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HomeMy WebLinkAbout2001-07-10 - AGENDA REPORTS - DIAPER PROCESSOR CONTR (2)CITY OF SANTA CLARITA AGENDA REPORT UNFINISHED BUSINESS City Manager Approval: Item to be presented b3-- Jill Fosselman DATE: July 10, 2001 SUBJECT: REVIEW OF DIAPER PROCESSOR CONTRACT DEPARTMENT: Planning & Building Services RECOMMENDED ACTION City Council to receive the contract for the purchase of a Knowaste Diaper Processor II and to provide staff with direction regarding the execution of the contract, subject to City Attorney review. BACKGROUND At the June 12, 2001 City Council meeting, the Council approved the diaper -recycling pilot program Memorandum of Understanding (MOU) between the City, the franchisees, and Knowaste, LLC. The MOU requires staff to present a contract for the purchase of a Knowaste Diaper Processor II (KDP II) to the Council for approval and direction regarding timing of execution of the contract. In accordance with the MOU, the contract will not be executed until a mutually agreed upon processing facility has been secured and the contract has been approved by the Council. The contract creates a legally binding contract between the City and Knowaste on the goods and services that are expected by the City in return for the total purchase price of $500,000. The contract contains the following: 1. Scope of Services a. A description of the KDP II, including a list of additional materials Knowaste will provide that are necessary for the operation of the processor. b. Delivery and installation services that will be provided by Knowaste. C. Training on the proper operation and maintenance of the KDP II. d. Identification of a processing location and preparation of a letter of agreement between the processor, City and Knowaste. e. A two-year warranty and maintenance agreement on all parts to be supplied by Knowaste. f. Knowaste's responsibilities upon completion of the pilot program. 2. Schedule of Performance — Providing firm deadlines for services that shall be provided by Knowaste regarding delivery, installation, and training for implementation of the diaper -recycling pilot program. Agenda Item 33 L�ll� l� X1011 L�iJ 3 3. Compensation Schedule — Outlines the payment schedule and services to be completed prior to the City payments for the processor. ALTERNATIVE ACTIONS 1. Council may direct staff to return by a specific date to approve the contract. 2. Council may modify the contract and instruct staff to return with a new contract by a specific date. 3. Council may approve the contract and direct staff to commence immediate implementation of the contract upon securing a mutually agreed -to processing location. 4. Other action as determined by the Council. FISCAL IMPACT Fund's in the amount of $500,000 are currently budgeted for startup and acquisition of the diaper processor ($250,000 in 3811-8021 and $250,000 in 3815-8110). The $250,000 grant provided by the State of California through Assemblyman George Runner is exclusively for the purchase of the KDP II processor and was conditioned upon not increasing rates to residents to offer the program. Thus, any difference in funding must be met by the haulers, Knowaste, the processor, or through a combination of funding strategies. ATTACHMENTS Contract for the purchase of a KDP II diaper processor from Knowaste, LLC. JAF:BAL S:\PBS\ENVSRVCS\SOLWAST2\COUNCIL\2001\Diaper Contract Agenda.doc City of Santa Clarita 23920 Valencia Blvd., Suite 300 Santa Clarita, CA 91355-2196 Phone: (661) 259-2489 FAX: (661) 259-8125 CONSTRUCTION AND MAINTENANCE SERVICES AGREEMENT This Agreement, between the City of Santa Clarita ("City"), a municipal corporation, and Knowaste, LLC ("Contractor"), is entered into this day of .2001. 1. Scope of Services Contractor shall perform services specified in Exhibit "A" "SCOPE OF SERVICES," `B" "Knowaste, LLC Quote for Purchase of Knowaste Diaper Processor II" and "C" "Knowaste, LLC Supplementary Letter" which are attached hereto and incorporated herein by reference. 2. Term of Agreement The term of this Agreement shall be from the date of execution of this Agreement, until all work is accepted as complete by the City. 3. Schedule of Performance The services of Contractor are to be completed according to the schedule set out in Exhibit "D," "SCHEDULE OF PERFORMANCE," which is attached hereto and incorporated herein by reference. 4. Compensation Subject to the limitations contained in Section 10, "Termination" and Exhibit "A," "Scope of Services," Contractor shall be paid the amounts identified in Exhibit "C," Compensation Schedule, which is attached hereto and incorporated herein by reference. 5. Independent Contractor Contractor is an independent Contractor and not an agent or employee of the City. As an independent Contractor, Contractor shall obtain no rights to retirement, health care, or any other benefits which accrue to City employees. Contractor expressly waives any claim Contractor may have to any such rights. 6. Assignability The expertise and experience of Contractor are material considerations for this Agreement. Contractor shall not assign or transfer any interest in this Agreement or the performance of any of Contractor's obligations without the prior written consent of City. Any attempt by Contractor to assign or transfer any of Contractor's rights, duties, or obligations arising under this Agreement shall be void. City acknowledges its understanding that Contractor, in the performance of its duties pursuant to this Agreement, may utilize subcontractors. Insurance A. General Insurance Requirements 1. All insurance shall be primary insurance and shall name City of Santa Clarita as an additional insured. The naming of an additional insured shall not affect any recovery to which such additional insured would be entitled under the policy if not named as an additional insured, and an additional insured shall not be held liable for any premium or expense of any nature on the policy or any extension thereof solely because they are an additional insured thereon. Page 1 of 6 2. If the operation under this Agreement results in an increased or decreased risk in the opinion of the City's Risk Manager, then Contractor agrees that the minimum limits hereinabove designated shall be changed accordingly upon written request by the Risk Manager. 3. Contractor agrees that provisions of this paragraph as to maintenance of insurance shall not be construed as limiting in any way the extent to which Contractor may be held responsible for the payment of damages to persons or property resulting from Contractor's activities, the activities of its subcontractors, or the activities of any person or persons for which Contractor is otherwise responsible. 4. A Certificate of Insurance and endorsement, evidencing the above insurance coverage with a company acceptable to the City's Risk Manager shall be submitted to City prior to execution of this Agreement on behalf of the City. 5. The terms of the insurance policy or policies issued to provide the above insurance coverage shall provide that said insurance may not be amended or canceled by the carrier, for nonpayment of premiums otherwise, without 30 days prior written notice of amendment or cancellation to City. In the event the said insurance is canceled, Contractor shall, prior to the cancellation date, submit new evidence of insurance in the amounts heretofore established. 6. All required insurance must be in effect prior to awarding the contract, and it or a successor policy must be in effect for the duration of the contract. Maintenance of proper insurance coverage is a material element of the Agreement, and the failure to maintain and renew coverage or to provide evidence of renewal may be treated by the City as a material breach of contract. If Contractor, at any time during the term of this Agreement, should fail to secure or maintain any insurance required under this Agreement, City shall be permitted to obtain such insurance in Contractor's name and shall be compensated by Contractor for the cost of the insurance premiums. B. General Liability and Property Damage Insurance Contractor agrees to procure and maintain general liability and property damage insurance at its sole expense to protect against loss from liability imposed by law for damages on account of bodily injury, including death therefrom, suffered or alleged to be suffered by any person or persons whomsoever, resulting directly from any act or activities of Contractor, its subcontractors, or any person acting for Contractor or under its control or direction, and also to protect against loss from liability imposed by law for damages to any property of any person caused directly or indirectly by or from acts or activities of Contractor, or its sub -Contractors, or any person acting for Contractor, or under its control or direction. Such public liability and property damage insurance shall also provide for and protect City against incurring any legal cost in defending claims for alleged loss. Such general liability and property damage insurance shall be maintained in the following minimum limits: A combined single -limit policy with coverage limits in the amount of $1,000,000 per occurrence will be considered equivalent to the required minimum limits. C. Automotive Insurance Contractor shall procure and maintain public liability and property damage insurance coverage for automotive equipment with coverage limits of not less than $500,000 combined single limit. If Contractor does not own automobiles, Contractor shall provide a waiver releasing City from all liability resulting from Contractor's use of personal vehicles on project. Page 2 of 6 D. Worker's Compensation Insurance Contractor shall procure and maintain Worker's Compensation Insurance in such amount as will fully comply with the laws of the State of California and which shall indemnify, insure, and provide legal defense for both Contractor and City against any loss, claim, or damage arising from any injuries or occupational diseases happening to any worker employed by Contractor in the course of carrying out the Agreement. S. Indemnity Knowaste, LLC, upon demand of the City, made through the City Attorney, shall protect, defend, indemnify and hold harmless City, its elected officials, officers, employees, volunteers and agents from and against any and all losses, liabilities, fines, penalties, claims, damages, injuries or judgments, including City's or any other prevailing party other than the City, attorney's fees and costs arising out of or resulting in any way from acts or omissions occurring after completed delivery of collected diaper bins (or other approved containers filled with recyclable diaper waste) by franchised haulers to the MRF/Processor Facility (collectively, "Claims Indemnified by Knowaste") unless such Claims Indemnified by Knowaste are due to the sole negligence or wilfull acts or omissions of the City, its elected officials, officers, employees, agents or contractors. This provision shall survive the expiration of the period during which collection services are to be provided under this MOU. The duty of Knowaste, LLC to protect, indemnify and hold the City harmless pursuant to this Section shall include, but shall not be limited to, the following: Claims Indemnified by Knowaste initiated by government agencies or other third parties, whether judicial, administrative or otherwise. 9. W-9 Form — Request for Taxpayer Identification Number & Certification Pursuant to Senate Bill 542, chaptered in 1999, the Employment Development Department (EDD) of the State of California requires that a W-9 Form be filed by all vendors for all contracts entered into with the City of Santa Clarita that meet or exceed $600 in value. Contractor agrees to complete all required forms necessary to comply with EDD regulations. This requirement will be effective January 1, 2001. 10. Termination A. City may terminate this Agreement with or without cause at any time by giving ten days' written notice of termination to Contractor. If City gives such notice of termination, Contractor shall cease immediately all work in progress. B. If Contractor or City fails to perform any material obligation under this Agreement, then, in addition to all other remedies, City or Contractor may terminate this Agreement immediately upon written notice. C. Upon termination by either City or Contractor, Contractor shall deliver to City all property of the City in Contractor's possession and copies of all reports, documents, and other work prepared by Contractor under this Agreement. Contractor shall furnish to City a final statement of the work performed for compensation. The statement shall indicate the task to which the work performed is to be charged, according to the categories in Section 1, Scope of Services of this Agreement. Such statement shall also include a detailed record of actual reimbursable expenses, such as, but not limited to, copying costs, long-distance telephone charges, and computerized research. City will prepare a warrant payable to Contractor in the amount approved by City. City will then make final payment to Contractor for services performed and reimbursable expenses incurred, subject to the limitation on reimbursement set forth in this Agreement. D. Contractor may terminate this Agreement at any time upon thirty (30) days' written notice of termination to City. Page 3 of 6 10. Law to Govern: Venue The law of the State of California shall govern this Agreement. In the event of litigation between the parties, venue in state trial courts shall lie exclusively in the County of Los Angeles. In the event of litigation in U.S. District Court, exclusive venue shall lie in the Central District of California, in Los Angeles. 11. Compliance with Law Contractor shall comply with all applicable laws, ordinances, codes, and regulations of the federal, state, and local government. Contractor shall comply with all aspects of the current permit issued pursuant to the National Pollutant Discharge Elimination System ("NPDES"), in order to prevent pollution to local waterways. Failure to implement the current permit shall result in project delays through City issued Stop Work Notices and/or fines levied against the Contractor. 12. Nondiscrimination Contractor shall not discriminate, in any way, against any person on the basis of age, sex, race, color, religious creed, national origin, ancestry, physical handicap, medical condition, or marital status in connection with or related to the performance of this Agreement. 13. Ownership of Materials All reports, documents, computer disks, diskettes or other materials developed or discovered by Contractor during the course of this Agreement shall be solely the property of City. 14. Waiver Waiver by City or Contractor of any breach of any of the provisions of this Agreement shall not constitute a wavier of any other provision, nor a waiver of any subsequent breach or violation of the same or any other provision of this Agreement. Acceptance by City of any work or services by Contractor shall not be a waiver of any of the provisions of this Agreement. 15. Conflict of Interest Contractor shall at all times avoid conflict of interest or appearance of conflict of interest with the interests of the City in the performance of this Agreement. 16. Exhibits Incorporated Exhibits "A" through "E" are attached to and incorporated in this Agreement by this reference. Additional language describing specific duties and responsibilities are outlined in the exhibits and are inclusive to contract. 17. Notices All notices required or permitted to be given under this Agreement shall be in writing and shall be personally delivered, or sent by telecopier or certified mail, postage prepaid and return receipt requested, addressed as follows: To City: City Manager, City of Santa Clarita 23920 Valencia Boulevard, Suite 300 Santa Clarita, CA 91355 Page 4 of 6 and to: City Attorney, City of Santa Clarita 611 West Sixth Street, Suite 2500 Los Angeles, California 90017 Tel: (213) 236-0600 Fax: (213) 236-2700 To Contractor: Roy Brown, President, Knowaste, L.L.0 136 Watline Ave. Unit 6 Mississauga, Ontario L4Z 2E2 Canada and to: Hunt Brawly, Hacker, Kanowsky & Brawly 24510 Town Center Drive, #200 Santa Clarita, California 91355 Notice shall be deemed effective on the date delivered or transmitted by facsimile or, if mailed, three (3) days after deposit in the mail. 18. Dispute Resolution; Performance After Dispute A. All disputes concerning the interpretation, performance, breach, or termination of this Agreement shall be decided by binding arbitration before a retired judge, according to the provisions of Section 1280 et seq. of the California Code of Civil Procedure, through the Los Angeles County offices of either the Alternative Resolution Center ("ARC") or Alternative Dispute Resolution ("ADR"). The parties shall attempt to agree upon a retired judge from either the ARC or ADR panel, but if they are unable to agree within thirty (30) days after commencement of a proceeding, ARC or ADR will provide a list of three available judges and each party may strike one. If for any reasons ARC or ADR are unavailable, the dispute shall be decided by a retired federal or California judge, sitting as an arbitrator, and selected by the parties. If the parties are unable to agree upon a retired judge within 30 days after receipt of written notice, a retired judge shall be appointed by the Presiding Judge of the Los Angeles County Superior Court. The arbitrator shall render a written decision stating reasons therefor in reasonable detail within sixty (60) days after his appointment. The arbitrator's award shall be final and enforceable and may be confirmed by the judgment of a court of competent jurisdiction. The prevailing party shall be entitled to recover its costs of arbitration, as well as costs and attorney's fees, and expert witness fees, as determined by the arbitrator, as well as costs and attorney's fees in any proceedings to enforce an award. The parties reserve their rights to obtain provisional remedies from the courts, and no application for any such remedy shall be deemed inconsistent with the obligation to arbitrate disputes. B. Except for nonpayment of any portion of a statement presented to City by Contractor, if any dispute arises between the parties to this Agreement, Contractor shall continue to perform pending resolution of the dispute. 19. Prior Agreements and Amendments This Agreement, including the Exhibits, embodies the entire understanding of the parties with respect to the matters addressed in this Agreement and the Exhibits and supersedes all other agreements entered into between the parties prior to the execution of this Agreement. No amendment of this Agreement shall be valid unless in writing duly executed by the parties or their authorized representatives. Page 5 of 6 By signing this Agreement, the person signing states that he or she is authorized to enter into contracts on behalf of Contractor. The undersigned, on behalf of Contractor, binds Contractor, its partners, successors, executors, administrators, and assigns with respect to the terms and conditions of this Agreement. WITNESS THE EXECUTION of this Agreement on the day and year first written above. FOR CONTRACTOR: M Print Name & Date: FOR CITY OF SANTA CLARITA: By: Date: Attest: Date: George A. Caravalho, City Manager City Clerk BURKE, WILLIAMS & SORENSEN Approved as to form: Carl K. Newton, City Attorney Date: Page 6 of 6 Exhibit A Scope of Services The City will compensate the Contractor a total of $500,000 for the following goods and services listed in Sections I through III. I. Equipment Acquisition A. General description of one KDP II Diaper Recycling System with the capacity of processing 2000 pounds of diapers per hour. The capacity of 2000 pounds per hour is defined as the aggregate number of pounds processed divided by net running time after eliminating warm-up time and wash -down time. Contractor may make changes in sizes, dimensions and scope based on engineering requirements, process development, and site location. All changes from the specifications in Exhibit B will be provided to the City for review prior to commencement of manufacturing. B. One EDP II Diaper Recycling System with the capacity of processing 2000 pounds of diapers per hour generally described as follows: 1. Overall space requirements 18 feet high, 30 feet long, 12 feet wide. Contractor will use best efforts to stay within the footprint, unless final site selected dictates otherwise. 2. 225 Amps. Minimum power. 3. 1032 gallons of water per hour. 4. 712 gallons of clarified water that has been pH balanced (pH = 7.0 +- 0.5 range) discharged per hour. C. Generally required equipment for the proper installation of the KDP II.1 Screen, 18", perforations to be determined. 1. 4" diameter through -flow, 10 Bank. 2. 3" diameter 10 Bank. 3. 6 -Inclined Screw Thickener. 4. Pumps, valves, controls, piping. D. Contractor will provide any additional equipment, at no cost to the City, which is necessary to achieve the performance of 2000 pounds per hour. In addition, Contractor may add equipment if it results in higher value added. II. Equipment Installation A. Securing of mutually agreed upon location and processing agent for the KDP II processor. The location of the equipment shall be appropriate for diaper recycling activities, and shall be within a 25 -mile radius of City Hall. Contractor is to prepare a Letter of Agreement between the City, Contractor and the processing agent and it shall be signed by all parties prior to the purchase of the equipment. B. Delivery of the processor to its processing location. C. Set-up of the processor in its processing location. D. All other processor installation and start-up costs. Page 1 of 2 III. Services A. All of the appropriate training for the proper use and maintenance of a KDP II. The training shall be provided for a minimum of two processor employees, one Blue Barrel/Santa Clarita Disposal employee, one Consolidated Services employee, and one City of Santa Clarita employee. The training shall include but not be limited to proper start-up and shut- down techniques, proper operating procedures, proper safety procedures while operating the machine, use of proper safety equipment while operating the machine, troubleshooting techniques, and general maintenance and repair procedures. Contractor is to submit a schedule of training to the City for review and approval two weeks prior to delivery of the KDP II. It is understood that the employees of Blue Barrel/Santa Clarita Disposal, Consolidated Services and City of Santa Clarita which are trained under the provisions of this paragraph will at no time be allowed to operate the KDP II machine. B. $20,000 (not included in the equipment, maintenance and service price of $500,000) for promotion and education before and during the pilot, to be provided to the City on a reimbursement basis for mutually agreed upon means. C. State of California legislative lobbying efforts to secure permanent diaper recycling program funding. D. Two-year warranty on all parts and components of the processor. E. Two-year maintenance agreement for all repairs necessary for the processor and necessary technical support to ensure that the processor is operating properly. F. The City shall not pay for any processing costs beyond the purchase price for equipment, maintenance and service of $500,000. IV. Processor Ownership A. City to maintain sole ownership rights of the KDP II, until such time as additional municipalities or other agencies opt to purchase or lease use of the processor. City to work with Contractor to develop lease agreements with other agencies, and has the right to approve all leasing agreements. V. Post -Pilot and Equipment Failure Responsibilities A. Upon determination by the City Council that the pilot is unsuccessful (using the guidelines outlined in the June 12, 2001 MOU), within 12 months of the end of the pilot, Contractor will obtain a buyer for the KDP II for a minimum purchase price of $250,000. If after good faith efforts no buyer is obtained, the Contractor will pay the City $100,000 and assume all ownership rights to and liability for the KDP II. B. If the KDP II becomes non-operable and cannot be fixed during the time frame specified in Exhibit D, and prevents the pilot from being completed within a mutually agreeable timeline, Contractor will pay the City $100,000 and assume all ownership rights to and liability for the KDP II. Page 2 of 2 Exhibit B Knowaste, LLC Proposal for the Purchase of the Knowaste Diaper Processor II (IDJP II) The WA3X� KNOWASTE DIAPER C PROCESSOR KDP II This Disposable Diaper Recycling System was designed and manufactured to process disposable diapers and incontinence Products. This process separates and sanitizes the raw components that can be reused in the manufacture of other recycled products. CAPACITY: 2000 POUNDS PER HOUR* *Does not include 10 minutes for loading and 10 minutes for unloading. FOOTPRINT: 18' high x 30' long x 12' wide. (Operating Clearances) POWER: 225 AMP MINIMUM WATER: 1032 GALLONS PER HOUR (includes washdown and cleaning water usage) SEWER: 712 GALLONS PER HOUR (clarified water, PH balanced) ESTIMATED PROCESSING: $50.00 US PER TON PRICE: $500,000 US WARRANTY: 2 YEARS MAINTENANCE AGREEMENTS: Time and Materials Contract COST TO BE DETERIMINED Provides maintenance based on a fee for service basis to be billed monthly. SHIPPING: F.O.B. at Site Location to be Determined. DELIVERY- 120 DAYS from signed and approved Purchase Order. TERMS: 40% DOWN with signed Purchase Order. 40% upon Notification of Shipment. 20% upon Certification of Installation. ONE TIME COSTS: $21,000+/. Includes additional costs that may be needed to support electrical, sewer, and set-up costs depending on site location. KNOWASTE LLC SNOWASTE CALIFORNIA 136 Watline Avenue. Unit 5 & 6 P.O. Boa 801298 Mississauga, ONT Canada L4Z 2E2 Santa Clarita, CA 91380 (906) 568.0334 (661) 253.0876 MARCH 2000 Exhibit C Knowaste, LLC Supplementary Letter furthur clarifying the Proposal for the Purchase of a Knowaste Diaper Processor II (KDP II) Jill Fosselman Environmental Services Coordinator City of Santa Clarita 23920 Valencia Blvd., Suite 300 Santa Clarita, California 91355 Dear Jill: 1' C May 9, 2001 Re: Knowaste's Proposal At our meeting to discuss the Diaper Recycling MOU on May 4, 2001, you requested that we provide clarification regarding the options which were contained in the Knowaste proposal from March, 2000, a copy of which is enclosed. The following items referenced in the SCS Engineering Report are included as part of the Knowaste's proposal; which the Report also indicates: 1. 1-18" fine slotted screen 2. 4" Dia. through -flow, 10 Bank 3. 3" Dia. 10 Bank 4. 6 -Inclined screw thickener 5. Pumps, controls, piping and installation for above If you have any further questions, please don't hesitate to ask. Sincerely? Nazareth Chobanian Vice President, Knowaste, LLC NC/ilm Enclosure Cc: Ben Lucha (w/enclosure) HNOWASTE LLC HNOWASTE CALIFORNIA P 136 Watline Avenue, Unit 5 & 6 P.O. Boa oR.NT Mississauga, ONT Canada UZ 20' Santa Clarita, CA 91380 801298 (906)568.0334 (661) 253-0876 Exhibit D Schedule of Performance Date Allotted Time Span Deliverable Action Payment June 12, N/A Council approved the Diaper N/A 2001 Pilot MOU. Month 1 The execution of the City and Contractor shall N/A (Month contract is at the sole sign the Service Agreement Contract is discretion of the City for the Purchase of the KDP executed) Council. II. July 27, Within 45 days after City, Contractor, and #1: $200,000 2001 the MOU was approved processing agent sign a by the Council for the Letter of Agreement pilot. outlining each party's responsibility in the diaper - recycling pilot program. Upon execution of the KDP II contract, City shall submit 40%, or $200,000, of the total cost for the KDP II. Month 7 180 days following Contractor prepares the #2: $200,000 execution of the KDP II and delivers it to the contract for the KDP II processing location. Upon and signing of the receipt of the KDP II the service agreement. City shall submit 40%, or $200,000, of the total cost for the processor. Immediately following Contractor shall install and #3: $50,000 delivery of the KDP II. prepare the KDP II processor for recycling diapers at the housing location. Upon the complete installation of the processor and a successful test run of the processor, City shall submit 10%, or $50,000, of the total cost for the processor. Page 1 of 2 Date Allotted Time S an Deliverable Action Payment Month 8 Within 2 weeks of the Contractor shall provide #4: $50,000 installation and training to a minimum of successful test run of two Processor employees, the KDP II processor. one Blue Barrel employee, one Atlas employee, and one City employee on the proper use and general maintenance of the KDP II processor at no additional cost. Upon satisfactory completion of the training, the City shall submit the final 10%, or $50,000, of the total cost for the processor. Months 6 months, or longer Diaper recycling pilot N/A 10-16 upon mutual agreement commences within two (tentative) by the City, Contractor, months of the completion of and franchisees all training, for a minimum Of six months Month 17 Council determination. City Council will evaluate N/A (tentative) City staffs report on the pilot program and will decide whether or not to continue the diaper - recycling ro am. Month 29 Within 12 months of Pursuant to Exhibit A, N/A (tentative) Council determination Section V(A), Contractor will of an unsuccessful pilot. obtain a buyer for the KDP II for a minimum purchase price of $250,000. If after good faith efforts no buyer is obtained, the Contractor will pay the City $100,000 and assume all ownership rights to and liability for the KDP II. Months Upon mutual Pursuant to Exhibit A, N/A 7 — End of determination, at any Section V(B), Contractor will Pilot time, of non-operable pay the City $100,000 and and non -fixable status assume all ownership rights of the KDP II. to and liability for the KDP II. Page 2 of 2 Exhibit E Compensation Schedule City agrees to purchase the KDP II diaper processor from Contractor for the total amount of $500,000 through funds allocated from the 2000/2001 State Budget and the City's 2000/2001 General Fund Budget. City shall compensate Contractor in the following manner for the purchase of the IDP II diaper processor: 40% ($200,000) Following the execution of the Service Agreement for the Purchase of the KDP II. 40% ($200,000) Upon receipt of the shipment of the KDP II at its processing location. 10% ($50,000) Upon complete installation of the processor and a successful test run of the processor. 10% ($50,000) Upon satisfactory training of the necessary employees on proper operation and general maintenance of the KDP II (see Exhibit A).