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HomeMy WebLinkAboutContract 31398 CITY 3, t3/)"k�n CONTRAC`i NO. CONTRACT BETWEEN CITY OF FORT `NORTH AND E51, TX For Collection of Large Piles of Debris in Excess of 30 Cubic Yards Each and Other Out of Cycle Bulk and Brush Waste February 2005 CITY SECREY CONTRACT NO STATE OF TEXAS § COUNTIES OF TARRANT, § § DENTON AND WISE CONTRACT FOR COLLECTION SERVICES FOR DEBRIS AS DESIGNATED BY THE CITY OF FORT WORTH 02-25-05PO4 ' 48 RCVD THIS CONTRACT is made and entered into by and between the City of Fort Worth, a home-rude municipal corporation in Tarrant, Denton, and Wise Counties, Texas, acting herein by and through Libby Watson, its duly authorized Assistant City Manager, hereinafter called "City", and IESI TX Corporation doing business in Texas, acting herein by and. through Jeff Peckham, its duly authorized Vice President,hereinafter called "Contractor." THIS CONTRACT shall be for the collection of piles of Debris from Service Units consisting of Bulky Waste, Brush, Wood Waste, and C & D Materials; Debris piles in excess of thirty (30) cubic yards; and Out of Cycle Piles and Contaminated Piles that are in excess of the daily work orders guaranteed to the City's Solid Waste Collector; and other material as designated for collection by the City of Fort Worth at Service Units, or from Special Events. Collection of such Debris shall only be made as directed by the City and there shall be no guarantee of work under this Contract. KNOW ALL BY THESE PRESENTS: 1. DEFINITIONS In this Contract,the following words and phrases shall be defined as follows; Acceptable Debris shall mean the following as defined herein, Type fV Waste, C&D Waste, Large Brush and Large Bulky Waste, White Goods, and Yard Waste. Affiliate shall mean any parent, subsidiary, or any other entity controlling, controlled by, or under common control, of fESI Corporation, or IESI TX Corporation. Applicable Law shall mean any statute, law, constitution, charter, ordinance, resolution, judgment, order, decree, rule, regulation, directive, interpretation, standard or similarly binding authority, which in any case, shall be enacted, adopted, promulgated, issued or enforced that relates to or affects the City, the Contractor, or the performance by a party of its obligations hereunder. Contract for collection of DebrWNancomplaint Piles i. CRP0 AR05v4 2 I of28 `:'' Y ��W BUD Brush shall mean shrub limbs, tree limbs (up to four (4) inches in diameter), tree trimmings resulting from landscape maintenance and cleaning operations (other than an Unacceptable Commercial Pile), and untreated lumber (essentially free of hardware and nails, provided untreated lumber with hardware and nails can be collected without harm to Contractor's employees), not exceeding eight(8)feet in length. Brush Pile shall mean a waste pile consisting only of Brush. Bulky Items shall mean furniture, Treated Wood, construction materials, mattresses and box springs, carpet, swing sets, plastic swimming pools, small and large toys, bicycles, fish aquariums, toilets, household appliances, electronic equipment, and other similar items, open cardboard boxes only containing materials permitted to be disposed of at a Type IV landfill, White Goods (CFC-Free), large branches (being branches in excess of four (4) inches in diameter),tree trunks and root balls. Bu&ky Waste Pile shall mean a waste pile which contains Bulky Items. Bundled Yard Waste shall mean Brush that is cut, bundled and tied, with no limbs exceeding four inches(4")in diameter,and four feet(4')in length and such bundle not exceeding forty(40) pounds. City shall mean the City of Fort Worth,Texas. Collection Day shall mean the Day a Brush or Bulky Waste Pile is actually scheduled for collection from a given Service Unit, which Day shall fall (and may vary) as established by the City and Contractor. Collection Services shall mean removal of Debris for transport elsewhere, or cause of such to be done. Commission shall mean the Texas Commission on Environmental Quality (TCEQ), formerly known as the Texas Natural Resource Conservation Commission(TNRCC). Contaminated Pile shall mean a Brush Pile or Bulky Waste Pile containing (i) waste not permitted to be disposed of at the Type IV landfill designated by the City, (ii) plastic bags, including, but not limited to, plastic bags containing putrescibles, or(iii) closed boxes or(d) any other Debris Pile as the Director requests for services as provided herein. Construction and Demolition Waste (C & D) shall mean waste resulting from construction or demolition projects; includes all materials that are directly or indirectly the by-products of construction work or that result from demolition of buildings and other structures, including, but not limited to, bricks, concrete, other masonry materials, paper, cartons, gypsum board, wood, excelsior, rubber,and plastics. Contract shall mean this document and all attachments to this document. Contract far ealleetian ojDeb i%Woncr &iwplies CRP0209.45W 2 of 28 t Contractor shall mean IESI'fX Corporation. Day shall mean calendar day, unless otherwise specified. Debris shall mean all Bulky Waste, C & D Material, Refuse, Special Event Material, White Goods and Yard Waste and other waste as designated by the Director. DEM shall mean the Department of Environmental Management of the City of Fort Worth. Director shall mean the Director of DEM or his designated representative. Disposal shall mean the dumping or depositing of Brush and Bulky Waste into or onto a Disposal Facility so that the waste or any constituent thereof is not introduced into the environment. Disposal Facility shall mean a sanitary landfill or other facility permitted by TCEQ and/or other applicable regulatory agency with jurisdiction and utilized for the receipt or final disposition of Brush and Bulky Waste, White Goods and Yard Waste generated within the City. Garbage shall mean Solid Waste consisting of putrescible animal and vegetable waste materials resulting from the handling, preparation, cooking, and consumption of food, including waste materials from markets, storage facilities,handling,and sale of produce and other food products. s Governmental Body shall mean, as appropriate, any one or several of any court of competent jurisdiction, the United States of America, the State of Texas and/or any appropriate jurisdiction over activities relating to the services provided for under the terms of this Contract; or any agency, authority, regulatory body or subdivision of any of the above as may have jurisdiction over or power and authority to regulate the City,the Contractor, or the collection,disposal and/or processing of the material described herein. Government Approvals shall mean all licenses, permits and approvals required from any Governmental Body for performance of the Contractor's obligations under this Contract. GVW shall mean gross vehicle weight. Hazardous Waste shall mean. any Solid Waste identified or listed as a Hazardous Waste by the administrator of the United States Environmental Protection Agency(U.S.E.P.A)pursuant to the federal Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, 42 USC, §6901 et seq, as amended, or by applicable state law. Landfill shall mean the disposal/process facility as designated by the Director. Medical Waste shall mean waste generated by health-care-related facilities and associated with healthcare activities,not including Garbage or Rubbish generated from offices,kitchens, or other non-health-care activities. The term includes special waste from health care-related facilities Ca"Waafor cvlleedon afDebr&,Neneo WJaJmPUes CRP(1209.05vd 3 of 29 which is comprised of animal waste, bulk blood and blood products, microbiological waste, l pathological waste, and sharps as those terms are defined in 25 TAC §1.132 (Definition, Treatment, and Disposition of Special Waste from Health-Care Related Facilities) or any successor. The term does not include Medical Waste produced on farmland and ranchland as defined in Agriculture Code, §252.001(6) (Definitions--Farmland or ranchland)or any successor, nor does the term include artificial,nonhuman materials removed from a patient and/or requested by a patient, including but not limited to orthopedic devices and implants. Person shall mean any individual, partnership, co-partnership, firm, company, corporation, association,joint stock company, trust, estate, governmental entity, or any other legal entity; or their legal representatives, agents, or assigns. This definition includes all Governmental Bodies. Refuse shall mean nonputrescible Solid Waste (excluding ashes), consisting of both combustible and noncombustible waste materials. Combustible Refuse includes paper, rags, cartons, wood, excelsior, furniture, rubber, plastics, yard trimmings, leaves, or similar materials; noncombustible Refuse includes glass, crockery, tin cans, aluminum cans, metal furniture, and similar materials that will not burn at ordinary incinerator temperatures (1,600 degrees Fahrenheit to 1,800 degrees Fahrenheit). RFP shall mean the Request for Proposals No. 04-0232 and Contractor's Response to the Proposal,which shall be attached and shall become part of this Contract. Rubbish shall mean the same as Refuse. i l Type IV Waste shall mean Brush such as tree and shrub limbs and trimmings, C&D, and/or Refuse that are free of putrescible and free of household wastes as is regulated by Applicable Law. Service Unit shall mean a Single-Family dwelling, two-unit Multi-Family dwelling, and commercial generator that currently sets out their municipal Solid Waste in one-way containers, and other units such as aggregate containers and lamppost containers designated by the City for service. Set-Out Period shall mean a specific Day and time established by the City during which the City requires Service Units to place their Brush and Bulky Items out on the curb for collection. Special Event Material shall mean material collected from the City's convention center and material collected from City-sponsored events such as "Great American Cleanup", "Library Book Recycling Program", and "Phone Book Redirect Program", which produce waste and/or RecycIables. Ton shall means a short ton of 2000 pounds. Trash shall mean the same as Refuse. Cantract for collection ofDehris/Noneompiainr files C"02.09 OSvd Treated Wood shall mean wood that has been treated or preserved with chromated copper arsenate (CCA), pentachlorophenol, or other chemicals which have been classified as known human carcinogens by the U. S. E.P. A. Unacceptable Debris shall mean any and all waste, including but not limited to Hazardous Waste, special waste, Medical Waste and friable asbestos, the acceptance and handling of which by City Collector(s) would cause a violation of any permit condition, legal or regulatory requirement, substantial damage to Contractor's equipment or facilities, or present a substantial danger to the health or safety of the public or Collector's employees. Uncontrollable Circumstances includes "unanticipated events," and shall mean any act, event or condition (excluding those which result from the willful or negligent action or inaction of a party) occurring during the term that has, or may reasonably be expected to have, a material and adverse effect on a right or an obligation of either or both parties to the contract, if such act, event or condition is beyond the reasonable control of the party relying thereon as justification for not performing under the contract. Uncontrollable Circumstances shall include, but are not limited to, the following: an act of God, landslide, lightning, earthquake, fire, explosion, flood, ice storm, nuclear radiation, acts of a public enemy or terrorist, war, blockade, insurrection, riot or civil disturbance or any similar occurrence, or a condemnation or other taking by or on behalf of any public, quasi-public or private entity, but not including reasonably anticipated weather conditions for the geographic area of the City; Uncontrollable Circumstances shall not include: (1) insolvency or inability to pay any amount; (2) inability to obtain any letter of credit, surety bond, payment or performance bond or any other security required by the contract; (3) a public or private labor dispute relating to the collection, transportation or disposal of Solid Waste. Vehicle shall mean every device in, upon, or by which Contractor uses to transport materials and/or waste or drawn upon a public or private highway or road to perform the services and related services described for by this Contract. Violation shall mean any determination by a Governmental Body that the Contractor is in violation of or not in compliance with any portion of its permit(s)or Applicable Law. White Goods shall mean appliances such as refrigerators, stoves;washers, dryers and other large enameled appliances, which do not contain PCB or CFC units and have been officially certified to that effect. Working Day shall mean Monday through Saturday and holidays, except New Year's Day, Thanksgiving Day, and Christmas Day. COWFOct for collection of Debris/Noncomplai►u Piles CRP02.09.054 5 of 28 _,. 1 Yard Waste shalt mean leaves, yard trimmings, yard and garden debris, Christmas trees, and brush, including clean woody vegetative material not greater than six (6) inches in diameter, which results from landscaping maintenance and land-clearing operations. Z. SCOPE OF CONTRACTOR'S SERVICES Contractor hereby covenants and agrees to diligently and faithfully perform the Collection Services listed below as directed by the City with a City work order, for piles of Debris, consisting of Bulky Waste, Wood Waste, and C &D Materials at Service Units in excess of thirty(3 0)cubic yards; Contaminated Piles and Out of Cycle Piles. These Collection Services shall include the furnishing of all labor, tools, equipment, materials, insurance, performance bonds, supervision and all other items necessary to the performance of such work and services. All work and services to be performed under the Contract shall be carried out in the following manner: A. Contractor shall provide for the collection of Debris as described above from Service Units as assigned by the City within seven (7) days of a written request being issued by the City. B. Contractor shall collect Debris piles as directed by the City in a reasonable and systematic manner to ensure the collection of all Debris in an expeditious and timely t manner. C. Contractor shall inform the City's representative of the start date and time and the completion date and time of each assigned Debris pile. D. Contractor shall make collection without charge of any Debris pile determined by the City in its audit process to be a failure or neglect to collect. E. Debris collected by the Contractor shall be disposed of by the Contractor in the disposal facilities as directed by the Director. The City may change the assignment of these locations as it deems necessary. F. Contractor shall notify City of changes in key personnel such as Division President, Operations Manager and Filed Supervisor. 3. SCOPE OF CITY SERVICES The City agrees to perform the following services: Contractfer collection ofDehriwnaneomptaint Piles CRP0209.05P4 6 of 28 A. Designate a City representative to provide timely direction to the Contractor and render City decisions. B. Notify Contractor for collection of Debris piles. . C. Timely review and respond, if necessary,to reports submitted by Contractor. D. City reserves the right to verify the completion of any assigned collection work order by physical audit of the location and inform Contractor of any missed Debris pile not collected. E. Designate the Landfill(s)to which Contractor must deposit the Debris. F. Monitor the Personnel, Equipment, and Vehicle Standards as described in the terms of this Contract. G. Inform Contractor of complaints in a timely manner. 4. TERM This Contract shall commence on the date both parties have signed this agreement in fiill and shall terminate on March 31, 2013, unless agreed to otherwise in writing by both parties in an amendment to this Contract. S. PAYMENT AND MONTRY REPORTS A. For and in consideration of the above Collection Services performed in accordance with this Contract, City agrees to pay Contractor: 1. Eighty-four($84.00)per truck per hour, and 2. In an amount not-to-exceed four hundred twenty thousand dollars and no cents ($420,000)per year for the term of the Contract(the"Maximum Fees"). In the event the amounts due to Contractor hereunder equal or exceed $300,000 in the aggregate, Contractor shall promptly notify the City by email, facsimile, or certified mail, return receipt requested. In the event the amounts due to Contractor hereunder in the aggregate at any time equal or exceed the Maximum Fees, Contractor shall promptly notify the City and Contractor may, upon or after receipt by City of such notice, suspend Contractor's performance under this Contract until the next anniversary of the date this Contract is signed by both parties, unless the City has then-authorized an increase in the Maximum Fees and agreed with Contractor in writing to amend the terms of this Contract to reflect such increase. i Can&aafor eoilecdon ofDehr►vNonco►npww Piles CRP03 09.05v4 7 of 28 The parties acknowledge that the consideration hereunder does not include disposal fees incurred in the performance of this Contract, and that the City is responsible for payment of such disposal fees. B. Within fifteen (I5) Days of the end of the month in which services are provided by the Contractor, Contractor shall submit to the City a monthly report and invoice. Payment of any undisputed amounts shall be made by the City to the Contractor within thirty (30) Days of receipt by the Director of the Contractor's monthly invoice of services provided and monthly report. The Director shall also provide a written statement of any disputed amount with such notice and if necessary,the Director shall make a request for additional information from Contractor to substantiate such amount. Contractor and City shall work together to resolve such billing disputes within a reasonable time period if such dispute cannot be resolved immediately. C. The monthly report and invoice shall contain the following: 1. a detail, by load collected including address and City work order number, of time per load, location of Disposal Facility or Processing Facility where the load was delivered, and weight of load; 2. date and time each Debris pile is collected; 3. date and time each missed Debris pile is collected; 4. receipt and resolution of complaints and inquiries; 5. outstanding claims; and 6. monthly payments due Contractor. 6. HOLIDAYS The following Days shall be observed as holidays: New Year's Day, Thanksgiving Day, and Christmas Day. The Landfill shall be made available to receive Acceptable Debris from the Contractor and for Processing and/or Disposal every scheduled Working Day, including bad weather Working Days,unless the Director informs Contractor of a suspension of service. 7. UNIT PRICE ADJUSTMENT Contractor hereby agrees to accept payments adjusted in the manner as reflected in the Cost Adjustment Schedule included in this Contract as Attachment A, as full compensation for Conlraafar callecdon of DebrislNencomplainf Piles CRP0249.OSv4 services rendered. Contractor will submit documentation of the payment adjustment criteria to the City along with its annual request for rate adjustment. 8. LABOR FORCE A_ The Contractor agrees that all persons employed in the performance of services under the Contract shall be paid standard wages; notwithstanding the foregoing the Contractor agrees to: 1. comply with all requirements of Chapter 2258, Texas Government Code, including the payment of not less than the rates determined by the City Council of the City of Foil Worth to be the prevailing wage rates in accordance with Chapter 2258,Texas Government Code; 2. maintain records that show(1)the name and occupation of each worker employed by the Contractor for the Collection Services;and(2)the actual per diem wages paid to each worker, for a period of three(3)years following the commencement date. 3. post the prevailing wage rates in a conspicuous place at Contractor's place of business at all t>>imes. B. All workers shall have sufficient skill, ability, and experience to properly perform the work assigned to them and operate any equipment and Vehicles necessary to properly carry out the performance of the assigned duties. 1. Contractor shall provide suitable operational and safety training for all of its employees who utilize or operate equipment and Vehicles for collection of materials under the Contract. 2. Contractor shall use its best efforts to assure that all employees present a neat appearance and conduct themselves in a courteous manner. Contractor shall regularly train its employees in customer courtesy, and shall prohibit the use of loud or profane language. If any employee is found not to be courteous or not to be performing services in the manner required by the Contract, Contractor shall take all appropriate corrective measures, If City has notified Contractor of a complaint related to discourteous or improper behavior, Contractor will consider reassigning the employee to duties not entailing contact with the public while Contractor is pursuing its investigation and corrective action process. 3. Contractor shall designate qualified employees as supervisors of operations. Supervisors will inspect Contractor's work and will be available by radio or phone during the Contractor's hours of operation to handle calls and complaints from the City, or to follow up on problems and inspect Contractor's operations. Contract for collection of Debrr&1Noncomplawt Piles CRP02.09.054 9 of28 4. All employees of the Contractor performing work under the Contract shall be ` uniformed showing their association with the Contractor while operating under the Contract. Contractor shall provide a list of current employees, contractors and subcontractors relating to the services performed hereunder to City upon request. 9. VEHICLES AND EQUIPMENT A. Contractor shall furnish and maintain all equipment and Vehicles used for services under this Contract as is considered to be necessary for prosecution of the work in an acceptable manner and at a satisfactory rate of progress. All equipment, tools, Vehicles and machinery used for handling materials and executing any part of the work shall be maintained in satisfactory, safe and efficient working condition. Equipment and Vehicles used by Contractor shall be such that no injury to the workers or property should result from its proper use. Contractor shall be responsible for initiating, maintaining and supervising all safety precautions and programs,in connection with the work and services performed hereunder. Contractor shall provide reasonable protection to prevent property loss or damage and/or personal injury to persons, including but not limited to employees performing such work and all other persons who may be affected thereby. B. Contractor shall inspect each piece of equipment and each Vehicle daily to ensure that all equipment and Vehicles are operating properly. Equipment and Vehicles which are not operating properly shall be taken out of service until repaired and operating properly; and Contractor shall perform all scheduled maintenance functions in accordance with the manufacturer's specifications and schedule. Contractor shall keep accurate records of all equipment and Vehicle maintenance and shall make such records available to the City upon ,request to the extent necessary to ensure compliance with manufacturer's recommended scheduled equipment or Vehicle service. 10. MWBE REQUIREMENTS A waiver from the MWBE requirement was obtained for this Contract. 11. REPORTING RE UIREMENTS Contractor shall maintain and submit to the City accurate reports in accordance with Section 5 C, which detail certain activity related to the Collection Services. 12. EVENTS OF DEFAULT BY CONTRACTOR Contract far evlfamian of DebriVNonconipluint Piles CRP02.09.05v4 10 of 28 A. The following shall constitute events of default on the part of the Contractor except to the extent caused by the occurrence of an Uncontrollable Circumstance or City's fault unless otherwise specified herein: 1. Failure by the Contractor to perform any material obligation, or duty as defined in Section 12.A.3 and continuance of such failure after (i) written notice thereof has been provided by the Director specifying such failure and requesting that such condition be remedied, and(ii) Contractor's failure to cure the default or immediately initiate and diligently pursue reasonable action and cure such non performance within five (5) Days after receiving notice from the Director,provided, if such failure is of a nature that it cannot be cured within such five (5) Day period, Contractor shall not be in default if Contractor immediately notifies the City in writing and commences the curing of such failure within such five (5) Day period, and diligently pursues the curing thereof and both City and Contractor agree, each acting reasonably, that the failure cannot be cured in five (5)Days; or Z. The Contractor being insolvent or bankrupt or ceasing to pay its debts as they mature or making an arrangement with or for the benefit of its creditors or consenting to or acquiescing in the appointment of a receiver trustee, or liquidator for a substantial Part of its property; or a bankruptcy, winding up, reorganization, insolvency, arrangement, or similar proceeding instituted by the Contractor,under the laws of any jurisdiction or against the Contractor, if the Contractor does not take the appropriate action to dismiss said proceedings; which proceeding has not been dismissed within ninety(90)Days of the institution of such proceeding; or any action or answer by the Contractor approving, consenting to, or acquiescing in, any such proceeding; or the event of any distress, execution, or attachment upon the property of the Contractor which shall substantially interfere with its performance hereunder. 3. The following acts or omissions by the Contractor shall constitute failure to perform a material obligation under this Contract and an event of default: a. Failure of Contractor to commence work operations within the time specified in the Contract. b. Failure of Contractor to provide and maintain sufficient Iabor and equipment or permits and necessary licenses, permits and necessary approval from City or a third party to properly and legally execute the working operations. c. Contractor abandons the work. d. Failure on the part of Contractor to comply with the terms of this Contract or any requirements herein, such as, but not limited to, failure to provide the required insurance or Performance Bond, or to comply with any of the Director's requirements as reasonably determined. Contrast for collection of l]e6r vNvncontgluint Piles CRP02.09.O5u4 11 of28 e. Contractor makes an unauthorized assignment of the Contract or any funds due hereunder for the benefit of any creditor or for any other purpose. f. Failure to supply materially complete and accurate information as required in this Contract. g. Failure to indemnify the City as required herein. h. Falsifying records or reports to a Governmental Body. i. Failure to comply with Applicable Law that materially affects this Contract. j. Failure to remedy the cause of a complaint as described in Section 15. B. City shall, as soon as practical,notify Contractor of any failure on the Contractor's part to comply with the terms of this Contract. After receipt of notice from the City, Contractor shall acknowledge receipt of such notice within four(4)hours and shall promptly provide the City with notice of what corrective action has been or shall be taken by the Contractor. Contractor shall follow up with written notice describing the same along with any additional relevant information, within forty-eight (48) hours. Failure to provide acknowledgement of receipt of notice, or plan of corrective action, within the above mentioned time period(s) shall constitute an event of default by the Contractor. 13. EVENTS OF DEFAULT BY CITY A. The following shall constitute events of default on the part of the City, except to the extent excused by the occurrence of an Uncontrollable Circumstance or Contractor's fault unless otherwise specified herein: I. A failure by City to timely perform any material obligation after (i) written notice thereof has been provided by the Contractor specifying such failure and requesting that such condition be remedied, and (ii) City's failure to cure the default or immediately initiate and diligently pursue reasonable action and cure such non performance within five (5) Days after receiving notice from the Contractor, provided, if such failure is of a nature that it cannot be cured within such five (5) Day period, City shall not be in default if City commences the curing of such failure within such five (5) Day period, and diligently pursues the curing thereof and both City and Contractor agree, each acting reasonably,that the failure cannot be cured in five(5)Days; or 2. City being insolvent or bankrupt or ceasing to pay its debts as they mature or making an arrangement with or for the benefit of its creditors or consenting to or acquiescing in the appointment of a receiver, trustee or liquidator for a substantial part of its property; or a bankruptcy, winding up, reorganization, insolvency, arrangement or Caniructfor collecdon nfDeh?LVNOHM"WWnt Piles CRP022.09.054 12 of28 similar proceeding instituted by City under the laws of any jurisdiction or against City, if City does not take appropriate action to dismiss said proceedings, which proceedings have not been dismissed within ninety(90) Days of the institution of such proceedings; or any action or answer by City, approving of, consenting to, or acquiescing in, any such proceedings; or the levy of any distress, execution or attachment upon the property of City, which shall substantially interfere with its performance hereunder. B. Contractor shall, as soon as practical, notify City of any failure on the City's part to comply with the terms of this Contract. After receipt of notice from the Contractor, City shall acknowledge receipt of such notice within.four(4)hours and shall promptly provide the Contractor with notice of what corrective action has been or shall be taken by-the City, within a reasonable time, in light of the circumstances. City shall follow up with written notice describing the same along with any additional relevant information, within forty-eight (48) hours. Failure to provide acknowledgement of receipt of notice, or plan of corrective action, within the above mentioned time period(s) shall constitute an event of default by the City. 14. LOCAL OFFICE AND CONTRACT.A DiMMSTRA.TION Contractor shall maintain during the term of this Contract a fully operational business office within the Fort Worth area. Contractor shall charge, assign or delegate to this office full authority to transact all business required in the performance of this Contract. Contractor shall designate a qualified managing agent within the City of Fort Worth or its immediately surrounding areas and shall identify same in writing to the City. All notices may be served from the City or Director upon the designated managing agent. Service upon Contractor's managing agent shall always constitute service upon the Contractor. A. Contractor shall designate a representative who the City may contact on a twenty-four (24) hour basis in the event of an emergency and who is authorized to address all issues that may arise. The Director shall also designate an individual to be contacted by Contractor in an emergency. Both parties shall make their designation to the other in writing within ten (10) days from the commencement of this Contract. Each party shall be obligated to notify the other party within five (5) days if their designation changes. B. Contractor's local office shall be open during collection hours so that customers can lodge complaints, requests for information, etc. bequests for Collection Services to the Contractor shall come from the City. At a minimum, the Contractor's local office shall be open during the hours of 8:00 a.m. and 5:00 p.m. Monday through. Friday, and 8:00 a.m. and 3:00 p.m. on Saturdays, or until completion of tasks, whichever is latest. Cmntractfor collection oj'DehrisliVoneomplaint.Pilev CRP02.D9.05v4 13 of 28 C. Contractor's local office shall have a responsible person in charge during operating hours on Working Days, and shall be equipped with sufficient communications technology and sufficient competent personnel to receive all communications. Contractor's communication personnel shall deal with all communications in a courteous and polite manner and record all complaints. Contractor shall resolve all complaints in an expeditious manner within the following twenty-four (24) hours, excluding non-Working Days and hours. Contractor will have pre-recorded announcements for all after-hours communications to provide information on holiday office hours as well as other information the Director may reasonably require. 15. COMPLAINTS AND NON-PERFORMANCE A. All service complaints regarding the services described herein received by the City's call center shall initially be directed to Contractor and shall be resolved (or resolution initiated) within one (1) business day. On a monthly basis, Contractor shall supply the Director with copies of all complaints on a format acceptable to the City, indicating the date and hour of inquiry or complaint receipt, the nature of the complaint or inquiry, and the manner and timing of resolution. Complaints received after 3:00 p.m. on Saturday or a Day preceding a holiday must be resolved prior to 9:06 a.m. on the next Working Day. When a complaint is received on the Day preceding a holiday or a weekend, it shall be promptly serviced on the next Working Day. F B. Contractor shall provide the Director with a full explanation of the disposition of any complaint involving a customer's claim of damage to private property or personal injury as the result of actions of Contractor's employees, agents, or subcontractors in the performance of this Agreement as soon as possible, with additional information provided as requested by the Director and shall also include such information in the monthly report to the City. C. Notwithstanding anything contained herein to the contrary, Contractor's failure to remedy the cause of the complaint, or due to events described in Section 20 below, shall not be considered a material breach of the Contract or breach of a Material Obligation of Contractor, and thereby not an event of default, UNLESS Contractor's failure to perform or act in accordance with the terms of the Contract occurs in a consistent and repeated manner as reasonably determined by the Director. Notwithstanding anything contained in the Contract to the contrary, if the Director determines that failure has occurred in a consistent and repeated manner and the notification procedures by the City as described in Section 12 have been met, then the Contractor's failure to remedy complaints as described above may be considered a failure to perform a material obligation of Contractor. 16. CONTINGENCY PLAN Contract far CV&dion of Aebri&NonconVaird Piles C IV2,09.0SW 14 of 28 Within forty-five (45) Days of the commencement of the services of this Contract, Contractor shall submit to the Director for approval a contingency plan showing the program and procedures Contractor will implement in the event of an emergency, downtime, outage, equipment failure or breakdown, labor dispute, or other situation or condition that would impair Contractor's ability to Dispose of Acceptable Debris from the City or otherwise perform the services required raider the terms of this Contract. IT REPORTING REQUIREMENTS Contractor shall maintain and submit to the City accurate reports, which detail activity related to the above mentioned services,in a format approved by the City. A. Monthly reports shall include the data as described in Section 5. B. Annual reports shall report all the above data, following the same format as the monthly report. C. Records shall be kept on a daily, weekly, cumulative monthly, and cumulative annual basis, and shall be available to the City upon request. D. Contractor shall file reports with the City in a timely manner, but on no less than a monthly basis, specifying all complaints, accidents or incidents while performing any duties pursuant to the terms of the Contract, outages or downtime, and inspections by any regulatory agencies that would have an impact on the Contract during the month of the report. E. Reports shall detail the nature and reasons for these occurrences as well as all results, fmdings and actions taken to resolve such incidents. Contractor shall also notify the Director immediately of any fines or penalties levied and any actions that could have an adverse impact on the Contractor or the service to the City, or both. Failure to report such data shall subject the Contractor to liquidated damages. 18. LIQUIDATED DAMAGES For the purpose of computing damages and remedies for Contractor's failure to remedy an action or inaction listed below, it is agreed that the City may deduct from payments due to Contractor or to become due to Contractor,the following amounts as liquidated damages: 1. Failure to clean up material amounts of spilled materials resulting from loading and/or transporting-each incident: fifty dollars ($54.00). Contruei fur colleeffan of De6rLvWonco►np&int Pifes CRP42.09.95v4 15 of28 2. Chronic use of Vehicles for collection for which the manufacturer's gross allowable ° vehicle weight exceeds the Iimits allowable by City ordinance: fifty dollars ($50.00) per occurrence_ 3. Failure to provide service for City requested within seven (7) Days of request as required under the terms of the Contract and the RFP: fifty dollars ($50.00) per Day per Service Unit until service is completed. 4. Failure to maintain a staffed office during specified hours: fifty dollars ($50.00) per occurrence. 5. Failure to submit accurate reports, including monthly, quarterly, annual, employment reports and others as specified in the Contract and invoices in a City approved format: non-payment of invoices until submission of an accurate and complete invoice. 19. TERMINATION All work and services of the Contract may be suspended on written order of the Director of Environmental Management or the City Manager, or the Contract may be declared terminated by the City Council for any event of default by Contractor provided, (i) the City has provided Contractor written notice of such action or inaction constituting grounds for such suspension or termination, and (ii) Contractor fails to cure such alleged action or inaction within five (5) Days of Contractor's receipt of such notice. If such event of default is of a nature that it cannot be cured within such five (5) Day period, the City will not take action to suspend or terminate the Contract provided Contractor notified the City in writing of such nature and commences the curing of such action or inaction within the five(5)Day period and diligently pursues the curing thereafter. In the event of the City's termination of this Agreement as described above, the City shall have time power to perform and complete, by contract or otherwise, as it may determine, the work herein described or such part thereof as it may deem necessary, and Contractor agrees that the City shall have the right to procure equipment, labor and materials necessary for the completion of time work. The City shall not be required to obtain the lowest bid for the work of completing the Contract, but the expense to the City for same shall be the actual cost to the City of such work. In case such expenses shall exceed that amount which would have been payable under the Contract if the same had been fully completed by the Contractor, then the Contractor shall pay the amount of such excess to the City on notice from the City of the excess due. When any particular part of the work is being carried on by the City by contract or otherwise, under the provisions of this section, the Contractor shall continue the remainder of the work in conformity with the terms of the Contract. ( Con&aafor emawan of,Uehr►&woneomplalnl Piles CRM09.45W 16 of 28 In all instances, Contractor shall be liable for all costs incurred by City during the period after notice to discontinue the work has been served upon Contractor until such time as City either has elected to prosecute the work of the Contract itself or has replacement contractors in place to prosecute the work with or without additional City forces. 20. UNCONTROLLABLE CIRCUMSTANCES A. Uncontrollable Circumstance affecting Contractor's Obligations, Contractor shall be excused for the failure to perform its obligations under the terms of this Contract if such failure results from the occurrence of an Uncontrollable Circumstance. Contractor shall seek diligently and in good faith to perform its obligations, notwithstanding the occurrence of an Uncontrollable Circumstance, to mitigate the adverse effects of an Uncontrollable Circumstance, and to overcome an Uncontrollable Circumstance as soon as commercially practicable. As used above, actions shall be deemed "commercially practicable" if such actions are economically feasible in light of all relevant factors. B. Uncontrollable Circumstance affecting Ci 's Obligations. City shall be excused for the failure to perform its obligations under the terms of this Contract if such failure results from the occurrence of an Uncontrollable Circumstance. City shall seek diligently and in good faith to perform its obligations,notwithstanding the occurrence of an Uncontrollable Circumstance, to mitigate the adverse effects of an Uncontrollable Circumstance, and to overcome an Uncontrollable Circumstance as soon as commercially practicable. C. Notice of an Uncontrollable Circumstance. A party making a claim of an Uncontrollable Circumstance shall provide written notice of the Uncontrollable Circumstance to the other party within twenty-four (24) hours of such claiming party's knowledge of such Uncontrollable Circumstance. Such notice shall, at a minimum, set forth the following (to the extent then known or available, or if not, as soon as practicable thereafter, and a separate notice shall provide such information not provided in the first notice): 1. a description of the Uncontrollable Circumstance that has occurred; and 2. the effect, if any, of such Uncontrollable Circumstance on such claiming party's performance or other obligations under this Contract. Corrftafor collection of Debd&1NonconThd t Piles CHP02.09 05v4 17 of28 D. Reinstatement of Abil y to Perform. After the resolution of an Uncontrollable Circumstance and the restoration of the Collection Services as described herein, the Contractor shall provide written notice of a reinstatement of the above mentioned services. The City shall reinstate (or shall cause reinstatement of) such services unless this Contract shall have been previously terminated as provided herein. E. Liabilily for Uncontrollable Circumstance. Neither Contractor nor the City shall be liable for the failure to perform their duties nor for any resultant damage, or loss, if such failure is caused by Uncontrollable Circumstances. If such Uncontrollable Circumstance affecting Contractor's obligations persists for more than thirty (30) Days, or if after its/their cessation, the Contractor is unable to render full or substantial performance for a period of thirty(30) Days, the City may terminate this Contract by giving Contractor ten(1 D)Days advance written notice. 21. INDEPENDENT CONTRACTOR It is expressly understood and agreed that Contractor shall perform all work and services described herein as an independent contractor and not as an officer, agent, servant or employee of the City; that Contractor shall have exclusive control of and the exclusive right to control the details of the services and work performed hereunder, and all persons performing the same; and shall be solely responsible for the acts and omissions of its officers, agents, employees, contractors and subcontractors; that the doctrine of respondeat superior shall not apply as between City and Contractor, its officers, agents, employees, contractors and subcontractors; and that nothing herein shall be construed as creating a partnership or joint enterprise between City and Contractor. No person performing any of the work and services described hereunder shall be considered an officer,agent,servant or employee of the City. 22. INDEMNIFICATION A. CONTRACTOR SHALL RELEASE, INDEMNIFY, REIMBURSE, DEFEND, AND HOLD HARMLESS, CITY, ITS OFFICERS, AGENTS, SERVANTS AND EMPLOYEES,FROM AND AGAINST ANY AND ALL CLAIMS OR SUITS FOR PROPERTY DAMAGE OR LOSS AND/OR PERSONAL INJURY, INCLUDING DEATH, TO ANY AND ALL PERSONS, ARISING OUT OF THE WORK AND SERVICES TO BE PERFORMED HEREUNDER BY CONTRACTOR, ITS OFFICERS, AGENTS, EMPLOYEES, CONTRACTORS, SUBCONTRACTORS, LICENSEES, OR INVITEES, INCLUDING DAMAGES, LOSS, INJURY OR DEATH, TO THE EXTENT CAUSED BY ANY NEGLIGENT OR WILLFUL Contract for collection of DebrwNoncomplaw Piles CRP02.09.05v4 18 of 28 ERROR, OMISSION, DEFECT, OR DEFICIENCY OF CONTRACTOR IN ACCORDANCE WITH THIS CONTRACT EXCEPT TO THE EXTENT ANY SUCH DAMAGES, LOSS, INJURY OR DEATH IS CAUSED BY ANY NEGLIGENT ERROR, OMISSION,DEFECT OR DEFICIENCY OF THE CITY. B. CONTRACTOR DOES HEREBY RELEASE, INDEMNIFY, REIMBURSE, DEFEND, AND HOLD HARMLESS THE CITY, ITS OFFICERS, AGENTS, SERVANTS, AND EMPLOYEES FROM AND AGAINST ANY AND ALL LIABILITY, CLAIMS, SUITS, DEMANDS, OR CAUSES OF ACTION WHICH MAY ARISE DUE TO ANY LOSS OR DAMAGE TO PERSONAL PROPERTY, OR PERSONAL INJURY, AND/OR DEATH OCCURRING AS A CONSEQUENCE OF THE PERFORMANCE OF THIS CONTRACT, WHEN SUCH INJURIES, DEATH, OR DAMAGES ARE CAUSED BY THE NEGLIGENCE OF CONTRACTOR, ITS OFFICERS, AGENTS, OR EMPLOYEES, OR SUBCONTRACTORS, OR THE JOINT NEGLIGENCE OF CONTRACTOR, ITS AGENTS, OR EMPLOYEES, OR SUBCONTRACTORS, AND ANY OTHER PERSON OR ENTITY, EXCLUDING ALL PARTIES INDEMNIFIED HEREUNDER, TO THE EXTENT CAUSED BY THE NEGLIGENT ACT OR OMISSION OF CONTRACTOR. C. The obligations of the Contractor under this section shall include, but not be limited to, the burden and expense of defending all claims, suits, and administrative proceedings (with counsel reasonably approved by the indemnified parties), even if such claims, suits or proceedings are groundless, false, or fraudulent, and in conducting all negotiations of any description, and paying and discharging, when and as the same become due, any and all judgments, penalties or other sums due against such indemnified persons. D. Upon learning of a claim, lawsuit, or other liability which Contractor is required hereunder to indemnify, the City shall provide Contractor with reasonably timely notice of same. E. The obligations of the Contractor incurred during the term of this Agreement under this section shall survive the expiration of this Contract and the discharge of all other obligations owed by the parties to each other hereunder. F. In all of its contracts with subcontractors for the performance of any work under this Contract, Contractor shall require the subcontractors to indemnify the City in a manner consistent with this section. G. In the event that a written claim for damages against Contractor or any of its subcontractors remains unsettled at the time all work on the assigned task has been completed to the satisfaction of the City Manager, as evidenced by a final inspection, final payment to Contractor shall not be recommended by the City Manager for a Conlrad for collecdon ofDebdslNYonconWkint Piles CHPd2.D9.05v4 19 of 28 period of ninety (90) Days after the date of such final inspection, unless the Contractor submits written evidence reasonably satisfactory to the City Manager that the claim has been settled and a release has been obtained from the claimant involved,or offers reasonable security for payment of such claim. 1. If the claim concerned remains unsettled at the expiration of the said thirty (30) Day period, the Contractor may be deemed by the City Manager to be entitled to a semi-final payment for work completed, such semi-final payment to be in an amount equal to the total dollar amount then due less the dollar value of any written claims pending against the Contractor arising out of the performance of such work. Z. The City Manager shall not recommend final payment to Contractor if a claim for damages is outstanding for a period of six (6) months following the date of the acceptance of the work performed unless the Contractor submits evidence in writing,reasonably satisfactory to the City Manager,that: a. The claim has been settled and a release has been obtained from the claimant involved; or b. Good faith efforts have been made to settle such outstanding claims, and such good faith efforts have failed. 3. If condition (a) above is met at any time within the six (6) month period, the City Manager shall recommend that the final payment to Contractor be made. If condition (b) above is met at any time within the six-month period, the City Manager may recommend that final payment to Contractor be made. At the expiration of the six (6) month period, the City Manager may recommend that final payment be made if all other work has been performed and all other obligations of the Contractor have been met to the reasonable satisfaction of the City Manager. 23. INSURANCE Contractor shall not commence work under this Contract until it has obtained all the insurance required under the Contract, and such insurance has been approved by the City. Contractor shall keep the required insurance in force throughout the term of this Contract. A. WORKERS' CCMPENSA.TIDN INSURANCE: Contractor shall maintain,during the term of this Contract, Workers' Compensation Insurance at statutory limits on all of its employees to be engaged in work under this Contract, and for all subcontractors. Employer's Liability (EL) Insurance shall also be maintained, at minimum limits as Con"cl for eolkxaon ofDebd.VNaneonW1Wnl Piles CRP42.09.05v4 20 of 28 follows: $500,000 each accident/$500,000 disease each employee/$500,000 disease policy limit. B. GENERAL LIABILITY INSURANCE (CGL): Contractor shall procure and shall maintain during the term of this Contract a Commercial General Liability Insurance Policy at minimum limits of Two Million Dollars ($2,000,000) per occurrence with an aggregate of Five Million Dollars ($5,000,000) combined single limit, including property damage and personal injury coverage, during effective dates of the Contract, or any renewal thereof, in order to protect and save the City harmless against any and all claims for damage to person, persons, or property arising from the process of providing Collection Services in conformance with the provisions of this Contract. Contractor shall also provide excess Commercial General Liability in the amount of Ten Million Dollars ($10,000,000). C. AUTOMOBILE INSURANCE: Contractor shall procure and maintain during the term of this Contract Comprehensive Automobile Liability Insurance covering all vehicles involved with Contractor's operations under this Contract. The minimum limits of liability coverage shall be in the amount of Two Million Dollars ($2,000,000) per occurrence combined single limit, during the effective dates of Contract and any renewal period. The named insured and employees of Contractor shall be covered under this policy. The City of Fort Worth shall be named an additional insured on Endorsement TE 9901 or equivalent,as its interests may appear. D. ENVIRONMENTAL IMPAIRMENT LIABILITY (EIL) AND/OR POLLUTION LIABILITY—Ten Million Dollars ($10,000,000)per occurrence. EIL coverage(s)must be included in policies listed in items above; or, such insurance shall be provided under separate policies. Liability for damage occurring while loading, unloading and transporting materials under the Contract shall be included under the Automobile Liability insurance or other policy(s). NOTE: BETWEEN A AND D ABOVE,ANY POLLUTION EXPOSURE, INCLUDING ENVIRONMENTAL IMPAIRMENT LIABILITY,ASSOCIATED WITH THE SERVICES AND OPERATIONS PERFORMED UNDER THIS CONTRACT SHALL BE COVERED;IN ADDITION TO SUDDEN AND ACCIDENTAL CONTAMINATION OR POLLUTION LIABILITY COVERAGE,THERE MUST BE NON-SUDDEN AND NON-ACCIDENTAL CONTAMINATION LIABILITY COVERAGE FOR GRADUAL EMISSIONS AND CLEAN-UP COSTS_ The following shall pertain to all applicable policies of insurance(A. through D,) listed above: 1. Additional Insured Clause: "The City of Fort Worth, its officers, agents, employees, and representatives are added as additional insureds as respects operations and activities of, or on behalf of the named insured, performed Conoaafor collection of DebrivmncomplaintP11a Cxroz o9.osva 21 of28 __.__- under contract with the City of Fort Worth." An equivalent clause may be acceptable in the discretion of the City. 2. Subcontractors shall be covered under the Contractor's insurance policies or they shall provide their own insurance coverage; and, in the latter ease, documentation of coverage shall be submitted to the Contractor prior to the commencement of work and the Contractor shall deliver such to the City. 3. Prior to commencing work under the Contract, the Contractor shall deliver to the City insurance certificate(s) documenting the insurance required and the terms and clauses required. 4. Each insurance policy required by this Contract shall contain the following clauses: "This insurance shall not be canceled, limited in scope or coverage, or non-renewed until after thirty (30) Days prior written notice has been given to the Director of Environmental Management, City of Fort Worth, 1000 Throckmorton, Fort Worth, Texas 76102." Note: Written notice can be by Contractor or insurance company. 5. The insurers for all policies must be approved to do business in the State of Texas and be currently rated in terms of financial strength and solvency to the reasonable satisfaction of the Risk Manager for the City. 6. The deductible or self-insured retention (SIR) affecting the coverage required shall be reasonably acceptable to the Risk Manager of the City; and,in lieu of traditional insurance, alternative coverage maintained through insurance pools or risk relations groups must be also approved. 24. UNACCEPTABLE DEBRIS Contractor shall NOT knowingly accept, nor be required to accept Unacceptable Debris. Contractor shall notify City's Collector(s) and the Director of the suspected Unacceptable Debris immediately and provide the Director with a description of such waste. Contractor reserves the right to reject or revoke acceptance of any Unacceptable Debris in accordance with Applicable Law. 25. CUMULATIVE REMEDIES The rights and remedies granted in this Contract are cumulative, and the exercise of such rights shall be without prejudice to the enforcement of any other right or remedy authorized by lave or this Contract. No waiver of any violation shall be deemed or construed by a court of law Contractfor collection of AehriY1Noncomplaint files CRP02.09.05v4 22 of 28 or an arbitrator to constitute a waiver of any other violation or other breach of any of the terms, provisions, and covenants contained herein. 26. REMEDIES FOR BREACH The parties agree that in the event that either party breaches this Contract,the other party may exercise any legal rights it has under this Contract under Applicable Law to recover damages or to secure specific performance, and that such rights to recover damages and to secure specific performance shall ordinarily constitute adequate remedies for any such breach. 27. NO WAIVER OF RIGHTS No failure by the City or by the Contractor to insist upon the strict performance of any term, covenant, agreement, provision, condition or limitation of this Contract or to exercise any right or remedy hereunder, and no acceptance by the City of full or partial payment during the continuance of any such breach, shall constitute a waiver of any such breach or of such term, covenant, agreement, provision, condition or limitation. No term, covenant, agreement, provision, condition or limitation of this Contract to be kept, observed or performed by the City or by the Contractor, and no breach thereof, may be waived, altered or modified except by a written instr runt executed and acknowledged by and delivered to the City and the Contractor. No waiver of any breach shall affect or alter this Contract, but each and every term, covenant, agreement, provision, condition and limitation of this Contract shall continue in full force and effect with respect to any other then existing or subsequent breach thereof. This Contract may be terminated (except by expiration of the term of this Contract) only by a written instrument of termination executed by the appropriate parry and delivered to the non-terminating party. 28. RIGHT TO AUDIT Until the expiration of three (3) years after the final payment under this Contract, the City shall have access to and the right to examine any directly pertinent books, documents, papers and records of the Contractor involving transactions relating to this Contract. Contractor further agrees to include in all its subcontracts hereunder a provision to the effect that the subcontractor agrees that the City shall,until the expiration of three (3) years after final payment under the subcontract, have access to papers and records of such subcontractor involving transactions relating to the subcontract. The term"subcontract" as used herein includes purchase orders. 29. HEALTH AND SANITATION Contractor shall establish and enforce in its operations and among its employees such regulations in regard to cleanliness and sanitation in the collection of all Brush and Bulky Waste Onstraet fir collection of Deb rLVNonc&nWIaint Piles CRP02.09.OSv4 23 of 28 as will tend to prevent the inception and spread of disease and to effectively prevent the creation of a nuisance on any property either public or private. 30. GOVERNMENTAL POWERS AND EWJL NITIES It is understood and agreed that, by execution of this Contract,the City does not waive or surrender any of its governmental powers or immunities. Contractor acknowledges that the City is a Governmental Body and as such has certain rights, powers and duties that may affect the Contractor's rights or obligations under the Contract. The Contractor agrees that, subject to Section 13 above,no action by the City acting in its governmental capacity shall be construed as a breach or an event of default by the City under this Contract, nor shall any such action excuse the Contractor from performance of its obligations under this Contract; provided, however, if such action constitutes an Uncontrollable Circumstance, the Contractor may assert any rights it may have under this Contract as is permitted for any other Uncontrollable Circumstance. 31. COMPLIANCE WITH LAWS Contractor, its officers, agents, employees, contractors and subcontractors, shall abide by and comply with all Applicable Law, federal, state and local, including the City's charter and all ordinances, rules and regulations of the City and shall maintain all permits and approvals required for the services to be provided to City. It is agreed and understood that, if City calls the attention of Contractor to any such violations on the part of Contractor, its officers, agents, employees, contractors or subcontractors, then Contractor shall immediately desist from and correct such violation. 32. LICENSES PF..RMITS AND FEES Contractor agrees to obtain and pay for and maintain all licenses, permits, certificates, inspections and all other fees required by law or otherwise necessary to perform the services prescribed hereunder. 33. DISCRIMINATION PROHIBITED Contractor, in the execution,performance or attempted performance of this Contract shall not discriminate against any person or persons on any unlawful basis. This Contract is made and entered into with reference specifically to Article III of Chapter 17 of the Code of the City of Fort Worth (1986), as amended, an ordinance prohibiting discrimination, and Contractor hereby covenants and agrees that it has fully complied with all provisions of same and that no employee or employee-applicant has been discriminated against or will be discriminated against by Con&actfor collection ofDebr&,WoncaoVh%ird Piles CRP02.09.05W 24 of 28 Contractor in violation of said ordinance. Contractor warrants that it is an equal opportunity employer. In addition, Contractor, in the execution, performance or attempted performance of this Contract shall not discriminate on any prohibited basis and shall fully comply with all other applicable federal,state and local laws concerning discrimination. 34. NON ASSIGNMENT Contractor shall not assign, transfer, sublet, convey, or otherwise dispose of the Contract or the rights,title, or interest in or to the same or any part thereof without the previous consent of the City Council which consent will not be unreasonably withheld, conditioned or delayed if the assignment is made to an Affiliate. In the event Contractor does, without such previous consent, assign, transfer, sublet, convey or otherwise dispose of the Contract or of the right, title or interest therein or any part thereof, City may, at its discretion, terminate the Contract. Consent will not be required when an assignment is made to an Affiliate, provided that Contractor shall not be released from their respective obligations hereunder and provided the Contractor has provided thirty(30) days notice to the City of such assignment. 35. SUCCESSORS AND ASSIGNS All of the terms, covenants, and Contracts contained herein shall be binding upon and shalt inure to the benefit of successors and assigns of the respective parties hereto. 36. NOTICES Any notices,bills,invoices or reports required by this Contract shall be sufficient if sent by the parties in the United States mail,postage paid, to the address noted below: If to the City: Kim Mote,Assistant Director Solid Waste Management Division Department of Environmental Management City of Fort Worth 4100 Columbus Trail Fort Worth,Texas 76133 (817)392-5153 Confraa far colleelion of Uebris/Noncomplainl Piles CRP02.09.45v4 25 of 28 If to the Contractor: Bob Kneis IESI District Manager 4001 Old Denton Road Fort Worth,TX 76117 (817)222-2221 and Tom Fowler General Counsel 2301 Eagle Parkway,Suite 200 Fort Worth,TX 76177 37. VENUE Should any action,whether real or asserted, at law or in equity, arise out of the terms and conditions of this Contract,venue for said action shall be in Tarrant County,Texas. 38. SAVINGS CLAUSE In case any one or more of the provisions contained in this Contract shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Contract; this Contract shall be construed as if such invalid,illegal or unenforceable provision had never been contained herein. 39. NON-APPROPRIATION In the event that no funds or insufficient funds are collected, appropriated and budgeted or funds are otherwise unavailable for payment of amounts due hereunder by City to Contractor, City shall notify Contractor and this Contract shall terminate on the last day of the fiscal period for which appropriations were made without penalty or expense to City of any kind whatsoever, except as to the payment of amounts due and payable for which appropriations have been made for said fiscal period. City covenants that it will provide Contractor as much notice as possible of this contingency. Provided, however, that this Section 43 is not intended to grant to the City an independent ground for termination of this Contract separate and apart from any grounds for termination for non-appropriation or non-availability of funds which would be provided to City by reason of Tex. Const.Ann.Art. 11, Sec. 5 and 7. 40. REPRESENTATIONS AND WARRANTIES OF EACH PARTY Contract for colleMon of AebrislNoncomplaint Piles CRP02.09.051o4 26 of 28 Each party represents and warrants to and with the other as to the Commencement Date (and such representations and warranties as of the Commencement Date shall survive the termination or expiration of this Contract), as follows: A. Each party is duly organized and existing in good standing and each is duly qualified and authorized to enter into and perform the obligations set forth in this Contract. The execution and performance of this Contract(1) have been duly authorized by all required corporate or other action of such party, (2) do not require any consent or approval not otherwise previously obtained, and (3) will not violate any judgment, order, law or regulation applicable to such party or any provisions of such party's charter, ordinances or resolutions. B. The execution of this Contract and the performance of all obligations set forth herein do not conflict with, and will not, nor with the passage of time or the giving of notice, constitute a breach of or event of default under any charter, ordinances or resolutions of the party, or any contract, indenture, mortgage, bond, instrument or Applicable Law to which the party is subject or by which such party is bound. This Contract has been duly executed and constitutes a legal, valid and binding obligation of each party and is enforceable in accordance with its terms, except to the extent that the enforcement thereof is limited by any applicable bankruptcy, insolvency, reorganization, moratorium or other laws relating to or limiting creditors' rights generally and the application of principles of equity. C. There is no action, suit or proceeding, at law or in equity, before or by any court or governmental authority, pending or threatened against the party, wherein an unfavorable decision,ruling or finding would materially adversely affect the performance by the party of its obligations hereunder or the other transactions contemplated hereby, or which, in any way, would adversely affect the validity or enforceability of this Contract, or any other contract or instrument entered into by the party in connection with the transactions contemplated hereby. IN WITNESS WHEREOF, The parties hereto have executed this Contract on this day of , ,A.D., 2005,in Fort Worth,Tarrant County,Texas. CFrY OF FORT WORTH TESI TX Corporation U by Watson J AfPeckham Assistant City Manager President(Vice Pre idea Date Signed: • S Date Signed: ���� 2-DO� Contract for rollerfion of Dehriv2Voncomplaint Piles CRM2.09.95W 27 of 28 Signalrere Page 2 for Contract with IESI ATTEST: ;gJ. , L— �" � - [�\ Many Hendr Fowler, Vice President City Secretary APPROVED AS TO FORM CORPORATE SEAL: AND LEGALITY: (�W. 4)a- ?44v� — AssistanAitity Attorney CO3r.—r7 t i axt Date Controctfor collection ofbebrislNoncomplaint Piles cxP0209.os►4Y� 28 of28 r 1 Bond Number 1015628 PERFDRMANOE BOND THE STATE OF TEXAS COUNTY OF TARRANT KNOW ALL MEN 13Y THESE PRESENTS:That we,IESI TX Corporation,a corporation of the State of Texas hereinafter called Principal and Lexon insurance Company , a corporation organized and existing under the laws the State of Texas and fully authorized to transact business in the State of Texas,as Surety,are held and firmly bound unto the City of Fort Worth,a municipal corporation organized and existing under the laws of the State of Texas hereinafter called Owner, in the penal sum of two hundred fifty dollars and no cents ($250,000) in lawful money of the United States, to be paid in Fort Worth,Tarrant County,Texas, for the payment of which sum well and truly be made,we hereby bind ourselves,our heirs,executors,administrators,and successors,jointly and severally,firmly by these presents. THE CONDITION OF THIS OBLIGATION is such that Whereas, the .Principal entered into a certain Contract with the City of Fort Worth, the Owner, dated the day of , 204 a copy of which is hereto attached and made a part hereof, for the; Collection of Debris. NOW THEREFORE, if the Principal shalt well, truly and faithfully perform the work in accordance with the plans, specification, and Contract documents during the original term thereof, and any extensions thereof which may be granted by the Owner,with or without notice to the Surety,and if he shalt satisfy all claims and demands incurred under such Contract, and shall fully indemnify and save harmless the Owner from all costs and damages which it may suffer by reason of failure to do so, and shall reimburse and repay the Owner all outlay and expense which the Owner may incur in making good any default,then this obligation shall be void;otherwise to remain in full force and effect, PROVIDED FURTHER,that if any legal action be filed upon this bond,venue shall lie in Tarrant County,State of Texas. AND PROVIDED FURTHER, that the said Surety, for value received, hereby stipulates and agrees that no change,extension of time,alteration or addition to the terms of the Contract or to the work to be performed thereunder or the specifications accompanying the same shall in any way affect its obligation on this bond, and it does hereby waive notice of any such change,extension of time alteration or addition to the terms of the Contract or to the work or to the specifications. IN WrMESS WHEREOF, this instrument is executed in 3 Counterparts each one of which shall be deemed an original,this the List day of March MX 2005, IESI TX Corporation Principal ATTEST: jss't, {Principal Secretary By J. Fowler, Vice�Pnnnesid�ent (SEAL) (Printed Name/Title) 2301 Eagle Parkway ADDRESS Fort Worth,TX 76177 L`)(TYISTATEIZIP Lexon Insurance Company (Address) (Surety) ATTEST: (Surety)Secretary By: a (Attorney-in-Fact)(5) EAL) Linda Gibson (Printed Attorney-in-Pact) Witness as to Surety Note: Date of Bond must not be prior to date of Contract (l) Correct name of Can(ractor 0) A Corporatton,a Partnership or and individual,as case may be (3) Correct Name ofsorety (4) If Contractor is pannet ship all Partners shoultt execute bond (5) A true ropy of Power of Attorney shall be attached to bond by Attorney-in-Fact POWER OF ATTORNEY Lexon Insurance Company KNO%N ALL MEN BY THESE PRESENTS, that LEXON INSURANCE COMPANY, a Texas Corporation, with its principal office in -aisviIto, Ken tucky, does hereby constitute and appoint: John B.Manus,Linda Gibson,Mary E.Joseph,Megan Kaefiny'I7tmm Masterson Brook T.smi th,Kathy Hobbs,Raymond M.Hu ndley,Jason D.Cromwell,]ames Fi.Martin,Sandra F.Harper,Myrtie F.Heniy,Julie Rod ican its true and la►Nful Attorney(s)-In-Fact to make, execute, seal and deliver for, and on its behalf as surety, any and all bonds, undertakings or other writings obligatory in nature of a bond. This authority is made under and by the authority of a resolution which was passed by the Board of Directors of LEXON INSURANCE COMPANY on the 1st day of July, 2003 as follows: Rest/Ived, that the President of the Company is hereby authorized to appoint and empower any representative of the Company or other person or persons as Attorney-In-Fact to execute on behalf of the Company any bonds, undertakings, poficies, contracts of indemnity or other writings obligatory in nature of a bond not to exceed$2,500,000.00,Two-million five hundred thousand dollars, which the Company might execute through its duty elected officers, and affix the seal of the Company thereto. Any said execution of such documents by an Attorney-In-Fact shaft be as binding upon the Company as if they had been duly executed and acknowledged by the regularly elected officers of the Company.Any Attorney-In-Fact, so appointed, may be removed for good cause and the authority so granted may be revoked as specified in the Power of Attorney. Resolved, that the signature of the President and the seal of the Company may be affixed by facsimile on any power of attorney granted,and the signature of the Vice President,and the seal of the Company may be affixed by facsimile to any certificate of any such power and any such power or certificate bearing such facsimile signature and seal shall be valid and binding on the Company.Any such power so executed and sealed and certificate so executed and sealed shall, with respect to any bond of undertaking to which it is attached, continue to be valid and binding on the Company. IN WITNESS THEREOF, LEXON INSURANCE COMPANY has caused this instrument to be signed by its President, and its Corporate Seal to be affixed this 2nd day of July, 2003. ��FtANCFO LEXON INSURANCE COMPANY A Zt TEXAS n O: yc INSURANCE 11ss1= COMPANY BY y. •�• David E_Campbell ........... " President ACKNOWLEDGEMENT On this grid day of July, 2003, before rne, personally came David E.Campbell to me known,who being duly sworn, did depose and say that he is the President of LEXON INSURANCE COMPANY,the corporation described in and which executed the above instrument;that he executed said instrument on behalf of the corporation by authority of his office under the By-laws of said corporation. wµ "OFFIGIAL SEAL" LYDIA J.€]E.JUNG r NOTARY PUBLIC STATE OF ILLINOIS t/� MY COMMISSIOR IXPfRE511t2120I17 �� - - Lydia J.OeJong CERTIFICATE Notary Public I, the undersigned, Secretary of LEXON INSURANCE COMPANY, A Texas insurance Company, DO HEREBY CERTIFY that the original Power of Attorney of which the foregoing is a true and correct copy, is in full force and effect and has not been revoked and the resolutions as set forth are now in force. Signed and Sealed at Lombard, Illinois this f Day of Q.C ,20" -_- .C�]RAN... A s� p; TEXAS •-v X: INSURANCE Wj�• COMPANY �=Y ti•• Donald D. Buchanan Secretary CONTRACTOR COMPLIANCE WITH WORKERS' COMPENSATION LAW Pursuant to V.T.C.A. Labor Code §406.96 (2000), as amended, Contractor certifies that it provides workers' compensation insurance coverage for all of its employees employed on City of Fort Worth Department of Environmental Management Project No. 04-0232. IESI TX CORPORATION By. Title 02�21�246� Date STATE OF TEXAS § COUNTY OF TARRANT § �efor� me, the undersigned authority, on this day personally appeared known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he executed the same as the act and deed of for the purposes and consideration therein expressed and in the capacity therein stated. Given Under My Hand and Seal of Office this ! day of Ft'Wk�-J , 20 L'` '' Ir , �►c. Wr` Notary Public in and for the State of Texas 0"1►I1{f{1H1Hq�H��,I,f GINDYp �. a- •�Sao Rr�. �_ Attachment A Cost Adjustment Method The Fee for the Collection of Debris under this Contract with the City will be adjusted by the Contractor for the second and subsequent Contract Years of the term of the Contract. The Collection Fee will be adjusted upward or downward annually to reflect changes in the cost of operations by the Cost Adjustment Method using indices applicable to Collection and the methodology as set forth below, on the "Cost Adjustment Date". The first cost adjustment date shall be October 1, 2005, and the first Cost Adjustment shall represent changes in the indices applied herein for the previous twelve (12) months (calculated by using indices for the end of September in 2004 and the end of September in 2005). All indices used represent either the Employment Cost Index (ECI) or components of the Producer Price Index (PPI), and are all published by the U.S. Department of Labor, Bureau of Labor Statistics (BLS). Since some BLS data are not finalized for several months, cost adjustments will be applied when data is released and updated if necessary when numbers used are issued as final. If BLS changes the methodology for calculating ECI or components of the PPI, which causes historical data used to calculate this cost adjustment to be restated, such changes shall only apply to future adjustments and not to adjustments already implemented. Cost adjustments shall not exceed five (5) percent per year and fifteen (15) percent in any four (4) consecutive years. As soon as possible after a Cost Adjustment Date, Contractor shall send to the City a comparative statement setting out the change determined through the Cost Adjustment Method and the increase or decrease in the Collection Fee that will be charged by the Contractor. On the next billing date after the receipt and approval by the City of the comparative statement showing the calculated change to the Collection Fee, the City shall pay to the Contractor, or the Contractor shall credit to the City, as the case may be, a lump sum equal to any increase or decrease applicable to that portion of the current period which has elapsed, and thereafter, the Collection Fee charged by the Contractor shall be modified to reflect any change until the next Cost Adjustment Date, and a comparative statement is received and approved by the City. Any fixed pass-through or add-on surcharges or costs, such as State fees on'#arinage, host municipality benefit fees, or any other government mandated surcharge, shall riot apply to the cost adjustment and will be deducted from the Collection Fee prior to calculating any annual cost adjustment. . If any index defined herein shall not be determined and published or if any index as it is constituted on the Contract Date is thereafter substantially changed, there shall be substituted for such index another index which is determined and published on a basis substantially similar to the index being replaced as shall be mutually agreed upon by the City and the Contractor. Listed below are the indices and Contractor's percentages of the indices that shall constitute the basis for adjustment of the Fees for Collection under this C '11trA t."The i' rir••V1 Y/+re Yr���i percent of change applied to cost adjustment shall be carried out to three (3) decimal places without rounding. Indices and Contractor's Percentage of Each Index to be Applied in the Cast Adjustment - Collection Industrial Handling Equipment (25%) Contractor has designated 25% of Collection Fee to be adjusted by the "Industrial Handling Equipment" component of the PPI, which is found under"Capital Equipment," commodity code "11-44". Employment Cost Index (25%) Contractor has designated 25% of Collection Fee to be adjusted by the ECI, a BLS index separate from PPL ECI data for "South" under the "Region (3)"category shall be used for the adjustment calculation. Gasoline (50%) Contractor has designated 50% of Collection Fee to be adjusted by the gasoline component in the CPI, which is found under the CPI under Gasoline, series ID CWURA316SETB01. Example Following is an example of the application of these indices with Contractor's percentages for cost adjustment. In the example below, an annual factor of 4.570% would be applied to Contractor's base Collection Fee to determine the Collection Fee for the next Contract Year. WEIGHTED September INDEX WEIGHT CHANGE% CHANGE 30. 2004 Current Year Change% PPI -Industrial Handling Eqt. ID#11-44 25% 5.379% 1,345% 145.0 152.8 5.379% Employment Cost Index Region 3 South 25% 2.001% {3.504°/° 1 fi4.9 1682 2.001°/o CPI-Gasoline ID#CWURA316SETBOI 50% 5.450% 2.725%1 163.3 172-21 5.450% Composite Index Change: 12.831% 4.570%1 12.831% hale of Contents QUALIFICATIONS AND EXPERIENCE BUSINESS PLAN AND TECHNICAL PROPOSAL EXCEPTIONS TO THE TERMS AND CONDITIONS OF CONTRACT USE OF MWBE REFERENCES FINANCIAL STABILITY AND • ABILITY TO OBTAIN INSURANCE AND BONDING OTHER SPECIAL FEATURES COST * PROPOSAL FORMS REQUEST FOR PROPOSAL October 20, 2004 Mr. Robert Combs Purchasing Manager City of Fort Worth 1000 Throckmorton Street Fort Worth,TX 76102 RE; RFP 04-0232—Collection of Large Piles of Debris in Excess of 30 Cubic Yards Each and Other Out of Cycle Bulk and Brush Waste Dear Mr. Combs: IESI TX Corporation is both pleased and excited about the opportunity to provide bulky waste collection service to the City of Fort Worth. IESI is a"home grown"Tarrant County company with many senior level management personnel that are proud to call Fort Worth"home". 4 IESI Corporation is the ninth largest solid waste collection and disposal company in the United States. Our Corporate headquarters,Fort Worth District Office,a hauling company and solid waste transfer station are located in Tarrant County. We are proud to operate the only Type IV C&D Landfill(Fort Worth C&D Landfill)in Tarrant County and have just recently purchased a Type I MSW Landfill in Weatherford,Texas. We have also just completed construction of a new operating facility in Haltom City. IESI is a fully integrated, non-hazardous solid waste services company dedicated to providing the highest quality collection, recycling,transportation and disposal services in an environmentally aware and cost effective manner. As it is with all of those municipalities IESI serves,we pledge to the City of Fort Worth and its residents the highest level of customer service along with a selection of disposal services that are second to none in the industry. IESI "gives back"to those communities in which we serve by the donation of our time and service to a full range of community services and organizations. Our people value greatly their work with area schools,Chambers of Commerce,Meals-On-Wheels,senior citizen programs,the local YMCA and community clean-up programs,just to name a few. IESI South Texas District received the Keep Texas Beautiful Business/Leadership Award for 2000-2001,and the Frisco Chamber of Commerce named IESI the Business of the Year in 2001. IESI has provided both jobs and vendor opportunities in the Dallas/Fort Worth area for years. Through our contract with the City of Fort Worth,we look forward to expanding these employment and business opportunities here in Tarrant County. IESI is strongly committed to the development of public/private partnerships with the communities in which it does business. Mr. Robert Combs Page 2 October 20, 2004 We at IESI take great pride in the"fact"that customer service,to both the City of Fort Worth and its citizens, is paramount in our corporate thought process. We take the delivery of environmental services very seriously. Our management team goes to great lengths to insure that this thought process carries down to our most important asset—the excellent employees at IESI. Our Customer Satisfaction, Safety and Maintenance programs are great assets to IESI as we deliver services to communities and businesses throughout the United States. I am confident in telling you that the City of Fort Worth will notice a marked improvement with our solid waste collection services in your community through the award of this critical, sensitive and high profile contract to IESI. People do,in fact,make the difference,and I am certain that you will find IESI's people to be the very best. Strong communication with both the City and your residents is a key focus for our company. Customer service representatives and operations supervisors will be hired and trained specifically to handle the Bedford contract. We at IESI consider our relationship with our municipal customers to be a public/private partnership of which we understand the importance of and take great pride in, In closing,we are aware and appreciative of the great time and effort put forth by city leaders and staff in extending this opportunity to IESI and other solid waste collection companies to submit our RFD's. Upon review of our proposal, should you have any questions,do not hesitate to contact me personally to address your questions or concerns. Respectfully submitted, Bob Kneis District Manager f I MISSION IESI Corporation is a fully integrated, non-hazardous solid waste services company dedicated to providing high quality collection, recycling, transportation and disposal services at low cost to its customers. IESI prides itself on its community involvement, environmental awareness and strong commitment to personalized customer service. IESI will provide the utmost in customer service orientated solid waste collection, along with a selection of disposal services that are second to none in the industry. COMMITMENTCOMMUNITY IESI donates time, money and services to area schools, Meals on Wheels, senior citizens, community clean- up programs and more. We are also active in the local Chambers of Commerce. Whenever possible, IESI hires within the communities it serves and locally purchases supplies, fuel and equipment. We don't just sign a contract with a city...we become part of the community. -- COMPANY HO- Mickey Flood founded IESI Corporation in 1995. As a veteran in the solid waste industry, Flood wanted to create a company that could offer high quality, low cost, solid waste disposal services to communities while •siding personalized customer service. IESI's corporate headquarters is located in Fort Worth, Texas, and currently serves residential, commercial and industrial roll-off customers in two core regions, which include the states of Arkansas, Louisiana, Maryland, Missouri, New Jersey, New York, Oklahoma, Pennsylvania and Texas. IESI's principal operations as of March 2004 include forty-three hauling operations, seventeen landfills, twenty-three transfer stations, and seven material recycling facilities. IESI provides solid waste collection and disposal services to over 270 municipalities. IESI's original location was in Justin, Texas, and began with three trucks and two drivers. Today, IESI employs more than eighteen hundred people, operates a fleet of over 1,000 vehicles across nine states, and services over five hundred fifty-five thousand residential customers and fifty-five thousand commercial/industrial customers. Since its inception in March 1995, IESI has achieved a record of profitable growth and is the 81" largest and fastest growing non-hazardous solid waste company in the United States. FINANCIAL STABILITY From the start, IESI's focus has been on superior customer service and responsible management. IESI's growth has been a natural process that comes with this focus. Today IESI is the 8th largest and one of the fastest growing non-hazardous, solid waste management companies in the United States. Since 1996, its assets have grown from $1.4 million in 1995 to over $400 million in 2002. Independent audits have been performed and completed by the accounting firm of Ernst & Young, LLP. To date, IESI has raised over $240 million in private equity financing and has increased its line of credit provided by a syndicate of lenders led by Fleet National Bank, as administrative agent from $15 million in 1997 to its current credit facility of $400 million. Additionally, IESI successfully completed a High Yield Bond offering for $150 million in June of 2002. i the same focus on service and responsibility that it started with, IESI has developed the financial i,,�ources necessary to provide its clients with superior equipment and the financial s abil.ity needed for a rapidly growing company. GORDON D. (JEFF) PECKHAM Profile • 26 years experience in the solid waste industry. ■ MuIti level managerial experience including operations management,sales& marketing,acquisitions and financial management. Professional Experience 2000—Present IESI TX CORP. Fort Worth,TX Region Vice President ■ Responsibilities include 40 collection operations plus 14 landfills and 18 transfer stations in Texas,Arkansas,Louisiana, Oklahoma,and Missouri, ■ Annual Revenues of$170 million 1999 ❑COEE(JOINT VENTURE IESI CORPORATION) Atlanta, GA Region Vice President Operations • Managed Operations in Georgia and Tennessee ■ Improved profitability by 50%within one year • Acquired 3 hauling operations and 2 transfer stations 1993 - 1998 WASTE MANAGEMENT,INC. Atlanta,GA Division President 1995— 1998 • Increased annual revenues by$750,000. • Achieved 20%annual profit improvement ■ Managed largest location in Atlanta market with 200 personnel and 75 operating vehicles General Manager Atlanta,GA t 1993— 1995 ■ Managed operations and maintenance for Atlanta South Facility,within nine months assumed leadership over two additional Atlanta facilities. • Negotiated contract to provide services to Atlanta's Hartsfield International Airport,with annual revenue of$1 million. 1991-1992 ENV IROFIL,INC. Atlanta,GA Regional Vice President • Managed hauling/landfill operations. • Identified four acquisition opportunities. 1988-1991 CHAMBERS DEVELOPMENT COMPANY,INC. Atlanta,GA Regional Vice President • Managed operations and business development in nine states,covering 25 Iocations. ■ Annual revenues increased from$18 miIlion in 1988 to$90 million in 199L ■ Acquired 15 new business entities($27 million annual revenues) • Negotiated 10 year contract worth$60 million with the City of Richmond,VA 1978-1987 LAIDLAw WASTE SYSTEMS,INC. Arlington Heights, IL Regional mice President 1986-1987 • Managed operations and business development covering 14 divisions and 4 states. • Negotiated favorable tax reform with state and local government,providing savings of$400,000 annually. • Acquired three business entities,which added annual revenues of$1 million. GORDON D.(JEF'F)PECKHAM Page 2 Regional Manager(GSX Corporation) Fort Worth,TX 1984—1986 ■ Directed$65 million region with 11 divisions in five states. • Improved profitability by an average of 15%annually. REGIONAL MA NAGERIPR0.IECT MANAGER(SCA SERVICES,INC-) Fort Worth,TX 1983-1984 • Managed the turnaround of two divisions from breakeven to 20%profitability. MANAGER FINANCIAL SYSTEMS(SCA SERVICES,ma) Boston,MA 1978-1983 a Managed conversion ❑f all financial systems for 100 locations and six accounting centers to an in- house computerized operation. Education NORTHEASTERN UNIVFRSr1 V Boston,MA Accounting and Finance Major ROBERT D.KNEIS 5799 Walnut Creek Dr. Fort Worth,TX 76137 Home(817)306-4634 Mobile(817)822-9789 Profile • 12 years experience in the solid waste industry. • Multi-level managerial experience within$3 billion corporation. ■ Acquisition and municipal franchise negotiation and integration experience. Professional Experience 2000—Present IES1 TX Corporation Haltom City,TX District Manager • Responsibilities include the management of(9)collection companies,(2)landfill operations and(4)transfer station operations with annual revenues totaling$45 million. ■ Direct management of(61)municipal contracts serving a total of 77,000 residential customers. ■ Acquired and integrated 7 collection companies totaling$15.7 million in annual revenue. ■ Responsible for Landfill Compliance and Development. • Successfully awarded and renewed 9 municipal contracts. 1996—2000 Republic Services,Inc. Asheville,NC General Manager 1997—2000 • Annual revenue increased from$8 million to$18 million and profits increased from $720 thousand to$3 million. • Acquired and integrated 6 collection companies totaling$5 million in annual revenue. • Implemented an employee incentive pay system resulting in an 18%increase in productivity. Increased profit margins to 21.21/10 from 6.2%EBIT. Division Manager Charlotte,NC 1996—1997 ■ responsible for the development and integration of a new market opportunity in Charlotte,NC. • Annual revenue totaled$7 million and profit margins increased from 5%to 9% EBIT. 1992— 1006 Laidlaw Waste Systems Fort Worth,TX Operations Manager 1994— 1996 • Responsibility included daily operations of all commercial and industrial business consisting of 52 collection routes and$22 million in annual revenues. • Responsible for the implementation of 20 municipal franchises serving 14,000 commercial and industrial customers. Operations Supervisor Fort Worth,TX 1993— 1994 • Supervised and assisted daily operations in 10 municipal franchises operating in Northeast Tarrant County and serving over 320,000 people and 120,000 homes. Responsible for daily operation of 18 industrial routes totaling$6 million n annual revenue. ■ Increased productivity and customer service with the implementation of new incentive pay system for employees. Customer Service Manager Fort Worth,TX 1992— I993 ■ Development of new customer service program with integration of a new computer i system. Education 1987— 1991 University of Texas Arlington Arlington,TX BA degree in Public Administration/Political Science Industry Achievements November 2000: Outstanding Volunteer Services Award—City of Haltom City December 2002: Successfully filed and completed landfill expansion of IESI Type IV Landfill in compliance with Texas Commission of Environmental Quality(TCEQ) July 2003: Successfully awarded and purchased the City of Weatherford Type I Municipai Landfill irk t: i s4P , ' ��, Pew 6eea m ffw Wa6te Adiotuf f.ou"2U Veau. Me itcmW w a .1 tw man udA X59 and hm expexieace co a Duo", Atecheaaic, Sam Rep, Supejwi,5", (9pe4atiam .Mauaaym avid AtaUdenance AfacnxayeA.Jcuj.becanw a qenvud .Macemy"with j%9 7 in 1993 and 6," wa P.avW&adiaao ,3incce. M-io BacaMm in (t&utda, Jt F.mpP. yed ov4m 4VC peapte mm*ing em 2CO9 cwtamo o. Mii eacatimm wi&535.71CV&d in (9ktah n a%aa cP5e to ICV tr wh,5 daifil. jack hw kea with JES9 oium Pu w 20V4. jggj!x Auez - .lam identkd Sup ewig w�c luu4n Pena been m the&mmeja fm aver%32 `L za w. Me tuo experience co a Oweem, 3(4en, J'aute Quditwc, D opatcherc. .Ro6t of Pilo cmeere Peaa 6een Peando-ant f9pmdiaao Supewmion. w&&Pee otareted witft rL'audeas f Lla" Pee ba,3 6em uaM 7CS T f.aver"5 ` z . No guwi wo-b know&dge of t(w `1[laote,uaahotW io unowipwoed. 'kg Ammudez - J`?eoiden#.iae SyReMb f ae started in t6 c bwineoo co a J?eiidentiaP 17Waft and opent 9 Vzwo atUh Mote Afaaagement Prtdinq oatiow pvaitiom tPeat&wAtded `W Off DWam, L'omhou"Deauemj D4ittm, Bead J?z5id6Wd DyftwA, Lead J'?e& Off 04ftw>c. W Pai&at JES3, fiae&w Duuen eaeW type of tu" and elrr ub co a Supewom f we om Aaetann eit*and eodxe e .l`Zvu w. No cotnmUmmt to uabw added oevike io &"ecca6e. Ed Cdfnwce - eammvwiatljr&U (U Sgpelwmat Ed otaded in tPee waote idr.6tW is 1973. Bike ma.4t of om ALwagm and Sup ewfb wco fw ab a wv.oW w a J2e5 identied Aiv", eomtnvwid 1`7Wve,c, AW Off 17Wuerc and Diapatchu. Me Peace man**`Lea m of Supew-biau elxpe%kuce in Sd d `cote caffectiam co weU ao Jwttaffe .m&t Service, Sheet Sweepi g.and :13w-A edwd Sewiceo. Ae Pray been witPc JES9r f"dnwot 2 Vewo. 9 3 b a $ _ J A \ ) E J/ ƒ° � M=C ® � ■ k ad \j \) )2 %r � £a ML I - �/ \\ §ƒi 4L � }} � k k j \ / Jk ,�. § # | d @ \ k&) { W IC,11T x n . \ / � L / mo k / ¥ \ 20 C mU � & » 0 k / e / % E F e g lo o Z> E 2 / 2 \ % k � � � � \ � / � k � \ / \ CL / 4� kW \ ( / 7 \ / \ / ƒ \ \ 0R CL 0 \ & c c a 2 > ma / e = g \ \ of / 2 2 " EJ \ \ e E e I m \ 0 2 f / t I_ / / § to -r CDui \ 7 E \ § f ƒ _ U c E c \ 2 $ £ o c g g § a 5 % k � Q / � > k \E _ n $ m <D > 2 � 0 k \ m E \ m � \ E52 A £ ® E = 2 § 0 p c o a 2 R E / \ ' /CL � / � \ 0') / B 5 Q � 7 £ / \ � g � > ® / � $ $ 6 G \\ \ = � z . § 5 / � o / \ 6 � E >,\ \■ o � � c (L I � � o @ 0 / � o R m = tt � Imo & 6 U) E J � 2 / 0 f m o \ n j m ƒ / § ƒ M j \ B \ m m Q c 2 \ % \ /2 =1 � o � 0� 2 2 � Jy � zy \ \ £ k 0 Z 0 •- _ E § m > :E / c e = ,2 m c % p Co \ § \ cc \ \ « \ \ / @ % C> § 3 = 5 # e 2 t 7 \ C14 0 0 .E 2 •z � m � . 2 ƒ Q 9 ■ ® a Q 0 6 d o r r 0] M CD i13 i0l1 ,Q 05 (ll N � L o � J •C V i Y sD CO j c > 2i C •i 1yA rA �; U) 4-a a � LL w m J p V m U cn a c E =32i ELF--- m o a C ,U) o > U) © F- L Q Qa L y _ m = G U) L cq m U Ul N U) � U © C) Af I Tab II: Detailed plan of approach Per the RFP, we will handle all "Out of Cycle" and or Non Compliant piles after the first 150. We will also pick up piles over 30 Yards. Our plan includes a daily log to the City that includes the status of every work order. We will evaluate our routing daily to ensure high productivity and less windshield driving time. This log and communication would go through our Dispatcher, Supervisor and the City. Part of the daily evaluation of piles will include the determination of which scenario of trucks are needed to be most productive and reduce the amount of hourly charges to the City. We will use our Spare residential trucks each day and/or send our existing trucks out after they have run their normal routes. We will primarily use these residential trucks to pick up the "out of cycle/non-compliant" work orders. We will use one of 3 existing Boom trucks with 30yd bodies to pick up the "over 30yd piles". We may send a roll off truck with another Open top container to help with this pile depending on the size and make. We may also send a residential truck with the Boom truck. As we have already exhibited, ❑ur goal is to take care of the residents in Fort Worth with the least amount of operating costs needed. A I Tab II: Business Plan and Technical Proposal In this section we have included an Organizational Chart for our Fort North Division. This Team will be responsible for the day to day ❑perations with the City. We have also included our Service Guarantee signed by our Division Manager and our detailed plan of approach for this contract. The equipment list is included as requested and Haltom City Facility will handle this contract. It is located at 4001 Old Denton Rd, Haltom City, Tx. 76117. Our Fleet is maintained by our in-house Maintenance Department to ensure maximum productivity and secure long term life of the assets. Our Maintenance staff includes a Manager, Mechanics, Tire Repair and truck washing personnel. This staff provides both preventive and re- active services daily. They review with drivers daily and make repairs needed and keep the highest safety standards in their daily duties. All Vehicle condition reports are handled daily per DOT regulations. Any truck leakage, debris or fluids, is handled immediately. This may include a clean up by our emergency response team and/or our trained driver's involvement. The contingency plan for equipment failure and/or downtime we have, includes having an adequate number of spare vehicles and always preventing ANY SERVICE ISSUES and transparent to the residents of Fort Worth. A# I Tab II: Business Plan and Technical Proposal (cunt...) Per our Service Guarantee, we guarantee the highest service level in writing. Our Customer Service Department located in Haltom City is state of the art and includes: Networking Customer Call Center— tracking and monitoring each and every call ensuring quick response that includes auto- dial back. Tower Information Center—with complete data base and service tracking system to ensure quality control for all work orders. Our company has made Safety a high priority. 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Ax r LL LL LL 0 W0N ( Ury � a 4 WO N cqm co o u� cfl CO uj C N 00 UUUUcsU ,- U- � C 't MLo0imMr- 0M a oomccco rnrnr� rnrna� a� rnvrn ui Q� � ❑7 � � ❑7 W Q783Q] 676] Q'iN a7 LLI G Z � o h N LL 0Lu C] ` V O N ❑ 0 t U 0 a ra —=i h F LL J © U oa ❑ � ¢ L U LU >" a o Q N W a } W a `v ❑ a C ❑ d vti �i � � a�iY m v f' > h Q- Q, o L s OL O a m VV (� U snri rJn ncnriu� ri nine mollo� r r T" 0 0 � a a' Y Qmuiui mX2 v 'T 5 Zcoo � m � x70 oC, J _ p � LL N o N UJ 2 LL Lu 1 c•7 LL w � vIi0IDvoLLLOD0 A CD CD co ID ID � °D 2 pm � 000 r LLLLro V L1_ 11J x V♦ a VNV1. « -2 -EwVL -Q V0 L Up o W LL cp ❑ w (3) U'7 v 1[7 c7 o P7 Co a 0mCDm w 0mCD00 W LU CDm0C7 W MM00C3M �., NrNrr rr NN C�fr ca Z F a w ma Cs7 v w � ❑ mN 130 PUBLIC RELATIONS & CUSTOMER EDUCATION IESI will provide knowledgeable speakers to make presentations to, and attend Community Outreach Programs relative to bulky waste collection for civic and neighborhood groups. IESI will designate a spokesperson, and provide information and access to facilities for reasonable news media requests to cover bulky waste collection issues that relate to the City of Fort Worth. We always meet requests from local schools to provide demonstrations of our equipment and are always open to participate in Safety Education Programs that involve our operations in the community. These Safety programs include training K thru 3rd grade about "Stay Back from the Back" of the Garbage truck and stand clear of possible projectiles during compaction. We teach students to "Make sure we see you" and understand that just because they can see us, we may not see you. Other educational training we can provide includes "Reverse Recycling for the Future", which reverses the traditional recycling training on the items that can be recycled and focuses our youth on finding ways to make new end sources for recyclables. The best way to help the environment today is to find a way to make more items out of trash while making it the most economical choice through saving businesses and community money and generating a marketable product. Fort Worth Brush Count Sept - Oct Od Name Date Truck Number Total Time Loads City Yards CARL STALLINS 29-Sep-04 300 10.80 2 FW 200 LAWRENCE LANE 29-Sep-04 314 10.80 1 FW 100 CLAUDE BURGESS 29-Sep-04 321 10.60 1 FW 100 REFUGI❑ PEREZ 29-Sep-04 391 10.30 2 FW 200 FELIPE MALDONADO 29-Se -04 602 11.00 3 FW 90 FELIPE MALDONAD❑ 30-Sep-04 602 11.10 3 FW 90 JORGE OCHOA 30-Se -04 329 4.60 1 FW 100 RICK BARRERA 30-Sep-04 325 5.20 1 FW 100 CARLOS HEIMPEL 30-Sep-04 319 5.60 1 FW 100 Sept Total Billed $8,000.00 80.00 GERADO SEGURA 1-Oct-04 319 11.12 2 FW 200 LAWRENCE LANE 1-Oct-04 328 2.00 1 FW 100 SAUL DOMINGUEZ 1-Oct-04 322 4.04 1 FW 100 BOBBY MCNEELEY 1-Oct-04 L/A 10.48 1 FW 100 JORGE ❑CHOA 1-Oct-04 329 5.61 1 FW 100 CARLOS HEIMPEL 1-Oct-04 314 4.10 1 FW 100 CHARLES EDWARDS 1-Oct-04 325 11.42 1 FW 100 FELIPE MALDONAD❑ 1-Oct-04 602 5.90 3 FW 90 DARRYL JOHNSON 1-act-04 601 9.86 3 FW 90 LAWRENCE LANE 2-Oct-04 330 9.39 1 FW 100 BOBBY MCNEELEY 2-Oct-04 10.30 FW JORGE OCHOA 2-Oct-04 329 6.26 1 FW 100 REFUGIO PEREZ 2-Oct-04 329 9.22 1 FW 100 CARL STALLINS 2-Oct-04 300 4.10 1 FW 100 CARLOS HEIMPEL 2-Oct-04 391 10.51 1 I^W 100 CLAUDE BURGESS 2-Oct-04 314 9.54 1 FW 100 CHARLES EDWARDS 2-Oct-04 322 9.44 1 FW 100 ❑ARRYL JOHNSON 2-Oct-04 601 9.86 4 FW 120 DARRYL JOHNSON 4-Oct-04 601 10.60 2 FW 60 CHARLES EDWARDS 4-Oct-04 300 3.00 1 FW 100 DARRYL JOHNSON 5-Oct-04 601 11.12 3 FW 90 CHARLES EDWARDS 5-Oct-04 122 10.56 1 FW 100 DARRYL JOHNSON 6-Oct-04 601 10.28 2 FW 60 CLAUDE BURGESS 6-Oct-04 391 10.00 1 FW 30 SHAMARKA WALKER 6-Oct-04 314 10.02 1 FW 100 JORGE OCHOA 6-Oct-04 329 4.52 1 FW 100 REFUGIO PEREZ 6-Oct-04 322 10.40 2 FW 200 CARL STALLINS 6-Oct-04 300 10.18 1 FW 100 FELIPE MALDONADO 6-Oct-04 602 10.70 5 FW 150 GERADO SEGURA 7-Oct-04 300 10.00 1 FW 100 FELIPE MALDONADO 7-Oct-04 602 10.92 4 FW 120 CARL STALLINS 7-Oct-04 114 10.10 4 FW 120 DENNIE ORTEGA 7-Oct-04 328 5.60 1 FW 100 DARRYL JOHNSON 7-Oct-04 601 11.10 3 FW 90 JORGE OCHOA 7-Oct-04 329 6.72 1 FW 100 CARL STALLINS 8-Oct-04 114 5.58 1 FW 30 DARRYL JOHNSON 8-Oct-04 601 6.48 1 FW 30 FELIPE MALDONADO 8-Oct-04 602 7.50 1 FW 30 IGNACIO ORTIZ 8-Oct-04 328 7.56 1 FW 25 REFUGI❑ PEREZ 8-Oct-04 300 6.10 1 FW 25 GERADO SEGURA 8-Oct-04 314 5.04 1 FW 25 CLAUDE BURGESS 9-Oct-04 300 4A6 0 FW 0 REFUGI❑ PEREZ 9-Oct-04 314 4A 5 0 FW 0 DARRYL JOHNSON 9-Oct-04 601 4A6 1 FW 30 FELIPE MALDONADO 9-Oct-04 602 1.69 0 FW 0 CARL STALLINS 9-Oct-04 114 2.23 0 FW 0 REFUGIO PEREZ 11-Oct-04 300 10.41 1 FW 25 DARRYL JOHNSON 11-Oct-04 601 11.08 3 FW 90 FELIPE MALDONADO 11-Oct-04 602 8.08 FW RICK BARRERA 12-Oct-04 300 10.60 1 FW 25 DARRYL JOHNSON 12-Oct-04 601 10.90 3 FW 90 FELIPE MALDONADO 12-Oct-04 602 8.08 2 FW 60 JORGE OCHOA 13-Oct-04 391 6.20 1 FW 25 CARL STALLINS 13-Oct-04 114 10.02 2 FW 60 DARRYL JOHNSON 13-Oct-04 601 10.64 2 FW 60 LARRY SMITH 13-Oct-04 300 10.04 1 FW 25 DAVID OSBORNE 13-Oct-04 329 10.13 2 FW 50 LAWRENCE LANE 13-Oct-04 314 10.00 1 FW 25 FELIPE MALDONADO 13-Oct-04 602 FW CLAUDE BURGESS 13-Oct-04 321 5.16 0 FW 0 REFUGIO PEREZ 14-Oct-04 314 10.54 1 FW 25 CARL STALLINS 14-Oct-04 114 9.80 4 FW 120 FELIPE MALDONADO 14-Oct-04 602 10.58 3 FW 90 DENNIE ORTEGA 14-Oct-04 328 3.85 1 FW 25 JORGE ❑CHOA 14-Oct-04 329 4.58 1 FW 25 NOEL ORTEGA 15-Oct-04 314 8.17 1 FW 25 CARL STALLINS 15-Oct-04 114 8.24 2 FW 60 DAVID OSBORNE 15-Oct-04 328 9.46 1 FW 25 FELIPE MALDONADO 15-Oct-04 602 10.62 2 FW 60 REFUGIO PEREZ 15-Oct-04 300 10.80 2 FW 50 DARRYL JCHNSON 15-Oct-04 601 11.11 4 FW 120 CARL STALLINS 16-Oct-04 114 8.44 2 FW 60 LARRY SMITH 16-Oct-04 314 7.25 0 FW 0 DARRYL JOHNSON 16-Oct-04 602 10.58 2 FW 60 REFUGIO PEREZ 16-Oct-04 300 9.36 2 FW 50 CLAUDE BURGESS 16-Oct-04 321 9.32 0 FW 0 JORGE OCHOA 16-Oct-04 329 3.95 0 FW 0 CHARLES EDWARDS 16-Oct-04 322 9.46 2 FW 50 Oct Total Billed $63,607.00 636.07 Oct Projected Billed $123,238.56 0.00 2085 40 :� •� vp a 21 APO lbo +� 3 , A V mmoo • - �►r .. molo [v r aT G [,! 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Jr E 're+k4 Fa y = ._ 575 Y t l r - 21116 �, Gro ,11 553 Y i0 11 .f�5r� Ir 'r`.yT,r _�eI A I I s 1L. our "Uuitomer, Vexromme: ' T Ivaw.�-A,)et that yaa-pe c'P(ia r o�oar- service /s ek more 4 o-fast elw►t to as, 4 5 dr- Xmt, sa�est it ow- hell ens Oa,- ex�/a,*ees wi��6e tr�ai�rec caur�teoas a�rd ar��a�,yred at a��tihre,� T ~ o►ra'to aV tyyaest ek sage day, s T p oaw Iallphre rt welllWdi(t►rd wrd always 1aohy 001911d Accmw to aao- &Vowfar-s a*14fapry,24 Icaw-,v T dais a Wee, Ea'�Mwgm, - &Vevw�a- 8774,?2 987lf 67m IleeramAz- YVewwhr, 817W2--3556 6&riav- 60mz- �S'r�aer vigor 877-822 3557 da� lwrter.- igfi4ia f A&fa er 877-822-3559 ANY 1� 01Koza - 817-822 3558 sways Itaac e,roajI e fwl0#re,rt a rdpeople to ~t yacu- reeds - i►rc�a/tj Wm&rds T ,deep aeeptes, dooms and 6o-ab clear, used and secev-c, , i T hra�e sw�e tIc!tt wlce� r�oa calf oao- Castoh ce Ye,,--wee (�e�te�, the rraice o r the otlrer� e,rd o�t1 plrore �s a�was peeasa.rt aura'Ice p�u� Jay Gunter, ❑ivisia anager Rene Reagan, CusEomer ervice Supervisor Al I ESI Alternate Proposal Included is a copy of the letter sent to the City of Fort Worth by Bob Kneis our District Manager. We hope that the City will pursue this request for the interim. October 15, 2004 Mr. Brian Boerner Director of EnvirorUnental Management 1000 Throckmorton St. Fort Worth, Texas 76 102-6311 RE. Pilot Program — Non-Compliance Brush and Bulk Waste Dear Mr. Boerner, On behalf of IESI we appreciate the opportunity to assist the City of Fort Worth with the bulky waste program during your transition period. We have a sound understanding of the obstacles which are ahead in converting to the new proposed program. In addition, we have an outstanding group of residential employees which have been highly tested 11 over the past six months in completing several storm clean-ups which occurred earlier this year. IESI Corporation has the strong desire to assist the City of Fort Worth in solving the issue currently with brush and bulky waste collection and recommends additional time to evaluate the non-compliant collections. We would like to take this opportunity to propose a continuation of the IESI contract to collect non-compliant brush and bulky waste under a pilot program status. Our opinion is a pilot term through June 2005 would accommodate both low and high volume periods. In addition, it is of our opinion additional time would benefit the City of Fort Worth to fully evaluate the transition into the new program without the commitment of a second long term contract. In addition to providing this service, IESI will provide industry experience and evaluation in assisting the City of Fort Worth and Waste Management in determining a long-term solution_ IESI, headquartered in Fort Worth, is the fastest growing industry company in the United States and desires to partner with tile City of Fort Worth in solving this debated issue. Our experience in this area will greatly benefit the residents of this community and the stability of your long term contract with Waste Management. In closing. IESI is also successfully lU1I1111110 tile L'\istlrl ? C011tr"aCt lal" 17roCL'55111 tills Nvaste stream £it the IESI 4001 Q€d Denton Road 817-�28-2r'_21 Haltom City.7flas 7617 FAY s317-822-95[38 Printed wi Recycled Phpo Fort Wor€h C&❑ Landfill which compliments the need to continue a strong diversion effort. Sincerely, Bob Kneis District Manager IESI Tat Corporation Cc: Charles Boswell, City Manager Mickey Flood, President and CEO, IESI Corporation l its TAB III---EXCEPTIONS TO THE TERMS AND CONDITIONS OF CONTRACT IESI HAS NO EXCEPTIONS TO THE TERMS AND CONDITIONS OF THE CONTRACT. IAL CITY OF HALTO CITY July 1, 2002 SUBJECT: Letter of Recommendation Regarding the Services of I.E.S.I. The Honorable Mayor and Council City of Fort Worth 1000 Throckmorton Street Fort Worth, Texas 76102 Dear Mayor and Council, It is without reservation that I highly recommend the services ofl.E.S.I. to any community who would be considering them as a refuse and recycling hauler. I have been closely associated with their firm as Finance Director since October 1996. I.E.S.I. has performed all of their contractual obligations in a superlative manner and has consistently demonstrated the willingness to go the "extra mile" to ensure customer satisfaction. They are quick to respond to customer service issues and have maintained a strong working relationship with City stafl'that has proven very effective and useful in the course ofday-to-day business. During my ten month tenure as Interim City Manager in 2001,I.E.S.I.was a good faith negotiator when their contract was up for renewal and at this time they exhibited a strong desire to work out a deal that would be in the best interests of both parties and yet offer the lowest competitive rates possible. Several years ago,when a regional transfer station was staff being considered for construction in Haltom City,the senior staofl.E.S.I. worked tirelessly with city stairand residents to overcome difficult environmental and aesthetic concerns. This resulted in a very clean and positive addition to the community. I.E.S.I. has also consistently partnered with the City on numerous occasions by providing assistance with volunteer clean-up efforts and other civic minded projects. Best regards, Patrick J. Mink Finance Director City of Haltom City 5024 Broadway Avenue, R0. Box 14246, Haltom City, Texas 76117(peifrink[a@baltomcitytx.com) 817-222-7700 Metro 817-429-0702 FAX 817-834-7237 t Senator Craig Estes The Senate of the State of Texas 4245 Kemp, ,Suite 306, Wichita Falls, TX 76308 (940) 763-7415 January 7, 2002 Mr. Jerry Allred- MS.W Permits Section (MC 124) Texas Natural Resource Conservation Commission P.Q. Box 13087 Austin, TX 78711-3057 Re: ZEST Bowie Transfer Station Registration No. MSW-40171 Bowie, Montague County, Texas Dear Mr. Allred: I understand that the City ofBowie has been woarking,with IESI to provide Bowies residents and businesses with an enviromnentally safe and disposal system.-There were limited disposal options availableprior to���waste of IESI's new transfer station in Bowie_ Demand for the new transfer station has sung ss expectations, and it is necessary for IESI to further xPa ssed expand its operations_ IESI's representatives have informed me oftheir intention to request a modification Registration No,. MSW 40171 to delay closure of its original compactor_ A to modification request will allow IESI to tern original c0 l of the pora�]'continue using the original com in the company's operations while Providing Bowie'S residents and businesses with Pactor expanded access to-the new transfer station. I understand that IESI will also be submitting a permit application to the TNRCC to meet the community's long-terra solid waste processing needs. in order My understanding of this issue suggests that the City of Bowie will beYneftt from the TNRCC granting IESI's modification.request which will improve solid waste handling capabilities and promote a cleaner community_ cerely, ig Estes fu: 1lLR� ICSG . of WesiworthVfflage 1.tel: •I' 311 Burson Mill Road 317) 738-3673 Fors Womb, Texas 76114 (817) 738-3673 May 16, 2000 TQ WHOM IT MAY CONCERN: It is with great pleasure that I write this letter concerning the service our city has received from INDEPENDENT ENVIRONMENTAL SERVICE, INC. Our city started a contract with them an September, 1999. They have always- maintained their schedule of twice weekly service, including small brush bundles, bulky items and recycle service on the 2nd pick up day. Customers have complimented the courteous manner of their employees, on many occasions to me, when they come in to pay their utility bills. When I have called their office, my calls are answered promptly, and the reason for the call handled on a timely basis. Special attention is given to the citizens in our community that are handicapped. If Ir can be of any further service, please contact me. Nancy Tsivis Utility Dept. MUNICIPAL The following are Municipalities that are contracted with IESI for solid waste collection and disposal services. Please contact any of these Municipalities for service references. ARKANSAS MUNICIPALITIES: City of Ash Flat City of Briarcliff City of Bull Shoals P.D. Box 280 945 Scenic Drive P.Q. Box 390 Ash Flat,AR 72513 Briarcliff,AR 72653 Bull Shoals,AR 72619 Contact. Charlotte Goodwin Contact: Dave Schumm Contact: Margaret Hall Mayor Mayor 870-9944-7324 870-491-5126 870-445-4775 #Homes Aprox. Pop. 977 #Homes 104 Aprox. Pop.240 #Homes 790 Aprox. Pop.2000 City of Cabot City of Calico Rock City of Cherokee Village P.O. Box 1287 PO Box 370 P.D. Box 129 Cabot,AR 72023 Calico Rock,AR 72519 Cherokee Village,AR 72529 Contact: Mr.Towe Contact: Ronald Guthrie Contact: Ray Maynard Operations Mayor 501-843-3566 870-297-3772 870-257-5522 #Homes 5,800 Aprox. Pop.8,319 #Homes 640 Aprox. Pop. 1728 #Homes 1,800 Aprox. Pop.4648 City of Cotter City of Franklin City of Garner P.O. Box 9 P.O. Box 76 208 S. Main Cotter,AR 72626 Franklin,AR 72536 Garner,AR 72052 Contact: Bill Jennings Contact: Darlene Folyer Contact: Mrs.Willie Smith Mayor Mayor 870-435-6325 870-322-7245 501-726-3393 #Homes 349 Aprox. Pop. 921 #Homes 102 Aprox. Pop. #Homes 40 Aprox. Pop. City of Hardy City of Horseshoe Bend City of Imboden PO Box 5 704 W. Commerce PO Box 487 Hardy,AR 72542 Horseshoe Bend,AR 72512 Imboden,AR 72431 Contact: Louie Siebert Contact: Bob Spears Contact: Gene Dearen Mayor Mayor Mayor 870-856-3811 870-670-4554 870-869-2996 #Homes 315 Aprox. Pop.879 #Homes 1093 Aprox. Pop.2896 #Homes 252 Aprox. Pop.79 1 City of Mammoth Spring City of Norfork City of Oxford PO Box 185 RO{ Bo 239 PO Box 40 Mammoth Spring,AR 72564 Norfolk,AR 72658 Oxford,AR 72565 Contact:Jean Pace Contact: Jean Therrien Contact: Larry Thomas Mayor Mayor Mayor 870-625-3518 870-499-5225 870-258-3174 #Homes 568 Aprox. Pop. 1534 #Homes 200 Aprox. Pop.484 #Homes 320 Aprox. Pop.791 City of Pangburn City of Ravenden City of Summit P.O. Box 1287 P.O. Box 97 P.O. Box 365 Pangburn,Aft 72121 Ravenden,AR 72459 Summit,AR 72677 Contact: Mr.Wood Contact: Larry Gibbons Contact: Edith Johnson Mayor Mayor 501-728-4611 870-869-2730 870-449-4332 #Homes 251 Aprox. Pop. #Homes 240 Aprox. Pop. 511 #Homes 260 Aprox.Pop. LOUISIANA MUNICIPALITIES: City of Alexandria Avoyeiles Parish Caddo Parish Commission P.O. 71 312 N. Main Street Caddo Parish Courthouse Alexandria, LA 71309-0071 Mansura, LA 71350 501 Texas Street,41h Floor Contact: Harold Chambers Contact: Kirby Roy Ili Shreveport,LA 71101-5409 Jr. Chief of Staff President 318-449-5000 318-253-9208 #Homes 17,000 Approx.Pop.49,000 #Homes 16000 Aprox. Pop.35,916 Town of Cheneyville Town of Coushatta England Authority PO Box 322 PO Box 531 1611 Arnold Drive Cheneyville, LA 71325 Coushatta,LA 71019-0531 Alexandria, LA 71311 Contact: Coral A.Johnson Contact:Archie Worsham Contact: Kate Wells Mayor Mayor Senior Accounting Technician 318-279-2166 318-932-4312 318-449-3504 #Homes 160 Aprox. Pop.913 #Homes 800 Aprox. Pop.2,289 #Homes 158 2 Town of Forest Hill Town of Glenmora City of Jonesboro PO Box 309 PO Box 265 PO Box 610 Forest Hill, LA 71430 Glenmora, LA 71433 Jonesboro, LA 71251 Contact: Marsha Young Contact: Tyrone Doyle Contact: Ira Reeves Mayor Mayor Mayor 318-748-6300 318-748-4885 318-259-2385 #Homes 229 Aprox. Pop.456 #Homes 597 Aprox. Pop. 1,558 #Homes 1859 Aprox. Pop. 5019 Town of Lecompte Village of McNary Town of Many PO Box 649 PO Box 1197 PO Box 1330 Lecompte, LA 71346 Glenmora, LA 71433 Many, LA 71449 Contact: Rosa Jones Contact: Q.A. Clark Contact: Kenneth A. Freeman Mayor Mayor Mayor 318-776-5488 318-748-8264 318-256-3651 #Homes 325 Aprox. Pop. 1,366 #Homes 55 Aprox. Pop. 211 #Homes 1345 Aprox. Pop. 3631 City of Natchitoches Natchitoches Parish Red River Parish 700 2"d Street 200 Church Street PO Box Drawer 709 Natchitoches, LA 71457 Natchitoches, LA 71457 Coushatta, LA 71019 Contact:Wayne McCullen Contact: John Salter Contact:Jessie J. Davis Mayor President President 381-352-2772 318-352-2714 318-932-5719 #Homes 5665 Aprox. Pop. 18,337 #Homes 2640 Aprox. Pop.6863 Sabine Parish Policy Jury Vernon Parish Winn Parish Police Jury 400 Courthouse Street PO Box 1548 Court Street Many, LA 71449 Leesville, LA 71446 Winnfield, LA 71483 Contact:Jerry McDonald Contact:Grady Stephens Contact: Lamar Tarver President Parish Manager Mayor 318-256-5637 337-238-0234 318-628-5824 #Homes #Homes 15,504 #Homes 4702 Aprox.Pop. 12,694 City of Winnfield Town of Woodworth City of Zwolle PO Box 509 PO Box 228 952 S. Main Street Winnfield, LA Woodworth, LA 71485 Zwolle, LA 71486 Contact: Deno Thornton Contact: David Butler Contact: Roger Lopez Mayor Mayor Mayor 318-628-3939 318-442-1198 318-645-6141 #Homes 2186 Aprox. Pop. 5742 #Homes 431 Aprox. Pop. 1,335 #Homes 825 Aprox. Pop. 1,900 3 MISSOURI MUNICIPALITIES: City of Koshkonong City of Manchester City of Oakland PO Box 368 14318 Manchester Road PO Box 220551 Koshkonong, MO 65692 Manchester, MO 63011 St. Louis, MO 63122 Contact: Doyle Langley Contact: Ed Blattner Contact: Paul Marti Mayor Public Works Director Mayor 417-867-3260 636-227-1385 314-416-0026 #Homes 81 Aprox. Pop.300 #Homes 6,105 Aprox. Pop. 15,000 #Homes 500 Aprox. Pop. 1,593 City of Thayer PO Box 76 Thayer, MO 65791 Contact: Noval Willbanks Mayor 417-264-3921 #Homes 890 Aprox. Pop.2403 OKLAHOMA MUNICIPALITIES: City of Alex City of Aline City of Anadarko PO Box 27 PO Box 199 PO Box 647 Alex,OK 73002-0027 Aline, OK 73716 Anadarko,OK 73005 Contact: Glenda Ward Contact:Jean Fanery Contact: Beverly Willhoite City Clerk City Clerk-Treasurer Mayor 405-785-2393 580-463-2612 405-247-2481 #Homes 254 Aprox.Pop. 635 #Homes 101 Aprox. Pap.214 #Homes 2387 Aprox. Pap.6645 City of Asher City of Binger City of Blair PO Box 308 PO Box 481 PO Box 458 Asher,OK 74826 Binger,OK 73009 Blair, ❑K 73526 Contact: Sheila Blythe Contact: Paula James Contact: Ms. Kerri Orick City Clerk-Treasurer City Clerk-Treasurer r City Administrator 405-784-2242 405-656-2426 580-563-2406 #Homes 164 Aprox. Pop.419 #Homes 281 Aprox. Pop.708 #Homes 361 Aprox. Pop.894 4 City of Boley City of Bradley City of Bristow PO Box 158 PC Box 54 110 W 7th Street Boley,OK 74829 Bradley, OK 73011 Bristow,OK 74010 Contact: Frances Fisher Contact: Charlene Brown Contact.Judy Elias City Garbage Clerk City Clerk Mayor 918-667-9790 405-462-7559 918-367-2237 #Homes 136 Aprox. Pop. 1126 #Homes 67 Aprox. Pop. 182 #Homes 1793 Aprox. Pop. 4325 City of Burns Flat City of Byars City of Calumet PO Box 410 PO Box 251 PO Box 190 Burns Flat,OK 73624 Byars,OK 74831 Calumet, ❑K 73014 Contact: Billy Yarbrough Contact: Shara Rogers Contact: Arnelda J. Hall Town Administrator City Clerk City Clerk 580-562-3144 405-783-7255 405-893-2323 #Homes 622 Aprox. Pop. 1782 #Homes 105 Aprox. Pop.280 #Homes 181 Aprox. Pop.353 City of Canute City of Carnegie Town of Chattanooga PO Box 220 11 E. Main P.O. Box 165 Canute,OK 73626 Carnegie, OK 73015 Chattanooga, OK 73528 Contact: Mary Beth Thomas Contact: Kenny Bailey Contact: Gerald Gravlee City Clerk-Treasurer Sewer Supt./Rolloff Only Mayor 580-472-3111 580-654-1004 580-597-3390 #Homes 214 Aprox. Pop. 524 #Homes 636 Aprox. Pop. 1637 #Homes 170 Approx. Pop.432 City of Corn City of Cornish Town of Davidson PO Box 482 P.O. Box 333 PO Box 355 Corn, OK 73024 Cornish,OK 73456 Davidson,OK 73530 Contact: Perry Regier Contact:Jack Ferguson Contact: Carrie Sparks City Cleric-Treasurer Mayor City Secretary 580-662-2428 580-662-2745 580-568-2600 #Homes 198 Aprox.Pop.591 #Homes 66 Approx. Pop. 172 #Homes 193 Aprox. Pop.470 City of Depew City of Duke City of Eakly 407 E. Main Hwy 62 311 W. Main Street Depew, ❑K 74028 Duke, OK 73532 Eakly, OK 73033 Contact:Jeani Fisher Contact: Kathy Contact: Lisa Root City Clerk-Treasurer City Clerk City Clerk-Treasurer 918-324-5251 580-679-3831 405-797-3252 #Homes 213 Aprox. Pop.564 #Homes 120 aprox. Pop. 360 #Homes 112 Aprox. Pop.276 5 City of El Reno City of Eldorado City of Forest Park PO Drawer 700 PO Box 190 4203 N. Coltrane Rd. E1 Reno,OK Eldorado,OK 73537 Forest Park,OK 73132 Contact: Doug Henley Contact: Ronda Stevens Contact:Jeff Tucker City Manager City Clerk-Treasurer Acting City Manager 405-262-4070 580-633-2245 405-424-1212 #Homes 5727 Aprox. Pop. 16212 #Homes 234 Aprox. Pop.527 #Homes 480 Aprox. Pop. 1,066 City of Frederick City of Ft. Cobb City of Geronimo 200 W.Grand St. 201 E. Main 100 W. Main Frederick, OK 73542 Ft. Cobb,OK 73038 Geronimo, OK 73543 Contact: Chris L. Marcom Contact: Patricia Kusel Contact:Steve Mallow Mayor City Clerk Mayor 580-335-7551 405-643-2682 580-353-5511 #Homes 1,797 Approx. Pop.4,637 #Homes 270 Aprox. Pop.667 #Homes 344 Approx. Pop. 959 City of Gotebo City of Granite City of Headrick PO Box 84 420 N. Main Street PO Box 153 Gotebo,OK 73041 Granite, OK 73547 Headrick,OK 73549 Contact: Linda Cardenas Contact: Mike Nunneley Contact:Jerry Simmons City Clerkr City Manager City Manager 580-538-5351 580-535-2116 580-738-5703 #Homes 120 Aprox. Pop. 272 #Homes 443 Aprox. Pop. 1844 #Homes 49 Aprox. Pop. 130 City of Healdton City of Hinton City of Hobart P.O. Box 296 PO Box 159 113 E.3`d Street Healdton, OK 73438 Hinton,OK 73047 Hobart, OK 73651 Contact:Tom McNeil Contact: Paula Gabehart Contact:Wilt Brown Mayor City Treasurer City Manager 580-229-1283 405-542-3253 580-726-3100 #Homes 1,032 Approx. Pop.2,786 #Homes 575 Aprox. Pop.2175 #Homes 1584 Aprox.Pop.3997 City of Hoffman City of Hollister City of Hydro RR 3 Sox 930 PO Box 222 105 W 51h Street Hoffman,OK 73651 Hollister,OK 73551 Hydro, OK 73048 Contact: Mr.CM Burney Contact:Carolyn McAlexander Contact: Dennison Duke Mayor Mayor Mayor 918-652-8431 580-335-7643 405-663-2531 #Homes 58 Aprox. Pop. 148 #Homes 25 Approx.Pop.60 #Homes 413 Aprox. Pop. 1060 6 City of Kiefer City of Lexington City of Lone Wolf PO Box 369 111 E. Broadway PO Box 38 Kiefer, ❑K 74041 Lexington,OK 73051 Lone Wolf,OK 73655 Contact: Rita Stover Contact: Lisa Hadley Contact: Margaret Horton City Administrator City Clerk Court Clerk 918-321-5925 405-527-6123 580-846-9078 #Homes 373 Aprox. Pop. 1026 #Homes 761 Aprox. Pop.2086 #Homes 222 Aprox. Pop. 500 City of Mangum City of Manitou City of Martha 201 N. Oklahoma PO Box 40 PO Box 100 Mangum,OK 73554 Manitou, OK 73555 Martha, OK 73556 Contact: Robert Zinn Contact: James Hoover Contact: Jim Woodard Mayor Mayor Mayor 580-782-2256 580-397-2006 580-266-3300 #Homes 1550 Aprox. Pop.2924 #Homes 84 Aprox.Pop.278 #Homes 82 Aprox. Pop.205 City of Minco City of Mountain Park City of Mountain View PO Box 512 208 W.Spruce 321 Main Street Minco, OK 73059 Mountain Park,OK 73559 Mountain View, OK 73062 Contact: Linda Wilburn Contact:Adam Ney Contact:JoAnn Thompson City Clerk/Treasurer Mayor City Clerk-Treasurerr 405-352-4274 580-569-4234 580-347-2711 #Homes 658 Aprox. Pop. 1672 #Homes 134 Aprox. Pop.473 #Homes 381 Aprox. Pop.880 City of Mustang City of Okarche City of Olustee 224 W.Highway 152 102 E.Oklahoma 105 E.4ih Street Mustang, OK 73064 Okarche, ❑K 73762 Olustee,OK 73560 Contact: David Cockrell Contact: Elise Turner Contact: B. Yvonne Bullard City Manager City Clerk City Clerk-Treasurer 405-376-4521 405-263-7290 580-648-2288 #Homes 5,400 Aprox.Pop. 15,700 #Homes 454 Aprox. Pop. 1160 #Homes 250 Aprox. Pop.680 City of Paden City of Piedmont City of Purcell 724 Main Street 314 Edmond Street 230 W. Main Street Paden,OK 74860 Piedmont,OK 73078 Purcell, OK 73080 Contact: Laura Raines Contact: Michael Vaught Contact: Rhonda❑ennie City Clerk City Clerk-Treasurer City Clerk-Treasurer 405-932-4441 405-373-2000 405-527-6561 #Homes 184 Aprox. Pop.400 #Homes 1226 Aprox. Pop.3650 #Homes 2120 Aprox. Pop.5571 7 City of Ringling City of Rocky City of Roosevelt P.O. Box 565 PO Box 287 525 S. Main Street Ringling, OK 73456 Rocky,OK 73661 Roosevelt, ❑K 73564 Contact: Denise Drake Contact: Neva Tittle Contact: Elizabeth Block Mayor City Clerk-Treasurer City Clerk 580-662-2264 580-666-2471 580-639-2681 #Homes 469 Approx. Pop. 1,135 #Homes 77 Aprox. Pap. 174 #Homes 133 Aprox. Pop.280 City of Ryan City of Sentinel City of Snyder 314 Washington 328 E. Main Street 721 E Street Ryan, OK 73565 Sentinel,OK 73664 Snyder, ❑K 73566 Contact: Bennie Patrick Contact: Catrina Smith Contact: Faye Patrick Mayor City Clerk-Treasurer City Clerk-Treasurer 580-757-2277 580-393-2171 580-569-2119 #Homes 358 Approx. Pop.894 #Homes 346 Aprox. Pop.859 #Homes 607 Aprox.Pop. 1509 City of Stroud City of Terral City of Thomas 220 W.2nd Street PO Box 399 122 W.Broadway Stroud,OK 74079 Terral, OK 73569 Thomas,OK 73669 Contact:Gayle Thornton Contact: Shirley Gambill Contact:Tonya Carter City Administrator City Secretary City Clerk 918-968-2890 580-437-2337 580-661-3687 #Homes 1139 Aprox. Pop.2758 #Homes 194 Aprox. Pop. 531 #Homes 486 Aprox. Pop. 1238 City of Tipton City of Verden City of Walters 200 S. Broadway 101 Morris Avenuen P.O. Box 485 Tipton,OK 73570 Verden,OK 73092 Walters,OK 73572 Contact: Diana Rogers Contact:Tracey Wooten Contact: Dr. Floyd J. Lashley City Clerk City Clerk Mayor 580-667-5211 405.453-7235 580-875-3337 #Homes 396 Aprox. Pop 916 #Homes 246 Aprox. Pop.659 #Homes 1,063 Approx.Pap.2,657 City of Wanette City of Washington City of Waurika PO Box 142 PO Box 127 122 S. Main Wanette,OK 74878 Washington, OK 73093 Waurika,OK 73573 Contact: Ms. Billie Compton Contact: Peggy Graham Contact: Dana Eck City Clerk-Treasurer City Clerk-Treasurer Mayor 405-383-2246 405-288-2578 580-228-2713 #Homes 147 Aprox. Pop.402 #Homes 186 Aprox. Pop. 520 #Homes 741 Approx.Pop. 1,988 8 City of Wayne City of Willow PO Box 160 Pa Box 55 Wayne, ❑K 73095 Willow,OK 73673 Contact: Leona Davenport Contact: Estell Elemons Mayor Mayor 405-449-3451 580-287-3398 #Homes 262 Aprox. Pop.714 #Homes 90 Aprox. Pop. 145 9 TEXAS MUNICIPALITIES: City of Alvin City of Alvord City of Angleton 216 W. Sealy Street P.O. Box 63 121 South Velasco Alvin,TX 77511 Alvord,TX 76225 Angleton,TX 77515 Contact: Paul Horn Contact: Ricky Tow Contact: Michael Stoldt City Manager City Administrator City Manager 281-388-4200 940-427-5916 979-849-4364 #Homes 4790 Aprox. Pop.21,413 #Homes 365 Approx. Pop. 1,007 #Homes 5,628 Aprox. Pop. 15,028 City of Annetta North City of Archer City City of Arcola PO Box 1238 PO Box 367 13222 Hwy 6 Aledo,TX 76008 Archer City,TX 76351 Arcola,TX 77583 Contact: Daniel Glen Wilkerson Contact: Buster Boren Contact: Roy Jackson Mayor City Manager Mayor 817-441-6635 940-574-4 570 281-431-0606 #Homes 269 Aprox. Pop.400 #Homes 765 Aprox.Pop.2049 #Homes 300 Aprox. Pop. 1,048 City of Austin City of Bardwell City of Bartonville PO Box 1088 P.O. Box 271 1941 East Jeter Road Austin,TX 78767-1088 Bardwell,TX 75101 Bartonville,TX 76226 Contact: Samuel Harris Contact:P.W.Gentry Contact: Stacy Nicholas City Manager Mayor City Secretary 512-499-2000 972-646-5332 940-430-4052 #Homes 2412 Aprox.Pop.6271 #Homes 145 Approx. Pop.583 #Homes 25 Aprox. Pop. 1250 City of Bevil Oaks City of Blanco City of Blooming Grove 7390 Sweetgum Road PO Box 750 P.O. Box 237 Beaumont,TX 77713 Blanco,TX 78606-0750 Blooming Grove,TX 76626-0237 Contact: Erin Galloway Contact: Becky Mowery Contact: Ralph Dozier Mayor City Secretary Mayor 409-753-1475 940-648-2541 903-695-2711 #Homes 405 Aprox. Pop. 1,500 #Homes 523 Aprox. Pop. 1296 #Homes 300 Approx. Pop. 870 10 City of Bowie City of Boyd City of Brazoria 304 Lindsey PO Box 216 201 S. Main Bowie,TX 76230 Boyd,TX 76023-0216 Brazoria,TX 77422 Contact:James Cantwell Contact:Allen Dickey Contact:Thomas Smyser City Manager Mayor City Manager 940-872-1114 940-433-5166 979-798-2489 #Homes 2140 Aprox. Pop. 5219 #Homes 386 Aprox. Pop. 1099 #Homes 1275 Aprox. Pap.3426 City of Bremond City of Bridgeport City of Bruceville-Eddy PO Box E 812 Halsell 143A Wilcox Drive Bremond,TX 76629 Bridgeport,TX 76426 Eddy,TX 76524 Contact: Dorothy Boudreaux Contact:Joe Jackson Contact: Jana Garner Council Member Director of City Services City Manager 254-746-7730 940-683-5935 254-859-5964 #Homes 425 Aprox. Pop. 1105 #Homes 1410 Aprox. Pop. 5095 #Homes 478 Aprox. Pap. 1,490 City of Bryson City of Buckholts City of Bulverde PO Box 219 PO Box 117 30070 Highway 281 N.#236 Bryson,TX 76427-0219 Buckholts,TX 7651 8-01 1 7 Bulverde,TX 78163 Contact: Kenneth Boland Contact: Lisa Wilkins Contact:Beverly Lemun Mayor City Secretary Mayor 940-392-2241 254-593-3101 830-438-3612 #Homes 201 Aprox. Pop.5042 #Homes 150 Aprox. Pop. 353 #Homes 1,250 Aprox. Pop. 1210 City of Burkburnett Town of Byers City of Cedar Park 501 Sheppard CIO US Post Office 600 N. Bell Blvd. Burkburnett,TX 76354 Byers,TX 76357 Cedar Park,TX 78613 Contact: Lee Potts Contact: W.A. Lundrum Contact: Bob Young Mayor Pro Tern Mayor Mayor 940-569-2263 940-529-6149 512-258-4121 #Homes 3915 Aprox.Pop. 10,927 #homes 232 Aprox. Pop. 764 #Homes 11,500 Aprox, Pop.32,234 City of Chico City of China Town of Chillicothe 113 W. Decatur Street 425 Broadway PO Box 546 Chico,TX 76431 China,TX 77613 Chillicothe,TX 79225 Contact:Anita Long Contact: Herman Edwards Contact:Wallace Clay City Secretary Mayor Mayor 940-644-2435 409-752-5403 940-852-5211 #Homes Approx. Pop.947 #Homes 400 Aprox. Pop. 1,302 #Homes 407 Aprox. Pop. 1110 11 City of Clark City of Clear Lake Shores City of Colleyville 10109 Clark Airfield Road 1006 South Shore Dr. 100 Main Street Clark,TX 76247 Clear Lake Shares,TX 77565 Colleyville,TX 76034 Contact: L.E. Clark Contact: Katherine S. McIntyre Contact: Bill Lindley Mayor Mayor City Manager 940-648-2264 281-334-2799 817-577-7575 #Homes 13 Aprox. Pop. 345 #Homes 378 Aprox. Pop. 1,290 #Homes 6,925 Aprox. Pop.20,500 City of Collinsville City of The Colony City of Crandall P.O. Box 649 5151 North Colony Boulevard 110 S. Main Street Collinsville,TX 76233 The Colony,TX 75056 Crandall,TX 75114 Contact: Francis Pitcher Contact: Lanny Lambert Contact:Vicki High City Secretary City Manager Mayor 903-429-6225 972-625-2743 972-427-3771 #Homes: 714 Approx. Pap. 1,235 #Homes 10298 Aprox.Pop.35,050#Homes 1004 Aprox. Pop.3,250 City of Cresson City of Crossroads City of Crowell PO Box 619 1401 FM 424 PO Box 250 Cresson,T)(76035 Crossroads,TX 76227 Crowell,TX 76304 Contact:J*hn Carroll Contact: Hary Kitchens Contact: Tiffni Hererra Mayor Mayor City Secretary 817-396-4"f29 940-365-9693 940-684-1722 #Homes 200 Aprox. Pop. 2,000 #Homes 158 Aprox. Pop 603 #Homes 415 Aprox. Pop. 1126 City of Crowley City of Decatur City of Decordova PO Drawer 747 PO Box 1299 4612 Cimarron Trl Crowley,TX 76036-0747 Decatur,TX 76234 Granbury,TX 76049 Contact: Billy Davis Contact:Joe Lambert Contact Dick Pruitt Mayor Mayor Mayor 817-297-2201 940-627-2741 817-910-2553 #Homes 2750 Aprox. Pop.8,850 #Homes 1621 Aprox.Pop. 5284 #Homes 900 Aprox. Pop. 2,093 City of Dublin City of Eastland City of Electra 213 E. Blackjack St. 113 E. Commerce 101 N. Main Dublin,TX 76446 Eastland,TX 76448 Electra,TX 76360 Contact: Brian Boudreaux Contact:Jerry Mathews Contact' Ron Pittman City Manager Mayor Mayor 254-445-3334 254-629-8321 940-495-2146 #Homes 1250 Aprox. Pop.3,950 #Homes 1,385 Aprox. Pop.3690 #Homes 1150 Aprox. Pop.3165 12 City of Eustace City of Evant City of Falls City P.O. Box 579 PO Box 10 208 N. Irvin Street Eustace,TX 75124-0579 Evant,TX 76525 Falls City,TX 78113 Contact: Dru Haynes Contact:Alma Green Contact:Vi Malone City Secretary Mayor Mayor 903-425-4702 254-471-3135 830-254-3242 #Homes 304 Approx. Pop.798 #Homes 200 Aprox. Pap.475 #Homes 288 Aprox. Pop. 536 City of Farmersville City of Fate City of Forest Hill 205 S. Main Street 105 E. Fate Main Place 6800 Forest Hill Drive Farmersville,TX 75442 Fate,TX 75132 Fort Worth,TX 76140 Contact: George Crump Contact: Gary Boren Contact: David Vestal Mayor City Manager City Manager 972-782-6151 972-771-4601 817-568-3000 #Homes 1122 Aprox. Pop.3200 #Homes 398 Aprox. Pop. 1360 #Homes 3,951 Aprox. Pop. 11,700 City of Forney City of Freeport City of Friendswood PO Box 826 200 W.2"d St. 910 S. Friendswood Drive Forney,TX 75126-0826 Freeport,TX 77541 Friendswood,TX 77546 Contact:Jim McConnell Contact: Ron Bottoms Contact: Roger Roecker City Manager City Manager Director of Administrative Services 972-552-1028 979-233-3526 281-996-3211 #Homes 2175 Aprox. Pop.7400 Commercial Only #Homes 9,900 Aprox. Pop.33,009 City of Frisco City of Frost City of Galveston 6891 Main Street P.O. Drawer X 823 Rosenberg Frisco,TX 75034 Frost,TX 76641-0923 Galveston,TX 77550 Contact:Jason Gray Contact: Kenneth Reed Contact: Steven James LeBlanc Assistant City Manager Mayor City Manager 972-335-5551 903-682-3861 409-797-3500 Commercial Only #Homes 200 Aprox. Pop.648 Commercial Only City of Glen Rose City of Gordon City of Graford 201 NE Vernon PO Box 227 PO Box 97 Glen Rose,TX 76043 Gordon,TX 76453-0227 Graford,TX 76449 Contact: Peggy Busch Contact: Barbara Epperson Contact:Carl Walston City Secretary City Secretary Mayor 254-897-2272 254-693-5676 940-664-2125 #Homes 782 Aprox. Pop.2,395 #Homes 234 Aprox. Pop.631 #Homes 170 Aprox. Pop.610 13 City of Graham City of Granbury City of Greenville PO Box 1449 PO Box 969 PO Box 1049 Graham,TX 76450 Granbury,TX 76048 Greenville,TX 75403-1049 Contact: Larry Fields Contact: Harold Sandel Contact: Karen Daly City Manager City Manager City Manager 940-549-3324 817-573-1114 903-457-3121 #Homes 3242 Aprox. Pop.8,986 #Homes 1825 Aprox. Pop. 6050 #Homes 7233 Aprox. Pop. 25,250 City of Hackberry City of Haltom City City of Hearne 119 Maxwell Road PO Box 14246 210 Cedar Street Hackberry,TX 75034 Haltom City,TX 76117 Hearne,TX 77859 Contact:Jerry Davis Contact: Tom Muir Contact: Michael Washington Mayor Interim City Manager Council member 972-292-3223 817-222-7700 409-279-3461 #Homes 153 Aprox. Pop. 500 #Homes 10,887 Aprox. Pop.39,400#Homes 1661 Aprox. Pop.4690 City of Henderson City of Henrietta City of Hico 400 W. Main Street PO Box 409 PO Box 533 Henderson,TX 75652 Henrietta,TX 76365 Hico,TX 76457 Contact: Gregory Smith Contact: Carol Loucks Contact: Stan Bundy City Manager City Secretary Mayor 903-657-6551 940-538-4316 254-796-4620 #Homes 3926 Aprox. Pop. 11,280 #Homes 1350 Approx. Pop. 3264 #Homes Aprox. Pop. 1,341 City of Hillcrest Village City of Holiday Lakes City of Holliday PO Box 1172 195 N.Texas Ave PO Box 508 Alvin, TX 77512-1172 Angleton,TX 77515 Holliday,TX 76366 Contact: Johnny Villareal Contact: Darlene Lassiter Contact:Gary Bernal Mayor City Secretary Mayor Pro Tom 281-585-3499 979-849-1136 940-586-1313 #Homes 265 Aprox. Pop.671 #Homes 313 Aprox. Pop. 1244 #Homes 620 Aprox. Pop. 1604 City of Howe City of Iowa Park City of Jamaica Beach PO Box 518 PO Box 190 PO Box 5264 Howe,TX 75459 Iowa Park,TX 76367 Galveston,TX 77554-5264 Contact: Diane Walsh Contact: Mike Price Contact:John Brick Mayor City Manager City Manager 903-532-5571 940-592-2131 409-737-1142 #Homes 813 Aprox. Pop.2195 #Homes 2540 Aprox.Pop.6431 #Homes 1138 Aprox. Pop.2846 14 City of Johnson City City of Jonestown City of Joshua 303 East Pecan Drive PO Box 5023 101 S. Main Street Johnson City,TX 78636 Jonestown,TX 78645-5023 Joshua,TX 76058 Contact: Kermit Roeder Contact: Linda Hambrick Contact: Earl Keaton Mayor City Secretary City Manager 903-429-6225 940-440-9100 817-558-7447 #Homes 487 Aprox. Pop. 1174 #Homes 600 Aprox.Pop. 1531 #Homes 1,370 Approx. Pop.4,650 City of Justin City of Kaufman City of Kemp PO Box 129 209 S.Washington P.O. Box 449 Justin,TX 76247 Kaufman,TX 75142 Kemp,TX 75143-0449 Contact: Ed Trietsch Contact:Jo An Talbot Contact: Becky Lambert Mayor City Secretary City Secretary 940-648.2541 972-932-2216 903-498-3191 #Homes 647 Aprox. Pop.2250 #Homes 1845 Approx. Pop 6,700 #Homes 560 Approx. Pop. 1,200 City of Kenedy City of Krugerville City of Krum 303 W. Main Street 100 Kruger Road PO Box 217 Kenedy,TX 78119 Krugerville,TX 76227 Krum,TX 76249 Contact: Randy Jurgaijtis Contact: Shelby Moore Contact: Doyle Fletcher Mayor Mayor Mayor Pro Tern 830-583-2230 940-365-5833 940-482-3491 #Homes 1355 Aprox.Pop. 3658 #Homes 415 Aprox.Pop. 903 #Homes 859 Aprox. Pop. 2450 City of Lago Vista City of Lake Bridgeport Lake Kiowa POA PO Box 4727 301 S. Main Street 905 Kiowa Drive West Lago Vista,TX 78645-4178 Bridgeport,TX 76426 Lake Kiowa,TX 76240 Contact: Donna Hutchins Contact: Dwayne Slaten Contact: Bill Keating City Secretary Mayor Community Manager 512-267-3253 940-683-2700 940-665-1055 or 665-1062 #Homes 1550 Aprox. Pop. 5300 #Homes 84 Aprox. Pop. 387 #Homes 1123 Aprox. Pop.2886 City of Lake Worth City of Lakeside City City of Lakeway 3805 Adam Grubb PO Box 4287 104 Cross Creek Lake Worth,TX 76135 Lakeside City,TX 76308 Lakeway,TX 78734 Contact: Joey Highfill Contact: Don Sheppard Contact: David Benson City Manager City Manager City Manager 817-237-1211 940-691-6603 512-261-6090 #Homes 1,625 Aprox. Pop.4,700 #Homes 375 Aprox. Pop. 1,100 #Homes 2780 Aprox. Pop.7228 15 City of Lavernia City of Lavon City of League City PO Box 225 PO Box 340 300 W.Walker La Vernia,TX 78121 Lavon,TX 75166-0340 League City,TX 77573 Contact: Adeline Peirdolla Contact:Jim Albright Contact: Paul Davis Mayor Mayor Interim City Administrator 830-779-4541 972-843-422 281-338-4853 #Homes 330 Aprox. Pop.931 #Homes 250 Aprox.486 #Homes 16,650 Aprox.Pop.37,526 City of Lindale City of Lindsay City of Lipan PO Box 1379 608 Ash Street PO Box 129 Lindale,TX 75771 Lindsay,TX 76250 Lipan, TX 76462 Contact: Bobby McClenny Contact: Betsy Heitman Contact:Alford Spencer Mayor City Secretary Mayor 903-882-3422 940-6654455 254-646-3345 #Homes 1632 Aprox.Pop.2954 #Homes 257 Approx. Pop. 788 #Homes 110 Aprox. Pop.421 City of Lometa City of Lott City of Luling PO Box 280 PO Box 398 PO Box 630 Lometa,TX 76853 Lott,TX 76656 Luling,TX 78648-0630 Contact: R.A. McClinton Contact: Ellis Bailey Contact:John Hobson Mayor Mayor City Manager 512-752-3331 254584-2681 830-875-2481 #Homes 229 Aprox. Pop.791 #Homes 450 Aprox. Pop.775 #Homes 1585 Aprox. Pop. 5080 City of Lumberton City of McKinney City of Maypearl 836 N. Main Street 222 North Tennessee Street P.O. Box 400 Lumberton,TX 77657 McKinney,TX 75069 Maypearl,TX 76064-0400 Contact: Don Surratt Contact;Glyn Strickland Contact: Medford Marion Mayor Solid Waste Mayor 409-755-3700 972-542-1431 972-435-2082 #Homes 2,100 Aprox. Pop.8731 #Homes 21,344 Aprox. Pop.82,800#Homes 290 Approx. Pop.992 City of Manvel Town of Megargel City of Mineral Wells 6615 FM 1128 PO Box 31 PO Box 460 Manvel,TX 77578 Megargel,TX 76360 Mineral Wells,TX 76068 Contact. Florence Shumann Contact: Geneta Mahan Contact: Lance Howerton City Secretary City Secretary City Manager 281-489-0630 940-569-2341 940-328-7700 #Homes 880 Aprox. Pop. 1694 #Homes 127 Aprox. Pop. 303 #Homes 5250 Aprox. Pop. 16,050 I6 City of Mingus City of Millsap City of Muenster PO Box 115 P.O. Box 57 PO Box 208 Mingus,TX 76463-0115 Millsap,TX 76066-0057 Muenster,TX 76252 Contact: Milo Moffit Contact: Debby Lane Contact: Linda Webb Mayor Mayor City Manager 254-672-5995 940-682-7446 940-759-2236 #Homes 112 Aprox.Pop.302 #Homes 117 Approx. Pop. 602 #Homes 557 Aprox.Pop. 1534 Town of Newcastle City of Nocona City of Nolanville PO Box 66 101 Cooke Street PO Box 37 Newcastle,TX 76372 Nocona,TX 76255 Nolanville,TX 76559 Contact: Wayne Davis Contact: Minnie Walker Contact: Candee Hacker Mayor City Manager City Manager 940-846-3547 940-825-3282 254-698-6335 #Homes 225 Aprox. Pop.577 #Homes 1,200 Approx. Pop.3,198 #Homes 846 Aprox. Pop.2284 City of Noonday City of Northlake City of Olney PO Box 6425 105 West Fourth Street PO Box 546 Tyler,TX 75711-6425 Justin,TX 76247 Olney,TX 76374 Contact: Patsy Bryans Contact: Carla Hardeman Contact: Phil B.Jeske II City Secretary Mayor Mayor 903-561-3351 940-648-3290 940-564-2102 #Homes 369 Aprox.Pop.500 #Homes 150 Aprox. Pop.921 #Homes 1472 Aprox. Pop.2355 City of Oyster Creek City of Paducah City of Paradise 3210 FM 523 PO Box 759 PO Box 314 Oyster Creek,TX 77541 Paducah,TX 79254 Paradise,TX 76073-0314 Contact: Richard Merriman Contact: John Brinson Contact: Pauline Shannon Mayor Alderman Mayor Pro Tem 972-617-7262 806-492-3713 940-969-2114 #Homes 375 Aprox. Pop. 1192 #Homes 578 Aprox. Pop. 1470 #Homes 77 Aprox. Pop. 225 City of Pecan Hill Town of Petrolia City of Pflugerville PO Box 443 PO Box 154 PO Box 589 Pecan Hill,TX 75154 Petrolia,TX 76377 Pflugerville,TX 78691-0589 Contact: Clinton Bittick Contact: John W.Swenson,Jr. Contact: Scott Winton Mayor Mayor Mayor 972-617-6274 940-524-3315 512-990-4363 #Homes 175 Aprox. Pop.750 #Homes 321 Aprox. Pop.905 #Homes 5882 Aprox. Pop.21,978 17 City of Ponder City of Pottsboro City of Princeton PO Box 297 528 Highway 120 E PO Box 970 Ponder,TX 76259-0297 Pottsboro,TX 75076 Princeton,TX 75407-0970 Contact: Charles A. Deussen Contact: Dennis Michael Contact: Shelby Moore Alderman Mayor Pro Tem City Administrator 940-479-2396 903-786-2626 or 786-2281 972-736-2416 #Homes 195 Aprox.Pop.509 #Homes 639 Aprox. Pop. 1579 #Homes 1,202 Aprox. Pop.3,700 City of Prosper City of Quanah City of Quintana PO Box 307 PO Box 629 814 N. Lamar Prosper,TX 75078 Quanah,TX 73252 Quintana,TX 77541 Contact: Bill Little Contact: Larry Black Contact: James Nevil Director of Public Works Mayor Pro Tern Mayor 972-346-2640 940-663-5336 979-233-0848 #Homes 949 Aprox. Pop.3,100 #Homes 1142 Aprox. Pop. 1941 #Homes 40 Aprox. Pop. 47 City of Ranger City of Red Oak City of Rhome 400 W. Main 101 Live Oak PO Box 228 Ranger,TX 76470 Red Oak,TX 75154-0393 Rhome,TX 76078-0228 Contact:Arthur Comacho Contact: Ken J. Pfeifer Contact: Benny Gray City Secretary Mayor Mayor Pro Tern 254-647-3522 972-617-3638 817-636-2465 #Homes 861 Aprox. Pop.2241 #Homes 1,160 Aprox. Pop.6,200 #Homes 343 Aprox. Pop. 859 City of Rosebud City of Rowlett City of Royse City PO Box 657 4000 Main Street 124 South Arch Street Rosebud,TX 76570 Rowlett,TX 75088 Royse City,TX 75189 Contact: Miles Shaunfield Contact: Shane Johnson Contact: Paul Fisk City Manager Mayor Mayor 254-583-7926 972-412-6100 972-636-2250 #Homes 700 Aprox. Pop. 1,638 Homes 18360 Aprox. Pop.50,800 #Homes 1276 Aprox. Pop.5,200 City of Runaway Bay City of Runge City of Sadler 101 Runaway Bay drive 306 N. Helena Street PO Box 543 Runaway Bay,TX 76426 Runge,TX 78151 Sadler,TX 76264-0543 Contact:Joe White Contact: Jack Roberson Contact:Virginia Reese Mayor Mayor Mayor 940-575-4745 830-239-4121 903-564-9607 #Homes 309 Aprox. Pop.835 #Homes 380 Aprox. Pop. 1190 #Homes 170 Aprox. Pop.540 19 City of Saint Jo City of San Leanna City of Sanger PO Box 186 PO Box 1107 PO Box 1729 Saint Jo,TX 76265-0186 Manchaca,TX 78652-1107 Sanger,TX 76266 Contact: Lori Dunn Contact:Terri Hartley Contact: Glenn Ervin City Secretary Village Secretary Alderman 940-995-2337 512-280-3898 940-458-7930 #Homes 394 Aprox. Pop.977 #Homes 150 Aprox. Pop.384 #Homes 1607 Aprox. Pop.5,300 City of Sansom Park City of Santa Fe City of Seguin 5500 Buchanan PO Box 950 PO Box 591 Fort Worth,TX 76114 Santa Fe,TX 77510-0950 Seguin,TX 78155-0591 Contact: Mike Wasser Contact:Joe Dickson Contact: Jack Hamlett Mayor City Manager City Manager 817-626-3791 409-925-6412 830-379-3212 #Homes 1350 Aprox. Pop.4183 #Homes 3084 Aprox.Pop.5626 #Homes 6625 Aprox. Pop. 17,225 City of Seymour City of Spring Valley City of Stephenville PO Box 314 1025 Campbell Road 298 W.Washington Seymour,TX 76380 Houston,TX 77055 Stephenville,TX 76401 Contact:Carl S. Potter Contact: Mike Andrews Contact: Mike Castor Mayor Mayor City Manager 940-888-3148 713-465-8308 254-918-1220 #Homes 1190 Aprox. Pop. 3564 #Homes 1,368 Aprox. Pop.3611 #Homes 4883 Aprox. Pop. 15,900 City of Stockdale City of Strawn City of Sweeny PO Box 446 PO Box 581 PO Box 248 Stockdale,TX 78160 Strawn,TX 76475-0581 Sweeny,TX 77480-0248 Contact: Carl Lambeck Contact: Mattie Lou Copeland Contact: Tim Moss City Manager Alderman City Manager 830-996-3128 254-672-5311 409-548-3321 #Homes 566 Aprox. Pop. 1398 #Homes 312 Aprox. Pop. 811 #Homes 1,149 Aprox. Pop.14,745 Town of Sunset City of Taylor City of Terrell PO Box 197 400 Porter St. PO Box 310 Sunset,TX 76270 Taylor,TX 76574 Terrell,TX 75160-0310 Contact: Danny Russell Contact: Frank Lynn Salvato Contact: Gordon Pierce Mayor City Manager City Manager 940-845-3098 512-352-3675 972-551-6600 #Homes 100 Aprox. Pop.337 #Homes 4,300 Aprox. Pop. 13,575#Homes 3794 Aprox. Pop. 14,750 19 City of Thorndale City of Troup City of Vernon P.O. Box 308 P.O. Box 637 PO Box 1423 Thorndale,TX 76577-0308 Troup,TX 75789 Vernon,TX 76384 Contact: Keith Kiesling Contact: Russ Obar Contact: R. Kelly Crouch City Manager City Manager Mayor 512-898-2523 903-842-3128 940-552-2581 #Homes 478 Aprox.Pop. 1,278 #Homes 761 Aprox. Pop. 1,949 #Homes 3875 Aprox. Pop.6037 City of Venus City of Waxahachie City of Westworth Village P.O. Box 380 PO Box 757 311 Burton Hill Road Venus,TX 76084-0380 Waxahachie,TX 75168 Fort Worth,TX 76114 Contact: Carolyn Welcher Contact: Robert Sokoll Contact:Terry L.Smith Mayor City Manager City Manager 972-366-3348 972-937-7330 817-738-3673 #Homes 360 Approx. Pop.2,900 #Homes 6,300 Aprox. Pop.23,600#Homes 792 Aprox. Pop. 1,750 City of Whitehouse City of Whitesboro City of Wilmer PO Box 776 112 West Main Street 128 N. Dallas Avenue Whitehouse, TX 75791-0776 Whitesboro,TX 76273 Wilmer,TX 75172 Contact: Ronny Fite Contact: Charles Whitecotton Contact:Thom Lauer City Manager City Administrator City Manager 903-839-4916 903-546-3311 972-441-6373 #Homes 2245 Aprox. Pop.4860 #Homes 1457 Aprox. Pop.3829 #Homes 920 Aprox. Pop.3400 City of Woodcreek PO Box 1570 Wimberly,TX 78676 Contact: Kenneth Jacobs Mayor 512-847-9390 #Homes 705 Aprox. Pap. 1274 20 IESI CORPORATION INDEX TO CONSOLIDATED FINANCIAL.STATEMENTS Report of Independent Auditors Consolidated Balance Sheets as of December 31,2003 and 2002 Consolidated Statements of Operations for the Years Ended December 31,2003,2002 and 2001 Consolidated Statements of Stockholders' E uit Deficit for the Years Ended December 31 2003,2002 and 2001 Consolidated Statements of_Cash_Flows for the Years Ended December 31,2003,2002 and 2001 Notes to Consolidated Financial Statements 1 of 35 Report of Independent Auditors The Board of Directors IESI Corporation We have audited the accompanying consolidated balance sheets of IESI Corporation and subsidiaries as of December 31,2003 and 2002,and the related consolidated statements of operations, stockholders'equity,and cash flows for each of the three years in the period ended December 31,2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining,on a test basis,evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management,as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion,the financial statements referred to above present fairly,in all material respects,the consolidated financial position of IESI Corporation and subsidiaries at December 31,2003 and 2002,and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31,2003,in conformity with accounting principles generally accepted in the United States. As discussed in Note 2 to the consolidated financial statements,effective January 1,2003,the Company adopted Statement of Financial Accounting Standards No. 143,Accounting for Asset Retirement Obligations. As discussed in Note 2 to the consolidated financial statements,effective January 1,2002,the Company adopted Statement of Financial Accounting Standards No. 142,Goodwill and Other Intangible Assets. Isl Ernst&Young LLP March 26,2004 Fort Worth,Texas 2 of 35 IESI CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2003 2002 Current assets: Cash and cash equivalents $ 4,197,157 $ 2,589,726 Accounts receivable-trade,less allowance of$2,397,000 and$941,000 at December 31,2003 and 2002,respectively 30,585,797 24,723,534 Deferred income taxes 1,356,471 849,649 Prepaid expenses and other current assets 4,782,446 3,949,590 Total current assets 40,921,871 32,112,499 Property and equipment,net of accumulated depreciation of$110,218,000 and$73,475,000 at December 31,2003 and 2002,respectively 488,659,850 241,869,538 Goodwill 138,335,715 128,409,308 Other intangible assets,net 32,986,163 22,666,277 Other assets 2,143,616 3,001,394 Total assets S 703,047,215 $428,059,016 Liabilities and Stockholders' Equity(Deficit) Current liabilities: Accounts payable-trade $ 27,448,950 $ 17,086,458 Accrued expenses and other current liabilities 17,512,525 13,387,878 Deferred revenue 1,231,758 984,101 Current portion of long-term debt 2,731,595 184,825 Total current liabilities 48,924,828 31,643,262 Long-term debt 378,129,393 198,386,401 Accrued environmental and landfill costs 47,456,769 12,539,318 Deferred income taxes 9,949,611 6,770,058 Other liabilities 1,282,992 1,593,534 Total liabilities 495,743,593 250,932,573 Commitments and contingencies Redeemable preferred stock: Redeemable Series A Convertible Preferred Stock,32,000 shares authorized,issued and outstanding, liquidation preference of $40,000,000 at December 31,2003 and 2002 39,683,637 39,693,637 Redeemable Series B Convertible Preferred Stock,20,I00 shares `4 authorized,issued and outstanding,liquidation preference of $25,125,000 at December 31,2003 and 2002 24,808,636 24,808,636 Redeemable Series C Convertible Preferred Stock,55,000 shares authorized, issued and outstanding,liquidation preference of $I05,448,126 and$91,247,703 at December 31,2003 and 2002, respectively 103,405,665 89,205,242 Redeemable Series D Convertible Preferred Stock,55,000 and 145,000 shares authorized, 55,000 and 55,000 shares issued and outstanding, liquidation preference of$68,655,338 and$62,272,416,at December 31,2003 and 2002,respectively 66,035,461 59,652,539 Redeemable Series E Convertible Preferred Stock,55,000 and 0 shares authorized,49,660 and 0 shares issued and outstanding,liquidation preference of$50,762,561 and$0,at December 31,2003 and 2002, respectively 49,120,889 r 3 of 35 Total redeemable preferred stock 283,054,288 213,350,054 Stockholders'equity(deficit): Common stock,par value$.01 at December 31,2003 and 2002, respectively: Authorized shares:Class A-4,200,000 and 3,600,000, Class B Convertible-450,000 and 450,000,at December 31,2003 and 2002,respectively; issued and outstanding shares:Class A-142,000, Class B Convertible-112,980,at December 31,2003 and 2002 2,550 2,550 Additional paid-in capital — — Accumulated deficit (65,753,216) (36,226,161) Cumulative other comprehensive income — Total stockholders' equity(deficit) (65,750,666) (36,223,611) Total liabilities and stockholders' equity(deficit) $703,047,215 $428,059,016 IESI CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, 2003 2002 2001 Services revenue $ 256,015,678 $ 212,940,552 $ 185,690,309 Costs and expenses: Operating 164,203,396 139,640,79C 119,816,245 General and administrative 32,722,982 25,536,654 24,062,920 Depreciation,depletion and amortization 41,079,389 27,848,910 25,721,970 238,005,767 193,026,354 169,601,041 Income from operations 18,009,911 19,914,198 16,089,268 Interest expense,net (20,275,874) (14,067,694) (12,960,630) Loss on termination of interest rate swaps — (825,665) Loss on extinguishment of debt — (585,591) — Other expense,net (340,516) (103,487) (178,238) Income(loss)before income taxes (2,606,479) 4,331,761 2,950,400 Income tax expense (3,703,961) (3,726,254) (703,501) Income(loss)before cumulative effect of change in accounting principle (6,310,440) 605,507 2,246,899 Cumulative effect of change in accounting principle net of income tax benefit of$0 (1,5302708) — — Net income(loss) $ (7,841,148) $ 605,507 $ 2,246,899 Pro forma income(loss)before cumulative effect of change in accounting principle,assuming change in accounting principle described in Note 2 was applied retroactively $ (6,310,440) $ 138,176 $ 1 945 523 See accompanying notes. 4 of 35 IESI CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS'EQUITY(DEFICIT) Cumulative Additional Other Common Stock Paid4n Accumulated Comprehensive Shares ParAmnunt Capital Deficit Income Total Balance at December 31, 2000 2,713,893 $ 27,139 $9,574,060 $(17,461,534)$ — $ (7,860,335) Comprehensive income: Net income — — — 2,246,899 — 2,246,899 Other comprehensive income: Unrealized gain on market value of interest rate swaps,net of tax of$266,456 — — 398,476 398,476 Comprehensive income — - — — 2,645,375 Accretion of dividends on Series C and D Preferred Stock — (9,607,737) (1,889,444) — (11,497,181) Allocation of beneficial conversion feature from issuance of Series D Preferred Stock — 1,650,000 1,650,000 Recognition of beneficial conversion feature from issuance of Series D Preferred Stock (1,650,000) — (1,650,000) Common stock returned from escrow (164,09I) (1,641) (1,639,271) (1,640,912) 1-for-10 reverse stock split (2,294,822) (22,948) 22,948 Balance at December 31, 2001 254,980 2,550 ---- (18,754,079) 398,476 (I8,353,053) Comprehensive income: Net income --- -- --- 605,507 -- 605,507 Other comprehensive income: Unrealized loss on - - market value of - - interest rate swaps,net of tax of $(595,917) -- (893,875) (893,875) Reclassification of loss on termination of interest rate swaps,net of tax — 495,399 495,399 5 of35 of$330,266 Comprehensive income — — — — - 207,031 Accretion of dividends on Series C and D Preferred Stock — (18,077,589) — (18,077,589) Balance at December 31, 2002 254,980 2,550 -- (36,226,161) — (36,223,611) Net loss — — (7,841,148) — (7,841,148) Accretion of dividends on Series C,D and E Preferred Stock - — (1,489,800) (20,196,107) — (21,685,907) Allocation of beneficial conversion feature from issuance of Series E Preferred Stock 1,489,800 1,489,800 Recognition of beneficial conversion feature from issuance of Series E Preferred Stock — (1,489,800) — (1,489,800) Balance at December 31, 2003 254,980 $ 2,550 $ — $(65,753,216)$ — $(65,750,666) l 6 of 35 IESI CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2003 2002 2001 Operating Activities Net income(loss) $ (7,84 1,148) $ 605,507 $ 2,246,899 Cumulative effect of change in accounting principle 1,530,708 — -- Adjustments to reconcile net income(loss)to net cash provided by operating activities: Depreciation,depletion and amortization 41,079,389 27,848,910 25,721,970 Amortization of deferred Financing costs 2,530,677 2,386,222 1,543,023 Capping,closure and post-closure accretion 1,305,517 Provision for doubtful accounts 3,002,895 962,512 1,233,554 Write off of costs associated with transactions in process 170,535 980,000 1,570,000 Loss on extinguishment of debt 585,591 — Gain on sale of waste management operations --- - (3,541) Deferred income tax expense 2,672,731 3,286,331 408,892 Changes in operating assets and liabilities,net of effects of acquired waste management operating assets and liabilities: Accounts receivable,net (412,055) (2,031,598) (7,052,394) Prepaid expenses and other current assets (583,114) 184,703 1,472,40I Accounts payable 7,479,985 480,228 3,541,518 Accrued expenses and other liabilities (3,154,545) (4,664,351) (309,5I4) Capping,closure and post-closure expenditures (1,297,763) Net cash provided by operating activities 46,483,812 30,624,055 30,372,808 Investing Activities Purchases of property and equipment (46,890,208) (41,330,847) (30,804,989) Acquisitions of waste management operations (214,545,084) (44,029,297) (14,191,I60) Initial development costs for newly acquired permitted landfills (6,0I 8,195) (340,466) (1,437,234) Capitalized interest (1,994,671) (1,852,980) (1,601,635) Deferred costs associated with transactions in process (130,396) (557,265) (2,177,060) Net cash used in investing activities (269,578,554) (88,1 10,855) (50,212,078) Financing Activities Borrowings under long-term debt 293,100,000 217,800,000 23,800,000 Payments on long-term debt (110,138,953) (151,543,866) (56,415,262) Net proceeds from issuance of preferred stock 48,018,328 — 52,380,123 Debt issue costs (6,277,202) (7,525,327) (2,826,853) Payments on interest rate swap termination — (825,665) — Net cash provided by financing activities 224,702,173 57,905,I42 16,938,008 Net increase(decrease) in cash and cash equivalents 1,607,431 418,342 (2,901,262) Cash and cash equivalents at beginning of year 2,589,726 2,171,384 5,072,646 Cash and cash equivalents at end of year $ 4,197,157 $ 2,589,726 $ 2,171,384 Supplemental Disclosure Cash paid for interest $ 18,889,439 $ 14,810,992 $ 11,516,830 Cash paid for income taxes $ 856,230 $ 674,027 $ 60,505 Noneash Investing and Financing Activities Liability assumed in connection with acquisition of business $ 44,801,000 $ --- $ 1,200,000 See accompanying notes. 7 of35 IESI CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Business and Organization IESI Corporation{IESI}is a Delaware holding company incorporated in March 1997.IESI and its subsidiaries(together,the Company)is a regional,integrated non-hazardous solid waste management company that provides collection,transfer,disposal,and recycling services to commercial, industrial and residential customers.The Company was formed in order to participate in the consolidation of the fragmented solid waste industry.The Company is executing this strategy through an acquisition program, which targets businesses in two principal geographic regions,the Northeast and the South United States. The Company is currently operating in nine states: Arkansas,Louisiana,Maryland,Missouri,New Jersey, New York,Oklahoma,Pennsylvania,and Texas. 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements include the accounts of IESI and its subsidiaries.All significant inter-company accounts and transactions have been eliminated. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and related notes.Actual results could differ from these estimates and assumptions. As it relates to estimates and assumptions in rates per ton,significant engineering and accounting input is required.The Company reviews these estimates and assumptions not less than annually.In many circumstances,the ultimate outcome of the estimates and assumptions may not be known for decades into the future.Actual results could differ materially from these estimates and assumptions due to changes in environmental-related regulations,changes in future operational plans,and inherent imprecision associated with estimating environmental matters so far into the future. New Accounting Pronouncements In June 200I,the Financial Accounting Standards Board(FASB)issued SFAS No. 143, "Accounting for Asset Retirement Obligations" SFAS No. 143 applies to all Iegally enforceable obligations associated with the retirement of tangible long-lived assets and provides the accounting and reporting requirements for such obligations. SFAS No. 143 requires amounts initially recognized as an asset retirement obligation to be measured at fair value. The recognized asset retirement cost is capitalized as part of the cost of the asset and is depreciated over the useful life of the asset. The Company adopted SFAS No. 143 effective January 1,2003. We have adopted SFAS No. 143 as of January 1,2003 and recorded approximately$1,500,000 as a cumulative effect of a change in accounting principle. The adoption of SFAS No. 143 had no impact on our cash flow. 8of35 The following table summarizes the impact of our initial adoption of SFAS No. 143 on our landfill and environmental liabilities. The table also includes our landfill and environmental remediation liabilities as of January 1,2002 computed on a pro forma basis as if the provisions of SFAS No. 143 had been applied during all periods effected: Pro Forma Balance at Balance at December 31, Balance at January 2002 Change January 1,2003 1,2002(t) Landfill closure/post closure liabilities $ 10,853,142 $ (1,864,496) $ 8,988,646 $ 6,625,859 Environmental remediation liabilities 1,686,176 232,534 1,991,710 2,305,417 Total landfill and environmental remediation liabilities $ 12,539,318 $ (1,631,962} $ 10,907,356 $ 8,931,276 (1) The pro forma computations have been performed based on assumptions and interest rates at January 1,2003,the date of adoption of SFAS No. 143. The following table summarizes the pro forma impact to income(loss)before cumulative effect of change in accounting principle for the years ended December 31,2003,2002 and 2001 of the accounting change implemented beginning January 1,2003: Year Ended December 31, 2003 2002 2001 Reported income(loss)before cumulative effect of change in accounting principle $ (4,142,550) $ 605,507 $ 2,246,899 Adoption of SFAS No. 143, net of tax — (467,331) (301,376) Pro forma income(loss)before cumulative effect of change in accounting principle $ (4,142,550) $ 138,176 $ 1,945,523 The application of SFAS No. 143 increased loss before cumulative effect of changes in accounting principle for the year ended December 31,2003 by approximately$391,000,net of tax. The following table summarizes the impact on income from operations of applying the provisions of SFAS No. 143 on income before cumulative effect of change in accounting principle for the year ended December 31,2003. Year Ended December 3I, 2003 Increase to operating expense $ 189,000 Increase to depletion expense 202,000 Decrease to income from operations $ 391,000 SFAS No. 143,which primarily impacts the accounting for our landfill operations,does not change the basic landfill accounting followed historically by us along with others in the waste industry. In general,the waste industry has recognized expenses associated with both amortization of capitalized costs and future closure and post-closure obligations on a units-of-consumption basis as airspace is consumed over the life of the related landfill. This practice,referred to as life cycle accounting within the waste industry is still being followed,except as discussed below. Under the new rules,costs associated with future final capping activities that occur during the operating life of a landfill,which were previously recognized on an undiscounted basis over the operating life of the landfill as airspace is consumed,are now accounted for as an asset retirement obligation,on a 9 of 35 discounted basis. We recognize landfill retirement obligations that relate to closure and post-closure activities over the operating life of a landfill as landfill airspace is consumed and the obligation is incurred. We recognize our final capping obligations on a discrete basis for each expected future final capping event over the number of tons of waste that each final capping event is expected to cover. These obligations are initially measured at estimated fair value. Fair value is measured on a present value basis,using a credit- adjusted,risk-free rate,of 10.25%during 2003, Accretion expense is recorded on all landfill retirement obligations using the effective interest method, Landfill retirement costs arising from closure and post- closure obligations are capitalized as part of the landfill asset and amortized using our existing landfill accounting practices. Landfill retirement costs arising from final capping obligations,which are also capitalized as part of the landfill asset,are amortized on a units-of-consumption basis over the number of tons of waste that each final capping event covers. In July 2002,the FASB issued SFAS No. 146,"Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities,such as restructurings,involuntarily terminating employees and consolidating facilities. SFAS No. 146 excludes from its scope exit and disposal activities conducted in connection with a business combination and those activities to which SFAS Nos. 143 and 144 are applicable. SFAS No. 146 is effective for exit and disposal activities that are initiated after December 31,2002. The adoption of this statement did not have a material effect on the consolidated financial position or results of operations. In November 2002,the FASB issued Interpretation No.45,"Guarantor's Accounting and Disclosure Requirements for Guarantees,Including Indirect Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45 elaborates on the disclosures that a guarantor should make in its interim and annual financial statements regarding its obligations relating to the issuance of certain guarantees. It also requires a guarantor to recognize,at the time it issues a guarantee,a liability for the fair value of the obligation undertaken in issuing the guarantee. FIN 45 provides specific guidance identifying the characteristics of contracts that are subject to its guidance and it also provides for scope exceptions from the guidance in its € entirety and from only the initial recognition and measurement provisions. The recognition and measurement provisions of FIN 45 apply on a prospective basis to guarantees issued or modified after December 31,2002,regardless of the guarantor's fiscal year end. The disclosure requirements of FIN 45 are effective for interim and annual period financial statements ending after December I5,2002. The Company's adoption of FIN 45 did not have a material impact on its financial position,results of operations or disclosure requirements. In May 2003,the FASB issued SFAS No. 150,"Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity." SFAS No. 150 establishes standards for classifying and measuring certain financial instruments with characteristics of both liabilities and equity. SFAS No. 150 is effective for financial instruments entered into or modified after May 31,2003,and otherwise is effective at the beginning of the first interim period beginning after June 15,2003. In November 2003,the FASB issued an FASB Staff Position delaying the effective date for certain instruments and entities. SFAS No. 150 had no impact on our consolidated financial statements. Cash and Cash Equivalents Cash and cash equivalents include cash on deposit and highly liquid investments with original maturities of three months or less. Concentrations of Credit Risk The Company provides services to commercial,industrial,municipal,and residential customers. Financial instruments that potentially subject the Company to concentrations of credit risks consist primarily of accounts receivable from these customers.Credit risk on accounts receivable is minimized as a result of the large and diverse nature of the Company's customer base. The Company performs ongoing credit evaluations of its customers,but generally does not require collateral to support accounts receivable. 1 Credit losses are provided for in the financial statements. 10 of 35 One customer accounted for approximately l t%, 14%and 15%of the Company's services revenue for the periods ended December 31,2003,2002 and 2001,respectively.At December 31,2003 and 2002,this same customer accounted for approximately 20%and 30%,respectively,of accounts receivable. Accounts Receivable The Company's accounts receivable are recorded when billed,advanced or accrued and represent claims against third parties that will be settled in cash. The carrying value of the trade receivables,net of the allowance for doubtful accounts,represents their estimated net realizable value. The Company estimates the allowance for doubtful accounts based on historical collection trends,type of customer,such as municipal or non-municipal,the age of outstanding trade receivables and existing economic conditions. If circumstances indicate that specific accounts receivable balances may be impaired,further consideration is given to the collectibility of those balances and the allowance is adjusted accordingly. Past-due trade receivable balances are written-off when the Company's internal collection efforts have been unsuccessful in collecting the amount due. Credit losses have been within management's expectations. Following is a summary of the Company's allowance for doubtful accounts for fiscal 2003,2002 and 2001: Year Ended December 31, 2003 2002 2001 Allowance for doubtful accounts Balance at beginning of year $ 941,000 $ 939,000 $ 1,293,000 Additions charged to income 3,003,000 962,000 1,234,000 Additions from acquisitions 151,000 225,000 50,000 Balances written off,net of recoveries (1,698,000) (1,185,000) (1,638,000) Balance at end of year $ 2,397,000 $ 941,000 $ 939,000 Property and Equipment Property and equipment are stated at cost. Improvements or betterments,which significantly extend the life,or add to the utility,of an asset,are capitalized.Expenditures for maintenance and repair costs are charged to operations as incurred.The cost of assets retired or otherwise disposed of and the related accumulated depreciation are eliminated from the accounts in the year of disposal and any resulting gain or loss is reflected in the Consolidated Statements of Operations. The Company revises the estimated useful lives of property and equipment acquired through business acquisitions to conform with its'policies regarding property and equipment.Depreciation is calculated on the straight-line method over the estimated useful lives of the related assets which generally range from three to five years for furniture and fixtures and computer equipment,five to 10 years for containers,compactors,trucks and collection equipment,and 10 to 40 years for buildings and improvements.The Company assumes no salvage value for its depreciable property and equipment. Depreciation expense on property and equipment was approximately$21,441,000,$16,550,000 and $13,443,000 during 2003,2002 and 2001,respectively, Landfills and landfill improvements are stated at cost and are depleted based on consumed airspace.Landfill improvements include direct costs incurred to obtain landfill permits and direct costs incurred to construct and develop the site.All indirect landfill development costs are expensed as incurred. Depletion expense was approximately$15,788,000,$8,085,000 and$6,988,000 during 2003,2002 and 2001,respectively. Interest is capitalized on certain projects under development including I and fiII projects and probable landfill expansion projects,and on certain assets under construction,including operating landfills. The capitalization of interest for operating landfills is based on the costs incurred on discrete cell construction projects. Interest capitalized w•as approximately$1,995,000,$1,853,000 and$1,602,000 during 2003,2002 and 2001,respectively. 11 of 35 Property and equipment consisted of the following at December 31: 2003 2002 Land $ 9,189,881 a 4,428,264 Landfills 389,028,075 153,067,613 Vehicles 90,346,853 72,693,739 Containers and compactors 52,677,979 45,021,821 Machinery and equipment 33,085,294 20,I99,485 Buildings and improvements 19,722,952 15,535,880 Furniture and office equipment 5,826,441 4,397,468 598,877,475 315,344,270 Less accumulated depreciation and depletion 110,217,625 73,474,732 $488,659,850 $241,869,538 Landfall Accounting Effective January 1,2003,our method of accounting for landfill final capping,closure and post- closure changed as a result of our adoption of SFAS No. 143. With the exception of the accounting for capitalized and future landfill final capping costs,SFAS No. 143 does not change basic life-cycle accounting. The table below compares our historical practices to the method prescribed by SFAS No. 143. Description Previous Definition Definition Under SFAS No.143 Definitions: Final Included installation of flexible membrane and No change. Capping geosynthethic clay liners,drainage and compacted soil layers and topsoil constructed over areas of landfill where total airspace capacity has been consumed. Closure Included last final capping event,final portion of methane No change. gas collection system to be constructed,demobilization, and the routine maintenance costs incurred after site ceases to accept waste,but prior to being certified closed. Post- Included routine monitoring and maintenance of a landfill No change. 'ON closure after it has closed,ceased to accept waste and been certified as closed by the applicable state regulatory agency. Description Previous Practice Practice Under SFAS No.143 Discount None. Credit-adjusted,risk-free Rate: rate(10.25%during 2003). 12of35 Description Previous Practice Practice Under SFAS No.143 Cost Estimates: Cost were estimated based on performance, No change,except that principally by third parties,with a small portion the cost of any activities performed by us. performed internally must be increased to represent an estimate of what a third party would charge to perform such activity. Inflation: Not applicable. 2.5%during 2003,based on the prior 10 year average. Recognition of Liability: Final Capping Costs were capitalized as spent,except for the last All final capping is final capping event that occurs after the landfill recorded as a liability and closes,which was accounted for as pail of closure. asset when incurred; the discounted cash flow associated with each final capping event is recorded to the accrued liability with a corresponding increase to landfill assets as airspace is consumed related to the specific final capping event. Closure and post- Accrued over the life of the landfill,the Accrued over the life of Closure undiscounted cash flow associated with such the landfill; the liabilities was recorded to accrued liabilities,with a discounted cash flow corresponding charge to cost of operations as associated with such airspace was consumed, liabilities is recorded 1460 accrued liabilities,with a corresponding increase ink landfill assets as airspace; is consumed. Statement of Operations Expense: i Liability accrual Expense charged to cost of operations at same Not applicable. amount accrued to liability. t Landfill asset Not applicable. The Iandfill asset is amortization amortized to depreciation,depletion and amortization expense 13 of 35 as airspace is consumed over life of specific final capping event or life of landfill for closure and post-closure. Accretion Not applicable. Expense,charged to cost of operations,is accreted at credit-adjusted,risk- free rate(10.25%during 2003)under the effective interest method. Goodwill and Other Intangible Assets Intangible assets consist primarily of the cost of acquired businesses in excess of the fair value of net assets acquired(goodwill). In accordance with SFAS No. 142,"Accounting for Goodwill and Other Intangible Assets"(SFAS No. 142),the Company did not amortize goodwill that arose from purchases of businesses after June 30,2001,Through December 31,2001,the Company continued the amortization of goodwill that was recorded prior to July 1,2001. Amortization of goodwill ceased on January 1,2002. The following table presents the effect on net income(loss),as reported,of the non-amortization provisions of SFAS No. 142 had such provisions been in effect as of the beginning of each year presented. The amortization expense and adjusted net income(loss)for the three years ended December 31,2003 is as follows: Year Ended December 31, 2003 2002 2001 Net income(loss)as reported $(7,841,148)$ 605,507 $ 2,246,899 Amortization, net of tax — 2,153,065 Adjusted net income(loss) $(7,841,148)$ 605,507 $ 4,399,964 Other intangibles consist of values assigned to customer lists and covenants not-to-compete,costs incurred to obtain debt financing and other separately identifiable intangible assets. Other intangibles are recorded at cost and,except for debt issue costs,amortized over periods ranging from five to seven years, computed on the straight-line method. Amortization expense was approximately$3,850,000$3,214,000 and$5,291,000 during 2003,2002 and 2001,respectively.The Company defers costs incurred in obtaining debt and amortizes,as additional interest expense,these costs over the term of the related debt using the effective interest method. Debt issue cost amortization was approximately$2,531,000$2,386,000 and $1,543,000 during 2003,2002 and 2001,respectively. Other intangible assets consisted of the following at December 31: 2003 2002 Customer lists S 23,707,139 $ 14,033,330 Noncompetition agreements 7,277,689 7,195,493 Debt issue costs 22,007,533 15,900,865 Other 951,088 1,033,983 53,943,449 38,163,661 Less accumulated amortization 20,957,286 15,497,384 $ 32,986,I63 $ 22,666,277 The Company assesses whether goodwill is impaired on an annual basis. Upon determining the existence of goodwill impairment,the Company measures that impairment based on the amount by which the book value of goodwill exceeds its implied fair value. The implied fair value of goodwill is determined by deducting the fair value of a reporting unit's identifiable assets and liabilities from the fair value of the 14 of 35 reporting unit as a whole,as if that reporting unit had just been acquired and the purchase price were being initially allocated. The Company's reporting units are consistent with its reportable segments. Additional impairment assessments may be performed on an interim basis if the Company encounters events or changes in circumstances that would indicate,more likely than not,the book value of goodwill has been impaired. On an ongoing basis,management reviews the valuation and amortization of other intangible assets with consideration toward recovery through future operating results. The Company periodically evaluates the value and future benefits of its other intangible assets. The Company assesses recoverability from future operations using cash flows of the related acquired business as measures.In accordance with SFAS No. 144,Accounting for the Impairment or Disposal of Long-Lived Assets,the carrying value would be reduced to estimated fair value if it becomes probable that the Company's estimate for expected future cash flows of the related business would be less than the carrying amount of the related intangible assets. There have been no adjustments to the carrying amount of intangible assets resulting from these evaluations during the three years ended December 31,2003. Scheduled estimated amortization of other intangible assets is as follows: 2004 $ 7,527,000 2005 6,455,000 2006 5,303,000 2007 4,903,000 2008 3,783,000 Thereafter 5,015,000 $32,986,000 Accrued Expenses and Other Current Liabilities The following is a summary of accrued expenses and other current liabilities at December 31: 2003 2002 Acquisition related accrued liabilities $ I,489,429 $ 2,740,190 Interest 2,104,923 1,169,589 Accrued payroll and other employee related liabilities 3,613,059 2,663,757 Accrued insurance liabilities 5,062,902 2,874,036 Other 5,242,212 3,940,306 $ 17,512,525 $ 13,387,878 Revenue Recognition Revenue is recognized as services are provided to customers.Certain customers are billed in advance and,accordingly,recognition of the related revenue is deferred until the services are provided. Advertising Costs All advertising costs are expensed when paid.Advertising costs were$610,000,$512,000 and $381,000 in 2003,2002 and 2001,respectively. Income Taxes Deferred income taxes are determined based on the difference between the financial reporting and tax bases of assets and liabilities.Deferred income tax provision represents the change during the reporting period in the deferred tax assets and deferred tax liabilities,net of the effect of acquisitions and dispositions.Deferred tax assets include tax loss carryforwards and are reduced by a valuation allowance if, based on available evidence,it is more likely than not that some portion or all of the deferred tax assets will not be realized. 15 of35 Stock-Based Compensation The Company accounts for stock option grants to employees using the intrinsic value method in accordance with the Accounting Principles Board Opinion No.25(APB No.25),Accounting for Stock Issued to Employees,and related interpretations.The Company grants stock options for a fixed number of shares to employees with stock option exercise prices equal to the fair value of the shares on the date of grant and,accordingly,recognizes no compensation expense for the stock option grants. The following schedule reflects the impact on net income if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock based employee compensation: 2003 2002 2001 Net income(loss): As reported $ (7,841,148) $ 605,507 $ 2,246,899 Less: compensation expense per SFAS No. 123,net of tax (149,859) (58,970) (134,766) Pro forma net income(loss)for SFAS No. 123 $ (7,991,007) $ 546,537 $ 2,112,133 The effects of applying SFAS No. 123 in the pro forma disclosure may not be indicative of future amounts as additional option grants in future years are anticipated. Risks and Uncertainties The Company's business could be impacted by federal and state legislative changes in the area of environmental policy.As of December 31,2003,management believes that the Company has no significant risk of a near-term severe impact resulting from such changes. Fair Values of Financial Instruments The Company's financial instruments consist primarily of cash,trade receivables,trade payables, debt instruments,and interest rate swaps.The carrying values of cash,trade receivables,and trade payables are considered to be representative of their respective fair values. At December 31,2003,the carrying amount of the Company's Senior Subordinated Notes due 2012,issued in.tune 2002(Senior Subordinated Notes),excluding$999,000 related to the fair value of the Company's interest rate swaps,was $150,000,000. The fair value of such debt was estimated at$166,500,000. The fair value is based on quoted market prices. The carrying values of the Company's revolving credit loan and other debt instruments approximate their fair values as of December 31,2003 and 2002,based on current incremental borrowing rates for similar types of borrowing arrangements.The Company's interest rate swaps are recorded at their fair values based on estimated cash flows calculated using interest rate yield curves as of December 31,2003. Derivative Financial Instruments From time to time,the Company uses derivatives to manage interest rate risk. The Company's policy is to use derivatives for risk management purposes only,which includes maintaining the ratio between the Company's fixed and floating rate debt obligations that management deems appropriate,and prohibits entering into such contracts for trading purposes.To minimize credit risk,the Company enters into derivatives only with counterparties(primarily financial institutions)which have substantial financial resources.The amount of gains or losses from the use of derivative financial instruments has not been,and is not expected to be,material to the Company's financial statements. f f 16 of35 In dune 1998,the FASB issued SFAS No. 133,Accounting for Derivatives and Hedging Activities,which was amended by SFAS No. 138,Accounting for Certain Derivative Instruments and Certain Hedging Activities(an Amendment ofFAS13 Statement 133),(collectively SFAS No. 133). SFAS No. 133 establishes accounting and reporting standards for derivative instruments,including certain derivative instruments embedded in other contracts,and for hedging activities. SFAS No. 133 requires the Company to recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income.If the derivative is a hedge, depending on the nature of the hedge,changes in the fair value of derivatives will either be offset against the change in fair value of the hedged assets,liabilities,or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings.The ineffective portion of a derivative's change in fair value is immediately recognized in earnings. The Company has evaluated its derivative instruments,consisting solely of two interest rate swaps as of December 31,2003 effective through June 20I2 and believes these instruments qualify for hedge accounting pursuant to SFAS No. 133. Because the relevant terms of the interest rate swaps and the specific cash flows related to the debts they have been designated to hedge are virtually identical,there was no material ineffectiveness required to be recognized in earnings.In addition,there are no components of the derivative instruments'gain or loss that have been excluded from the assessment of hedge effectiveness.The fair value of the Company's interest rate swaps was approximately$999,000 at December 31,2003 and has been included in the carrying amount of the Senior Subordinated Notes and other assets in the consolidated balance sheet. Reclassifications Certain reclassifications have been made in prior years' financial statements to conform to the 2003 presentation. 3. Acquisitions All acquisitions were accounted for as purchases and,accordingly,the operations of the acquired companies since the acquisition dates are included in the accompanying consolidated financial statements. 2003 In October 2003,the Company acquired Seneca Meadows,Inc.("SMI"),the owner and operator of the Seneca Meadows landfill(SML)for an aggregate purchase price of approximately$227,757,000 consisting of approximately$187,679,000 in cash and approximately$40,078,000 of liabilities assumed (see Note 7).The Company funded the acquisition with approximately$861,000 in cash,$138,800,000 in net borrowings(see Note 5)and net proceeds of$48,018,000 from the issuance of Series E convertible preferred stock(see Note 9).Additionally,if certain permits are obtained increasing the allowable daily disposal volume at the SML and specific average daily disposal volume milestones are achieved at the SML,the Company will be required to pay to SMI's former shareholder$15,000,000 as additional purchase price. In connection with the acquisition,the Company recorded approximately$5,000,000 of amortizing intangibles related to customer lists with generally two to seven year amortization periods. l 17 of 35 The following table summarizes the assets and liabilities recorded at the date of purchase for the SMI acquisition: Assets Accounts receivable-trade,net of allowance $ 6,939,000 Other current assets 206,000 Property and equipment 215,712,000 Other intangible assets 5,000,000 Total Assets $ 227,757,000 Liabilities Accounts payable-trade $ 2,883,000 Other current liabilities 2,410,000 Notes payable 294,000 Accrued environmental and landfill costs 34,015,000 Other liabilities 476,000 Total Liabilities $ 40,078,000 The following unaudited pro forma results of operations assume that the Company's acquisition of SMI acquired in October 2003 and accounted for using the purchase method of accounting,occurred as of January 1,2002: 2003 2002 Services revenue $ 290,432,000 $ 258,184,000 Income(loss)before cumulative effect of change in accounting principle $ (4,660,000) $ 3,427,000 Net income(loss) $ (6,191,000) $ 3,427,000 The unaudited pro forma results do not purport to be indicative of the results of operations which actually would have resulted had the acquisition occurred on January 1,2002,nor are they necessarily indicative of future operating results. Additionally in 2003,the Company acquired the hauling and disposal assets of 14 other solid waste management companies and real estate associated with an operating landfill for an aggregate purchase price of approximately$3I,589,000 consisting of cash and liabilities assumed. In connection with the acquisitions,the Company recorded approximately$8,523,000 of goodwill,of which approximately $6,650,000 is expected to be deductible for tax purposes,and approximately$6,948,000 of amortizing intangible assets. The amortizing intangible assets consist of$4,731,000 related to customer lists with generally two to seven year amortization period and$2,285,000 related to non-competition agreements with generally two to five year amortization periods. The pro forma effects of these 14 acquisitions are not significant to the Company's operating results. The allocation of the purchase price for certain acquisitions closed during the current period are preliminary and will be finalized upon completion of valuations of certain assets and liabilities,which the Company expects to occur by March 31,2004. Upon completion of such valuations,the Company may be required to reallocate a portion of such purchase price between assets and liabilities. The Company does not believe any such reallocation will have a material effect on its consolidated financial statements. 18 of 35 1rymp V E X. Also in 2003,the Company incurred approximately$6,018,000 of development costs in connection with two"greenfield"landfills,which the Company purchased in 2002. Both landfills included the land and the permit to operate. However,unlike the purchase of an operating landfill,neither greenfield landfill had incurred the costs of development,which include the infrastructure of an operating landfill and initial cell. Both landfills opened during year ended December 31,2003. 2002 During the year,the Company acquired the hauling and disposal assets of 17 waste management companies and real estate associated with planned landfill development and expansions. The total purchase price of the 17 waste management companies and real estate was approximately$46,996,000 consisting of cash and liabilities assumed. The Company recorded approximately$20,744,000 of goodwill,of which approximately$5,291,000 is expected to be deductible for tax purposes,and approximately$5,359,000 of amortizing intangible assets related to the acquisition of the 17 waste management companies. The amortizing intangible assets consist of$2,907,000 of customer lists with a three to eight year amortization period,$1,901,000 of non-compete agreements with a two to five year amortization period and$551,000 other intangibles assets related to long-term contracts with a seven to thirty-three year amortization period. Certain of the acquisitions in 2002 contain items with the potential for the Company to pay contingent purchase price upon the achievement of specific criteria,including specific monthly revenue levels for hauling assets and specific average daily volume levels at the landfills. As of December 31, 2002,the Company accrued$2,370,000 of additional contingent purchase price payments,representing payments the Company considered probable. During 2003,the Company paid approximately$1,760,000 of this additional contingent purchase price. The remaining amount is expected to be paid during 2004 and 2005. An additional$11,000,000 of contingent purchase price payments was not accrued as of December 31,2003 as the occurrence of the specific criteria which would give rise to such payments was not considered probable. These payments relate to volume levels at specific landfills and could occur anytime during the remaining operating life of the specific landfills. The following unaudited pro forma results of operations assume that the Company's acquisitions of the 17 waste management companies acquired during the year and accounted for using the purchase method of accounting,occurred as of January 1,2001: 2002 2001 Services revenue $224,934,000$207,141,000 Net income $ 109,000$ 414,000 The unaudited pro forma results do not purport to be indicative of the results of operations which actually would have resulted had the acquisition occurred on January 1,2001,nor are they necessarily indicative of future operating results. Also in 2002,the Company incurred approximately$340,000 of development costs in connection with two"greenfield"landfills,which the Company purchased during 2002. Both landfills included the land and the permit to operate. However,unlike the purchase of an operating landfill,neither greenfield landfill had incurred the costs of development,which include the infrastructure of an operating landfill and initial cell. Both landfills opened during year ended December 31,2003. 2001 In June 2001,the Company acquired the assets of Capital City Roll-Offs,Inc.(Capital). The approximate total purchase price of Capital was$1,644,000 consisting of cash and liabilities assumed. l 19 of 35 The following unaudited pro forma results of operations assume that the Company's acquisition of Capital,accounted for using the purchase method of accounting,occurred as of January 1,2001: Year Ended December 31, 2001 Services revenue $ 186,402,079 Net income(loss) $ 2,300,564 The unaudited pro forma results do not purport to be indicative of the results of operations which actually would have resulted had the acquisition occurred on January 1,2001,nor are they necessarily indicative of future operating results. During the year,the Company acquired the assets of 15 other waste management companies.The approximate total purchase price of the 15 waste management companies was$10,451,000,consisting of cash and liabilities assumed. In addition,during 2001,the Company incurred approximately$1,437,000 of development costs in connection with a"greenfield"landfill,which the Company purchased in 1999. The landfill included the land and the permit to operate. However,unlike the purchase of an operating landfill,the greenfield landfill had not incurred the costs of development,which include the infrastructure of an operating landfill and initial cell. The landfill opened during the year ended December 31,2001. 4. Landfill and Accrued Environmental Costs The following is a roll-forward of amounts accrued for final closure and post-closure costs and environmental costs: Final Closurel Post-Closure Environmental Costs Costs Total Balance at December 31,2000 $ 9,439,354 $ 3,132,166 $ 12,571,520 Obligations incurred 465,779 465,779 Obligations acquired through acquisitions 565,092 — 565,092 Obligations settled (80,987} (921,247) (1,002,234) Balance at December 31,2001 $ 10,389,238 S 2,210,919 $ 12,600,157 Obligations incurred 358,487 — 358,487 Obligations acquired through acquisitions 147,177 — 147,177 Obligations settled (41,760) (524,743) (566,503) Balance at December 31,2002 $ 10,853,142 $ 1,686,176 $ 12,539,318 Cumulative effect of change in accounting principle (1,864,465) 232,534 (1,631,931) Obligations incurred 1,596,020 70,780 1,666,800 Obligations acquired through acquisitions 8,928,303 25,725,000 34,653,303 Obligations settled (919,923) (375,618) (1,295,541) Revisions in estimates 219,303 — 219,303 Accretion 1,116,529 188,988 1,305,517 Balance at December 31,2003 $ 19,928,909 $ 27,527,860 S 47,456,769 20 o£35 Life Cycle Accounting The Company uses life cycle accounting and the units-of-consumption method to recognize certain landfill costs. In life cycle accounting,all costs to acquire,construct,close and maintain a site during the post-closure period are capitalized or accrued and charged to expense based upon the consumption of cubic yards or tons of available airspace.Costs and airspace estimates are developed annually by independent engineers together with the Company's engineer.These estimates are used by the Company's operating and accounting personnel to annually adjust the Company's rates used to expense capitalized costs and accrue closure and post-closure costs. Changes in these estimates primarily re-late to changes in available airspace,inflation rates and applicable regulations.Changes in available airspace primarily include changes due to the addition of airspace lying in expansion areas deemed probable to be permitted. Airspace Amortization and Final Closure 1 Post-Closure Rate Per Unit The Company expenses amounts for landfill airspace usage and landfill final closure and post- closure costs for each unit of waste accepted for disposal at its landfills. In determining the amount to expense for each unit of waste accepted,the Company estimates the total cost to develop each landfill site to its final capacity and the total final closure and post-closure costs for each landfill site.The Company's engineers also estimate the capacity of the landfill.The expense for each unit is then calculated based on the total costs remaining to be provided and the total remaining capacity.Estimates for projected landfill site costs and for final closure and post-closure costs are developed using input from the Company's engineers and accountants and are reviewed by management,typically at least once per year. Total Available Disposal Capacity As of December 31,2003,the Company owned or operated 14 MSW landfills and three C&D landfills. Based on engineering estimates,the total available disposal capacity of 16 of such landfills is approximately 246,824,000 in-place cubic yards,which consists of approximately 127,438,000 in-place cubic yards of estimated permitted airspace and approximately 119,386,000 in-place cubic yards of estimated additional airspace deemed probable to be permitted. Additionally,the Company operates one landfill at which,pursuant to the terms of the operating contract,the Company is not responsible for construction,closure and post-closure costs and,as a result,for which the Company prepares no engineering estimates. Probable to be Permitted Expansion Airspace Before airspace included in an expansion area is determined as probable to be permitted and, therefore,included in the Company's calculation of total available disposal capacity,generally the following criteria must be met: I. The land associated with the expansion airspace is either owned by the Company or controlled by the Company pursuant to an option agreement; 2. The Company is committed to supporting the expansion project financially and with appropriate resources; 3. There are no identified fatal flaws or impediments associated with the project, including political impediments; 4. The expansion is attainable within a three to five year time frame; 5. Progress is being made on the project. 21 of 35 Upon meeting the Company's expansion criteria,the rates used for each applicable landfill to expense costs to acquire,construct,close and maintain a site during the post-closure period are adjusted to include probable to be permitted airspace and all additional costs to be capitalized or accrued associated with the expansion airspace.Once a landfill meets the Company's expansion criteria,management continuously monitors each site's progress in obtaining the expansion permit.If at any point it is determined that an expansion area no longer meets the required criteria,the probable to be permitted airspace is removed from the landfill's total available capacity and the rates used at the landfill to expense costs to acquire,construct,close and maintain a site during the post-closure period are adjusted accordingly.Additionally,the Iandfill's future operations will typically reflect lower profitability due to higher amortization rates,final closure and post-closure rates,and expenses related to the removal of previously included expansion airspace.The landfill may also become subject to impairment,which could be material to the results of operations of any individual reporting period. Capitalized Landfill Costs Capitalized landfill costs include expenditures for land,operating agreements,permitting costs, cell construction costs and environmental structures.Capitalized permitting and cell construction costs are limited to direct costs relating to these activities,including legal,engineering and construction associated with excavation,liners and site berms. Interest is capitalized on landfill construction projects while the assets are undergoing activities to ready them for their intended use. Capitalized landfill costs,excluding the estimated residual value of unpermitted land,are depleted as airspace is consumed using the units-of- consumption method. As of December 31,2003,the Company expected to spend an estimated additional $436,800,000 on existing landfills,primarily related to cell construction and environmental structures,over their expected remaining lives. Closure and Post-Closure Costs Landfill site closure and post-closure costs include estimated costs to be incurred for landfill capping events,final closure of the Iandfills and estimated costs for providing required post-closure monitoring and maintenance of landfills.These costs are accrued as asset retirement obligations and charged to operations based upon consumed airspace in relation to total available disposal capacity using the units-of-consumption method of amortization.The Company estimates future cost requirements for final closure and post-closure monitoring and maintenance for its solid waste facilities based on the technical standards of the Environmental Protection Agency's Subtitle D regulations and applicable state and local regulations.Reviews of the future requirements for closure and post-closure monitoring and maintenance costs for the Company's operating landfills are performed by the Company's engineer and independent engineers at least annually. The total estimated future payments related to landfill capping events,final closure and post-closure monitoring and maintenance was estimated to be approximately $I89,ODO,000 as of December 31,2003. A number of the Company's landfills were previously operated by other entities.Accordingly,the Company assessed and recorded a final closure and post-closure liability as of the date of the landfill acquisition based upon the estimated total final closure and post-closure costs and the percentage of total available disposal capacity utilized as of such date.Thereafter,the difference between the final closure and past-closure costs accrued and the total estimated final closure and post-closure costs to be incurred are accrued as asset retirement obligations and charged to expense as the remaining airspace is consumed. Estimated aggregate final closure and post-closure costs will be fully accrued for the Company's landfills at the time such facilities cease to accept waste and are closed. The Company pays annual premiums to obtain performance bonds underwritten by a large insurance carrier,which support the Company's financial assurance obligations for its facilities'closure and post-closure costs.These premiums are expensed as incurred. 22 of 35 5. Long-Term Debt Long-term debt consisted of the following at December 31: 2003 2002 Revolving credit loan $ 29,600,000 $ 46,400,000 Term loan 200,000,000 Senior subordinated notes due dune 15,2012 150,998,599 151,964,430 Other 262,389 206,796 Total long-term debt 380,860,988 198,571,226 Less current portion 2,731,595 184,825 $ 378,I29,393 $ 198,386,40I Scheduled maturities of long-term debt are as follows: 2004 $ 2,73I,595 2005 2,030,794 2006 2,000,000 2007 2,000,000 2008 31,600,000 Thereafter 339,500,000 $ 379,862,399 On October 10,2003,the Company entered into the Fifth Amended and Restated Revolving Credit and Term Loan Agreement(the Credit Facility). The Credit Facility is provided by a syndicate of lenders led by Fleet National Bank,as administrative agent(Fleet),and LaSalle National Bank Association, as syndication agent,and includes a$200,000,000 senior secured term loan,a$200,000,000 senior secured revolving loan and has a maximum of$80,000,000 letters of credit sub-limit. Subject to certain conditions, the Company may request an increase in the revolving loan portion or the term loan portion of the Credit Facility of up to$50,000,000 such that the total of the revolving loan and term loan portions would equal $450,000,000. As of December 31,2003,there was$29,600,000(excluding$49,100,000 underlying letters of credit)outstanding under the revolving loan portion of the Credit Facility and$121,300,000 of remaining capacity(of which$29,408,000 was immediately available for borrowing)under the revolving loan portion,plus a maximum of$30,800,000 underlying letters of credit. In order to borrow under the revolving loan portion of the Credit Facility,the Company must satisfy customary conditions including maintaining certain financial ratios. If a default under the indenture governing the Notes("Notes")or Credit Facility should occur,the holders of our Notes or the lenders under the Credit Facility could elect to declare all amounts borrowed to be immediately due and payable. Furthermore,this could result in all amounts borrowed under other instruments,including the indenture governing our Notes or the Credit Facility,that contain cross-acceleration or cross-default provisions being declared immediately due and payable and the lenders could terminate all commitments there under. The Credit Facility is secured by a pledge of the stock of the Company's direct and indirect subsidiaries and a lien on substantially all of the Company's direct and indirect subsidiaries' assets. The Credit Facility also contains covenants which restrict the Company's ability to,among other things,incur additional debt,create liens,dispose of assets, make investments,engage in transactions with affiliates,enter into a merger or consolidation,make specified payments,including dividends,and enter into certain franchise agreements. These limitations are subject to certain qualifications and exceptions. Pursuant to the terms of the Credit Facility,each year,commencing on October 1 and ending on September 30,the Company is required to repay 1.0%(except for the 12-month period prior to maturity when it is required to repay 94.0%)of the principal amount of the term loan portion of its senior credit facility in quarterly installments payable on the last business day of each calendar quarter. In addition,the Company's senior credit facility requires it to prepay the term loan with,subject to certain conditions and exceptions, 100.0%of the net cash proceeds it receives from any disposition of assets in excess of 23 of 35 $5.0 million in the aggregate per year, 100.0%of the net cash proceeds it receives from the incurrence of any permitted indebtedness(other than up to$100.0 million of additional subordinated indebtedness)and 50.0%of the net cash proceeds it receives in connection with any issuance of the Company's equity(other than equity the Company issues(i)in an aggregate amount not to exceed$100.0 million,(ii)as payment in a permitted acquisition or(iii)to employees,consultants or directors in connection with the exercise of options under bona fide option plans). The Company is also required to prepay the term loan with the percentage of excess consolidated operating cash flow(to be calculated for the period from October 1,2003 through December 31,2003 and for each fiscal year thereafter,and which includes,generally,consolidated EBITDA,plus or minus net working capital changes and extraordinary cash items,less the sum of (a)capital expenditures,(b) the cash purchase price of any permitted acquisitions,(c) cash payments for taxes,(d)cash payments of interest and(e) the scheduled principal repayments of indebtedness,in each case of clauses(a)through(e),paid during such period)corresponding to the applicable leverage ratio set forth below: Percentage of Excess Consolidated Operating Cash Flow Required as Mandatory Prepayment of Term Leverage Ratio Loan 3.50:1.00 50% ?3.00:1.00 and <3.50:1.00 25% c3.00:1.00 0% In the period of October 1,2003 through December 31,2003,we performed the calculation and determined that no payment was due for the period. The Credit Facility permits borrowings at floating interest rates based,at the Company's option, on the designated Eurodollar interest rate,which generally approximates LIBOR,or the Fleet prime rate, in each case,plus an applicable margin,and requires payment of an annual commitment fee based on the unused portion of the revolving loan portion. As of December 31,2003,the interest rate applicable to $25,000,000 outstanding under the revolving loan portion of the Company's senior credit facility was LIBOR plus 325 basis points,or 4.41%,and the interest rate applicable to the remaining balance of $4,600,000 outstanding there under was Fleet's prime rate plus 100 basis points,or 5.25%. As of December 31,2003,the interest rate applicable to$100,000,000 outstanding under the tern loan portion of its senior credit facility was LIBOR plus 300 basis points,or 4.25%,and the interest rate applicable to the remaining balance of$100,000,000 outstanding there under was Fleet's prime rate plus 75 basis points,or 5.00%. The revolving loan portion of the Credit Facility expires on September 30,2008 and the term loan portion of the Credit Facility expires on September 30,2010. On.Tune 12,2002,the Company issued$150,000,000 of 10.25%Senior Subordinated Notes due 2012(the Notes)in a private placement. Interest is payable semi-annually on June I5th and December l 5th. In December 2002,the Company filed a registration statement under the Securities Act of 1933,as amended,to register new 10.25%Senior Subordinated Notes due 2012(Exchange Notes)and to offer to exchange the Exchange Notes for the Notes. The net proceeds from the offering of the Notes were approximately$144,000,000,after deducting the initial purchasers'discounts and other expenses of the offering. The Company used$142,800,000 of these proceeds to repay amounts under the term loan and revolving credit loan portions of its credit facility. Upon repayment of the term loan portion of its credit facility,the Company expensed approximately$596,000 of debt issue costs related to the term loan portion of its credit facility during the year ended December 31,2002. In addition,the Company terminated three interest rate swap agreements in advance of the contract termination dates.The Company recorded a loss on the early termination of the interest rate swap agreements of approximately$826,000 during the year ended December 31,2002. The Notes are guaranteed by all of IESI's current subsidiaries,all of which are 100%owned by IESI. Condensed consolidating financial information is not provided as IESI has no independent assets or operations,the subsidiary guarantees are full and unconditional and joint and several and there are no 24 of35 significant restrictions on the ability of the Company or any subsidiary guarantor to obtain funds from its subsidiaries by dividend or loan. In August 2002,the Company entered into two interest rate swap agreements,which are effective through June 15,2012,with two financial institutions. Under each swap agreement,the fixed interest rate on$25,000,000 of the Senior Subordinated Notes effectively was converted to an interest rate of 5.275% and 5.305%,respectively,plus an applicable floating rate margin that is based on six month LIBOR which is readjusted semiannually on June 15 and December 15 of each year. 6. Income Taxes The provision for income taxes for each of the last three years consists of: 2003 2002 2001 Federal: Current $ — $ -- $ Deferred 2,469,659 3,026,884 376,611 State: Current 1,031,230 439,923 294,609 Deferred 203,072 259,447 32,291 $3,703,961 $3,726,254 $ 703,501 At December 31,2003, the Company had a federal net operating loss carryforward of approximately$45,059,000,which is available to reduce future taxable income and will begin to expire in 2012. t The Company's net operating loss carryforwards expire at specific future dates and utilization of certain carryforwards is limited to specific amounts each year. Due to the uncertain nature of their ultimate realization,the Company has established a valuation allowance against these carryforward benefits and will recognize benefits only as reassessment demonstrates they are more likely than not to be realized. Realization is dependent upon future taxable earnings in specific tax jurisdictions. During 2003,the valuation allowance increased due to the change in the temporary differences related to tax deductible goodwill,resulting from the adoption of SPAS No. 142,in 2002. Also during 2003,the valuation allowance was reduced by approximately$237,000 as a result of the recognition of deferred tax liabilities resulting from certain purchase business combinations. Significant components of the Company's deferred income tax liabilities and assets as of December 31 are as follows: 2003 2002 Deferred income tax liabilities: Depreciation and amortization $ 24,104,121 $ 20,893,551 Other 204,759 — Total deferred income tax liabilities 24,308,880 20,893,551 Deferred income tax assets: Allowance for doubtful accounts 910,860 357,580 Other 871,894 634,624 Net operating loss carryforward 17,122,540 14,087,575 Valuation allowance (3,189,554) (106,637) Total deferred income tax assets 15,715,740 14,973,142 Net deferred income tax liability $ 8,593,140 $ 5,920,409 25 of 35 The following is a reconciliation of the federal statutory income tax rate to the effective income tax rate for 2003,2002 and 2001: 2003 2002 2001 Federal statutory income tax rate(benefit) (34.0)% 34.0% 34.0% State income taxes,net of federal benefit 38.8% 13.6% 10.0% Change in valuation allowance 128.1% 35.3% (25.6)% Non-deductible amortization — -- 4.4% Other 9.2% 3.1% 1.0% 142.1% 86.0% 23.8% 7. Commitments and Contingencies The Company has operating lease agreements for service facilities,office space and equipment. Some of these lease agreements contain renewal clauses that allow the Company,at its option,to extend the term of the leases for additional periods.At December 31,2003,total future minimum payments under the noncancelable operating leases with terms of one year or more consisted of: Operating Leases 2004 $ 2,117,000 2005 2,280,000 2006 2,023,000 2007 1,931,000 2008 1,603,000 Thereafter 7,731,000 Total minimum lease payments $ 17,685,000 Rental expense was$3,532,000,$3,164,000 and$2,989,000 during 2003,2002 and 2001, respectively. In certain business combinations,the Company agrees to pay additional amounts to sellers contingent upon achievement by the acquired businesses of certain negotiated goals,such as targeted revenue levels or targeted disposal volumes. Contingent payments,when incurred,are recorded as purchase price adjustments or expense,as appropriate,based on the nature of each contingent payment. The Company has a certain disposal contract that requires the Company to meet specific volume requirements. These volume requirements are measured based on an annual average. In the event the Company does not meet the required volumes,the Company would be required to make additional payment based on the volume shortfall. At December 31,2003,there was no volume requirement shortfall related to the disposal contract that would have a significant impact on the Company's business,financial condition, results of operation or cash flows. The Company's business activities are conducted in the context of a developing and changing statutory and regulatory framework.Governmental regulation of the waste management industry requires the Company to obtain and retain numerous governmental permits to conduct various aspects of its operations.These permits are subject to revocation,modification or denial.The costs and other capital expenditures,which may be required to obtain or retain the applicable permits or comply with applicable regulations,could be significant. Any revocation,modification or denial of permits could have a material adverse effect on the Company. 26 of 35 The Company is subject to liability for any environmental damage that its solid waste facilities may cause to neighboring landowners or residents,particularly as a result of the contamination of soil, groundwater or surface water,and especially drinking water,including damage resulting from conditions existing prior to the acquisition of such facilities by the Company.The Company may also be subject to liability for any off-site environmental contamination caused by pollutants or hazardous substances whose transportation,treatment or disposal was arranged by the Company or its predecessors. The Company has an accrued environmental liability of approximately$25,253,000 on its balance sheet at December 31,2003,related to an inactive landfill(hereinafter referred to as Tantalo)which the Company assumed as part of the SMI acquisition in October 2003. The liability consists of approximately $15,971,000 related to the remediation of Tantalo and approximately$9,282,000 post closure monitoring of Tantalo for 30 years. The initial remediation work will commence in 2004,and the post-closure monitoring period is expected to commence in 2007. Tantalo is a 26-acre landfill that stopped accepting waste in 1976 and has been identified by the State of New York as an Inactive Hazardous Waste Disposal Site. During its period of operation,Tantalo received both municipal and industrial waste,some of which has been found to exhibit"hazardous"characteristics as defined by the US Resource Conservation and Recovery Act. Past activities at Tantalo have resulted in the release of hazardous wastes into the groundwater. A remediation program has been developed for Tantalo in conjunction with the New York State Department of Environmental Conservation.The remediation program includes:installation of groundwater barriers,protective liner caps,leachate and gas collection systems and storm-water drainage controls,as well as methods to accelerate the decontamination process. In addition,simultaneously with the acquisition of SMI,the Company purchased a"Cleanup Cost Cap Insurance Policy",with a ten year policy period,which provides an additional$25,000,000 of coverage in excess of the remediation portion of the liability. Remediation costs incurred were approximately$108,000 during the year ended December 31,2003. The remediation costs,which are not discounted,are included in the company's liabilities at December 31,2003 in"Accrued environmental and landfill costs." Estimates of the method and ultimate cost of remediation require a number of assumptions and are t inherently difficult,and the ultimate outcome may differ materially from current estimates. However,the Company believes that its extensive experience in the environmental services industry,together along with its use of third-party consulting engineers provides a reasonable basis for estimating its aggregate liability. As additional information becomes available,estimates are adjusted as necessary. It is possible that technological,regulatory or enforcement developments,the results of environmental studies,or other factors could necessitate the recording of additional liabilities which could be material. The estimated environmental remediation liabilities have not been reduced for possible recoveries from other potentially responsible third parties. As part of a Host Community Agreement(HCA)between the Company and the Town of Seneca Falls in which the Seneca Meadows Landfill is located,the Company has agreed to guarantee the market value of certain homeowners'properties within a certain distance of the landfill based on a Property Value Protection Program(PVPP)incorporated into the HCA. Under the PVPP,the Company would be responsible for the difference between the sale value and the hypothetical market value of the homeowners' properties assuming a previously approved expansion of the landfill had not been approved,if any. The Company does not believe it is possible to determine the contingent obligation associated with the PVPP guarantees,but does not believe it would have a material effect on the Company's financial position or results of operations. As of December 31,2003,the Company has not been required to compensate any homeowner under the PVPP. In the normal course of its business and as a result of the extensive governmental regulation of the solid waste industry,the Company is subject to various judicial and administrative proceedings involving federal,state or local agencies.In these proceedings,an agency may seek to impose fines on the Company or to revoke or deny renewal of an operating permit held by the Company.From time to time the Company may also be subject to actions brought by citizens'groups or adjacent landowners or residents in connection with the permitting and licensing of landfills and transfer stations,or alleging environmental € damage or violations of the permits and licenses pursuant to which the Company operates. 27 of 35 In addition,the Company may become party to various claims and suits pending for alleged damages to persons and property,alleged violations of certain laws and alleged liabilities arising out of matters occurring during the normal operation of the waste management business.However,as of December 31,2003,there were no proceedings or litigation involving the Company that the Company believed would have a material adverse impact on its business,financial condition,results of operations or cash flows. 8. Redeemable Preferred Stock In 2003,the Company issued 49,660 shares of Series E Convertible Preferred Stock(Series E Preferred)at$1,000 per share.At the closing,the Company paid the holders of the Series E Preferred a 3% fee,which was accounted for as a reduction of the carrying value of the Series E Preferred.The Series E Preferred was issued with a beneficial conversion feature.The amount of the beneficial conversion feature was$1,489,800,which represents the excess of fair value of common stock that the holder would receive at conversion over the proceeds received.As the Series E Preferred is convertible at any time at the option of the holder into Common Stock of the Company,the discount related to the beneficial conversion feature was amortized upon issuance.The difference between the redemption value and carrying value as of December 31,2003 of$1,641,672 will be recognized upon the determination that redemption is probable. As of December 31,2003,redemption was considered uncertain as redemption is contingent upon the occurrence of a Liquidation,Sale Transaction or Asset Sale(LSA Event). The holders of the Series E Preferred,subject to certain regulatory requirements applicable to such holders,along with the Series A,B,and C Preferred holders are entitled to vote separately as a class (Preferred Holders)on each matter required to be submitted to a vote of holders of Common Stock. In respect to the election of the members of the Board of Directors,the holders of Series A,B and C Preferred vote together with the holders of Class A Common Stock,with each holder having one vote per share, while the holders of the Series D and E Preferred have no right to vote.Certain matters requiring a vote, ( such as amending the Company's Certificate of Incorporation or by-laws,issuing additional shares of preferred stock or authorizing and issuing capital stock,must obtain the approval of not less than 75%of the Preferred Holders. The Company entered into a Second Amended and Restated Stockholders'Agreement,dated as of October I0,2003. Per the terms of the Company's Second Amended and Restated Stockholders' Agreement,the Company's board of directors currently consists of eight members designated as follows: ■ Mr.Flood is entitled to be a director as long as he is the Company's Chief Executive Officer; • Three Preferred Holders are entitled to designate one director each; • Two Preferred Holders are entitled to designate two directors each. The Series E Preferred shall be entitled to receive,when and if declared by the Company's Board of Directors,a dividend at a rate of f 0%per annum,or$100 per share.Such dividends accrue and compound semiannually on a cumulative basis whether or not they have been declared.During 2003,the carrying amount of the Series E Preferred was increased for accumulated and unpaid dividends of $1,102,561 in the aggregate,or$22.20 per share, The Series E Preferred ranks senior to all other classes of stock with respect to the payment of dividends and distributions of the applicable liquidation preferences.In the event of an LSA Event,the holders of the Series E Preferred are entitled to a Liquidation Preference equal to$1,000 per share,plus all accrued and unpaid dividends for each share of the Series E Preferred,if any,before any distribution of assets are made to the holders of Series A,B,C and D Preferred and the holders of Common Stock of the Company.In the event of a Sales Transaction(as defined in the Company's Certificate of Incorporation), each holder of the Series E Preferred has the right to redeem for cash its Series E Preferred shares along 28 of 35 with all accrued and unpaid dividends. In the event of an Asset Sale(as defined in the Company's Certificate of Incorporation)of the Company,the Series E Preferred shares along with all accrued and unpaid dividends will be redeemed into cash.The Series E Preferred shares are convertible into the Company's Common Stock at the Company's option upon an IPO only if the Series E Preferred's calculated annual return is at least 25%.The Series E Preferred is convertible at any time into Common Stock of the Company at$100 per Common Share at the option of the holder. In 2001,the Company issued 55,000 shares of Series D Convertible Preferred Stock(Series D Preferred)at$1,000 per share.At the closing,the Company paid the holders of the Series D Preferred a 3% fee,which was accounted for as a reduction of the carrying value of the Series D Preferred.The Series D Preferred was issued with a beneficial conversion feature.The amount of the beneficial conversion feature was$1,650,000,which represents the excess of fair value of common stock that the holder would receive at conversion over the proceeds received.As the Series D Preferred is convertible at any time at the option of the holder into Common Stock of the Company,the discount related to the beneficial conversion feature was amortized upon issuance.The difference between the redemption value and carrying value as of December 31,2003,of$2,619,877 will be recognized upon the determination that redemption is probable. As of December 31,2003,redemption was considered uncertain as redemption is contingent upon the occurrence of a Liquidation,Sale Transaction or Asset Sale(LSA Event). The holders of the Series D Preferred,subject to certain regulatory requirements applicable to such holders,along with the Series A,B and C Preferred holders are entitled to vote separately as a class (Preferred Holders)on each matter required to be submitted to a vote of holders of Common Stock.In respect to the election of the members of the Board of Directors,the holders of Series A,B and C Preferred vote together with the holders of Class A Common Stock,with each holder having one vote per share, while the holders of the Series D Preferred have no right to vote. Certain matters requiring a vote,such as amending the Company's Certificate of Incorporation or by-laws,issuing additional shares of preferred stock or authorizing and issuing capital stock,must obtain the approval of not less than 75%of the Preferred Holders. The Series D Preferred shall be entitled to receive,when and if declared by the Board of Directors, a dividend at a rate of 10%per annum,or$100 per share.Such dividends accrue and compound semiannually on a cumulative basis whether or not they have been declared.During 2003 and 2002,the carrying amount of the Series D Preferred was increased for accumulated and unpaid dividends of $6,382,922 and$5,789,499 in the aggregate,or$116.05 and$105.26 per share,respectively. The Series D Preferred ranks junior to the Series E Preferred and senior to all other classes of stock with respect to the payment of dividends and distributions of the applicable liquidation preferences. In the event of an LSA Event,the holders of the Series D Preferred are entitled to a Liquidation Preference equal to$1,000 per share,plus all accrued and unpaid dividends for each share of the Series D Preferred,if any,before any distribution of assets are made to the holders of Series A,B and C Preferred and the holders of Common Stock of the Company.In the specific event of a Sales Transaction(as defined in the Company's Certificate of Incorporation),it is the right of each holder of the Series D Preferred to redeem into cash its Series D Preferred shares along with all accrued and unpaid dividends.In the specific event of an Asset Sale(as defined in the Company's Certificate of Incorporation)of the Company,the Series D Preferred shares along with all accrued and unpaid dividends will be redeemed into cash. The Series D Preferred shares are convertible into the Company's Common Stock at the Company's option upon an IPO only if the Series D]"referred's calculated annual return is at least 25%.The Series D Preferred is convertible at any time into Common Stock of the Company at$80 per Common Share at the option of the holder. In 1999,the Company issued 55,000 shares of Series C Convertible Preferred Stock(Series C Preferred)at$1,000 per share.At the closing,the Company paid the holders of the Series C Preferred a 3% fee,which was accounted for as a reduction of the carrying value of the Series C Preferred.The difference between the redemption value and carrying value as of December 31,2003,of$2,042,461 will be recognized upon the determination that redemption is probable.As of December 31,2002,redemption is considered uncertain as redemption is contingent upon the occurrence of an LSA Event. 29 of 35 t The Series C Preferred shall be entitled to receive,when and if declared by the Board of Directors, a dividend at a rate of 15%per annum,or$150 per share. Such dividends accrue and compound semiannually on a cumulative basis whether or not they have been declared.During 2003,2002 and 2001 the carrying amount of the Series C Preferred was increased for accumulated and unpaid dividends of $14,200,423,$12,288,090 and$10,014,264 in the aggregate,or$258.19,$223.42 and$192.08 per share, respectively. The Series C Preferred ranks junior to the Series D and E Preferred and senior to all other classes of stock with respect to the payment of dividends and distributions of the applicable liquidation preferences.Upon the occurrence of an LSA Event,the holders of the Series C Preferred are entitled to a Liquidation Preference equal to$1,000 per share plus all accrued and unpaid dividends for each share of the Series C Preferred,if any,before any distribution of assets made to the holders of Series A and B Preferred Stock and Common Stock of the Company. In the specific event of a Sales Transaction,it is the right of each holder of the Series C preferred to redeem into cash its Series C Preferred shares along with all accrued and unpaid dividends. In the specific event of an Asset Sale of the Company,the Series C Preferred shares along with all accrued and unpaid dividends will be redeemed into cash.The Series C Preferred shares are convertible into the Company's Common Stock at the Company's option upon an IPO (as defined in the Company's Certificate of Incorporation)only if the Series C Preferred calculated annual return is at least 25%annually.The Series C Preferred is convertible at any time along with all accrued and unpaid dividends into Common Stock of the Company at$150 per Common Share at the option of the holder. The Company has 32,000 shares of Series A Convertible Preferred Stock(Series A Preferred)and 20,100 shares of Series B Convertible Preferred Stock(Series B Preferred),both issued at$I,250 per share. Upon the occurrence of an LSA Event of the Company,the holders of the Series A and B Preferred are entitled to a Liquidation Preference equal to the$1,250 per share plus all declared and unpaid dividends,if any,on each share before any distribution of assets made to the holders of Common Stock of the Company. r So long as shares of Series E Preferred,D Preferred or Series C Preferred are outstanding,the Company may not declare or pay any dividends on shares of Series A Preferred or Series B Preferred.Additionally, holders of Series A and B Preferred are entitled to receive dividends only as dividends are declared and paid on the common stock.The difference between the redemption value and carrying value as of December 31,2003 of$507,727 will be recognized upon the determination that redemption is probable.As of December 31,2003,redemption is considered uncertain as redemption is contingent upon the occurrence of an LSA Event. The Series A and B Preferred rank junior to the Series E,D and C Preferred,equally as to each other and senior to all other classes of stock with respect to the payment of dividends and distributions of the applicable liquidation preferences. In the event of a Sales Transaction,Asset Sale or IPO(a Triggering Event)and the calculated internal rate of return,calculated in accordance with the formula provided in the Company's Certificate of Incorporation,with respect to the Series A and B Preferred is less than 25%,the then-applicable conversion price per share will be reduced,effective as of the date of such triggering event, to the higher of(a)$80 per share(subject to adjustment in certain circumstances)or(b)a price per share that,after giving effect to such reduction,will yield an internal rate ofretum(calculated in accordance with the same formula)of 25%. In the specific event of a Sales Transaction,it is the right of the each holder of the Series A and B Preferred to redeem into cash its shares of Series A and B Preferred,along with all accrued and unpaid dividends. In the specific event of an Asset Sale of the Company,the Series A and B Preferred shares along with all accrued and unpaid dividends will be redeemed into cash.The shares are convertible into shares of Common Stock of the Company at the Company's option upon an IPO.The shares are convertible at any time into Common Stock of the Company at$125 per Common Share at the option of the holder. The Company's Series A,B,C,D and E Preferred is considered redeemable due to certain terms of the Preferred Shares and due to a majority of members of the Board of Directors being holders of ( Preferred Shares.Certain events,as defined,can trigger redemption and the occurrence of such events is effectively controlled by the holders of the Preferred Shares. 30 of 35 9. Stockholders' Equity In September 2001,the Company completed a 1-for-10 reverse stock applicable to all authorized and outstanding shares of common stock. The Company's Certificate of Incorporation authorizes 4,650,000 shares of common stock consisting of 4,200,000 shares of Class A voting common stock and 450,000 shares of Class B convertible non-voting common stock. Holders of Class A common stock are entitled to one vote per share for each share held of record on all matters submitted to a vote of stockholders.Except as required by law,holders of Class B common stock are not entiticd to vote.At any time,holders of the Class B common stock can convert,on a I-for-I basis,such stock into shares of Class A common stock. The Company adopted the 1999 Stock Option Plan(the Plan)in January 1999 and amended the Plan in March 2003. Options granted under the Plan are nonqualified stock options(options).The Plan provides for the granting of options to key employees,certain consultants and advisors who perform services for the Company,and members of the Board of Directors of the Company. Under the Plan,the Company is authorized to issue up to 250,000 shares of the Company's Class A Common Stock. Options issued under the Plan expire 10 years from date of grant and become fully vested and exercisable five to eight years from date of grant.All granted options become fully vested and exercisable upon a change in control of the Company. In addition,upon the occurrence of an initial public offering of the Company's common stock,the options vest on an accelerated basis from immediately to on a pro-rata basis up to four years from the date of grant. The following table,adjusted for all periods to reflect the 1-for-10 reverse stock split,summarizes activity of the Company's stock options: Weighted Weighted Average Average Fair Value at the Shares Exercise Price Date of Grant Options outstanding at December 31,2000 128,162 $ 102.20 — Granted 22,600 $ 150.00 $ 21.80 Canceled (138,366) $ 110.20 — Options outstanding at December 31,2001 12,396 $ 100.00 — Granted 180,266 $ 80.00 $ 3.06 Canceled (2,850) $ 80.00 — Options outstanding at December 31,2002 189,812 $ 81.31 — Granted 22,600 $ 95.00 $ 2.08 Canceled (1,450) $ 87.20 Options outstanding at December 31,2003 210,962 Weighted average remaining contractual life of options outstanding at December 31,2003 8.43 years The range of exercise prices of options outstanding 80.00 to at December 31,2003 $ $t00.00 No shares were exercisable at December 31,2003,2002 or 2001. 31 ❑f 35 The fair value of each option is estimated on the date of grant using the Black-Scholes option- pricing model with the following assumption: 2003 2002 Expected dividend yield 0% 0% Expected stock price volatility I% 1% Risk free interest rate 1.25% 1.61% Expected life of options 1.75 years 2.42 years Of the 4,395,020 shares of Class A voting common stock and Class B non-voting common stock authorized but unissued as of December 31,2003,the following shares were reserved for issuance: Conversion of Series A 500,000 Conversion of Series B 314,063 Conversion of Series C 702,988 Conversion of Series D 859,192 Conversion of Series E 507,626 Common stock options 210,962 3,093,831 Upon termination,a certain employee of the Company can require the Company to purchase that employee's outstanding stock at fair market value as determined in good faith by the Board of Directors of the Company. 10. Segment Reporting The Company's two geographic regions are the Company's reportable segments.The segments provide integrated waste management services consisting of collection,transfer,disposal,and recycling services to commercial,industrial,municipal,and residential customers.Summarized financial information concerning the Company's reportable segments for the respective years ended December 31 is shown in the following table: South Northeast Corporate Region Region Functions Total Year ended December 31,2003 Outside revenues Collection $140,607,597 $ 33,492,208 $ — $174,099,805 Transfer 4,562,257 41,223,008 — 45,785,265 Disposal 9,639,844 18,679,218 28,319,062 Recycling 2,674,848 3,720,016 — 6,394,864 Other 701,058 7I5,624 — 1,416,682 Total outside revenues 158,185,604 97,830,074 256,015,678 Income(loss)from operations 11,726,877 15,275,620 (8,992,586) 18,009,911 Depreciation,depletion and amortization 26,327,IO2 14,072,262 680,025 41,079,389 Purchases of property and equipment 36,131,770 12,473,462 279,647 48,884,879 Acquisitions of waste operations and initial development costs for newly-acquired permitted landfills. 32,884,743 187,678,536 — 220,563,279 Goodwill Acquired 8,522,881 -- — 8,522,88I Goodwill 90,707,519 47,628,196 — 138,335,715 Total assets $302,854,805 $378,653,540 $21,538,870 $703,047,215 Year ended December 31,2002 Outside revenues 32 of 35 Collection $ 112,157,748 $ 31,019,630 $ — $143,177,378 Transfer 4,531,093 43,139,053 — 47,670,146 Disposal 7,752,210 6,763,089 — 14,515,299 Recycling 2,651,559 3,651,458 — 6,303,017 Other 1,241,389 33,323 — 1,274,712 Total outside revenues 128,333,999 94,606,553 — 212,940,552 Income(loss)from operations 16,111,068 12,206,502 (8,403,372) 19,914,199 Depreciation,depletion and amortization 20,063,067 7,178,368 607,475 27,848,910 Purchases of property and equipment 32,245,712 9,861,896 1,076,219 43,183,827 Acquisitions of waste operations 43,671,250 698,513 — 44,369,763 Goodwill Acquired 20,753,125 — — 20,753,125 Goodwill 80,781,112 47,628,196 — 128,409,308 Total assets $259,880,930 $151,673,046 $16,505,040 $428,059,016 South Northeast Corporate Region Region runctions Total Year ended December 31,2001 Outside revenues Collection $ 94,569,239 $ 28,938,761 $ — $123,508,000 Transfer 3,155,898 39,572,298 — 42,728,196 Disposal 6,233,082 0,762,644 -- 12,995,726 Recycling 2,047,233 3,603,701 — 5,650,934 Other 801,732 5,721 807,453 Total outside revenues 106,807,184 78,883,125 — 185,690,309 Income(loss) from operations 13,140,189 10,095,720 (7,146,641) 16,089,268 Depreciation,depletion and amortization 16,921,772 8,277,993 522,205 25,721,970 Purchases of property and equipment 24,902,403 6,907,824 596,397 32,406,624 Acquisitions of waste operations 12,481,295 3,147,099 — 15,628,394 Goodwill Acquired 6,143,011 6,143,011 Goodwill 60,027,997 47,628,196 — 107,656,183 Total assets $196,373,949 $149,838,183 $ 8,095,944 $354,308,076 11. Employee Benefit Plans The Company has a defined contribution 401(k)savings plan that covers substantially all non- union employees meeting certain minimum eligibility requirements.Participating employees can elect to defer a portion of their compensation and contribute it to the plan on a pre-tax basis.The Company also matches certain amounts,as defined. Contributions made by the Company under the plan were$496,000,$483,000 and$390,000 for the years ended December 31,2003,2002 and 2001,respectively. 12. Related Parties During 2003,IESI paid two companies affiliated with two employees of the Company approximately$760,000 for temporary labor services and$116,000 for maintenance related services, respectively, During 2003,IESI paid a company affiliated with a director of the Company$150,000 as final payment for the purchase of an airplane. During 2002,IESI paid the same company a down payment of $1,000,000 related to the purchase of the airplane. IESI paid a company affiliated with a director of the Company approximately$250,000 during both 2002 and 2001 for expenses related to financing transactions. 33 of 35 13. Quarterly Financial Data(Unaudited) Historically,the Company's quarterly operating results have fluctuated. The fluctuations may be caused by many factors,including revenue mix and general economic conditions. The Company's revenues and income from operations typically reflect seasonal patterns. The Company's operating revenues tend to be somewhat lower in the winter months,primarily due to the lower volume of construction and demolition waste. The volumes of industrial and residential waste in certain regions where the Company operates also tend to decrease during the winter months. The Company's first and fourth quarter results of operations typically reflect this seasonality. The following table summarizes the unaudited quarterly results of operations for 2003 and 2002: First Second Third Fourth Qnarter(a)(r) Quarter(c) Quarter(c) Quarter(c) 2003 Services revenues $55,413,871 $60,899,514 $64,175,475 $75,526,818 Income from operations 3,436,670 4,860,908 4,694,023 5,018,310 Loss before cumulative effect of change in accounting principle (500,913) (23,921) (2,836,009) (2,949,597) Net Loss $ (2,031,62I) $ (23,921) $ (2,836,009) $ (2,949,597) First Second Third Fourth Quartea• Quarter uarter b Quarter 2002 Services revenues $46,657,958 $52,370,268 $57,220,618 $56,691,708 Income from operations 5,071,194 6,064,804 4,924,722 3,853,478 Net income(loss) $ 109,617 $ 934,180 $ (263,534) $ (174,756) (a) The first quarter of 2003 results include a net of tax charge of$1,476,450 related to the cumulative effect of a change in accounting principle for the initial adoption of SFAS No. 143. See Note 2 for further discussion. Approximately$54,000 of this amount was recorded by the Company in the fourth quarter of 2003 due to a minor revision in our engineering estimates for one of our landfills. For purposes of quarterly reporting within this table,we have revised our net income(loss)amount previously reported in our 2003 quarterly report. (b) Included in the third quarter of 2002 income from operations are pre-tax charges totaling $980,000,of which$828,000 related to the write-off of certain landfill and transfer station development projects and$152,000 related to the write-off of legal,engineering and other professional fees incurred in connection with aborted acquisitions. (c) In the fourth quarter of 2003 the Company recorder!approximately$2,168,000 of expenses related to misconduct of a manager in the Company's South Region. For purposes of quarterly reporting within this table,we have revised our net income(loss) amount previously reported in our 2003 quarterly reports to reflect the allocation of such expenses to the appropriate quarters. Included in the first,second,third and fourth quarters of 2003 are expenses of$125,000,$125,000,$419,000 and$1,749,000, respectively. 14. Subsequent Events In January 2004,the Company entered into four,three-year interest rate swap agreements with f financial institutions. Under each swap agreement,the variable interest rate on$25.0 million outstanding 34 of 35 under the Company's senior credit facility effectively was converted to a fixed interest rate of 2.58%, 2.61%,2.71%and 2.75%,respectively,plus an applicable LIBOR margin, On January 28,2004,the Compensation Committee of the Board of Directors of the Company granted non-qualified stock options to purchase an aggregate of 79,794 shares of the Company's Class A voting common stock to certain employees and directors of the Company pursuant to the Company's 1999 Stock Option Plan,as amended(the Plan). On the same date,the Board of Directors also approved an amendment to the Plan increasing the number of options authorized to be granted thereunder from 250,000 to 400,000. The options were granted at an exercise price of$100.00 per share,which was equal to or greater than the estimated fair value of the underlying shares. Options granted under the Plan expire 10 years from the date of grant and become fully vested over the periods ranging for 5 to 8 years. In March 2004,following an internal investigation,the Company discovered that the manager of a division in the Company's South Region had engaged in misconduct resulting in an overstatement of the South Region's accounts receivable and an understatement of its expenses during 2003. As a result of this incident,the Company recorded in general and administrative expenses reserves for bad debts of $1,600,000 and recorded in operating expenses an accrual of$833,000 related to operating expenses that had not been accrued as of December 31,2003. 35 of 35 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 © ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2003 OR ❑ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 333-98657 IESI CORPORATION (Exact name of registrant as specified in its charter) Delaware 75-2712191 (State of other jurisdiction of incorporation or (I.R.S. Employer Identification Number) organization) 2301 Eagle Parkway Suite 200 Fort Worth,Texas 76177 (Address of principal executive offices, including zip code) (817)632-4000 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: None Item 6. Selected Financial Data. We set forth below our selected historical consolidated financial data. The information in the following table is qualified by reference to,and should be read in conjunction with,Item 7."Management's Discussion and Analysis of Financial Condition and Results of Operations"and our consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. The selected historical statement of operations data and cash flow data for the years ended December 31, 2001,2002 and 2003 and the selected historical balance sheet data at December 31,2002 and 2003 set forth below have been derived from our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. The selected historical statement of operations data and cash flow data for the years ended December 31, 1999 and 2000 and the selected historical balance sheet data at December 31, 1999,2000 and 2001 set forth below have been derived from our audited consolidated financial statements not included in this Annual Report on Form 10-K. See Part 1I, Item 7."Management's Discussion and Analysis of Financial Condition and Results of Operations"and the notes to our consolidated financial statements regarding acquisitions occurring in 2001,2002 and 2003 which affect the comparability of the financial information presented. 1999 2000 2001 2002 2003(t) (dollars in thousands) Statement of Operations Data: Services revenue $ 110,115 $ 139,634 $ 185,690 $ 212,941 $ 256,015 Costs and expenses: Operating 79,807 90,560 119,816 139,641 164,203 General and administrative 19,084 18,543 24,063 25,537 32,723 Depreciation,depletion and amortization 15,007 20,087 25,722 27,849 41,079 Total costs and expenses 113,898 129,190 169,601 193,027 238,005 Income(loss)from operations (3,783) 10,444 16,099 19,914 18,010 Interest expense,net (7,905) (11,142) (12,961) (14,067) (20,276) Loss on termination of interest rate swaps (826) - Loss on extinguishment of debt -- --- - (586) - Other income(expense),net 1,705 (186) (178) (103) (340) Income(loss)before income taxes (9,983) (884) 2,950 4,332 (2,606) Income tax expense (83) (171) (703) (3,726) (3,704) Income(loss)before cumulative effect of change in accounting principle (10,066) (1,055) 2,247 606 (6,310) Cumulative effect of change in accounting principle net of income tax benefit of$0 (1,531) Net income(loss) $ (10,066) $ (1,055) $ 2,247 $ 606 $ (7,841) Pro forma income(loss)before cumulative effect of change in accounting principle, assuming change in accounting principle described in Note 2 to the consolidated financial statements was applied retroactively $ (10,554) $ (1,397) $ 1,946 $ 139 $ (6,310 At December 31, 1999 2000 2001 2002 2003 (dollars in thousands) Balance Sheet Data: Cash and cash equivalents $ 2,048 $ 5,073 $ 2,171 $ 2,590 $ 4,197 Working capital 11,184 3,828 (158) 469 (8,003) Property and equipment,net 133,170 175,094 198,521 241,870 488,660 Goodwill,net 84,215 106,224 107,656 128,409 138,336 Other intangible assets,net 14,733 14,107 15,576 22,666 32,986 Total assets 259,254 324,239 354,308 428,059 703,047 Long-term debt(including current portion) 107,518 161,849 120,351 198,571 380,861 Redeemable preferred stock 121,575 131,395 195,272 213,350 283,054 Stockholders' equity(deficit) 3,019 (7,860) (18,353) (36,224) (65,751) 1999 2000 2001 2002 2003(1) (dollars in thousands) Other Financial Data; Cash provided by(used in)operating activities $ (16,855) $ 24,588 $ 28,803 $ 30,624 $ 46,484 Cash used in investing activities (101,409) (76,035) (48,642) (98,111) (269,579) Cash provided by financing activities 118,501 54,471 16,938 57,905 224,702 Income from operations before depreciation,depletion and amortization(2) $ 11,224 $ 30,531 $ 41,811 $ 47,763 $ 59,089 Income from operations before depreciation,depletion and amortization margin(3) 10.2% 21.9% 22.5% 22,4% 23.1% (1) The selected financial data presented for the year ended December 31,2003 include the results of operations of our Seneca Falls,New York IandfiIl from the acquisition date of October 9,2003 through year-end. (2) In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles,or GAAP,we also disclose income from operations before depreciation,depletion and amortization,which is not a GAAP measure. We believe that our presentation of income from operations before depreciation,depletion and amortization is useful to investors because it is an indicator of the strength and performance of our ongoing business operations,including our ability to fund capital expenditures and to incur and service debt. In addition,certain covenants in our senior credit facility are tied to a substantially similar measure(which hermits us to add back certain additional amounts to income from operations). While depreciation,depletion and amortization are considered operating costs under GAAP,these expenses represent the non-cash current period allocation of costs associated with long-lived assets acquired or constructed in current and prior periods. We also use income from operations before depreciation,depletion and amortization to evaluate our operations and management performance. We do not intend for income from operations before depreciation,depletion and amortization to be considered in isolation or as a substitute for GAAP measures. Other companies may define this financial measure differently. Following is a reconciliation of income from operations before depreciation,depletion and amortization to income from operations: r -2- 1999 2000 2001 2002 2003 (in thousands) Income from operations before depreciation,depletion and amortization $ 11,224 $ 30,531 $ 41,811 $ 47,763 $ 59,089 Less.depreciation,depletion and amortization 15,007 20,087 25,722 27,849 41,079 Income(loss)from operations $ (3,783) $ 10,444 $ I6,089 $ 19,914 $ 18,0I0 (3) Income from operations before depreciation,depletion and amortization margin represents income from operations before depreciation,depletion and amortization expressed as a percentage of revenue. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. You should read the following discussion in conjunction with Item 6. "Selected Financial Data"and our consolidatedfinancial.statements and the related notes included elsewhere in this Annual Report on Form I O-K. Some of the statements in the following discussion are forward looking statements and, accordingly, are subject to risks and uncertainties discussed below under `=Risk Factors"and elsewhere in this Annual Report on Form I0- K, as well as in our other filings with the Securities and Exchange Commission, which could cause actual results to differ materially from those currently anticipated Industry Overview The non-hazardous solid waste management industry is characterized as localized businesses driven by {, local economic and demographic factors as well as fluctuations in capacity utilization,in both the collection and landfill business. The business is competitive,with competition coming from large well capitalized national companies,regional multi-location companies(some that are also well capitalized)and smaller individual local independent businesses. The industry requires substantial labor and capital resources. Customers require high levels of service,and competitors compete for new collection customers primarily on the basis of price and the quality of service. Localized markets typically have limited number of landfill businesses and these businesses compete for customers on the basis of tipping fees,geographic location and the quality of the operations. Generally,the most profitable industry operators are those companies that are vertically integrated. Companies with vertical integration have collection routes in a local market,use their own transfer stations when required due to the distance between the collection route and landfill,and own or operate a landfill servicing the same local market. Companies that have a vertically integrated market benefit from the internalization of waste (bringing waste to a company-owned landfill)and the ability to charge third-party haulers tipping fees either at landfills or at transfer stations. This industry has been consolidating for nearly forty years. The consolidation in this industry is the result of several factors,including increasing costs and complexity associated with waste management operations,fewer landfills and strict regulatory compliance. For many years now,small independent operators as well as municipalities have lacked the capital resources,quality of management,operating skills and the technical expertise necessary to operate effectively. The industry consolidation coupled with a strict regulatory environment that has closed thousands of small poorly run municipal landfills,has caused solid waste companies to operate larger more regional Iong-lived Iandfills, As the total number of operating landfills have continue to decrease nationwide, landfills servicing a local market have tended to move a greater distance from the center of the local market. Strict regulations and increasing transportation costs have increased collection costs in some markets. To remain competitively priced,controlling the point of transfer from collection routes,through transfer stations to a landfill owned or operated by the company has become increasingly important. The solid waste industry is experiencing l continuing consolidation as companies seek to take advantage of economies of scale by increasing route densities and market share in hauling operations,and by reducing disposal expenses by owning transfer stations and controlling landfill operations. -3- We are one of the leading regional,non-hazardous solid waste management companies in the United States and more than 80%of our collection revenue in 2003 was generated in areas where we believe we are among the top three commercial providers,as measured by collection routes. We provide collection,transfer,disposal and recycling services in two geographic regions.our South Region,consisting of Texas,Louisiana,Oklahoma, Arkansas and Missouri;and our Northeast Region,consisting of New York,New Jersey,Pennsylvania and Maryland. In 2003,we were the tenth largest,and the third largest privately held,service provider in the approximately$43 billion non hazardous solid waste management industry in the United States. In order to compete in the industry,in the past five years we have increased through acquisition the number of landfills we own or operate from two at the end of 1998 to 17 at the end of 2003,and during the same period increased our disposal internalization rate into our landfills from under 10.0%to over 58.0%by the end of 2003. In addition our tuck-in acquisition program focuses on acquiring collection companies in markets where we can internalize the waste into our network of landfilIs and transfer stations. Executive Overview In 2003,we continued to execute our strategy of growth through acquisitions within our existing markets. Our 2003 acquisition activity was highlighted by our$227.8 million(subject to adjustment)acquisition in October of Seneca Meadows,Inc.,the owner of the largest MSW landfill in New York State,which has enabled us to internalize 100%of the MSW we handle at our New York City collection operations and transfer stations,and our $5.3 million acquisition in July of an MSW landfill from the City of Weatherford,Texas which has enabled us to internalize substantially all of our MSW waste collected in and around our Fort Worth,Texas district. In addition, in August 2003 we finished construction and opened greenfield landfills in Richmond,Missouri(near St.Louis)and Oakdale,Louisiana(near AIexandria,)which we had previously acquired in 2002. In April 2003,we received a landfill expansion permit for our Bethlehem Pennsylvania landfill which,among other things,increased our permitted average daily capacity at the landfill from 750 tons to 1,375 tons, The addition of these four new landfills and the Bethlehem landfill expansion increased our internalization rate from more than 40%at the beginning of 2002 to more than 58%by the end of 2003. We believe that this higher level of internalization will result in higher gross margins,higher levels of depletion expense and higher capital expenditures. Our 20.2%year-over-year revenue growth in 2003 was partially the result of acquisitions completed during 2003,as well as the rollover effect from acquisitions completed in 2002. Our 2003 acquisitions resulted in approximately$19.1 million of our 2003 revenue growth. We estimate that these acquisitions should contribute at least$46.0 million of rollover revenue growth in 2004. In general,acquired collection operations have lower operating margins than our existing collection operations during an initial integration period of three to six months following the closing date. Landfill acquisitions,on the other hand,generally have a more immediate impact on our operating margins,as we experienced with our acquisition of the Seneca Falls,New York landfill during the fourth quartcr of 2003. Despite challenges related to a poor national economy and adverse weather conditions primarily in our Northeast Region during the first quarter of 2003,we were able to continue to show strong internal growth. Our 2003 internal revenue growth from new business was 3.1%and from existing business was 2.8%primarily as a result of price increases. During 2003,we added 13 new municipal contracts resulting in new aggregate annual revenue of$4.9 million. Expansion of Management In 2003 and early 2004,we expanded our management infrastructure in the areas of operations,accounting and management information systems to(i)better support our growth,(ii)help improve our under-performing operations,(iii)increase the focus on reducing accidents,injuries and claims management and(iv)support our implementation of requirements under the Sarbanes-Oxley Act of 2002. We also expanded our management infrastructure in our Northeast Region by adding a vice president regional manager in 2003. Capital Expenditures We incurred$54.9 million in capital expenditures in 2003 to continue to grow our business,open the two new greenfeld landfills described above,expand our landfill capacity and update our fleet of collection vehicles. Our collection vehicles had an average age of 5.3 years at the end of 2003, representing only a slight increase from -4- 2002. In 2003,we narrowed the gap between our total capital expenditures and our net cash provided 1 y oprerating. activities. We expect that our net cash provided by operating activities will exceed our capital expenditures in 2004. We intend to use the excess,if any,to help finance acquisitions and/or reduce our indebtedness. Financings During the Fourth quarter of 2003,we completed the sale of$48.0 million of new equity capital,net of fees and expenses,primarily from our existing shareholders and their affiliates and management. Our Series E convertible preferred stock is the most senior class of our equity securities and is otherwise substantially similar to our Series D convertible preferred stock. The new equity helped finance our acquisition of the Seneca Falls,New York landfill. To date,we have raised in excess of$240.0 million of equity capital. In October 2003,we also refinanced our senior credit facility which was to mature in August 2005. The expanded$400.0 million senior credit facility includes up to$200.0 million in revolving loans,which mature on September 30,2008,and a$200.0 million term loan,which matures on September 30,2010. The$200.0 million term loan and borrowings of$33.7 million under the revolver were used to refinance our existing senior credit facility and to finance a portion of the purchase price and expenses related to our acquisition of Seneca Falls,New York landfill. Future borrowings under the revolver may be used to finance future acquisitions,capital expenditures,working capital and for other general corporate purposes. Critical Accounting Policies The following is a discussion of accounting policies applicable to areas where,in preparing our consolidated financial statements,we apply significant judgments and estimates that are inherently uncertain and that affect the reported amounts in such consolidated financial statements: Landfill Life Cycle Accounting. We use life cycle accounting and the units-of-consumption method to recognize certain landfill costs. In life cycle accounting,all costs to acquire,construct and close a site and to maintain a site during the post-closure period are capitalized or accrued and charged to expense based on the consumption of cubic yards of available airspace(sometimes referred to as disposal capacity). During 2003,we continued to account for our landfills using this industry-wide accounting methodology with the exception of capitalized and future landfill final capping costs. Pursuant to SFAS No. 143,we accrue future final capping costs for each specific capping event and amortize those capping costs over the estimated disposal capacity related to that event rather than over the operating life of our entire landfill,as was our practice prior to our adoption of SFAS No. 143. Airspace estimates and cost estimates for final capping,closure and post-closure activities are developed annually by independent engineers together with our engineers. These estimates are used by our operating and accounting personnel to annually adjust our rates used to expense capitalized landfill development costs and accrue closure and post-closure costs. We also estimate additional costs,as required under SFAS No. 143,based on the amount a third party would charge us to perform such activities,even when we expect to perform these activities internally. Because landfill final capping,closure and post-closure obligations are measured at estimated fair value using present value techniques,changes in the estimated timing of future landfill final capping and closure and post- closure activities would have an effect on these liabilities,related assets and results of operations. Additionally, major changes in our airspace estimates could significantly affect our depletion expense as well as closure,final closure and post-closure related expenses. We revise our estimates of remaining airspace to be consumed,total construction and other development costs and closure and post-closure costs annually in the ordinary course of our business when we receive updated information related to such airspace and costs. At the time of the acquisition of a new landfill,we typically initially use the existing estimates of the acquired landfill. As of December 31,2003,we estimated total future construction and other development costs for our then existing landfills to be$436.8 million over their then estimated remaining operating lives. Actual future costs of construction materials and third party labor could differ from the costs we have estimated and changes in legislative or regulatory requirements may cause changes in the landfill permitting process or landfill design and development. Evaluations of new facts and circumstances relating to site permit and design criteria or development costs could -5- also result in revisions to our cost estimates. Changes in our construction and other development cost estimates are reflected prospectively in the landfill depletion rates that are updated annually. t Historically,the significant changes we have made to prior remaining airspace,total construction and other development costs and closure and post-closure costs estimates resulted from our inclusion of additional remaining airspace related to landfill expansions that had not yet received final approval from the applicable regulatory agencies,but met the criteria outlined below and were deemed probable to be permitted where such additional capacity had not been previously included or resulted from our annual update of the above costs and remaining airspace estimates related to newly-acquired landfills. In addition,upon the acquisition of landfills,we often use expansion airspace estimates from sellers in determining our remaining landfill volumes at the newly-acquired landfills. Our post-closing internal analyses of these estimates have sometimes resulted in changes in the estimated remaining airspace at these landfills. The following tables reflects airspace activity for our landfills during the periods indicated: Landfills Balance as of New Acquired, Changes in Balance as of December 31, Expansions Net of Permits Airspace Engineering December 31, 2000 Undertaken Divestitures Granted Consumed Estimates 2001 Permitted airspace: Cubic yards (in thousands) 56,302 407 8,000 (2,432) 768 63,045 Number of sites 9 1 10 Expansion airspace: Cubic yards (in thousands) 46,529 9,200 9,434 11,853 77,016 Number of sites 5 1 1 7 Total available disposable capacity: Cubic yards (in thousands) 102,931 9,200 9,841 8,000 (2,432) 12,621 140,061 Number of sites 9 1 10 Landfills Balance as of New Acquired, Changes in Balance as of December 31, Expansions Net of Permits Airspace Engineering December 3l, 2001 Undertaken Divestitures Granted Consumed Estimates 2002 Permitted airspace: Cubic yards (in thousands) 63,045 27,091 9,200 (2,787) 4,3I0 100,959 { Number of sites 10 4 14 Expansion -6- airspace: Cubic yards (in thousands) 77,016 10,363 (9,200) (794) 77,385 Number of sites 7 2 (1) 8 Total available disposable capacity: Cubic yards (in thousands) 140,061 — 37,454 2,787) 3,5I6 178,244 Number of sites(1) ]0 4 14 Landfills Balance as of New Acquired, Changes in Balance as of December 31, Expansions Net of Permits Airspace Engineering December 31, 2002 Undertaken Divestitures Granted Consumed Estimates 2003 Permitted airspace: Cubic yards (in thousands) 100,859 15,833 8,028 (4,074) 6,792 127,438 Number of sites 14 2 16 Expansion airspace: Cubic yards (in thousands) 77,385 47,829 (8,028) 2,200 119,386 Number of sites 8 3 (1) 10 Total available disposable capacity: Cubic yards (in thousands) 178,244 — 63,G62 — (4,074) 8,992 246,824 Number of sites(]) 14 2 16 (1) Excludes one landfill operated by us at which,pursuant to the terms of the applicable operating contract,we are not responsible for the construction,closure and post-closure costs(and,as a result,for which we do not prepare engineering estimates). As of December 31,2003,we estimated total future payments for landfill capping events and final closure and post-closure obligations for our then existing landfills to be approximately$189 million. The post-closure period during which we are required to maintain and monitor our landfills usually extends for 30 years for MSW landfills and five years for C&D landfills. Changes in legislative or regulatory requirements,including changes in capping or monitoring requirements,types and quantities of materials used or length of post-closure care could -7- cause changes in our closure and post-closure costs. Changes in our closure and post-closure cost estimates are reflected prospectively in the closure and post-closure accrual rates that are updated annually for our operating c, landfills but are recorded immediately for our closed Iandfills. Our accruals for landfill capping events and final closure and post-closure costs were$19.9 million as of December 31,2003,$10.9 million as of December 31,2002 and$10.4 million as of December 31,2001. The net increase of$9.0 million from December 31,2002 to December 31,2003 resulted from accruals of$1.6 million based on the consumption of disposal capacity at our landfills during 2003,$8.9 million based on the historical consumption of disposal capacity at landfills we acquired in 2003 during the periods prior to such acquisitions and $1.1 million of accretion expense and$219,000 from a revision of estimates,both related to our adoption of SFAS No. 143 effective January 1,2003,offset by$1.9 million related to the cumulative effect of change in accounting principle from the adoption of SFAS No. 143 on January I,2003 and actual cash expenditures against these accruals during 2003 of$920,000. The net increase of$463,000 from December 31,2001 to December 31,2002 resulted from accruals of$358,000 based on the consumption of disposal capacity at our landfills during 2002 and$147,000 based on the historical consumption of disposal capacity at landfills we acquired in 2002 during the periods prior to such acquisitions,offset by actual cash expenditures against these accruals during 2002 of$42,000. Landfill depletion rates are influenced by our original cost basis for the landfill,including acquisition costs. Landfills acquired with other assets in business acquisitions are valued at the time of acquisition based upon market value and the purchase price is allocated accordingly. Landfill depletion rates are also influenced by site specific engineering and other cost factors and estimates of remaining disposal capacity at our landfills. Closure and post-closure accrual rates are influenced by our closure and post-closure cost estimates and our estimates of remaining disposal capacity at our landfills. In addition,when we acquire a new landfill,our then current average landfill depletion rate per ton and closure and post-closure accrual rate per ton will likely be altered based on the acquisition cost for the landfill and our estimates of total construction and other development costs,closure and post-closure costs and remaining airspace available to be consumed with respect to such landfill. Probable to be Permitted Airspace at a Landfill. We include in our calculation of total available landfill airspace expansion areas that have not yet received final approval from regulatory agencies but that,in our determination,are probable to be permitted. We have developed the following five criteria that generally must be met before airspace included in an expansion area is determined as probable to be permitted and,therefore,included in our calculation of total available disposal capacity: • the land associated with the expansion airspace is either owned by us or controlled by us pursuant to an option agreement; • we are committed to supporting the expansion project financially and with appropriate resources; • there are no identified irremediable flaws or impediments associated with the project,including political impediments; • the expansion is attainable within a three to five year time frame;and • progress is being made on the project. When our landfill expansion projects meet these criteria,we adjust the rates used for each applicable landfill to expense costs to acquire,construct and close a site and to maintain the site during the post-closure period to include probable to be permitted airspace and all additional costs to be capitalized or accrued associated with the expansion airspace. Once a landfill meets these expansion criteria,our management continually monitors each site's progress in obtaining the expansion permit. If,at any point,we determine that an expansion area no longer meets the required criteria,the probable to be permitted airspace is removed from the landfill's total available capacity,the additional costs to be capitalized or accrued associated with the expansion airspace are removed from the expense calculation and the rates used at the landfill to expense costs to acquire,construct and close a site and to maintain the site during the post-closure period are adjusted accordingly. In addition,if we remove previously included expansion airspace,the landfill's future operations will typically reflect lower profitability due to higher depletion rates,final closure and post-closure accrual rates and expenses related to such removal. The landfill may also become subject to impairment,which could be material to our results of operations during any individual reporting period. In any of these scenarios,our depletion and closure,final closure and post-closure expenses could change significantly. L Useful Lives. Property and equipment are recorded at cost. Depreciation and amortization expense is provided over the estimated useful lives of'the applicable assets using the straight-line method. Depreciation is calculated on the straight-line method over the estimated useful Iives of the related assets which generally range from three to five years for furniture,fixtures and computer equipment;five to ten years for containers,compactors, trucks and collection equipment;and ten to 40 years for buildings and improvements. We assume no salvage value for our depreciable property and equipment. Our estimates regarding the useful lives of our depreciable assets are based on our judgment, Accordingly,actual useful lives could differ from our estimates. Capitalized Interest. We capitalize interest on landfill cell construction projects and other construction projects in accordance with SFAS No.34,"Capitalization of Interest Cost."Capitalizing too much or too little interest expense could lead to a misstatement of interest expense in our statements of operations. In order to minimize this risk,construction projects must meet the following criteria before interest is capitalized:(a)total construction cost must be$100,000 or greater;(b)the construction phase must last a month or longer;and(c)the assets must have a useful life of three years or longer. Revenue and Accounts Receivable. Our revenue consists primarily of collection fees from various customer types,and transfer and landfill disposal fees charged to third parties. Advance billings are recorded as deferred revenue. Our revenue is recognized over the period in which services are provided. Reserves for accounts receivable are provided when a receivable is believed to be uncollectible or generally when a receivable is in excess of 90-120 days old. Establishing reserves against specific accounts receivable and the overall adequacy of our accounts receivable reserve is a matter of professional judgment. If our judgment and estimates concerning the adequacy of our reserves for accounts receivable are incorrect,our bad debt expense would change. Asset,Impairment. We periodically evaluate whether events and circumstances have occurred that may warrant revision of the estimated useful lives of our property and equipment and amortizable intangible assets or whether the remaining balance of these assets should be evaluated for possible impairment. We use an estimate of the undiscounted cash flow over the remaining life of the assets in assessing their recoverability. We measure impairment loss as the amount of the asset,as carried on our books,that exceeds the fair value of the asset. Our estimates of the future cash flows are based on our judgment. Accordingly,we could designate certain assets as impaired that are not impaired or fail to identify certain impaired assets. Derivatives. We periodically use derivatives to limit our exposure to fluctuations in interest rates and limit our exposure to changes in the fair value of our fixed-rate debt due to fluctuations in interest rates. These derivatives have been accounted for in accordance with SFAS No. 133,"Accounting for Derivative and Hedging Activities,"as amended by SFAS No. 138,"Accounting for Certain Derivative Instruments and Certain Hedging Activities."The hedging relationships we have developed are,in our judgment,either 100%effective or highly effective and have been determined by us to meet the criteria for hedge accounting. If these relationships are determined to be other than 100%or highly effective,or if they no longer meet the criteria for hedge accounting,our results of operations could change. Sources of Revenue Our revenue consists primarily of fees we charge customers for solid waste collection,transfer and disposal and recycling services. We frequently perform these services under service agreements with businesses,contracts with municipalities,landlords or homeowners' associations,or subscription arrangements with homeowners. We estimate that more than 40%of our South Region's revenue was generated from 273 municipal contracts during 2003. Our contracts with the City of New York represented in the aggregate approximately 30%of our Northeast Region's,and approximately 11%of our overall,revenue in 2003. Contracts with municipalities provide relatively consistent cash flow during the terms of the contracts. Our municipal contracts generally last from three to five years and usually have renewal options. Many of our municipal contracts are franchise agreements that give us the exclusive right to provide specified waste services within a specified territory during the contract term. These exclusive arrangements are typically awarded,at least initially,on a competitive bid basis or through a formalized proposal and subsequently on a bid or negotiated renewal basis. Collection fees are paid either by the municipalities from their tax revenue or directly by the residents receiving the services. Our collection business from time to time also generates revenue from the sale of recyclable commodities depending on the pricing of the commodities; -9- however,such revenue does not represent a significant part of our recycling revenue. After recyclables are collected,they are delivered to other sorting facilities operated by third parties. We typically determine the prices for our collection services by the collection frequency and level of service,route density,volume,weight and type of waste or recyclable material collected,type of equipment and container furnished,the distance to the disposal or processing facility,the cost of disposing or processing,and prices charged by competitors for similar services. The terms of our contracts sometimes limit our ability to pass on cost increases. Long-term solid waste collection contracts typically contain a formula,usually based on the consumer price index,which automatically adjusts fees,usually on an annual basis,to cover increases in some,but not all of our operating costs. We charge transfer station and landfill customers a"tipping fee"either on a per-ton or per-yard basis for disposing of their MSW,C&D waste or both at the transfer stations and landfills we operate. We generally base our transfer station"tipping fees"on market factors and the cost of processing the waste deposited at the transfer station, the cost of transporting the waste to a disposal facility and the cost of disposal. We generally base our landfill "tipping fees"on market factors and the type and weight or volume of the waste deposited and the type and size of the vehicles used in the transportation of the waste. Many of our landfills are assessed state,county or local community fees based on the volume of tons or yards disposed of during a defined period,usually either monthly or quartcrly. The types and amounts of fees charged can vary widely,but typically a state fee is uniformly charged to all landfills within a state. We report our landfill revenue net of all these fees. Since July 2002,the Commonwealth of Pennsylvania has imposed an additional disposal fee of$4.00 per ton on all solid waste disposed of at MSW landfills in Pennsylvania,raising the total disposal fees assessed on MSW landfill operators under Pennsylvania state law to$7.25 per ton. Landfill operators are authorized to pass through the new fee as a surcharge on any fee schedule established by law or contract. Similarly,transporters and transfer stations are authorized to pass the new fee through as a surcharge to the generators of such MSW. We have passed through the new fee by increasing the fees we charge at our Pennsylvania landfills,New York City transfer stations and New York and Pennsylvania collection operations. Accordingly,the new fee has not had,nor do we expect it to have in the future,a significant effect on our operating income. In .. addition,Pennsylvania and Virginia are both currently considering legislation that would impose a fee of an additional$5.00 on each ton of waste disposed of at landfills in their respective states. Other states could follow this trend as well. Effective September 2003,the City of New York revised its waste collection services maximum rate to permit haulers to charge commercial customers either the current$12.20 per loose yard or a new rate of$160.00 per ton. The disposal facilities in and around New York City charge by the ton. However,prior to September 2003,the maximum rate was imposed on a per loose yard basis only. Accordingly,based on the weight of certain customers' loose yardage,it historically was not economical for us to service customers with heavy waste. As a result,until recently,our New York City collection operations focused on customers that had loose garbage that was lighter and on those customers that have a large paper recycling component,which enabled us to reduce our cost of disposal. The new tonnage rate will enable our New York City collection operations to service all customer in all areas in which we operate. The City of New York awarded us two new three-year contracts,effective November 2003,each with two optional one-year renewals,which collectively provide for us to transfer and dispose of up to an aggregate of 1,500 tons of MSW per day collected by the City. The new contracts replaced our prior contracts with the City which expired in 2003. The City's trucks collect primarily residential waste in Brooklyn and deliver it to two of our Brooklyn transfer stations. In 2003,the City delivered average daily volumes of approximately 1,330 tons pursuant to these contracts. During 2002,New York City announced changes to update its Solid Waste Management Plan,pursuant to which it plans to utilize and upgrade its existing marine transfer station system instead of private transfer stations to process and transfer its residential waste stream of approximately 12,000 tons of MSW per day. New York City initially intended to implement these changes by retrofitting and repermitting these marine transfer stations by 2008 so that the stations could containerize the City's residential MSW on site and then transport the loaded containers to ultimate disposal sites by alternative transportation methods,such as barge,rail and truck. In 2003,New York City determined that this plan was not feasible from a cost standpoint,and decided to seek proposals from the private industry with respect to the transfer and disposal of New York City's residential waste stream. Additionally,in - 10- February 2004,the State of New Jersey terminated its discussions with the City of New York regarding the building of a marine transfer station for the City's garbage on a New Jersey waterfront. See"-----Risk Factors—Customer 1 Concentration—The loss of the City of New York as a customer could have a significant adverse effect on our business and operations." The table below shows,for the periods indicated,the percentage of our total reported revenue attributable to each of our services: 2001 2002 2003(1) Collection 66.5% 67.2% 68.0%= Transfer 23.0 22.4 17.9 Disposal 7.0 6.8 1 1,I Recycling 30 3.0 2.5 Other 0.5 0.6 0.5 Total 100.0% 100.0% 100.0% (1)The increase in the percentage of our total reported revenue attributable to our disposal services during 2003 primarily resulted from our acquisition of the Seneca halls,New York landfill,which we acquired on October 10, 2003. Excluding the effects of this acquisition,the percentage would have been substantially the same as 2002. In 2003,our services revenue increased by an aggregate of$43.1 million from 2002. This increase primarily resulted from increases in our revenue from collection services($30.9 million increase from 2002)and disposal services ($13.8 million increase from 2002), Our revenue from transfer services during 2003 decreased by$1.9 million from 2002 primarily as a result of the reduced volumes of waste accepted at our Northeast Region transfer stations during the first quarter of 2003 due to the severe winter weather in the region. Cost Structure Our operating expenses include labor,fuel,equipment maintenance,"tipping fees"paid to third-party transfer stations and disposal facilities,workers' compensation,vehicle insurance,third-party transportation expenses and accretion expense. We monitor the fluctuation in fuel prices and,from time to time,if this cost increases at a higher rate than inflation,we generally pass the additional cost on to our customers. Our business strategy is to develop vertically integrated operations to internalize--the waste that we handle and thus realize higher margins from our operations. By disposing of waste at our landfills,we retain the margin generated through disposal operations that would otherwise be earned by third-party landfills. We currently internalize approximately 58%of the chargeable solid waste that we handle and deliver the rest to third-party disposal facilities. Some of our municipal contracts require us to only provide collection services and to dispose of the collected waste at a designated third-party disposal facility(at no cost to us)with whom the municipality has contracted with directly. If the operators of third-party landfills increase their"tipping fees,"we would seek to pass along these increases to our customers,but if we were unable to do so,our profitability would be adversely affected. If these operators discontinue their arrangements with us and we cannot find alternative disposal sites with favorable arrangements,our costs of disposal may rise. Also,our failure to obtain the required permits to establish new landfills and transfer stations or expand our existing landfills and transfer stations could hinder our business strategy to develop vertically integrated operations. Failure to expand capacity could lead to decreased profitability as a result of the increased"tipping fees"we would have to pay to third-party landfills. We operate 23 transfer stations,which reduce our costs by allowing us to use collection personnel and equipment more efficiently and by consolidating waste to gain volume discounts on disposal rates. General and administrative expenses include management,clerical and administrative compensation and overhead costs associated with our marketing and sales force,professional services and community relations expenses. Depreciation,depletion and amortization expense includes depreciation of fixed assets over their estimated useful lives using the straight-line method,depletion of landfill costs using life cycle accounting and the units-of- consumption method and amortization of intangible assets other than goodwill using the straight-line method. In - 11 - allocating the purchase price of an acquired company among its assets,we first assign value to the tangible assets, followed by intangible assets,including non-competition covenants and certain contracts that are determinable both in terms of size and life. We determine the value of the intangible assets other than goodwill by considering,among other things,the present value of the cash flows associated with those assets. We capitalize some third-party expenditures related to pending acquisitions and development projects,such as legal and engineering expenses. We expense indirect acquisition costs,such as executive and corporate overhead, public relations and other corporate services,as we incur them. We charge against net income any unamortized capitalized expenditures and advances,net of any portion that we believe we may recover through sale or otherwise, that relate to any operation that is permanently shut down and any pending acquisition or landfill development project that is not expected to be completed.. We routinely evaluate all capitalized costs and expense those related to projects that we believe are not likely to be completed. Effective January I,2003,we adopted SFAS No. 143,"Accounting for Asset Retirement Obligations." See Note 2 to our consolidated financial statements and related notes included elsewhere in this Annual Report on Form I0-K. Under SFAS No. 143,costs associated with final capping activities that occur during the operating life of a landfill, as well as closure and post-closure activities,are accounted for as asset retirement obligations on a discounted basis. We recognize landfill retirement obligations that relate to closure and post-closure activities over the operating life of a landfill as landfill airspace is consumed and the obligation is incurred. We recognize our final capping obligations on a discrete basis for each expected future final capping event over the number of tons of waste that each final capping event is expected to cover. The landfill retirement obligations are initially measured at estimated fair value, Fair value is measured on a present value basis,using a credit-adjusted,risk-free rate of 10.25%during 2003. Accretion is recorded on all landfill retirement obligations using the effective interest method. We amortize landfill retirement costs arising from closure and post-closure obligations,which are capitalized as part of the landfill asset,using our historical landfill accounting practices. We amortize landfill retirement costs arising from final capping obligations,which are also capitalized as part of the landfill asset,on a units-of-consumption basis over the number of tons of waste that each final capping event covers. We periodically evaluate the value and future benefits of our goodwill and other intangible assets.For intangible assets other than goodwill,we assess the recoverability from future operations using cash flows of the related assets as measures. Under this approach,the carrying value is reduced if it becomes probable that our best estimate of expected future cash flows from the related intangible assets would be less than the carrying amount of the intangible assets. As of December 31,2003,there were no adjustments to the carrying amounts of intangibles other than goodwill resulting from these evaluations. We test goodwill for impairment using the two-step process prescribed in SFAS No. 142. The first step is a screen for potential impairment and the second step measures the amount of the impairment,if any. We performed our annual impairment test during the fourth quarter of 2003 and incurred no impairment. As of December 31, 2003,goodwill and other intangible assets represented approximately 24.4%of total assets,60.5%of redeemable preferred stock and 78.8%of the sum of our redeemable preferred stock and stockholders' equity(deficit). Seasonality Seasonality and weather can temporarily affect our revenue and expenses. We generally experience lower C&D waste volumes during the winter months when the construction industry slows down. Frequent and/or heavy snow and ice storms can affect our revenue,primarily from our transfer station and landfill operations which are volume-based,and the productivity of our collection operations. In our South Region,higher than normal rainfall and more frequent rain and ice storms over a 30-90 day period can put additional stress on the construction industry,lowering the volumes of waste we handle. For example,inclement weather in our South Region during the fourth quarter of 2002 and the first two months of 2003 resulted in a reduction in the volumes of waste we handled during such periods. Significantly below normal rainfall can lead to higher levels of construction activity, increasing our volumes. Impact of Inflation To date,inflation has not significantly affected our operations. Consistent with industry practice, many of our contracts allow us to pass through certain costs to our customers,including increases in landfill"tipping fees" and,in some cases,fuel costs. Therefore,we believe that we would be able to increase prices to offset many cost - 12- increases that result from inflation. However,competitive pressures and the terms of certain of our long-term contracts may require us to absorb at least part of these cost increases,particularly during periods of high inflation. For example,during the first six months of 2003,diesel fuel costs were significantly higher than during the comparable six-month period of 2002. Acquisitions Our integration plan for acquisitions contemplates certain cost savings,including through the elimination of duplicative personnel and facilities. Unforeseen factors may offset the estimated cost savings or other components of our integration plan,in whole or in part,and,as a result,we may not realize any cost savings or other benefits from future acquisitions,and we may experience a net increase in costs. In accordance with GAAP,we capitalize some expenditures and advances relating to pending acquisitions. For any pending acquisition that is not consummated,we charge any such expenditures and advances against earnings. Therefore,we may incur charges against earnings in future periods,which could have a material adverse effect on our business,financial condition and results of operations. All of our acquisitions have been accounted for as purchases and,accordingly,only the operations of acquired companies since the acquisition dates are included in our unaudited consolidated financial statements. These acquisitions were financed through a combination of funds borrowed under our senior credit facility and proceeds from private offerings of our equity securities. We expect to be able to finance any future acquisitions with cash provided from operations,borrowings under our senior credit facility,debt or equity offerings,or some combination of the foregoing. 2003. In October 2003,we acquired all of the shares of capital stock of Seneca Meadows,Inc.,the owner and operator of the Seneca Meadows landfill,located in Seneca Falls,New York,for an aggregate purchase price of approximately$227.8 million,consisting of approximately$187.7 million in cash and$40.1 million of assumed liabilities. The acquisition was financed with approximately$861,000 in cash,$138.8 million in net borrowings and net proceeds of$48.0 million from the issuance of shares of our Series E convertible preferred stock. Additionally, if certain permits are obtained increasing the allowable daily disposal volume of the landfill and specific average daily disposal volume milestones are achieved at the Iandfill,we will be required to pay to the former shareholder of the landfill an additional$15.0 million. In connection with the acquisition,we recorded approximately$5.0 million of definite-lived intangible assets related to customer lists with generally two to seven year amortization periods. The following unaudited pro forma results of operations assume that our acquisition of the landfill occurred as of January 1,2002(in thousands): 2002 2003 Services revenue $ 258,184 $ 290,432 Income(loss)before cumulative effect of change in accounting principle 3,427 (4,660) Net income(loss) $ 3,427 $ (6,191) The unaudited pro forma results do not purport to be indicative of the results of operations which actually would have resulted had the acquisition occurred on January 1,2002,nor are they necessarily indicative of future operating results. We also acquired the hauling and disposal assets o€14 other solid waste management companies and real estate associated with an operating landfill for an aggregate purchase price of approximately$31.6 million, consisting of cash and liabilities assumed. In connection with the acquisitions,we recorded approximately $8.5 million of goodwill,of which approximately$6.7 million is expected to be deductible for tax purposes,and approximately$6.9 million of definite-lived intangible assets. The definite-lived intangible assets consist of $4.7 million related to customer lists with generally two to seven year amortization period and$2.3 million related to non-competition agreements with generally two to five year amortization periods. The pro forma effects of these 14 acquisitions are not significant to our operating results. - 13- We also incurred approximately$6.0 million of development costs in connection with two"greenfield" landfills,which we previously purchased in 2002. Both landfills included the land and the permit to operate. However,unlike operating Iandfills,neither greenfield landfill had incurred the costs of development,which include the infrastructure of an operating landfill and initial cell. Both landfills opened during 2003. 2002, During 2002,we acquired the assets of 17 solid waste management companies as well as real estate associated with landfill expansions for an aggregate purchase price of$47.0 million,consisting of cash and liabilities assumed. In addition,we incurred approximately$340,000 of development costs in connection with two "greenfield"landfills purchased in 2002. 200I. During 2001,we acquired the assets of 16 solid waste management companies for an aggregate purchase price of approximately$12.1 million,consisting of cash and liabilities assumed. In addition,we incurred approximately$1.4 million of development costs in connection with two"greenfield"landfills purchased in 1999. Results of Operations The following table sets forth, for the periods indicated,selected consolidated statement of operations data (in thousands)and the percentage relationship that such data bear to our revenue: 2001 2002 2003 South Region 106,807 57.5 128,334 60.3 158,185 61.8 Northeast Region 78,883 42.5 84,607 39.7 97,830 38.2 Services revenue 185,690 100.0 212,941 100.0 256,015 100.0 Operating expense 119,816 64.5 139,641 65.6 164,203 64.1 General and administrative 24,063 13.0 25,537 12.0 32,723 12.8 Depreciation, depletion and amortization 25,722 13.9 27,849 13.1 41,079 16.1 Income from operations 16,089 9.7 19,914 9.4 18,010 7.0 Interest expense, net (12,961) (7.0) (14,067) (6.6) (20,276) (7.9) Loss on termination of interest rate swaps - - (826) (0.4) - - Loss on extinguishment of debt (586) (0.3) - Other income '` Rely (expense),net (178) (0.1) (103) (0.0) (340) (0.1) Income tax expense (703) (0.4) (3,726) (1.7) (3,704) (1.5) Cumulative effect of change in accounting principle - (1,531) (0.6) Net income(loss) 2,247 1.2 606 0.3 (7,841) (3.1) 2003 Compared With 2002 Revenue. Our revenue increased by$43.1 million,or 20.2%,to$256.0 million during 2003 from $212.9 million during 2002. During 2003,acquisitions completed since January 2002 contributed$30.6 million,or 14.3%,to the increase in our revenue from 2002. Excluding incremental revenue from acquisitions,our revenue increased by$12.5 million,or 5.9%. Our new business,from both new municipal contracts and increased sales from - 14- existing operations,contributed 3.1%of such increase,while price increases contributed 2.8%. In our South Region,our revenue increased by$29.9 million,or 23.3%,to$158.2 million during 2003 from$128.3 million during 2002. In our Northeast Region,our revenue increased by$13.2 million,or 15.6%,to$97.8 million 2003 from$84.6 million during 2002. During the winter months of January,February and March 2003,severe weather in our Northeast Region and,to a lesser extent,in our South Region,reduced our roll-off collection,transfer station and landfill revenue by$I.6 million to$1.8 million,as compared to the comparable three-month period in 2002. Operating Expenses. Our operating expenses increased by$24.6 million,or 17.6%,to$164.2 million during 2003 from$139.6 million during 2002. Operating expenses as a percentage of our revenue decreased by 1.5%to 64.1%during 2003 from 65.6%during 2002. The increase in our operating expenses was substantially due to the increase in our revenue during the same period, including as a result of expenses from acquired operations and new business. Integration of newly-acquired businesses into our organizational structure typically takes three to six months. The labor,maintenance,fuel and disposal costs related to newly-acquired businesses are generally higher during the integration period. Start-up and integration costs related to a municipal contract typically are incurred in the one to two months prior to,and the one to two months after,the commencement of the contract.During this period, labor costs are generally higher due to delivery of containers,residential carts and recycling bins to the new municipality and training of newly-hired employees. In addition,during 2003,our insurance claims expense increased by$3.0 million from 2002. This was a result of the following factors: (i)our current year claims expense for accidents and injuries increased by$900,000 over the comparable expense in 2002 and (ii)we increased our future claims development reserve resulting in a charge of$980,000 for 2003 claims and(iii)an increase in premium costs and claim processing expenses during 2003. Higher average fuel cost per gallon in 2003 as compared to 2002 also increased operating expenses in 2003 by$800,000.The margin improvement in operating expenses during 2003 was primarily the result of our purchase of the Seneca Falls,New York landfiII in October 2003. General and Administrative. Our general and administrative expenses increased by$5.9 mullion,or 7.2%, to$28.1 million during 2003 from$32.7 million during 2002. General and administrative expenses as a percentage of our revenue increased by 0.8%to 12.8%during 2003 from 12.0%during 2002, Our general and administrative expenses increased as a result of our employment of additional personnel from companies acquired and additional corporate and regional overhead to accommodate our internal growth from our collection operations. During 2003, we wrote off$170,000 in connection with an aborted debt transaction,primarily related to legal and accounting fees, we increased our bad debt reserve by an additional$1.6 million to cover expected write-offs at one of our collection divisions in our South Region,as described in more detail in Part If.Item 9A."Controls and Procedures,"and paid $130,000 in severance costs to one of our former executive officers. In addition,accounting fees increased in 2003 by$200,000,primarily related to implementation of SFAS No. 143. Depreciation, Depletion andAmortization. Our depreciation,depletion and amortization expenses increased by$13.3 million,or 47.5%,to$41.1 million during 2003 from$27.8 million during 2002. Depreciation, depletion and amortization as a percentage of our revenue increased by 3.0%to 16.1%during 2003 from 13.1% during 2002. This increase resulted primarily from the inclusion of depreciation,depletion and amortization expenses related to businesses acquired in 2003,a full year of depreciation,depletion and amortization expenses related to businesses acquired since January 2002,and depreciation of capital assets purchased for internal growth. The Seneca Falls landfill we acquired in October 2003,increased our depreciation,depletion and amortization expenses by$5.4 million. During 2003,we also added three operating landfills,including two greenfield sites acquired in 2002 which we opened in August 2003 and an operating landfill we purchased in July 2003,which have a higher component of depreciation,depletion and amortization expenses than a typical hauling operation. Additionally,depletion expense related to the Bethlehem landfill expansion permit we obtained in April 2003,which increased our daily permitted volume at the landfill from 750 tons to 1,375 tons,resulted in an increase to depletion expense for 2003 of V.I million. Income from Operations. Our income from operations decreased by$1.9 million,or 9.6%,to$18.0 million during 2003 from$19.9 million during 2002. income from operations as a percentage of our revenue decreased by 2.4%to 7.0%in 2003 from 9.4%during 2002. Increases in operating expenses from additional insurance claims, higher fuel costs,an increase in our bad debt reserve,the write-off of$170,000 in connection with an aborted debt transaction,higher accounting fees related to the implementation of SFAS No. 143,severance pay to a former ( executive,higher depreciation,depletion and amortization expenses related to our Seneca Falls and Bethlehem landfills and our new landfills and the severe winter weather during 2003 resulted in a reduction in margin. - 15- Interest Expense,Net. Our interest expense,net,increased$6.2 million,or 44.1%,to$20.3 million during 2003 'from S 14.1 million during 2002. Interest expense,net,as a percentage of our revenue, increased to 7.9%in 2003 from 6.6%during 2002. This increase was attributable to higher debt levels during 2003 as compared to 2002, primarily due to our acquisition of the Seneca Falls landfill in October 2003. This increase also resulted from the inclusion of a full year of interest related to$150.0 million of our 10-114%senior subordinated notes due 2012(our "Notes")which we issued on June 12,2002(which was partially offset by interest rate swaps on$50.0 million of this debt),the reduction of capitalized interest due to the completion of our Bethlehem landfill expansion project and the increase in debt throughout the year related to capital used to fund internal growth and our ongoing acquisition program. Loss on Termination of Interest Date Swaps. There was no such expense in 2003. We incurred a loss on the termination of interest rate swaps of$826,000 in 2002 in conjunction with the payoff of the then outstanding balance under our senior credit facility with the proceeds from the offering of our Notes.The loss resulted from our termination of interest rate swaps that were in place with respect to a portion of the then outstanding debt under our senior credit facility. ,Loss on Extinguishment of 27ebt. There was no such expense in 2003. We incurred a non-cash loss on the extinguishment of debt of$586,000 in 2002 in conjunction with the payoff of a$39.2 million term loan under our senior credit facility with the proceeds from the offering of our Notes. The loss resulted from our loan transaction costs incurred in previous years related to the term Ioan. Other Expenses. Our other expenses increased by$237,000 to$340,000 in 2003 from$I03,000 in 2002. The increase was primarily the result of additional state franchise taxes. Income Tax Expense. Our income tax expense was unchanged at$3.7 million during 2003 from $3.7 million in 2002. Income tax expense as a percentage of revenue was 1.4%for 2003 as compared to 1.7%for 2002. The difference in income taxes computed at the statutory rate and reported income taxes for 2003 is due primarily to state and local income taxes and an increase in the valuation allowance related to deferred tax assets. r i. Cumulative Effect of Change in Accounting Principle. We recorded an after-tax expense of$1.5 million from a cumulative effect of a change in accounting principle related to our adoption of SFAS No. 143 on January 1, 2003. See Note 2 to our consolidated financial statements and related notes included elsewhere in this Annual Report on Form i 0-K. 2002 Compared With 2001 Revenue. Our revenue increased by$27.2 million,or 14.7%,to$212.9 mullion during 2002 from $185.7 million during 2001. During 2002,acquisitions completed since January 2001 accounted for using the purchase method of accounting,contributed$13.5 million,or 7.3%,to the increase in our revenue from 2001. Excluding our incremental revenue from acquisitions,our revenue increased by$13.7 million,or 7.4%. During 2002,our new business,from both new municipal contracts and increased sales from existing operations, contributed 3.8%of such increases,while selective price increases contributed 3.6%. In our South Region,our revenue increased by$21.5 million,or 20.2%,to$128.3 million during 2002 from$106.8 million during 2001. In our Northeast Region,our revenue increased by$5.7 million,or 7.3%,to$84.6 million during 2002 from $78.9 million during 2001. Operating Expenses. Our operating expenses increased by$19.8 million,or 16.5%,to$139.6 million during 2002 from$119.8 million during 2001. Operating expenses as a percentage of our revenue increased by 1.1%to 65.6%during 2002 from 64.5%2001. The increase in our operating expenses was primarily due to the increase in our revenue during the same period. We acquired approximately$24.0 million of new collection revenue during 2002 compared to approximately$6.7 million of new collection revenue during 2001. In 2002,we were awarded 18 new municipal contracts representing an aggregate of approximately$7.3 million in annualized revenue compared with awards for 17 new municipal contracts in 2001,representing an aggregate of approximately $4.1 million in annuali�xd revenue. Operating expenses also increased during 2002 due to increases in our general - 16- and workers compensation insurance premiums, increased labor costs related to a renewal of a collective bargaining agreement covering some of our New York-based employees which became effective on March 1,2002 and an additional$4.00 per ton disposal fee enacted by Pennsylvania on-July 9,2002. For more information on the additional Pennsylvania disposal fee,see"-General-Sources of Revenue." General and Administrative. Our general and administrative expenses increased$1.5 million,or 6.1%,to $25.5 million during 2002 from$24.1 million during 2001. Our general and administrative expenses increased as a result of additional personnel from companies acquired and additional corporate and regional overhead to accommodate our internal growth from our collection operations. General and administrative expenses as a percentage of our revenue decreased to 12.0%during 2002 from 13.0%during 2001. Depreciation,Depletion and Amortization. Our depreciation,depletion and amortization expenses increased$2.1 million,or 8.3%,to$27.8 million during 2002,from$25.7 million during 2001. This increase resulted primarily from the inclusion of depreciation,depletion,and amortization of businesses acquired in 2002,the inclusion in 2002 of 12 months of depreciation,depletion,and amortization from businesses acquired in 2001 and depreciation of capital assets purchased for internal growth. In accordance with SPAS No. 142,goodwill is deemed to have an indefinite life and our amortization of goodwill ceased on January 1,2002. During 2001,goodwill amortization expense was$2.8 million. Depreciation,depletion and amortization as a percentage of our revenue decreased to 13.1%in 2002 from 13.9%during 2001. Income f om Operations. Our income from operations increased$3.8 million,or 23.8%,to$19.9 million during 2002 from$16.1 million during 2001. The increase was attributable to operating income recognized from acquisitions closed in 2002,the inclusion in 2002 of 12 months of operating income from acquisitions closed in 2001,selective price increases,greater integration of collection volumes into the transfer stations and landfills we operate,and internal growth. Income from operations as a percentage of our revenue increased to 9.4%in 2002 from 8.7%during 2001. Interest Expense,Net. Our interest expense,net increased$1.1 million,or 8.5%,to$14.I million during 2002,from$13.0 million during 2001. This increase was attributable to higher debt levels during 2002 as compared to 2001 and by the relatively higher interest rate paid on$150.0 million of our Notes which constituted a substantial portion of oar outstanding debt as of December 31,2002. Interest expense,net,as a percentage of our revenue, decreased to 6.6%in 2002 from 7.0%in 2001. Loss on Termination of Interest Rate Swaps. We incurred a loss on the termination of interest rate swaps of $826,000 during 2002. There was no such expense in 2001. In conjunction with the payoff of the then outstanding balance under our senior credit facility with the proceeds from the offering of our Notes,we terminated interest rate swaps that were in place with respect to a portion of the then outstanding debt under our senior credit facility. Loss on Extinguishment of Debt. We incurred a non-cash loss on the extinguishment of debt of$586,000 during 2002. There was no such expense in 2001. In conjunction with the payoff of the$39.2 million term loan under our senior credit facility with the proceeds from the offering of our Notes,we wrote off loan transaction costs incurred in previous years related to the term loan. Other Expenses. Our other expenses decreased to$103,000 in 2002 from$178,000 in 2001. Income Tax Expense. Our income tax expense increased to$3.7 million during 2002,from$703,000 during 2001. Our effective income tax rate for the year ended December 31,2002 was 86.0%,which is above the federal statutory rate of 35.0%,due to state income taxes and an increase in the valuation allowance established against net operating loss carryforward benefits. The increase in the valuation allowance is due to a change in the estimated reversal of temporary differences related to tax deductible goodwill. The change in the estimated reversal resulted from the adoption of SFAS No. 142. - 17- Liquidity and Capital Resources i Cash Flow The following is a summary,for the periods indicated,of our cash flows(in thousands): 2002 2003 Net cash provided by operating activities $ 30,624 $ 46,484 Net cash used in investing activities $ (88,1 1 1) $ (269,579) Net cash provided by financing activities $ 57,905 $ 224,702 During 2003,net cash used in investing activities was$269.6 million. Of this amount,$214.5 million was used for the acquisition of businesses. Cash used for capital expenditures during 2003 was$46.9 million,which was principally for investments in fixed assets,consisting primarily of trucks,containers,landfill and transfer station equipment,and landfill construction projects. In addition$6.0 million was used for the initial development costs of two permitted landfills acquired in 2002. Net cash provided by financing activities during 2003 was$224.7 million, which consisted of the proceeds from our issuance of our Series E convertible preferred stock of$49.7 million and a net borrowing increase under our senior credit facility of$183.0 million,offset by$1.7 million of expenses related to the issuance of our Series E convertible preferred stock and$6.3 million of expenses related to the refinancing of our senior credit facility. During 2002,net cash used in investing activities was$88.1 million. Of this amount,$44.0 million was used for the acquisition of businesses. Cash used for capital expenditures during 2002 was$41.3 million,which was principally for investments in fixed assets,consisting primarily of trucks,containers, landfill and transfer station equipment,and landfill construction projects. Net cash provided by financing activities during 2002 was $57.9 million,which consisted of the proceeds from the offering of our Notes,offset by$7.5 million of expenses related to the issuance of our Notes and a net borrowing reduction under our senior credit facility of$83.7 million. i The following table summarizes the components of the reconciliation of our debt balances from December 31,2001 and 2002 to December 31,2002 and 2003,respectively; 2002 2003 (in thousands) Roll-forward of debt balance: Debt balance at beginning of period $ 130,351 $ 198,571 Free cash flow(deficit)before acquisitions(l) 12,560 2,402 Acquisitions and divestitures 44,370 220,563 Acquisition-related and other expenditures 557 130 Debt issue costs 7,525 6,277 Debt increase due to interest rate swap termination payment 826 — Net proceeds from issuance of preferred stock — (48,018) Increase in cash 418 1,607 Addition related to the change in fair value of interest rate swap from long-term debt 1,964 (966) Addition related to debt issued to sellers in connection with acquisitions — 295 Dent balance at end of period $ 198,571 $ 390,861 (1) Free cash flow(deficit)before acquisitions is not a measure of liquidity,operating performance or cash flow from operating activities under GAAP. Free cash flow(deficit)before acquisitions is defined as net cash provided by operating activities,less capital expenditures(other than for acquisitions)and capitalized interest. We believe that the presentation of free cash flow(deficit)before acquisitions is useful to investors because it - 18- allows them to better assess and understand our ability to meet debt service requirements and the amount of recurring cash generated from operations after expenditures for fixed assets. Free cash flow(deficit)before acquisitions does not represent our residual cash flow available for discretionary expenditures because we have mandatory debt service requirements and other required expenditures that are not deducted from free cash flow deficit before acquisitions. Free cash flow(deficit)before acquisitions does not capture debt repayment and/or the receipt of proceeds from the issuance of debt. We use free cash flow(deficit)before acquisitions as a measure of recurring operating cash flow. We do not intend for free cash flow(deficit)before acquisitions to be considered in isolation or as a substitute for GAAP measures. Other companies may define this financial measure differently. The most directly comparable GAAP measure to free cash flow(deficit)before acquisitions is net cash provided by operating activities. Following is a reconciliation of free cash flow(deficit) before acquisitions to net cash provided by operating activities: 2002 2003 (in thousands) Free cash flow(deficit)before acquisitions $ (12,560) $ (2,402) Add: Capital expenditures,excluding acquisitions 41,331 46,890 Capitalized interest 1,853 1,995 Other 1 Net cash provided by operating activities $ 30,624 $ 46,484 Liquidity Our business is capital intensive. Our capital requirements include acquisitions,new municipal contracts and fixed asset purchases for internal growth,primarily for trucks,containers and equipment,and for landfill cell construction,landfill development and IandfilI closure activities. We have historically financed,and plan to continue to finance,our capital needs with cash provided from operations,borrowings under our senior credit facility,debt or equity offerings,or some combination of the foregoing. On October 10,November 20,and December 30,2003,we issued an aggregate of 49,660 shares of our Series E convertible preferred stock for an aggregate purchase price of$49.7 million. Net proceeds from such sale of$48.0 million were used to fund the acquisition of the Seneca Falls,New York landfill and to pay expenses related thereto. See Part II.Item 5."Market for the Registrant's Common Equity and Related Stockholder Matters Recent Sales of Unregistered Securities"of this Annual Report on Form 10-K. On June 12,2002,we completed a private offering of our Notes at a price of 100.0%. These Notes mature on June 15,2012. Interest on our Notes is due on June 15 and December 15 of each year. Our Notes are guaranteed by all of our current,and will be guaranteed by certain of our future,subsidiaries and are unsecured senior subordinated obIigations that rank junior in right of payment to all of our existing and future senior debt and secured debt. The Notes are redeemable on or after June 15,2007 and we may redeem up to 35.0%of the aggregate principal amount of our Notes on or before June 15,2005 with the proceeds from qualified public offerings of our equity securities. The indenture governing our Notes contains covenants which,among other things, limit our ability to incur additional debt,create liens,engage in sale-leaseback transactions,pay dividends or make other equity distributions,purchase or redeem capital stock,make investments,sell assets,engage in transactions with affiliates and effect a consolidation or merger. These limitations are subject to certain qualifications and exceptions. As of December 31,2003,we were in compliance with all covenants contained in the indenture governing our Notes. The net proceeds from the offering of the Notes were approximately$144.0 million after deducting the initial purchasers'discounts and other expenses of the offering. We used$142.8 million of the net proceeds to prepay all of the debt then outstanding under the term loan and revolving loan portions of our senior credit facility (other than approximately$4.7 million underlying then outstanding letters of credit),and the remainder of the net proceeds for general corporate purposes,including working capital,and to fund acquisitions. Upon repayment of the term loan portion of our senior credit facility,we expensed approximately$586,000 of related debt issue costs. In addition,we terminated three interest rate swap agreements in advance of their respective contract termination dates. We recorded a loss on the early termination of the interest rate swap agreements of approximately$826,000. }i5lp��iv�.� - 19- SIT;�, RHAII '1Y In connection with our acquisition of the Seneca Falls,New York landfill,on October 10,2003,we and our subsidiaries entered into the Fifth Amended and Restated Revolving Credit and Term Loan Agreement with a syndicate of lenders led by Fleet National Bank,as administrative agent("Fleet"),and LaSalle Bank National Association,as syndication agent,and Fleet Securities,Inc.,as arranger,which amended our then existing senior credit facility,dated as of September 14,2004. Our senior credit facility,as so amended,includes a$200.0 million senior secured term loan and a$200.0 million senior secured revolving loan,including an$80.0 million letter of credit sublimit. We used the borrowing of the$200.0 million term loan and borrowings of$33.7 million in revolving loans to pay a portion of the purchase price for our acquisition of the Seneca Falls Iandfi[1 to refinance our then existing senior credit facility and to pay related fees and expenses. Subject to certain conditions,we may request an increase in the revolving loan or term loan portions of our senior credit facility of up to$50.0 million such that the total amount of indebtedness under this senior credit facility would equal$450.0 million. As of December 31,2003,there was$200.0 million outstanding under the term loan portion and$29.6 million(excluding $49.1 million underlying letters of credit)outstanding under the revolving loan portion of our senior credit facility. As of such date,we had$121.3 million of unused borrowing capacity under the revolving loan portion(of which $29.4 million was immediately available), including a maximum of$30.8 million underlying letters of credit. In order to borrow under the revolving loan portion of our senior credit facility,we must satisfy customary conditions including maintaining certain financial ratios. Our senior credit facility is secured by a pledge of the stock of our direct and indirect subsidiaries and a lien on substantially all of our direct and indirect subsidiaries'assets. Our senior credit facility permits borrowings at floating interest rates based on,at our option,the designated eurodollar interest rate,which generally approximates LIBOR,or the Fleet prime rate,in each case,plus an applicable margin,and requires payment of an annual commitment fee based on the unused portion of the revolving loan portion. As of December 31,2003,the interest rate applicable to$25.0 million outstanding under the revolving loan portion of our senior credit facility was LIBOR plus 325 basis points,or 4.41%,and the interest rate applicable to the balance of$4.6 million outstanding thereunder was Fleet's prime rate plus 125 basis points,or 5.25%. As of December 31,2003,the interest rate applicable to$100.0 million outstanding under the term loan portion of our senior credit facility was LIBOR plus 300 basis points,or 4.25%,and the interest rate applicable to the balance of$100.0 million outstanding thereunder was Fleet's prime rate plus 100 basis points,or 5.0%. The revolving loan and term loan portions of our senior credit facility mature on September 30,2008 and September 30, 2010,respectively. Pursuant to the terms of our senior credit facility,each year,commencing on October 1 and ending on September 30,we are required to repay 1.0%(except for the I2-month.period prior to maturity when we are required to repay 94.0%)of the principal amount of the term loan portion of our senior credit facility in quarterly installments payable on the last business day of each calendar quarter. In addition,our senior credit facility requires us to prepay the term loan with,subject to certain conditions and exceptions, 100.0%of the net cash proceeds we receive from any disposition of assets in excess of$5.0 million in the aggregate per year, 100.0%of the net cash proceeds we receive from the incurrence of any permitted indebtedness(other than up to$100.0 million of additional subordinated indebtedness)and 50.0%of the net cash proceeds we receive in connection with any issuance of our equity(other than equity we issue(i)in an aggregate amount not to exceed$100.0 million,(ii)as payment in a permitted acquisition or(iii)to employees, consultants or directors in connection with the exercise of options under bona fide option plans), We are also required to prepay the term loan with the percentage of excess consolidated operating cash flow(to be calculated for the period from October 1,2003 through December 31,2003 and for each fiscal year thereafter,and which includes, generally,consolidated EBITDA,plus or minus net working capital changes and extraordinary cash items,less the sum of(a)capital expenditures,(b) the cash purchase price of any permitted acquisitions,(c) cash payments for taxes,(d)cash payments of interest and(e) the scheduled principal repayments of indebtedness,in each case of clauses(a)through(e),paid during such period)corresponding to the applicable leverage ratio set forth below: Percentage of Excess Consolidated Operating Cash Flow Required as Mandatory Leverage Ratio Prepayment of Term Loan 3,50:1.00 50% ?3.00:1.00 and 25% -20- <3.50:1,00 c3.00:1.00 0% In the period of October 1,2003 through December 31,2003,we performed the calculation and determined that no payment was due for the period. The proceeds of the loans under our senior credit facility may be used solely to refinance certain debt,fund certain acquisitions,capital expenditures,working capital and general corporate purposes. The letters of credit under our senior credit facility may be used solely for working capital and general corporate purposes. Our senior credit facility contains affirmative and negative covenants and other terms customary to such financings,including requirements that we maintain specified financial ratios,including the following: • Maximum Leverage Ratio—Our consolidated debt to consolidated EBITDA(1)ratio for any period of four consecutive fiscal quarters may not be greater than 4.5 to I.O. • Maximum Senior Leverage Ratio— Our consolidated senior debt(generally,consolidated debt other than certain debt,including,without limitation,our Notes,subordinated to our senior credit facility)to consolidated EBITDA(l)ratio for any period of four consecutive fiscal quarters may not be greater than 3.0 to 1.0. ■ Minimum Interest Coverage Ratio—Our consolidated EBITDA(l)to consolidated interest expense ratio for any period of four consecutive fiscal quarters ending on the last day of any fiscal quarter specified below may not be less than the applicable ratio indicated below: Consolidated EBITDA(l)to Consolidated Interest Expense Quarters Ending Ratio Through December 31,2003 2.75 to 1.0 March 31,2004 through June 30,2004 3.00 to 1.0 September 30,2004 3.25 to 1.0 December 31,2004 and thereafter 3.50 to 1.0 • Minimum Consolidated Net Worth—Our consolidated net worth(generally,excess of our assets over our liabilities excluding redeemable preferred stock)at any time may not be less than approximately$213.4 trillion,plus(a)the proceeds of any new equity offerings and(b)50%of our positive consolidated net income for each fiscal quarter beginning with the first quarter of 2004. ■ Maximum Capital Expenditures—Our annual capital expenditures less capital expenditures for new municipal contracts may not be greater than the product of our annual depreciation and depletion expense for any fiscal year and the applicable multiple specified below; Multiple or Depreciation and Depletion Year Ending December 31, _Expense for Such Year 2003 1.6x 2004 1.3x 2005 and 2006 1,2x Thereafter L I x -21 - As of December 31,2003,we were in compliance with our senior credit facility financial covenants—our consolidated debt to consolidated EBITDA(1)ratio was 4.18.1,our consolidated senior debt to consolidated ` EBITDA(1)ratio was 2.53:1,our consolidated EBITDA(1)to consolidated interest expense ratio was 2.98:1 and our i consolidated net worth was$217.3 trillion($3.9 million in excess of the minimum required under our senior credit facility). In addition,our fiscal 2003 annual capital expenditures of$54.9 million less capital purchased for new municipal contracts of$3.9 million did not exceed 1.6 times our fiscal 2003 annual depreciation and depletion expense. Our ability to comply in future periods with the financial covenants in our senior credit facility will depend on our ongoing financial and operating performance,which,in turn,will be subject to economic conditions and to financial,business and other factors,many of which are beyond our control,and will be substantially dependent on our ability to successfully implement our overall business strategies. Our senior credit facility also contains covenants which restrict our ability to,among other things,incur additional debt,create liens,dispose of assets,make investments,engage in transactions with affiliates,enter into a merger or consolidation,make specified payments,including dividends,and enter into certain franchise agreements. These limitations are subject to certain qualifications and exceptions. (1) EBITDA is calculated in accordance with the definition in our senior credit facility and is used solely in this context to provide information on the extent to which we are in compliance with our senior credit facility covenants. In August 2002,we entered into two interest rate swap agreements,which are effective through June 15, 2012,with two financial institutions. Under each swap agreement,the fixed interest rate on$25.0 million of our Notes effectively was converted to an interest rate of 5.275%and 5.305%,respectively,plus an applicable floating rate margin that is based on six month LIBOR which is readjusted semiannually on June 15 and December 15 of each year. Environmental laws and regulation,including Subtitle D,that apply to the non-hazardous solid waste management industry have required us,as well as others in the industry,to alter the way we conduct our operations and to modify or replace pre-Subtitle D landfills. These expenditures have been,and will continue to be,substantial; however,we do not anticipate that these expenditures relating to our ongoing operations will be substantially different than what we have experienced to date. Legislative or regulatory changes could increase the costs of operating our business,accelerate required expenditures for closure activities and post-closure monitoring and obligate us to spend sums in addition to those presently reserved for such purposes. These factors could substantially increase our operating costs and adversely affect our results of operations,financial condition and cash flow. We believe that cash flow from operations and borrowings under the revolving loan portion of our senior credit facility will provide adequate cash to fund our working capital,capital expenditure,debt service and other cash requirements for the foreseeable future. Our ability to meet future working capital,capital expenditure and debt service requirements to provide financial assurance,as requested or required,and to fund capital amounts required for the expansion of our existing business will depend on our future financial performance,which will be affected by a range of economic,competitive and business factors,many of which are outside of our control. See "—Risk Factors."We cannot assure you that our business will generate sufficient cash flow from operations,that future financings will be available to us in amounts sufficient to enable us to service our debt or to make necessary capital expenditures,or that any refinancing would be available on commercially reasonable terms,if at all. Further, depending on the timing,amount and structure of any possible future acquisitions and the availability of funds under,and compliance with certain other covenants in,our senior credit facility,we may need to raise additional capital. We may raise such funds through public or private offerings of our debt or equity securities. We cannot assure you that we will be able to secure such funding,if necessary,on favorable terns,if at all. Working capital at December 31,2003 was a deficit of$8.0 million as compared to a working capital surplus of$469,000 at December 31,2002. Included in the current portion of long-term debt at December 31,2003 and not at December 31,2002 was$2.5 million of the term loan portion of our senior credit facility,representing the principal amount required to be repaid in 2004. In addition,as discussed in Part II.Item 9A."Controls and Procedures,"during 2003,we increased our bad debt reserve by an additional$1.6 million to cover expected write- offs at one of our collection divisions in our South Region. The remaining$4.3 million deterioration in working -22- capital year-aver-year was primarily related to an increase in capital expenditures accrued in accounts payable at year end 2003,related to landfill construction projects and new municipal contracts. There is no covenant in our senior credit facility directly tied to working capital. At December 31,2003,our immediately available borrowing capacity was sufficient to cover the working capital deficit. We have no off-balance sheet debt or similar obligations,other than as outlined in the"Significant Commercial Commitments"table below. See also Part 1. Item 1."Business—Risk Management,Insurance and Performance or Surety Bonds." We have no transactions or obligations with related parties that are not disclosed, consolidated into or reflected in our reported results of operations or financial position. Obligations and Commitments The following tables outline what we regard as our significant contractual obligations and commercial commitments as of December 31,2003. The tables do not represent all of our contractual obligations and commercial commitments that we have entered into. Payments Due By Period (in thousands) Less Than t to 3 4 to 5 Over 5 Significant Contractual Obligations Total t Year Years Years Years Long-term debt(]) $ 380,861 $ 2,732 S 4,031 $ 33,600 $ 340,498 Operating leases 16,493 2,117 4,303 3,534 6,539 Disposal contract 20,022 8,434 11,588 — — Total significant contractual cash obligations $ 417,376 $ 13,283 $ 19,922 $ 37,134 $ 347,037 (1) Long-term debt obligations include$150.0 million aggregate principal amount of our Notes,$200.0 million outstanding on the term loan portion of our senior credit facility due September 30,2010 and$29.6 million - outstanding under the revolving loan portion of our senior credit facility due September 30,2008. The revolving loan portion of our senior credit facility provides for borrowings of up to$200.0 million,of which $41.0 million was available for borrowing as of December 31,2003. Payments listed above exclude related interest payments. Amount of Commitment Expiration Per Period (in thousands) Significant Commercial Less Than t to 3 4 to 5 Over 5 Commitments 'rotal I Year Years hears Years Letters of credit $ 49,149 $ 49,149 $ — $ — $ Performance and other bonds 31,080 31,080 — — — Landfill closure bonds 47,165 47,I65 — — — Total significant commercial commitments $ 127,394 $ 127,394 $ — $ The tables above do not include expenditures that we will likely be required to make in connection with the construction of our existing or anticipated landfills,replacement of trucks and other equipment or otherwise in the ordinary course of our business. As of December 31,2003,we estimated that we would spend approximately $436.8 million on our then operated landfills over their then estimated remaining operating lives,primarily for cell construction and environmental structures. We cannot accurately predict the timing and ultimate amount of these expenditures as they will vary depending on the volumes of waste disposed of at such landfills,future permitting requirements,acquisition of additional landfills or collection operations and other factors many of which are beyond our control. None of these expenditures represent contractual commitments. We had an environmental cost accrual on our balance sheet of$25.3 million as of December 31,2003 consisting of a liability related to an inactive landfill("Tantalo")which we assumed in connection with our r acquisition of the Seneca Falls,New York landfill in October 2003. The liability consists of$16.0 million related to the remediation of the Tantalo landfill and$9.3 million for post-closure monitoring of Tantalo for 30 years. The initial remediation work will commence in 2004,and the post-closure monitoring period is expected to commence in -23 - 2007. Tantalo,a 26-acre landfill which stopped accepting waste in 1976,has been identified by the State of New York as an Inactive Hazardous Waste Disposal Site. During its period of operation,Tantalo received both municipal and industrial waste,some of which has been found to exhibit hazardous characteristics as defined by the RCRA. Past activities at Tantalo have resulted in the release of hazardous wastes into the groundwater. A remediation program has been developed for Tantalo in conjunction with the New York State Department of Environmental Conservation. The remediation program includes installation of groundwater barriers,protective liner caps,leachate and gas collection systems and storm-water drainage controls,as well as methods to accelerate the decontamination process. We have purchased a ten year"Clean-up Cost Cap Insurance Policy"which provides an additional$25.0 million of coverage in excess of the remediation portion of the liability. Cash paid for remediation was approximately$108,000 during 2003. The remediation costs,which are not discounted,are included in our liabilities as of December 31,2003 as accrued environmental and landfill costs. We had an environmental cost accrual on our balance sheet of$1.9 million as of December 31,2003 and $1.7 million as of December 31,2002,consisting of a liability related to a consent decree requiring the relocation of certain waste which we assumed in connection with our acquisition of the Chambersburg landfill. Cash paid for this relocation was approximately$265,000 during 2003,approximately$525,000 during 2002 and approximately $921,000 during 2001. We had an obligation on our balance sheet of$283.1 million as of December 31,2003 and$213.4 million as of December 31,2002,representing the carrying value of our preferred stock as of such dates. In accordance with EITF Topic No.D-98,Classification and Measurement of Redeemable Securities,we have classified our preferred stock outside of permanent equity because,pursuant to the terms thereof,such preferred stock is redeemable upon the occurrence of certain transactions deemed to be liquidation events. This redemption is not deemed to be solely within our control because holders of our preferred stock currently control a majority of the votes of our board of directors. See our consolidated financial statements and the related notes included elsewhere in this Annual Report on Form I0-K. We have a disposal contract that requires us to meet specific volume requirements. These volume requirements are measured based on an annual average. In the event we do not meet the required volumes,we would be required to make additional payments based on the volume shortfall. At December 31,2003,there was no volume requirement shortfall related to the disposal contract that would have a significant impact on our business, financial condition,results of operation or cash flows. Capital Rxpenditures We made capital expenditures of$54.9 million during 2003,including$3.9 million for new municipal contracts and$2.0 million of capitalized interest primarily related to landfill construction and permitting projects. In addition,during 2003,we incurred$6.0 million of development costs in connection with two"greenfield"landfills purchased in 2002. Both landfills when purchased included the Iand and the permit to operate. However,unlike the purchase of an operating landfill,neither greenfield landfill had incurred the costs of development,which include the infrastructure of an operating landfill and initial cell. Both landfills opened in August 2003. We expect to make capital expenditures of approximately$48.0 to$52.0 million during 2004 in connection with our existing business, including approximately$4.0 million to$5.0 million for new municipal contracts,$2.5 to$3.0 million of capitalized interest primarily related to landfill construction and permitting projects and$2.5 million to$3.0 million for new transfer station and"greenfield"landfill projects. We intend to fund our planned 2004 capital expenditures principally through existing cash,internally generated funds and borrowings under our senior credit facility. In addition,we may make substantial additional capital expenditures in acquiring solid waste management businesses. If we acquire additional landfill disposal facilities,we may also have to make significant expenditures to bring them into compliance with applicable regulatory requirements,obtain permits or expand our available disposal capacity. In addition we may need to make additional capital expenditures if we bid and are awarded new municipal contracts. We cannot currently determine the amount of these expenditures because they will depend on the number,nature,condition and permitted status of any acquired landfill disposal facilities or new municipal contracts. -24- From time to time we evaluate our existing operations and their strategic importance to us. If we determine that a given operating unit does not have future strategic importance,we may sell or otherwise dispose of those operations. Although we believe our operations would not be impaired by such dispositions,we could incur losses on such disposals. Recent Accounting Pronouncements For a description of new accounting pronouncements that affect us,please see Note 2 to our consolidated financial statements included elsewhere in this Annual Report.on Form 10-K. Risk Factors The following risk factors,among others,could adversely affect our operations and future performance and cause our actual results to differ materially fi,om those indicated by forward-looking statements made in this Annual Report on Form 10-K and subsequently presented(in writing or orally)by us or persons acting on our behalf. Substantial Leverage—Our substantial debt could adversely affect our financial condition:and make it more difficult for its to make payments iuith respect to our debt. We have a substantial amount of debt with significant debt service requirements. The following table shows important credit statistics as of December 31,2003(dollars in thousands): Total indebtedness $ 380,861 Redeemable preferred stock 283,054 Stockholders'deficit (65,751) This leverage could have adverse consequences both for us and for our investors. For example,it could.- make it more difficult for us to satisfy our obligations with respect to our debt; • make us more vulnerable to unfavorable economic conditions and competitive pressures in our industry; • limit our ability to borrow additional funds,whether for working capital,acquisitions,purchases of machinery,equipment or other assets,or otherwise; • require us to dedicate or reserve a large portion of our cash flow from operations to payments on our debt,which would prevent us from using it for other purposes; • limit our ability to plan for,or react to,changes in our business or the industry in which we operate;and • place us at a disadvantage compared to our competitors that have less debt in relation to cash flow. Additional Borrowings Available Despite our current indebtedness levels, we and our subsidiaries may be able to incur substantially more debt This could exacerbate the risk described above. We and our subsidiaries may be able to incur substantial additional indebtedness in the future, The indenture governing our Notes restricts,but does not prohibit,our ability to incur additional indebtedness. There are a number of qualifications and exceptions to these restrictions that could allow us to incur substantial additional indebtedness,including under our senior credit facility. The revolving loan portion of our senior credit facility currently permits us to borrow up to an aggregate amount of$200.0 million,including up to$80.0 million underlying letters of credit,subject to satisfying certain financial ratios. As of December 31,2003,we had j $121.3 million available,including up to$49.1 million underlying letters of credit,under the revolving loan portion of our senior credit facility. As of such date,the term loan portion of our senior credit facility was full funded and had an outstanding balance of$200.0 million. Subject to certain conditions,we may request an increa e in either the -25 �� r ' revolving loan portion or the term loan portion of our senior credit facility of up to$50.0 million such that the total senior credit facility would equal$450.0 million. If new debt is added to our and our subsidiaries' current debt levels,the related risks that we and they now face could increase. Ability To Service Debt—We will require a significant amount of cash to service our debt. Our ability to generate cash depends an arany.factors,satire of ivhich are beyond our control. Our ability to make payments on our debt will depend on our ability to generate cash. Our success in doing so will depend on the results of our operations,which in turn depend on many factors,including those described in this"Risk Factors"section and elsewhere in this Annual Report on Form Id-K. Our ability to generate adequate cash is also subject to general economic,financial,competitive,legislative,regulatory and other factors that are beyond our control. Also,if we consummate acquisitions in the future,our needs for cash will increase. Accordingly,our business may not generate sufficient cash flow from operations,and future borrowings may not be available to us under our senior credit facility or otherwise,in an amount sufficient to enable us to pay our debt or to fund our other liquidity needs. .Events of Default—Our failure to comply with the covenants contained in our senior credit facility or the indenture governing our Notes,including as a result of events beyond our control,could result in an event of default,which could materially and adversely affect our operating results and financial condition. If a default under the indenture governing our Notes or our senior credit facility should occur,the holders of our Notes or the lenders under our senior credit facility could elect to declare all amounts borrowed,together with accrued interest,to be immediately due and payable. Furthermore,this could result in all amounts borrowed under other instruments,including the indenture governing our Notes or our senior credit facility,that contain cross- acceleration or cross-default provisions being declared immediately due and payable and the lenders could terminate all commitments thereunder. In such event,we may not be able to pay the accelerated amounts or borrow funds sufficient to make any such payment. Even if additional financing could be obtained,it may not be on terms that are favorable or acceptable to us. Further,if we are unable to repay,refinance or restructure our debt under our senior credit facility,the lenders under our senior credit facility could proceed against the collateral securing that indebtedness. In such event,any proceeds received upon a realization of the collateral would be applied first to amounts due under our senior credit facility before any proceeds would be available to make payments on our Notes. Covenant Restrictions—Covenant restrictions in our senior credit facility and the indenture governing our Notes may limit our ability to operate our business. Our senior credit facility and the indenture governing our Notes contain covenants that restrict our ability to operate our business. The indenture governing our Notes restricts our ability to,among other things,incur additional debt,sell assets,create liens or other aricuiribrances,make certain guarantees of debt,snake specified payments,including dividends,engage in transactions with affiliates and enter into a merger or consolidation. Our senior credit facility contains similar restrictions and also requires us to comply with certain financial covenants and ratios,including a leverage ratio,a senior leverage ratio,an interest coverage ratio,a minimum consolidated net worth and a limit on capital expenditures. These restrictions,covenants and ratios may limit our ability to operate our business,finance future operations,respond to changing business and economic conditions,secure additional financing,if needed,and take advantage of potential business opportunities as they arise. Furthermore,our ability to comply with these restrictions,covenants and ratios may be affected by changes in economic or business conditions, other events beyond our control or significant asset impairments resulting from a failure to obtain extensions that we are currently seeking with respect to the permitted lives of some of our landfills. If we do not comply with these or other provisions contained in our senior credit facility and the indenture governing our Notes,we could default under these agreements,and the associated debt,together with accrued interest,could then be declared immediately due and payable. If our indebtedness were accelerated,we may not be able to repay the amounts due or borrow sufficient funds to refinance the debt. Acceleration of the debt under our senior credit facility would constitute an event of default under the indenture governing our Notes. Controlling Stockholders-The interests of our controlling stockholders could conflict ivith those of other holders of our securities. i. Thayer Equity Investors IV,LP and its affiliates,TC Carting L.L.C.,TC Carting;lI L.L.C.,and TC Carting III L.L.C.,control a majority of our capital stock. As a result,Thayer and its affiliates effectively control the -26- outcome of most matters submitted to a vote of our stockholders. In addition,pursuant to our Second Amended and Restated Stockholders'Agreement,Thayer and TC Carting are entitled to designate up to four of eight members of our board of directors. Our Second Amended and Restated Stockholders' Agreement also requires us to obtain the consent of the directors designated by Thayer and TC Carting for certain material corporate actions,including the issuance of additional debt and the declaration of dividends. See Part III. Item 13. "Certain Relationships and Related Transactions—Second Amended and Restated Stockholders'Agreement." Thayer's and its affiliates' interests may not be aligned with those of our other securityholders and transactions may be pursued that could enhance Thayer's and its affiliates'equity investments while involving risks to our other securityholders' interests. Capital Requirements—Our business is capital intensive and may consume cash in excess of casli flow fi•orn our operations and borrowings. Our ability to remain competitive,sustain our growth and operations,and expand our operations largely depends on our cash flow from operations and our access to capital. We intend to fund our cash needs through our operating cash flow and borrowings under our senior credit facility. We have historically also financed some of our liquidity requirements through private sales of shares of our preferred stock. We may require additional equity or debt financing to fund our growth and debt repayment obligations. Our capital expenditures,including capitalized interest and initial development costs for newly-acquired permitted landfills,were$54.9 million during 2003. If we undertake acquisitions or expand our operations,our capital expenditures,including closure, final closure and post-closure and remediation expenditures,may increase. The increase in expenditures may result in low levels of working capital or require us to finance working capital deficits. In addition,if we must close a landfill sooner than we currently anticipate,or if we reduce our estimate of a landfill's remaining available volume,we may be required to incur such costs earlier or accrue liabilities for them at a higher rate. Our cash needs will increase if the expenditures for closure,final closure and Bost-closure monitoring increase above the current reserves taken for these costs. Expenditures for these costs may increase as a result of any federal,state or local government regulatory action taken to accelerate such expenditures. These factors, together with those discussed above,could substantially increase our operating costs and therefore impair our ability to invest in our existing or new facilities. We may need to refinance our senior credit facility,our Notes or other debt to pay the principal amounts due at maturity. In addition,we may need additional capital to fund future acquisitions and the integration of solid waste management businesses. Our business may not generate sufficient cash flow,we may not be able to obtain sufficient funds to enable us to pay our debt obligations and capital expenditures or we may not be able to refinance on commercially reasonable terms,if at all. Ongoing Internal Investigation—We face risks related to an ongoing internal investigation of certain accounting matters. In March 2004,we discovered that the manager of a division in our South Region had engaged in misconduct that violated our internal policies resulting in an overstatement of our South Region's accounts receivable by approximately$1.5 million as of December 31,2003 and an understatement of expenses by approximately$833,000 during 2003. Based upon the internal investigation we have been conducting,in consultation with the audit committee of our board of directors,as further described in Part II Item 9A."Controls and Procedures,"we have taken steps to improve our disclosure controls and procedures and internal control over financial reporting,including segregation of the accounting and financial reporting duties from the management duties at this division. The implementation of these initiatives is one of our highest priorities.Our board of directors,in coordination with our audit committee,will continually assess the progress and sufficiency of these initiatives and make adjustments as necessary. However,no assurance can be given that we will be able to successfully implement our revised disclosure controls and procedures and revised internal control over financial reporting or that our revised disclosure controls and procedures or revised internal control over financial reporting t will be effective in remedying all of the identified deficiencies in our disclosure controls and procedures and our internal control over financial reporting or any deficiencies that have not yet been identified. If we are unable to implement these changes effectively or efficiently,there could be a material adverse effect on our operations or -27- financial results. Further,our ongoing investigation may uncover additional facts that could result in additional adjustments to our financial statements in future or prior periods. Constraints to Growth—Our growth strategy depends,in part,on our acquiring other solid waste management or related businesses and expanding our existing landfills and other operations, which we may be unable to do. Our growth strategy is based,in part,on our ability to acquire other solid waste management businesses, particularly transfer stations and landfill operations. The success of this acquisition strategy will depend,in part,on our ability to accomplish the following: • identify suitable businesses to buy; • complete the purchase of those businesses on terns acceptable to us; • complete the acquisition in the time frame we expect; • improve the results of operations of the businesses that we buy and successfully integrate their operations into our own;and • avoid or overcome any concerns expressed by regulators,including antitrust concerns. There can be no assurance that we will be successful in pursuing any or all of these steps. Our failure to implement our acquisition strategy could have an adverse effect on other aspects of our business strategy and our business in general. For example,our ability to continue to successfully implement our vertical integration strategy will depend on our ability to identify and acquire or develop additional suitable landfills,collection operations and transfer stations and obtain necessary permits. We may not be able to find appropriate acquisition candidates, acquire those candidates that we find,obtain necessary permits or integrate acquired businesses effectively or profitably. Many of our competitors are also seeking to acquire collection operations,transfer stations and landfills, including many competitors that have greater financial resources than we do. Increased competition may reduce the number of acquisition targets available to us and may lead to unfavorable terms as part of any acquisition,including high purchase prices. if acquisition candidates are unavailable or too costly,we may need to change our business strategy. We also cannot be certain that we will have enough capital or be able to raise enough capital by issuing stock or debt instruments or through other financing methods on reasonable terms,if at all,to complete the purchases of the businesses that we want to buy. Acquisitions may increase our capital requirements,and thereby exacerbate the risks mentioned under"--Capital Requirements--Our business is capital intensive and may consume cash in excess of cash flow from our operations and borrowings"above. Our senior credit facility requires us to obtain the consent of certain lenders under our senior credit facility before engaging in any acquisition that involves cash consideration in excess of$15.0 million. Acquisitions in excess of$5.0 million must also be approved by the directors designated by certain of our key stockholders. The indenture governing our Notes also restricts our ability to consummate acquisitions. Our acquisitions also involve the potential risk that we fail to assess accurately all of the pre-existing liabilities of the operations acquired,including liabilities of the type described under Environmental Contamination—We may have liability for environmental contamination"below. Our growth strategy also calls for expanding the total capacity and increasing the daily volume limits of a number of our facilities,including our MSW landfill in Seneca Falls,New York,our largest landfill in our Northeast Region,which currently has an estimated remaining operating life,based on current volumes,of more than five years. Failure to expand capacity could have a material adverse effect on our operations or financial condition. We do not know whether our growth strategy will continue to be effective. Our integration plan for acquisitions contemplates certain cost savings,including from the elimination of duplicative personnel and -28- facilities. Unforeseen factors may offset the estimated cost savings or other components of our integration plan in whole or in part and,as a result,we may not realize any cost savings or other benefits from future acquisitions. Also,our increased size means that federal and state government regulators,such as antitrust regulators,may examine our acquisitions more closely. They may object to certain purchases or place conditions on them that would limit their benefit to us. If we are unsuccessful in implementing our acquisition strategy or expanding our existing landfills and other operations for the reasons discussed above or otherwise,our business,financial condition and results of operations could be materially adversely affected. Growth—We may not be able to successfully manage our growth. Our growth strategy places significant demands on our financial,operational and management resources. In order to continue our growth,we will need to add administrative,management and other personnel,and make additional investments in operations and systems. We may not be able to find and train qualified personnel,or do so on a timely basis,or expand our operations and systems to the extent,and in the time,required. Competition—Competition could reduce our profitability or limit our ability to grow. The non-hazardous solid waste management industry is very competitive and we expect that increased consolidation in the industry will increase competitive pressures. Competition may require us to discount our prices, which could reduce our revenue and have a material adverse effect on our business,financial condition and results of operations. We face competition from several larger and better capitalized competitors and a large number of local and regional competitors. Because companies can enter the collection and transportation segments of the solid waste management industry with very little capital or technical know-how,there are a large number of regional and local companies in the industry. We face competition from these businesses in the markets we currently serve. Similar competition may exist in each location into which we try to expand in the future. Our competitors could also take actions that would hurt our growth strategy,including the support of regulations that could delay or prevent us from obtaining or keeping permits. They may also give financial support to citizen groups that oppose our plans to locate a disposal or transfer facility at a particular location. In each market in which we operate a landfill,we compete for solid waste volume on the basis of disposal or"tipping"fees,geographical location and quality of operations. Our ability to obtain solid waste volume for our landfills may be limited by the fact that some major collection companies also operate landfills to which they send their waste. In markets in which we do not operate a landfill,our collection operations may operate at a disadvantage to fully integrated competitors. State and Municipal Landfill Alternatives—State and municipal requirements to reduce landfill disposal by encouraging various alternatives may adversely affect our ability to operate our landfills at frill capacity. States and localities increasingly have supported the following alternatives to or restrictions on current landfill disposal: • recycling; • incinerating; • composting; • reducing waste at the source; • prohibiting disposal of certain types of waste at landfills; and • limiting landfill capacity. -29- Many states have enacted,or are currently considering or have considered enacting,laws regarding waste disposal,including: • requiring counties to use waste planning,composting,recycling or other programs to reduce the amount of waste deposited in landfills;and • prohibiting the disposal of yard waste,tires and other items in landfills. These trends may reduce the volume of waste destined for landfills in certain areas,which could lead to our landfills operating at a reduced capacity or force us to charge lower prices for landfill disposal services. These results could have a material adverse effect on our business,financial condition and results of operations. Loss of Contracts—We may lose contracts through competitive bidding or early termination,which would cause our revenue to decline. We derive a substantial portion of our revenue from services provided under municipal contracts and exclusive franchise agreements. Many of these may be subject to competitive bidding at some time in the future. We also intend to bid on additional municipal contracts and franchise agreements. Whether we are the successful bidder for any particular municipal contract is subject to significant uncertainty. In addition,some of our customers may terminate their contracts with us before the end of the contract term. If we are not able to replace revenue from contracts lost through competitive bidding,early termination or from the renegotiation of existing contracts with other revenue within a reasonable time period,our revenue would decline, Geographic Concentration—We are geographically concentrated in the northeastern and southern United States and susceptible to those regions'local economies and regulations. We operate in the following nine states:Texas,Arkansas,Missouri,Oklahoma,Louisiana,New York,New Jersey,Pennsylvania and Maryland. We estimate that more than 43%of our revenue during 2003 was derived from services provided in Texas and more than 28%of our revenue during 2003 was derived from services provided in New York. Accordingly,our business and financial results would be harmed by downturns in the economies of Texas or New York and other factors affecting such states,such as state regulations affecting the solid waste management industry and severe weather conditions. In addition,the costs and time involved in obtaining permits for,and the scarcity of,available landfills in the northeastern United States could make it difficult for us to expand vertically in our Northeast Region. Our C&D waste services constitute a substantial portion of our business in our South Region. The C&D waste market is more cyclical than the MSW market because it is based on the volume of construction projects. If our South Region suffers a recession or other economic downturn,we would likely experience reduced revenue fi-om our C&D operations in that region. Customer Concentration—Tire loss of the City of New York as a customer could have a significant adverse effect on our business and operations. 11%of our revenue in 2003 was attributable to our contracts with the City of New York to dispose of residential waste collected by the City in Brooklyn,New York. These contracts expire on October 31,2006 and may be renewed by the City for two additional one-year terms. During 2002,New York City announced changes to update its Solid Waste Management Plan,pursuant to which it plans to utilize and upgrade its existing marine transfer station system instead of private transfer stations to process and transfer its residential waste stream of approximately 12,000 tons of MSW per day. New York City initially intended to implement these changes by retrofitting and repermitting these marine transfer stations by 2008 so that the stations could containerize the City's residential MSW on site and then transport the loaded containers to ultimate disposal sites by alternative transportation methods,such as barge,rail and truck. In 2003,New York City determined that this plan was not feasible from a cost standpoint,and decided to seek proposals from the private industry with respect to the transfer and disposal of New York City's residential waste stream. Additionally,in February 2004,the State of New Jersey terminated its discussions with the City of New York regarding the building of a marine transfer station for the City's garbage on a New Jersey waterfront. Our contracts with the City of New York could be terminated or not renewed or extended upon the expiration of their initial terms if the c_ Anges,ark �'J implemented as presently proposed or for any other reason. If these contracts are terminated or not renewed or extended and we are not able to replace the revenue from the contracts with other revenue within a reasonable time period,our revenue would decline. Surety Bonds,Letters of Credit and Insurance If ive are unable to obtain performance or surety bonds,letters of credit or insurance, ive may not be able to enter into additional MSW collection contracts or retain necessary landfill operating permits MSW collection contracts,other municipal contracts and landfill closure obligations may require performance or surety bonds,letters of credit or other financial assurance to secure contractual performance or comply with state or local law. We typically satisfy these requirements by posting bonds and,as of December 31, 2003,we had$78.2 million of such bonds in place. Alternatively,we may use letters of credit,for which we have an$80.0 million sub-limit available under our senior credit facility. Closure bonds may become more difficult or costly to obtain in the future. If we were to draw fully upon our senior credit facility commitments or were unable to obtain performance or surety bonds or additional letters of credit in sufficient amounts or at acceptable rates,we could be precluded from entering into additional MSW collection contracts or obtaining or retaining landfill operating permits. Any future difficulty in obtaining insurance also could impair our ability to secure future contracts that are conditioned upon the contractor having adequate insurance coverage. Accordingly,our failure to obtain performance or surety bonds,letters of credit or other financial assurances or to maintain adequate insurance coverage could limit our operations or violate state or local requirements. Hey Executives--We depend heavily on our senior management. We depend heavily on a limited number of senior executives. Our future success will depend on,among other things,our ability to keep the services of these executives and to hire other highly qualified employees at all levels. We compete with other potential employers for employees,and we may not be successful in hiring and keeping the services of executives and other employees that we need. The loss of the services of,or our inability to hire,executives or key employees could hinder our business operations and growth. Labor Unions—Efforts by labor anions to o gaidw our employees could divert management attention and increase our operating expenses. Labor unions may make attempts to organize our non-unionized employees. Some groups of our employees have chosen to be represented by unions,and we have negotiated collective bargaining agreements with them. We cannot predict which,if any,groups of employees may seek union representation in the future or the outcome of any collective bargaining. The negotiation of these agreements could divert management attention and the terms of any agreements could result in increased operating expenses and lower operating margins. If we are unable to negotiate acceptable collective bargaining agreements,we may have to wait through"cooling off'periods,which are often followed by union-initiated work stoppages,including strikes. Although we have never experienced a work stoppage,we may in the future. Depending on the type and duration of any work stoppage,our operating expenses could increase significantly, which could have a material adverse effect on our business,results of operations and financial condition. Legislation and Governmental Regulation—We are subject to extensive legislation and governmental regulation that may restrict our operations or increase our costs of operations. Our equipment, facilities and operations are subject to extensive and changing federal,state and local laws and regulations relating to environmental protection,health,safety, land use,transportation and related matters. These include,among others,laws and regulations governing the use,treatment,storage and disposal of solid and hazardous wastes and materials,air quality,water quality,permissible or mandatory methods of processing waste and the remediation of contamination associated with the release of hazardous substances. Environmental laws and regulations have been enforced more stringently in recent years because of greater public interest in protecting the environment. Our compliance with regulatory requirements is costly. We are often required to enhance or replace our equipment and to modify landfill operations and,in some cases,we could be required to close landfills. We may not be able to offset the cost of complying with these standards. In addition,environmental regulatory -31 �pggl��41C51I�dl�! :� i inability to obtain extensions to the life of a landfill could accelerate or increase accruals or expenditures for closure, final closure and post-closure monitoring at solid waste facilities and obligate us to spend sums in addition to those presently accrued for such purposes. Extensive regulations govern the design,operation and closure of landfills. In October 1991,the EPA established minimum federal requirements for landfills under Subtitle D of the Resource Conservation and Recovery Act of 1976,also referred to as the Subtitle D regulations. If we fail to comply with the Subtitle D regulations,we could be required to undertake investigatory or remedial activities,curtail operations or close a landfill temporarily or permanently,or be subject to monetary penalties. Certain of our waste disposal operations traverse state and county boundaries. In the future,our collection, transfer and landfill operations may be affected by proposed federal legislation governing interstate shipments of waste. Although no such legislation has been enacted,it has been proposed regularly in Congress over the last ten years. Such proposed federal legislation would have prohibited or limited the disposal of out-of-state waste and may require states,under certain circumstances,to reduce the amount of waste exported to other states. If this or similar legislation is enacted in states in which we operate landfills that receive a significant portion of waste originating from out-of-state,our operations could be negatively affected. In addition,we believe that several states have proposed or have considered adopting legislation that would regulate the interstate transportation and disposal of waste in the states' landfills. Our collection,transfer and landfill operations may also be affected by"flow control"legislation. Some states and local governments may enact laws or ordinances directing waste generated within their jurisdiction to a specific facility for disposal or processing. If this or similar legislation is enacted,state or local governments could act to limit or prohibit disposal or processing of waste in our transfer stations or landfills. In 1996,the New York City Council enacted Local Law 42,which prohibits the collection,disposal or transfer of commercial and industrial waste without a license issued by the Business Integrity Commission and requires Business Integrity Commission approval of all acquisitions or other business combinations in New York City proposed by all licensees. See Part I.Item 1. "Business—Regulation—State and Local Regulations--New York." The need for review by the Business Integrity Commission could delay our consummation of acquisitions in New York City. The delay or prevention of our acquisitions could limit our ability to grow our business in New York City. From time to time,states and local authorities consider and sometimes adopt laws or regulations imposing fees or other charges on waste disposed of at landfills located in those states. If any significant fees are imposed in states in which we operate and we are not able to pass the fees through to our customers,our operations and profitability could be negatively affected. The operational and financial effects discussed above associated with compliance with the Iaws and regulations to which we are subject could require us to make material expenditures or otherwise materially adversely affect the way we operate our business,as well as have a material adverse effect on our results of operations and financial condition. Operating Permits—We may not be able to obtain permits we require to operate our business Permits,licenses and approvals to operate or expand non-hazardous solid waste landfills have become increasingly difficult,time consuming and expensive to obtain. Obtaining permits often takes years as a result of numerous hearings and the time needed to comply with land use,environmental and other regulatory requirements. Granting of these permits is also often subject to resistance from citizen or other groups. Our ability to continue to sustain our current vertical integration strategy will depend on our ability to establish new landfills and transfer stations,expand our landfills and transfer stations and increase applicable daily or periodic tonnage allowances. Our failure to obtain the required permits to establish new landfills and transfer stations or expand the permitted capacity of our existing landfills and transfer stations could hinder our vertical integration and impair our business strategy, particularly in our Northeast Region,where we are currently seeking to expand the more than five year estimated remaining operating life,based on current volumes,of our Seneca Meadows landfill. More specifically,if we fail to obtain such permits,we may have to dispose:collected waste at landfills operated by our competitors or haul the waste long distances at a higher cost to another of our landfills,or we may incur closure costs sooner,or accrue them at a higher rate,or suffer asset impairments. Failure to obtain permits could,therefore,significantly increase our -32- waste disposal expenses and have a material adverse effect on our business,financial condition,results of operation and ability to comply with covenants in our senior credit facility and thereby impair our access to capital. s Environmental Litigation—We may be subject In legal action relating to compliance with environmental laws. Solid waste management companies like us are often subject to close scrutiny by federal,state and local regulators,as well as private citizens,and may be subject to judicial and administrative proceedings relating to their compliance with environmental and local land use laws. In general,environmental laws authorize federal or state environmental regulatory agencies and attorneys general to bring administrative or judicial actions for violations of environmental laws. Potential penalties for such violations may include,among other things,civil and criminal monetary penalties,imprisonment,permit suspension or revocation,and injunctive relief. These agencies and attorneys general may also attempt to revoke or deny renewal of our operating permits, franchises or licenses for violations or alleged violations of environmental laws or regulations. Under certain circumstances,citizens are also authorized to file lawsuits to compel compliance with environmental laws and to impose monetary penalties. Surrounding landowners may assert claims alleging environmental damage,personal injury or property damage. From time to time,we have received,and we expect in the future to receive,citations or notices from governmental authorities alleging that our operations are not in compliance with our permits or certain applicable environmental or land use laws or regulations. We generally seek to work with the relevant authorities to resolve the issues raised by these citations or notices. However,we may not always be successful in resolving these types of issues without resorting to litigation or other formal proceedings. Any adverse outcome in these proceedings, whether formal or informal,could result in negative publicity,and reduce the demand for our services and our revenue. A significant judgment against us,the loss of a significant permit or license or the imposition of a significant fine could also have a material negative effect on our financial condition, Environmental Contamination—We may have liability for environmental contamination We could be liable to federal or state governments or other parties if hazardous substances contaminate or have contaminated our properties,including soil or water under our properties,or if hazardous substances from our properties contaminate or have contaminated the properties of others. We could be liable for this type of contamination even if the contamination did not result from our activities or occurred before we owned or operated the properties. We also could be liable for environmental contamination at properties to which we transported hazardous substances or arranged to have hazardous substances transported,treated or disposed. Certain environmental Iaws such as the federal Comprehensive Environmental Response,Compensation and Liability Act of 1980,as amended,or CERCLA,and similar state laws,impose joint and several and strict liability in connection with environmental contamination,which means that we could have to pay all recoverable damages,even if we were only partially responsible or not responsible at all for the injury giving rise to the damages. While we may seek contribution for these expenses from others,we may not be able to identify who the other responsible parties are and we may not be able to compel them to contribute to these expenses or they may be insolvent or unable to afford to contribute. If we do incur liability under CERCLA or similar state laws and if we cannot identify other parties who we can compel to contribute to our expenses and who are financially able to do so, it could have a material adverse effect on our business,financial condition and results of operations. See Part 1.Item 1. "Business—Regulation." In addition,we have previously acquired,and may in the future acquire,businesses that may have handled and stored hazardous substances,including petroleum products,at their facilities. These businesses may have released hazardous substances into soil or groundwater, They also may have transported or disposed of hazardous substances or arranged to have transported,disposed of or treated hazardous substances to or at other properties where hazardous substances were released into soil or groundwater. Depending on the nature of our acquisition of these businesses and other factors,we could be liable for the cost of cleaning up any contamination,and other damages,for which the businesses we acquired or acquire are liable, Any indemnities or warranties we obtained or obtain in connection with the purchases of these businesses may not suffice to cover these liabilities,due to limited scope,amount or duration,the financial limitations of the party who gave or gives the indemnity or warranty or other reasons. i Accordingly,we could be subject to legal actions brought by governmental or private parties in connection with environmental contamination. Any substantial liabilities associated with environmental contamination, -33- whether to federal or state environmental authorities or other parties,could have a material adverse effect on our business,financial condition and results of operations. We may also be susceptible to negative publicity if we are identified as the source of potential environmental contamination. If an accident occurred with one of our transportation trucks,with the potential risk of even minor environmental contamination,the resulting media coverage could have a material adverse effect on our business,financial condition and results of operations. Environmental and Other Liabilities—We will ahvays face the risk of liability,and insurance may not always be available or sufficient. Our industry presents risks of liability under statutes,regulations,contracts and tort law. If we fail to comply with any duty imposed by these laws and contracts,liability for environmental contamination,personal injury or property damage may result. We maintain pollution liability,general liability and workers'compensation insurance which we believe is adequate to protect our business and employees. If a claim is made against us for which we are uninsured,or for which we are underinsured,it could have a material adverse effect on our business, financial condition and results of operations. Because we believe that the cost for environmental liability insurance is high relative to the coverage it would provide,we generally maintain our coverage at statutorily required levels. Due to the limited nature of our insurance coverage for environmental liability,any substantial liability for environmental damage in excess of our coverage that we may incur could have a material adverse effect on our business,financial condition and results of operations. Item 7A. Quantitative and Qualitative Disclosures About Market Risks. In the normal course of business,we are exposed to market risk,including changes in interest rates and certain commodity prices. We use hedge agreements to manage a portion of our risks related to interest rates. While we are exposed to credit risk in the event of non-performance by counterparties to our hedge agreements,in all cases such counterparties are highly rated financial institutions and we do not anticipate non-performance. We do not hold or issue derivative financial instruments for trading purposes. We monitor our hedge positions by regularly evaluating the positions at market and by performing sensitivity analyses. We have performed sensitivity analyses to determine how market rate changes will affect the fair value of our market risk sensitive hedge positions and all other debt. Such an analysis is inherently limited in that it represents a singular,hypothetical set of assumptions. Actual market movements may vary significantly fi-om our assumptions. Fair value sensitivity is not necessarily indicative of the ultimate cash flow or earnings effect we would recognize from the assumed market rate movements. As of December 31,2003,we were exposed to cash flow and earnings risk due to changes in interest rates with respect to the entire$29.6 million outstanding balance under the revolving loan portion of our senior credit facility,the entire$200.0 million outstanding balance under the term loan portion of our senior credit facility and$50.0 million of our Notes. A one percentage point increase in interest rates on our variable rate debt as of December 31,2003 would decrease our annual pre-tax income by approximately$2.8 million. Because all of our remaining debt is at fixed rates,changes in market interest rates would not significantly impact our cash flows or results of operations. In August 2002,we entered into two interest rate swap agreements,which are effective through rune 15, 2012,with two financial institutions. Under each swap agreement,the fixed interest rate on$25.0 million of our Notes effectively was converted to an interest rate of 5.275%and 5.305%,respectively,plus an applicable floating rate margin which is based on six month LIBOR and which is readjusted semiannually on June 15 and December 15 of each year. The applicable floating rate margin was 1.42%and 1.23%as of December 31,2002 and 2003, respectively. i -34- �E TAB VII—OTHER SPECIAL FEATURES IESI TEAM FORT WORTH HAS BEEN PROVIDING BULK SERVICE FOR THE CITY OF FORT WORTH SINCE THE LAST WEEK OF SEPTEMBER. WE TAKE PRIDE IN THE FACT THAT WE ARE ABLE TO ASSIST THE CITY WHILE GIVEN SHORT NOTICE AND PERFORM TO A LEVEL THAT HAS ALLOWED THE CITY AND IT'S RESIDENCE TO BE CAUGHT UP WITH THEIR BULK CLEAN UP. OUR SERVICE MOTTO WILL ALWAYS BE"UNDER PROMISE OVER DELIVER". NOT LISTED IN OUR REFERENCES ARE CITY CONTACTS: Kim Mote Keith Christian Please ask these City employees about our performance. APPENDIX B City of Fort Worth Cost Proposal Form Cost per Hour for Collection of Brush,Sulky,and/or C& D material Piles in excess of 30 cubic yards from residential lots or vacant lots and out of cycle material outside the collection requirements of the City's contracted bulk waste collection company in the City of Fort Worth. All work to be directed by Work Order from the City of Fort Worth Collection of Storm Debris as directed by the City Cost per hour for collection of piles of debris as directed by City Work Order. Per hour charge is to be portal-to-portal $84.00 Cost per so long as this is understood to be the time that the truck(s)is hour. making multiple collections,not portal to portal for each individual collection. No guarantees are made by City of Fort Worth for number of collections or hours that will be required at any time during the term of the Contract Proposer's Name(Print or Type) Jeff Peckham Title Mice President Authorized Signature Date: October 24, 24 -s- R11Iky►V:is1e Colleetion RVP ]]roll l o,'20/2004 t Contract Price Adjustment Percentages to be filled in by Proposer Index 1 Service % 1. Fixed Price no escalation applied) 0 2. Industrial Handling Equipment 25% 3. Employment Cost Index 25%p 4. Gasoline 50% Total 100% Key: Data Sources Web Address 1 fixed Price N/A ] Producer Price Index•-Table 2: 1D#1 1-44 http./Iwww.bls.goy,/news.relea.e/ppi.tO2.him 3 Employment('ost Index-- Table 7.South http:llwww.bls.gov/news.release?eci.107.htm Region 4 Consumer Price Index Series ID: http:/,'data.blx.gov/5ervlet/SurveyOutputServlet?jntnsessionid+i018U28 8 71 2648 71195 CWURA_3I6S1 TBOI.CWUSA316SETBO1 -S— liniky► sOe C.offettlan ItFP Dralt W/20/20 4 Page 1 of 7 PROPOSAL FORM D-I. PROPOSER INFORMATION FORM TO: City of Fort Worth The undersigned, as Proposer, hereby declares that this Proposal is made in good Faith without fraud or collusion with any person or persons proposing on the same Contract; that Proposer has carefully read and examined the Contract documents including Advertisement, Request For Proposals, Proposal, General Conditions, corm of Bond and Specifications and understands all the same and that the Proposer or representative has made such personal investigation as is necessary to determine the character and difficulties attending the execution of the proposed work as described in RFP 04-0232. The Proposer acknowledges that Proposer has not received or relied upon any representations or warranties of any nature whatsoever from the City of Fort Worth, its agents or employees, as to any conditions to be encountered in accomplishing the work and that this Proposal is based so lely upon the Proposer's own independent business judgment. The Proposer recognizes that Proposer will not be entitled to any additional compensation by reason of conditions being different from those anticipated, or by reason of failing to be fully acquainted with the conditions and the work now in place or on account of interference by the City's or by any other Contractor's activities which affect the proposed work, The undersigned hereby proposes and agrees that if this Proposal is accepted for award of a Contract, Proposer will Contract with the City to furnish all necessary labor, materials, Vehicles, equipment, machinery, tools, apparatus, and other means for performing related work For the specific option(s) proposed, and do all the work required to perform the work herein specified in complete conformity with the RFP Advertisement, General Conditions and Contract, and other portions of the Contract documents for the unit prices and for the calendar periods listed in this Proposal. The undersigned also agrees that if the Foregoing Proposal shall be selected by the City, Proposer will meet with the City within five (5) days of selection, or within -9— Rulky Waste Collection RFP Drag 10/20/2004 Page 2 of 7 PROPOSAL FORM 0-1 PROPOSER INFORMATION FORM (Continued) such time as the City shall designate, to negotiate the final points of the Contracts), and within thirty (30) days (Sundays and legal holidays excepted) after receiving notice of such selection, use best efforts to complete negotiation on outstanding issues, if any, so as to enter into the form of Contract attached to the RFP, for performing the requested work at the prices and for the time stated in this Proposal and that Proposer will furnish the City a satisfactory performance bond and certificates of insurance for coverage as stated in the RFP. The undersigned agrees, and attaches hereto, Proposal Security in the amount of $12,500.00 (Certified Check, Letter of Credit, or Proposal Bond), to be forfeited to the City in case of withdrawal of a proposal following submission to the City, failure on the part of the successful Proposer to enter into the attached form of Contract to do the work covered by such proposal at the price and within the time as stated after having been selected and/or in the case of failure to negotiate in good faith with the City. The undersigned agrees that in case of failure to fulfill the obligations under the foregoing Proposal and/or failure to furnish a performance bond as specified, the City may, at City's option, determine that the undersigned has abandoned the rights and interests in such Contract and that the Proposal Security has been forfeited to the City, but otherwise, the Proposal Security shall be returned to the undersigned upon the execution by the Proposer and the acceptance by the City of the performance bond. The undersigned agrees that if awarded the Contract, Proposer will start work not later than December 1, 2004, or on such other date as the City and Proposer shall agree. In submitting th is Proposal, it is understood that the right is reserved by the City to reject any or all Proposals, to award the Contract for the work proposed by the Proposer to other than the low-cost Proposer, to waive irregularities and/or formalities, and in general, to make award in any manner deemed by it, in its sole discretion, to be in the best interest of the City. Dated and signed at 2301 Eagle Parkway, Ste. 200 Ft. Worth Tx this 20th - day of October , 2004. RFP Amendment Acknowledgement: -rn- Bulk%WaMe CnFle dinn RFP Draft 10,2W2004 No. I ❑ate Received October 19,2004 No. 2 Date Received No. 3 Date Received Bulk%►Vn%te CoIleelhm HGP Dratl I W2012004 Page 3 of 7 PROPOSAL FORM D-1 PROPOSER INFORMATION FORM (Continued) A. General Information Firm Proposer Name: _ IESI TX Corporation Address: 2301 Eagle Parkway, Suite 200 Fort Worth, TX 76177 Telephone: 817-632-4000 Fax: 817-632-4541 Contact: Jay Gunter Type of organization (corporation,joint venture, partnership, individual): Corporation If a corporation, list the names of ail officers, directors, and shareholders possessing five percent or more of outstanding stock in the corporation. If a partnership, list the names of all general and limited partners. Attach additional sheets as necessary. B. Btisiness Information I.. Have you ever failed to complete any contract awarded to you? No If so, where and why? -Iz— livlkr";IAA C'aBeclion RFP Drati 10!'20"2004 2. Has any officer or partner of your organisation ever been an officer or partner of some other organization that failed to complete a Contract? N❑ Page 4of7 PROPOSAL FORM D-1 PROPOSER INFORMATION FORM (Continued) If so, state name of individual, other organization, reason therefore, and bondin NIA g company: 3. Has any officer or partner of your organization ever failed to complete a contract handled in his or her own name? No If so, state name of individual, name of owner, reason therefore, and bonding company; 4. With what other lines of business are you directly or indirectly affiliated? None 5. With what individuals or entities have you been associated as partner or otherwise during the past five years? Attach additional sheets as necessary. None 6. Describe the nature of your current business: Waste Disposal & Collection Business Ruik<Wu C'u INC I if)n HFJ' wail 10120.12004 7. State the length of time you have been in that business under your present name: Since 9-39-1998 Page 5 of 7 PROPOSAL FORM D-1 PROPOSER INFORMATION FORM (Continued) 8. Has any business or facility that you operated been the subject of administrative or judicial action For alleged violation of environmental or public health laws or regulations? If so, state the details and disposition. Attach additional sheets as necessary. None 9. Have you, your partners, members, joint venturers, parent corporation, or subsidiaries been a party to any lawsuits, including any current investigations, indictments, or pending litigation, within the last three (3) years? If so, list these lawsuits. Attach additional sheets as necessary. See attached. -14 Milky Waste C:alleefinn RFP Draft 10"2012004 2 k � § ) � t � \ 2 � 2 g a E \ a § ) i G 7 § k § 7 2 § \ § ) ) 0 j m u a 0 � ] � § ) f e S S G S c / u k / i r / d § @ � k COL 2 k ES 0 � { {kjE �k E 2) ){f % � 2 )� ) fm 'a 5 \ MO)MC { - 3 � �\ �� .- .- f § \2 � >1■� 0�—i- ) i 7} B} . g , o , , § � *� �c = - z �I ,V U) ) [ § \ � = � EgEEe£ \ 7 k000 L) m o000ou \ a/kkfco mco 2 7 2 Q tu $ q 2 10. List any and all actions occurring within the last three (3) years which have resulted in revocation or suspension of any permit or authority to do business in any federal, state or local jurisdiction, recorded by Proposer, any officer or director thereof or any affiliate or related company. None I5— Bulky 1lMR Collection J P DrAl 1012012004 � u l Page 6 of a PROPOSAL FORM PROPOSER INFORMATION FORM (Continued) 11. List any and all actions occurring in the past three (3) years that have resulted in the barring From public bidding recorded by Proposer, any officer or director thereof or any affiliate or related company. None 12. List any bankruptcy proceedings in the past three (3) years recorded by Proposer, any affiliate or related company. None -lr- lW1kl 1Voou Oplkc don H V11 far ail 10120/2004 Page 7 of 7 PROPOSAL FORM PROPOSER INFORMATION FORM (Continued) C. plac,a of Performance and Main Office Following is the name and location of the main office and the place of business for which the services will be performed. Main Office: Fort Worth, TX City and State IESI TX Corporation Name of Company/Place of Performance Haltom City, TX City and State D, Ambiguity In case of ambiguity or lack of clarity in stating prices in the proposal, the City shall have the right to construe such prices in a manner most advantageous to the City or to reject the Proposal. Signature of person duly authorized to sign submittal on behalf of the Proposer: Au rized Signature Vice President_ _ October 20, 2004 Title Date _Iry.. RIIIky Wit sle Calieaiun Id FP Draft 10120 2004 PROPOSAL FORM b-2 FORM OF PROPOSAL SECURITY KNOW ALL By THESE PRESENTS, that we, the undersigned, _IESI-TX Corp 2301 Eagle Parkway Ft,Worth TX 76177 as Principal, and Lexon Insurance Company _ as Surety, are hereby held and firmly Found unto City of FtL Worth 1000 Throckmorton Ft Worth Tx 7ra107 ,-__ as OWNER in the penal sum of Twelve Thousand Five Hundred and 001100 $12 500.00 for the payment of which, well and truly to be made, we hereby jointly and severally bind ourselves, successors and assigns. Signed, this 21st day of October + 2004. The Condition of the above obligation is such that whereas the Principal has submitted to City of Ft.Worth a certain PROPOSAL, attached hereto and hereby made a part hereof to enter into a Contract in writing, for the Solid Waste Services NOW THEREFORE, (a) If said PROPOSAL shall be rejected, or (b) If said PROPOSAL shall be accepted and the Principal shall execute and deliver a Contract in the Farm of Contract attached hereto (properly completed in accordance with said PROPOSAL) and shall furnish a BOND for his faithful performance of said Contract, and for the payment of all persons performing labor or furnishing materials In connection therewith, and shall in all other respects perform the agreement created by the acceptance of said PROPOSAL, then this obligation shall be void, otherwise the saute shall remain in force and effect; it being expressly understood that the liability of the Surety for any and all clairrts .t8_ SuttU Wavle Collection RFF Draft 1 012 012 0 0 4 hereunder shall, in no event, exceed the penal amount of this obligation as herein stated. -19— Bulky WBsfe C016wflem RFT Drag[0/20/2004 Page 2 of 2 PROPOSAL FORM D-2 FORM OF PROPOSAL SECURITY (Continued) The Surety, for value received, hereby stipulates and agrees that the abligations of said Surety and its BOND shall be in no way impaired or affected by an extension of the time within which the OWNER may accept such PROPOSAL; and said Surety does hereby waive notice of any such extension. IN WITNESS WHEREOF, the Principal and the Surety have hereunto set their hands and seals, and such of them as are corporations have caused their corporate seals to be hereto affixed and these presents to be signed by their proper officers, the day and year first set forth above. IESI -T rp By: rincl I Lexon Insurance Company Surety By: - Sandra F.Harper,Attorney-in-Fact IMPORTANT - Surety companies executing BONDS must appear on the U. S. Treasury's most current list (Circular 570) and be authorized to transact business in the State of Texas where:the project is located. 20- soMY wake collmdon BFP Draft 10/20/2004 POWER OF ATTORNEY LX - 007600 Lexon Insurance Company KNOW ALL MEN BY THESE PRESENTS, that LEXON INSURANCE COMPANY, a Texas Corporation, with its principal office in ville, Kentucky,does hereby constitute and appoint: John B.Manus,Linda Gibson,Mary E.Joseph,Megan Kaolin,Tammy Masterson, Brook T.Smith,Kathy Hobbs,Raymond M.Hundley,Jason D.Cromwell,James H.Martin,Sandra F.Harper,Myrtie F.Henry,Julie Radican its true and lawful Attorneys)-In-Fact to make, execute, seal and deliver for, and on its behalf as surety, any and all bonds, undertakings or other writings obligatory in nature of a bond. This authority is made under and by the authority of a resolution which was passed by the Board of Directors of LEXON INSURANCE COMPANY on the 1st day of July,2003 as follows: Resolved, that the President of the Company is hereby authorized to appoint and empower any representative of the Company or other person or persons as Attorney-In-Fact to execute on behalf of the Company any bonds, undertakings, policies, contracts of indemnity or other writings obligatory in nature of a bond not to exceed$ 2,500,000.00 Two Million Five Hundred Thousand Dollars dollars,which the Company might execute through its duly elected officers, and affix the seal of the Company thereto.Any said execution of such documents by an Attorney-In-Fact shall be as binding upon the Company as if they had been duly executed and acknowledged by the regularly elected officers of the Company.Any Attorney-In-Fact, so appointed, may be removed for good cause and the authority so granted may be revoked as specified in the Power of Attorney. Resolved, that the signature of the President and the seal of the Company may be affixed by facsimile on any power of attorney granted,and the signature of the Vice President,and the seal of the Company may be affixed by facsimile to any certificate of any such power and any such power or certificate bearing such facsim lie signature and seal shall be valid and binding on the Company.Any such power so executed and sealed and certificate so executed and sealed shall,with respect to any bond of undertaking to which it is attached,continue to be valid and binding on the Company. IN WITNESS THEREOF, LEXON INSURANCE COMPANY has caused this instrument to be signed by its President, and its Corporate Seal to be affixed this 2nd day of July,2003. LEXON INSURANCE COMPANY (F) BY David E.Campbell President ACKNOWLEDGEMENT On this 2nd day of July,2003, before me, personally came David E.Campbell to me known,who being duly sworn,did depose and say that he is the President of LEXON INSURANCE COMPANY,the corporation described in and which executed the above instrument;that he executed said instrument on behalf of the corporation by authority of his office under the By-laws of said corporation. f]FF1d1_ SEAL" F "­ LYDIA J.DEJONG NOTARY€UBLIC STATE OF ILLINOIS MY COMMISSION EXPIRES 1/1212007 Lydia J. DeJong CERTIFICATE Notary Public I, the undersigned, Secretary of LEXON INSURANCE COMPANY, A Texas Insurance Company, DO HEREBY CERTIFY that the original Power of Attorney of which the foregoing is a true and correct copy, is in full force and effect and has not been revoked and the resolutions as set forth are now in force. Signed and Sealed at Lombard, Illinois this Day of 20 C .$5v..A CE O _ TEAAS••• X INSURANCE t COMPANY SZ r Donald D. Buchanan Secretary AGO R . CERTIFICATE OF LIABILITY INSURANCE �TEiM 1a/3o/20032oos Rob Machacek THIS CERTIFICATE IS ISSUED AS A MATTEFR OF INFORMATION Talbot Agency, Inc_ ONLY AN❑ CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR Box 90756 87199 ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. U Jefferson NE, Suite 200 COMPANIES AFFORDING COVERAGE Albuquerque, NM 87109 COMPANY American Cas Cc of Reading, PA (505)828-4000 . fax (5CS) 828-0732 A INSURED - COMPANY Axis Specialty Ins . Co. B ISSI TX Corporation COMPANY Indian Harbor Insurance Company C 2301 Eagle Parkway, Suite 200 Fort worth, Tx 76177 COMPANY Arch Specialty Insurance D covIEI7A��s THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED, NOTWITHSTANDING ANY REQUIREMENT,TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES.LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. 00 TYPE OF INSURANCE POLICY NUM 8ER POLICY EI:FW ME: I POLICY E1 1EDn1ON UMFTS LTR DATE(MMIDIYYY) [a4TE(MMIf7WM A GENERAL LIABILITY GL249220522 2/31/2003 12/31/2004 GENERAL AGGREGATE s 2,000 000 X COMMERL:IAL GENERAL LIABILITY PRODUCTS-COMWOP AGG is 2,000,000 CLAIMS MADE r--1 OCCUR PERSONAL&ADV INJURY $ 1,000,000 OWNER'S&CONTRACTOR'S PROT EACH OCCURRENCE $ 1,000,000 X Contractual Liabilit.r FIRE DAMAGtIAny one fire) s 500,000 MEP EXP[Any one person] $ 10,000 A AUTOMOB(LEuABIL1iY BUA249221041 12/31/2003 12/31/2004 COMBINED SINGLE LIMIT s 1,000,000 X ANY AUTO ALL OWNED AUTOS BODILY INJURY $ SCHEDULED AUTOS IPer person) X HIRED AUTOS BODRYENJURY $ X NON-OWNED AUTOS IPA acCldentl PROPERTY DAMAGE $ GARAGrE LIAB LFFY AUTO ONLY•EA ACCIDENT $ ANY AUTO OTHER THAN AUTO ONLY: EACH ACCIDENT S AGGREGATE $ B I ExCESSUABILITY ALU7000548 12/31/2003 12/31/2004 EACH OCCURRENCE S10, 000,000 X UMBRELLA FORM AGGREGATE $10,0 0 0, 0 0 0 D OTHE R THAN UMB RE LLA FOR M UME123102-02 1 1$ A WORIUM COM PENSATION AND WC249221069 12/31/2003 12/31/2004O7S &Y51ATU- OTH- EMFLGY LIABILITY ER EL EACH ACCIDENT $ 1,000,000 THE PROPRIETORI INCL EL DISEASE•POLICY LIMIT S 1,0 00,0 00 PARTNERSIEXECUTIVE OFFICERS ARE: EXCL EL DISEASE-EA EMPLOYEE $ 1,0 0 0,0 00 C OTHER 2/31/2003 12/31/2004 Supplemental PSC000197004 $5,000,000 Each Incident Environmental Auto Liability (Pgllutio MCS-90 Endorsement $51000,000 Aggregate D�9CRIPTfONOFOPERATIONSILOOATICNS H-ItCLEBISPIECIAL ITEM 8 CERTIFICATE HOLDER CANCELLATION To ki It May Concern SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED THE EXPIRATION DATE THEREOF, THE ISSUING COMPANY MLL ENDEAVOR TO MAIL 3 0 DAYS WRITTEN NOTICE TO THE CE3RFIRCATE HOLDER NAMED TO THE LEFT, 10 d} notice iux• no__ ppayy�ae^t BUT FAILURE TO NAIL SUCH NOTRCE SHALL IMPOSE NO OBLIGATION OR iLITY OF ANY AND U THE COMPANY, ITS A43ENTS OR RURMENTATNES. AUTHORIZED PHf&S8jje ACORD 25s 1/95) aACORD CORPORA ON 1988 ctds#3814798 1ND16067 Page i of 2 PROPOSAL FORM D-3 ANTI-COLLUSION AFFIDAVIT AND NOTARY'S CERTIFICATION Proposer, as a part of this proposal, submits the following affidavit; The undersigned deponent, of lawful age, being duly sworn, upon his oath deposes and says: That he has lawful authority to execute the within and foregoing proposal; that he has executed the same by subscribing his name hereto under oath for and on behalf of said Proposer; that Proposer has not directly or indirectly entered into any agreement, express or implied, with any Proposer or Proposers, having for its object the controlling of the price or amount of such proposal or proposals, the limiting of the proposals or Proposers, the parceling or farming out to any Proposer or Proposers or other persons of any part of the Contract or any part of the subject matter of the proposal or proposals or of the profits thereof, and that he has not and will not divulge the sealed Proposal to any person whomsoever, except those having a partnership or other financial interest with him in said proposal or proposals, until after the said sealed proposal or proposals are opened and disclosed to the public by the City of Fort Worth, Texas. Deponent further states that the Proposer has not been a party to any collusion: among Proposers in restraint of freedom of competition by agreement to make a proposal at a fixed price or to refrain from submitting a proposal; with any City official or employee as to quantity, quality, or price in the prospective Contract or in any discussions between Proposers and any City official or employee concerning exchange of money or other things of value for special consideration in the letting of a Contract. Deponent further states that the Proposer has not paid, given or donated or agreed to pay, give or donate to any official, officer or employee of the City directly or indirectly, in the procuring of the award of Contract pursuant to this proposal. BIIIkv%V:nde 0PIItsoinn RGP Drab[ 10/20/2004 Page 7 of 2 PROPOSAL FORM D-3 ANTI-COLLUSION AFFIDAVIT AND NOTARY'S CERTIFICATION (Continued) Executed under penalty of perjury on this 20thday of October, 2004 at 2301 Eagle Parkway, Fort Worth, TX SIGNED BY ff Peckham TITLE Vice President Subscribed and sworn to before me this 20th day of October , 2004 at �2301 Eagle Parkway, Fort Worth. TX Notary Public My Commission expires: Oct. 16, 2007 RI A.JOY O�pp�Y PUQ� �'0, r 7 4gUD&ER A rO 2z_ 1W1ks► ;ML,011lecIion It1,1' Draft 10/20120 Y4 PROPOSAL FORM D-4 FORM OF PERFORMANCE BOND [Continued] the Principal shall Bally indemnify and save harmless the City from all costs and damages which it may suffer by reason of failure to do so, and shall reimburse and repay the City all outlay and expense which the City may incur in making good any default, then this obligation shall be void; otherwise to remain in full force and effect. PROVIDE❑ FURTHER, that if any legal action be filed upon this bond, venue shall lie in Tarrant County, State of Texas. PERFORMANCE BOND AND PROVIDED FURTHER, THAT THE SAID Surety, for value received hereby stipulates and agrees that no change, extension of time, renewal, alternations or additions to the terms of the Contract or to the Work to be performed thereunder or the Specifications accompanying the same shall in any ways affect its ❑bligation on this bond, and it does hereby waive notice of any change, extension of time, renewal, alteration or addition to the terms of the Contract or to the work or to the Specifications. -»- Bulky Waste Collc0lon RFP Draft 10/8/2004 Page 3of4 PROPOSAL FORM D-4 FORM OF PERFORMANCE BOND (Continued) IN WITNESS WHEREOF, this instrument is executed in four counterparts, each one of which shall be deemed an original dated Principal (4) ATTEST: By: (Principal) Surety Address Witness as to Principal Address Surety ATTEST: By: Attorney-in-Fact (S) (SEAL) Witness as to Surety Address -18— Hulky Waste Collection RFP Draft 10/8/2404 PROPOSAL FORM D-5 �;ERTIFICATION OF NONDISCRIMINATION IN EMPLOYMENT THIS FORM SHALL BE EXECUTED BY AN OFFICIAL AUTHORIZED TO BIND THE OFFEROR, DETACHED, AND MADE A PART OF ITS PROPOSAL During the performance of this Contract, the Contractor agrees as follows: I. The Contractor shall not discriminate against any employee or applicant for employment because of race, religion, color, sex, sexual orientation, disability, or national origin. The Contractor agrees to post in conspicuous places, available to employees and applicants For employment, notices setting forth the provisions of this nondiscrimination clause. 2. The Contractor, in all solicitations or advertisements for employees placed by or on behalf of the Contract, shall state that such Contractor is an equal opportunity employer. 3. Notices, advertisements, and solicitations placed: in accordance with federal law, rule or regulations shall be deemed sufficient for the purpose of meeting the requirements of this section. 4. The Contractor shall include the provisions of the foregoing Paragraphs 1, 2, and 3 above in every subcontract or purchase order so that the provisions shall be binding upon each subcontract or vendor. Autholdd ature Vice President Title October 20 2004 -za-- Rulkc Naze C'ulkrlian HI P J)rall 10i20 2oc4 Notarization State of Texas County of Denton On this 20th day of October , 20 04 , before me appeared Jeff Peckham and to me personally known and who, being duly sworn, did execute the foregoing affidavit and did state that they were properly authorized to execute this affidavit and did so as their free act and deed. Notary Public Lori A. Joyce Print Name W Notary Public Signature Commission Expires October 16, 2007 - _ fS �p1[lll(fltnlly aft A,JOr� � PUBS fib Questions concerning this addendum may be addressed electronically to robert.combs,rofortworthgov.o� - Q '9Tfi0F1E,l%' d�� ��f�i�T�BER A6.2������ Robert Combs � lz PSI�llilllU►11����� Purchasing Division Manager _28- i Bulkv Wo;IC Co It FP Dn fit 10/20/2004 FORTWORTH CITY OF FORT WORTH REQUEST FOR PROPOSALS (RFP) NOTICE REFERENCE NO: RFP 04-0232 PROPOSALS DUE: 1.30 p.m. (CST) Thursday, October 21, 2004 SERVICE: Collection of Large Piles of Debris in excess of 30 cubic yards each and other out of cycle bulk and brush waste. Work to be performed at the direction of the City TERM OF CONTRACT: Thru March 31■ 2013 DETAILED DESCRIPTION: Collection of large debris piles in excess of 30 cubic yards and other out of cycle bulk and brush waste piles within the City of Fort Worth. No guarantee of number of services per month is made or implied. All work will be done at the exclusive direction of the City. If you are interested in this RFP, you can download it in Adobe PDF format from our web site: http://www.fortworthciov.o[g/cmo/RF 04-0232.pdf. Any other additional information related to this RFP and amendments and addenda will be posted with the original document on the web site. An Adobe Acrobat reader is required to view the document; it can be obtained free by following the Adobe link from the website address listed above. PRE-PROPOSAL CONFERENCE: LOCATION: DATE/TIME: Wednesday, October 13, 2004 at Office of the Purchasing Manager 1:00 P.M. Lower Level Municipal Building 1000 Throckmorton Fort Worth, Texas 76102 f -1— Bulky Waste Collection Rl-T Draft 1 41812 0 0 4 REQUEST FOR PROPOSALS RFP: 04-D232 THE CITY OF FORT WORTH OFFICE OF THE PURCHASING MANAGER SERVICES FOR: Collection of Large Piles of Debris in excess of 30 cubic yards each and other out of cycle bulk and brush waste. Collection to be made at the direction of the City. Any alterations to this document made by the Proposer may be grounds for rejection of proposal, cancellation of any subsequent award, or any other legal remedies available to The City. -z- Bulky Waste Colleetion RFP Draft 1 0/812 0 0 4 ;']J 1.0 INTRODUCTION AND GENERAL INFORMATION The City of Fort Worth comprises approximately 350 square miles in its corporate City limits. Based on the 2000 U. S. Census and updates that the City has been provided, it is believed that the total population of Fort Worth is approximately 598,850, occupying about 195,078 housing units. The City has over 5,600 lane miles of City streets. The City contracts with Waste Management of Texas, Inc. (WMTX), for the collection of the City's residential Solid Waste, bulky waste, wood waste, and recycling. The Contract with WMTX will expire on March 31, 2013. The City's Department of Environmental Management (DEM) is responsible for managing the collection of Garbage, Recyciables, and brush and bulky waste to the residents of Fort Worth. The City also contracts with Allied Waste Systems, dbal Trinity Waste Services for the lease and operation of the City's Southeast Landfill, and with Independent Environmental Services, Inc (IESI) of disposal and processing of the City's Brush, Yard Waste, Bulky Waste, and C & D materials delivered by the City and WMTX under their contract with the City. Other background on the City can be viewed on the City's web site at http:llwww.fortworthgov.org/dem/garbage recycling.asp. 1.1 PURPOSE The City's current contract with WMTX does not require the WMTX to service large piles of Debris in the City of over 30 cubic yards in volume nor more than 150 out of cycle piles daily. However, there are piles of Debris placed at certain residential locations and vacant lots, in excess of 30 cubic yards and out of cycle, and the City needs to have these collected. The City I envisions that the Contract for collection services may also be used for special services in the event of a storm or disaster creating a large amount of Debris within the City that will require removal. 1.2 PROCUREMENT SCHEDULE The City's anticipated procurement schedule is shown below. These dates are subject to change by the City. Procurement Schedule Deadline Date Time Activi October 7, 2004 Request for Proposals Available October 13,2004 1.00 P.M. Pre-Proposal Meeting October 15,2004 NOON RFP Comments and Questions due October 21,2004 1:30 p.m. Proposals Due to the City November 30,2004 Final Negotiations Completed,Contract(s) Executed December 1, 2004 New Services Initiated -3— Bulky waste Collection RFF Draft 1 01812 0 0 4 1.3 CONTACT PERSON The contact person regarding any questions concerning this RFP will be Robert Combs, Purchasing Manager. All requests for additional information must be received in writing via U. S. Mail,fax,or e-mail to: Robert.combs@fortworthgov.com. 1.4 PRE-PROPOSAL CONFERENCE A pre-proposal conference will be held at the Office of the Purchasing Manager at 1000 Throckmorton Street, Fort Worth, TX 76102 at 1:00 p.m. Wednesday, October 13,2004. All prospective Proposers are encouraged to attend. Only written questions regarding this RFP (via fax or mail) will be accepted prior to and after the pre-proposal conference. Both oral and written questions will be accepted at the pre-proposal conference. Written responses will be provided in the form of an RFP Addendum as soon as possible for all written questions received and any oral questions not answered at the pre-proposal conference, and will be provided to every Proposer attending the pre--proposal conference. No questions will be accepted after NOON on Friday, October 15, 2004. Written responses will govern. Communications regarding this RFP shall be done exclusively through the Purchasing Manager, Robert Combs, who can be reached at 817-871-8350. 1.5 CONDITIONS REGARDING SUBMITTALS All material made available to the City as part of Proposer's submittal, excluding confidential f and proprietary material that is properly marked as such, shall become the sole and exclusive property of the City even if a Proposer withdraws a proposal after submission to the City. 1.6 RESERVATIONS OF RIGHTS The City reserves the right to reject any or all proposals, and may elect to make a decision without further discussion or negotiation. This RFP is not to be construed as a Contract of any kind. The City is not liable for any costs incurred by any Proposer in the preparation of a response to this RFP or in any subsequent negotiations or response to questions by the City and its consultants, advisors and agents. The City may withdraw, supplement or modify this RFP at any time. The City reserves the right to award A contract to Proposer(s) who is (are) deemed to offer proposal(s) in the best interests of the City. 1.7 PROPOSAL EVALUATION METHOD The City will first examine proposals to determine their conformance with the RFP. Any proposals that are deemed to be non-conforming to the stated requirements may be eliminated. Therefore, Proposers should exercise particular care in reviewing the required Proposal Format as set forth in this RFP. -4— Bulky Waste Collection RFP Draft 10/8/2004 Criteria Point Value Experience handling brush and bulk waste 30 Capability of firm—Personnel and Equipment 30 Financial Data 20 Legal History 20 References 20 Cost 30 150 The evaluation committee shall then rank all proposals based upon its evaluation. The City may request oral presentations on the Proposals and interviews with certain Proposers, as deemed appropriate by the City. Upon completion of the evaluation, the committee may recommend short-listing the proposals that are within the competitive range for negotiations, or the City may award a contract to one or more Proposers. It must be expressly understood that the City reserves the right to select the Proposers), not withstanding any evaluation procedure, who, in the best judgment of the City, offer a proposal deemed to be in the City's best interests. The City also reserves the right to reject any or all proposals. The City further reserves the right to supplement or modify this RFP, to issue additional solicitations for proposals, to negotiate with Proposers for amendments or modifications to their proposals, and/or to not enter into a Contract as contemplated by this RFP. The City accepts no liability for cost and expenses E incurred by the Proposers during the preparation of proposals and subsequent interviews. I.$ DEFINITIONS In this RFP, the following words and phrases shall be defined as follows; Applicable Law shall mean any statute, law, constitution, charter, ordinance, resolution, judgment, order, decree, rule, regulation, directive, interpretation, standard or similarly binding authority, which in any case, shall be enacted, adopted, promulgated, issued or enforced that relates to or affects the City, the Contractor, or the performance by a party of its obligations hereunder. Bulky Items shall mean indoor/outdoor furniture, treated lumber, construction materials, mattresses and box springs, carpet, swing sets, plastic swimming pools, large toys, bicycles, fish aquariums, large household appliances,and other similar items. City shall mean the City of Fort Worth,Texas. Collection Services shall mean the removal of Debris piles in excess of 30 cubic yards or other Non-Complaint Piles (in the terms of the City's residential collections contract) as directed by the City of Fort Worth for collection and transport of such collected Debris to a Disposal or Processing Facility designated by the City and approved for receipt of such Debris. s- Bulky waste Collection RVP Draft 1 0/812 0 0 4 Commission shall mean the Texas Commission on Environmental Quality (TCEQ), formerly i known as the Texas Natural Resource Conservation Commission(TNRCC). Construction and Demolition Waste (C & D) shall mean waste resulting from construction or demolition projects; includes all materials that are directly or indirectly the by-products of construction work or that result from demolition of buildings and other structures, including, but not limited to, bricks, concrete, other masonry materials, paper, cartons, gypsum board, wood, excelsior,rubber,and plastics. Contaminated Pile shall mean a Brush Pile or Bulky Waste Pile containing thirty (30) cubic yards or less of waste, and containing (i) waste not permitted to be disposed of at the Type IV landfill designated by the City, (ii) plastic bags, including, but not limited to, plastic bags containing putrescibles, or(iii) closed boxes; provided, in no event shall Contractor be obligated to collect (a) rock, (b) tires, (c) Unacceptable Debris, or (d) any other waste stream expressly excluded from collection pursuant to the Contract or by Applicable Law. Contract shall mean this RFP, and the Contract with all attachments to be entered into by the City and the Contractor. Contractor shall mean the person selected by the City to provide Debris Collection Services pursuant to the Contract. Contract Year shall mean October 1 through September 30 of the following year, except that the first Contract Year shall be the partial year from the date of the contract signage through September 30, 2005. f Cost Adjustment Method shall mean the adjustment of unit prices for collection of Debris under the Contract with the City by the Contractor for each year of the Contract. The first adjustment shall cover the period between October 1, 2005 through September 30, 2006 according to the procedure shown in Appendix C of this RFP, and shall be effective October 1, 2006. Day shall mean calendar day,unless otherwise specified. Debris shall mean Bulky Waste, C & D Material, Refuse, Special Event Material, White Goods and Yard Waste DEM shall mean the City's Department of Environmental Management. Director shall mean the Director of Environmental Management or a designated representative. Disposal shall mean dumping or depositing of Solid Waste or Debris into or onto a Disposal Facility so that the waste or any constituent thereof is not introduced into the environment. Disposal Facility shall mean a sanitary landfill or other Solid Waste Disposal Facility permitted by TC>?Q and/or other applicable regulatory agency with jurisdiction and utilized for the receipt or final disposition of Solid Waste and Debris generated within the City. -6— Bulky Waste Collection 11F11 Drat/10/8/2004 Governmental Body shall paean, as appropriate, any one or several of any court of competent jurisdiction, the United States of America, the State of Texas and/or any appropriate jurisdiction over activities relating to the services provided for under the terms of the contract; or any agency, authority, regulatory body or subdivision of any of the above as may have jurisdiction over or power and authority to regulate the City, the Contractor, or the collection of Solid Waste and Recyclables. Government Approvals shall mean all licenses, permits and approvals required from any Governmental Body for performance of the Contractor's obligations under the contract. GVW shall mean gross vehicle weight. Hazardous Waste shall mean any Solid Waste identified or listed as a Hazardous Waste by the administrator of the United States Environmental Protection Agency(U.S.E.P.A) pursuant to the federal Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976,42 USC, §6901 et seq,as amended. Letter of Credit shall mean as it is described in Section 22. Material Obligation of City shall mean those services or duties for which the Contract calls upon by the City to perform unless specifically noted otherwise within the terms of the Contract, and for which,by the terms of the Contract may constitute grounds for penalties or termination if the City fails to perform such services or duties. Material Obligation of Contractor shall mean the acts or omissions of Contractor as set forth in Section 12.A3.below. MWBE shall mean a minority or women's business enterprise. Non-Compliant Pile(in the terms of the City's residential collections contract) shall mean a pile which is (i) a pile in excess of thirty (30) cubic yards of material, (ii) an Unacceptable Commercial Pile, (iii) an Out-of-Cycle Bulk Pile, (iv) an illegally dumped pile, or (v) a Contaminated Pile. Performance Bond shall mean a corporate surety bond that guarantees compensation to the City in the event that the City must assume the obligations or duties of the Contractor in order to continue the services defined in the Contract. Person shall mean any individual, partnership, co-partnership, firm, company, corporation, association,joint stock company, trust, estate, governmental entity, or any other legal entity; or their legal representatives,agents,or assigns. This definition includes all Governmental Bodies. Processing Facility shall mean a Facility whose activities include, but are not limited to, the separation and preparation of Solid Waste or Debris for reuse or Disposal or separation and preparation of Recyclables or Yard Waste to produce a marketable commodity or product(s) for beneficial use. Proposer shall mean a Person who submits a proposal to the City in response to RFP 04-0232. Bulky Waste Collection RFP Draft 10/8/2004 + r+67 Recyclables shall mean material that has been recovered or diverted from the non-hazardous Solid Waste stream for purposes of reuse, recycling, or reclamation, a substantial portion of which is consistently used in the manufacture of products, which may otherwise be produced using raw or virgin materials. Recyclables are not Solid Waste. However, Recyclables may become Solid Waste at such time, if any, as it is abandoned or disposed of rather than recycled, whereupon it will be Solid Waste with respect only to the party actually abandoning or disposing of the material. Refuse shall mean nonputrescible Solid Waste(excluding ashes), consisting of both combustible and noncombustible waste materials. Combustible Refuse includes paper, rags, cartons, wood, excelsior, furniture, rubber, plastics, yard trimmings, leaves, or similar materials; noncombustible Refuse includes glass, crockery, tin cans, aluminum cans, metal furniture, and similar materials that will not burn at ordinary incinerator temperatures (1,600 degrees Fahrenheit to 1,800 degrees Fahrenheit). RFP shall mean the Request for Proposals No. 04-0232 and all ancillary documents of the RFP or Contractor's proposal. Rubbish shall mean the same as Refuse. Service Unit shall mean a dwelling unit or other building or location where a Debris pile is set out and is designated by the City for service by the Contractor. Single-Family Dwelling shall mean a building designed exclusively for residential occupancy by not more than one family. Solid Waste shall mean any Garbage, Rubbish, Refuse, sludge from a wastewater treatment plant, Water supply treatment plant, or air pollution control facility,and other discarded material, including solid, liquid, send-solid, or contained gaseous material resulting from industrial, municipal, commercial, mining, and agricultural operations and from community and institutional activities. The term does not include: (A) solid or dissolved material in domestic sewage, or solid or dissolved material in irrigation return flows, or industrial discharges subject to regulation by permit issued under the Water Code, Chapter 26; (S) soil, dirt, rock, sand, and other natural or man-made inert solid materials used to fill land if the object of the fill is to make the land suitable for the construction of surface improvements. Southeast Landfill shall mean the City-owned landfill accepting Municipal Solid Waste, located at 6900 Dick Price Road,Fort Worth,Texas. Southeast Landfill is leased and operated by Allied Waste Systems,dbal Trinity Waste Services. Special Event Material shall mean material from storm events, other disasters or material collected from City sponsored events such as "Great American Cleanup", "Library Book Bulky Waste Collection RFP Draft 1 01812 0 04 Recycling Program", and "Phone Book Redirect Program", which produce waste and/or Recyclables. Ton shall means a short ton of 2000 pounds. Trash shall mean the same as Refuse. Treated Wood shall mean wood that has been treated or preserved with chromated copper arsenate (CCA), pentachlorophenol, or other chemicals which have been classified as known human carcinogens by the U. S. E. P. A. Tpe IV Waste shall mean brush such as tree and shrub limbs and trimmings, C&D, and/or Refuse that are free of putrescible waste and free of household wastes. Unacceptable Debris shall mean any and all waste, including but not limited to Hazardous Waste, Special Waste,Medical Waste and friable asbestos,the acceptance and handling of which by Contractor would cause a violation of any permit condition, legal or regulatory requirement, substantial damage to Contractor's equipment or facilities, or present a substantial danger to the health or safety of the public or Collector's employees. Uncontrollable Circumstances includes "unanticipated everits," and shall mean any act, event or condition (excluding those which result from the willful or negligent action or inaction of a party) occurring during the term that has, or may reasonably be expected to have, a material and adverse effect on a right or an obligation of either or both parties to the contract, if such act, event or condition is beyond the reasonable control of the party relying thereon as justification for not performing under the contract. Uncontrollable Circumstances shall include, but are not limited to, the following: an act of God, landslide, lightning, earthquake, fire, explosion, flood, ice storm, nuclear radiation, acts of a public enemy or terrorist, war, blockade, insurrection, riot or civil disturbance or any similar occurrence, or a condemnation or other taking by or on behalf of any public, quasi-public or private entity, but not including reasonably anticipated weather conditions for the geographic area of the City; Uncontrollable Circumstances shall not include: (1) insolvency or inability to pay any amount; (2) inability to obtain any letter of credit, surety bond, payment or performance bond or any other security required by the contract; (3) a public or private labor dispute relating to the collection, transportation or disposal of Solid Waste. Vehicle shall mean every device in,upon,or by which Contractor uses to transport Debris and/or waste or drawn upon a public or private highway or road to perform the services and related services described for by the Contract. 1 'y— Bulky waste Collection RFP Draft 10/8/2004 Violation shall mean any determination by a Governmental Authority that the Contractor is in t violation of or not in compliance with any portion of its Governmental Approvals or Applicable Law. White Goods shall mean appliances such as refrigerators, stoves,washers, dryers and other large enameled appliances, which do not contain PCB or CFC units and have been officially certified to that effect. Working Day shall mean Monday through Friday and holidays, except New Year's Day, Thanksgiving Day, and Christmas Day. Yard Waste shall mean leaves, yard trimmings, yard and garden debris, Christmas trees, and brush, including clean woody vegetative material not greater than four inches in diameter, which results from landscaping maintenance and land-clearing operations. The term does not include stumps,roots,or shrubs with intact root balls,and specifically excludes all Treated Wood. 1.9 AWARD OF CONTRACT(S) 1.9.1 General The Contract(s)will be awarded to the Proposer(s)that the City of Fort Worth determines to offer the greatest value to the City, within budgetary limitations. The City's goal is to receive the highest quality service at the lowest reasonable cost, and the successful Proposer(s) may or may not have submitted the lowest cost proposal. However, the City reserves the night to reject any or all proposals, to accept or reject any one or more items of a proposal,or to waive any irregularities or informalities in a proposal. 1.9.2 Modification to Award The City reserves the right to issue clarifications, modifications, and/or amendments to any award, as it may deem appropriate. 2.0 QUALIFIICATIONS OF PROPOSERS 2.1 General The City wishes to enter into a long-term, stable relationship with one or more Proposers that have exhibited a secure and reliable financial standing, Iimited past litigation problems, extensive and successful service delivery, state-of-the-art equipment and - In-Bulky Waste Collection RFP Draft 10/8/2004 management practices, high customer and client satisfaction and a strong record of environmental compliance. The City desires Proposers with a strong environmental record and experience in solving environmental issues in a timely manner. Therefore, Proposer shall describe any regulatory complaints or violations related to Proposer's operations received within the last seven years involving any company, partner, holding company, or subsidiary; any partner on their proposal team; or any corporate officer, including litigation arising from or related to: $* performance of a Solid Waste or Recycling collection contract; * performance of a Recycling or Yard Waste processing or marketing contract; performance of a Solid Waste processing or Disposal services contract; ❖ violation of State or federal anti-trust laws; or 4• allegation of corrupt practices. If applicable, Proposer shall provide evidence of successful mitigation of environmental and community impacts from its operations. 2.2 Certification of Non-Indebtedness No proposal will be accepted from, or Contract awarded to, any Person, firm or corporation that is in arrears or is in default to the City upon any debt or Contract, or that is a defaulter, as surety or otherwise, upon any obligation to the City or had failed to f perform faithfully any previous Contract with the City'. Proposer shall certify that, as of the date of Proposal, it has no unpaid, delinquent taxes and/or any other unpaid, delinquent bills owed to the City. 2.3 Qualifications of Key Personnel All key personnel of Proposer to be used in providing services to the City shall have experience performing similar work in a satisfactory manner. Details of such experience shall be provided, including employer, position, duties, dates of employment, skills, education and training. 2.4 Minority and Women Business Enterprises Participation M/WBE participation is not required for this contract. 2.5 References Proposers shall provide references for the communities where similar work was performed by Proposer in a satisfactory manner. Name of community, contact, address and phone number shall be provided for each reference. Proposer's information shall include the following for each reference: Bulky Waste Collection RFP Draft 10/8/2004 Start and completion dates of contract • Approximate value of contract • Types of waste and/or Recyclables collected and transported Disposal and/or Processing Facility name(s)and location(s) to which waste and/or Recyclables were delivered Quantities of waste and/or Recyclables collected and transported in each year of contract Description of equipment used for transport/hauling services a Number of employees working on the contract + Problems experienced in providing service and actions taken to resolve problems ■ Experience in providing customer service and evidence of customer/jurisdiction satisfaction 2.6 Financial Qualifications Each proposal must include financial information on the Proposer, and any member of the Proposer's team. This information relates to the Proposer's ability to perform its obligations under the Contract. To determine the Proposers financial soundness qualifications, the City requires the submission of the applicable items listed below: A copy of the most recent audited annual financial statements. Copies of subscquent quarterly financial reports. A copy of the Proposer's most recent Form lU-K and Form 1O-Q filed with the SEC or,if Form 1 O-K is not filed with the SEC, the following: Certified audited financial statements for the past three(3) fiscal years Copies of all subsequent quarterly financial reports A copy of the latest annual report Information on any changes in the mode of conducting business,bankruptcy proceedings, filings,and mergers or acquisitions within the past three(3)years A description of all major financial commitments, including but not limited to, liabilities and equity contribution obligations of the Proposer,and their bearing on the Proposer's ability to secure the Proposer's obligations for the services proposed. Information on Proposer's access to bank lines of credit,revolving credit agreements,or other sources of short term liquidity. The Proposer must also identify the following,with references to the appropriate section of the financial statements or other documents,as applicable: -tx- Bulky waste Collection RFP Draft 10/8/2004 • Net Book Equity for the three(3)most recent fiscal years • Pre-tax earnings for the three(3)most recent fiscal years • A ratio of current assets divided by current liabilities for the three(3)most recent fiscal years • Cash and cash equivalents as of the date of its most recent audited annual financial statements • Any material adverse changes in its financial position since the end of its most recent business year that would affect the ability to meet the above criteria. • Long-term debt to capitalization ratio for the three(3)most recent fiscal years If any of the above information changes significantly subsequent to submission of the Proposal, such changed information shall be provided to the City. 3.0 SCOPE OF CONTRACTOR'S SERVICES 3.1 General The selected Contractor shall covenant and agree to diligently and faithfully perform the services listed below(hereinafter"Collection Services"). Contractor shall collect, only as directed by the City on a City Work Order, piles of Debris, consisting of Bulky Waste, Wood Waste, and C & D Materials at Service Units in excess of 30 cubic yards or Non- Complaint Piles and those out of cycle piles in excess of those guaranteed to the City of Fort Worth's Solid Waste Service Provider. All collections are to be made within 7 days of requested service by the City. These Collection Services shall include the furnishing of all labor, tools, equipment, materials, insurance, performance bonds (to the extent set t forth herein), supervision and all other items necessary to the performance of such work and services. All work and services to be performed under the Contract shall be carried out in the following manner, at the times, in the locations and at the per hour rate specified in the Schedule for Collection Services which will be an Attachment to the Contract. 3.1.1 Collection Services Collection of piles of Debris consisting of Bulky Waste, Wood Waste, C & D Materials, or material designated for collection by the City of Fort Worth at Service Units, or for special events, in excess of 30 cubic yards. Collection of out of cycle piles that are in excess of 150 daily work orders guaranteed to the City's Solid Waste Service Provider. Collection will only be made as directed by the City of Fort Worth on a case by case basis. All collections are to be made within 7 days of request by the City. 3.1.2 Delivery All collections under the terms of the Contract, unless otherwise determined by the Director shall be delivered as follows: Debris, Large Brush, Wood Waste, C & D Materials, and Large Bulky waste, Yard Waste, and Type IV C&D materials shall be delivered to IESI Fort Worth C&D Landfill, located at 4144 Dick Price Road, Kennedale, Texas, unless the City designates another Processing Facility or Disposal Facility. -13— Sulky Waste Collection RFP Draft 1 01812 0 04 3.2 Scope of City Services The City agrees to perform the following services: ■ Designate a City representative to provide timely direction to the Contractor and render City decisions; • Timely review and-response, if necessary, to reports submitted by Contractor; • Make timely payments upon review and approval of invoices submitted by the Contractor; ■ Monitor the personnel, equipment, and Vehicles used by Contractor to ensure compliance with the Contract; • Work with Contractor to resolve complex customer service issues; and ■ Determine assessments, and collect liquidated damages as determined by the Director. • Payment of processing and disposal fees of delivered wastes designated facilities. 3.3 Term The term of the Contract shall begin at Contract signing and shall end no later than March 31,2013. 3.4 Payment For and in consideration of the Collection Services performed in accordance with the Contract,City agrees to pay Contractor as follows: Within fifteen Days of the end of each month during which Collection Services are provided by the Contractor, Contractor shall submit to the Director a monthly report and invoice as shown in an Attachment to the Contract, detailing monthly total activities, to include the services provided by Contractor.The monthly report and invoice shall contain the following: 1. a detail, by load collected including address and City work order number, of time per load, location of Disposal Facility or Processing Facility where the load was delivered,and weight of load; 2. receipt and resolution of complaints and inquiries; 3. outstanding claims; 4. MWBE participation information and status;and 5. monthly payments due Contractor. The monthly payment shall be the sum of: 1. The time billed per City work order tunes the Contract rate per hour. 2. Special Event Waste, times the applicable hourly rate, and shall include the work orders describing the time it took Contractor to complete such services and the disposal tickets identifying the Disposal Facility and/or Processing Facility and the weight of the waste and/or Recyclables; plus -14— Bulky Waste Collection RFP Draft 10/8/2004 3. Disaster debris and any other special collection services requested by City times the applicable rate; less 4. Any liquidated damages assessed by the City as per Section 16. Payment shall be made to the Contractor within thirty (30) Days from receipt and approval by the City of the Contractor's final monthly statement of services provided and Contractor's monthly report. 3.5 Unit Price Adjustment Contractor hereby agrees to accept payments, adjusted by the Cost Adjustment Method in the manner as reflected in the Adjustment Schedule included in the Contract as an Attachment, as full compensation for services rendered. Contractor will submit documentation of the payment adjustment criteria to the City along with its annual :request for rate adjustment. 3.6 HOLIDAYS The following Days shall be observed as holidays: New Year's Day, Thanksgiving Day, and Christmas Day. These holidays may be changed upon the determination of the Director. Collection shall be provided every scheduled Day, including bad weather Days, unless the Director informs Contractor of a suspension of service. 3.7 Labor Force Contractor shall provide fifteen (15) Days' notice after a change in key personnel (e.g., Division President, Operations Manager, Field Supervisor, and equivalent) to the Director and introduce such new personnel to the Director. Contractor may bring in from outside the City of Fort Worth its key personnel. All other workers, including equipment operators, Vehicle drivers and laborers may be imported only after the local supply of competent personnel is reasonably exhausted by reviewing lists provided by the Director and newspaper advertising. Contractor shall employ only such superintendents, foremen, and workers who are careful, competent and fully qualified to perform the duties or tasks assigned to them and shall take appropriate action against any employees or subcontractors of Contractor who shall behave themselves in such manner as to be actionable or who neglect or refuse to comply with or carry out the directions of Contractor. 3.8 Personnel Standards Contractor shall furnish such qualified drivers, mechanical, supervisory, clerical and other personnel as may be necessary to provide the services required in a safe, economical and efficient manner. All drivers shall be trained and qualified in the operation of collection Vehicles and must have in effect a valid commercial drivers license, of the appropriate class, issued by the Texas Department of Public Safety. -15— Bulky Waste Collection RFP Draft ]0/8/2004 Contractor shall provide suitable operational and safety training for all of its employees who utilize or operate Vehicles or equipment for collection of materials under the Contract. Contractor shall train its cmployces in Solid Waste collection to identify, and use reasonable effort not to collect Hazardous Waste or Infectious Medical Waste. Contractor shall not, nor shall it permit its employees to, demand or solicit, directly or indirectly, any additional compensation or gratuity from members of the public for services provided under the Contract. Contractor shall use its best efforts to assure that all employees present a neat appearance and conduct themselves in a courteous manner. Contractor shall regularly train its employees in customer courtesy, shall prohibit the use of loud or profane language, and shall instruct collection crews to perform the work as quietly as possible. If any employee is found not to be courteous or not to be performing services in the manner required by the Contract, Contractor shall take all appropriate corrective measures. If City has notified Contractor of a complaint related to discourteous or improper behavior, Contractor will consider reassigning the employee to duties not entailing contact with the public while Contractor is pursuing its investigation and corrective action process. Contractor shall designate qualified employees as supervisors of field operations. Supervisors will be in the field inspecting Contractor's work and will be available by radio or phone during the Contractor's hours of operation to handle calls and complaints from the City,or to follow up on problems and inspect Contractor's operations. All employees of the Contractor performing work under the Contract shall be uniformed, showing their association with the Contractor while operating in the field. Contractor shall provide a list of current employees, contractors and subcontractors to City upon request. Contractor will train its employees as to the City's Solid Waste ordinance and collection rules and regulations, ensuring employees can answer questions from citizens and follow the City's collection rules at the curb. This training is to be ongoing and reach new hires. 3.9 Vehicle and Equipment Standards 3.9.1 General 1. Contractor shall provide a fleet of collection Vehicles and other support equipment in sufficient in number and capacity to efficiently perform the work requested by the City in strict accordance with the terms of the Contract. Contractor shall have available sufficient back-up Vehicles and equipment used to respond to Work Orders directed by the City for collection, complaints and emergencies. City representative(s) shall inspect all Vehicles to be used in servicing the Contract no later than thirty(30) Days before Contract begins and each year of the Contract. City shall notify Contractor about the failure of any Vehicle to meet the Vehicle requirements within ten(10)Days of inspection. f -IF— Bulky Waste Collection RFP Draft 1 01812 0 04 2. Contractor shall furnish and maintain all such equipment in accordance with the standards set out in the RFP, and as is considered to be necessary for prosecution of the work in an acceptable manner and at a satisfactory rate of progress. 3.9.2 List Contractor shall identify in writing to the Director a listing of: 1. Vehicles and other key equipment to be proposed by service type 2. Number of spare Vehicles to be on hand for back-up of front-line Vehicles; and 3. Designated unique Vehicle number,description, and legal GVW of each Vehicle. 3.9.3 Specifications 1. All Vehicles used by Contractor in providing collection of materials under the Contract shall be designed to prevent blowing, spillage or overflow. All such Vehicles shall comply with U.S. Environmental Protection Agency noise emission regulations and other applicable noise control regulations. Contractor shall also ensure that gross Vehicle weight of all Vehicles, even when loaded, does not exceed Vehicle license limitations to protect the highways of the City. 2. All Vehicles, equipment, tools, and machinery used for handling materials and executing any part of the work shall be subject to approval by the Director and shall be maintained in satisfactory, safe and efficient working condition in accordance with the manufacturer's specifications and/or recommendations. Equipment used by Contractor or Contractor's subcontractor(s) shall be such that no injury to the workers or property should result from its proper use. Contractor shall be responsible for initiating, maintaining and supervising all safety precautions and programs, in connection with the work and services performed under the Contract. Contractor shall provide reasonable protection to prevent property loss or damage and/or personal injury to Persons, including but not limited to employees performing such work and all other Persons who may be affected thereby. 3.9.4 Vehicle Identification Contractor's name, local telephone number and a unique Vehicle identification number designated by Contractor for each Vehicle shall be prominently displayed on all Vehicles. The Contractor's name and local telephone number,shall be displayed in letters and numbers no less than four(4) inches high and the identification number shall be displayed in letters and numbers no less than two and one-half(2 /2) inches high. Contractor shall not place the City's logo on its Vehicles. 3.9.5 Cleaning and Maintenance Contractor shall maintain all of its properties, facilities and equipment used in providing service in a safe, neat, clean and operable condition at all times. Vehicles used in the collection of materials shall be thoroughly washed on a regular basis so as to present a clean appearance. City may inspect Vehicles at any time to determine compliance with sanitation requirements. 3.9.6 Inspection Contractor shall inspect each Vehicle and each piece of equipment daily to ensure that all -17— Bulky Waste Collection RFP Draft I U/3/2UQ4 equipment is operating properly and complies with Applicable Law. Vehicles which are not operating properly or do not comply with Applicable Law shall be taken out of service until they are repaired and do operate properly and comply with Applicable Law. Contractor shall perform preventive maintenance and all scheduled maintenance functions in accordance with the manufacturer's specifications and schedule. Contractor shall keep accurate records of all Vehicle maintenance, recorded according to date and mileage, and shall make such records available to the City upon request to the extent necessary to ensure compliance with manufacturer's recommended scheduled Vehicle service. 3.9.7. Repair Contractor 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. Contractor shall maintain accurate records of repair, which shall include the date/mileage, nature of repair and the signature of a maintenance supervisor that the repair has been properly performed. 3.9.8 Storage Contractor shall arrange to store all Vehicles and other equipment in safe and secure location(s), where applicable, in accordance with City's applicable zoning regulations. 3.10 MWSE Requirements Deliberately omitted. 3.11 Contingency Plan Within forty-five (45) Days prior to the commencement of the Collection services, Contractor shall submit to the Director for approval a contingency plan showing the program and procedures Contractor will implement in the event of an emergency, downtime, outage, equipment failure or breakdown, labor dispute, or other situation or condition that would impair Contractor's ability to perform under the Contract. 3.12 Reporting Requirements Contractor shall maintain and submit to the City accurate reports, which detail activity related to the above mentioned services, in a format approved by the City and shown in an Attachment to the Contract. 1. Monthly reports shall include the data as described 2. Annual reports shall report all the above data, following the same format as the monthly report. ' -Is— Bulky Waste Collection RFP Draft 1 Q1812004 3. Records shall be kept on a daily, weekly, cumulative monthly, and cumulative annual basis,and shall be available to the City upon request. 4. Contractor shall file reports with the City in a timely manner,but on no less than a monthly basis, specifying all complaints, accidents or incidents while performing any duties pursuant to the terms of the Contract, outages or downtime, and inspections by any regulatory agencies during the month of the report. 5. Reports shall detail the nature and reasons for these occurrences as well as all results, findings and actions taken to resolve such incidents. Contractor shall also notify the Director immediately of any fines or penalties levied and any actions that could have an adverse impact on the Contractor or the service to the City, or both. Failure to report such data shall subject the Contractor to damages described in Section 3.17 below. 3.13 Events of Default by Contractor The following shall constitute events of default on the part of the Contractor except to the extent caused by the occurrence of an Uncontrollable Circumstance or City's default: 1. Failure by the Contractor to perform any Material Obligation of Contractor under the terms of the Contract, and continuance of such failure after(i) written notice thereof has been provided by the Director specifying such failure and requesting that such condition be remedied,and(H)Contractor's failure to cure the default or immediately initiate and diligently pursue reasonable action and cure such non performance within fifteen(15)Days after receiving notice from the Director(provided, if such failure is of a nature that it cannot be cured within such 15 day period,Contractor shall not be in default if Contractor commences the curing of such failure within such 15 day period, and ........diligently pursues the curing thereof); or 2. The Contractor being insolvent or bankrupt or ceasing to pay its debts as they mature or making an arrangement with or for the benefit of its creditors or consenting to or acquiescing in the appointment of a receiver trustee,or liquidator for a substantial part of its property;or a bankruptcy,winding up,reorganization, insolvency, arrangement, or similar proceeding instituted by the Contractor,under the laws of any Governmental Body or against the Contractor, if the Contractor does not take the appropriate action to dismiss said proceedings;which proceedings have not been dismissed within ninety(90)Days of the institution of such proceedings; or any action or answer by the Contractor approving,consenting to,or acquiescing in,any such proceedings; or the event of any distress, execution,or attachment upon the property of the Contractor which shall substantially interfere with its performance hereunder; or 3. The following acts or omissions by the Contractor shall constitute failure to perform a Material Obligation of Contractor under the Contract: -19— Bulky waste Collection RFP Draft 1 01312 0 04 a. Failure of Contractor to commence work operations within the time specified in the Contract. b. Failure of Contractor to provide and maintain sufficient labor and equipment or licenses,permits and necessary approvals from City or a third party to properly and legally execute the working operations. c. Evidence that Contractor has abandoned the work. d. Evidence that Contractor has become insolvent or bankrupt, or otherwise financially unable to carry on the work satisfactorily. e. Failure on the part of Contractor to comply with any material requirements of the Contract such as failure to maintain insurance or the Performance Bond or to comply with any of the Director of Environmental Management's material requirements which are provided for in the Contract. f Indication that the Contractor has made an unauthorized assignment of the Contract or any funds due thereof for the benefit of any creditor or for any other purpose. g. Failure to supply complete and accurate information in all material respects as required in the Contract. h. Deliberately omitted. i. Failure to indemnify the City as required herein, j. Falsifying records or reports to the City, State or Federal governments. k. Failure to remedy the cause of a complaint as described in Section 3.1 G, subject to the provisions of Section 3.18 E below. 1. Failure to comply with Applicable Law that materially affects the Contract. City shall,as soon as practical,notify Contractor of any failure on the Contractor's part to comply with the terms of the Contract. After receipt of notice from the City of an event of default set forth above, Contractor shall acknowledge receipt of such notice and within twenty-four (24) hours Contractor shall provide the City with verbal notice of what corrective action has or shall be taken by the Contractor and shall follow up with written notice describing the same along with any additional relevant information, within forty- eight (48) hours. Failure to provide acknowledgement of receipt of notice, or plan of corrective action within the above mentioned time period(s) shall constitute an event of default by the Contractor. -xn- Bulky Wwte Colleetlon RCP Draft t 0/8,1o04 "t 3.14 Events of Default by City The following shall constitute events of default on the part of the City, except to the extent excused by the occurrence of an Uncontrollable Circumstance or Contractor's fault: 1. A failure by City to timely perform any Material Obligation under the terms of the Contract,and the continuance of failure for a period of sixty(60) Days after written notice thereof has been provided by the Contractor specifying such failure and requesting that such condition be remedied if City does not either cure the default or initiate and diligently pursue reasonable actions to cure such non- performance;or 2. City being insolvent or bankrupt or ceasing to pay its debts as they mature or making an arrangement with or for the benefit of its creditors or consenting to or acquiescing in the appointment of a receiver, trustee or liquidator for a substantial part of its property; or a bankruptcy,winding up,reorganization, insolvency, arrangement or similar proceeding instituted by City under the laws of any jurisdiction or against City, if City does not take appropriate action to dismiss said proceedings,which proceedings have not been dismissed within ninety(90) Days of the institution of such proceedings; or any action or answer by City, approving of,consenting to,or acquiescing in,any such proceedings;or the levy of any distress, execution or attachment upon the property of City, which shall substantially interfere with its performance hereunder. Contractor shall, as soon as practical, notify City of any failure on the City's part to comply with the terms of the Contract. After receipt of notice from the Contractor, City shall acknowledge receipt of such notice and shall promptly provide the Contractor with notice of what corrective action has or shall be taken by the City, within a reasonable time, in light of the circumstances. Failure to promptly provide acknowledgement of receipt of notice, or notice of planned corrective action, shall constitute an event of default by the City. 3.15 Local Office and Contract Administration Contractor shall maintain during the terra of the Contract a fully operational business office with responsibility for the performance of the Contract. Contractor shall charge, assign or delegate to this office full authority to transact all business required in the performance of the Contract. Contractor shall designate a qualified managing agent and shall identify same in writing to the City. All notices may be served from the City or Director upon the designated managing agent. Service upon Contractor's managing agent shall always constitute service upon the Contractor. It is anticipated that all communications with the Contractor will come from the City with little or no communications coming from the general public. Contractor's office shall have a responsible person in charge during collection hours on Working Days, and shall -21— Bulky Waste Collection RFP Draft 14/8/2004 be equipped with sufficient communications technology and sufficient competent s personnel to receive all communications. Contractor's communication personnel shall deal with all communications in a courteous and polite manner and record all complaints. Contractor shall resolve all complaints in an expeditious manner within the following one (1)business day period. 3.16 Complaints and Non-performance 1. All service complaints received by the City's call center shall initially be directed to Contractor and shall be resolved (or resolution initiated) within one (1) business day. On a monthly basis, Contractor shall supply the Director with copies of all complaints on a format specified in an Attachment to the Contract, indicating the date and hour of inquiry or complaint receipt, the nature of the complaint or inquiry,and the manner and timing of resolution. Complaints received after 3:00 p.m. on Saturday or a Day preceding a holiday must be resolved prior to 9:00 a.m. on the next Working Day. When a complaint is received on the Day preceding a holiday or a weekend, it shall be promptly serviced on the next Working Day. 2. Contractor shall provide the Director with a full explanation of the disposition of any complaint involving a customer's claim of damage to private property or personal injury as the result of actions of Contractor's employees, agents, or subcontractors in the format specified in Attachment D as soon as possible, with additional information provided as requested by the Director and shall also include such information in the monthly report to the City. 3. Notwithstanding anything contained herein to the contrary, Contractor's failure to remedy the cause of the complaint, or due to events described in Section 3.17 below, shall not be considered a material breach of the Contract or breach of a Material Obligation of Contractor , and thereby not an event of default, UNLESS Contractor's failure to perform or act in accordance with the terms of the Contract occurs in a consistent and repeated manner as reasonably determined by the Director. Notwithstanding anything contained in the Contract to the contrary, if the Director determines that failure has occurred in a consistent and repeated manner and the notification procedures as described in Section 3.12 have been met, then the Contractor's failure to remedy complaints as described above may be considered a failure to perform a Material Obligation of Contractor. 3.17 Liquidated Damages For the purpose of computing damages and remedies for Contractor's failure to remedy an action or inaction listed below, it is agreed that the City may deduct from payments due to Contractor or to become due to Contractor, the following amounts as liquidated damages: 1. Failure to clean up spilled materials resulting from loading and/or transporting - each incident: fifty dollars($50.00). ( -zx- Milky Wa0e Collection RFP Draft 10/8/2004 2. Chronic use of Vehicles for collection for which the manufacturer's gross allowable vehicle weight exceeds the limits allowable by City ordinance: fifty dollars: ($50.00)per occurrence. 3. Failure to provide service for City requested within seven (7) Days of request as required under the terms of the Contract and the RFP: fifty dollars ($50.00) per Day per Service Unit until service is completed. 4. Failure to submit accurate reports, including monthly, quarterly, annual, employment reports and others as specified in the Contract and invoices in the specified format: non-payment of invoices until submission of an accurate and appropriately formatted invoice and complete reporting information. 5. Failure to maintain a staffed office during specified hours: fifty dollars ($50.00) per occurrence. b. Failure to notify the DEM of changes in key personnel (e.g. Division President, Operations Manager, and Field Supervisor) and/or to introduce such new personnel to the DEM: fifty dollars($50.00)per occurrence. 3.18 Uncontrollable Circumstances P € 3.18.1 Uncontrollable Circumstance affecting Contractor's Obligations. Contractor shall be excused for the failure to perform its obligations under the terms of the Contract if such failure results from the occurrence of an Uncontrollable Circumstance. Contractor shall seek diligently and in good faith to perform its obligations, notwithstanding the occurrence of an Uncontrollable Circumstance, to mitigate the adverse effects of an Uncontrollable Circumstance, and to overcome an Uncontrollable Circumstance as soon as practicable. 3.18.2 Uncontrollable Circumstance affecting City's Obligations. City shall be excused for the failure to perform its obligations under the terms of the Contract if such failure results from the occurrence of an Uncontrollable Circumstance. City shall seek diligently and in good faith to perform its obligations, notwithstanding the occurrence of an Uncontrollable Circumstance, to mitigate the adverse effects of an Uncontrollable Circumstance, and to overcome an Uncontrollable Circumstance as soon as practicable. 3.18.3 Notice of an Uncontrollable Circumstance. Contractor shall provide verbal notice of an Uncontrollable Circumstance to the Director within eight (8) hours of the Contractor's knowledge of such Uncontrollable Circumstance and Contractor shall follow up with written notification within three (3) Days of the Contractor's knowledge of such Uncontrollable Circumstance. Such notice shall, at a minimum, set forth the ( -23— Bulky Waste Collection RFP Draft 10/8/2004 following (to the extent then known or available, or if not, as soon as practicable thereafter, a separate notice shall provide such information not provided in the first notice): 1. a description of the Uncontrollable Circumstance that has occurred; and 2. the effect, if any, of such Uncontrollable Circumstance on Contractor's performance or other obligations under the Contract. 3.18.4 Reinstatement of Abilily to Perform. After the resolution of an Uncontrollable Circumstance and the restoration of Collection Services, the Contractor shall provide written notice of a reinstatement of Collection Services. The City shall reinstate the Collection Services (or shall cause reinstatement of) unless the Contract shall have been previously terminated as provided herein. 3.18.5 Uncontrollable Circumstance. Neither Contractor nor the City shall be liable for the failure to perform their duties nor for any resultant damage, or loss, if such failure is caused by Uncontrollable Circumstances. If such Uncontrollable Circumstances persists for more than thirty(30) Days, or if after its [their] cessation, the Contractor is unable to render full or substantial performance for a period of thirty(30) Days, the City may terminate the Contract by giving Contractor ten (10) Days advance written notice. 3.19 Termination All work and services of the Contract may be suspended on written order of the Director of Environmental Management or the City Manager, or the Contract may be declared terminated by the City Council for any event of default by Contractor or Contractor's failure to perform a Material Obligation of the Contract; provided, (i) the City has provided Contractor written notice of such action or inaction constituting grounds for such suspension or termination, and (ii) Contractor Fails to cure such alleged action or inaction within seven (7) Days of Contractor's receipt of such notice. If such event of default is of a nature that it cannot be cured within such thirty (30) Day period, the City will not take action to suspend or terminate the Contract provided Contractor commences the curing of such action or inaction within the seven (7) Day period and diligently pursues the curing thereafter,as determined by the Director. A copy of any suspension order or action of the City Council shall be served on Contractor's surety. When work is suspended for any cause or causes, or when the Contract is terminated, Contractor shall discontinue the work or such part thereof as the City shall designate,whereupon the surety may, at its option,assume the Contract or that portion thereof which the City has ordered Contractor to discontinue, and may perform the same or may, with the written consent of the City, sublet the work or that portion of the work as taken over; provided, however, that the surety shall exercise its option and begin performance of the work, if at all, within five (5) Days after the written notice to discontinue the work has been served upon Contractor and upon the surety or its -a4— Bulky Waste Collection RFP Draft 1 01812 0 04 authorized agent. The surely, in such event, shall assume Contractor's place in all respects and shall be bound by all the terms and conditions of the Contract. Surety shall be paid by the City for all work performed by it in accordance with the terms of the Contract. In case the surety does not, within the above-specified time, assume the Contract responsibilities, or that portion thereof which the City has ordered Contractor to discontinue, then the City shall have the power to perform and complete, by contract or Otherwise, as it may determine, the work herein described or such part thereof as it may deem necessary, and Contractor agrees that the City shall have the right to procure equipment, labor and materials necessary for the completion of the work. The City shall not be required to obtain, the lowest bid for the work of completing the Contract, but the expense to the City for same shall be the actual cost to the City of such work. In case such expenses shall exceed that amount which would have been payable under the Contract if the same had been fully completed by the Contractor,then the Contractor and its surety shall pay the amount of such excess to the City on notice from the City of the excess due. When any particular part of the work is being carried on by the City by contract or otherwise, under the provisions of this section, the Contractor shall continue the remainder of the work in conformity with the terms of the Contract. In all instances,Contractor and surety shall be liable for all costs incurred by City during the period after notice to discontinue the work has been served upon Contractor and the surety until such time as City either has elected to prosecute the work of the Contract itself or has replacement contractors in place to prosecute the work with or without i additional City forces. 3.20 Independent Contractor It is expressly understood and agreed that Contractor shall perform all work and services described herein as an independent contractor and not as an officer, agent, servant or employee of the City; that Contractor shall have exclusive control of and the exclusive right to control the details of the services and work performed hereunder, and all persons performing the same; and shall be solely responsible for the acts and omissions of its officers, agents, employees, contractors and subcontractors; that the doctrine of respondeat superior shall not apply as between City and Contractor, its officers, agents, employees, contractors and subcontractors; and that nothing herein shall be construed as creating a partnership or joint enterprise between City and Contractor. No person performing any of the work and services described hereunder shall be considered an officer,agent, servant or employee of the City. 3.21 INDEMNIFICATION CONTRACTOR SHALL RELEASE, INDEMNIFY,REIMBURSE,DEFEND,AND HOLD HARMLESS, CITY,ITS OFFICERS, AGENTS, SERVANTS AND EMPLOYEES,FROM AND AGAINST ANY AND ALL CLAIMS OR SUITS FOR PROPERTY DAMAGE OR LOSS AND/OR PERSONAL INJURY, INCLUDING DEATH, TO ANY AND ALL PERSONS, ARISING OUT OF THE WORK AND SERVICES TO BE PERFORMED ( -2s— Bulky waste Collection RFP Draft 1 01812 0 04 HEREUNDER BY CONTRACTOR, ITS OFFICERS, AGENTS, EMPLOYEES, CONTRACTORS, SUBCONTRACTORS, LICENSEES, OR INVITEES, INCLUDING ' DAMAGES, LOSS,INJURY OR DEATH,TO THE EXTENT CAUSED BY ANY ERROR, OMISSION, DEFECT, OR DEFICIENCY OF CONTRACTOR IN ACCORDANCE WITH THE CONTRACT. CONTRACTOR DOES HEREBY RELEASE, INDEMNIFY, REIMBURSE, DEFEND, AND HOLD HARMLESS THE CITY, ITS OFFICERS, AGENTS, SERVANTS, AND EMPLOYEES FROM AND AGAINST ANY AND ALL LIABILITY, CLAIMS, SUITS, DEMANDS, OR CAUSES OF ACTION WHICH MAY ARISE DUE TO ANY LOSS OR DAMAGE TO PERSONAL PROPERTY, OR PERSONAL INJURY, AND/OR DEATH OCCURRING AS A CONSEQUENCE OF THE PERFORMANCE OF THE CONTRACT, WHEN SUCH INJURIES, DEATH, OR DAMAGES ARE CAUSED BY THE NEGLIGENCE OF CONTRACTOR, ITS OFFICERS, AGENTS, OR EMPLOYEES, OR SUBCONTRACTORS, OR THE JOINT NEGLIGENCE OF CONTRACTOR, ITS AGENTS, OR EMPLOYEES, OR SUBCONTRACTORS, AND ANY OTHER PERSON OR ENTITY, EXCLUDING ALL PARTIES INDEMNIFIED HEREUNDER, TO THE EXTENT CAUSED BY THE NEGLIGENT ACT OR OMISSION OF CONTRACTOR. THE OBLIGATIONS OF THE CONTRACTOR UNDER THIS SECTION SHALL INCLUDE, BUT NOT BE LIMITED TO, THE BURDEN AND EXPENSE OF DEFENDING ALL CLAIMS, SUITS, AND ADMINISTRATIVE PROCEEDINGS (WITH COUNSEL REASONABLY APPROVED BY THE INDEMNIFIED PARTIES), EVEN IF SUCH CLAIMS, SUITS OR PROCEEDINGS ARE GROUNDLESS, FALSE, OR FRAUDULENT, AND IN CONDUCTING ALL NEGOTIATIONS OF ANY DESCRIPTION, AND PAYING AND DISCHARGING, WHEN AND AS THE SAME BECOME DUE, ANY AND ALL JUDGMENTS, PENALTIES OR OTHER SUMS DUE AGAINST SUCH INDEMNIFIED PERSONS. UPON LEARNING OF A CLAIM, LAWSUIT, OR OTHER LIABILITY WHICH CONTRACTOR IS REQUIRED HEREUNDER TO INDEMNIFY, THE CITY SHALL PROVIDE CONTRACTOR WITH REASONABLY TIMELY NOTICE OF SAME. THE OBLIGATIONS OF THE CONTRACTOR UNDER THIS SECTION SHALL SURVIVE THE EXPIRATION OF THE CONTRACT AND THE DISCHARGE OF ALL OTHER OBLIGATIONS OWED BY THE PARTIES TO EACH OTHER HEREUNDER. IN ALL OF ITS CONTRACTS WITH SUBCONTRACTORS FOR THE PERFORMANCE OF ANY WORK UNDER THE CONTRACT,CONTRACTOR SHALL REQUIRE THE SUBCONTRACTORS TO INDEMNIFY THE CITY IN A MANNER CONSISTENT WITH THIS SECTION. 3.22 Insurance Contractor shall not commence work under the Contract until it has obtained all the insurance required under the Contract, and such insurance has been approved by the City. Contractor shall keep the required insurance in force throughout the term of the Contract. 3.22.1 WORKERS' COMPENSATION INSURANCE: Contractor shall maintain, during the term of the Contract, Workers' Compensation Insurance at statutory limits on all of its employees to be engaged in work under the Contract, and for all r _26— Bulky waste Collection RFP Draft 10/8/2004 subcontractors. Employer's Liability (EL) Insurance shall also be maintained, at f minimum limits as follows: $500,000 each accidentl$500,000 disease each employeel$500,000 disease policy limit. 3.22.2 GENERAL LIABILITY INSURANCE (CGL): Contractor shall procure and shall maintain during the term of the Contract a Commercial General Liability Insurance Policy at a minimum limits as Two Million. Dollars ($2,000,000) per occurrence with an aggregate of Five Million($5,000,000)Dollars combined single limit, including property damage and personal injury coverage, during effective dates of the Contract, or any renewal thereof, in order to protect and save the City harmless against any and all claims for damage to person, persons, or property arising from the collection services as described in the Contract. Contractor shall also provide excess Commercial General Liability in the amount of Ten Million Dollars($10,000,000). 3.22.3 AUTOMOBILE INSURANCE: Contractor shall procure and maintain during the term of the Contract Comprehensive Automobile Liability Insurance covering all Vehicles involved with Contractor's operations under the Contract. The minimum limits of liability coverage shall be in the amount of Two Million Dollars ($2,000,000) per occurrence combined single limit, during the effective dates of Contract and any renewal period. The named insured and employees of Contractor shall be covered under this policy. The City of Fort Worth shall be named an Additional insured on Endorsement TE 9901 or equivalent, as its interests may appear. €r The following shall pertain to all applicable policies of insurance(3.22.1 through 3.22.3) listed above: 1. Additional Insured Clause: "The City of Fort Worth, its officers, agents, employees, and representatives are added as additional insureds as respects operations and activities of, or on behalf of the named insured, performed under Contract with the City of Fort Worth."An equivalent clause may be acceptable in the discretion of the City. 2. Subcontractors shall be covered under the Contractor's insurance policies or they shall provide their own insurance coverage; and, in the latter case, documentation of coverage shall be submitted to the Contractor prior to the commencement of work and the Contractor shall deliver such to the City. 3. Prior to commencing work under the Contract, the Contractor shall deliver to the City of Fort Worth insurance certificate(s) documenting the insurance required and terms and clauses required. 4. Each insurance policy required by the Contract shall contain the following clauses: "This insurance shall not be canceled, limited in scope or coverage, or non-renewed until after thirty(30) Days prior written notice has been given to the Director of Environmental Management,City of Fort Worth, 1000 Throckmorton, r -z7— MAY Waste Collection IZFP Draft 1 01812 0 04 Fort Worth, Texas 761 02." Note: Written notice can be by Contractor or insurance company. 5. The insurers for all policies must he approved to do business in the State of Texas and be currently rated in terms of financial strength and solvency to the satisfaction of the Risk Manager for the City of Fort Worth. 6. The deductible or self-insured retention (SIR) affecting the coverage required shall be acceptable to the Risk Manager of the City of Fort Worth; and, in lieu of traditional insurance, alternative coverage maintained through insurance pools or risk relations groups must be also approved. 3.23 Performance Bond Contractor agrees that upon the execution of the Contract and before beginning work, it shall make, execute and deliver to the City of Fort Worth a good and sufficient Performance Bond in a form furnished by the City, to secure the faithful performance of the terms and conditions herein. Such Performance Bond shall be the annual amount of the contract, and shall be renewed each year thereafter throughout the term of the Contract and any renewal periods in such amounts as the City shall require. Same shall be signed by the President or General Officer of the Contractor, together with the signature of the corporate secretary and the corporate seal. The surety shall be a surety company duly authorized to do business in the State of Texas, and acceptable to the City Council of the City of Fort Worth. In lieu of the Performance Bond,Contractor may submit an irrevocable, direct pay Letter of Credit, issued by a local banking institution, in the amount listed above, made out in favor of the City of Fort Worth. All performance security,whether Performance Bond or Letter of Credit,must be in form and content acceptable to the City Attorney and annual documentation is required in the form of written certification from the surety company or banking institution that the said Performance Bond or Letter of Credit remains in effect each year of the Contract. In the event that the Performance Bond or Letter of Credit will cease to be in effect, the surety company or banking institution and Contractor shall notify the City at least 30 Days in advance of lapse, and Contractor shall make, execute and deliver to the City of Fort Worth a good and sufficient Performance Bond or replacement Letter of Credit as described above and in the amount named above no less than five(5) Days in advance of lapse of coverage. 3.24 Licenses, Permits and Fees Contractor agrees to obtain and pay for all licenses, permits, certificates, inspections and all Governmental Approvals and other fees required by Applicable Law or otherwise -as- Bulky Waste Collection RFP Draft I0/8/2004 necessary to perform the collection Services prescribed hereunder. Contractor shall also E pay, at its own expense, all fees necessary to the collection and removal of all Debris piles and the contents therein as directed by the City. 3.25 Unacceptable Waste Contractor shall NOT knowingly accept, nor be required to accept for disposal, Unacceptable Waste. Contractor shall leave Unacceptable Waste at its original location and notify the Director immediately of the location and provide the Director with a description of such waste. Contractor reserves the right to reject or revoke acceptance of any Unacceptable Waste. Upon notification from the Contractor, the Director shall determine whether the waste is Unacceptable Waste or acceptable under the terms of the Contract. Contractor shall immediately return to the site to pick up the suspected waste upon notification from the Director that the waste is not Unacceptable Waste. 3.26 Health and Sanitation Contractor shall establish and enforce in its operations and among its employees such regulations in regard to cleanliness and sanitation in the collection and transport of collected materials, as will tend to prevent the inception and spread of disease and to effectively prevent the creation of a nuisance on any property either public or private. 3.27 Right to Audit Until the expiration of three (3) years after the final payment under the Contract, the City shall have access to and the right to examine any directly pertinent books, documents, papers and records of the Contractor involving transactions relating to the Contract. Contractor further agrees to includc in all its subcontracts hereunder a provision to the effect that the subcontractor agrees that the City shall, until the expiration of three (3)years after final payment under the subcontract, have access to papers and records of such subcontractor involving transactions relating to the subcontract. The term "subcontract" as used herein includes purchase orders. 3.28 Compliance with Laws Contractor, its officers,agents, employees, contractors and subcontractors, shall abide by and comply with all Applicable Law, federal, state and local, including the City's charter and all ordinances, rules and regulations of the City of Fort Worth. It is agreed and understood that, if City calls the attention of Contractor to any such violations on the part of Contractor, its officers, agents, employees, contractors or subcontractors, then Contractor shall immediately desist from and correct such violation. -29— Bulky►vasle Collection RFP Draft 1 01812 0 0 4 3.29 Discrimination Prohibited Contractor, in the execution, performance or attempted performance of the Contract shall not discriminate against any person or persons on any unlawful basis. The Contract will be entered into with reference specifically to Article III of Chapter 17 of the Code of the City of Fort Worth (1986), as amended, an ordinance prohibiting discrimination, and Contractor hereby covenants and agrees that it has fully complied with all provisions of same and that no employee or employee-applicant has been discriminated against or will be discriminated against by Contractor in violation of said ordinance. Contractor warrants that it is an equal opportunity employer. In addition, Contractor, in the execution, performance or attempted performance of the Contract will not discriminate on any prohibited basis and shall fully comply with all other applicable federal,state and local laws concerning discrimination. 4.0 PROPOSAL SUBMISSION REQUIREMENTS General Requirements Submission of a proposal shall constitute acknowledgment and acceptance of all the terms and conditions contained in this RFP applicable to the proposed service(s) unless exception to particular terms and conditions are expressed in writing in the proposal. The successful Proposer(s) will be expected to enter into a Contract with the City substantially as included herein. The City is not obligated to agree to exceptions to the conditions of this RFP taken by any Proposer,but reserves the right to negotiate modification of such noted exceptions. Each and every term and condition of the proposal shall be irrevocable until the City enters into a Contract for the performance of the scope of services for the proposed price(s)according to those terms and conditions. Within ten. (10) days of the execution of the Contract, the Proposer is bound to provide evidence of all required insurance, and furnish the Perfomlance Bond (or letter of credit) as required. The terms of this RFP and the proposals shall be firm for a period of one hundred and eighty(180)days. Once submitted, proposals in response to this RFP cannot be altered without the City's express written consent. Compliance with RFP All proposals must be in compliance with this RFP. A detailed information listing of the Proposal Forms to be completed and submitted for each proposal is provided in Appendix D, and all Proposal Forms are attached to this RFP. Failure to comply with all provisions of this RFP may result in disqualification of a Proposer. -30— Bulky Waste Collection RFP Draft 1 0/812 0 0 4 Delivery and Acceptance of Proposals i Proposals may be mailed, couriered or hand delivered to the City of Fort Worth, Office of the Purchasing Manager, 1000 Throckmorton Street, Fort Worth, TX 76102. All proposals must be received at the Office of the Purchasing Manager in the City of Fort Worth by no later than 1:30 p.m. Thursday, October 21, 2004. Proposals received after this time and date will be returned unopened. Postmarks will not be accepted as proof of receipt. Proposer must submit one (1) original and four (4) numbered copies of each proposal (total of five-5). Proposer must provide a separate response and complete the designated cost proposal forms for each requested service it is responding to and label each accordingly. Proposers shall mark the RFP Number on the outside of the box or envelope and note "RFP Response Enclosed." Proposals may be opened publicly; however,only names of Proposers will be read aloud to avoid public disclosure of contents. Interpretations,Amendments and Addenda Nothing stated or discussed orally during any Q&A, pre-proposal conference, interview or other session shall alter, modify or change the requirements of the RFP. Only interpretations, explanations or clarifications of this RFP that are incorporated into a written amendment or addendum to this RFP issued by the City shall be considered by Proposers. All amendments or addenda will be distributed to each Person that registers with the Office of the Purchasing Manager and requests a copy of all amendments to this RFP, but it shall be the responsibility of Proposers to make inquiries as to the addenda issued. All such amendments or addenda shall become a part of this RFP, and all Proposers shall be bound by such amendments or addenda. Each amendment or addendum issued will be on file in the Office of the Purchasing Manager. Each Proposer must acknowledge its receipt of all amendments or addenda by completing, executing and submitting the appropriate Proposer Information form with its Proposal. Ambiguity,Conflict or Errors in RFP If a Proposer discovers any ambiguity,conflict, discrepancy,omission, or other error in this RFP, it shall immediately notify the City of such error in writing and request modification or clarification of the document. The City will make modifications by issuing a written revision and will give written notice to all parties who have received the RFP from the City. The Proposer is responsible for clarifying any ambiguity, conflict, discrepancy, omission, or other error in the Request for Proposals prior to submitting the proposal or it shall be waived. Implied Requirements: Products and services that are not specifically requested in this RFP, but which are necessary to provide the functional capabilities proposed by the Proposer, shall be included in the proposal. Information Provided by City Information included in or provided with this RFP is provided solely for the convenience of the Proposers. NO REPRESENTATION OR WARRANTY OF ANY KIND IS MADE BY THE ( CITY AS TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION 4 _31— F;. Bulky Waste Collection RFP Draft 1 01812 0 04 INCLUDED IN OR PROVIDED WITH THIS RFP. Proposers are solely responsible for conducting such independent due diligence investigations as may be necessary for the preparation of proposals. The City and its employees, consultants, agents and advisors are not responsible for the completeness or accuracy of any information distributed or made available, orally or in writing,during this procurement process. Costs and Expenses of Proposers The City accepts no liability under any circumstances for any costs or expenses incurred by Proposers in making a proposal, attending any meetings and participating in Contract negotiations or in acquiring information, clarifying or responding to any condition, request or standard contained in this RFP. Each Proposer that participates in this procurement process does so at its own expense and risk and agrees that the City shall not reimburse any costs incurred during this process whether or not any award results from this solicitation. Cancellation or Modification of RFP and Rejection of Any and all Proposals The City reserves the right to withdraw this RFP at any time and for any reason and to issue such clarifications, modifications, and/or amendments, as it may deem appropriate. If there is any disagreement or discrepancy between this RFP and any supplement or amendment, the most recent supplement or amendment shall govern. The City reserves the right to waive irregularities in proposals, if such action is in the best interest of the City. Any such waiver shall not modify any remaining RFP requirements or excuse the Proposer from full compliance with the RFP specifications and other Contract requirements if the Proposer is awarded a Contract. The City shall accept all proposals for review that are prepared and submitted in conformance with this RFP, but reserves the right to accept or reject in whole or in part any or all proposals submitted. The City reserves the right to request clarifications or corrections to proposals. The unreasonable failure of a Proposer to promptly supply information in connection with such a request may be grounds for a determination of non-responsibility and rejection of the proposal. Receipt of a proposal by the City or submission of a proposal to the City confers no rights upon the Proposer, nor does it obligate the City in any manner. The City reserves, at its sole discretion, the right to determine which Proposers are qualified to provide services requested in this RFP, including the lease of the City's Southeast Landfill. The City, in its sole discretion, may exclude a Proposer from further participation in the negotiation process if it determines that the Proposer is severely falling behind in the negotiations, without any apparent or documented reason for such delay. The notification of such exclusion from further negotiation shall be in writing, signed by City Manager and delivered to the Proposer by certified mail, and the Proposer's Proposal Security shall be subject to forfeiture. Material and/or submissions presented during the negotiation process will not be returned and will be retained by the City for official record purposes. The City will retain or dispose of any or all copies of these materials in whatever manner it deems appropriate. -32— Bulky waste Collection RFP Draft 10/8/2004 U } Ownership and Disclosure L Proposals received in response to this RFP will be maintained by the City, are matters of public record and subject to public inspection except during the time reserved for review, evaluation, and negotiation by the City. To the extent allowed by Applicable Law, the City will not disclose Proposal contents during the period falling between the Proposal Submission and the date of the Notice of Intent to Award a Contract. However, all information submitted by Proposers becomes a matter of public record upon Notice of Intent to Award a Contract. Notwithstanding the foregoing, the City recognizes and agrees that neither the City nor its staff, agents, employees, representatives, nor its advisors shall be responsible or liable in any manner for any losses that a Proposer may suffer from the disclosure of information or materials to third parties or any other claims or damages resulting from this RFP process. All Proposals (other than portions thereof subject to patent or copyright protection) will become the property of the City to the fullest extent permissible under Applicable Law upon submission. Regardless of the outcome of this procurement process, the City, in accordance with all Applicable Laws, reserves the right to use all information, documents, data,concepts, and other items contained therein, for its own purposes in any manner it elects to do so without further cost to the City. Proposals submitted in response to this RFP may contain certain data of which public disclosure is deemed to cause substantial injury to the Proposer's competitive position or constitute a trade secret. To protect these data from disclosure, the Proposer should insert information in a separate volume clearly identified as "Confidential•-Proprietary Informatiod'. The appropriate sections of the proposals from which the "Confidential-Proprietary Information" is deleted should clearly refer the reader to the separately bound volume. However, the completed Cost Proposal Forms and Other Proposal Forms cannot be considered proprietary information. Conducting Investigations/Requesting Supplementary Information The City reserves the right to conduct investigations with respect to the qualifications, experience and representations of the Proposer and Proposer Team Members and to require Proposers to supplement, clarify or provide additional information in order for the City to evaluate the Qualification Statements submitted. Each Proposer and Proposer Team Member, through its request for and receipt of this RFP and participation in this procurement, consents to such investigations. Proposal Security Proposal Security in the amount of $12,500 (which is 5% of the estimated contract amount) made out in favor of the City must accompany the Proposer's Proposal. Acceptable forms of Proposal Security are: Proposal Bond, Irrevocable, Direct Pay Letter of Credit, or Certified Check. If a Proposer withdraws its Proposal, fails to negotiate in good faith with the City, or if, after the City and the Proposer agree on terms of a Contract, the Proposer fails to sign the Contract within ten business days after a copy of a Contract has been presented to it, the Proposal Security shall be forfeited and retained by the City as liquidated damages. -33— Bulky Waste Collection RFP Draft 10/8/2004 A Proposer may withdraw from the negotiation process at any time prior to the projected date for completion of negotiations and forfeit the Proposal Security. The withdrawal shall be in writing, signed by the same individual who signed the Proposal Cover Letter and delivered to the City by certified mail at the Office of the Purchasing Manager at the address set forth above. Proposal Format Proposers must utilize the format presented in this RFP. Failure to comply with provisions of the RFP may result in disqualification. The items listed below,and the designated locations thereof, shall be included in the proposal and in the order shown. Each section shall be clearly labeled, with pages numbered and separated by tabs. Failure by a Proposer to include information and forms requested in this RFP may result in the rejection of its proposal. Tab I Qualifications and Experience Provide a cover letter indicating the underlying philosophy of the Proposer in providing the service. Provide information that documents the Proposer's qualifications to produce the required outcomes, including ability,capacity, skill,and financial strength of Proposer. Attach resumes of all managers, field supervisors, and senior-level supervisors who will be involved in the management of the total package of services, as well as the delivery of specific services. i Tab II Business Plan and Technical Proposal Provide the following in this Tab II: • Description of the Proposer's team and the role of each member of the proposed team, identifying all key personnel, in performing the proposed service(s) • Proposed team organizational structure,interrelationships,and interactions ■ Detailed plan of approach (including major tasks and sub-tasks) in performing the service(s)proposed • Listing and description of facilities and equipment to be used by Proposer for services proposed. Note the age and condition of equipment. Describe the plan to assure that equipment shall be available to meet the service needs at all times. Describe how leakage or debris from Vehicles will be minimized and/or handled • Public relations, customer education program • Quality control methods,complaint management and resolution procedures • Any limitations on items to be collected and requirements for preparing unusual items for pickup • Any complementary or additional services available to improve the value taxpayers are receiving or to enhance their quality of life or address special needs t -sa- BulkY waste Collection RFP Draft 10/8/2004 • Traffic safety plans for areas around and near schools • Methods for handling barriers to collection,including blocked streets • Methods for ensuring customer satisfaction and service quality and copies of related company policies • Contingency plans for how the company will notify the City and resolve the situation in case of equipment breakdown or other event which may delay the pickup of • Worker training and incentives Tab III Exceptions to the Terms and Conditions of Contract Indicate any exceptions to the general terms and conditions of the RFP. The City shall reserve the right to determine if the exceptions taken by Proposer are reasonable, and the number and nature of the exceptions will be compared to those noted by other Proposers during the proposal evaluation process and will be considered in the ranking of proposals. Tab IV Use of MWBE Deliberately omitted. Tab V References f Proposer shall include three references, Name of community, contact, address and phone number shall be provided for each reference. All information requested in Section 2.5 shall be included in this Tab V. Tab VI Financial Stability and Ability to Obtain Insurance and Bonding Proposer shall include all financial qualifications data as requested in Section 2.6. Proposer shall highlight data that demonstrate financial strength and stability. Proposer shall also demonstrate the ability to obtain and maintain all insurance and bonding as required in the RFP. Tab VI[ Other Special Features Information in this Tab VII shall include any other information Proposer deems necessary to aid t he City in evaluation of Proposer's Proposal Tab VH1 Cost All completed Cost Proposal Forms shall be included in this Tab VI11. Proposer's Cost Adjustment Method for all services proposed shall be clearly set forth in this Tab -35— Bulky Waste Collection RFP Draft 10/8/2004 Proposal Forms Other Proposal Forms are included as attachments. Other Proposal Forms to be completed by Proposer and submitted with the Proposal include: C-1 Proposer Information Form C-2 Form of Proposal Security C-3 Anti-Collusion Affidavit and Notary's Certification C-4 Form of Performance Bond C-5 Certification of Non-Discrimination in Employment APPENDIX A FORM OF CONTRACT -36— Bulky Waste Collection RFP Draft 1 01812 0 0 4 The RFP for the most part,contains the terms of a contract. City will negotiate a contract as part of the award process with the successful proposer. -37— Balky Waste Collection RFP Draft 1 01812 0 04 APPENDIX B City of Fort Worth Cost Proposal Form Cost per Hour for Collection of Brush,Bulky, and/or C& D material Piles in excess of 30 cubic yards from residential lots or vacant lots and out of cycle material outside the collection requirements of the City's contracted bulk waste collection company in the City of Fort Worth. All work to be directed by Work Order from the City of Fort Worth Collection of Storm Debris as directed by the City Cost per hour for collection of piles of debris as directed by City Work Order. Per hour charge is to be portal-to-portal Cost per so long as this is understood to be the time that the truck(s) is hour. making multiple collections,not portal to portal for each individual collection. No guarantees are made by City of Fort Worth for number of collections or hours that will be required at any time during the term of the Contract Proposer's Name (Print or Type) Title Authorized Signature Date• -38— Bulky Waste Collection RRP Draft 10/8/2004 F' Contract Price Adjustment 4 Percentages to be filled in by Proposer Index 1 Service % 1. Fixed Price no escalation applied) 2. Industrial Handling Equipment 3. Employment Cost Index 4. Gasoline Total 100% Key: Data Sources Web Address 1 Fixed Price NIA 7 Producer Price Index—Table 2:ID#11-44 http://www.bls.gov/news.release/ppi.tO2.htm 3 Employment Cost Index—Table 7,South http://www.bls.gov/news.release/cei.t07.htm Region 4 Consumer Price Index Series ID: http:lldata.bIs.govIservletlSurveyOutputSery let?j run scssionid•+-101802887126487995 CWURA316SETB0 i,CWUSA316SETB0I Bulky waste Collection R1;P Draft 10/8/2004 APPENDIX C Cost Adjustment Method The Unit cost for Collection of Debris piles as directed by the City and collected in the City, under the Contract set forth on Appendix B, will be adjusted by the Contractor for the second and subsequent Contract Years of the Term of Contract. The Unit cost will be adjusted upward or downward to reflect changes in the cost of operations by the Cost Adjustment Method using indices applicable to Collection, and the methodology as set forth below, on the anniversary date of the Contract (the "Cost Adjustment Date"), except that the first anniversary date shall be October 1, 2005, and the first Cost Adjustment shall only represent changes in the indices applied herein for the previous aggregate months of Collection Services from the ConiLmencement Date through September 30,2005. All indices used represent either the Employment Cost Index (ECI) or components of the Producer Price Index (PPI), and are all published by the U.S. Department of Labor, Bureau of Labor Statistics (BLS). Since some BLS data are not finalized for several months, cost adjustments may be corrected when all data used are issued as final. I£ BLS changes the methodology for calculating ECI or components of the PPI, which cause historical data used to calculate this cost adjustment to be restated, such changes shall only apply to future adjustments and not to adjustments already implemented. Cost adjustments shall not exceed five (5) percent in any Contract Year and fifteen (15) percent in any four consecutive years. As soon as possible after a Cost Adjustment Date,Contractor shall send to the City a comparative statement setting out the change determined through the Cost Adjustment Method and the increase or decrease in the Unit Fees that will be charged by the Contractor. On the next billing date after the requested cost adjustment, the City shall pay to the Contractor, or the Contractor shall credit to the City,as the case may be, a lump sum equal to any increase or decrease applicable to that portion of the current period which has elapsed, and thereafter, the Unit Fees charged by the Contractor shall be modified to reflect any change until the next Cost Adjustment Date,and a comparative statement is received and approved by the City. Any fixed pass-through or add-on surcharges or costs, such as State fees on tonnage, host municipality benefit Fees, or any other government mandated surcharge, shall not apply to the cost adjustment and will be deducted from the Unit bees prior to calculating any annual cost adjustment. If any index defined herein shall not be determined and published or if any index as it is constituted on the Contract Date is thereafter substantially changed, there shall be substituted for such index another index which is determined and published on a basis substantially similar to the index being replaced as shall be mutually agreed upon by the City and the Contractor. Listed below are the indices and Contractor's percentages of the indices that shall constitute the basis for adjustment of the Unit Fees under the Contract. The percent of change applied to cost adjustment shall be carried out to three(3)decimal places without rounding. -2— Bulky Waste Collection RUT Draft 1 01812 0 0 4 Indices and Contractor's Percentage of Each Index to be Applied in the Cost Adjustment Example Following is an example of the application of these indices with assumed percentages for cost adjustment. In the example below, an annual factor of 1.874%would be applied to Contractor's base Unit Prices to determine the Unit Prices for the next Contract Year. Employment Cost Index (90%) Assume that 90% of the Unit Fee is to be adjusted by the ECI, a BLS index separate from PPI. ECl data for"South"under the"Region(3)"category shall be used for the adjustment calculation. No. 2 Diesel Fuel (10%) Assume that 10%of the Unit Fee is to be adjusted by the No. 2 Diesel Fuel component of"Fuel and Related Products and Power" in the PPI,which is found under the"05"Commodity Code, "Fuels and Related Products and Power","05730302 No. 2 diesel fuel". Contractor's Fee Applicable Previous Current Index Index %Applied Adjustment Indices Index Index Index Value Percent to Cost Percentage Value Value Change Change Adjustment Employment Cost Index 90% 150.2 152.2 2.0 1.33% 1 198%a Diesel Fuel 10% 116.7 124.6 7.9 6.77% .677% Totals: 1 100% 1 1.875% -3- Bulky Waste Col let tion RFP Draft 1002904 Appendix D OTHER PROPOSAL FORMS -4— Bniky Waste Collection RFP Draft 10/8/2004 Page I of 7 PROPOSAL FORM D-1 PROPOSER INFORMATION FORM TO: The undersigned, as Proposer, hereby declares that this Proposal is made in good faith without fraud or collusion with any person or persons proposing on the same Contract; that Proposer has carefully read and examined the Contract documents including Advertisement, Request for Proposals, Proposal, General Conditions, Form of Bond and Specifications and understands all the same and that the Proposer or representative has made such personal investigation as is necessary to determine the character and difficulties attending the execution of the proposed work as described in RFP 04-0232. The Proposer acknowledges that Proposer has not received or relied upon any representations or warranties of any nature whatsoever from the City of Fort Worth, its agents or employees, as to any conditions to be encountered in accomplishing the work and that this Proposal is based solely upon the Proposer's own independent business judgment. The Proposer recognizes that Proposer will not be entitled to any additional compensation by reason of conditions being different from those anticipated, or by reason of failing to be fully acquainted with the conditions and the work now in place or on account of interference by the City's or by any other Contractor's activities which affect the proposed work. The undersigned hereby proposes and agrees that if this Proposal is accepted for award of a Contract, Proposer will Contract with the City to furnish all necessary labor, materials, Vehicles, equipment, machinery, tools, apparatus, and other means for performing related work for the specific option(s) proposed, and do all the work required to perform the work herein specified in complete conformity with the RFP Advertisement, General Conditions and Contract, and other portions of the Contract documents for the unit prices and for the calendar periods listed in this Proposa I. The undersigned also agrees that if the foregoing Proposal shall be selected by the City, Proposer will meet with the City within five (5) days of selection, or within -s- Bulky Waste Collection RFP Draft 10I812004 Page 2of7 PROPOSAL FORM D-1 PROPOSER INFORMATION FORM (Continued) such time as the City shall designate, to negotiate the final points of the Contracts), and within thirty (30) days (Sundays and legal holidays excepted) after receiving notice of such selection, use best efforts to complete negotiation on outstanding issues, if any, so as to enter into the form of Contract attached to the RFP, for performing the requested work at the prices and for the time stated in this Proposal and that Proposer will furnish the City a satisfactory performance bond and certificates of insurance for coverage as stated in the RFP. The undersigned agrees, and attaches hereto, Proposal Security in the amount of $12,500.00 (Certified Check, Letter of Credit, or Proposal Bond), to be forfeited to the City in case of withdrawal of a proposal following submission to the City, failure on the part of the successful Proposer to enter into the attached form of Contract to do the work covered by such proposal at the price and within the time as stated after having been selected and/or in the case of failure to negotiate in good faith with the City. The undersigned agrees that in case of failure to fulfill the obligations under the foregoing Proposal and/or failure to furnish a performance bond as specified, the City may, at City's option, determine that the undersigned has abandoned the rights and interests in such Contract and that the Proposal Security has been forfeited to the City, but otherwise, the Proposal Security shall be returned to the undersigned upon the execution by the Proposer and the acceptance by the City of the performance bond. The undersigned agrees that if awarded the Contract, Proposer will start work not later than December 1, 2004, or on such other date as the City and Proposer shall agree. In submitting this Proposal, it is understood that the right is reserved by the City to reject any or all Proposals, to award the Contract for the work proposed by the Proposer to other than the low-cost Proposer, to waive irregularities and/or formalities, and in general, to make award in any manner deemed by it, in its sole discretion, to be in the best interest of the City. Dated and signed at _ this _ day of , 2004. RFP Amendment Acknowledgement: No. 1 Date Received No, 2 Date Received No. 3 Date Received -6— Doi1hy Waste Calleetlan RFP Draft 10/8/2004 Page 3of7 PROPOSAL FORM D-1 PROPOSER INFORMATION FORM (Continued) A. General Information Firm Proposer Name: Address: Telephone: Fax: Contact: Type of organization (corporation, joint venture, partnership, individual): If a corporation, list the names of all officers, directors, and shareholders possessing five percent or more of outstanding stock in the corporation. If a partnership, list the names of all general and limited partners. Attach additional sheets as necessary. B. Business Information 1. Have you ever failed to complete any contract awarded to you? If so, where and why? 2. Has any officer or partner of your organization ever been an officer or partner of some other organization that failed to complete a Contract? Page 4 of 7 _7_ [sulky Waste Collection RFC' Draft 10/8/2004 PROPOSAL FORM 0-1 PROPOSER INFORMATION FORM (Continued) If so, state name of individual, other organization, reason therefore, and bonding company: 3. Has any officer or partner of your ❑rganization ever failed to complete a contract handled in his or her ❑wn name? If so, state name ❑f individual, name of owner, reason therefore, and bonding company: 4. With what other lines of business are you directly or indirectly affiliated? 5. With what individuals or entities have you been associated as partner or otherwise during the past five years? Attach additional sheets as necessary. 6. describe the nature of your current business: 7. State the length of time you have been in that business under your present name: Page 5 of 7 -s- Balky Waste Collection RFP Draft 10/8/20G4 PROPOSAL FORM D-x PROPOSER INFORMATION FORM (Continued) 8. Has any business or facility that you operated been the subject of administrative or judicial action for alleged violation of environmental or public health laws or regulations? If so, state the details and disposition. Attach additional sheets as necessary. 9. Have you, your partners, members, joint venturers, parent corporation, or subsidiaries been a party to any lawsuits, including any current investigations, indictments, or pending litigation, within the last three (3) years? If so, list these lawsuits. Attach additional sheets as necessary. 10. List any and all actions ❑ocurring within the last three (3) years which have resulted in revocation or suspension of any permit or authority to do business in any federal, state or local jurisdiction, recorded by Proposer, any ❑fficer or director thereof or any affiliate ❑r related company. _q_ Bulky Waste Collection RFP Draft 10/8/2004 Page 6 of 7 PROPOSAL FORM PROPOSER INFORMATION FORM (Continued) 11. List any and all actions occurring in the past three (3) years that have resulted in the barring from public bidding recorded by Proposer, any officer or director thereof or any affiliate ❑r related company. 12. List any bankruptcy proceedings in the past three (3) years recorded by Proposer, any affiliate or related company. -ro- Bulky Waste Collection RFP Draft 1 0/812 0 0 4 Page 7of7 PROPOSAL FORM PROPOSER INFORMATION FORM (Continued) C. Place of Performance and Main Office Fallowing is the name and location of the main office and the place of business for which the services will be performed. Main Office: City and State Name of Company/Place of Performance City and State D. Ambiguity In case of ambiguity or lack of clarity in stating prices in the proposal, the City shall have the right to construe such prices in a manner most advantageous to the City or to reject the Proposal. Signature of person duly authorized to sign submittal on behalf of the Proposer: Authorized Signature Title Date 6nMy Waste Collection RFP Draft 1 01812Q44 PROPOSAL FORM D-2 FORM OF PROPOSAL SECURITY KNOW ALL BY THESE PRESENTS, that we, the undersigned, as Principal, and as Surety, are hereby held and firmly bound unto as OWNER in the penal sum of for the payment of which, well and truly to be made, we hereby jointly and severally bind ourselves, successors and assigns. Signed, this day of , 2004. The Condition of the above obligation is such that whereas the Principal has submitted to a certain PROPOSAL, attached hereto and hereby made a part hereof to enter into a Contract in writing, for the NOW THEREFORE, (a) If said PROPOSAL shall be rejected, or (b) If said PROPOSAL shall be accepted and the Principal shall execute and deliver a Contract in the Form of Contract attached hereto (properly completed in accordance with said PROPOSAL) and shall furnish a BOND for his faithful performance of said Contract, and for the payment of all persons performing labor or furnishing materials in connection therewith, and shall in all other respects perform the agreement created by the acceptance of said PROPOSAL, then this obligation shall be void, otherwise the same shall remain in force and effect; it being expressly understood that the liability of the Surety for any and all claims hereunder shall, in no event, exceed the penal amount of this obligation as herein stated. -12— Bulky waste Collection RFP Draft 101812004 '�� • `��`ii yn�?s� L.....�..Jtir 1. Page 2 of 2 PROPOSAL FORM D-2 FORM OF PROPOSAL SECURITY (Continued) The Surety, for value received, hereby stipulates and agrees that the obligations of said Surety and its BOND shall be in no way impaired ❑r affected by an extension of the time within which the OWNER may accept such PROPOSAL; and said Surety does hereby waive notice of any such extension. IN WITNESS WHEREOF, the Principal and the Surety have hereunto set their hands and seals, and such of them as are corporations have caused their corporate seals to be hereto affixed and these presents to be signed by their proper officers, the day and year first set forth above. Principal Surety By: IMPORTANT - Surety companies executing BONDS must appear on the U. S. Treasury's most current list (Circular 570) and be authorized to transact business in the State of Texas where the project is located. -13— Bulky Waste Collection RFP Draft 10/8/2004 Page 1 of 2 PROPOSAL FORM D-3 ANTI-COLLUSION AFFIDAVIT AND NOTARY'S CERTIFICATION Proposer, as a part of this proposal, submits the following affidavit: The undersigned deponent, of lawful age, being duly sworn, upon his oath deposes and says: That he has lawful authority to execute the within and foregoing proposal; that he has executed the same by subscribing his name hereto under oath for and on behalf of said Proposer; that Proposer has not directly or indirectly entered into any agreement, express or implied, with any Proposer or Proposers, having for its object the controlling of the price or amount of such proposal or proposals, the limiting of the proposals or Proposers, the parceling or farming out to any Proposer or Proposers or other persons of any part of the Contract or any part of the subject matter of the proposal or proposals or of the profits thereof, and that he has not and will not divulge the sealed Proposal to any person whomsoever, except those having a partnership or other financial interest with him in said proposal or proposals, until after the said sealed proposal or proposals are opened and disclosed to the public by the City of Fort Worth, Texas. Deponent further states that the Proposer has not been a party to any collusion: among Proposers in restraint of freedom of competition by agreement to make a proposal at a fixed price or to refrain from submitting a proposal; with any City official or employee as to quantity, quality, or price in the prospective Contract or in any discussions between Proposers and any City official or employee concerning exchange of money or other things of value for special consideration in the letting of a Contract. Deponent further states that the Proposer has not paid, given or donated or agreed to pay, give or donate to any official, officer or employee of the City directly or indirectly, in the procuring of the award of Contract pursuant to this proposal. -la-- Bulky Waste Collection RUT Draft 101$12004 Page Z of 2 PROPOSAL FORM D-3 ANTI-COLLUSION AFFIDAVIT AND NOTARY'S CERTIFICATION (Continued) Executed under penalty of perjury on this day of at SIGNED BY TITLE Subscribed and sworn to before me this day of , at Notary Public My Commission expires: Bulky waste Collection RFP Draft 10/9/2004 Page 1 of 4 PROPOSAL FORM D-5 FORM OF PERFORMANCE BOND THE STATE OF TEXAS } COUNTY OF TARRANT } SS. KNOW ALL MEN BY THESE PRESENTS: That we (1) (2) of hereinafter called Principal, and (3) a corporation organized and existing under the laws of the State of and fully authorized to transact business in the State of Texas as Surety, are held and firmly bound unto the City of Fort Worth, a municipal corporation organized and existing under the laws of the State of Texas, hereinafter called City, in the penal sum of Dollars in lawful money of the United States, to be paid in Fort Worth, Tarrant County, Texas, for the payment of which sum well and truly to be made, we hereby bind ourselves, our heirs, executors, administrators and successors, jointly and severally, firmly by these presents. THE CONDITION OF THIS OBLIGATION is such that whereas the Principal entered into a certain Contract with the City of Fort Worth, dated _ or a copy of which is hereto attached and made a part hereof, to provide the public service of as specifically directed by the Director of Environmental Services of the City of Fort Worth, such public service hereinafter referred to as the "Work". NOW, THEREFORE, if the Principal shall well, truly and faithfully perform the Work in accordance with the Specifications and Contract Documents during the original term thereof, and any extensions or renewals thereof without or without notice to the Surety, and if Principal shall satisfy all claims and demands of any kind incurred under such Contract, including but not limited to the payment of all amounts owed by the Principal to persons who furnished labor, equipment, materials, or services in connection with the Work, and if Page 7 of 4 -16— Bulky Waste Collection Hf P Draft 1 01812 0 04 PROPOSAL FORM D-4 FORM OF PERFORMANCE BOND (Continued) the Principal shall fully indemnify and save harmless the City from all costs and damages which it may suffer by reason ❑f failure to do so, and shall reimburse and repay the City all outlay and expense which the City may incur in making good any default, then this obligation shall be void; otherwise to remain in full force and effect. PROVIDED FURTHER, that if any legal action be filed upon this bond, venue shall lie in Tarrant County, State of Texas. PERFORMANCE BOND AND PROVIDED FURTHER, THAT THE SAID Surety, for value received hereby stipulates and agrees that no change, extension of time, renewal, alternations or additions to the terms of the Contract or to the Work to be performed thereunder or the Specifications accompanying the same shall in any ways affect its obligation on this bond, and it does hereby waive notice of any change, extension of time, renewal, alteration or addition to the terms of the Contract or to the work or to the Specifications. -17— RteMy Waste Co Ned Ian RFP Draft 10/8/2004 Page 3 of 4 PROPOSAL FORM D-4 FORM OF PERFORMANCE BOND (Continued) IN WITNESS WHEREOF, this instrument is executed in four counterparts, each one of which shall be deemed an original dated Principal (4) ATTEST: By: (Principal) Surety Address Witness as to Principal Address Surety ATTEST: By: Attorney-in-Fact (5) (SEAL) Witness as to Surety Address _la- Rulky Was le Col lee liorn RFP Draft 1 018 12 0 0 4 Page 4 of 4 PROPOSAL FORM Q-4 FORM OF PERFORMANCE BOND (Continued) A Note on the Performance Bond The date of Bond must not be prior to the date of Contract, and the Bond itself must include the following: 1. correct name of Contractor; 2. a Corporation, a Partnership or an Individual, as the case may be; 3. correct name of Surety; 4. if Contractor is a Partnership, all partners should execute the Bond; 5. a true copy of Power of Attorney shall be attached to the Bond by Attorney-in-Fact. In order for a surety to be acceptable to the City, the name of the surety shall be included on the current U.S. Treasury list (Circular 570) of acceptable sureties, and the amount of bond written by any one acceptable company shall not exceed the amount shown on the Treasury list for that company. Each bond shall be properly executed by both the contractor and surety company. -19— Bulky Waste Collection RFP Drafl 10/8/2004 PROPOSAL FORM D-5 CERTIFICATION OF NONDISCRIMINATION IN EMPLOYMENT THIS FORM SHALL BE EXECUTED BY AN OFFICIAL AUTHORIZED TO BIND THE OFFEROR, DETACHED, AND MADE A PART OF ITS PROPOSAL During the performance of this Contract, the Contractor agrees as follows: 1. The Contractor shall not discriminate against any employee or applicant for employment because of race, religion, color, sex, sexual orientation, disability, or national origin. The Contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices setting forth the provisions of this nondiscrimination clause. 2. The Contractor, in all solicitations or advertisements for employees placed by or on behalf of the Contract, shall state that such Contractor is an equal opportunity employer. 3. Notices, advertisements, and solicitations placed in accordance with federal law, rule or regulations shall be deemed sufficient for the purpose of meeting the requirements of this section. 4. The Contractor shall include the provisions of the foregoing Paragraphs 1, 2, and 3 above in every subcontract or purchase order so that the provisions shall be binding upon each subcontract or vendor. Authorized Signature Title -xu- Bulky Was le Col lccI[on It IT Draft 1 01812 0 0 4 Notarization State of _ County ❑f On this day of _, 20 , before me appeared and to me personally known and who, being duly sworn, did execute the foregoing affidavit and did state that they were properly authorized to execute this affidavit and did so as their free act and deed. Notary Public Print Name Notary Public Signature Commission Expires (seal j -21- 0ulky Waste CQIIvction RCP Draft 10I812004 City of Fort Worth Finance Department Purchasing Division ADDENDUM NUMBER ONE, RFP# 04-0232, Collection of large piles of debris in excess of 30 cubic yards each and other out of cycle bulk and brush waste. October 19,2004 The purpose of this addendum is to provide prospective vendors with current information regarding the above RFP. Please note—the due date remains unchanged. 1. Definitions: a. "Non-compliant"-remove from specifications. b. "Contaminated"—see"contaminated pile". c. "Unacceptable waste"—shall mean"Any and all waste, including but not limited to Hazardous Waste, Special Waste,Medical Waste and friable asbestos, the acceptance and handling of which by Contractor would cause a violation of any permit condition, legal or regulatory requirement,substantial damage to Contractor's equipment of facilities,present a substantial danger to the health or safety of the public or Collector's employees or any other waste stream excluded l from collection as authorized by director or designated representative". 2. Bonding: Paragraph 3.23 performance bond. In lieu of a performance bond equaling 100 percent of the bid price,the City amends this to read: A.$250,000 is required of the awarded contractor. The bond is renewable at each contract renewal and the bond will reflect the renewal rate, adjusted up or down according to the current contract price at the time of renewal, 3. Proposal forms: By request of those in attendance at the pre-proposal conference, the vendor proposal forms are attached electronically in word format. The only changes that may be made are in formatting any individual lines for the purposes of entering a proposal response. Altering, amending or otherwise modifying any wording in the original document shall be cause for rejection of a proposal without further consideration. Proposal Forms Other Proposal Forms are included as attachments. Other Proposal Forms to be completed by Proposer and submitted with the Proposal include: C-1 Proposer Information Form C-2 Form of Proposal Security C-3 Anti-Collusion Affidavit and Notary's Certification C-4 Form of Performance Bond Bulky Waste Collection RFP Draft 10/20/2004 C-5 Certification of Non-Discrimination in Employment F APPENDIX A FORM OF CONTRACT -2— Bulky Waste Collection RFP Draft 10/20/2004 The RFP for the most part,contains the terms of a contract. City will negotiate a contract as part of the award process with the successful proposer. -3— Bulky Waste Collection RFP Draft 10/20/2004 APPENDIX B City of Fort Worth Cost Proposal Form Cost per Hour for Collection of Brush,Bulky, and/or C & D material Piles in excess of 30 cubic yards from residential lots or vacant lots and out of cycle material outside the collection requirements of the City's Contracted bulk waste collection company in the City of Fort Worth. All work to be directed by Work Order from the City of Fort Worth Collection of Storm Debris as directed by the City Cost per hour for collection of piles of debris as directed by City Work Order. Per hour charge is to be portal-to-portal Cost per so long as this is understood to be the time that the truck(s)is hour. making multiple collections,not portal to portal for each individual collection. No guarantees are made by City of Fort Worth for number of collections or hours that will be re wired at any time during the term of the Contract Proposer's Name(Print or Type) Title Authorized Signature Date• -4- 1lulky Waste Collection RFP Draft 10/20/2004 r i Contract Price Adjustment Percentages to be filled in by Proposer Index 1 Service % 1. Fixed Price no escalation applied) 2. Industrial Handling Equipment 3. Em to ment Cost Index 4. Gasoline Total 10�% Key: Data Sources Web Address I Fixed Price NIA 2 Producer Price Index--Table 2:ID#11-44 http:/Jwww.bls.gov/news.releaselppi.t02.htm 3 Employment Cost Index—Table 7,South http://www.bls.gov/news.release/eci.107.htm Region q 1 Consumer Price Index Series ID: http://data.bls.gov/servlet/SurveyOutputSer►+let?jrunsessionid+l01802887126487995 C W URA316SE`IBO 1,C W U SA316 SETB Ol Bulky Waste Collection RFP Draft 10/20/2004 APPENDIX C Cost Adjustment Method The Unit cost for Collection of Debris piles as directed by the City and collected in the City, under the Contract set forth on Appendix B, will be adjusted by the Contractor for the second and subsequent Contract Years of the Term of Contract. The Unit cost will be adjusted upward or downward to reflect changes in the cost of operations by the Cost Adjustment Method using indices applicable to Collection, and the methodology as set forth below, on the anniversary date of the Contract(the"Cost Adjustment Date"),except that the first anniversary date shall be October 1, 2005, and the first Cost Adjustment shall only represent changes in the indices applied herein for the previous aggregate months of Collection Services from the Commencement Date through September 30, 2005. All indices used represent either the Employment Cost Index (ECI) or components of the Producer Price Index (PPI), and are all published by the U.S. Department of Labor, Bureau of Labor Statistics (BLS). Since some BLS data are not finalized for several months, cost adjustments may be corrected when all data used are issued as final. If BLS changes the methodology for calculating ECI or components of the PPI, which cause historical data used to calculate this cost adjustment to be restated, such changes shall only apply to future adjustments and not to adjustments already implemented. Cost adjustments shall not exceed five (5) percent in any Contract Year and fifteen (15) percent in any four consecutive years. As soon as possible after a Cost Adjustment Date, Contractor shall send to the City a comparative statement setting out the change determined through the Cost Adjustment Method and the increase or decrease in the Unit Fees that will be charged by the Contractor. On the next billing date after the requested cost adjustment, the City shall pay to the Contractor, or the Contractor shall credit to the City, as the case may be, a lump sum equal to any increase or decrease applicable to that portion of the current period which has elapsed, and thereafter, the Unit Fees charged by the Contractor shall be modified to reflect any change until the next Cost Adjustment Date, and a comparative statement is received and approved by the City. Any fixed pass-through or add-on surcharges or costs, such as State fees on tonnage, host municipality benefit fees,or any other government mandated surcharge, shall not apply to the cost adjustment and will be deducted from the Unit Fees prior to calculating any annual cost adjustment. If any index defined herein shall not be determined and published or if any index as it is constituted on the Contract Date is thereafter substantially changed, there shall be substituted for such index another index which is determined and published on a basis substantially similar to the index being replaced as shall be mutually agreed upon by the City and the Contractor. 6_ Bulky Waste Collection HFP Draft 10/20/2004 t ••..; 1`+':3' 7 r • r Listed below are the indices and Contractor's percentages of the indices that shall constitute the basis for adjustment of the Unit Fees under the Contract. The percent of change applied to cost adjustment shall be carried out to three(3) decimal places without rounding. Indices and Contractor's Percentage of Each Index to be Applied in the Cost Adjustment Example Following is an example of the application of these indices with assumed percentages for cost adjustment. In the example below,an annual factor of 1.874%would be applied to Contractor's base Unit Prices to determine the Unit Prices for the next Contract Year. Employment Cost Index(90%) Assume that 90%of the Unit Fee is to be adjusted by the ECI,a BLS index separate from PPI. ECI data for"South"under the"Region(3)"category shall be used for the adjustment calculation. No.2 Diesel Fuel(10%) i Assume that 10%of the Unit Fee is to be adjusted by the No.2 Diesel Fuel component of"Fuel and Related Products and Power"in the PPI,which is found under the"05" Commodity Code, "Fuels and Related Products and Power", "05730302 No. 2 diesel fuel". Contractor's Fee Applicable Previous Current Index Index %Applied Adjustment Indices Index Index Index Value Percent to Cost Percenta a Value Value Change Change Adjustment Emclo meat Cost Index 90% 150.2 152.2 2.0 1.33% 1.198% Diesel Fuel 10% 116.7 124.E 7.9 6.77% .677% Totals: 1 100% 1.875% -7— Bulkc W;tste Colledion I0,11 Draft 10/20/2004 Appendix D OTHER PROPOSAL FORMS -a- Bulky Waste Collection RFP Drafi 10/20/2004 Page 1 of 7 PROPOSAL FORM D-1 PROPOSER INFORMATION FORM TO: The undersigned, as Proposer, hereby declares that this Proposal is made in good faith without fraud or collusion with any person or persons proposing on the same Contract; that Proposer has carefully read and examined the Contract docu ments including Advertisement, Request for Proposals, Proposal, General Conditions, Form of Bond and Specifications and understands all the same and that the Proposer or representative has made such personal investigation as is necessary to determine the character and difficulties attending the execution of the proposed work as described in RFP 04-0232. The Proposer acknowledges that Proposer has not received or relied upon any representations or warranties of any nature whatsoever from the City of Fort Worth, its agents or employees, as to any conditions to be encountered in accomplishing the work and that this Proposal is based so lely upon the Proposer's own independent business judgment. The Proposer recognizes that Proposer will not be entitled to any additional compensation by reason of conditions being different from those anticipated, or by reason of failing to be fully acquainted with the conditions and the work now in place or on account of interference by the City's or by any other Contractor's activities which affect the proposed work. The undersigned hereby proposes and agrees that if this Proposal is accepted for award of a Contract, Proposer will Contract with the City to furnish all necessary labor, materials, Vehicles, equipment, machinery, tools, apparatus, and other means for performing related work for the specific option(s) proposed, and do all the work required to perform the work herein specified in complete conformity with the RFP Advertisement, General Conditions and Contract, and other portions of the Contract documents for the unit prices and for the calendar periods listed in this Proposal. The undersigned also agrees that if the foregoing Proposal shall be selected by the City, Proposer will meet with the City within five (5) days of selection, or within Bulky WAste Collection RFP Draft 10/20/2004 Page Z of 7 PROPOSAL FORM D-1 PROPOSER INFORMATION FORM (Continued) such time as the City shall designate, to negotiate the final points of the Contracts), and within thirty (30) days (Sundays and legal holidays excepted) after receiving notice of such selection, use best efforts to complete negotiation on outstanding issues, if any, so as to enter into the form ❑f Contract attached to the RFP, for performing the requested work at the prices and for the time stated in this Proposal and that Proposer will furnish the City a satisfactory performance bond and certificates of insurance for coverage as stated in the RFP. The undersigned agrees, and attaches hereto, Proposal Security in the amount of $12,500.00 (Certified Check, Letter of Credit, ❑r Proposal Bond), to be forfeited to the City in case of withdrawal of a proposal following submission to the City, failure on the part of the successful Proposer to enter into the attached form of Contract to do the work covered by such proposal at the price and within the time as stated after having been selected and/or in the case of failure to negotiate in good faith with the City. The undersigned agrees that in case of failure to fulfill the obligations under the foregoing Proposal and/or failure to furnish a performance bond as specified, the City may, at City's ❑ption, determine that the undersigned has abandoned the rights and interests in such Contract and that the Proposal Security has been forfeited to the City, but otherwise, the Proposal Security shall be returned to the undersigned upon the execution by the Proposer and the acceptance by the City of the performance bond. The undersigned agrees that if awarded the Contract, Proposer will start work not later than December 1, 2004, or on such other date as the City and Proposer shall agree. In submitting th is Proposal, it is understood that the right is reserved by the City to reject any or all Proposals, to award the Contract for the work proposed by the Proposer to other than the low-cost Proposer, to waive irregularities and/or formalities, and in general, to make award in any manner deemed by it, in its sole discretion, to be in the best interest of the City. ❑ated and signed at this day of , 2004. RFP Amendment Acknowledgement: -to- Bulky Waste Collection RFP Draft f 0/20/2004 No. 1 Date Received No. 2 Date Received No. 3 Date Received Bulky Was le Collection RFP Draft 10/20/2004 Page 3 of 7 PROPOSAL FORM D-1 PROPOSER INFORMATION FORM (Continued) A. General Information Firm Proposer Name: Address: Telephone: Fax: Contact: Type of organization (corporation, joint venture, partnership, individual): If a corporation, list the names of all ❑fficers, directors, and shareholders possessing five percent or more of outstanding stock in the corporation. If a partnership, list the names of all general and limited partners. Attach additional sheets as necessary. B. Business Information 1. Have you ever failed to complete any contract awarded to you? If so, where and why? -lz— Bulky Waste Collection RFP Draft 10/20/2004 2. Has any officer or partner of your organization ever been an officer or partner of some other organization that failed to complete a Contract? Page 4of7 PROPOSAL FORM D-1 PROPOSER INFORMATION FORM (Continued) If so, state name of individual, other organization, reason therefore, and bonding company: 3. Has any officer or partner of your organization ever failed to complete a contract handled in his or her own name? If so, state name of individual, name of owner, reason therefore, and bonding company: 4. With what other lines of business are you directly or indirectly affiliated? 5. With what individuals or entities have you been associated as partner or otherwise during the past five years? Attach additional sheets as necessary. b. Describe the nature of your current business: -13— Bulky Waste Collection Rf P Draft 10/20/2004 7. State the length of time you have been in that business under your present name: Page 5 of 7 PROPOSAL FORM D-1 PROPOSER INFORMATION FORM (Continued) 8. Has any business or facility that you operated been the subject of administrative or judicial actlon for alleged violation of environmental or public health laws or regulations? If so, state the details and disposition. Attach additional sheets as necessary. 9. Have you, your partners, members, joint venturers, parent corporation, or subsidiaries been a party to any lawsuits, including any current investigations, indictments, ❑r pending litigation, within the last three (3) years? If so, list these lawsuits. Attach additional sheets as necessary. -14-- Bulky Waste Collection RCP Draft 10/20/2004 10. List any and all actions ❑ccurring within the last three (3) years which have resulted in revocation or suspension of any permit or authority to d❑ business in any federal, state or local jurisdiction, recorded by Proposer, any officer ❑r director thereof or any affiliate or related company. - Bulky►Vaste Collection RFP Draft ]0/20/2004 Page 6 of 7 PROPOSAL FORM PROPOSER INFORMATION FORM (Continued) 11. List any and all actions occurring in the past three (3) years that have resulted in the barring from public bidding recorded by Proposer, any officer or director thereof or any affiliate or related company. 12. List any bankruptcy proceedings in the past three (3) years recorded by Proposer, any affiliate or related company. -I6-- Sulky Waste Collection RFP ❑raft 10/20/2004 Page 7 of 7 PROPOSAL FORM PROPOSER INFORMATION FORM (Continued) C. Place of Performance and Main Office Following is the name and location of the main office and the place of business for which the services will be performed. Main Office: City and State Name of Company/Place of Performance City and State ❑. Ambiguity In case of ambiguity or lack of clarity in stating prices in the proposal, the City shall have the right to construe such prices in a manner most advantageous to the City or to reject the Proposal. Signature of person duly authorized to sign submittal on behalf of the Proposer: Authorized Signature Title Date r -17— Bulky Waste Collection RFP Draft 10/20/2004 PROPOSAL FORM D-2 FORM OF PROPOSAL SECURITY KNOW ALL BY THESE PRESENTS, that we, the undersigned, as Principal, and as Surety, are hereby held and firmly bound unto as OWNER in the penal sum of for the payment of which, well and truly to be made, we hereby jointly and severally bind ourselves, successors and assigns. Signed, this day of 2004. The Condition of the above obligation is such that whereas the Principal has submitted to a certain PROPOSAL, attached hereto and hereby made a part hereof to enter into a Contract in writing, for the NOW THEREFORE, (a) If said PROPOSAL shall be rejected, or (b) If said PROPOSAL shall be accepted and the Principal shall execute and deliver a Contract in the Form of Contract attached hereto (properly completed in accordance with said PROPOSAL) and shall furnish a BOND for his faithful performance of said Contract, and for the payment of all persons performing labor or furnishing materials in connection therewith, and shall in all other respects perform the agreement created by the acceptance of said PROPOSAL, then this obligation shall be void, otherwise the same shall remain in force and effect; it being expressly understood that the liability of the Surety for any and all claims -ta- Bulky Waste Collection RNP Draft 10/20/2004 hereunder shall, in n❑ event, exceed the penal amount of this obligation as herein stated. -is-- Sulky Waste Collection HFP Draft 10/20/2004 Page 2 of 2 PROPOSAL FORM D-2 FORM OF PROPOSAL SECURITY (Continued) The Surety, for value received, hereby stipulates and agrees that the obligations of said Surety and its BOND shall be in no way impaired or affected by an extension of the time within which the OWNER may accept such PROPOSAL; and said Surety does hereby waive notice of any such extension. IN WITNESS WHEREOF, the Principal and the Surety have hereunto set their hands and seals, and such of them as are corporations have caused their corporate seals to be hereto affixed and these presents to be signed by their proper officers, the day and year first set forth above. Principal Surety By: IMPORTANT - Surety companies executing BONDS must appear on the U. S. Treasury's most current list (Circular 570) and be authorized to transact business in the State of Texas where the project is located. -28— Bulky Was le Collect inn RFP Draft 10/20/2004 Page 1 of 2 PROPOSAL FORM D-3 ANTI-COLLUSION AFFIDAVIT AND NOTARY'S CERTIFICATION Proposer, as a part of this proposal, submits the following affidavit: The undersigned deponent, of lawful age, being duly sworn, upon his oath deposes and says: That he has lawful authority to execute the within and foregoing proposal; that he has executed the same by subscribing his name hereto under oath for and on behalf of said Proposer; that Proposer has not directly or indirectly entered into any agreement, express or implied, with any Proposer or Proposers, having for its object the controlling of the price or amount of such proposal or proposals, the limiting of the proposals or Proposers, the parceling or farming out to any Proposer or Proposers or other persons of any part of the Contract or any part of the subject matter of the proposal or proposals or of the profits thereof, and that he has not and will not divulge the sealed Proposal to any person whomsoever, except those having a partnership or other financial interest with him in said proposal or proposals, until after the said sealed proposal or proposals are opened and disclosed to the public by the City of Fort Worth, Texas. Deponent further states that the Proposer has not been a party to any collusion: among Proposers in restraint of freedom of competition by agreement to make a proposal at a fixed price or to refrain from submitting a proposal; with any City official or employee as to quantity, quality, or price in the prospective Contract or in any discussions between Proposers and any City official or employee concerning exchange of money or other things of value for special consideration in the letting of a Contract. Deponent further states that the Proposer has not paid, given or donated or agreed to pay, give or donate to any official, officer or employee of the City directly or indirectly, in the procuring of the award of Contract pursuant to this proposal. -xl- Bulky Waste Collection RFF Draft 10/20/2004 Page 2 of 2 PROPOSAL FORM D-3 ANTI-COLLUSION AFFIDAVIT AND NOTARY'S CERTIFICATION (Continued) Executed under penalty of perjury on this day of at SIGNE❑ BY TITLE Subscribed and sworn to before me this day of at Notary Public My Commission expires: -xx- Bniky Waste Collection RFP Draft 10/20/2004 Page 1 of 4 PROPOSAL FORM D-5 FORM OF PERFORMANCE BOND THE STATE OF TEXAS } COUNTY OF TARRANT 3 SS. KNOW ALL MEN BY THESE PRESENTS: That we (1) (2) of hereinafter called Principal, and (3) a corporation organized and existing under the laws of the State of and fully authorized to transact business in the State of Texas as Surety, are held and firmly bound unto the City of Fort Worth, a municipal corporation organized and existing under the laws of the State of Texas, hereinafter called City, in the penal sum of Dollars in lawful money of the United States, to be paid in Fort Worth, Tarrant County, Texas, for the payment of which sum well and truly to be made, we hereby bind Ourselves, our heirs, executors, administrators and successors, jointly and severally, firmly by these presents. THE CONDITION OF THIS OBLIGATION is such that whereas the Principal entered into a certain Contract with the City of Fort Worth, dated , a copy of which is hereto attached and made a part hereof, to provide the public service of as specifically directed by the Director of Environmental Services of the City of Fort Worth, such public service hereinafter referred to as the "Work". NOW, THEREFORE, if the Principal shall well, truly and faithfully perform the Work in accordance with the Specifications and Contract Documents during the original term thereof, and any extensions or renewals thereof without or without notice to the Surety, and if Principal shall satisfy all claims and demands of any kind incurred under such Contract, including but not limited to the payment of all amounts owed by the Principal to persons who furnished labor, equipment, materials, or services in connection with the Work, and if -Z3— Bulky Waste Collection RFP Draft 10/20/2004 Page 2 of 4 PROPOSAL FORM D-4 FORM OF PERFORMANCE BOND (Continued) the Principal shall fully indemnify and save harmless the City from all costs and damages which it may suffer by reason of failure to d❑ so, and shall reimburse and repay the City all outlay and expense which the City may incur in making good any default, then this obligation shall be void; otherwise to remain in full force and effect. PROVIDED FURTHER, that if any legal action be filed upon this bond, venue shall lie in Tarrant County, State of Texas. PERFORMANCE BOND AND PROVIDE❑ FURTHER, THAT THE SAID Surety, for value received hereby stipulates and agrees that no change, extension of time, renewal, alternations or additions to the terms of the Contract or to the Work to be performed thereunder ❑r the Specifications accompanying the same shall in any ways affect its obligation on this bond, and it does hereby waive notice of any change, extension of time, renewal, alteration or addition to the terms of the Contract ❑r to the work or to the Specifications. -24— Buiky Waste Collection RFP Draft 10/20/2004 Page 3 of 4 PROPOSAL FORM D-4 FORM OF PERFORMANCE BOND (Continued) IN WITNESS WHEREOF, this instrument is executed in four counterparts, each one of which shall be deemed an original dated Principal (4) ATTEST: By: (Principal) Surety Address Witness as to Principal Address Surety ATTEST: By: Attorney-in-Fact (5) (SEAL) Witness as to Surety Address -as- Bulky Waste Collection RFP ©raft 10/20/2004 Page 4 of 4 PROPOSAL FORM D-4 FORM OF PERFORMANCE BOND (Continued) A Note on the Performance Bond The date of Bond must not be prior to the date of Contract, and the Bond itself must include the following: 1. correct name of Contractor; 2. a Corporation, a Partnership or an Individual, as the case may be; 3. correct name of Surety; 4. if Contractor is a Partnership, all partners should execute the Bond; 5. a true copy of Power of Attorney shall be attached to the Bond by Attorney-in-Fact. In order for a surety to be acceptable to the City, the name of the surety shall be included on the current U.S. Treasury list (Circular 570) of acceptable sureties, and the amount of bond written by any one acceptable company shall not exceed the amount shown on the Treasury list for that company. Each bond shall be properly executed by both the contractor and surety company. -26— Bulky Waste Collection RFF Draft 10/20/2004 PROPOSAL FORM D-S CERTIFICATION OF NONDISCRIMINATION IN EMPLOYMENT THIS FORM SHALL BE EXECUTED BY AN OFFICIAL AUTHORIZE❑ TO BIND THE OFFEROR. DETACHED AND MADE A PART OF ITS PROPOSAL During the performance of this Contract, the Contractor agrees as follows: 1. The Contractor shall not discriminate against any employee or applicant for employment because of race, religion, color, sex, sexual orientation, disability, or national origin. The Contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices setting forth the provisions of this nondiscrimination clause. 2. The Contractor, in all solicitations or advertisements for employees placed by or on behalf of the Contract, shall state that such Contractor is an equal opportunity employer. 3. Notices, advertisements, and solicitations placed in accordance with federal law, rule or regulations shall be deemed sufficient for the purpose of meeting the requirements of this section. 4. The Contractor shall include the provisions of the foregoing Paragraphs 1, 2, and 3 above in every subcontract or purchase order s❑ that the provisions shall be binding upon each subcontract or vendor. Authorized Signature Title _z7— Bulky Wastc Collection RFP Than 10/20/2004 Notarization State of _ County of On this day of , 20 before me appeared and to me personally known and who, being duly sworn, did execute the foregoing affidavit and did state that they were properly authorized to execute this affidavit and did so as their free act and deed. Notary Public Print Name Notary Public Signature Commission Expires (seal) Questions concerning this addendum may be addressed electronically to robert.combs fortworth ov.or Robert Combs Purchasing Division Manager xs Bulky Waste Collection RFP Draft 10/20/2004 l POLICY NUMBER: COMMERCIAL GENERAL LIABILITY GL274965926 31-DEC-2004 31-DEC-2005 CG 20 10 10 93 IESI TX Corporation THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. ADDITIONAL INSURED - OWNERS, LESSEES OR CONTRACTORS (FORM B) This endorsement modifies insurance provided under the fallowing: COMMERCIAL GENERAL LIABILITY COVERAGE PART SCHEDULE Name of Person or Organization: City of Fort Worth (If no entry appeass above., inforrration required to complete this endorsement will be shown in the Declaraticrm as awj:'i:'cable to this endorsement.) WHO IS AN INSURED (Section ll) is amended to include as an insured the person or organization shown in the Schedule, but only with respect to liability arising out of your ongoing operations per- formed for that insured. RE: CITY OF FORT WORTH CG 20 10 10 93 Copyright Insurance Services Office, Inc., 1992 City of Fort Worth, Texas Mayor and Council Communication COUNCIL ACTION: Approved on 12/1412004 - Ordinance No. 16235 CONTINUED FROM A PREVIOUS WEEK DATE: Tuesday, December 07, 2004 LOG NAME: 52EXCESSPILES REFERENCE NO.: C-20428 SUBJECT: Adoption of Supplemental Appropriation Ordinance and Approve Execution of Contract with Independent Environmental Services of Texas, Inc. for Collection Services of Out-of-Cycle, Contaminated and Excess Waste Piles RECOMMENDATION; It is recommended that the City Council: 1. Adopt the attached supplemental appropriation ordinance increasing appropriations in the Solid Waste Fund by $420,000 decreasing unreserved retained earnings by the same amount; and 2. Approve the execution of a contract,with Independent Environmental Services of Texas, Inc. (IESI) to provide supplemental brush and bulky collection services from the date the contract is signed through March 31, 2013 for a total cost not to exceed $ 420,000 per year. DISCUSSION: On November 1, 2004, the City began a new monthly brush and bulky waste collection program. Under the terms of the agreement for this program, Waste Management, Inc. (WMI) is not responsible for collecting brush or bulky waste piles that are in excess of 30 cubic yards or more than 150 out-of-cycle and contaminated brush/bulky waste piles per day. The Environmental Management Department is requesting that the City contract with a third party to collect brush and bulky piles in excess of 30 cubic yards and for any out-of cycle and contaminated piles in excess of 150 each day. For the period July 1, 2003 through June 30, 2004 WMI collected 766 piles in excess of 30 cubic yards. There is no data for out-of-cycle and contaminated piles in excess of 150 per day. The cost of this service shall be $ 84.00 per truck hour, The total cost of these services is estimated not to exceed $420,000 per year and there is no guarantee of any work under this contract. The contract term will run parallel with the remaining term of the Waste Management, Inc. contract that terminates on March 31, 2013. PROPOSAL ADVERTISEMENT — This bid was advertised in the Commercial Recorder on October 6 and October 13, 2004. All known qualified vendors were contacted and one proposal was received. City staff s review of the IESI's proposal found the terms and price to be fair and reasonable. City staff recommends the contract be awarded to IESI. IESI will be responsible for the collection of such brush and bulky waste routes as directed by the City. A waiver of MIWBE participation was requested and approved for this project because subcontracting and supply opportunities are negligible. Logname: 52EXCESSPILES Page 1 of 2 FISCAL INFORMATIONICERTIFICATION: The Finance Director certifies that upon approval of the above recommendation, and adoption of the attached appropriation ordinance, funds will be available in the current operation budget, as appropriated, of the Solid Waste Fund. The unrestricted cash balance of the Solid Waste Fund will be $7,631,036.94. TO Fund/AccountlCenters FROM Fund/Account/Centers PE64 539120 0525002 $420,000.00 PE..E4.539120 0525002 2S4 0, 0-0000 Submitted for City Manager's Office by . Libby Watson (6183) Originating Department Head: Brian Boerner(6647) Additional_information Contact: Kim Mote (5153) Logname: 52EXCESSPILES Page 2 of 2