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Contract - CR Transfer - 2002-07-01 1 AGREEMENT This AGREEMENT is effective on the 1st day of July, 2002 by and between THE COSTA MESA SANITARY DISTRICT,a governmental agency formed and existing under the Sanitary District Act of 1923 (hereinafter referred to as "DISTRICT"), and C.R. TRANSFER, INC., a California corporation (hereinafter referred to as "CRT"). RECITALS: 1. DISTRICT provides for residential solid waste collection for residents utilizing curbside service within its geographical boundaries as authorized by the procedures set forth in Health and Safety Code ' 5470-5474.10, and provides for said collection by contract with an independent solid waste hauling contractor, in accordance with the authority granted in the Sanitary District Act of 1923, Health and Safety Code ' 6400-6941. 2. CRT is a California corporation in the business of accepting solid waste from government agencies and from solid waste hauling contractors at its transfer station for further removal to county landfill sites or other lawful destinations and is engaged in the separation of recyclable material from solid waste for marketing to users of recycled material. 3. The parties acknowledge that the state has required every city to have a source reduction and recycling element(SRRE)which mandates an implementation schedule that requires that 50% of all waste shall be diverted from the solid waste stream by January 1, 2000 through source reduction,recycling and composting activities(Public Resources Code Section 41780),and the parties have met that objective. It is a material consideration to DISTRICT that contractor assist DISTRICT in continuing to meet this legislative mandate. 4. The parties further acknowledge that public agencies that provide for solid waste disposal have been sued under the Federal Comprehensive Environmental Response Compensation and Liability Act of 1980 (CERCLA) and when they have issued exclusive franchises for waste disposal and the parties do therefore desire to define the respective responsibilities therefor. The provisions for CERCLA indemnification are a material consideration to DISTRICT. 5. DISTRICT desires to enter into an agreement with CRT which will provide that CRT will accept solid waste from the DISTRICT contract solid waste hauler and will continue to recover or reclaim the minimum percentages of said solid waste for reuse as set forth in Public Resources Code Section 41780. 6. CRT desires to enter into an agreement with DISTRICT establishing transfer rates and processing rates for solid waste it accepts from the DISTRICT contract hauler and to provide for the reclamation of recyclable materials as will be required by law. 7. The parties hereto desire by this AGREEMENT to set forth and restate their rights and obligations in connection herewith and to supercede those previous agreements with this Agreement. NOW,THEREFORE,for and in consideration of the covenants herein contained,performed and to be performed, the parties hereto agree as follows: 1. DISTRICT warrants and represents to CRT that it has a right to and does provide for solid waste disposal from residential units using curb side service only within its geographical boundaries(the commercial,industrial,and multi-family residential developments using bin service being provided for by others and that it will use its best efforts to cause all of the solid waste collected regularly by its contract solid waste hauler to be delivered to CRT's site in Stanton, California under terms and conditions as shall hereinafter appear. 2. CRT agrees to accept directly from DISTRICT's contract hauler as it is picked up from DISTRICT's residences on a regular basis all solid waste of whatever kind and nature and in whatever quantity at CRT's transfer station in Stanton, California and to reclaim recyclable material from the solid waste delivered to CRT and to lawfully dispose of the residue under terms and conditions as hereinafter stated. 3. The parties intend to establish an "evergreen" term for this AGREEMENT. This AGREEMENT shall have an effective date of July 1, 2002 and shall renew for a new six (6) year term on each July 1 of successive years beginning on July 1,2003 unless otherwise terminated. The intent of the parties is that a new six year term will be granted in perpetuity on July 1 of each successive year unless otherwise terminated. The term of this AGREEMENT may be terminated in two ways: (1) by notice of cancellation of the perpetual renewal, and (2) for cause. Notice of cancellation of the perpetual renewal may be given by either party,without cause,and will cause this AGREEMENT not to automatically renew and will cause this AGREEMENT to terminate when the balance of the remaining term expires. 4. This AGREEMENT may also be terminated for cause by either party hereto and cause shall be determined to be failure on the part of either party hereto to perform any of the requirements of this AGREEMENT where said party has failed to perform within 30 days after having been given written notice of a default. Termination shall occur 30 days after notice has been given if all deficiencies have not been cured within that time frame. This AGREEMENT may also be terminated by mutual consent of the parties. 5. In exchange for accepting all solid waste from the DISTRICT at CRT's transfer station,and recycling and reclaiming materials from said waste as well as providing final disposal at the county landfill sites without cost to DISTRICT,CRT,except as shall hereinafter appear,shall be compensated as provided in paragraphs 7 and 8 of this AGREEMENT. 6. CRT shall invoice monthly and be paid monthly and shall provide such supporting documentation for each invoice as DISTRICT may require including, but not limited to, trip or weight tickets as proof of tonnage billed for and such other documentation as DISTRICT may require to support the requirements of percentages of recycled or reclaimed materials as such percentages may be required by law. 7. This AGREEMENT has been entered into with reference to current County landfill costs being$22.00 per ton and with reference to the fact that contractor has been able to use those landfills available at the time of contracting. Should those costs or the availability of disposal sites change during the term of this AGREEMENT the parties may re-negotiate this AGREEMENT or the compensation provisions hereof. DISTRICT reserves the right to direct the disposal of its residual tonnage to a facility, provided that the parties shall thereafter renegotiate the related provisions of this contract. In the event that CRT uses a non-Orange County landfill with lower disposal fees,CRT will credit the District with an amount equal to seventy-five percent(75%)of the savings realized by not using the Orange County landfill.The landfill component of CRT's compensation is set forth in Exhibit A. 8. CRT may be entitled to an annual increase in the compensation paid pursuant to this AGREEMENT for labor performed on behalf of DISTRICT based upon the Consumer Price Index (CPI) for All Urban Consumers for the Los Angeles-Riverside-Orange Co. area (1967=100 for indices purposes) as prepared by the U.S. Department of Labor Bureau of Labor Statistics for the trailing twelve month period of May to May each year. Said increase shall become effective on each yearly anniversary date beginning July 1, 2002 and on each July 1 thereafter for the six-year term beginning July 1, 2002. As agreed to by the parties, the base rate effective July 1, 2002 shall be $38.06 per ton. Said CPI increase shall not exceed three(3%)percent irrespective of said calculation and shall be calculated on all expenses relating to this AGREEMENT except landfill fees, and any increase given in paragraph 7. Further, said increase shall not exceed 16% in total over the six-year term beginning July 1,2002.CRT shall provide such records and other supporting materials as may be required by DISTRICT to support CRT's claim for increase in compensation.The sixteen percent (16%)cumulative cap for the six-year term from July 1,2002 to July 1,2008 shall be limited to 16% of the amount given on July 1, 2002. Should the CPI decline, DISTRICT may be entitled to a corresponding reduction. The parties will renegotiate CPI increases in 2008.The compensation set forth in Paragraph 8 shall be calculated as set forth in Exhibit A. 9. CRT shall become owner of all solid waste when delivered to its site in Stanton, California and shall have the exclusive right to market all recycled material reclaimed from solid waste generated by DISTRICT pursuant to this AGREEMENT and shall be entitled to any and all income derived from said marketing over which DISTRICT shall have no claim. 10. In consideration for said compensation,CRT shall, in addition to the other covenants set forth herein, perform as follows: (a) CRT guarantees DISTRICT that its rate is the most favorable rate given to any customer using service similar to DISTRICT. I f CRT negotiates a more favorable rate with any customer, that rate shall become the rate for the DISTRICT. (b) CRT shall participate in AB 939 education programs by providing five tours of the facility each year,conducting one seminar per year,and preparing and mailing one brochure to each resident every two years, if requested by DISTRICT. DISTRICT to supply mailing labels. Said brochure to be mailed within six (6) months of written request by DISTRICT. (c) CRT shall have an agreement in place throughout the term of this AGREEMENT for composting or processing green waste with a properly licensed facility. CRT shall use its best efforts to process green waste by composting. (d) CRT shall make available to DISTRICT its audited financial statement which shall be performed on at least a yearly basis. Such financial statement shall not become a public record and DISTRICT will use its best efforts to protect such information from becoming available to competitors. (e) CRT shall separate telephone books at its material recycling facility at no additional cost to DISTRICT if DISTRICT determines to pursue such a program. (f) CRT shall provide support to an anti-scavenging program up to $5,000 per year if so requested by DISTRICT. Said $5,000 to be increased or decreased yearly according to the CPI beginning July 1,2003 using the same procedure as specified in paragraph 8. (g) CRT shall maintain a master manifest in which the transportation and disposal of all waste from DISTRICT shall be logged. Such manifest shall show dates,volumes,nature of the waste,transporter and disposal sites. CRT shall keep supporting documentation to establish the details of such disposal. All of such records shall be kept for 50 years. Such records shall be provided to DISTRICT upon request. (h) CRT shall guarantee that it will meet the tonnage diversion requirements of AB 939 as the same exists or as that law is amended. CRT shall prepare and retain appropriate documentation showing how the state requirements have been met including providing monthly diversion reports signed by an official of CRT. Either party may request renegotiation if such requirements are substantially revised. (i) CRT agrees to keep its site open during normal business hours, Monday through Friday,consistent with past practices,to facilitate DISTRICT's trash haulers disposal of collected waste. CRT will allow regular inspections by DISTRICT's personnel or agents to monitor the recycling of DISTRICT's solid waste. 11. CRT will indemnify, defend, and save harmless DISTRICT, its directors, officers, agents, employees, successors, assigns and insurers from and against any and all loss, damage, liability, claims, costs or causes of action which in any way result from the acts or omissions of CRT, its directors,officers,agents,employees,parent,subsidiaries,affiliates,successors,assigns and insurers in connection with or which in any way relate to the award of this AGREEMENT (including the exclusive nature thereof) to CRT or to the performance of this AGREEMENT. In addition, CRT agrees to indemnify,defend and hold DISTRICT harmless from any and all claims made or liability that may arise under CERCLA or similar federal or state law relating to responsibility for clean up costs of any waste disposal facility site to which CRT may transfer or dispose of waste collected pursuant to this AGREEMENT. 12. DISTRICT will indemnify, defend and hold harmless CRT, its directors, officers, agents, employees, successors, assigns, and insurers from and against any and all loss, damage, liability, claims, costs or causes of action which in any way result from any acts or omissions of DISTRICT, its directors, officers or employees in connection with the performance of their obligations which are the subject of this AGREEMENT. CRT shall promptly notify DISTRICT of any claims or complaints that it receives that may result in DISTRICT's indemnification of CRT. 13. CRT shall provide insurance coverage on its operation as follows: (A) Workers' Compensation Insurance: CRT shall take out and maintain during the life of this AGREEMENT workers' compensation insurance and, if any work is sublet,CRT shall require subcontractor similarly to provide workers' compensation insurance. CRT agrees to indemnify DISTRICT for any damage resulting to it from failure of either CRT or any subcontractor to take out or maintain such insurance. (B) Public Liability and Property Damage Insurance: CRT shall take out and maintain during the life of this AGREEMENT such public liability and property damage insurance as shall protect DISTRICT, its elective and appointive boards,officers, agents and employees,being public liability and property damage insurance on account of bodily injuries, including death resulting therefrom in the sum of not less than TWO MILLION($2,000,000) DOLLARS combined single limit resulting from any one accident which may arise from the operations of CRT in performing the work provided for herein. Said public liability and property damage insurance (including automobile) shall be endorsed to name DISTRICT,its elective board,officers,agents and employees as additional insureds with respect to all operations performed by or on behalf of CRT. Said policy shall be endorsed to provide that coverage shall not be reduced or canceled unless and until ten (10) days' advance notice of such reduction and/or cancellation has been mailed to DISTRICT. Said public liability and property damage insurance (including automobile) shall include contractual liability insurance applying to liability assumed under this AGREEMENT. Said public liability and property damage insurance shall be endorsed to stipulate that such insurance as is afforded to DISTRICT, its elective board, officers, agents and employees shall be primary insurance and not contributing with any other insurance maintained by DISTRICT. CRT shall furnish DISTRICT, concurrently with the execution hereof,with satisfactory proof of carriage of the insurance required and adequate legal assurances that each carrier will give DISTRICT at least ten (10) days' prior notice of the cancellation of any policy during the effective period of this AGREEMENT. 14. CRT shall obtain at its expense all permits and licenses from any governmental agency having jurisdiction over its operations necessary for the performance of this AGREEMENT and shall provide proof that said licenses and permits have been obtained if required to do so by DISTRICT. 15. In the event CRT or DISTRICT, or either of them, institutes action to enforce the terms of this AGREEMENT, the prevailing party shall be entitled to reasonable attorneys' fees and court costs. 16. This AGREEMENT shall be interpreted and enforced in accordance with the laws of the State of California. 17. All notices,requests,demands and other communications under this AGREEMENT shall be in writing and shall be deemed duly given (i) if delivered by hand and receipted for by the party addressee, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the mailing date. Addresses of the parties hereto are as follows: C.R. TRANSFER, INC. COSTA MESA SANITARY DISTRICT 11292 Western Avenue P.O. Box 1200 Stanton, CA 90680 Costa Mesa, CA 92628-1200 18. This AGREEMENT establishes contract rights that shall be binding upon,and shall inure to the benefit of, the successors, assigns, heirs and legal representatives of the parties hereto. This AGREEMENT may be executed in one or more counterparts,each of which shall constitute an original. No amendment, modification, termination or cancellation of this AGREEMENT shall be effective unless in writing signed by both parties hereto. 19. If any portion of this AGREEMENT shall be invalidated on any ground by a court of competent jurisdiction, the balance of said AGREEMENT shall continue to be binding upon the parties hereto. 20. Each of the parties hereto warrants and represents to the other that this AGREEMENT has been approved by its board of directors and that its officers are duly authorized to execute this AGREEMENT and make the same binding upon the parties hereto. 21. This AGREEMENT may not be assigned by CRT without the express written consent of the Board of Directors of DISTRICT. Dated: a//3 /03 Costa Mesa Sanitary District B • i-. : • •; EXHIBIT A I. Landfill Fee Calculation (Paragraph 7) CRT to be paid landfill fees based on tonnage delivered to CRT, diversion required as specified in II below, and County landfill fees. Example: Waste delivered to CR Transfer = 2,650 tons CR Transfer required to recycle 50% Gate fee = $22/ton 2,650 tons delivered to CRT; CRT recycles 1,325 leaving 1 ,325 to dump 1,325 x $22.00 per ton = CRT's compensation for the landfill calculation* *(Note: For administrative processing convenience the District requires 50% diversion but simply pays $11.00 per ton on waste delivered to CRT) II. Base Compensation Paid to CRT (Paragraph 8) Fiscal Year Diversion Base Compensation per ton of Beginning Required waste delivered to CRT July 1 (excluding landfill fees) Not to exceed 3% 18.92 1995 25.00% $18.92+3%(18.92)= ('0.03000 x 18.92)+ 18.92 = 19.49 1996 30.00% Previous Base+CPI (0.01547 x 19.49)+ 19.49 = 19.79 1997 30.00% Previous Base+CPI (0.01270 x 19.79)+ 19.79 = 20.04 1998 37.50% Previous Base+CPI+$6.92 per ton (0.01755 x 20.04)+ 20.04 = 27.31 1999 50.00% Previous Base+CPI+$6.92 per ton (0.02402 x 27.31)+ 27.31 = 34.89 2000 50.00% Previous Base+CPI (0.02948 x 34.89)+ 34.89 = 35.92 2001 50.00% Previous Base+CPI (0.03000 x 35.92)+ 35.92 = 37.00 2002 50.00% Previous Base+Renegotiated CPI (0.0287 x 37.00)+ 37.00 = 38.06 2003 50.00% Previous Base+CPI 2004 50.00% Previous Base+CPI 2005 50.00% Previous Base+CPI 2006 50.00% Previous Base+CPI 2007 50.00% Previous Base+CPI 2008 50.00% Previous Base+Renegotiated CPI Ill. Combined Rate to CRT For convenience purposes, the rate to CRT shall be $49.06 for all wastes delivered to CRT in the following example: $11 per ton for landfill costs $38.06 for base compensation $49.06 per ton (Note: CPI increases only apply to the base compensation component.)