Rate Year 2020- 2021, citing the need for extraordinary rate adjustments to offset increased tipping fees. The hauler additionally cites China's "National Sword Policy," which restricts foreign imports of recycled materials. This policy has been the primary cause for an industry -wide increase in processing costs and significant decline in commodity prices. This is highly significant for waste collectors because they have historically relied upon revenues from the sale of recycled materials to offset operational costs. The City, in light of the changing dynamics described above, has hired a consultant to analyze the current Franchise Agreements and explore ways to ensure the respective agreements continue to meet both the current and future needs of our community. Waste Management - Single Family Residence Cart Services Waste Management has requested a total rate adjustment of 16.96 percent (or $3.95) for single- family residence waste services for Rate Year 2020-2021. This would increase the monthly single-family service rate from $23.28 to $27.23. Using the annual adjustment methodology identified in the Franchise Agreement, staff calculated a 3.37 percent adjustment, which is inconsistent with the company's request of 3.38 percent due to a rounding error. Waste Management has also requested a 2.35 percent extraordinary rate adjustment as a result of increased tipping fees. The final component of the request is an 11.23 percent carryover from previous years due to unrealized adjustments, as a result of the Santa Clarita Valley Rate Cap. Annual Rate Adjustment 3.38% Extraordinary Rate Adjustment 2.35% Unrealized Adjustment Carryover (2015-19) 11.23% Total Requested Adjustment for Residential Cart Service*: 16.96% *subject to the limitations of Agreement Article 6.5.2 (Santa Clarita Valley Rate Cap) StaffRecommendation: The County has not yet established a new rate for the 2020-2021 rate year; therefore, the Santa Clarita Valley Rate Cap is unknown for the upcoming rate year. Staff recommends maintaining the current rate of $23.28 and making the adjustment once the County rate is verified, not to exceed 5 percent, in accordance with the Franchise Agreement. If approved, the final adjusted rates will not be implemented until the new County rates take effect, and 30 days after residential customers are notified. A memo will be provided to the City Council, detailing the single family standard service rates, once the rate adjustment for the County is finalized. Waste Management - Multi -Family Residential Waste Services Waste Management has requested a total rate adjustment of 4.23 percent (or $3.92) for multi- family residence waste services for Rate Year 2020-21. This would increase the standard Page 2 Packet Pg. 23 O monthly service rate from $92.69 to $96.60 for a three -yard waste container serviced once a week. Using the annual adjustment methodology identified in the Franchise Agreement, staff calculated a 3.37 percent adjustment, which is inconsistent with the company's request of 3.38 percent due to a rounding error. Waste Management has also requested a 0.85 percent extraordinary rate adjustment as a result of increased tipping fees. Annual Rate Adjustment 3.38% Extraordinary Rate Adjustment 0.85% Total Requested Adjustment for Multi -Family Residential Bin Service 4.23% In addition to an annual rate and extraordinary rate adjustments, Waste Management has included the following requests. A transition from multi -family recycling collection to a paid program. The City to impose monetary penalties on properties not complying with the Mandatory Commercial Recycling requirements of AB 341 (Chapter 476, Statutes of 2011) and Mandatory Organics Recycling AB 1826 (Chapter 727, Statutes of 2014). The City to increase fees for overfilled or contaminated bins at multi -family residential locations. StaffRecommendation: Staff recommends approving a 4.22 percent adjustment for multi -family residential bin services, as requested by Waste Management, with the rounding error adjusted. In terms of the other requests, the current Franchise Agreement requires Waste Management to provide recycling services at no cost to all multi -family residential customers. New fees are not identified in the current agreements, therefore, these requests are inconsistent with the Franchise Agreement, and staff does not recommend including them into the rate structure at this time. ALTERNATIVE ACTION Other action as determined by the City Council. FISCAL IMPACT None by this action. ATTACHMENTS Waste Management Ninth Amendment Resolution Waste Management Request 2020 Waste Management Methodology 2020 Waste Management Residential Franchise Agreement 2012 FINAL (available in the City Clerk's Reading File) Page 3 Packet Pg. 24 5.a RESOLUTION 20- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CLARITA, CALIFORNIA, APPROVING THE NINTH AMENDMENT OF THE AMENDED AND RESTATED AGREEMENT BETWEEN THE CITY OF SANTA CLARITA AND USA WASTE OF CALIFORNIA, INC. (WASTE MANAGEMENT), FOR RESIDENTIAL SOLID WASTE MANAGEMENT SERVICES WHEREAS, the City of Santa Clarita (City) is empowered under Section 7 of Article 11 of the California Constitution to make and enforce, within its limits, all police and sanitary ordinances and regulations not in conflict with general laws; and WHEREAS, in partial implementation of Section 7 of Article 11 of the California Constitution, California Public Resources Code Section 40059 authorizes the City to determine all aspects of handling of solid waste that are of local concern, including the frequency of collection, means of collection and transportation, level of services and nature, location, and extent of waste handling services; and WHEREAS, on November 20, 2003, the City and USA Waste of California, Inc. (Waste Management), entered into that certain "Agreement Between the City of Santa Clarita and USA Waste of California, Inc., for Residential Solid Waste Management Services" (Agreement); and WHEREAS, on May 24, 2011, the City Council directed staff to execute an Amended and Restated Agreement Between the City of Santa Clarita and USA Waste of California Inc.; and WHEREAS, pursuant to Section 6.3 of the Amended and Restated Agreement Between the City of Santa Clarita and USA Waste of California, Inc., Waste Management is entitled to pursue an annual adjustment to its maximum rates for the rate year commencing on July 1, 2020 to June 30, 2021; and WHEREAS, the City and Waste Management desire to amend the Amended and Restated Agreement Between the City of Santa Clarita and USA Waste of California, Inc., by increasing the maximum rates as outlined in Sections 6.3 and 6.4 of the Amended and Restated Agreement Between the City of Santa Clarita and USA Waste of California, Inc. NOW, THEREFORE, the City Council of the City of Santa Clarita, California, does hereby resolve as follows: SECTION 1. The "Ninth Amendment of the Amended and Restated Agreement Between the City of Santa Clarita and USA Waste of California, Inc., for Residential Solid Waste Management Services" (Ninth Amendment), a copy of which is attached hereto, is hereby approved. The City Manager is authorized to execute the Ninth Amendment on behalf of the City. Packet Pg. 25 5.a SECTION 2. The City Clerk shall certify to the adoption of this resolution. PASSED, APPROVED, AND ADOPTED this 26th day of May 2020. MAYOR ATTEST: CITY CLERK DATE: STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF SANTA CLARITA ) I, Mary Cusick, City Clerk of the City of Santa Clarita, do hereby certify that the foregoing Resolution 20- was duly adopted by the City Council of the City of Santa Clarita at a special meeting thereof, held on the 26th day of May 2020, by the following vote: AYES: COUNCIL,MEMBERS: NOES: COUNCIL,MEMBERS: ABSENT: COUNCIL,MEMBERS: 2 CITY CLERK Packet Pg. 26 5.a NINTH AMENDMENT OF THEAMENDED AND RESTATED AGREEMENT BETWEEN THE CITY OF SANTA CLARITA AND USA WASTE OF CALIFORNIA, INC., (WASTE MANAGEMENT) FOR RESIDENTIAL SOLID WASTE MANAGEMENT SERVICES This NINTH AMENDMENT OF THE AMENDED AND RESTATED AGREEMENT BETWEEN THE CITY OF SANTA CLARITA AND USA WASTE OF CALIFORNIA, INC., (WASTE MANAGEMENT) FOR RESIDENTIAL SOLID WASTE MANAGEMENT SERVICES, (Ninth Amendment) is entered into this day of _ 2020, between the City of Santa Clarita (City), California, a California municipal corporation and USA Waste of California, Inc., a California corporation to amend that certain "Amended and Restated Agreement Between the City of Santa Clarita and USA Waste of California, Inc., for Residential Solid Waste Management Services." RECITALS WHEREAS, the City is empowered under Section 7 of Article 11 of the California Constitution to make and enforce, within its limits, all police and sanitary ordinances and regulations not in conflict with general laws; and WHEREAS, in partial implementation of Section 7 of Article 11 of the California Constitution, California Public Resources Code Section 40059 authorizes the City to determine all aspects of handling of solid waste that are of local concern, including the frequency of collection, means of collection and transportation, level of services and nature, location, and extent of waste handling services; and WHEREAS, on November 20, 2003, the City and USA Waste of California, Inc., (Waste Management) entered into that certain "Agreement Between the City of Santa Clarita and USA Waste of California, Inc., (Waste Management) for Residential Solid Waste Management Services"; and WHEREAS, on May 24, 2011, the City Council directed staff to execute an Amended and Restated Agreement Between the City of Santa Clarita and USA Waste of California Inc.(Waste Management); and WHEREAS, pursuant to Section 6.3 of the Amended and Restated Agreement, Waste Management is entitled to pursue an annual adjustment to its maximum rates for the rate year commencing on July 1, 2020; and WHEREAS, the City and Waste Management desire to amend the Amended and Restated Agreement by adjusting the maximum rates as outlined in Section 6.3 and 6.4 of the Amended and Restated Agreement. 3 Packet Pg. 27 5.a NOW, THEREFORE, the City and Waste Management in consideration of their mutual promises, amend the Amended and Restated Agreement as follows: SECTION 1. Exhibit 2 of the Amended and Restated Agreement shall be amended to contain the following maximum rates commencing July 1, 2020: • Standard Service Rate $X.XX per month • Reduced Rate for no Greenwaste services $X.XX per month • Reduced Rate for Super Saver/Senior/Lifeline Customers $X.XX per month • Mobile Home Service Rate $X.XX per month The multi -family rates will be as follows: Container Size Number of Weekly Pickups 1 2 3 4 5 6 7 1.5 yd3 $80.66 $161.31 $241.99 $322.60 $403.27 $483.92 $564.59 2 yd3 $85.98 $171.93 $257.89 $343.91 $429.83 $515.80 $601.78 3 yd3 $96.60 $193.14 $289.77 $386.35 $482.92 $579.54 $676.11 4 yd3 $107.18 $214.44 $321.60 $428.80 $536.00 $643.25 $750.44 Special Services Costs Street Litter Carts $23.71 per set per month Restart Charge $24.13 Refuse Overage Extra Pickup $8.06 per pickup Extra Trash Cart $16.08 month Locking Bin $16.09 per bin per month Bulk Billing Discount 8% Extra Bulky Item Pickup $32.19 per pickup Additional Bin Cleanings $56.30 per cleaning Extra Bin Empties $56.30 per empty Compactor Rates 2x comparable bin rate Late Fees 1.5% per month Emergency Services $112.66 per hour Manure Collection 100% of comparable multifamily bin refuse rate Prepayment Discount One month free with 11 months prepaid SECTION 2. Except as expressly amended herein, all provisions of the Amended and Restated Agreement are and remain in full force and effect. 4 Packet Pg. 28 5.a IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. CITY OF SANTA CLARITA A California Municipal Corporation Kenneth W. Striplin City Manager ATTEST: Mary Cusick City Clerk APPROVED AS TO FORM: Joseph Montes City Attorney 5 Packet Pg. 29 5.a WASTE MANAGEMENT IM [CEO, President, Chairman of the Board or any Vice President] And By: [The Secretary, any assistant secretary, CFO or any assistant treasurer] State of California ) County of ) On before me, , Date Here Insert Name and Title of the Officer Names) of Signer(s) who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Place Notary Seal Above Signature Signature of Notary Public Packet Pg. 30 5.b WuN%ii WASTE MANAGEMENT March 31, 2020 Mr. Curtis Williams, Solid Waste Administrator City of Santa Clarita 23290 Valencia Boulevard Santa Clarita, CA 91355 RE: 2020 Rate Adjustment Review Dear Mr. Williams: THINK GREEN. In accordance with Article 6.3 of the Amended and Restated Agreement (Agreement) between the City of Santa Clarita (City) and Waste Management (WM), we respectfully request an annual adjustment of service rates. Additionally, WM requests an extraordinary adjustments of service rates due to an increase in the tipping fee for refuse disposal and increased processing costs for recyclable material as provided for in Article 6.4.4 of the Agreement. Request for Extraordinary Rate Adjustment for Refuse Disposal Currently, refuse collected from Santa Clarita residents and multifamily customers is disposed of at Chiquita Canyon Landfill. On December 9, 2019, we were notified the disposal rate at this facility would be increasing by 70 cents per ton, beginning February 1, 2020. While WM makes every effort to minimize the impact of cost changes incurred during any one operating year, we are unable to absorb this entire additional increase following the significant increases incurred in 2017 and 2018 within the current approved rates. As such, we respectfully request an extraordinary adjustment to service rates to account for this change in costs. Request for Extraordinary Rate Adjustment for Recyclables Processing As both the City's solid waste consultant, R3, and the City's commercial waste hauler recently confirmed, the cost of processing recyclable materials continues to increase, while commodity values decline. Consistent with prior communication, the primary driver of these significant adverse impacts has been changes in laws governing these activities imposed by the People's Republic of China (PRC). Year over year processing costs have increased significantly as a result. Unfortunately, the rate adjustment formula does not specifically account for the change in recyclables processing costs. As such, we respectfully request an extraordinary adjustment service rates to reflect the continued impact on diverting Santa Clarita's recyclable materials to comply with the Agreement and the City's obligations under State law. Packet Pg. 31 AMENDED AND RESTATED AGREEMENT BETWEEN CITY OF SANTA CLARITA AND USA WASTE OF CALIFORNIA, INC. DBA BLUE BARREL DISPOSAL FOR RESIDENTIAL SOLID WASTE MANAGEMENT SERVICES Amended May, 2012 AMENDED AND RESTATED AGREEMENT BETWEEN CITY QF8ANTACLARITA AND USA WASTE OF CALIFORNIA, INC. DBABLUE BARREL DISPOSAL FOR RESIDENTIAL SOLID WASTE MANAGEMENT SERVICES TABLE OF CONTENTS Ene ARTICLE1 ................................................................................................................................................ DEFINITIONS^'^^^^^^^^^^`^^^^`^-`~^``^^`^``-``^``^`^^^^^^^^^^^^`^`^^^^^`^^`^^```^''````^^``^^^`^^`^^^^^^^^^^^^`^^^^~~ 11 AB93g................................................................................................................................................................ 1O 12 AFFILIATE ................................ 1.3 BILLINGS .---------------------------------------------------D 1.4 BIN .......................... _-_-..... ................ ...... .......... ................. _~.......... _-_~~............. ~-.~ .......... ....... 11 1.5 BIN SERVICE ................. ... .... ...... ...................... ....... ............................................................................. ........ Il 1.6 BULKY ITEMS ...................................... ............................................................................................................ I1 1.7 CART_-. ... ._~_-........ ........ ....... ___ ... ......... _...__._.._................ ........ ......... .... .__..... ... .11 1.8 CD](. ................................ -..... __~....... -............ .......... .............. -__---___..-............ .~.-..... ..... 12 1.0 COLLECT/COLLECTION ................ .......... ___ ... ............. _........ _------....... ___ ... ....... ___ ... 2 1]0 COMMERCIAL PREMISES ............................................................................................................................... 12 1.11 COMPANY ....................................................................................................................................................... 12 122 CDDTANY'SPROPOSAL ................................................................................................................................. 2 1.13 COMPANY ----'_---''_----_''--------._----'_---13 114 CONSTRUCTION AND DEMOLITION DEBRIS _--....... -...... -~_.-....... ....... ,__-__--_-... 3 115 CONTAINER ................. ___-^_---......... ......................... ........................ ............. ......... ....... .............. .13 116 CUSTOMER. ......................................... .-.----....... .......... ......... -......... ................. _-_-_-----.l3 117 Dl5POSAL_-_____--___--_-.-_-_-__--.__-___-__-_-_-----__---t3 118 DISPOSAL SIT8(S)-... ......... -----.--.-_---_---_-........ ............ ...... _-'..~.._.~.~-.~....13 1.19 ENVIRONMENTAL LAWS .............................................................................................................................. 1.20 FACILITY .......................................................................................................................................................... 14 121 FRANCHISE FEB---------------------------.-------------------.14 122 GREEN WASTE -----_-_-_-----_------_--.......................... --.__-_--.... -_14 1.23 GREEN WASTE PROCESSING FACILITY ...................................................................................................... 15 124 GROSS RECEIPTS ............................................................................................................................................. 15 125 HAZARDOUS SUBSTANCE ~____ .... .~-~... .____ --.......-_.-_... ......... .__..-..~._....~.___]5 126 HAZARDOUS WASTE ................ ....... .................... _-__-__-_.__-_._...... ............. _-.... -l6 127 HOUSEHOLD HAZARDOUS WASTE (-IH{W}....................................................................................................... 1.28 MATERIALS RECOVERY FACILITY (-88RF^ ---------------'---------------'l6 129 DWELLING ... ....... _._--__-_-...... -.----__--_--...... --_........... 16 1.30 PEDSON-....... .....___.......... .__--_-_-...... ___ ................. ___-....... _.__--_-...... .16 1.31 PREMISES .... ... .... ...... -_---_-__-_----'__-......... -...~.-.....~....._____-----17 1.32 RATE YEAR. ......... --..___'--_-._---........ ......... .-~-----_'.---............................. ..-17 133 RE{](CLDNG-........ _... _....... ._-~_-.___--_---...... ---......... ........ ___---__...... 17 1.35 REFUSE ....................................................... ...................................................................................................... 17 1.36 RESIDENTIAL PREMISES................................................................................................................................17 1.37 ROLLOFF BOX ....... ... ......... ......... ......... __...... ........... ____ ...... 18 1.38 SINGLE FAMILY DWELLING .. ........ ......... ......... ......................... ....... ................................... ...,..,,,,18 1.39 SOLID WASTE.................................................................................................................................................18 1.40 SOLID WASTE HANDLING SERVICES.........................................................................................................18 1.41 SOURCE SEPARATED....................................................................................................................................18 1.42 STATE ............................ ............. ...................................................................... ............................ I ............ I ..... 119 1.43 TEMPORARY BIN SERVICE............................................................................................................................19 1.44 TRANSFORMATION ... ............. 1.45 WASTE GENERATOR......................................................................................................................................19 ARTICLE2 ..............................................................................................................................2( GRANT AND ACCEPTANCE OF FRANCHISE.............................................................................................................20 2.1 GRANT AND ACCEPTANCE OF FRANCHISE ............. ......... ...., .......... ........... 20 2.2 ENFORCEMENT OF EXCLUSIVITY ,................. ......... ......... ..... 20 2.3 EFFECTIVE DATE........................................................................................................................................... x 2.4 TERM OF AGREEMENT..................................................................................................................................20 2.5 OPTION TO EXTEND TERM ... ........ ......... ......... ......... ..,.......... 21 2.6 CONDITIONS TO EFFECTIVENESS OF AGREEMENT. ........ ....... .................... ........ .............21 2.7 DELEGATION OF AUTHORITY ......... ...... ......... .............22 2.8 LIMITATIONS TO SCOPE............................................................................................................................... 22 2.9 CITY'S RIGHT TO DIRECT CHANGES ......... ......... ..... 24 2.9.1 General..............................................................................................................................................24 2.9.2 New Diversion Programs..................................................................................................................27 2.10 OWNERSHIP OF SOLID WASTE ......... ........ .................... .................. ......... ........„ 25 2.11 COMPANY STATUS..... .....,,„. ...... . ......... ........ 26 2.12 COMPANY AUTHORIZATION .......... .............. .......... .,..,.... ......... ..... .., 26 2.13 ANNEXATIONS .............. .. ........................................ .......26 ARTICLE3..............................................................................................................................................28 FRANCHISE FEE, ADMINISTRATIVE FEE & RECYCLING SURCHARGE...........................................................28 3.1 ADMINISTRATIVE ...... ...... .... . .........I ...... ..,,...,............. ,.,.,,........ .,..................... .........,,. .......... ,„ 28 3.2 FRANCHISE AND RECYCLING FEE.............................................................................................................28 3.2.1 Franchise Fee Amount......................................................................................................................28 3.2.2 Recycling Fee Amount.,..,,,. . —...................... ......... ......... ......... .... ............... ____ .........28 3.2.3 Time and Method of Payment........................................................................................................... 29 ARTICLE4..............................................................................................................................................31 DIRECTSERVICES................................................................................................................................................................31 4.1 REFUSE .._....... _........ ......... .............. .... ....... ...,......... ...... .,...,, ....,.,....,M 4.1.1 General ........... ......... ......... ......... ........ ,..,,..,. ....31 4.1.2 Refuse Cart Collection/Super Saver ..... ......... .... ...... ....,,.......... ,. ......... .. ...31 4.1.3 Refuse Overage .... ........ .... ................. ...................................... 32 4.1.4 In -Ground Refuse Container Collection ....,,,„. .. ......... ............ 33 4.1.5 Manual on .................... ... ......... ...33 4.1.6 Residential Bin Refuse Collection.,....... .....33 4.1.7 Street Litter Cart on..........................................................................................................................33 4.1.8 Street Litter Abatement Program..,..,... ....... ............... ............................................................ 34 4.1.9 Community Cleanup Program..........................................................................................................34 4.1.10 On -Call Bulky -Item Pickup ..... ......... ......... ......... ....,......34 4.1.11 Bulky -item Drop-off.- . ..................... ,......... 4,1.12 Special Pick-up....... ....... ___ ....... ............... . ....., ....,..,,. ........,........... ............... ... ...........35 4.1.13 Bulky Item Diversion., ......... ... 4.1.14 Disposal of Electronic Waste—__....,_ ...... ......... ...... ......-... .... ..... .,....36 4.1.15 Emergency Collection and Disposal Service...,.....„..........................................................................36 4.1.16 Collection of Former Contractor's Containers...................................................................................36 4.2 RECYCLING .. ..,...... ..... ........ ......... ................. ................. ....... .......... .................. 4.2.1 Single Family Recycling Collection ...... ...... ........ 37 4.2.2 In-Ground/Manual Service Area Recycling Options.....................................................................„ 38 4.2.3 Multi -Family Recycling Collection- ......... .................. ... ......... .. ....... ...............,,. , ......38 4.2.4 Warning Notice................................................................................................................................. 39 4.2.5 Marketing and Sale of Recyclable Materials..................................................................................... 39 4.2.6 Minimum Recycling Regidre°rrrents..... ........„ ......„ . ,,,..,, ., ..... ......... ...............40 4.2.7 Multij4mily Birk Mixed Waste Processing. ... .............. ......... ....... ....... ......... ..„,.....40 4.3 GREEN WASTE PROGRAM...........................................................................................................................In 4.3.1 Green Waste Collection ................... ,......... ,...,,.. ,, ......, 41 4.3.2 Green Waste Service Exemption ........ ... ........ ......... .......__42 4.3.3 Holiday Tree Collection Program.. ...... , ........-....42 4.3,4 End Uses for Green Waste..... ......,.,42 4.3.5 In -Horne Food Waste Containers.................................................................................................... 42 4.4 MANURE COLLECTION ....................___ .................................................... ...... ......... ...,...4'3 4.5 OPERATIONS.................................................................................................................................................. 0 4.5.1 Schedules............................................................................................................................................43 4.5.2 Vehicles,.,.,,, ..___ .... ___ ....... , ., ,...., ....... . ,......, ...,,,... ....... ,,....... .....,..,,....44 4.5.3 Containers..........................................................................................................................................47 4.5.3.1 Company -Provided Carts............. .,.,.47 4.5.3.2 Cart Maintenance arud Replacement Responsibilities ....... ........52 4.5.3.3 Cart and Can Ownership.................................................................................................... 53 4.5.3.4 Company -Provided Bins . .... ................ .... ___ .... ___ ...................... ........ ......................... _ 9 4.5.4 Litter Abatement................................................................................................................................53 4.5.5 Personnel...........................................................................................................................................54 4.5.6 Identi cation Regaired' .....-... ...... ........___ ........ .......... ...... ......... ....... ,..,,.,55 4.5.7 Fees and Gratuities .... . ........ ..... ........ .,,,,,,., .............. .........,, „ .....56 4.5.8 Non -Discrimination... .........___ .... ......... ................... ............ ..... ...... ... ........ .„.... ..,.56 4.5.9 Coordination With Street Sweeping Services....................................................................................56 4.5.10 Change in Collection Schedule ,..,..... . .,,,....» ....... ..............56 4.5.11 Report of Accumulation of Solid Waste; Unauthorized Dumping...................................................57 4.6 CONTINGENCY PLAN.................................................................................................................................. 57 4.7 TRANSPORTATION OF SOLID WASTE.......................................................................................................57 4.8 PROCESSING OF SOLID WASTE..................................................................................................................58 4.9 DISPOSAL OF REFUSE....................................................................................................................................58 4.10 STATUS OF DISPOSAL SITE .. ,......,. . _....... .. . ....... ... ..... ........ .................. ......... ., 58 4.11 COMMINGLING OF COLLECTION ROUTES...............................................................................................59 4.12 ANNUAL ROUTE AUDIT.... ... ......... ........ ...................................................................................59 4.13 DISPOSAL PRIORITY AND CAPACITY GUARANTEE................................................................................ 61 4.14 DIAPER RECYCLING PROGRAM..................................................................................................................61 4.15 VOLUME -BASED RATE STRUCTURE.......................................................................................................... 63 4.15.1 City-wide Implementation of Volume Based Rates...................,...,,.......,..,,,.,.,.............,.,.....,...,...,...,.63 4.16 CITY MATERIALS RECOVERY FACILITY..,........ ____ ........ ......_1 ........, ......... ...63 4.17 SERVICE EXCEPTIONS; HAZARDOUS WASTE NOTIFICATIONS........................................................„...63 4.18 SHARPS PROGRAM.......................................................................................„............65 4.19 TEXTILE DIVERSION PROGRAM..................................................................................65 ARTICLE5........................................................ ............................, ..........................................6 OTHERSERVICES................................................................................................................................................................66 5.1 SERVICES AND CUSTOMER BILLING ..........................,..,,.,.....,..................,...,.,...,..,..,................... 66 5.1.1 Service Description .... ................ ,........ ...,.,,.......... .....,,M. .,< ,,......,.65 5.1.2 Billing................................................................................................................................................66 2 5.1.3 Discounts ....................... ..................... ......... .............................. ................... ,, ............ ......... 67 5.1.4 Review of Billings.............................................................................................................................. 68 5,15 Suspension of Service Due to Non-Payment...................................................................................68 5.2 CUSTOMER SERVICE . .,..,.... ... ......... ......... ........ .,. ........., ID 5.2.1 Local Office....................................................................................................................................... 69 5.2.2 Telephone Customer Service Requirements.,.... ....... ....,... ...69 5.2.3 Complaint Documentation ,...., ,„,.,.... .......,,..,.., 70 5.2.4 Resolution of Customer Complaints.„... ,...,,.,, .... ..... 71 5.2.5 Government Liaison„, 71 5.3 EDUCATION AND PUBLIC AWARENESS ...... .......„,...... .,.... ......... ......,.. ,.,....,., 71 5.3.1 General.............................................................................................................................................72 5.3.2 Certified Recycling Outreach Coordinator....... .,.... .......... ............. ......... „.....„ ...,,,„,..72 5.3.3 .Implementation and Orr -going Education ......... ,72 5.3.4 Advertising Bridget Funding,...'...".'. ........... ......... ........ , ... .......,..25 5.3.5 Community Events........................................................................................................................... 3 5.4 WASTE GENERATION/CHARACTERIZATION STUDIES....„„ ..„............ ,.... ,,.,„„... ...,,.. _, .....'5 5.5 QUARTERLY MEETING ..................................................... 5.6 MULTI -FAMILY OUTREACH PROGRAM .... . . . . . . .... „ .... . , .. , ............ ...... ................ , , .76 5.7 INCREASED RESIDENTIAL OUTREACH., ....................................„............. ,...,... —.76 5.8 SUSTAINABILITY PROGRAM ................ ...............„......„... ,,......... ..... ...., .,,.,...„.76 ARTICLE6 ...............................................................................„., ........,. ..........,.............................78 COMPANY COMPENSATION AND RATES ....... ......... ............... ................ ......... .....»... ...,..... ..........78 6.1 GENERAL...................................................................................................................................................... iB 6.2 INITIAL RATES............................................................................................................................................. 78 6.2.1 Adjustment To Current Single Family Rates..................................................................................78 6.2.2 Initial Rates at Commencement of New Service..............................................................................78 6.3 SCHEDULE OF FUTURE ADJUSTMENTS................................................................................................... 79 6.3.1 Annual Rate Adjustments...............................................................................................................19 6.4 METHOD OF ADJUSTMENTS . ................... , . ,,..,.., .... .- ...... .......„,.79 6.4.1 Annual Adjrashisents................ ............,,.,.,. ......_., 79 6.4.2 Approved Rate Increases.......... ......... ......... ..„„..,. .,.,.„,.„.81 6.4.3 Residential Bin and Commercial Bin Rate Alignment....,..„...........................w.,.,,,,,..„,„,,,.„,,.,,....,,.,„ 81 6.4.4 Extraordinary Adjustments.„.........,. „....... ..... ............. ,........... ...,,81 6.5 ANNUAL RATE CAP ........................... .... ............... ............................................ ............................. I........... 82 6.5.1 Annual Rate Cap ......... ......... ........., .,....... .........„,,.,,.,.,,„ 6.5.2 Santa Clarita Valley Rate Cap........,,., ....„ , ,,,,, ,,,,,,,,, ...... ........ , .,,,..,.,.82 6.6 SUPPORTING INFORMATION............................................................................................................... 82 6.7 GRANTS_ . . _ . - _.......... ... ....,,......,.....,,,,,..,.,.....,.,..... ..,......... ...,............ ..,83 ARTICLE7.............................................................................................................................................84 REVIEW OF SERVICES AND PERFORMANCE............................................................................................................84 7.1 PERFORMANCE HEARING.......................................................................................................................... 84 7.2 PERFORMANCE SATISFACTION SURVEY...........................................................................I...................... 85 ARTICLE8..............................................................................................................................................86 RECORDS, REPORTS AND INFORMATION REQUIREMENTS.............................................................................86 8.1 GENERAL........................................................................................................................................................86 8.2 RECORDS 8.2.1 General..............................................................................................................................................86 8.2.2 Financial Records ........ ,, 87 8.2.3 Solid Waste Records.......................................................................................................................... 87 8.2.4 CERCLA Defense Records,..,., .....,„... ............... .. ......... .. ....... .....88 8.2.5 Disposal Records ................................... ,......... . ,,, 88 8.2.6 Other Programs' Records-............ ......... ..... .............88 8.2.7 Cost of Audit.....................................................................................................................................89 8.2.8 Payments and Refunds .......... ........ ... ......89 8.3 REPORTS......................................................................................................................................................... 89 8.3.1 Report Formats and Schedule ......... ............ .......... .......,,, 8.3.2 Monthly Reports .............................. ......... ..........,,...» ....,.,.............. ..... 90 8.3.3 Quarterly Reports............................................................................................................................ 91 8.3.4 Annual Report-.--... ....---- .... .... . ..... ................... --- ............ ... ....... ....,....,»...91 8.3.5 Financial Report...,...,... .............. .......... ............,.....,.92 8.4 ADVERSE INFORMATION............................................................................................................................92 8.5 RIGHT TO INSPECT RECORDS.,.... ........ ........... ---- ...... ........ Zi 8.6 FAILURE TO .REPORT ..... . 11 ........ ...... ......... ,......,.,.....,,......,...,...... ................ ....... � 8.7 AUDIT RELATED TO USE OF MATERIALS RECOVERY FACILITY..,„„.„................................................... SB ARTICLE9 ..............................................................................................................................................95 INDEMNIFICATION, INSURANCE BOND, AND LETTER OF CREDIT................................................................95 9.1 INDEMNIFICATION....................................................................................................................................... 95 9.2 HAZARDOUS SUBSTANCES INDEMNIFICATION......................................................................................96 9.3 AB 939 INDEMNIFICATION AND GUARANTEE.........................................................................................98 9.4 INSURANCE....................................................................................................................................................99 9.5 FAITHFUL PERFORMANCE BOND...............................................................................................................1% 9.6 FAITHFUL PERFORMANCE LETTER OF CREDIT ...... ........ ... ............. ............ .......,,...,....... ....104 9.7 FORFEITURE OF PERFORMANCE BOND.....................................................................................................10I 9.8 FORFEITURE OF LETTER OF CREDIT... ...... --- ................. ..... .... ....... ,,.,.,,.....„106 ARTICLE10 ........ ................... ........................................................................................................106 CITY'S RIGHT TO PERFORM SERVICE.........................................................................................................................106 10.1 GENERAL........................................................................................................................................................106 10.2 BILLING AND COMPENSATION TO CITY DURING CITY'S POSSESSION...............................................107 10.3 CITY'S RIGHT TO RELINQUISH POSSESSION ........ ....... --- ........ ......... ..- ........, ........,.,....107 10.4 CITY'S POSSESSION NOT A TAICING...........................................................................................................107 10.5 DURATION OF CITY'S POSSESSION...„ .......... ......... ... ..,...... 1(B ARTICLE11...........................................................................................................................................109 DEFAULT, REMEDIES AND LIQUIDATED DAMAGES............................................................................................109 11.1 EVENTS OF DEFAULT...................................................................................................................................109 11.2 RIGHT TO TERMINATE UPON DEFAULT AND RIGHT TO SPECIFIC PERFORMANCE .........................111 11.3 LIQUIDATED DAMAGES...............................................................................................................................112 11.4 EXCUSE FROM PERFORMANCE...................................................................................................................116 11.5 NOTICE, HEARING AND APPEAL OF CITY BREACH...............................................................................116 11.6 ASSURANCE OF PERFORMANCE................................................................................................................117 ARTICLE12...........................................................................................................................................118 OTHER AGREEMENTS OF THE PARTIES ......... » ...... .............. .... ...„....... ..» .-..... ............... , ........118 12.1 RELATIONSHIP OF PARTIES ......................... . ....... ......... ................ .. » ........ ...„.....118 12.2 COMPLIANCE WITH LAW..........................................................................................................................118 12.3 GOVERNING LAW........................................................................................................................................118 12.4 JURISDICTION...............................................................................................................................................118 12.5 ASSIGNMENT................................................................................................................................................119 12.6 BINDING ON ASSIGNS.................................................................................................................................121 12.7 COOPERATION FOLLOWING TERMINATION......,.. ......» ......... .....,... ................121 12.8 PARTIES IN INTEREST..................................................................................................................................121 12.9 WAIVER..........................................................................................................................................................121 12.10 COMPANY'S INVESTIGATION...... ........ ........ ................. . . . ...... ......... ..............122 G 12.11 CONDEMNATION........................................................................................................................................1" 12.12 NOTICE...........................................................................................................................................................122 12.13 REPRESENTATIVES OF THE PARTIES................:....................................................................................... 123 12.14 CITY FREE TO NEGOTIATE WITH THIRD PARTIES..................................................................................123 12.15 COMPLIANCE WITH MUNICIPAL CODE..................................................................................................124 12.16 PRIVACY.......................................................................................................................................................124 12.17 COMPLIANCE WITH IMMIGRATION AWS................................................................................................124 12.18 PROPRIETARY INFORMATION, PUBLIC RECORDS..................................................................................124 12.19 GUARANTEE OF CONTRACTOR'S PERFORMANCE.................................................................................124 ARTICLE13...........................................................................................................................................126 MISCELLANEOUSAGREEMENTS.................................................................................................................................126 13.1 ENTIRE AGREEMENT...................................................................................................................................126 13.2 SECTION HEADINGS....................................................................................................................................126 13.3 REFERENCES TO LAWS AND OTHER AGREEMENTS..............................................................................126 13.4 INTERPRETATION.........................................................................................................................................126 13.5 AGREEMENT.................................................................................................................................................126 13.6 SEVERABILM..............................................................................................................................................127 13.7 EXHIBrrs.........................................................................................................................................................127 13.8 ATTORNEYS' FEES........................................................................................................................................127 Exhibits 1. Company's Proposal 2. Year 2011/2012 Maximum Rates 3. Example Residential Rate Adjustment Formula for City MRF 4. Corporate Guaranty 5. Faithful Performance Bond 6. Procedures to Address Contamination and Container Overage RECITALS This Amended and Restated Franchise Agreement (hereinafter the "Agreement") is entered into this day of , 2012, by and between the City of Santa Clarita ("City") and USA Waste of California, Inc. dba Blue Barrel Disposal ("Company"), for the collection, transportation, Recycling, processing, and disposal of residential solid waste and other services related to meeting the goals and requirements of the California Integrated Waste Management Act and hereby amends and restates that certain franchise agreement originally entered into on November 20, 2003, by and between the parties and subsequently amended five times. This Agreement is intended to restate the language of the original agreement and the amendments described in the recitals herein, and also constitutes a sixth amendment to the original agreement. Where any language in this Agreement conflicts with or is inconsistent with the prior agreement and amendments, the language of this Agreement shall supercede. Recitals WHEREAS, the Legislature of the State of California, by enactment of the California Integrated Waste Management Act of 1989 (AB 939) (California Public Resources Code Section 40000 et seq.), has declared that it is in the public interest to authorize and require local agencies to make adequate provisions for solid waste handling within their jurisdictions; and, WHEREAS, pursuant to California Public Resources Code Section 40059(a)(2), the City of Santa Clarita has determined that the public health, safety, and well-being require that an exclusive franchise be awarded to a qualified company for the collection, transfer and transportation, Recycling, processing, and disposal of solid waste and other services related to meeting the diversion goals required by AB 939, and other requirements of the California Integrated Waste Management Act; and, WHEREAS, the City declares its intention of maintaining reasonable rates and quality service related to the collection, transportation, Recycling, processing, and disposal of solid waste and other services; and, WHEREAS, in response to a Request for Proposals, the Company submitted a proposal to the City and the City selected the Company on the competitive advantages of that proposal over other proposals received by the City; and WHEREAS, City and Company are mindful of the provisions of the laws governing the safe collection, transport, recycling, and disposal of Solid Waste, including AB 939, the Resource Conservation and Recovery Act ("RCRA"), and the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"). City and Company desire to leave no doubts as to their respective roles and to memorialize that by entering into this Agreement, City is not thereby becoming an "arranger" or a "generator" as those terms are used in CERCLA, and that it is Company, not City, who is "arranging for" the collection from residences in the City, transport for disposal, composting, and recycling of and municipal Solid Waste which may contain hazardous substances; and further to confirm that Company has agreed to indemnify the City in connection with any claims relating to the inadvertent or intentional collection, transportation and/or disposal of hazardous materials that may occur in connection with Company's performance under this Agreement, and WHEREAS, Company has agreed, as part of this Agreement, to provide such services as are necessary to ensure City complies with the requirements of Public Resources Code Section 40000, et seq. NOW, THEREFORE, in consideration of the premise above stated and the terms, conditions, covenants and agreements contained herein, the Parties do hereby agree as follows: RECITALS The Parties acknowledge the above recitals are true and correct and incorporate them herein as if they were fully restated. 0 ARTICLE 1 DEFINITIONS Whenever any term used in this Agreement has been defined by the provisions of the Santa Clarita Municipal Code ("SCMC") or by Division 30, Part 1, Chapter 2 of the California Public Resources Code, the definitions in the Municipal Code or the Public Resources Code shall apply (with precedence given to definitions in the SCMC over conflicting definitions contained in the Public Resources Code) unless the term is otherwise defined in this Agreement, in which case this Agreement shall control. The terms defined herein shall have the meaning set forth in this Agreement. Otherwise, the terms herein shall have their ordinary meaning. For purposes of this Agreement, the following terms shall have the following respective meanings: 1.1 AB 939 "AB 939" means the California Integrated Waste Management Act of 1989 (California Public Resources Code Section 40000 et seq.), as it may be amended from time to time. 1.2 Affiliate Affiliate" means all businesses (including corporations, limited and general partnerships and sole proprietorships) which are directly or indirectly related to Company by virtue of direct or indirect ownership interest or common management shall be deemed to be "Affiliated with" Company and included within the term "Affiliates" as used herein. An Affiliate shall include a business in which Company owns a direct or indirect ownership interest, a business which has a direct or indirect ownership interest in Company and/or a business which is also owned, controlled or managed by any business or individual which has a direct or indirect ownership interest in Company. For purposes of determining whether an indirect ownership interest exists, the constructive ownership provisions of Section 318(a) of the Internal Revenue Code of 1986, as in effect on the date of this Agreement, shall apply; provided, however, that (i) "ten percent (10%)" shall be substituted for "fifty percent (50%)" in Section 318(a)(2)(C) and in Section 318(a)(3)(C) thereof; and (ii) Section 318(a)(5)(C) shall be disregarded. For purposes of determining ownership under this paragraph and constructive or indirect ownership under Section 318(a), ownership interest of less than ten percent (10%) shall be disregarded and 10 percentage interests shall be determined on the basis of the percentage of voting interest or value which the ownership interest represents, whichever is greater. 1.3 Billings "Billings" or "Billing" or "Bill" means the statements of charges provided to Customers for services rendered by Company. 1.3 Bin "Bin" means a metal Container with hinged lids and wheels with a capacity of under 10 cubic yards. 1.4 Bin Service "Bin Service" means Solid Waste Handling Services in which a Bin is used for the Collection of Solid Waste. 1.6 Bulky Items "Bulky Items" means Solid Waste that cannot and/or would not typically be accommodated within a Cart including specifically: furniture (including chairs, sofas, mattresses, and rugs); appliances (including refrigerators with and without freon, ranges, washers, dryers, water heaters, dishwashers, plumbing, small household appliances and other similar items, commonly known as "white goods"); electronic equipment (including stereos, televisions, computers and monitors, cellular phones, VCRs, microwaves and other similar items commonly known as "brown goods" and "e * waste"); Residential wastes (including wood waste, tree branches, scrap wood, debris from building remodeling, rocks, sod and earth, in the aggregate not exceeding one cubic yard per Collection); clothing; and tires. Bulky Items do not include car bodies, Construction and Demolition Debris or items requiring more than two persons to remove. In the event a question ever arises as to whether a specific item, or category of items meets the definition of Bulky Items, City shall be responsible to determine whether said definition shall apply, which determination shall be final and binding on the Parties. 1.7 Cart "Cart" means a plastic Container with a hinged lid and wheels serviced by an automated 11 or semi -automated truck with a capacity of no less that 30- and no greater than 101- gallons. 1.8 City "City" means City of Santa Clarita, a municipal corporation, and all the territory lying within the municipal boundaries of City as presently existing or as such boundaries may be modified during the term of this Agreement. 1.9 Collect/Collection "Collect" or "Collection" means to take physical possession, transport, and remove Solid Waste within and from City. 1.10 Commercial Premises "Commercial Premises" means Premises upon which business activity is conducted, including but not limited to retail sales, services, wholesale operations, manufacturing and industrial operations, but excluding Residential Premises upon which business activities are conducted when such activities are permitted under applicable zoning regulations and are not the primary use of the property. Notwithstanding any provision to the contrary herein, in the SCMC, or otherwise, for purposes of this Agreement Premises upon which the following uses (as defined in the SCMC) are occurring shall be deemed to be Commercial Premises: Adult Residential Facilities, Assisted Living Facilities, Convalescent Homes, Dormitories, Extended Stay Motels, Group Residential Facilities, Group Care Facilities, Hotels, and Motels. 1.11 Company "Company" means USA Waste of California, Inc. dba Blue Barrel Disposal, a corporation organized and operating under the laws of the State of California and its officers, directors, employees, agents, companies and subcontractors. 1.12 Company's Proposal "Company's Proposal" means the proposal submitted by Company to City on May 19, 2003 in response to a Request for Proposals dated March 17, 2003, and all subsequent clarifications thereto, which are collectively attached hereto as Exhibit 1 for informational 12 and reference purposes. Company's Proposal was selected by City based on its competitive advantages over other proposals received, and City specifically relied upon the representations and warranties set forth therein in entering into this Agreement. While there are provisions contained in Company's Proposal which are referenced herein, and as more fully set forth in Section 13.1, this Agreement supercedes Company's Proposal and is the final written expression of the Parties Agreement. Company represents and warrants that all representations set forth in such proposal are true and correct. 1.13 Company Compensation "Company Compensation" means the revenue received by the Company from Billings in return for providing services in accordance with this Agreement. 1.14 Construction and Demolition Debris "Construction and Demolition Debris" means Solid Waste generated at a Premises that is directly related to construction or demolition activities occurring thereon. 1.15 Container "Container" means any and all types of Solid Waste receptacles, including Carts, Bins, and receptacles provided by Customers. 1.16 Customer "Customer" means a Person receiving Solid Waste Handling Services from Company pursuant to the terms of this Agreement. 1.17 Disposal "Disposal" means the ultimate disposition of Solid Waste Collected by Company at a landfill in full regulatory compliance. 1.18 Disposal Site(s) "Disposal Site(s)" mean the Solid Waste handling Facility or Facilities utilized for the ultimate Disposal of Solid Waste Collected by Company as more fully defined herein. 13 1.19 Environmental Laws "Environmental Laws" means all federal and state statutes, county, local and City ordinances concerning public health, safety and the environment including, by way of example and not limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980,42 USC §9601 et seq.; the Resource Conservation and Recovery Act, 42 USC §6902 et se .; the Federal Clean Water Act, 33 USC §1251 et seQ.; the Toxic Substances Control Act,15 USC §1601 et se .; the Occupational Safety and Health Act, 29 USC §651 et seq.; the California Hazardous Waste Control Act, California Health and Safety Code §25100 et seq.; the California Hazardous Substance Account Act, California Health and Safety Code §25300 et seq.; the Porter -Cologne Water Quality Control Act, California Water Code §13000 et se .; the Safe Drinking Water and Toxic Enforcement Act, California Health and Safety Code §25249.5 et seq.; as currently in force or as hereafter amended, and all rules and regulations promulgated thereunder. 1.20 Facility "Facility" means any plant or site, owned or leased and maintained, operated or used by Company for purposes of performing under this Agreement. 1.20.1 Food Waste "Food Waste" shall mean Solid Waste comprised of animal, fruit or vegetable matter that attends the preparation, consumption, decay, dealing in or storage of meats, fish, fowls, fruits or vegetables. 1.21 Franchise Fee "Franchise Fee" means the fee more particularly defined in Section 3.2.1 hereof to be paid by Company to City as part of its consideration for the right granted to it provide exclusive Solid Waste Handling Services as set forth in this Agreement. 1.22 Green Waste "Green Waste" means tree trimmings, grass cuttings, dead plants, leaves, branches and dead trees (not more than six (6) inches in diameter or 48 inches in length) and similar 14 materials as more fully described herein. 1.23 Green Waste Processing Facility "Green Waste Processing Facility" means a permitted Facility where Green Waste is sorted, mulched or separated for the purposes of Recycling, reuse or composting. 1.24 Gross Receipts "Gross Receipts" means any and all revenue receipts, or compensation in any form of Company or subsidiaries, parent companies or other Affiliates of Company, for the Collection and transportation of Solid Waste pursuant to this Agreement, in accordance with Generally Accepted Accounting Principals, including, but not limited to, monthly Customer fees for Collection of Solid Waste, without subtracting Franchise Fees or any other cost of doing business. Sales revenue from the sale of Recyclable materials is excluded from Gross Receipts for purposes of calculating Franchise Fees. 1.25 Hazardous Substance "Hazardous Substance" shall mean any of the following: (a) any substances defined, regulated or listed (directly or by reference) as "Hazardous Substances", "hazardous materials", "Hazardous Wastes", "toxic waste", "pollutant" or "toxic substances" or similarly identified as hazardous to human health or the environment, in or pursuant to (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 USC §9601 et seg.(CERCLA); (ii) the Hazardous Materials Transportation Act, 49 USC §1802, et seq.; (iii) the Resource Conservation and Recovery Act, 42 USC §6901 et seq.; (iv) the Clean Water Act, 33 USC §1251 et seq.; (v) California Health and Safety Code §§25115- 25117, 25249.8, 25281, and 25316; (vi) the Clean Air Act, 42 USC §7901 et seq.; and (vii) California Water Code §13050; (b) any amendments, rules or regulations promulgated thereunder to such enumerated statutes or acts currently existing or hereafter enacted; and (c) any other hazardous or toxic substance, material, chemical, waste or pollutant identified as hazardous or toxic or regulated under any other applicable federal, state or local Environmental Laws currently existing or hereinafter enacted, including, without limitation, friable asbestos, polychlorinated biphenyl's ("PCBs"), petroleum, natural gas and synthetic fuel products, and by-products. 15 1.26 Hazardous Waste "Hazardous Waste" means all substances defined as Hazardous Waste, acutely Hazardous Waste, or extremely Hazardous Waste by the State of California in Health and Safety Code §25110.02, §25115, and §25117 or in the future amendments to or recodifications of such statutes or identified and listed as Hazardous Waste by the US Environmental Protection Agency (EPA), pursuant to the Federal Resource Conservation and Recovery Act (42 USC §6901 et seg.), all future amendments thereto, and all rules and regulations promulgated thereunder. 1.27 Household Hazardous Waste ("HHW") "Household Hazardous Waste" means Hazardous Waste generated at Residential Premises. 1.28 Materials Recovery Facility ("MRF") "Materials Recovery Facility" means a permitted Solid Waste Facility where Solid Wastes or Recyclable Materials are sorted or separated for the purposes of Recycling, processing or composting. 1.29 Multi -Family Dwelling "Multi -Family Dwelling" means any building or lot containing two or more Dwelling Units, and which must receive Solid Waste Handling Services through the use of shared Bins, since they are not reasonably able to receive individualized Solid Waste Handling Service through the use of Carts, cans or bags due to the lack of storage space, or other factors as determined by City. Any ambiguity as to whether a Customer's Premises qualifies as a Single Family Dwelling or Multi -Family Dwelling shall be resolved by City. 1.30 Person "Person" means any individual, firm, association, organization, partnership, corporation, business trust, joint venture, the United States, the State of California, the County of Los Angeles, towns, cities, and special purpose districts. 16, 1.31 Premises "Premises" means any land, or building in City where Solid Waste is generated or accumulated. 1.32 Rate Year "Rate Year" means the period July 1 to June 30, for each year during the Term of this Agreement. 1.33 Recycling "Recycling" means the processing of Recyclable Materials for the purpose of returning them to the economy in the form of raw materials for new, reused, or reconstituted products. The Collection, transportation or Disposal of Solid Waste not intended for, or capable of, reuse is not Recycling. Recycling does not include use of Solid Waste for conversion to energy. 1.34 Recyclable Materials "Recyclable Materials" means Solid Waste that is Source Separated, has some potential economic value, and is set aside, handled, packaged, or offered for Collection in a manner different from Refuse in order to allow it to be processed for Recycling. 1.35 Refuse "Refuse" means putrescible and non-putrescible Solid Waste. 1.36 Residential Premises "Residential Premises" means Premises upon which Dwelling Units, as defined by the SCMC, exist, including, without limitation, single and multi -family dwellings, apartments, boarding or rooming houses, condominiums, mobile homes, efficiency apartments, and second units. Notwithstanding any provision to the contrary herein, in the SCMC, or otherwise, for purposes of this Agreement Premises upon which the following uses (as defined in the SCMC) are occurring shall not be deemed to be Residential Premises, and rather shall be deemed to be Commercial Premises: Adult Residential Facilities, Assisted Living Facilities, Convalescent Homes, Dormitories, 17 Extended Stay Motels, Group Residential Facilities, Group Care Facilities, Hotels, Motels, and any other businesses not specifically listed at which residency is transient in nature and hence should be classified as Commercial Premises as determined by City on a cases by case bases. 1.37 Rolloff Box "Rolloff Box" means Solid Waste Collection Containers of 10-yards or larger, including compactors. 1.38 Single Family Dwelling "Single Family Dwelling" means a building or lot containing one Dwelling Unit, and for purposes of this Agreement includes buildings and lots with more than one Dwelling Unit where such Dwelling Units are determined by the City to be reasonably able to receive individualized Solid Waste Handling Service. Any ambiguity as to whether a Customer's Premises qualifies as a Single Family Dwelling or Multi -Family Dwelling shall be resolved by City. 1.39 Solid Waste "Solid Waste" means all discarded putrescible and non-putrescible solid, semisolid, and liquid wastes, including Refuse, Construction and Demolition Debris, Bulky Items, Recyclable Materials, manure, and Green Waste, or any combination thereof which are permitted to be disposed of in a Class III landfill, and which are included in the definition of "Non -hazardous Solid Waste" set forth in the California Code of Regulations. 1.40 Solid Waste Handling Services "Solid Waste Handling Services" means the Collection, transfer, transport, Recycling, processing, and disposal of Solid Waste. 1.41 Source Separated "Source Separated" means the segregation by the Waste Generator of individual components of Solid Waste, which otherwise would become Refuse or Garbage (such as glass bottles, metal cans, newspapers, plastic containers, etc.) into separate Containers for IF the purpose of allowing the Recycling of such materials. 1.42 State "State" means the State of California. 1.43 Temporary Bin Service "Temporary Bin Service" means Bin Service provided to a Premises on a temporary, as needed basis, and in such a manner that no Bin belonging to the same solid waste enterprise, or any of its Affiliates, remains on the Premises for more than 30 days at a time, or for more than 60 days of any consecutive 90 day period in any calendar year. 1.44 Transformation "Transformation" means incineration, pyrolysis, distillation, gasification, or biological conversion other than composting. "Transformation" does not include composting. 1.45 Waste Generator "Waste Generator" means any Person as defined by the Public Resources Code, whose act or process produced Solid Waste as defined in the Public Resources Code, or whose act first causes Solid Waste to become subject to regulation. 19 ARTICLE 2 GRANT AND ACCEPTANCE OF FRANCHISE 2.1 Grant and Acceptance of Franchise Subject to the terms and conditions of this Agreement, City hereby grants to Company and Company hereby accepts from City, for the Term hereof, the exclusive franchise, right and privilege to provide Solid Waste Handling Services at all Residential Premises within City. 2.2 Enforcement of Exclusivity Company shall be responsible for enforcing the exclusivity of this Agreement. City shall have the right to enforce the exclusivity provisions hereof if, in its absolute and sole discretion, it chooses to do so, but shall have no obligation to do so for the benefit of Company or otherwise. City additionally shall have the right, but not the obligation, to request that Company enforce the exclusivity provisions hereof. Company shall have an affirmative obligation to enforce such exclusivity provisions when requested to do so by City. Should City take administrative, law enforcement, or other legal action to protect Company's exclusive rights, or otherwise enforce the exclusivity of this Agreement (including the adoption of any resolution or ordinance intended to facilitate the enforcement of the exclusive rights granted herein) Company shall reimburse City for its all administrative, law enforcement, or other legal costs and fees related to any such action. 2.3 Effective Date This Agreement shall be effective and enforceable as of July 1, 2011 ("Effective Date"). 2.4 Term of Agreement 20 The term of this Agreement (the "Term") shall extend to and include midnight on June 30, 2023, subject to extension as provided herein. 2.5 Option to Extend Term City shall have the sole option to extend the Term of this Agreement up to twenty-four (24) months. The City may, upon 90-day advance written notice to the Company prior to the expiration of the Term of this Agreement, exercise this extension option. If such extension notice is provided by City, the Agreement will automatically renew monthly, up to a maximum of 24 months. Such automatic renewals shall cease, and this Agreement shall terminate, upon the earlier of: (i) the expiration of the aforementioned 24 months, or (ii) 60 days following the date upon which City gives Company written notice of termination. The City may exercise the option to extend set forth in this Section upon expiration of the initial Agreement Term. 2.6 Conditions to Effectiveness of Agreement The satisfaction of each and all of the conditions set out below, each of which may be waived in whole or in part by City in writing, is a condition precedent to the effectiveness of this Agreement, and a condition of Company's continued right to the benefits conveyed herein: a) Accuracy of Representations. All representations and warranties made by Company and set forth in this Agreement shall be accurate, true and correct on and as of the Effective Date of this Agreement. b) Absence of Litigation. There shall be no litigation pending in any court challenging the award of this Franchise to Company or the execution of this Agreement or seeking to restrain or enjoin its performance. c) Furnishing of Insurance, Bond and Letter of Credit. Company shall have furnished evidence of the insurance, bonds and letter of credit required by Article 9, on or before the Commencement Date, and shall comply with all ongoing requirements relating thereto. 21 d) Effectiveness of City Council Action. City's Resolution approving this Agreement shall have become effective pursuant to California law prior to the Effective Date. 2.7 Delegation of Authority The administration of this Agreement by the City shall be under the supervision and direction of the City Manager's office and the actions specified in this Agreement, unless otherwise stated, shall be taken by the City Manager. 2.8 Limitations to Scope Notwithstanding any provision to the contrary contained herein, the exclusive franchise, right and privilege to provide Solid Waste Handling Services at Residential Premises within City granted to Company by this Agreement specifically excludes the following services, which services may be provided by Persons other than Company and which may be the subject of other permits, licenses, franchises or agreements issued or entered by City: a) The sale or donation of Recyclable Material by the Waste Generator to any person or entity other than Contractor; provided, however, to the extent permitted by law, if the Generator is required to pay monetary or non -monetary consideration for the collection, transportation, transfer, or processing of Recyclable Material, the fact that the Generator receives a reduction or discount in price (or in other terms of the consideration the Generator is required to pay) shall not be considered a sale or donation; b) Solid Waste, including Recyclable Materials and Green Waste, which is removed from any Premises by the Waste Generator, and which is transported personally by such Generator (or by his or her full-time employees) to a processing or Disposal Facility in a manner consistent with all applicable laws and regulations; c) Containers delivered for Recycling under the California Beverage Container Recycling Litter Reduction Act (California Public Resources Code, Section 14500, 22 et. seq.); d) Green Waste removed from a Premises by a gardening, landscaping, or tree trimming Company, utilizing its own equipment, as an incidental part of a total service offered by that Company rather than as a hauling service; e) The Collection, transfer, transport, Recycling, processing, and disposal of Construction and Demolition Debris; f) The Collection, transfer, transport, Recycling, processing, and disposal of animal waste (excluding horse manure which is included in the scope of this Agreement) and remains from slaughterhouse or butcher shops for use as tallow; g) The Collection, transfer, transport, Recycling, processing, and disposal of by- products of sewage treatment, including sludge, sludge ash, grit and screenings; h) The Collection, transfer, transport, Recycling, processing, and disposal of Hazardous Substances, Hazardous Waste, and radioactive waste regardless of its source; i) The Collection, transfer, transport, Recycling, processing, and disposal of Solid Waste by the City through City officers or employees in the normal course of their employment; j) Solid Waste Handling Services for governmental agencies other than City, which may have facilities in City, but over which City has no jurisdiction in connection with the regulation of Solid Waste; k) The Collection, transfer, transport, Recycling, processing, and disposal of Solid Waste when such Solid Waste is Collected and transported in a Rolloff Box; 1) Temporary Bin Service; m) Solid Waste Handling Services at Commercial Premises; excepting the Collection of Source Separated diapers for Recycling as set forth in Section 4.14 hereof which 23 services are part of the grant contained herein; and, n) Solid Waste Handling Services provided by any Person having a legal right to continue doing so, pursuant to Public Resources Code Section 49520, et seq., or otherwise, as long as and to the extent such legal right continues to exist. While the grant contained herein shall not be exclusive with respect to the above noted matters, Company shall still be obligated to provide those services which may be included in the above (i.e., Collection of Bulky Items) pursuant to the rates, and other terms, as set forth to in this Agreement. The exclusive franchise, right and privilege to provide Solid Waste Handling Services at Residential Premises within City granted to Company by this Agreement shall be interpreted to be consistent with all applicable state and federal laws, now in effect and adopted during the term of this Agreement, and the scope of this Agreement shall be limited by all applicable current and developing laws and regulations. In the event that future interpretations of current law, future enactments or developing legal trends limit the ability of City to lawfully grant Company the scope of services as specifically set forth herein, Company agrees that the scope of this Agreement will be limited to those services and materials which may be lawfully provided, and that City shall not be responsible for any lost profits claimed by Company as a result thereof. 2.9 City's Right to Direct Changes 2.9.1 General City may direct Company to perform additional services (including new diversion programs, etc.) or modify the manner in which it performs existing services or bills for services. Pilot programs and innovative services which may entail new Collection methods, different kinds of services and/or new requirements for Waste Generators, and use of new or alternative waste processing and disposal technologies are included among the kinds of changes which City may direct. Company shall be entitled to an adjustment in its Company Compensation for providing such additional or modified services, at a rate of profit estimated at 10% of the incremental cost of such additional or modified services. City may utilize cost components included in the Company's 24 Proposal in calculating equitable rate adjustments. If the City Manager and Company can not agree upon the amount of a rate adjustment authorized pursuant to this Section, the City Council shall make the final determination and its decision shall be final and binding. 2.9.2 New Diversion Programs If requested by City under Section 2.9.1, Company shall present, within 30 days of a request to do so by City, a proposal to provide additional or expanded diversion services. The proposal shall contain a complete description of the following: 6 Collection methodology to be employed (equipment, manpower, etc.). 0 Equipment to be utilized (vehicle number, types, capacity, age, etc.). 0 Labor requirements (number of employees by classification). • Type of Containers to be utilized. Type of material to be Collected. Provision for program publicity/education/marketing. • Three-year projection of the financial results of the program's operations in a balance sheet and operating statement format including documentation of the key assumptions underlying the projections and the support for those assumptions. 2.10 Ownership of Solid Waste City and Company understand and agree that it is Company, and not City, who will arrange to Collect Solid Waste, that City has not, and, by this Agreement does not, instruct Company on its Collection methods, nor supervise the Collection process; nor do the Parties intend to place title to Solid Waste Collected by Company in City. Rather, the Parties intend that whatever, if any, title in and to the Solid Waste that is Collected by Company which otherwise might exist in or with City in the absence of 25 this Agreement is hereby transferred to Company; and further that if Company gains title to such Solid Waste it is by operation of law and agreement with its Customers and is not the result of this Agreement. Subject to the provisions of this Agreement, and unless City exercises its rights to direct the location for Disposal and processing of Solid Waste, Company shall have the right to retain, Recycle, process, Dispose of, and otherwise use Solid Waste Collected pursuant to the terms hereof in any lawful fashion or for any lawful purpose; and, further, shall have the right to retain any benefit resulting from its right to retain, Recycle, process, Dispose of, or reuse the Solid Waste which it Collects. 2.11 Company Status Company represents and warrants that is duly organized, validly existing and in good standing under applicable laws. It is qualified to transact business in the State of California and has the power to own its properties and to carry on its business as now owned and operated and as required by this Agreement. 2.12 Company Authorization Company represents and warrants that it has the authority to enter into and perform its obligations under this Agreement. The Board of Directors or partners of Company (or the shareholders, if necessary) have taken all actions required by law, its articles of incorporation, its bylaws or otherwise to authorize the execution of this Agreement. The Persons signing this Agreement on behalf of Company have authority to do so. Company shall authorize one employee for the City as a single point of contact for issues arising under this Agreement, and Company acknowledges and agrees that City may expect and assume that this employee's actions are taken on behalf of and with the full approval of the Company. 2.13 Annexations Company's rights and obligations as set forth in this Agreement shall apply in any territory annexed to the City during the Term of this Agreement, except to the extent that the application of such rights and obligations within such annexed territory would violate the provisions of Public Resources Code Section 49520 et. seq., or any other law or regulation relating to the rights of other solid waste enterprises to continue providing services in annexed areas. In such event, this Agreement shall become effective as to such area at the earliest possible date permitted by law. If upon annexation Company is permitted to provide Solid Waste Handling Services to Customers at Residential Premises in the annexed areas pursuant to preexisting rights granted by another jurisdiction, Company will provide all such Customers in the annexed area with the same services, at the same rates, as are available to Customers at Residential Premises in the balance of City pursuant to the terms of this Agreement 27 ARTICLE 3 FRANCHISE FEE, ADMINISTRATIVE FEE & RECYCLING SURCHARGE In addition to any other consideration set forth herein, as part of its consideration for entering this Agreement, and for the exclusive franchise, right and privilege to provide Solid Waste Handling Services at Residential Premises as specified herein, Company shall provide the following: 3.1 Administrative Fee Company has paid to City an Administrative Fee in a one-time lump sum payment of one hundred fifty thousand dollars ($150,000) to reimburse the City for the staff time and out- of-pocket costs it incurred in connection with entering this Agreement 3.2 Franchise and Recycling Fee 3.2.1 Franchise Fee Amount Throughout the Term of this Agreement Company shall pay to City a Franchise Fee in an amount equal to 10% of the Gross Receipts derived by Company from services provided in City pursuant to the terms of this Agreement, as more fully described in Section 3.2.3. The Franchise Fee shall be submitted along with a report of the revenue upon which the Franchise Fee is calculated by month and by service category (i.e., Single Family Dwellings, Multi -Family Dwellings) such that Gross Receipts from all sources of revenue are easily identifiable. 3.2.2 Recycling Fee Amount In order to support the City's outreach and administration of AB 939 programs, and to offset the costs City will incur in connection therewith as a result of entering this Agreement, Company shall pay a Recycling Fee to City in the amount of approximately $35,000 per year, adjusted annually as set forth herein. The Recycling Fee shall be payable in May of each Rate Year, with the first payment of $35,000 due in May 2006, and shall be deemed late if received after May 31. 28 The Recycling Fee shall be an annual payment in amount equal to the greater of either $35,000 or fifty -percent (50%) of the City's annual personnel expenses for a Project Development Coordinator (Grade 42), a non -bargaining, exempt, non -management position within the City of Santa Clarita with responsibility for coordinating recycling activities. City's annual personnel expenses for the Project Development Coordinator includes all regular City of Santa Clarita health benefits, Public Employee Retirement System (PERS) benefits, Consumer Price Increases (which are calculated using an average of the following factors: Los Angeles/Riverside/Orange County -CPI All Urban Consumers; All Urban Wage Earners and Clerical Workers), overhead expenses and pay grade increases. In the event it is impossible or impractical to determine the actual amount of the Recycling Fee due in any Rate Year as of the date payment is due, the City Manager may authorize Contractor to make a partial paymL-nt in such amount as he deems appropriate as of the due date, with the balance due at such other time as he determines. 3.2.3 Time and Method of Payment On or before the twentieth (20th) day following the end of each calendar quarter during the Term of this Agreement, Company shall remit to City a sum of money equal to the percent, as provided in Section 3.2.1, of the Gross Receipts collected by Company as a result of services provided within City pursuant to the terms hereof during the preceding calendar quarter, as a Franchise Fee. If the Franchise Fee is not paid on or before the twentieth (20th) day following the end of the calendar quarter, Company shall pay to City a penalty in an amount equal to two percent (2%) of the amount owing for that quarter. If the Recycling Fee, as provided in Section 3.2.2 above, is not paid by May 31st of each Rate Year (or by such other date as may be authorized by the City Manger in writing pursuant to Section 3.2.2), Company shall pay to City a penalty in an amount equal to two percent (2%) of the amount owing for that year. Company shall pay an additional two percent (2%) owing on any unpaid balance for each following thirty (30) day period the Franchise Fee and/or Recycling Fee remains unpaid. Late payment penalties shall not be included in any revenue requirement. City may 29 charge the same late payment penalties for other payments due to the City pursuant to the terms hereof. Each quarterly Franchise Fee remittance to City shall be accompanied by a statement detailing Gross Receipts for the period covered from all operations conducted or permitted, pursuant to this Agreement. In addition, Company shall maintain copies of all Billing and Collection records for five (5) years, following the date of Billing, for inspection and verification by City or its authorized representatives at any reasonable time upon request. 30 ARTICLE 4 DIRECT SERVICES 4.1 Refuse 4.1.1 General The work to be done by Company pursuant to this Agreement shall include, but not be limited to, the furnishing of all labor, supervision, equipment, materials, supplies, and all other items necessary to perform the services required. The enumeration of, and specification of requirements for, particular items of labor or equipment shall not relieve Company of the duty to furnish all others, as may be required, whether enumerated elsewhere in the Agreement or not. The work to be done by Company pursuant to this Agreement shall be accomplished in a thorough and professional manner so that all Customers are provided reliable, courteous and high -quality Solid Waste Handling Services at all times. The enumeration of, and specification of requirements for, particular aspects of service quality shall not relieve Company of the duty of accomplishing all other aspects in the manner provided in this section, whether such other aspects are enumerated elsewhere in the Agreement or not. 4.1.2 Refuse Cart Collection/Super Saver Except for those Customers that City determines may receive In -Ground Service or Manual Service, and those Customers that choose to receive Bins for service, Company shall provide all Customers at Single Family Dwellings with a 90-Gallon Cart for Collection of Refuse ("Refuse Cart(s)"), and shall Collect all Refuse placed therein for Collection not less than once per week. Company shall substitute 64-gallon Refuse Carts to space -constrained or physically challenged Customers upon request. Company may continue to use 90-Gallon Refuse Carts it previously distributed to its existing Customers under a previous franchise agreement, provided such Customers shall be provided with a new Cart upon request. Company may also continue to use 90-Gallon Refuse Carts previously distributed by Atlas (Republic Services, Inc.) to Atlas' customers under that 31 company's preexisting franchise agreement with the City; provided, however, if Atlas Refuse Carts are used, then Company will label the Atlas Carts with Company's name by using a decal or other means acceptable to City. All Customers may request that their Cart be exchanged for a different size Cart at no additional charge. Wherever feasible, Customers shall be directed to place Carts for Collection in the street gutter, against the curb. Company shall relocate Carts for Collection, when necessary, and return them to their original position. Standard service includes one Refuse Cart. Customers may obtain additional Refuse Carts for an additional monthly charge that does not exceed the maximum rate set forth on Exhibit 2. Any Single Family Dwelling that requests Refuse Collection in a Bin shall be provided service in that manner pursuant to Section 4.1.6, instead of with a Cart, at rates that do not exceed those set forth on Exhibit 2. At the customer's request and for a reduced rate, Company shall provide all Customers eligible for cart service with a 35 gallon Refuse cart (otherwise referred to as a "Super Saver' cart). The Refuse cart will be available to residents beginning July 1, 2011. Customer's that opt for this service will be required to return their larger Refuse cart to Company at no additional charge. Company also agrees to offer 64 gallon carts to customers who are willing to pay the 90-gallon rate but want the smaller cart due to space constraints. Super Saver Cart service will be provided at rates that do not exceed those set forth on Exhibit 2. 4.1.3 Refuse Overage Customers may periodically generate more Refuse than will fit in the Refuse Cart(s), but not consistently enough to maintain additional Refuse Carts. Customers are therefore entitled to eight (8) annual pickups of material that does not fit in the Refuse Cart(s) at no additional cost, except that Customers using 35-gallon Refuse Cart(s) are entitled to four (4) annual pickups. One pickup shall consist of up to three large bags, boxes or barrels of refuse. Company shall Collect all Refuse put out for Collection in addition to the foregoing pickups to be provided at no charge, and Customers may be charged $5.00 per pickup for pickups above eight (8) or four (4) per year, as the case may be. In addition to the eight free Collections, Company shall Collect all additional bags of Refuse placed out for Collection at no additional charge during the period beginning December 26 through the end of the holiday tree Collection period. This service is limited to bagged Refuse that could otherwise be placed in the Refuse Cart, and not Bulky Items, which are Collected in 32 accordance with Section 4.1.9, Section 4.1.10 and Section 4.1.11. 4.1.4 In -Ground Refuse Container Collection Company shall provide weekly Refuse Collection service to Customers of Single Unit Dwellings with in -ground Containers ("In -Ground Service"). Company shall remove such Containers from their in -ground housing, bring them to the truck for dumping, and return them to the in -ground housing, covered. Company shall not be obligated to provide Customers receiving In -Ground Service with Green Waste Collection as described in Section 4.3. 4.1.5 Manual Collection In cases where City determines that Solid Waste Handling Services utilizing Cart's is not feasible at Single Family Dwellings, Company shall provide Solid Waste Handling Services by manual means (i.e., manually lifting Containers and dumping their contents into a Collection vehicle) ("Manual Service.") Company shall not be required to provide Refuse Carts to Customers receiving Manual Service, and such Customers shall provide their own Refuse Containers. Company shall not be obligated to provide Customers receiving Manual Service with Green Waste Collection as described in Section 4.3. 4.1.6 Residential Bin Refuse Collection Company shall provide all Customers at Multi -Family Dwellings with a Bin for Collection of Refuse, and shall Collect all Refuse placed therein for Collection not less than once per week. City shall have the right to determine the number and size of Containers and frequency of Collection. Single Family Dwellings may elect to use Bins for Refuse rather than Carts, space permitting and at the City's discretion. Company shall provide Single Family Dwellings that elect to utilize Bins with the same service as Multi -Family Dwellings, except that Company may limit Single Family Dwellings to Green Waste Cart, not Bin, service. 4.1.7 Street Litter Cart Collection 33 Company shall Collect and dispose of all Solid Waste deposited in City's street litter Carts as set forth below, as part of the consideration for the City granting it the exclusive rights for Solid Waste Handling Services set forth herein. All such Carts will be emptied as frequently as necessary to prevent overflow, but no less than twice per week unless otherwise approved in writing by the City. City shall purchase automated street litter Carts (for both Refuse and Recyclable Materials), which Company shall distribute and service as described above at no cost to City. City has street litter cans that are manually serviced; these cans shall be Collected by City crews. Including extensions, Company will service up to 300 sets of street litter Carts at no cost to City. Any sets of street litter Carts in excess of the above shall be serviced by Company for the rate shown in Exhibit 2. 4.1.8 Street Litter Abatement Program As part of the consideration for the City granting it the exclusive rights for Solid Waste Handling Services set forth herein, every quarter of each Rate Year Company shall provide City with one collection vehicle and eight man-hours of labor per week for assistance with litter abatement, at no charge to City. The equipment and man-hours may be used and counted concurrently to meet Company's obligations under this Section and Section 4.1.12. 4.1.9 Community Cleanup Program As part of the consideration for the City granting it the exclusive rights for Solid Waste Handling Services set forth herein, Company shall provide a maximum of five sets of Rolloff Boxes per quarter to communities wishing to participate in the City's Community Cleanup Program. The communities will be approved and selected at the City's sole discretion and the events must not occur during the week prior, the week of, or the week after a holiday. If the City fails to identify five communities for any given quarter, all unused sets shall not carry over until the next quarter. 4.1.10 On -Call Bulky -Item Pickup Company shall provide Bulky -Item pickup service to all Customers of Single Family and Multi -Family Dwellings. Each Customer shall be entitled to four pickups per year, with a maximum of three items per pickup at no charge. Company may instruct Customers to 34 provide Company with 48 hours notice for the items which shall be Collected on the Customer's regular Collection day. However, the Company will be expected to Collect all items placed for Collection, even if the Customer did not call in. Company shall Collect all Bulky Items as defined in Section 1.6 and conform with Section 4.1.9, including items referred to as electronic waste or "e-waste" (which items shall be Collected and disposed of in accordance with all applicable laws and regulations). Company may Bill Customers for Bulky Item pickups in excess of those set forth above at rates not exceeding those set forth on Exhibit 2. 4.1.11 Bulky -Item Drop-off Customers may drop-off unlimited Bulky Items, including electronic waste, at the Company's site within the City Monday through Friday, from 8:00 a.m. to 5:00 p.m. Company shall not charge Customers for accepting, processing or Disposing of Bulky Items so delivered. Company shall handle and dispose of all electronic waste so deposited at its facility in accordance with all applicable laws and regulations. 4.1.12 Special Pickup As part of the consideration for the City granting it the exclusive rights for Solid Waste Handling Services set forth herein, Company will collect all items abandoned in City's public right-of-ways or on City's public property within 24 hours of notification from the City to do so. In addition, beginning July 1, 2011, Company shall develop regular fixed collection routes for Monday through Friday for the areas with frequent abandoned items, by mutual agreement between the City and Company, for a total of eight (8) hours per week. Company shall not charge City for these services. While these routes are anticipated to be used for Collection of abandoned items, the City may direct Company to use these eight (8) service hours per week for other City needs. Any changes or additions to the designated routes shall be by mutual agreement between the City and Company. -Notwithstanding the above, Company will not be responsible for cleaning up, handling, transporting or disposing of any illegally -dumped Hazardous Waste, Hazardous Substance, or Infectious Waste. 4.1.13 Bulky Item Diversion 35 Bulky Waste Collected by Company in accordance with Sections 4.1.9, 4.1.10, 4.1.11 or 4.1.12, or otherwise Collected under this Agreement, may not be landfilled or disposed of until the following hierarchy of diversion efforts has been followed by Company: 1) Reuse as is (if energy efficient) 2) Disassemble for reuse or Recycling 3) Recycle, transformation, other means of diversion 4) Disposal This hierarchy is intended to preclude the use of front or rear loading packer vehicles for Bulky Items unless the compaction mechanism is not used to compact the Bulky Items, unless they have been designated for Disposal. 4.1.14 Disposal of Electronic Waste Company shall not dispose of electronic Waste, or "e-waste," Collected in accordance with Sections 4.1.9, 4.1.10 or 4.1.11 or by other means under this Agreement, in any landfill, and instead shall divert such waste by taking it to a properly permitted facility, or otherwise disposing of it in accordance with all applicable laws and regulations. 4.1.15 Emergency Collection and Disposal Service Company will assist City at the City's request with emergency Collection and Disposal service (in the event of major disaster, such as an earthquake, storm, tidal wave [tsunami], riot or civil disturbance), or as otherwise determined necessary by the City), by providing Collection vehicles and drivers normally assigned to the City, at the rates not exceeding those set forth on Exhibit 2. 4.1.16 Collection of Former Contractor's Containers Except for existing Refuse Carts that will remain in service during the Term pursuant to Section 4.1.2, if any solid waste enterprise providing Solid Waste Handling Services to i Customers prior to the Commencement Date does not remove the Containers it had in use prior to the Commencement Date, Company shall Collect and dispose of, or recycle, all such Containers at no additional charge. 4.2 Recycling 4.2.1 Single Family Recycling Collection Company shall provide all Customers at Single Family Dwellings with a Cart for Collection of Recyclable Materials ("Recycling Cart(s)"), and shall Collect all Recyclable Materials placed therein for Collection not less than once per week. Recycling Carts shall have a capacity of 90-gallons, except that Recycling Carts with a capacity of 64 gallons may be utilized when requested by Customers that have space -constraints. Wherever feasible, Customers shall be directed to place Carts for Collection in the street gutter, against the curb. Company shall relocate Carts for Collection, when necessary, and return them to their original position. Customers that regularly fill their Recycling Cart shall be provided with additional carts by Company upon request at no additional charge. Company shall Collect Recyclable Material placed in Recycling Carts for Collection from each Customer on the same day as such Customers' Refuse Cart is Collected. Company shall have a Recycling program whereby it, at a minimum, collects the following: aluminum cans; glass jars and bottles; steel, bi-metal, and tin cans; empty aerosol containers; PET plastic; HDPE plastic; plastics types 3 - 7; plastic bags, shrink wrap, plastic toys and tools, and other plastic materials (if readily identifiable as being recyclable); juice boxes and milk cartons (aseptic packaging, Tetra Pak© and waxed cardboard); Scrap metal, coat hangers and metal foil; newspaper; mixed paper (e.g., ledger, computer, junk mail, magazines, paperback books cereal boxes, envelopes, paper shopping bags and non-metallic wrapping paper); corrugated cardboard; telephone books; and florescent tubes (unless designated as a Hazardous Waste by government authorities). Without in any way limiting Company's obligations set forth above, at a minimum, Company shall ensure that plastic bags collected as part of Company's Recycling Collection service are sorted at a processing facility for Recycling purposes. As of the Effective Date, and until the Commencement Date, Company will be providing Recyclable Material Collection services to the majority of Customers at Single Family Dwellings in the City pursuant to a pre-existing franchise agreement. The Carts that 37 Company would otherwise utilize for this purpose do not meet the specifications hereof for Recycling Carts, and Company has agreed that by June 30, 2004 it will replace all existing Recycling Containers used by Company and Consolidated Disposal Service in the City with new Carts that meet the specifications hereof for Recycling Carts. 4.2.2 In-Ground/Manual Service Area Recycling Options Communities with In -Ground or Manual Refuse Service may request that Company provide a recyclables program tailored to the community at no additional cost. This program may include shared Recyclables Containers, service for each individual dwelling unit, or another method. If Company and community can not agree on specifics of a program, City will make a final determination. 4.2.3 Multi -Family Recycling Collection Customers at Multi -Family Dwellings who request Recycling Collection, shall be provided such service by Company using either Bins, or Recycling Carts, at no additional charge, with the exception of Split -Bins (a Bin with an internal divider to segregate Solid Waste from Recyclable Materials), where the Solid Waste portion of the Bin is subject to the volume charge set forth on Exhibit 2. Recyclable Materials Collected in Bins, and Recycled by Company, pursuant to this provision shall include the same materials as noted above for Collection in Recycling Carts. Company shall provide a monthly report to City identifying all newly established programs for Collecting Recyclable Materials from such Customers, as well as the location of all Split -Bins within the City. Company shall notify City prior to removing any Split -Sin and substituting separate Refuse and Recyclables Collection Containers at a particular location. The location for Bins for the Collection of Recyclable Materials shall be decided between Company and the Customer. Split -Bins shall be used for multi -family premises with insufficient space to accommodate separate Bins for both Solid Waste and Recyclable Materials. Should Company and Customer not be able to mutually agree to a Collection location, the City shall make this determination, and its decision shall be final. Company's Recycling program pursuant to this Section shall, at a minimum, be geared toward Collecting the same materials Collected for Recycling pursuant to Section 4.2.1. 38 Company will provide one (1) drop-off recycling site in the City, one at Company's yard, at which City residents may deposit material for Recycling, with the intended purpose of servicing those Customers at Multi -Family Dwellings who may not otherwise receive Recycling Collection service. Materials accepted shall be the same as those Collected for Recycling pursuant to Section 4.2.1. This service, including Collection and disposal costs, shall be provided at no additional cost. 4.2.4 Warning Notice Company may refuse to Collect Recyclable Materials and shall not be obligated to continue to provide any type of Container for Recyclable Materials to any Customer who, after reasonable warning, regularly fails to properly sort and set out Recyclable Materials for Collection; provided, however, Company shall obtain City approval prior to taking such action. Reasonable warning as used herein shall mean three (3) written warnings in any Rate Year. Company shall notify City on a monthly basis of any warning notices issued pursuant to this Section, and shall provide copies of such warnings to City upon request. 4.2.5 Marketing and Sale of Recyclable Materials Company shall be responsible for marketing and sale of all Recyclable Materials Collected pursuant to this Agreement. Beginning April 15, 2006, Company shall pay City $5.50 per ton on Recyclable Materials revenue for use by the City in awarding grants to non-profit organizations providing a benefit to the City and/or environment. This shared revenue, from all recovered recyclable material except for green waste, source separated diapers or diverted bulky items, shall be paid to the City on a quarterly basis, within 20 days of the end of the calendar quarter. City may apply late penalties in accordance with Section 3.2.3. If City instructs Company to direct Recyclable Material to a City MRF in accordance with Section 4.16, the $5.50 per ton revenue sharing payment set forth above shall no longer apply. Tonnage upon which the shared revenue is calculated may be the tonnage after processing and removing residual waste, if the Company can document to the City's satisfaction these tonnage figures. If such documentation is not available in a sufficient form, shared revenue shall be based on the tonnage delivered for processing. Tonnage 39 reports, broken down by month, shall accompany quarterly payments. 4.2.6 Minimum Recycling Requirements By the calendar quarter ending September 30, 2006, Company shall recycle or divert from landfill disposal 50% of all Solid Waste Collected pursuant to this Agreement, understanding the City has an overall goal of 75% diversion. Solid Waste Collected shall only be considered to have been recycled or diverted as required under this Agreement if it is deemed to be diversion by the California Integrated Waste Management Board in connection with efforts to meet City's AB 939 diversion goals. Company shall provide documentation to the City within 20 days of the end of each calendar quarter stating and supporting that quarter's diversion rate. Diversion from other sources other than Company's Collection and diversion efforts (such as source reduction, reuse, or recyclables diverted by solid waste enterprises Collection of materials that are not the subject of this Agreement or the efforts of self -haulers) shall not be counted as diversion achieved by Company. Company shall pay a penalty to City of Ten Thousand Dollars ($10,000) for each quarter in which the Company can not provide documentation verifying this 50% diversion was achieved. Payment of this penalty is due within 20 days of the end of each calendar quarter, along with the documentation stating and supporting that quarter's diversion rate, and is subject to the late payment provisions hereof. If City instructs Company to direct Solid Waste to a City MRF in accordance with Section 4.16, Company will be credited with a diversion rate for purposes of this Agreement for all such Solid Waste directed to such a MRF that is equal to the greater of the actual diversion rate achieved or the rate being achieved by Company for the same Solid Waste prior to such time as it is directed to the City's MRF. 4.2.7 Multi -family Bin Mixed Waste Processing Upon the start of operations at the Sun Valley Recycling Park (anticipated July 1, 2013), or agreed upon Material Recovery Facility, Company shall provide mixed waste processing 40 for not less than 50% to 65% of all Refuse (as measured by weight) Collected pursuant to this Agreement in Bins. Company shall achieve a diversion rate of not less than 50 % to 55% for all loads that receive mixed waste processing as required by this provision, resulting in total diversion of not less than 25% to 36% of the waste stream collected from multi -family complexes that is the subject of this Agreement from this program. Company will provide this service at no additional cost to City or Customers. 4.3 Green Waste Program 4.3.1 Green Waste Collection Company shall provide all Customers at Single Family Dwellings that receive Refuse Collection utilizing Refuse Carts (and, if feasible as determined by City, In -ground and Manual Service Customers) with a new Cart for Collection of Green Waste ("Green Waste Cart(s)"). Company shall Collect all Green Waste placed in Green Waste Carts, as well as all Green Waste bundled as set forth below, and put out for Collection by Customers not less than once per week. Green Waste Carts shall have a capacity of 90 gallons, except that Green Waste Carts with a capacity of 64-gallons may be utilized when requested by Customers that have space -constraints. Wherever feasible, Customer's shall be directed to place Carts for Collection in the street gutter, against the curb. Company shall relocate Carts for Collection, when necessary, and return them to their original position. Customers that regularly fill their Green Waste Cart shall be provided with additional carts by Company upon request at no additional charge. Company shall Collect Green Waste placed for Collection either in Green Waste Carts or bundled as provided below from each Customer on the same day as such Customers' receive Refuse Collection. Company shall have a Green Waste Recycling program whereby it, at a minimum, collects the following types of Green Waste in Green Waste Carts from Customers: food waste (upon program implementation in accordance with Section 4.3.5), leaves, grass clippings, weed, twigs, shrubbery and tree trimmings. Company shall only be obligated to collect Green Waste set out for Collection in bundles if it is a maximum of forty-eight (48) inches long and twenty-four (24) inches in diameter, with each bundle weighing less than fifty (50) lbs. Customers of Multi -Family Dwellings shall be provided weekly Green Waste 41 Collection by Company at no additional charge upon request, and may select either a Green Waste Cart or a Bin for Green Waste Collection, as space and need requires. Any disputes between Customers and Company regarding any aspect of providing Green Waste Collection for Multi -Family Dwelling Customers shall be decided by City, and its decision shall be final and binding on the parties. 4.3.2 Green Waste Service Exemption Customers of Single Family Dwellings that receive Refuse Collection utilizing Refuse Carts, and who demonstrate to the satisfaction of City that they either do not generate Green Waste, or already use other means to divert the Green Waste they generate from landfilling, may request that they not receive a Green Waste Cart or Green Waste Collection. Such Customers shall receive a $2.00 per month discount to the maximum rate they may be charged by Company. 4.3.3 Holiday Tree Collection Program Company shall operate an annual holiday tree Collection program, beginning December 26th and continuing through 10:00 P.M. on the second Saturday in January. During this period all holiday trees placed out for Collection by Customers shall be Collected by Company. 4.3.4 End Uses for Green Waste Company shall divert Green Waste materials Collected through weekly Collection, holiday tree Collection and mixed waste processing (if applicable) from Disposal. Company must provide end uses for Green Waste that maximize diversion credits for City according to regulations established by the California Integrated Waste Management Board. Company shall divert through uses other than as alternative minimum daily cover whenever feasible. 4.3.5 In -Home Food Waste Containers On or after April 15, 2006, as requested by City, Company shall provide in -home food waste Containers to all Single Family and/or Multi -Family Dwelling Customers at no 42 additional cost. Company shall implement a pilot program prior to full program implementation. City may request that all or only a designated segment of such Customers be provided these Containers. Said Containers shall be designed to be used to transfer food waste from inside the dwelling unit to either a Green Waste Container for Collection or to a composting bin. Company shall obtain City approval for the specific food waste Container type it proposes to utilize prior to ordering them. 4.4 Manure Collection Company shall provide any Customer that requests a Container for the Collection of manure with either a 64-gallon Cart (considered a green waste cart) or a Bin. Company shall collect all manure placed in a green waste cart or Bin at least once per week, or more often if arranged between Customer and Company. Customers may be instructed not to fill the Containers above a specified line or weight, so as not to damage the Containers or Collection equipment, and City shall resolve any disputes regarding the maximum weight that may be accommodated in such Containers. Customers may place the manure in their green waste carts, which is provided at no charge. Customers that utilize bin service for manure collection may be charged no more than the rate as set forth in Exhibit 2 for refuse collection service of the same size Container and at the same frequency. All manure collected shall be diverted from landfilling through composting or other means and may not be collected or commingled with Refuse. 4.5 Operations 4.5.1 Schedules To preserve peace and quiet, Solid Waste shall only be Collected between 7:00 A.M. and 7:00 P.M. Monday through Friday and 8:00 A.M through 6 P.M. Saturday. There shall be no Collection on Sunday without prior City approval. If the regularly scheduled Collection day falls on New Year's Day, Memorial Day, Fourth of July, Labor Day, Thanksgiving Day, or Christmas Day, Collection days for the remainder of that week shall all be postponed one Collection day. If one of these holidays falls on a Saturday, the Company shall perform Collection on the following Monday. 43 Company shall review its operations plan outlining the Collection routes, intervals of Collection and Collection times for all materials Collected under this Agreement with City at least once annually, and upon 30-day written notice requesting said review. If the plan is determined to be inadequate by City, Company shall revise it incorporating any changes necessary to make it satisfactory to City within thirty (30) days. When notified of a missed pick-up, Company shall Collect the Refuse, Recyclable Materials, Manure and/or Green Waste that was not Collected within twenty-four (24) hours. 4.5.2 Vehicles A. General. Company shall provide vehicles for the Collection of Solid Waste ("Collection Vehicles") that are sufficient in number and capacity to efficiently perform the work required by this Agreement in strict accordance with its terms, and at a minimum as described in Company's Proposal. Company is expressly obligated to provide such Collection Vehicles and routes as are required to meet the service standards set forth herein, even if such Collection Vehicles and routes exceed those set forth in Company's Proposal. Company shall have available on Collection days sufficient back- up vehicles for each type of Collection Vehicle used to respond to complaints and emergencies. B. Specifications. Company shall operate no Collection Vehicles within the City that are over 15-years in age during the Term of this Agreement. All Collection Vehicles used by Company in providing services pursuant to this Agreement, excluding spares, shall use alternative fuel beginning July 1, 2013 and continuing for the entirety of the Term hereof. Qualifying vehicles include vehicles that use compressed natural gas or liquefied natural gas, dual fuel vehicles, or other alternative fuel vehicles with similar emission performance standards meeting the requirements of the Southern California Air Quality Management District. Such vehicles must be registered with the California Department of Motor Vehicles and shall have water -tight bodies designed to prevent leakage, spillage or overflow. In addition, Company's Collection vehicles shall comply with SCAQMD Rule 1193 and the Air Resource Board's proposed new emission standards for Refuse removal vehicles, and any and all Federal, State and local laws and regulations that may be enacted during the term of this Agreement. C. Vehicle Identification. Company's name, local telephone number, and vehicle identification number designed by Company for each Collection Vehicle shall be prominently displayed on all such vehicles, in letters and numbers no less than five inches (5") high and no more than eight inches (8") high. All Collection Vehicles shall display the words, "Serving the City of Santa Clarita" in letters no less than two inches (2") high. All Collection Vehicles will display the seal of the City of Santa Clarita, in a figure at least twelve inches (12") in diameter. All equipment of Company used to provide the services set forth in this Agreement shall be subject to inspection by City on a semi-annual basis. D. Vehicle as City Billboard. Company shall dedicate one (and if requested two) sides of all Collection Vehicle packer bodies to display a City billboard, of dimensions determined by City. Company shall be responsible for affixing and removing this signage. City shall pay all other costs relating to the creation of this signage. Company shall not allow any other advertising on its Collection Vehicles. E. Cleaning and Maintenance. 1) Company shall maintain all of its properties, vehicles, facilities, and equipment used in providing service under this Agreement in a good, safe, neat, clean and operable condition at all times. 2) Collection Vehicles shall be painted, thoroughly washed, and thoroughly steam cleaned on a regular basis so as to present a clean appearance. City may inspect vehicles at any time to determine compliance with this Agreement. Company shall also make all Collection Vehicles available to the Los Angeles County Health Department for inspection, at any frequency it requests. Company agrees to replace or repair to the City's satisfaction, any Collection Vehicle which City determines to be of unsightly appearance, leaking, or in unsatisfactory operating condition. 3) Company shall repaint all Collection Vehicles at least every two years, and within thirty (30) days' notice from City, if City determines that their appearance warrants painting. 4) Company shall inspect each Collection Vehicle daily to ensure that all equipment is 45 operating properly. Collection Vehicles which are not operating properly shall be removed from service until repaired and operating properly. Company shall perform all scheduled maintenance functions upon Collection Vehicles in accordance with the manufacturer's specifications and schedule. Company shall keep accurate records of all Collection Vehicle maintenance, recorded according to date and mileage and shall make such records available to City upon request 5) Company shall repair, or arrange for the repair of, all of its vehicles and equipment for which repairs are needed because of accident, breakdown or any other cause so as to maintain all equipment in a safe and operable condition. Company shall maintain accurate records of repair, which shall include the date and mileage, nature of repair and the verification by signature of a maintenance supervisor that the repair has been properly performed. 6) Company shall clean up any leaks or spills from their vehicles per the NPDES permit in effect at the time. No fluids shall be washed into storm drains at anytime. All NPDES dry-cleaning measures shall be complied with. All Collection vehicles must be equipped with absorbent for such clean up efforts. 7) Upon request, Company shall furnish City a written inventory of all equipment, including Collection Vehicles, used in providing service pursuant to this Agreement. This inventory shall list all equipment by manufacturer, ID number, date of acquisition, type, and capacity. F. Operation. Vehicles shall be operated in compliance with the California Vehicle Code, and all applicable safety and local ordinances. Company shall not load vehicles in excess of the manufacturer's recommendations or limitations imposed by state or local weight restrictions on vehicles. Company's equipment shall comply with US EPA noise emission regulations, currently codified at 40 CFR Part 205 and other applicable noise control regulations, and such noise control features shall be incorporated throughout the entirety of all Collection Vehicle. Noise levels of equipment used forl Collection shall comply with City ordinance and in no event shall the noise level exceed 75 dba when measured at a distance of 25 feet from the vehicle, five feet from the ground. Company shall store all equipment in safe and secure locations in accordance with City's applicable zoning regulations. Subject to Section 9.1, Company shall be responsible for any damage resulting from or directly attributable to any of its operations, and which it causes to: City's driving surfaces, whether or not paved; associated curbs, gutters and traffic control devices; and all other public and private improvements. G. City Inspection per Code. City may cause any vehicle used in performance of this Agreement to be inspected and tested at any commercially reasonable time and in such manner as may be appropriate to determine that the vehicle is being maintained in compliance with the provisions of the State Vehicle Code, including, but not limited to, California Vehicle Code Sections 27000(b), 23114, 23115, 42030, 42032, and all Vehicle Code Sections regarding smog equipment requirements. City may direct the removal of any vehicle from service if that vehicle is found to be in nonconformance with applicable codes. No vehicle directed to be removed from service shall be returned to service until it conforms with, and its return to service has been approved by the City. H. Brake Inspections. The brake system of each vehicle used in performance of this Agreement shall be inspected and certified annually according to state law by the California Highway Patrol or by a brake inspection station licensed by the California Highway Patrol. Notice of certification shall be filed with the City within thirty (30) days after each such certification. Failure to submit the required certification shall be grounds for terminating this Agreement. I. Correction of Defects. Following any inspection, the City Manager shall have the right to cause Company, at its sole cost and expense, to recondition or replace any vehicle or equipment found to be unsafe, unsanitary or unsightly. The City Manager's determination may be appealed to the City Council, whose decision shall be final. 4.5.3 Containers 4.5.3.1 Company -Provided Carts A. Cart Design Requirements All Carts utilized in the performance of this Agreement shall be manufactured by injection or rotational molding and 47 meet the Cart design and performance requirements as specified below. All Carts used in the performance of this Agreement, (with the limited exception of Carts which may be used by existing Customers as set forth in Section 4.1.2) shall be new and shall not have been used in connection with services provided pursuant to any prior franchise or otherwise. The manufacturer, finish, and model of all Carts selected shall be subject to written City approval which Company is to obtain prior to its placement of purchase orders therefore. B. Capacity Sections 4.1, 4.2, 4.3 and 4.4's references to Cart sizes of 90- and 64 and 35-gallons are approximate. The Company shall provide Refuse Carts of approximately 90- and 64 and 35 gallons, Recycling and Green Waste Carts of approximately 90- and 64-gallons in size, and manure Carts of approximately 64-gallons in size. Acknowledging the different sizes provided by the various Cart manufacturers, the Carts shall be uniform in appearance and must conform to the following ranges in size: 0 30- to 38 gallons 0 60- to 70-gallons, and 90- to 101-gallons. C. Cart Handles The Cart handles and handle mounts may be an integrally molded part of the Cart body or molded as part of the lid. The Cart handles will provide comfortable gripping area for pulling or pushing the Cart or lifting the lid. Pinch points are unacceptable. D. Cart Lid Each Container shall be provided with a lid that continuously overlaps and comes in contact with the Container body or otherwise causes an interface with the Container body that simultaneously: • Prevents the intrusion of rainwater, rodents, birds, and flies; w Prevents the emission of odors; Enables the free and complete flow of material from the Container during the dump cycle without interference with the material already deposited in the truck body or the truck body itself and its lifting mechanism; Permits users of the Container to conveniently and easily open and shut the lid throughout the serviceable life of the Container; o The lid handle shall be an integrally molded part of the lid; • The lid (and body) must be of such design and weight that would prevent an empty Container from tilting backward when flipping the lid open; and, The lid shall be hinged to the Cart body in such a manner so as to enable the lid to be fully opened, free of tension, to a position whereby it may rest against the backside of the Container body. E. Cart Colors The Refuse, Recycling and Green Waste Carts will be differentiated by color. The colors shall be colorfast and resistant to fading as a result of weathering or ultraviolet degradation. Color must be uniform within each Container. Refuse Carts will be black, brown or gray. Recycling Carts will be blue. Green Waste Carts will be green. Manure Carts may be any color, approved in advance by City, provided all such Carts are the same color and are not similar to any other Cart colors. F. Identification Markings All markings on the Containers shall be approved by the City in advance of ordering Carts. An arrow (at least 3 inches by 5 inches) hot stamped in white color shall be placed on the lid, indicating the direction of Cart placement. Sit In character size of no less than 3 16 inches, the phrase: PLACE CONTAINER WITH ARROW FACING STREET FOR COLLECTION COLOQUE EL RECIPIENTE CON LAS FLECHAS HACIA LA CALLE Additionally, the words REFUSE, RECYCLING, GREEN WASTE, or MANURE must be hot stamped in white color on the front or sides of the Refuse, Recycling, Green Waste and Manure respectively, in characters no less that one inch. Labels/stencils will also list allowable contents and be update as necessary at the Company's cost. G. Cart Performance Requirements All Carts shall be designed and manufactured to meet the minimum performance requirements described below. H. Cart Load Capacity Depending on the capacity, the Carts shall have a minimum load capacity as noted below without Container distortion, damage, or reduction in maneuverability or any other functions as required herein. Cart Size (Gallons) Minimum Load Capacity (LSS) 90-101 200 60-70 130 50 I. Cart Durability Carts shall remain durable, and at a minimum, shall meet the following durability requirements to satisfy its intended use and performance, for the term of this Contract: •' Maintain its original shape and appearance; • Be resistant to kicks and blows; • Remain water -tight; 11 • Require no routine maintenance and essentially be maintenance free; • Not warp, crack, rust, discolor, or otherwise deteriorate over time in a manner that will interfere with its intended use, • Resist degradation from ultraviolet radiation; • Be incapable of penetration by biting or clawing of household pets (i.e., dogs and cats); • The bottoms of Cart bodies must remain impervious to any damage, that would interfere with the Cart's intended use after repeated contact with gravel, concrete, asphalt or any other rough and abrasive surface; • All wheel and axle assemblies are to provide continuous maneuverability and mobility as originally designed and intended; and • Resist degradation by other airborne gases or particulate matter currently present in the ambient air of the City. J. Chemical Resistant 51 Carts shall resist damage from common household or Residential products and chemicals. Carts, also, shall resist damage from human and animal urine and feces. K. Stability and Maneuverability The Carts shall be stable and self -balancing in the upright position, when either empty or loaded to its maximum design capacity with an evenly distributed load, and with the lid in either a closed or open position. The Carts shall be capable of maintaining its upright position in sustained or gusting winds of up to 45 miles per hour as applied from any direction. The Carts shall be capable of being easily moved and maneuvered, with an evenly distributed load equal in weight to its maximum design capacity on a level, sloped or stepped surface. L. Lid Performance Cart lid assemblies shall meet the following minimum requirements: Prevent damage to the Cart body, the lid itself or any component parts through repeated opening and closing of the lid by residents or in the dumping process as intended; Remain closed in winds up to 45 miles per hour from any direction. All lid hinges must remain fully functional and continually hold the lid in the original designed and intended positions when either opened or closed or any position between the two extremes; and, Lid shall be designed and constructed such that it prevents physical injury to the user while opening and closing the Container. 4.5.3.2 Cart Maintenance and Replacement Responsibilities Minor cracks, holes, and other damages to hinges, wheels, axle, hardware, and other 52 component parts shall be readily repairable by Company personnel. All repairs must restore the Cart to its full functionality to meet the design and performance requirements as set for herein. Unsightly/worn-out Carts shall be replaced upon Customer request. The City may intervene, at the City's discretion, in the event of complaints from chronic Cart abusers. The Company shall be responsible for Cart repair and maintenance, graffiti removal, and replacing lost, stolen or damaged Carts within one business day at no additional charge to the Customer or to the City. 4.5.3.3 Cart and Can Ownership All Carts and Cans provided under this Contract shall become the property of the City at the end of this Contract, although the City retains the right to direct the Company to remove and Dispose of the Carts and Cans at the end of the Contract term at no additional charge. 4.5.3.4 Company -Provided Bins The size of the Company -provided Bins shall be determined by mutual agreement of the Customer and Company, and shall be subject to City approval. Company shall clean Bins once per year upon request for no additional charge. Additional cleanings shall be provided in accordance with the approved rate schedule. 4.5.4 Litter Abatement A. Minimization of Spills. Company shall use due care to prevent Solid Waste or fluids from leaking, being spilled and/or scattered during the Collection or transportation process. If any Solid Waste or fluids leak or are spilled during Collection, Company shall promptly clean up all such materials. Each Collection vehicle shall carry a broom, shovel, absorbent, and containment materials at all times for this purpose. Company shall not transfer loads from one vehicle to another on any public street, unless it is necessary to do so because of mechanical failure, accidental damage to a vehicle, or a pre -approved method of Solid Waste transfer between vehicles, without prior written 53 approval by City. S. Clean Up. During the Collection or transportation process, Company shall clean up litter in the immediate vicinity of any Solid Waste storage area whether or not Company has caused the litter. Company shall identify instances of repeated spillage not caused by it directly with the Waste Generator responsible and will report such instances to City. City will attempt to rectify such situations with the Waste Generator if Company has already attempted to do so without success. In the event of a spill of materials (vehicle fluids, green waste leachate, etc.) the Company shall provide a clean-up of the spill to the satisfaction of the City and other governing agencies. Clean-up methods may include pressure washing (Company must capture and reclaim water) or other similar clean-up methods. C. Covering of Loads. Company shall properly cover all open debris boxes during transport to the Disposal Site. 4.5.5 Personnel A. Qualified Drivers. Company shall furnish such qualified drivers, mechanical, supervisory, clerical, management and other personnel as may be necessary to provide the services required by this Agreement in a satisfactory, safe, economical and efficient manner. All drivers shall be trained and qualified in the operation of vehicles they operate and must possess a valid license, of the appropriate class, issued by the California Department of Motor Vehicles. Company shall prescreen all applicants seeking employment which would result in the applicant, if hired, driving company vehicles within City in connection with Company's obligations under this Agreement. The prescreening shall include drug and alcohol testing by an accredited or certified independent testing laboratory, reasonably acceptable to City. Company shall reject any applicant for employment within City who tests positively for any prohibited substance or alcohol. In addition, Company shall conduct unannounced random drug and alcohol testing of all employees performing driving duties under this Agreement within City. The Random testing shall be conducted by an accredited or certified independent testing laboratory reasonably acceptable to City, and shall be performed on a schedule approved by City. Any employee who tests positive for prohibited substances or alcohol shall be 54 immediately and permanently removed from any assignment to perform duties under this Agreement. Company shall annually certify, in writing, to City that it has complied with all responsibilities under this Section, and failure to provide such certification, or the falsification of such certification, shall constitute a material breach of this Agreement. B. Hazardous Waste Employee Training. Company also agrees to establish and vigorously enforce an educational program which will train Company's employees in the identification of Hazardous Waste. Company's employees shall not knowingly place such Hazardous Waste in the Collection vehicles, nor knowingly dispose of such Hazardous Wastes at the processing Facility or Disposal Site. C. Customer Courtesy. Company shall train its employees in Customer courtesy, shall prohibit the use of loud or profane language, and shall instruct Collection crews to perform the work quietly. Company shall use its best efforts to assure that all employees present a neat appearance and conduct themselves in a courteous manner. If any employee is found to be discourteous or not to be performing services in the manner required by this Agreement, Company shall take all necessary corrective measures including, but not limited to, transfer, discipline or termination. If City has notified Company of a complaint related to discourteous or improper behavior, Company will consider reassigning the employee to duties not entailing contact with the public while Company is pursuing its investigation and corrective action process. D. Unauthorized Material Removal. Company will dismiss or discipline employees that remove documents or any other material from Containers, other than specifically for the purposes of Disposal and diversion as described in this Agreement. F. Training. Company shall provide suitable operations, health and safety training for all of its employees who use or operate equipment or who are otherwise directly involved in Collection or other related operations. 4.5.6 Identification Required Company shall provide its employees, companies and subcontractors with identification for all individuals who may make personal contact with residents or businesses in City. City may require Company to notify Customers yearly of the form of said identification. 55 Company shall provide a list of current employees, companies, and subcontractors to City upon request. The City reserves the right to perform a security and identification check through the Los Angeles County Sheriffs Department upon Company and all its present and future employees, in accordance with accepted procedures established by the City, or for probable cause. 4.5.7 Fees and Gratuities Company shall not, nor shall it permit any agent, employee, or subcontractors employed by it, to request, solicit, demand, or accept, either directly or indirectly, any compensation or gratuity for temporary Bin/Rolloff services or the Collection, transportation, Recycling, processing, and Disposal of Solid Waste, other than as required under this Agreement. 4.5.8 Non -Discrimination Company shall not discriminate in the provision of service or the employment of Persons engaged in performance of this Agreement on account of race, color, religion, sex, age, physical handicap or medical condition in violation of any applicable federal or state law. 4.5.9 Coordination With Street Sweeping Services Company shall coordinate route schedules with the City's street sweeping schedule. Company shall provide all routes and route schedules to the City and work with City to resolve conflicts with street sweeping schedules. City's decisions shall be final in the event of any dispute relating to efforts to coordinate Collection schedules with sweeper schedules. Additionally, Company shall notify City staff and the City's street sweeper in the event that a route has not been completed within its regularly scheduled day in order to prevent the street sweeper to pass through the neighborhood prior to their trash collection. 4.5.10 Change in Collection Schedule Company shall notify City in writing forty-five (45) days prior to, and Residential 56 Customers in writing and by publication in a newspaper of general circulation not later than thirty (30) days prior to, any change in Residential Collection operations which results in a change in the day on which Solid Waste Collection occurs. Company will not permit any Customer to go more than seven (7) days without service in connection with a Collection schedule change. City's approval of any change in Residential Collection is required prior to such change, and such approval will not be withheld unreasonably. City may require changes in the route map or Collection schedule, to improve service, to resolve complaints or for other reasons. 4.5.11 Report of Accumulation of Solid Waste; Unauthorized Dumping Company shall direct its drivers to note (1) the addresses of any Premises at which they observe that Solid Waste is accumulating and is not being delivered for Collection; and (2) the address, or other location description, at which Solid Waste has been dumped in an apparently unauthorized manner. Company shall deliver the address or description to City within five (5) working days of such observation. 4.6 Contingency Plan Company shall submit to City on or before the Commencement Date of the Agreement, a written contingency plan demonstrating Company's arrangements to provide vehicles and personnel and to maintain uninterrupted service during breakdowns, and in case of natural disaster or other emergency (not including a labor dispute), including the events described in Section 11.4. 4.7 Transportation of Solid Waste The Company shall transport all Refuse Collected under Section 4.1 to an appropriate Transfer Station, MRF, Transformation Facility or Disposal Site for processing, transfer, recycling or disposal. Company agrees to make all reasonable efforts to separate Recyclable Materials from Refuse for diversion from landfill Disposal. The Company shall maintain accurate records of the quantities of Solid Waste transported to the forgoing facilities, and will cooperate with the City in any audits or investigations of such quantities. 57 The Company shall cooperate with the operator of any Transfer Station, MRF, Transformation Facility or Disposal Site with regard to operations therein, including, for example, complying with directions from the operator to unload Collection vehicles in designated areas, accommodating to maintenance operations and construction of new facilities, cooperating with its Hazardous Waste exclusion program, and so forth. 4.8 Processing of Solid Waste The City, upon prior written notice to the Company, reserves the right, prior to Disposal, to direct portions or all of the Solid Waste stream Collected under this Franchise to a Materials Recovery Facility, Green Waste Processing Facility, waste- to- energy Facility, or conversion Facility for separation, reuse, and Recycling of any Recyclable Materials contained therein. The Company agrees to assist the City by identifying loads suitable for processing in a MRF. If City exercises this right, City agrees to pass through any incremental increase or decrease in a one- time adjustment in Company's cost and revenue received from any recyclable materials by adjusting the monthly rate. 4.9 Disposal of Refuse The Company shall dispose of all Refuse Collected under Section 4.1 at the Disposal Site. Unless and until the City otherwise obtains ownership of the Solid Waste stream, or unless otherwise approved by City, the Disposal Site shall be the Antelope Valley Public Landfill I and Antelope Valley Public Landfill II. Company may also utilize the following sites which, when utilized for disposal, shall be deemed to be the Disposal Site: Lancaster Landfill, Simi Valley Landfill, El Sobrante Landfill, Chiquita Canyon Landfill, Bradley Transfer Station and Landfill, Los Angeles Sanitation District Facilities including the Commerce Waste -to -Energy facility, Kettleman Hills Landfill, Nuway Landfill in Irwindale, Azusa Landfill and SERRF transformation facility in Long Beach. In connection with Company's affirmative obligations to City related to access, pricing and capacity, the Disposal Site shall be the Antelope Valley Public Landfills I and II. 4.10 Status of Disposal Site Any facility used as the Disposal Site by Company, shall be designed and constructed in W accordance with 23 California Code of Regulations Section 2510 et seq. ("Subchapter 15"), and shall have been issued all permits from federal, state, regional, county and local agencies necessary for it to operate as a Class III Sanitary Landfill; and, further, shall be in full regulatory compliance with all such permits. Company represents and warrants that the Disposal Site is currently authorized to accept, under its existing permit, and has sufficient uncommitted capacity to accept, all Solid Waste delivered to it by, or on behalf of, City for the term of this Agreement plus any extensions thereto. 4.11 Commingling of Collection Routes Company shall not commingle City Refuse Collection routes with other city or county routes. Each route shall be dedicated exclusively to City -generated waste Collected within City boundaries under this Agreement. 4.12 Annual Route Audit At least once annually, the Company shall conduct an audit of its Collection routes in the City. The annual route audit, at minimum, shall consist of an independent physical observation by Person(s) other than the route driver or route supervisor of each Customer (both Multi -Family and Single -Family Dwelling Unit) in the City. This person(s) is to be approved in advanced by the City. The annual route audit information shall include, as a minimum, the following information for each account: Route Number; • Truck Number; • Account Name; • Account Number; • Account Service Address; 59 • Service Level per Billing System (Quantity, Size, Frequency); • Service Level per Routing System; • Observed Containers (Quantity and Size). • Bin condition; • Proper signage; and, • Graffiti. Within 30 days after the completion of the annual route audit, the Company shall submit to the City a report summarizing the results of the annual audit. This summary shall include: • Identification of the routes; • Route map; • Truck numbers; • Number of accounts, by route and in total; • Confirmation that all routes are dedicated exclusively to City Customers; • Types of exceptions observed; • Number of exceptions by type; • Total monthly Billing, pre -audit; • Total monthly Billing, post -audit (subsequent to corrections of identified exceptions; and, • Percentage of exceptions: o Percentage of the number of accounts with errors to the total number of accounts served; o Percentage of the "net" change in monthly Billing as a result of the audit to the total pre -audit monthly Billing; and, o Percentage of the "absolute" change in net monthly Billing as a result of the audit to the total "pre -audit" monthly Billing. The report shall include a description of the procedures followed to complete the annual route audit. This description shall include the names and titles of those supervising the route audits and the name and titles of those performing the observations. Additionally, the report shall include a description of the pre -audit training of the route auditors, particularly if temporary personnel are used. The report shall also include a description of the changes and the Company's plans to resolve the exceptions. The results of the annual audit, and supporting back-up data, shall be available for review by the City or its representative. If review indicates that 2% or more of the samples tested are inaccurate, Company shall pay City for the cost of conducting a second route audit by the City or a third party selected by City. 4.13 Disposal Priority and Capacity Guarantee Company warrants and guarantees City that the Disposal Site, or another landfill as may be approved in advance by the City in writing (and which thereafter shall become the "Disposal Site"), will have capacity for all Solid Waste Collected by Company pursuant to this Agreement throughout the Term hereof. Company will either retain or obtain ownership of the Disposal Site, or obtain and/or retain contracts with the Disposal Site guaranteeing such capacity for the term of this Agreement. If the Disposal Site is owned by Company or an Affiliate, and capacity becomes limited, City -generated Refuse shall have priority over all other refuse received at the Disposal Site. Company further represents and warrants that it has made sufficient arrangements with the Disposal Site to allow City to dispose of all Solid Waste it may be required to Collect pursuant to Section 61 10.1 hereof at the same rates available to Company. 4.14 Diaper Recycling Program At the City's option, and if directed by the City to implement diaper recycling, Company shall promote the diaper Recycling program and Collect disposable diapers from all participating Customers. Disposable diapers must be Collected using a separate truck compartment or a dedicated truck. City will direct Company to provide this service to Single Family Dwelling Customers or to both Single and Multi -Family Dwelling Customers. Only the applicable customer group for whom the City has directed the implementation of services shall be Billed the rate for such services, the maximum rate for which is set forth on Exhibit 2. The maximum rate for the diaper recycling program as set forth on Exhibit 2 shall be the sole compensation for this program. Diaper Collection service will be offered to Commercial Premises as described in the following paragraph at no charge. Company will notify Customers at least annually that this service is available at no additional cost to service subscribers. City may delay implementation of or terminate the program with a 60-day notice. At such times as diaper collection service is required pursuant to the terms hereof, Company shall provide a Container for Collection of diapers ("Diaper Container') for such purpose to all Customers requesting to receive diaper Collection service. Residential Customers will be given a Cart that is the same color as Recycling Carts, but with a slightly different color lid. Furthermore, and notwithstanding any provision of this Agreement to the contrary, Company shall provide City approved Containers for the Collection of source separated diapers to all Commercial Premises that operate any of the following: Adult day care facilities, Adult residential facilities, Assisted living facilities, Convalescent homes, Day care centers, and Family day care homes. This provision shall also apply to other similar facilities (as determined by City) that generate at least one 64- gallon Container of disposable diapers each week. Company will notify these businesses twice per year of the availability of this free program. Company shall not be obligated to deliver Containers for diaper Collection to any of the foregoing Commercial Premises if the Customer at said Premises demonstrates diapers are not used in connection with its business. City will provide to Company for its use, at no charge to Company, one "KDP-2" diaper 62 Recycling machine (the "Diaper Recycler"). Company is responsible for moving the Diaper Recycler from its location at 9200 Glen Oaks, Sun Valley, California, securing a location for the Diaper Recycler and related operations and for all other aspects of operating this diaper Recycling program. Company shall bear all costs of operating and maintaining the Diaper Recycler. City will retain ownership of the Diaper Recycler. Company shall only use the Diaper Recycler to process diapers collected in City pursuant to this Agreement, unless Company obtains prior approval in writing from City to process diapers from other jurisdictions. In addition to any other terms required by City for granting such approval, at a minimum any such agreement for the Company to use the Diaper Recycler to processes diapers from other jurisdictions shall include a requirement for payment to City to offset City's costs in purchasing the Diaper Recycler, and reasonable assurances that the processing of other cities' diapers will not interfere with the processing of those generated in City. 4.15 Volume -Based Rate Structure 4.15.1 Citywide Implementation of Volume Based Rates City may direct Company, with six months advance written notice, to implement volume based rates. City and Company agree to negotiate in good faith volume based rates with the goal that Company's profit level would be the same after implementation of the volume based rates. This section is fulfilled with the implementation of the Super Saver program outlined in section 4.1.2. 4.16 City Materials Recovery Facility During the term of this Agreement, the City may establish a MRF and/or transfer station. The City reserves the right to direct any or all of the waste streams to be sent to the MRF/transfer station for processing and/or transfer. Should City exercise this right, the maximum rates that Company may charge Customers shall be adjusted by the percentage stated in Exhibit 4. The City will be entitled to an $18.00 per ton gate fee for City solid waste processed or transferred through its MRF and delivered to the Disposal Site. This rate will be adjusted each July 1, beginning July 1, 2006, based on the change in the Consumer Price Index for All Urban Consumers, all items index (CPI-U), U.S. cities average for the 12 months 63 ending the most recent December 31. 4.17 Service Exceptions; Hazardous Waste Notifications A. Failure to Collect. When Solid Waste is not Collected from any Solid Waste service recipient, Company shall notify its service recipient in writing, at the time Collection is not made, through the use of a "tag" or otherwise, of the reasons why the Collection was not made. B. Multi -Family Accessibility. If, at the time of collection at a Multi -Family Dwelling receiving Bin Service, the Bin is not accessible to the Collection vehicle, Company will notify the Customer by telephone of the situation and request that access be provided. If the Customer is unavailable or unable to provide prompt access to the Bin, Company will provide pickup at a later time, but may charge an extra pickup fee. C. Hazardous Waste Inspection and Reporting. Company reserves the right and has the duty under law to inspect Solid Waste put out for Collection and to reject Solid Waste observed to be contaminated with Hazardous Waste and the right not to Collect Hazardous Waste put out with Solid Waste. Company shall notify all agencies with jurisdiction, if appropriate, including the California Department of Toxic Substances Control and Local Emergency Response Providers and the National Response Center of reportable quantities of Hazardous Waste, found or observed in Solid Waste anywhere within the City. In addition to other required notifications, if Company observes any substances which it or its employees reasonably believe or suspect to contain Hazardous Wastes unlawfully Disposed of or released on any City property, including storm drains, streets or other public rights of way, Company will immediately notify the City Manager or the City Manager's designee. Company shall implement and maintain a training program that will assist its employees in identifying and properly disposing of any Hazardous Waste that may come into their possession. D. Hazardous Waste Diversion Records. Company shall maintain records showing the types and quantities, if any, of Hazardous Waste found in Solid Waste and which was inadvertently collected from service recipients within the City, but diverted from landfilling. mo E. Bin and Super Saver Overfilling. Company shall address instances of contamination of Recyclables and Green Waste Containers and instances of ongoing overfilling of containers used by Customers receiving Bin Service and Customers using a 35-gallon Cart in accordance with Exhibit 6. 4.18 Sharps Program Home generated sharps, such as needles, syringes, and lancets shall be placed in a sharps container and removed from the regular waste stream to minimize exposure to solidwaste workers and recyclables processors. To ensure sharps are handled in an appropriate manner, Company shall provide, upon request, each residential account with up to one postage -paid mail -back sharps containers per year at no additional cost. Seniors shall be provided with up to two postage -paid mail -back sharps containers per year at no additional cost. Residents requesting Sharps containers may request containers only at participating pharmacies. Company shall work with pharmacies located within the City's boundaries to establish this program and provide sharps containers to participating pharmacies. In addition, Company shall promote this program in all quarterly newsletters and in other forms of outreach as determined by City. Additionally, Company shall provide to the City on an annual basis not less than 200 postage -paid mail -back Sharps containers for City staff to distribute at special events. 4.19 Textile Diversion Program Company shall provide a minimum of two City-wide textile collection drives on an annual basis. Company will deliver textile collection bags to all customers (both single- family and tenants of multi -family complexes) and will collect the bags on a scheduled day. Textile bags will be delivered not less than one week prior to the scheduled clothing collection day, but no more than two weeks prior to the scheduled collection day or by other means which are convenient and more frequent. Company shall also make available a textile drop off location at the Company's yard, which shall remain open during the hours specified in Section 4.1.11 of this agreement. All textiles collected through this program shall be diverted from the landfill either through donation to a local non-profit organization or through other means of diversion. 65 ARTICLE 5 OTHER SERVICES 5.1 Services and Customer Billing 5.1.1 Service Description Company shall periodically, at least 30 days prior to the effective date of a rate change, and a minimum of once per year, prepare and distribute subject to the direction of City, a notice to each Customer containing the following: a listing of Company's Collection rates, the annual holiday schedule, the street sweeping schedule and a general summary of services required to be provided hereunder including optional service which may be furnished by Company. Such notice shall be in a form subject to City's approval prior to its distribution and may be included with Billings made by Company. Company shall include in each Billing the phone number for residents to can for Bulky Item pickups. 5.1.2 Billing Company shall provide services pursuant to this Agreement at rates it sets, charges to, and collects from Customers; provided, however, Company's rates shall not exceed those set forth in the attached Exhibit 2, which sets out the maximum rates that may be charged by Contractor for the various different service options that may occur hereunder, as such maximum rates may be adjusted from time to time pursuant to the terms hereof. Company shall provide all Customers with itemized Bills, detailing charges for all services, including charges for late payments, as well as the period of service to which the Bill applies. Company acknowledges that it, and not Customers, is to pay a franchise fee and the other fees noted herein to City as consideration for this Agreement. Accordingly, Company's Bills shall not include separate itemization of a "franchise fee" or other similar designation relating to fees which Company is required to pay to City. The due date of the billings shall not be earlier than the last day of the period for which services are provided. Billings may be made on a quarterly basis in advance for all Customers, but no sooner than the first day of the service period covered by the Bill. All Billings shall contain astatement to the effect that Persons who qualify as low income Customers (as defined in Section 5.1.3) are entitled to receive monthly Billings on request. Customers ordering service after the first of any calendar month shall be charged on a prorated daily basis, and Company shall reimburse Customers that pay in advance for service not used, on a prorated daily basis, within 30 days of Customer terminating service. City shall not be responsible for or participate in efforts to collect amounts due from Customers, and Company shall handle issues relating to Customer non-payment in accordance with Section 5.1.5. Company may negotiate a fee with customers directly for new or additional services not provided for in the Rate Schedule; provided, however, that at least thirty days prior to commencing such new or additional services, Company shall provide written notification to the City's Public Works Director of the service and the proposed maximum rate therefore to the City for review and approval. Company shall not implement a new service and fee until the City has contacted the Company in writing approving the proposed service and fee. Further, Company may not charge for services currently provided without charge under the terms of this provision. At the discretion of the City Manager or his or her designee an amendment to the Rate Schedule may also be required prior to the implementation of any fees or rates for any new or additional services not currently provided for on the Rate Schedule that are provided to more than 3 accounts. 5.1.3 Discounts Company shall provide the following discounts for services rendered to Customers, and shall notify all Customers in writing of the availability and amount of the discounts at least once per year. For new customers commencing collection services on or after July 1, 2011, customer is eligible for one of the following discounts unless their property is deeded by the City as a 55 and older community, then customer may be eligible for the senior discount and one additional discount of their choice if customer meets the qualifications. The discounts are as follows: a) A senior citizens' and low-income discount of 20% shall be given to Customers that either: i) are 60 years or older and are considered to be the head of their household, or ii) qualify for and receive lifeline telephone service. Only one 20% discount is offered, even if Customers meet both 67 criteria. The senior citizen discount shall not be applied or in addition to the Super Saver rate. B) Customers such as mobile home parks, condominium complexes, and homeowners' associations, where service is charged on a per unit basis but collectively billed on a single invoice, shall receive a "bulk billing" discount of 8 % on all units, except for the first unit billed. c) Customers that fall under the no -Green Waste exemption of Section 4.3.2 shall receive a $2.00 per month discount. d) Customers that pay Company in advance for 11 months of service shall receive a credit to their account for one month of free service. 5.1.4 Review of Billings Company shall review each Customer's account annually, and submit to City a written report of its annual review of all Customer accounts annually on the anniversary of the Effective Day of this Agreement. The purpose of the annual Customer account review is to confirm that the amount which Company is Billing each Customer is correct. Company shall maintain copies of all Billings as well as records of receipts from said Billings, each in chronological order, as required by Section 8.2.1 for inspection by City upon request. Company may, at its option, maintain those records in computer form, on microfiche, or in any other manner, provided that the records can be preserved and retrieved for inspection and verification in a timely manner, are sufficient to verify the accuracy of Franchise Fees and other fees owed to the City. 5.1.5 Suspension of Service Due to Non -Payment Company may send a written or telephonic notice to customers regarding payments of Billings during the billed service period, at the approximate intervals of thirty (30) and sixty (60) days after the billing date. Once a payment is 15 days past due, Company shall send Customers a notice (and shall also send a monthly report of past due customers to the City) that service will be suspended if payment is not made within an additional 15 days. Notice shall be on a form approved by the City. Company may only suspend a Customer's service after compliance with the provisions of this Section. City .: will not be responsible for or assist with the collection of delinquent accounts. Company is permitted to charge late fees in the amount of 1.5% per month with a minimum fee of $3.00 (three dollars) commencing 15 days after payment is due. Company may charge a restart fee in accordance with the approved rate schedule as outlined in Exhibit 2. Notwithstanding the above, in the event of a billing dispute or to avoid negatively impacting public health or safety, Company shall continue to provide service to any Customer if directed to do so by City without regard to the status of said Customer's account. 5.2 Customer Service 5.2.1 Local Office Company shall maintain an office within the City. Said office shall be open ("Office hours"), at a minimum, from 8:00 A.M. to 5:00 P.M., Monday through Friday, and on Saturdays during Collection hours, exclusive of holidays. A responsible and qualified representative of Company shall be available during Office Hours for personal communication with the public at the local office, and a similarly qualified person shall be available for communication with the public by phone during any times other than Office Hours when Collection is occurring. 5.2.2 Telephone Customer Service Requirements Company shall maintain a local toll free telephone number during Office Hours. Bilingual (English and Spanish speaking) personnel will be available during Office Hours, at the office in the City to assist Customers with both personal and telephonic inquiries. Company's telephone system shall be adequate to handle the volume of calls typically experienced on the busiest days. Company shall also maintain a toll free telephone number for use at times other than Office Hours, which number shall be published in the Santa Clarita telephone directory at the Company's expense. Company shall have a representative, answering or message providing/receiving (voice -mail) service available at said non -Office Hours telephone number. Calls received at tunes other than during Office Hours shall be responded to on the next business day. Company shall provide City with a 24-hour emergency number to a live person, not voice -mail. we Company shall make reasonable attempts to answer all phone calls within four rings. If a call has been placed on hold for 1.5 minutes, the caller will be switched to a message center which shall be responsible to obtain the caller's address, and Company shall make at least three attempts within the next 24-hour period to return the call. If Company is unsuccessful in contacting the Customer after following this procedure, it shall send a letter to the caller indicating its efforts. Company shall record Customer complaints regarding Customer service personnel in accordance with Section 5.2.3. Customer service representatives receiving multiple complaints are to be transferred from Customer service duties or disciplined and appropriately trained. 5.2.3 Complaint Documentation All service complaints shall be directed to Company. Daily logs of complaints shall be retained for a minimum of twenty-four (24) months and shall be available to City at all times upon request. Company shall log all complaints received by telephone and said log shall include the date and time the complaint was received, the name, address and telephone number of the caller, a description of the complaint, the name of the employee recording the complaint and the action taken by Company to respond to and remedy the complaint. All written Customer complaints and inquiries shall be date -stamped when received and shall be initially responded to within one (1) business day (Monday through Saturday) of receipt. Company shall log action taken by Company to respond to and remedy the complaint. All Customer service records and logs kept by Company shall be available to City upon request. City shall, at any time during regular Office Hours, have access to Company's Customer service department for purposes that may include monitoring the quality of Customer service or researching Customer complaints. 70 5.2.4 Resolution of Customer Complaints Disputes between Company and its Customers regarding the services provided in accordance with this Agreement may be resolved by the City. The City's decision shall be final and binding. Company shall pay City $100 for each City intervention in a dispute between Company and a Customer if the City reasonably deems intervention is required and the Customer's dispute is valid. Should Company and Customers not be able to establish a mutually acceptable fee to be charged for special hauling services, the matter shall also be determined by the City, and the City's decision shall be final. Intervention by the City is not a condition precedent to any rights or remedies third parties might otherwise have in any dispute with Company. Nothing in this section is intended to affect the remedies of third parties against Company. 5.2.5 Government Liaison Company shall designate in writing a "Government Liaison" who shall be responsible for working with City and/or City's designated representative(s) to resolve Customer complaints. City shall have the right to approve the Company's choice for a liaison. 5.3 Education and Public Awareness 5.3.1 General Company acknowledges and agrees that education and public awareness are critical, key and essential elements of any efforts to achieve the requirements of AB 939. Accordingly, Company agrees to take direction from City to exploit opportunities to expand public and Customer knowledge concerning needs and methods to reduce, reuse and recycle Solid Waste and to cooperate fully with City in this regard. Company shall maintain its own program of providing information relevant to needs and methods to reduce, reuse and recycle Solid Waste with its Bills. All public education materials shall be approved in advance by City. 71 Company shall reproduce and include in any Billing, at no additional cost, one 8.5" x 11" sheet, provided by the City. City may request Company to perform mailing services and if so able, provide not less than thirty (30) days notice to Company prior to the mailing date of any proposed mailing to permit Company to make appropriate arrangements for inclusion of City's materials in its Billings. City will provide Company the mailers at least fifteen (15) days prior to the mailing date. City shall only bear the expense of distribution of such mailers only to the extent it is clearly in excess of Company's normal mailing costs for its Billings. 5.3.2 Certified Recycling Outreach Coordinator During the Term hereof, Company shall at all times retain on its staff a Recycling coordinator, responsible for conducting waste surveys of Customers and developing site -specific plans for Recycling and diversion of Solid Waste generated by Customers. This coordinator shall complete four Certified Education units in courses relating to the Recycling, diversion, and/or reuse of Solid Waste every six months, and Company shall keep records of such continuing educational efforts for City's review. 5.3.3 Implementation and On -going Education Requirements In order to promote public education, in addition to any other materials it develops, Company shall create the following public education materials and programs at its expense, which will be distributed as indicated below. All of these materials and programs shall be produced and/or available in both English and Spanish languages. • Initial Mailing - Within 90 days preceding April 15, 2006, Company will prepare and mail an initial mailing to all Customers explaining the transition from the existing Solid Waste Handling Service program to the new program as defined by this Agreement. The mailing will describe program changes, route changes, dates of program implementation, Recycling and diversion programs available, and other pertinent information. • Workshops - Within 120 days preceding April 15, 2006, Company will conduct a minimum of three public workshops to educate the public about the transition from the existing Solid Waste Handling Service program to the new program as defined by this 72 Agreement. At each workshop Company will display the new Containers to be distributed pursuant to this Agreement. Company shall pay for outreach as needed to inform the public about the workshops, which shall at a minimum include (4) four one - quarter page ads in local newspapers for each workshop. This expense shall be in addition to the advertising funding in Section 5.3.4. City and Company shall coordinate to determine whether Spanish interpreters shall be present at the workshops, or whether certain workshops shall be presented in Spanish. It Instructional Packet Accompanying Company -Provided Containers - An information packet shall be attached to each set of Carts or Bins distributed to a Customer. This packet shall: describe available services, including available Recycling and diversion programs; provide instructions for proper use of the Carts and Bins provided (such as how to place Carts or Cans for Collection, the types of materials to be placed in each Cart); detail holiday Collection schedules; and provide Company's Customer service phone number. Container Labels - Recyclables, Green Waste, and Manure Containers shall carry stickers/labels or other identifying markings in both English and Spanish indicating the materials that should and should not be placed in each Container. How -To Brochure - Company will prepare and distribute a brochure packet to new Customers when they start service. This packet will contain updated information on how to use the Company -provided Containers, when, where and how to place Solid Waste for Collection, and who to contact with service or Billing questions. * Multi -Family Brochure and Outreach - Company will produce an educational outreach brochure directed toward educating Multi -Family Customers on Recycling. Company will mail this brochure to all existing Multi -Family Customers, both owner/managers and tenants, by April 1, 2004. Company will perform waste audits of and make presentations to a minimum of 15 large quantity Multi -Family complexes or homeowners' associations each month until all Customers have been contacted. New Customers will be contacted as they subscribe to services. Quarterly Newsletter - Not less than four times per year during each Rate Year Company shall prepare and distribute to each Customer a brochure providing relevant 73 information about Company's services, including, at a minimum, information regarding access to and use of available services, holiday collection schedules, and Company's Customer service numbers. This brochure shall be at least four (4) pages, and printed in full color. • Quarterly Notices - Not less than once each quarter during each Rate Year, Company shall prepare and mail notices to each Customer promoting and explaining: programs (such as Recycling, Green Waste, Manure Collection, Holiday Tree and Bulky Item Collections, and proper Household Hazardous Waste Disposal); Collection schedules, including holiday schedules; and the procedures to begin and terminate services. These materials may be included with Billings. Quarterly Workshops - Not less than once each quarter, Company shall promote and conduct a workshop designed to promote Recycling in the City. Corrective Action Notice - Company shall develop a corrective action notification form for use in instances where a Customer sets out inappropriate materials for Collection, that explains the appropriate manner for disposal of such items. Company Representative - Company shall retain on its staff an individual who shall as part of his or her job function routinely visit civic groups, school assemblies, and homeowners' associations, to promote and explain the Recycling programs Company offers, and participate in demonstrations, and civic events. Web Site Page - Company shall dedicate one page of a Company web site to City services, which shall include at least the following information: a listing of contact names and numbers for Customer Service; information on Bulky Item Collection; Collection schedules, including holiday schedules; and the procedures to begin and terminate services. Company shall assist the City in establishing a link to this web page from the City's web site. Recycling Curriculum - Company shall provide a Recycling education curriculum for use in classroom visits and workshops, and shall develop materials for use with such curriculum such as posters, coloring books, puzzles and quizzes. Annually, Company will provide all schools within City with Containers to Collect CRV 74 containers. Company will Collect and process these containers, pay schools for these materials and award the top school with a prize. All brochures, mailings, and other educational materials are to be approved by the City in advance of distribution, and shall bear the City seal, unless otherwise approved by the City. 5.3.4 Advertising Budget Funding Contractor shall make a payment to City of $3,000 on or before May 31 of each Rate Year during the Term of the Agreement, beginning May 31, 2006, to offset City expenses relating to City notices and outreach. The payment shall be deemed late if received after May 31 and subject to the late penalties set forth in Section 3.2.3. 5.3.5 Community Events At the direction of City, Company shall participate in and promote Recycling and other diversion techniques at community events and local activities. Such participation would normally include providing, without cost, educational and publicity information promoting the goals of City's Solid Waste program. 5.4 Waste Generation/Characterization Studies Company acknowledges that City must perform Solid Waste generation and Disposal characterization studies periodically to comply with the requirements of AB 939. Company agrees to participate and cooperate with City and its agents and to accomplish studies and data collection and prepare reports, as needed and directed by City, to determine weights and volumes of Solid Waste Collected and characterize Solid Waste generated, disposed, transformed, diverted or otherwise handled/processed to satisfy the requirements of AB 939. 5.5 Quarterly Meeting The City may request quarterly meetings with Company to discuss problems or issues such as Collection or Recycling programs, Billing or Customer service issues, day to day 75 operations, etc. This provision shall not be interpreted as precluding City from requesting meetings on a more frequent basis should it deem that to be necessary. 5.6 Multi -Family Outreach Program Company shall provide a public education tool kit to all multi -family complexes in the City at no additional cost. The tool -kit may include posters, flyers, door hangers, recycling guides, bin enclosure signs, recycle bin signs, and any thing else deemed appropriate. Materials should be created to assist multi -family complexes in implementing a recycling program and to assist the tenants in making the program successful. Company shall provide in -home basket upon request to any tenant of a multi -family complex that has recycling bin service. Requests for in -home baskets may be submitted by the Management Company, homeowners association, or resident. Company shall arrange for the delivery of the in -home basket at no additional cost to the customer. Company shall mail a biannual newsletter to all of the tenants of multi -family dwellings within the City during the two year grant period. After the grant period, or not less than two years, Company shall mail an annual newsletter to all of the tenants of multi -family dwellings. 5.7 Increased Residential Outreach In order to increase the City's diversion and highlight the programs available to residents in the City, Company shall provide a minimum funding amount of $10,000 for the City to administer a comprehensive outreach program. This program will be created in conjunction with Company staff and City staff and shall be fully implemented no later than July 1, 2012. 5.8 Sustainability Program Company shall partner with 5-10 large businesses in the City to conduct a sustainability cost analysis, equaling a total cost of up to $50,000. This analysis shall include an assessment of facilities and operations, execution of programs that improve environmental and economic performance, and establishment of a roadmap for a more 76 sustainable future. The sustainability analysis shall look at efficiencies in waste reduction, water, energy, etc. 77 ARTICLE 6 COMPANY COMPENSATION AND RATES 6.1 General The maximum rates set forth in Exhibit 2, and as more fully defined as Company Compensation in this Article, shall be the maximum amount Company may charge Customers as full, entire and complete compensation due pursuant to this Agreement for all labor, equipment, materials and supplies, taxes, insurance, bonds, letters of credit, overhead, Disposal, transfer, profit and all other things necessary to perform all the services required by this Agreement in the manner and at the times prescribed. No other charges shall be imposed by Contractor for services provided to Customers unless approved by the City Manager. 6.2 Initial Rates 6.2.1 Adjustment To Current Single Family Rates Beginning January 1, 2004, Company shall cause rates to all Customers at Single Family Dwellings in the City to be lowered as set forth herein, without regard to the identity of the Solid Waste enterprise providing service (excluding such Customers who may be receiving Collection services in Bins), to no more than the rates set forth in Exhibit 2. These rates shall be in effect, without adjustments for any reason, from January 1, 2004 until April 15, 2006. Company shall be responsible to make arrangements that are satisfactory to City to implement the reduction of rates for Customers serviced other than by Company as required by this provision. 6.2.2 Initial Rates at Commencement of New Service The rates Company Bills to Customers beginning July 1, 2011, through the Rate Year ending June 30, 2012 shall not exceed the maximum rates set forth in Exhibit 2. V 6.3 Schedule of Future Adjustments 6.31 An�n.tral Rate Adjustments Beginning with the Rate Year July 1, 2012 to June 30, 2013 and for all subsequent Rate Years, Company may request an annual adjustment to the maximum rates shown in Exhibit 2. The Company shall submit its request in writing, to be received by City in Person or via certified mail, by the preceding April 1, and shall be based on the method of adjustment described in Section 6.4. Failure to submit a written request by April 1 shall result in Company waiving the right to request such an increase for the subsequent Rate Year. Adjustment to the maximum rates is subject to the approval of the City Council at a publicly noticed City Council meeting, although the Council's discretion shall be limited to determining, based on substantial evidence, whether the requested maximum rate adjustment meets the requirements as set forth herein. 6.4 Method of Adjustments 6.4.1 Annual Adjustments The following formula shall be utilized to calculate the adjustment to the maximum rate Company may charge Customers. The calculation of the various components of this formula shall be based upon the corresponding information as set forth in Company's Proposal. Determination of the Rate C2m aonents - The maximum rates set forth on Exhibit 2 consist of the following components, derived from Company's Proposal, and shall be set at the start of the Agreement by the following weightings and adjusted using changes in the following specified rate adjustment indices. 79 Cost Category Rate Adjustment Index Weighting Labor 30% Producer Price Index, PCU56211-56211, Waste Collection Fuel 5 % Department of Energy (DOE) Clean Cities Alternative Fuel Price Report West Coast for CNG Fuel Prices Equipment 15% Producer Price Index, PCU336211336211, Motor vehicle body manufacturing. Disposal 25% Consumer Price Index for All Urban Consumers (CPI- U) - U.S. City Average, CUUROOOOSEHG02, Not Seasonally Adjusted, Garbage and Trash Collection All Other 25% Consumer Price Index for All Urban Consumers (CPI- U) - U.S. City Average, CUUROOOOSEHG02, Not Seasonally Adjusted, Garbage and Trash Collection. Consumers, all items index (CPI-U) - U.S. city average Total 100 % Step One - Calculate the percentage increase or decrease in each index. The increase or decrease in the indices shall be the difference in annual averages from the two previous calendar years prior to the scheduled annual rate adjustment. For purposes of this calculation, the annual averages shall be calculated using the two prior twelve month periods running from October 1 through September 30; provided, however, that for the increase requested April 1, 2012 to take effect July 1, 2012, the two prior twelve month periods used for the calculation shall run from January 1 through December 31. Step Two - Multiply the changes to each component by that component's weighting and add the percentages together to get the overall change to the maximum rates then adjust the rates up or down based upon that calculation. ft'Q:hree - If maximum rates were higher than the annual rate cap for the given rate year, roll the overage balance forward. :1 6.4.2 Approved Rate Increases Notwithstanding the methodology set forth in section 6.4.1, for Rate Years commencing on July 1, 2011 and July 1, 2012, Company shall receive an additional 1.5% rate increase, which, when added to any adjustment allowed by section 6.4.1, shall be subject to the Annual Rate Cap as described in section 6.5. For Rate Years commencing July 1, 2013, July 1, 2014, July 1, 2015, and July 1, 2016, Company shall receive a 2.5 % rate increase, which, when added to any adjustment allowed by section 6.4.1 for such years, shall be subject to the Annual Rate Caps as described in section 6.5. 6.4.3 Residential Bin and Commercial Bin Rate Alignment Notwithstanding any other provision of this section 6.4, effective when Company begins mixed -waste processing of the solid waste collected from multi -family dwelling units Company shall receive a 2.33% rate increase for the first four (4) years, which, when added to any adjustment allowed by section 6.4.1 for such years, shall be subject to the Annual Rate Caps as described in section 6.5 and for the 3-yard, one time per week service rate shall remain below the equivalent commercial franchise rate. Any unused increase limited by the annual rate cap may be carried forward until fully applied. 6.4.4 Extraordinary Adjustments Company may request an adjustment to maximum rates at reasonable times other than that required in Section 6.3 in the event of extraordinary changes in the cost of providing service under this Agreement. Such changes may include changes in tipping or processing fees for Refuse Disposal, Solid Waste, Food Waste, Recyclable Material or Green Waste, an increase or decrease in a direct per ton surcharge assessed at the Disposal or Processing Site by Federal, State or local regulatory agencies after the Effective Date of the Agreement, or any additional costs imposed by Federal, State or local regulatory agencies, including additional diversion requirements. Company is expected to comply with SCAQMD Rule 1193, and the Air Resource Board's existing emission standards for Refuse removal vehicles with no additional compensation. V. For each request for an adjustment to the maximum rates that Company may charge Customers brought pursuant to this Section, Company shall prepare a schedule documenting the extraordinary costs. Such request shall be prepared in a form acceptable to City with support for assumptions made by Company in preparing the estimate. Consistent with the process set forth in section 6.3, City shall review the Company's request and, in City's sole judgment and absolute, unfettered discretion make the final determination as to whether an adjustment to the maximum rates will be made, and, if an adjustment is permitted, the appropriate amount of the adjustment. Any extraordinary adjustment approved pursuant to this section shall not be subject to or included in the rate cap for the year in which it is approved. 6.5 Annual Rate Cap 6.5.1 Annual Rate Cap If the adjustment to the maximum rate as determined by the application of the formula set forth in Section 6.4 exceeds 5 % for any Rate Year the adjustment for said Rate Year shall nevertheless be limited to 5% except during Rate Years beginning July 1, 2011, 2012, 2013, 2014, 2015 and 2016, and any years involving increases pursuant to section 6.4.3, when the Annual Rate Cap will be 6%. Any increase calculated pursuant to section 6.4 which exceeds the Annual Rate Cap for such year shall be carried forward and added to future approved rate increases; provided, however, that the total increase for any future Rate Year is no more than the Annual Rate Cap for such Rate Year. Any unused increase may be carried forward until fully applied, except that any unused increases remaining at the end of the Term hereof will expire unused. 6.5.2 Santa Clarita Valley Rate Cap Notwithstanding any other provision of this agreement, all maximum rates shall remain below all jurisdictions, including Incorporated Cities and Unincorporated County Areas, with source separated (refuse, recyclables and green waste) franchised collection services in the Santa Clarita Valley. 6.6 Supporting Information M. To the extent reasonably required to support a specific request for an extraordinary rate adjustment, any request for an adjustment to the maximum rates made pursuant to Section 6.6 shall be accompanied by a copy of Company's certified annual financial statements prepared by a Certified Public Accountant, which shall have been prepared in compliance with Rule 58 of the "Rules and Regulations of the State Board of Accountancy," as established by the California Code of Regulations, Title 16, Chapter I. Such Certified Public Accountant shall be entirely independent of the Company and shall have no financial interest whatsoever in the business of the Company. The City may specify the form and detail of the financial statements. The financial statement will not be required where the specific request for an extraordinary rate adjustment is solely to recover increased costs of operation, and not to increase overall profitability. 6.7 Grants From time to time, Federal, State or local agencies including the City may provide to Company grants to assist in financing qualified programs provided by Company (including, without limitation, grants for diversion programs and related equipment, alternative fuel vehicles and equipment, and household hazardous waste collection and disposal.) Company shall notify City upon receipt of any such grant funds that may be used to fund services provided pursuant to the terms of this Agreement. Company agrees that the total amount of Company Compensation shall be reduced by an amount equal to 50 % of the amount of any such grant received from Federal, State or local agencies other than the City, and by an amount equal to 100% of the amount of any such grant received from the City. The City Council shall determine whether the reduction in Company Compensation shall be: (1) passed through to certain Waste Generators designated by City as a reduction to maximum rates; (2) as an offset to the next increase to maximum rates requested by Company as calculated in accordance with Sections 6.2 through 6.5; (3) paid to City for use as City directs; or, (4) applied in any combination of (1) through (3). 83 ARTICLE 7 REVIEW OF SERVICES AND PERFORMANCE 7.1 Performance Hearing In or about October 2007, and once in each Rate Year thereafter City may hold a public hearing to review Company's Solid Waste Collection efforts, source reduction, processing and other diversion services and overall performance under this Agreement (the "Solid Waste Services and Performance Review Hearing.") The purpose of the Solid Waste Services and Performance Review Hearing is to provide for a discussion and review of technological, economic, and regulatory changes in Collection, source reduction, Recycling, processing and Disposal to achieve a continuing, advanced Solid Waste Collection, source reduction and Recycling and Disposal system; and to ensure services are being provided by Company with adequate quality, effectiveness and economy and in full compliance with the terms of this Agreement. Topics for discussion and review at the Solid Waste Services and Performance Review Hearing shall include, but shall not be limited to, services provided, feasibility of providing new services, application of new technologies, Customer complaints, amendments to this Agreement, developments in the law, new initiatives for meeting or exceeding AB 939's goals, regulatory constraints and Company performance. City and Company may each select additional topics for discussion at any Solid Waste Services and Performance Review Hearing. City shall notify Company of its intent to hold a Solid Waste Services and Performance Review Hearing at least ninety (90) days in advance thereof. Forty-five (45) days after receiving notice from City of a Solid Waste Services and Performance Review Hearing, Company shall submit a report to City which may contain such information as it wished to have considered, and shall contain the following: a) Current diversion rates and a report on Company's outreach activities for the past year. b) Recommended changes and/or new services to improve the City's ability to meet the goals of AB 939 and to contain costs and minimize impacts on rates. c) Any specific plans for provision of changed or new services by Company. The reports required by this Agreement regarding Customer complaints shall be used as one basis for review of Company's performance, and Company may submit other relevant performance information and reports for consideration at the Solid Waste Services and Performance Review Hearing. In addition to the above, City may request Company to submit any other specific information relating to its performance for consideration at the Solid Waste Services and Performance Review Hearing, and any Customer may submit comments or complaints during or before the Hearing, either orally or in writing. Company shall be present at and participate in the Solid Waste Services and Performance Review Hearing. As a result of its findings following any Solid Waste Services and Performance Review Hearing, City may require Company to provide expanded or new services within a reasonable time and City may direct or take corrective actions for any performance inadequacies (although nothing contained in this provision should be construed as requiring City to hold a Solid Waste Services and Performance Review Hearing in order to enforce any rights or remedies it has pursuant to the terms hereof.) Should City require expanded or new services as a remedy for Company's failure to perform its obligations hereunder, no additional compensation shall be due for such services. Otherwise, any new or expanded services required of Company shall be subject to the provisions of Section 2.9.1. 7.2 Performance Satisfaction Survey If requested by the City, Company will create and conduct a survey at Company's expense in preparation for any Solid Waste Services and Performance Review Hearing held pursuant to Section 7.1. City shall notify Company of its desire for such a survey at least 90 days in advance of the Solid Waste Services and Performance Review Hearing. The purpose of the survey is to determine Customer satisfaction with current Collection services and Customer service provided by the Company. The Survey will be distributed to a minimum of 10% of the Customers, selected at random. Company shall obtain City's approval of the survey's content, format, and mailing list prior to its distribution. The City may require that Company have Customer responses to the survey returned directly to the City. The Survey results shall be made available to the City 30 days prior to the Solid Waste Services and Performance Review Hearing. 85 ARTICLE 8 RECORDS, REPORTS AND INFORMATION REQUIREMENTS 8.1 General Company shall maintain such accounting, statistical and other records related to its performance trader this Agreement as shall be necessary to develop the financial statements and other reports required by this Agreement. Also, Company agrees to conduct data collection, information and record keeping, and reporting activities needed to comply with applicable laws and regulations and to meet the reporting and Solid Waste program management needs of City. To this extent, such requirements set out in this and other Articles of this Agreement shall not be considered limiting or necessarily complete. In particular, this Article is intended to only highlight the general nature of records and reports and is not meant to define exactly what the records and reports are to be and their content. Further, with the written direction or approval of City, the records and reports to be maintained and provided by Company in accordance with this and other Articles of the Agreement shall be adjusted in number, format, or frequency. 8.2 Records 8.2.1 General Company shall maintain records required to conduct its operations, to support requests it may make to City, and to respond to requests from City in the conduct of City business. Adequate record security shall be maintained to preserve records from events that can be reasonably anticipated such as a fire, theft and earthquake. Electronically maintained data/records shall be protected and backed up. All records shall be maintained for five (5) years after the expiration of this Agreement. Company agrees that the records of any and all companies conducting operations addressed in the Agreement shall be provided or made available to City and its official representatives during normal business hours. City may have access to, review, copy or otherwise utilize any of the records described in this section for any purpose whatsoever. Such records include, but are not limited to financial, solid waste, CERCLA and disposal records. :. 8.2.2 Financial Records Company shall maintain financial records relating to its operations pursuant to this Agreement separate and segregated from such records relating to its other operations. Company shall maintain at least the following records: Audited financial statements for the Company as a whole; Audited statements of revenue and expense for this Agreement segregated from the other operations of Company (including without limitation those operations of Company in City and surrounding jurisdictions which are not covered by this Agreement), including a description of segregation methodology; and, Complete descriptions of related party transactions (corporate and/or regional management fees, inter -company profits from transfer, processing or disposal operations). 8.2.3 Solid Waste Records Company shall maintain the following records relating to its operations pursuant to this Agreement: a) Customer services and Billing records; b) Records of tons Collected, processed, diverted and disposed by waste stream (Refuse, Recycling, Green Waste, Manure), and the Facility used for such tonnages (transfer station, MRF, Transformation Facility or landfill); c) Quantity of Recyclable Materials recovered by material type, as well as quantity of material diverted from landfills in compliance with AB 939; d) Special annual cleanup event results, including tons disposed and diverted; e) Routes; f) Facilities, equipment and personnel used; ,M g) Facilities and equipment operations, maintenance and repair; h) Number of Refuse, Recycling, Green Waste and Manure Company -owned Containers in service; i) Complaints; and, j) Missed pickups. 8.2.4 CERCLA Defense Records City views the ability to defend against the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and related litigation as a matter of great importance. For this reason, the City regards the ability to prove where Solid Waste Collected in the City was taken for Disposal, as well as where it was not taken, to be matters of concern. Company shall maintain data retention and preservation systems which can establish where Solid Waste Collected in the City was landfilled (and therefore establish where it was not landfilled) for not less than five (5) years following the termination of this Agreement, and agrees to notify City's Risk Manager and City Attorney before destroying such records thereafter. At any time, including after the expiration of the Term hereof, Company shall provide copies of such records to City. The requirements of this Section shall survive the expiration of the Term of this Agreement. 8.2.5 Disposal Records Company shall maintain records of Disposal of all Solid Waste Collected in City for the period of this Agreement and all extensions to this Agreement or successor Agreements. In the event Company discontinues providing Solid Waste Handling Services to City, Company shall provide all records of Disposal or processing of all Solid Waste Collected in City within thirty (30) days of discontinuing service. Records shall be in chronological and organized form and readily and easily interpreted. 8.2.6 Other Programs' Records Records for other programs shall be tailored to specific needs. In general, they shall include: a) Plans, tasks, and milestones; and, b) Accomplishments in terms such as dates, activities conducted, quantities of products used, produced or distributed, and numbers of participants and responses. 8.2.7 Cost of Audit City may conduct or authorize an audit of the Company once each year. Should an audit conducted or authorized by the City disclose that Franchise or other fees payable by the Company were underpaid by two percent (2%) or more, or that more than 2% of the Customers were inaccurately billed, for the period under review, Company shall pay for the full cost of City's audit. In connection with any audit of the Company's reported tonnage in order to verify Company's compliance with the performance requirements to divert at least 50% of the waste stream Collected, with an overall City diversion goal of 75 %, Company shall reimburse the City its actual costs of such audit, and City shall select the auditor. 8.2.8 Payments and Refunds Should an audif disclose that the Franchise Fees payable by the Company were underpaid or that Customers were overcharged for the period under review, Company shall pay to City any underpayment of Franchise Fees and/or refund to Company's Customers any overcharges within thirty (30) days following the date upon which the audit report is issued. Undercharges shall not be billed in arrears for more than 90 days of service, with any remaining undercharges absorbed by the Company. Should an audit disclose that Franchise Fees were overpaid, City shall credit such amounts against future Franchise Fees payable by Company. 8.3 Reports 8.3.1 Report Formats and Schedule Records shall be maintained in forms and by methods that facilitate flexible use of data contained in them to structure reports, as needed. Reports are intended to compile recorded data into useful forms of information that can be used to, among other things: a) Determine and set rates and evaluate the financial efficacy of operations; b) Evaluate past and expected progress towards achieving AB 939 goals and objectives; c) Determine needs for adjustment to programs; and, d) Evaluate Customer service and complaints. Company may propose report formats that are responsive to the objectives and audiences for each report. The format of each report shall be approved by City. In addition to submitting all reports on paper, Company agrees to submit all reports in an electronic format approved by the City, compatible with City's software/computers at no additional charge. Monthly reports shall be submitted within twenty (20) calendar days after the end of the report month. Quarterly reports shall be submitted within twenty (20) calendar days after the end of the calendar quarter. Annual reports shall be submitted before January 31st following the reporting year. If requested, the Company's complaint summary, described in Section 8.3.3 (a) below, shall be sent to the City Manager within 5 days of request. All reports shall be submitted to: City Manager (or designated representative) City of Santa Clarita 23920 Valencia Blvd., Suite 300 Santa Clarita, CA 91355 8.3.2 Monthly Reports The information listed below shall be the minimum reported: Regular Services a) Solid Waste Collected by Company for each month, sorted by type of Solid Waste (Refuse, Recycling, Green Waste, Manure) in tons, and the Facilities where the tons were processed or disposed. b) Warning notices issued for contaminated Recyclable Materials, Green Waste and Manure Containers. c) Narrative summary of problems encountered (including scavenging) and actions taken with recommendations for City, as appropriate. d) Materials Sales. Sales statement showing: kinds of material, quantity sold (in tons), and materials rejected for sale. 8.3.3 Quarterly Reports Report should contain at a minimum the information required in the monthly report and the following: a) Complaint summary for the quarter summarized by nature of complaints on a compatible computer disc. b) Copies of promotional and public education materials sent during the quarter. c) Other information or reports that the City may reasonably request or require. d) Description of Company outreach activities conducted the previous quarter. 8.3.4 Annual Report The Annual Report is to be essentially in the form and content of the monthly and quarterly reports, but shall also include: a) A complete inventory of equipment used to provide all services (such as vehicles and Containers by size and waste stream type Container is used for). b) Results of route audits, including a summary of the number of Containers by size (35- gallon, 64-gallon, 90-gallon,1.5 cubic yard, 3 cubic yard) and type of service (Refuse, Recycling, Green Waste, Manure). c) Environmental Litigation Defense records required under Section 8.2.4. d) General information about the Company, including a list of officers and members of its board of directors, most recent annual report and other periodic public financial reports of the Company and its subsidiaries and Affiliated companies, 91 and of other entities that may perform services under this Agreement, as the City may request. e) Copy of Hazardous Waste diversion records showing types and quantities, if any, of Hazardous Waste that was inadvertently collected, but diverted from landfilling. f) Number of routes and route hours per day by type of service. 8.3.5 Financial Report The City may, at City's option, request and be provided with those Company's financial records, reports or statements for the most recently completed fiscal year reasonably required in connection with an extraordinary rate adjustment request, Billing audit, Franchise Fee audit, or verification of other information required under this Agreement. When required, financial statements shall include a supplemental combining schedule showing Company's results of operations, including the specific revenues and expenses in connection with the operations provided for in this Agreement, separated from others included in such financial statements. The financial statements and footnotes shall be prepared in accordance with Generally Accepted Accounting Principles (GAAP) and audited, in accordance with Generally Accepted Auditing Standards (GAAS) by a certified public accountant (CPA) licensed (in good standing) to practice public accounting in the State of California as determined by the State of California Department of Consumer Affairs Board of Accountancy. The cost for preparation of the financial statements and audit shall be borne by Company as a direct cost of service. In addition, Company shall provide to City the supplemental schedule on a compiled basis. 8.4 Adverse Information A. Reporting Adverse Information. Company shall provide City two copies (one to the City Manager, one to the City Attorney) of all reports, pleadings, applications, notifications, Notices of Violation, communications or other material relating in any way to Company's performance of services pursuant to this Agreement, submitted by 92 Company to, or received by Company from, the United States or California Environmental Protection Agency, the California Integrated Waste Management Board, the Securities and Exchange Commission or any other federal, state or local agency, including any federal or state court. Copies shall be submitted to City within 30 days of receipt by Company, or sooner if reasonably apparent that to do so is materially relevant and any responses by Company shall be submitted to City simultaneously with Company's filing or submission of such matters with said agencies. Company's routine correspondence to said agencies need not be routinely submitted to City, but shall be made available to City promptly upon City's written request. 8.5 Right to Inspect Records City shall have the right to inspect, copy or review the specific documents or records required expressly or by inference pursuant to this Agreement, or any other similar records or reports of Company or its Affiliates that City shall deem, in its sole discretion, necessary to evaluate annual reports, compensation applications provided for in this Agreement and Company's performance provided for in this Agreement. Company shall make all records and documents to be reviewed and inspected by the City as a part of any audit or other record review conducted by the City, available for the City's review, inspection and copying within forty-eight (48) hours of receiving written notice from the City requesting the same. 8.6 Failure to Report The refusal or failure of Company to file any required reports, or to provide required information to City, or the inclusion of any materially false or misleading statement or representation by Company in such report shall be deemed a material breach of the Agreement as described in Section 11.1 and shall subject Company to all remedies which are available to the City under the Agreement or otherwise. 8.7 Audit Related to Use of Materials Recovery Facility On a date as determined by the City, Company agrees to one financial audit following the start of Company's utilization of a materials recovery facility commencing operations in the City, or adjacent portions of unincorporated Santa Clarita Valley. Company shall agree to cover all costs associated with a third party conducting the audit. The audit will 93 evaluate the impact of the utilization of the new facility on Company's revenue and cost. The City Council shall review the results of the third party audit and in its discretion adjust the monthly rate to reflect the incremental increase or decrease in Company's revenue or cost. Notwithstanding any provision herein to the contrary, the foregoing audit requirement does not apply where the City directs Company to utilize a materials recovery facility in accordance with Section 4.8. In such instance, the adjustment to the monthly rate shall be undertaken in accordance with Section 4.8. 94 ARTICLE 9 INDEMNIFICATION, INSURANCE BOND, AND LETTER OF CREDIT 9.1 Indemnification Company hereby agrees to and shall indemnify and hold harmless City, its elected and appointed boards, commissions, officers, employees, and agents (collectively, indemnities) from and against any and all loss, liability, penalty, forfeiture, claim, demand, action, proceeding or suit in law or equity of any and every kind and description (including, but not limited to, injury to and death of any Person and damage to property, or for contribution or indemnity claimed by third parties) arising or resulting from and in any way connected with (1) the negligence or willful misconduct of Company, its officers, employees, agents, Companies and/or subcontractors in performing services under this Agreement; (2) the failure of Company, its officers, employees, agents, Companies and/or subcontractors to comply in all respects with the provisions of this Agreement, applicable laws (including, without limitation, the Environmental Laws), ordinances and regulations, and/or applicable permits and licenses; (3) the acts of Company, its officers, employees, agents, Companies and/or subcontractors in performing services under this Agreement for which strict liability is imposed by law (including, without limitation, the Environmental Laws). The foregoing indemnity shall apply regardless of whether such loss, liability, penalty, forfeiture, claim, demand, action, proceeding, suit, injury, death or damage is also caused in part by any of the indemnities negligence, but shall not extend to matters resulting from the indemnities sole negligence, or willful misconduct. Company further agrees to and shall, upon demand of City, at Company's sole cost and expense, defend (with attorneys acceptable to City) City, its elected and appointed boards and commissions, officers, employees, and agents against any claims, actions, suits in law or equity or other proceedings, whether judicial, quasi-judicial or administrative in nature, arising or resulting from any of the aforementioned events, and to reimburse the City for any and all costs and expenses City incurs in providing any such defense, either before, during or after the time Company elects to provide such defense, including any and all costs incurred in overseeing any defense to be provided herein by Company. Company, upon demand of the City, made by and through the City Attorney, shall 95 protect City and appear in and defend the City and its elected officials, officers, employees and agents, in any claims or actions by third parties, whether judicial, administrative or otherwise, including, but not limited to disputes and litigation over the definitions of "Solid Waste' or "Recyclable Material," the scope of the rights granted herein, conflicts between the rights granted herein and rights asserted by other Persons, or the limits of City's authority with respect to the grant of licenses, or agreements, exclusive or otherwise, asserting rights under the Dormant Commerce Clause or any other federal or state laws to provide Solid Waste Handling Services in the City. The provisions of this Section shall not terminate or expire, shall be given the broadest possible interpretation and shall survive the expiration or earlier termination of this Agreement. 9.2 Hazardous Substances Indemnification A. Without regard to any insurance coverage or requirements, and without limiting the above general indemnification obligation in any way, Company specifically agrees to and shall, to the maximum extent permitted by law, defend (with counsel acceptable to City) reimburse, indemnify, and hold City and its past and present officers, council members, employees, consultants and agents (hereinafter "Indemnified Parties") harmless from and against any and all claims, actions, liabilities, damages, demands, judgments, losses, costs, liens, expenses, suits, actions, attorneys' fees, consultant fees, penalties and any and all other losses, damages, fees and expenses of whatever kind or nature ("Claims") (including but not limited to response costs, investigative costs, assessment costs, monitoring costs, treatment costs, cleanup costs, removal costs, remediation costs, and similar costs, damages and expenses) that arise out of or are alleged to arise out of or in any way relate to any action, inaction or omission of Company that: 1. results in any demand, claim, notice, order, or lawsuit, asserting that any Indemnified Party is liable, responsible or in anyway obligated to investigate, assess, monitor, study, test, treat, remove, remediate, or otherwise cleanup, any Hazardous Contaminant (as defined herein); or 2. relates to material collected, transported, recycled, processed, treated or all disposed of by Contractor. B. Contractor's obligations pursuant to this Section shall apply, without limitation, to; 1. any Claims brought pursuant to or based on the provisions of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA" ), 42 U.S.C. § 9601 et seq., the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. § 9601 et seq., the California Hazardous Substances Account Act (California Health & Safety Code Sections 25300 et seq.), the California Hazardous Waste Control Laws (California Health and Safety Code Sections 25100 et seq.), the California Porter -Cologne Act (California Water Code Section 13000 et seq.), and any and all amendments and regulations thereto, and any other Federal, State, regional or local environmental statutory or regulatory provision; 2. any Claims based on or arising out of or alleged to be arising out of the ownership, use, lease, sale, design, construction, maintenance or operation of Contractor of any facility; 3. any Claims based on or arising out of or alleged to be arising out of the marketing, sale, distribution, storage, transportation, disposal, processing or use of any materials recovered by Contractor; 4. any Claims based on or arising out of or alleged to be arising out of any breach of any express or implied warranty, representation or covenant arising out of or in connection with this Agreement. C. The foregoing indemnity and defense obligations shall apply irrespective of the negligence or willful misconduct of Contractor or any Affiliate of Contractor. D. For purposes of this Section, the term "Hazardous Contaminant" shall mean any "hazardous material," as that term is defined under California Health & Safety Code Section 25501(1); any "hazardous substance," as that term is defined herein or under California Health & Safety Code Sections 25281(f), 25501(e), 25501.1 and under Title 42, Section 9601(14) of the United States Code; any "hazardous waste," as that term is defined under Title 42, Section 6093(5) of the United States Code and under California 97 Health & Safety Code Section 25550(m); any chemical which the Governor has identified as a chemical known to the State to cause cancer or reproductive toxicity pursuant to California Health & Safety Code Section 25249.8; any crude oil or refined or unrefined petroleum product or any fraction or derivative thereof; and any asbestos or asbestos -containing material. The term "Hazardous Contaminant" shall also include any and all amendments to the above -referenced statutory and regulatory provisions made before or after the date of execution of this Agreement. E. The provisions of this Section shall not terminate or expire, shall be given the broadest possible interpretation and shall survive the expiration or earlier termination of this Agreement. F. In the event City directs Company to dispose of Solid Waste Collected pursuant to this Agreement at a facility designated by City, Company shall not be required to provide the indemnification set forth in this Section 9.2 with respect to Claims arising from allegations relating to the handling and/or disposal of such Solid Waste after it is delivered to a City designated facility (although this exception shall not apply to any other Claims relating to said Solid Waste); provided, however, this exception to the indemnification requirements of Section 9.2 that would otherwise apply shall not apply in the event the City designated disposal facility in question is either owned or operated, in whole or part, by Company or any Affiliate. 9.3 AB 939 Indemnifications and Guarantee A. To the extent authorized by law, Company agrees to indemnify and hold harmless the City from and against all fines and/or penalties imposed by the California Integrated Waste Management Board in the event the source reduction and Recycling goals or any other requirement of AB 939 are not met by the City with respect to the waste stream Collected under this Agreement. B. Company warrants and represents that it is familiar with City's waste characterization study as set forth in City's SRRE, and that it has the ability to and will provide sufficient programs and services to ensure City will meet or exceed the 50% diversion goal set forth in AB 939, with respect to that portion of the Solid Waste generated in City that is the subject of this Agreement. 9.4 Insurance Company shall procure and maintain during the entire Term of this Agreement the following types of insurance, and shall maintain the following minimum levels of coverage, which shall apply to any claims which may arise from or in connection with Company's performance hereunder or the actions or inactions of any of Company's officers, agents, representatives, employees, or subcontractors in connection with Company's performance. The insurance requirements hereunder in no way limit Company's various defense and indemnification obligations, or any other obligations as set forth herein. A. Minimum Scope of Insurance. Coverage shall be at least as broad as: 1. The most recent editions of Insurance Services Office Commercial General Liability coverage ("occurrence" form CG 00 01). 2. The most recent editions of Insurance Services Office form number CA 00 01 covering Automobile Liability, code 1 "any auto" and endorsement CA 00 25, 3. Workers' Compensation insurance as required by the Labor Code of the State of California and Employers Liability insurance. S. Minimum Limits of Insurance. Company shall maintain in force for the term of this Agreement limits no less than: Comprehensive General Liability: Five Million Dollars ($5,000,000) limit aggregate and Five Million Dollars ($5,000,000) limit per occurrence for bodily injury, Personal injury and property damage. Such limits can be achieved through a combination of primary and excess liability policies. 2. Automobile Liability: Five Million Dollars ($5,000,000) limit aggregate and Five Million Dollars ($5,000,000) limit per accident for bodily injury and property damage. Such limits can be achieved through a combination of primary and excess liability policies. 3. Workers' Compensation and Employers Liability: Workers' compensation limits as required by the Labor Code of the State of California and Employers Liability limits of $1,000,000 per accident. C. Deductibles and Self -Insured Retentions. Any deductibles or self -insured retentions must be declared to and approved by City. If, in the reasonable opinion of the City, Contractor does not have sufficient financial resources to protect the City from exposure with respect to any deductibles or self -insured retentions, at the option of City, either: the insurer shall reduce or eliminate such deductibles or self -insured retention's as respects City, its officials, employees and agents; or Company shall procure a bond guaranteeing payment of losses and related investigations, claim administration and defense expenses. D. Other Insurance Provisions. The policies are to contain, or be endorsed to contain, the following provisions: 1. General Liability and Automobile Liability Coverages a) City, its elective and appointive boards, commissions, officials, employees, agents and volunteers are to be named as additional insureds as respects: liability arising out of activities performed by or on behalf of Company; Premises owned, leased or used by Company; or vehicles owned, leased, hired or borrowed by Company. The coverage shall contain no special limitations on the scope of protection afforded to City, its elective and appointive boards, commissions, officials, employees, agents or volunteers. b) Company's insurance coverage shall be primary insurance as respects City, its elective and appointive boards, commissions, officials, employees, agents and volunteers. Any insurance or self insurance maintained by City, its officials, elective and appointive boards, commissions, employees, agents or volunteers shall be excess of Company's insurance and shall not contribute with it. c) Any failure to comply with reporting provisions of the policies shall not affect coverage provided to City, its officials, elective and appointive boards, commissions, employees, agents or volunteers. d) Coverage shall state that Company's insurance shall apply separately to each insured against whom claim is made or suit is 100 brought, except with respect to the limits of the insurer's liability. 2. Workers' Compensation and Employers Liability Coverage - The insurer shall agree to waive all rights of subrogation against City, its officials, elective and appointive boards, commissions, employees, agents and volunteers for losses arising from work performed by Company for City. 3. All Coverages - Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended, voided, canceled by either party, reduced in coverage or in limits except after thirty (30) days' prior written notice by certified mail, return receipt requested, has been given to City. E. Acceptability of Insurers. The insurance policies required by this section shall be issued by an insurance company or companies authorized to do business in the State of California and with a rating in the most recent edition of Best's Insurance Reports of size category VII or larger and a rating classification of A or better. F. Verification of Coverage. Company shall furnish City with certificates of insurance and with original endorsements affecting coverage required by this clause. The certificates and endorsements for each insurance policy are to be signed by a Person authorized by that insurer to bind coverage on its behalf. The certificates and endorsements are to be on forms provided by or acceptable to City and are to be received and approved by City before work commences. City reserves the right to require complete, certified copies of all required insurance policies, at any time. G. Companies and Subcontractors. Company shall include all Companies and subcontractors as insureds under its policies or shall furnish separate certificates and endorsements for each Company and subcontractor performing work within the City. All coverages for Companies and subcontractors shall be subject to all of the requirements stated herein. H. Required Endorsements 1. The Workers' Compensation policy shall contain an endorsement in 101 substantially the following form: "Thirty (30) days prior written notice (ten (10) days in the event of cancellation for non-payment) by certified mail, return receipt requested, shall be given to City in the event of cancellation, reduction in coverage, or non -renewal of this policy. Such notice shall be sent to: City Manager City of Santa Clarita 23920 Valencia Blvd., Suite 300 Santa Clarita, CA 91355 2. The Public Liability policy shall contain endorsements in substantially the following form: a) "Thirty (30) days prior written notice (ten (10) days in the event of cancellation for non-payment) shall be given to City in the event of cancellation, reduction in coverage, or non -renewal of this policy. Such notice shall be sent to: City Manager City of Santa Clarita 23920 Valencia Blvd., Suite 300 Santa Clarita, CA 91355 b) "City, its officers, elective and appointive boards, commissions, employees, and agents are additional insureds on this policy." c) "This policy shall be considered primary insurance as respects any other valid and collectible insurance maintained by City, including any self -insured retention or program of self-insurance, and any other such insurance shall be considered excess insurance only." d) "Inclusion of City as an insured shall not affect City's rights as respects any claim, demand, suit or judgment brought or recovered against Company. This policy shall protect Company and City in the same manner as though a separate policy had been issued to 102 each, but this shall not operate to increase Company's liability as set forth in the policy beyond the amount shown or to which Company would have been liable if only one party had been named as an insured." I. Delivery of Proof of Coverage. Simultaneously with the execution of this Agreement, Company shall furnish City certificates of each policy of insurance required hereunder, in form and substance satisfactory to City. Such certificates shall show the type and amount of coverage, effective dates and dates of expiration of policies and shall have all required endorsements. If City requests, copies of each policy, together with all endorsements, shall also be promptly delivered to City. Renewal certificates will be furnished periodically to City to demonstrate maintenance of the required coverage throughout the Term. J. Other Insurance Requirements 1. In the event any services are delegated to another company or subcontractor, Company shall require such Company or subcontractor to provide statutory workers' compensation insurance and employer's liability insurance for all of the Company or subcontractor's employees engaged in the work in accordance with this Section 9.4. The liability insurance required by this Section 9.4 shall cover all Company or subcontractors or the Company or subcontractor must furnish evidence of insurance provided by it meeting all of the requirements of this Section 9.4. 2. Company shall comply with all requirements of the insurers issuing policies. The carrying of insurance shall not relieve Company from any obligation under this Agreement. If any claim exceeding the amount of any deductibles or self -insured reserves is made by any third Person against Company or any Company or subcontractor on account of any occurrence related to this Agreement, Company shall promptly report the facts in writing to the insurance carrier and to City. If Company fails to procure and maintain any insurance required by this Agreement, City may take out and maintain, at Company's expense, such 103 insurance as it may deem proper and deduct the cost thereof from any moneys due Company. 9.5 Faithful Performance Bond Prior to the Commencement Date, Company shall deliver to City a performance bond in the sum of the amount of Seven Hundred Fifty Thousand Dollars ($750,000.00), similar to the form provided in Exhibit 6, which secures the faithful performance of this Agreement, including, without limitation, payment of any penalty and the funding of any work to cure a breach of this Agreement, unless such requirement is waived by the City Manager. The bond shall contain the original notarized signature of an authorized officer of the surety and affixed thereto shall be a certified and current copy of his power of attorney. The bond shall be unconditional and remain in force during the entire term of the Agreement and shall be null and void at the conclusion of the term of this Agreement only if the Company promptly and faithfully performs all terms and conditions of this Agreement. 9.6 Faithful Performance Letter of Credit In addition to a corporate surety bond as noted in Section 9.5 above, Company shall furnish an irrevocable letter of credit drawn upon a financial institution with an office within one hundred (100) miles of City in the amount of Two Hundred Fifty Thousand Dollars ($250,000), in a form acceptable to the City attorney as security for the performance of this Agreement (the "LOC"). The LOC shall be the sole responsibility of Company, and shall be released within thirty days after both (i) the expiration of the term of this Agreement, or upon the earlier termination hereof; and (ii) Company's satisfactory performance of all obligations hereunder. 9.7 Forfeiture of Performance Bond In the event Company shall for any reason become unable to, or fail in any way to, perform as required by this Agreement, City may declare a portion or all of the performance bond which is necessary to recompense and make whole the City, forfeited to the City. Upon partial or full forfeiture of the performance bond, Company shall restore the performance bond to its face amount within 30 days of the City's declaration. Failure to restore the performance bond to its full amount within 30 days shall be a 104 material breach of the Agreement. 9.8 Forfeiture of Letter Of Credit Thirty (30) days following City providing Company with written notice of its failure to pay City any amount owing under this Agreement, the LOC may be drawn upon by City for purposes including, but not limited to: a. Payment of sums due under the terms of this Agreement which Company has failed to timely pay to City b. Reimbursement of costs borne by City to correct violations of this Agreement not corrected by Company. City may draw upon the entire Letter of Credit and convert it to a cash deposit if Company fails to cause the Letter of Credit to be extended or replaced with another satisfactory letter of credit no later than 60 days prior to its expiration during the term hereof. 105 ARTICLE 10 CITY'S RIGHT TO PERFORM SERVICE 10.1 General In the event that Company, for any reason whatsoever, fails, refuses or is unable to Collect, Recycle, process, transport or dispose of any or all Solid Waste as required by this Agreement, at the time and in the manner provided in this Agreement, for a period of more than forty-eight (48) hours, and if, as a result thereof, Solid Waste should accumulate in City to such an extent, in such a manner, or for such a time that such accumulation endangers or menaces the public health, safety or welfare, then City shall have the right, but not the obligation, upon twenty-four (24) hour prior written notice to Company during the period of such emergency as determined by City, (1) to perform, or cause to be performed, such services itself with its own or other personnel without liability to Company; and/or (2) to take possession of any or all of Company's land, equipment and other property used or useful in the Collection and transportation of Solid Waste, and to use such property to Collect and transport any Solid Waste generated within City which Company would otherwise be obligated to Collect, transport and properly dispose of or process pursuant to this Agreement. Notice of Company's failure, refusal or neglect to Collect, transport and properly dispose of or process Solid Waste may be given orally by telephone to Company at its principal office and shall be effective immediately. Written confirmation of such oral notification shall be sent to Company within twenty-four (24) hours of the oral notification. Company further agrees that in such event: A. It will take direction from City to effect the transfer of possession of equipment and property to City for City's use, or for use by any Person or entity designated by the City. B. It will, if City so,requests, keep in good repair and condition all of such equipment and property, provide all motor vehicles with fuel, oil and other service, and provide such other service as may be necessary to maintain said property in operational condition. City agrees that it assumes complete responsibility for the proper and normal use of such equipment and facilities while in its possession. 106 C. City may immediately engage all or any personnel necessary or useful for the Collection and transportation of Solid Waste, including, if City so desires, employees previously or then employed by Company, Company further agrees, if City so requests, to furnish City the services of any or all management or office Personnel employed by Company whose services are necessary or useful for Solid Waste Collection, transportation, processing and Disposal operations and for the Billing and Collection of fees for these services. 10.2 Billing and Compensation to City During City's Possession During such time that City is providing Solid Waste Handling Services, as above provided, Company shall bill and Collect payment from all users of the above - mentioned services as described in Section 5.1. Company further agrees that, in such event, it shall reimburse City for any and all costs and expenses incurred by City in taking over possession of the above -mentioned equipment and facilities and in providing Solid Waste Handling Services in such manner and to an extent as would otherwise be required of Company under the Terms of this Agreement. Such reimbursement shall be made from time to time after submission by City to Company of each statement listing such costs and expenses, but in no event later than five (5) working days from and after each such submission. In addition, Company shall pay City an amount equal to the profits Company is entitled to receive from Billings sent to Customers for Solid Waste Handling Services which Services are not provided by Company due to the conditions noted in this Section. Such payment shall be due on the date which is 30 days following the date upon which both the City's temporary possession of Company's equipment has ended and Company's Bills to Customers for such period have become due. 10.3 City's Right to Relinquish Possession It is further mutually agreed that City may at any time at its discretion relinquish possession of any or all of the above -mentioned property to Company and thereupon demand that Company resume the Solid Waste Handling Services as provided in this Agreement, whereupon Company shall be bound to resume the same. 10.4 City's Possession Not A Taking 107 It is expressly agreed between the Parties that City's exercise of its rights under this Article (1) does not constitute a taking of private property for which compensation must be paid, (2) shall not create any liability on the part of City to Company, and (3) does not exempt Company from any of the indemnity and insurance provisions of this Agreement, which are meant to extend to circumstances arising under this Section provided that the Company is not required to indemnify the City against claims and damages arising from the sole negligence of the City, its elective and appointive boards, commissions, officers, employees and agents in the operation of Collection vehicles during the time the City has taken possession of such vehicles. 10.5 Duration of City's Possession City's right pursuant to this Article to retain temporary possession of Company's facilities and equipment, and to render Collection services, shall terminate when City determines that such services can be resumed by Company, or when City no longer reasonably requires such property or equipment. In any case, City has no obligation to maintain possession of Company's property or equipment and/or continue its use for any period of time and may at any time, in its sole discretion, relinquish possession to Company. 108 ARTICLE 11 DEFAULT, REMEDIES AND LIQUIDATED DAMAGES 11.1 Events of Default All provisions of the Franchise and this Agreement to be performed by Company are considered material. Each of the following shall constitute an event of default. A. Fraud or Deceit or Misrepresentation. If the Company engages in, or attempts to practice, any fraud or deceit upon the City or makes a misrepresentation regarding material information to the City. B. Insolvency or Bankruptcy. If Company becomes insolvent, unable, or unwilling to pay its debts, files a bankruptcy petition or takes steps to liquidate its assets. C. Failure to Maintain Coverage. If Company fails to provide or maintain in full force and effect the Workers' Compensation, liability, or indemnification coverage, or the performance bond or letter of credit, as required by this Agreement. D. Violations of Regulation. If Company violates any orders or filings of any regulatory body having jurisdiction over Company relative to this Agreement, provided that Company may contest any such orders or filings by appropriate proceedings conducted in good faith, in which case no breach of the Franchise and this Agreement shall be deemed to have occurred until a final decision adverse to the Company is entered. E. Failure to Perform. If Company ceases to provide all or a portion of the Collection, processing or Recycling services, or any other Solid Waste Handling Services as required under this Agreement for a period of two (2) consecutive days or more, for any reason within the control of Company, including labor disputes. F. Failure to Pay. If Company fails to make any payments required under this Agreement and/or refuses to provide City, within ten (10) days of the demand, with required information, reports, and/or records in a timely manner as provided for in the Agreement. 109 G. Failure to Cooperate with Audits. Failure to complete, perform or cooperate with any audit as described by this agreement, provided that City shall provide Company with written notice of such failure and Company shall have 30 days to cure deficiency. H. Failure to Submit Reports or Documentation. Failure to complete or to provide required reports or documents to the City as required by this agreement within 60 days of their due date and 30 days after receipt of written notice from the City that such reports have not been submitted. I. Acts or Omissions. Any other act or omission by Company which violates the terms, conditions, or requirements of this Agreement, AB 939, or any law, statute, ordinance, order, directive, rule, or regulation issued thereunder, or the failure to correct or remedy any such violation within the time set in the written notice of the violation or, if Company cannot reasonably correct or remedy the breach within the time set forth in such notice, if Company should fail to commence to correct or remedy such violation within the time set forth in such notice and diligently effect such correction or remedy thereafter. This Section is intended to apply to any situation in which Company or any of its officers, directors or employees are found guilty of any crime related to the performance of this Agreement, or of any crime related to anti-trust activities, illegal transport or Disposal of hazardous or toxic materials, or bribery of public officials. The term "found guilty" shall be deemed to include any judicial determination that Company or any of Company's officers, directors or employees is guilty as well as any admission of guilt by Company or any of Company's officers, directors or employees including, but not limited to, the plea of "guilty", "nolo contendere", "no contest", and "guilty to a lesser charge." J. False or Misleading Statements. Any representation or disclosure made to City by Company in connection with or as an inducement to entering into this Agreement, or any future amendment to this Agreement, which proves to be false or misleading in any material respect as of the time such representation or disclosure is made, whether or not any such representation or disclosure appears as part of this Agreement. K. Attachment. The seizure of, attachment of, or levy on, the operating equipment of Company, including without limits its equipment, maintenance or office facilities, or 110 any part thereof. L. Suspension or Termination of Service. There is any termination or suspension of the transaction of business by Company, including without limitation, due to labor unrest including strike, work stoppage or slowdown, sick-out, picketing, or other concerted job action lasting more than two (2) consecutive days. M. Failure to Provide Assurance of Performance. It Company fails to provide reasonable assurances of performance as required under Section 11.6. Company shall have forty-eight (48) hours from the time it is given notification by City to cure any default arising under subsections E, F, G, H, K, L and M provided, however, that the City shall not be obligated to provide Company with a notice and cure opportunity if the Company has committed the same or similar breach within a twenty • four month period. It is expressly understood that Company is not entitled to receive notice of default, or to cure such default, with respect to those matters listed in subsections A, B, C, D, I, and J above. 11.2 Right to Terminate Upon Default and Right to Specific Performance If Company commits a material breach, including specifically any of the matters listed in subsections A through M of Section 11.1 above (and, if permitted to cure, does not cure it within the forty-eight (48) hours), City shall be entitled to unilaterally terminate this Agreement or impose other such sanctions (which may include financial sanctions, temporary suspensions or any other conditions it deems appropriate short of termination) as it shall deem proper. Should City decide to terminate this Agreement upon a default by Company, City shall have the right to do so upon giving ten (10) days notice to Company, and shall not be required to take any further action (such as holding any hearing, bringing any suit or taking any other action.) City's right to terminate this Agreement and to take possession of Company's Facility are not exclusive, and City's termination of this Agreement shall not constitute an election of remedies.. Instead, such remedies shall be in addition to any and all other legal and equitable rights and remedies which City may have. By virtue of the nature of this Agreement, the urgency of timely continuous and high - ill quality service, the time required to effect alternative service, and the rights granted by City to Company, the remedy of damages for a breach hereof by Company is inadequate and City shall be entitled to seek injunctive relief and/or specific performance of any breach of this Agreement. 11.3 Liquidated Damages A. General. The City finds, and Company agrees, that as of the time of the execution of this Agreement, it is impractical, if not impossible, to reasonably ascertain the extent of damages which shall be incurred by City as a result of a breach by Company of certain specific obligations under this Agreement. The factors relating to the impracticability of ascertaining damages include, but are not limited to, the fact that: (i) substantial damage results to members of the public who are denied services or denied quality or reliable service; (ii) such breaches cause inconvenience, anxiety, frustration, and deprivation of the benefits of the Agreement to individual members of the general public for whose benefit this Agreement exists, in subjective ways and in varying degrees of intensity which are incapable of measurement in precise monetary terms; (iii) that the services that are the subject of this Agreement might be available at substantially lower costs than alternative services and the monetary loss resulting from denial of services or denial of quality or reliable services is impossible to calculate in precise monetary terms; and (iv) the termination of this Agreement for such specific breaches, and other remedies are, at best, a means of future correction and not remedies which make the public whole for past breaches. S. Service Performance Standards; Liquidated Damages for Failure to Meet Standards. The parties further acknowledge that consistent, reliable Solid Waste Handling Service is of utmost importance to City and that City has considered and relied on Company's representations as to its quality of service commitment in entering this Agreement with it. The parties further recognize that some quantified standards of performance are necessary and appropriate to ensure consistent and reliable service and performance. The parties further recognize that if Company fails to achieve the performance standards, or fails to submit required documents in a timely manner, City and its residents will suffer damages and that it is and will be impractical and extremely difficult to ascertain and determine the exact amount of damages which City will, suffer. Therefore, without prejudice to City's right to treat such breaches as an event of default 112 under this Article 11, the parties agree that the following liquidated damage amounts represent a reasonable estimate of the amount of such damages for such specific breaches, considering all of the circumstances existing on the date of this Agreement, including the relationship of the sums to the range of harm to City that reasonably could be anticipated and the anticipation that proof of actual damages would be costly or impractical. In placing their initials at the places provided, each party specifically confirms the accuracy of the statements made above and the fact that each party has had ample opportunity to consult with legal counsel and obtain an explanation of the liquidated damage provisions at the time that the Agreement was made. Company City Initial Here Initial Here Company agrees to pay (as liquidated damages and not as a penalty) the amounts set forth below: 1. Collection Reliability a) For each failure to commence service to a new Customer account within seven (7) days after order, which exceed five (5) such failures annually: $150.00 b) For each failure, which exceeds ten (10) such failures annually, to Collect Solid Waste from any established Customer account on the scheduled Collection day and not Collected within the period described in this Agreement: $150.00 c) For each failure to Collect Solid Waste, which has been properly set out for Collection, from the same Customer on two (2) consecutive scheduled pickup days: $150.00 d) For each day beyond deadlines set in the transition plan that Company fails to meet any and all transition plan task deadlines: $500.00 2. Collection Oualitv 113 a) For each occurrence of failure to properly return empty Containers to avoid pedestrian or vehicular traffic impediments or to place cans upright with lids secured which exceeds ten (10) such occurrences annually: $150.00 b) For each occurrence of excessive noise or discourteous behavior: $250.00 c) For each occurrence of Collecting Solid Waste during unauthorized hours which exceeds five (5) such occurrences annually: $250.00 d) For each occurrence of damage to private property which exceeds five (5) such occurrences annually: $250.00 e) For each failure to clean up Solid Waste spilled from Solid Waste Containers within 90 minutes that exceeds ten (10) such failures annually: $150.00 3. Customer Responsiveness a) For each failure to initially respond to a Customer complaint within one (1) business day, and for each additional day in which the complaint is not addressed: $250.00 b) For each failure to process Customer complaints to City as required by Article 5: $250.00 c) For each failure to carry out responsibilities for establishing service to an individual resident: $250.00 d) For each failure to notify City within one (1) hour from the time Company has remedied a complaint forwarded by City. $10.00 e) For each failure to remove graffiti from Containers, or to replace with Containers bearing no graffiti, within twenty-four (24) hours of request from City or Customers: $150.00 114 f) For each failure to process a claim for damages within thirty (30) days from the date submitted to Company. $100.00 g) For each additional thirty (30) day increment of time in which Company has failed to resolve a claim for damages within thirty (30) days form the claim date. $100.00 4. Timeliness of Submissions to Cit Any report shall be considered late until such time as a correct and complete report is received by City. For each calendar day a report is late, the daily liquidated damage amount shall be: a) Monthly Reports: b) Quarterly Reports: $100 per day $250 per day c) Annual Reports: $350 per day City may determine the occurrence of events giving rise to liquidated damages through the observation of its own employees or representative or investigation of Customer complaints. Prior to assessing liquidated damages, City shall give Company notice of its intention to do so. The notice will include a brief description of the incident(s)/non-performance. Company may review (and make copies at its own expense) all information in the possession of City relating to incident(s)/non- performance. Company may, within ten (10) days after receiving the notice, request a meeting with City. Company may present evidence in writing and through testimony of its employees and others relevant to the incident(s)/non- performance. City will provide Company with a written explanation of his or her determination on each incident(s)/non-performance prior to authorizing the assessment of liquidated damages. The decision of City shall be final. C. Amount. City may assess liquidated damages for each calendar day or event, as appropriate, that Company is determined to be liable in accordance with this 115 Agreement. D. Timing of Payment. Company shall pay any liquidated damages assessed by City within ten (10) days after they are assessed. If they are not paid within the ten (10) day period, City may proceed against the performance bond required by the Agreement or find Company in default and terminate this Agreement pursuant to section 11.2, or both. 11.4 Excuse from Performance The parties shall be excused from performing their respective obligations hereunder in the event they are prevented from so performing by reason of floods, earthquakes, other natural disasters, war, civil insurrection, riots, and other similar catastrophic events which are beyond the control of and not the fault of the party claiming excuse from performance hereunder. Labor unrest, including but not limited to strike, work stoppage or slowdown, sick-out, picketing, or other concerted job action conducted by Company's employees or directed at Company is not an excuse from performance and Company shall be obligated to continue to provide service notwithstanding the occurrence of any or all of such events. The party claiming excuse from performance shall, within two (2) days after such party has notice of such cause, give the other party notice of the facts constituting such cause and asserting its claim to excuse under this section. The interruption or discontinuance of Company's services caused by one or more of the events excused shall not constitute a default by Company under this Agreement. Notwithstanding the foregoing, however, if Company is excused from performing its obligations hereunder for any of the causes listed in this section for a period of seven (7) days or more, City shall nevertheless have the right, in its sole discretion, to terminate this Agreement by giving ten (10) days' notice, in which case the provisions relative to taking possession of Company's land, equipment and other property and engaging Company's Personnel in Article 10 and this Article 11 will apply. 11.5 Notice, Hearing and Appeal of City Breach A. Administrative Hearing. Should Company contend that City is in breach of any 116 aspect of this Agreement, it shall give notice to the City Manager requesting an administrative hearing on the allegation. A hearing officer shall be appointed by the City Manager, and the hearing shall occur as soon as reasonably possible, or on such date as mutually agreed by the City Manager. The hearing officer shall make an advisory ruling on Contractors allegations, and suggest a remedy if a breach by City is determined to exist. The hearing officer's ruling and recommendations shall become final and binding if the parties so agree in writing within 30 days of the date notice of the decision is given to both parties. Otherwise, the hearing officer's ruling shall have no further force or effect. S. Other Remedies; Claims. Company shall be entitled to all available remedies in law or equity for City's breach of this Agreement; provided, however, Company shall not file or otherwise commence any action against City, in law or equity, in any court, until after an administrative hearing as set forth above has been completed, and the above noted 30 day period to accept the hearing officer's decision has passed, or either City or Company has given timely written notice to the other that it will not accept the hearing officers decision. C. Actions for Damages. As a prerequisite to the filing and maintenance of any action for damages by Company against City arising out of this Agreement, Company shall present a claim to City, as required by Government Code section 910 et seg, within 60 days of the date of the occurrence giving rise to the claim for damages. 11.6 Assurance of Performance City may, at its option and in addition to all other remedies it may have, demand from Company reasonable assurances of timely and proper performance of this Agreement, in such form and substance as City may require. If Company fails or refuses to provide satisfactory assurances of timely and proper performance in the form and by the date required by City, such failure or refusal shall be an event of default. 117 ARTICLE 12 OTHER AGREEMENTS OF THE PARTIES 12.1 Relationship of Parties The parties intend that Company shall perform the services required by this Agreement as an independent Company engaged by City and not as an officer or employee of City nor as a partner of or joint venture with City. No employee or agent or Company shall be or shall be deemed to be an employee or agent of City. Except as expressly provided herein, Company shall have the exclusive control over the manner and means of conducting the Solid Waste Handling Services performed under this Agreement, and all Persons performing such services. Company shall be solely responsible for the acts and omissions of its officers, employees, Companies, subcontractors and agents. Neither Company nor its officers, employees, Affiliates, subcontractors and agents shall obtain any rights to retirement benefits, workers' compensation benefits, or any other benefits which accrue to City employees by virtue of their providing service to the City. 12.2 Compliance with Law In providing the services required under this Agreement, Company shall at all times, at its sole cost, comply with all applicable laws and regulations of the United States, the State of California, and any federal, state, regional or local administrative and regulatory agencies, now in force and as they may be enacted, issued or amended. 12.3 Governing Law This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California. 12.4 Jurisdiction Except for those matters where Federal Courts have exclusive jurisdiction, any lawsuits between the parties arising out of this Agreement shall be brought and concluded in the courts of the State of California, which shall have exclusive jurisdiction over such lawsuits. 118 With respect to venue, the parties agree that this Agreement is made in and will be performed in Los Angeles County, North Judicial District. 12.5 Assignment Except as may be provided for in Article 10 (City's Right to Perform Service), Company shall not assign its rights, nor delegate, subcontract or otherwise transfer its obligations under this Agreement (collectively referred to as an "assignment") to any other Person without the prior written consent of City. Any such assignment made without the consent of City shall be void and the attempted assignment shall constitute a material breach of this Agreement. For purposes of this Section the term "assignment" shall be given the broadest possible interpretation, and shall include, but not be limited to (i) a sale, exchange or other transfer of substantially all of Company's assets dedicated to service under this Agreement to a third party; (ii) a sale, exchange or other transfer of outstanding common stock of Company to a third party provided said sale, exchange or transfer may result in a change of control of Company; (iii) any dissolution, reorganization, consolidation, merger, re -capitalization, stock issuance or re -issuance, voting trust, pooling agreement, escrow arrangement, liquidation or other transaction which results in a change of ownership or control of Company; (iv) any assignment by operation of law, including those resulting from mergers or acquisitions by or of Company of any of its Affiliates, insolvency or bankruptcy, making assignment for the benefit of creditors, writ of attachment for an execution being levied against this Agreement, appointment of a receiver taking possession of Company's property, or transfer occurring in the event of a probate proceeding; and (v) any combination of the foregoing (whether or not in related or contemporaneous transactions) which has the effect of any such transfer or change of ownership, or change of control of Company. Company acknowledges that this Agreement involved rendering a vital service to City's residents and businesses, and that City has selected Company to perform the services specified herein based on (1) Company's experience, skill and reputation for conducting its Solid Waste Handling Services in a safe, effective and responsible fashion, at all times in keeping with applicable Environmental Laws, regulations and best Solid Waste management practices, and (2) Company's financial resources to maintain the required equipment and to support its indemnity obligations to City under this Agreement. City 119 has relied on each of these factors, among others, in choosing Company to perform the services to be rendered by Company under this Agreement. If Company requests City's consideration of and consent to an assignment, City may deny or approve such request in its sole and absolute discretion. Any request for an assignment shall be made in a manner to be prescribed by the City Manager, and no request by Company for consent to an assignment need be considered by City unless and until Company has met (or with respect to matters that would only occur upon completion of the assignment if approved, made reasonable assurances that it will meet) the following requirements: a) Company shall undertake to pay City its reasonable expenses for attorney's fees and investigation costs necessary to investigate the suitability of any proposed assignee, and to review and finalize any documentation required as a condition for approving any such assignment. An advance payment of $50,000 towards expenses shall be paid to the City prior to City consideration of any assignment request and Company shall be responsible to pay all costs incurred by City in considering a request for assignment, including those in excess of the aforesaid deposit amount, regardless of whether City consents to the assignment. b) Company shall pay the City a transfer fee equal to 1% of the Gross Receipts it will receive during the remaining Term of the Agreement, as estimated by City. c) Company shall furnish City with audited financial statements of the proposed assignee's operations for the immediately preceding three (3) operating years. d) Company shall furnish City with satisfactory proof: (i) that the proposed assignee has at least ten (10) years of Solid Waste management experience on a scale equal to or exceeding the scale of operations conducted by Company under this Agreement; (ii) that in the last five (5) years, the proposed assignee has not suffered any significant citations or other censure from any federal, state or local agency having jurisdiction over its Solid Waste management operations due to any significant failure to comply with state, federal or local Environmental Laws and that the assignee has provided City with a complete list of such citations and censures; (iii) that the proposed assignee has at all times conducted its operations in an environmentally safe and conscientious fashion; (iv) that the proposed 120 assignee conducts its Solid Waste management practices in accordance with sound Solid Waste management practices in full compliance with all federal, state and local laws regulating the Collection and Disposal of Solid Waste including Hazardous Substances; and, (v) of any other information required by City to ensure the proposed assignee can fulfill the terms of this Agreement in a timely, safe and effective manner. Under no circumstances shall City be obliged to consider any proposed assignment by City if Company is in default at any time during the period of consideration. Should the City consent to any assignment request, such assignment shall not take effect until all conditions relating to the City's approval have been met. 12.6 Binding on Assigns The provisions of this Agreement shall inure to the benefit to and be binding on the permitted assigns (if any) of the parties. 12.7 Cooperation Following Termination At the end of the Term or in the event this Agreement is terminated for cause prior to the end of the Term, Company shall cooperate fully with City and any subsequent solid waste enterprise it designates to assure a smooth transition of Solid Waste Handling Services. Company's cooperation shall include, but not be limited to, providing route lists, Billing information and other operating records needed to service all Premises covered by this Agreement. The failure to cooperate with City following termination shall be conclusively presumed to be grounds for specific performance of this covenant and/or other equitable relief necessary to enforce this covenant. 12.8 Parties in Interest Nothing in this Agreement, whether express or implied, is intended to confer any rights on any Persons other than the parties to it and their representatives, successors and permitted assigns. 12.9 Waiver The waiver by either party of any breach or violation of any provisions of this Agreement 121 shall not be deemed to be a waiver of any breach or violation of any other provision nor of any subsequent breach of violation of the same or any other provision. The subsequent acceptance by either party of any moneys which become due hereunder shall not be deemed to be a waiver of any pre-existing or concurrent breach or violation by the other party of any provision of this Agreement. 12.10 Company's Investigation Company has made an independent investigation (satisfactory to it) of the conditions and circumstances surrounding the Agreement and the work to be performed by it. 12.11 Condemnation City fully reserves the rights to acquire Company's property utilized in the performance of this Agreement, by purchase or through the exercise of the right of eminent domain. This provision is additive, and not intended to alter the rights of the parties set forth in Article 10. 12.12 Notice All notices, demands, requests, proposals, approvals, consents and other communications which this Agreement requires, authorizes or contemplates shall be in writing and shall either be personally delivered to a representative of the parties at the address below or be deposited in the United States mail, first class postage prepaid, addressed as follows: If to City: If to Company: City Manager City of Santa Clarita 23920 Valencia Blvd., Suite 300 Santa Clarita, CA 91355 District Manager Blue Barrel Disposal 25772 Springbrook Road Santa Clarita, CA 91350 122 The address to which communications may be delivered may be changed from time to time by a written notice given in accordance with this section. Notice shall be deemed given on the day it is personally delivered or, if mailed, three days from the date it is deposited in the mail. 12.13 Representatives of the Parties References in this Agreement to the "City" shall mean the City Council and all actions to be taken by City shall be taken by the City Council except as expressly provided herein. The City Council may delegate, in writing, authority to the City Manager, and/or to other City employees and may permit such employees, in turn, to delegate in writing some or all of such authority to subordinate employees. Company may rely upon actions taken by such delegates if they are within the scope of the authority so delegated to them. Company shall, by the Effective Date, designate in writing a responsible officer who shall serve as the representative of Company in all matters related to the Agreement and shall inform City in writing of such designation and of any limitations upon his or her authority to bind Company. City may rely upon action taken by such designated representative as actions of Company unless they are outside the scope of the authority expressly delegated to him/her by Company as communicated to City. 12.14 City Free to Negotiate with Third Parties City may investigate all options for the Collection, transporting, Recycling, processing and Disposal of Solid Waste for periods after this agreement has expired or been terminated. Without limiting the generality of the foregoing, City may solicit proposals from Company and from third parties for the provision of Solid Waste Handling Services which are the subject of this Agreement, including without limitation Collection services, Disposal services, Recycling services, Green Waste services and processing, and any combination thereof, and may negotiate and execute agreements for such services which will take effect upon the expiration or earlier termination of this Agreement pursuant to Section 11.1 or otherwise. 123 12.15 Compliance with Municipal Code Company shall comply with those provisions of the municipal code of City which are applicable, and with any and all amendments to such applicable provisions during the term of this Agreement. 12.16 Privacy Company shall strictly observe and protect the rights of privacy of Customers. Information identifying individual Customers or the composition or contents of a Customer's waste stream shall not be revealed to any Person, governmental unit, private agency, or company, unless upon the authority of a court of law, by statute, or upon valid authorization of the Customer. This provision shall not be construed to preclude Company from preparing, participating in, or assisting in the preparation of waste characterization studies or waste stream analyses which may be required by AB 939. This provision shall not apply to reports or records provided to City pursuant to this Agreement. 12.17 Compliance with Immigration Laws. Company agrees that, in the performance of this Agreement, it will comply with all immigration laws. 12.18 Proprietary Information, Public Records The City acknowledges that a number of the records and reports of the Company are proprietary and confidential. Company is obligated to permit City inspection of its records on demand and to provide copies to City where requested. City will endeavor to maintain the confidentiality of all proprietary information provided by Company. Notwithstanding the foregoing, any documents provided by Company to City that are public records may be disclosed pursuant to a proper public records request. 12.19 Guarantee of Contractor's Performance Pursuant to a guarantee in substantially the form attached as Exhibit 5, Waste Management Holdings, Inc., a corporation which owns all of the issued and 124 outstanding common stock of Company, has agreed to guarantee Company's performance of this Agreement. The Guarantee is being provided concurrently with Company's execution of this Agreement. 125 ARTICLE 13 MISCELLANEOUS AGREEMENTS 13.1 Entire Agreement This Agreement contains the entire integrated agreement and understanding concerning the subject matter herein and supersedes and replaces any prior negotiations, promises, proposals (including Company's Proposal), and agreements between the Parties, whether written or oral. The Parties acknowledges this document has been executed with the consent and upon the advice of counsel. Each of the Parties acknowledges that no party or agent or attorney of any other party has made any promise, representation, or warranty, express or implied, not contained in this Agreement, to induce the other party to execute this instrument. 13.2 Section Headings The article headings and section headings in this Agreement are for convenience of reference only and are not intended to be used in the construction of this Agreement nor to alter or affect any of its provisions. 13.3 References to Laws and Other Agreements All references in this Agreement to laws shall be understood to include such laws as they may be subsequently amended or recodified, unless otherwise specifically provided. 13.4 Interpretation This Agreement, including the Exhibits attached hereto, shall be interpreted and construed reasonably and neither for nor against either party, regardless of the degree to which either party participated in its drafting. 13.5 Agreement This Agreement may not be modified or amended in any respect except by a writing signed by the parties. 126 13.6 Severability If any non -material provision of this Agreement is for any reason deemed to be invalid and unenforceable, the invalidity or unenforceability of such provision shall not affect any of the remaining provisions of this Agreement which shall be enforced as if such invalid or unenforceable provision had not been contained herein. 13.7 Exhibits Each of Exhibits identified as Exhibit "2" through "8" is attached hereto and incorporated herein and made a part hereof by this reference. Exhibit 1 is attached for information and reference purposes only as more fully set forth in Section 1.12. 13.8 Attorneys' Fees If either party to this Agreement is required to initiate or defend or made a party to any action or proceeding in any way connected with this Agreement, the prevailing party in such action or proceeding, in addition to any other relief which may be granted, whether legal or equitable, shall be entitled to recover its reasonable attorney's fees and costs. Attorneys fees shall include attorney's fees :on any appeal, and in addition a party entitled to attorney's fees shall be entitled to all other reasonable costs for investigating such action, taking depositions and discovery and all other necessary costs the court allows which are incurred in such litigation. All such fees shall be deemed to have accrued on commencement of such action and shall be enforceable whether or not such action is prosecuted to judgment. 127 IN WITNESS WHEREOF, City and Company have executed this Agreement as of the day and year first above written. CITY OF SANTA CLARITA ("City'') ATTEST: CITY CLERK",, APPROVED AS TO FORM: By F CITY MANAGER, CITY OF SANTA CLARITA USA WASTE OF CALIFORNIA, INC. DBA BLUE BARREL DISPOSAL ("COMPANY") By: Name: y Title: 1//G E 128 EXHIBIT 1 COMPANY'S PROPOSAL 129