The URL can be used to link to this page

Home My WebLink AboutContract 28336 CITY SECRETARY CONTRACT NO AGREEMENT TO LEASE AND OPERATE SOUTHEAST LANDFILL BY AND BETWEEN THE CITY OF FORT WORTH, TEXAS, as Lessor, and ALLIED WASTE SYSTEMS, INC. d/b/a TRINITY WASTE SERVICES, as Lessee Dated as of January, 2003 wu Al EL TABLE OF CONTENTS Page ARTICLE I DEFINITIONS SECTION1.01. Definitions.....................................................................................................................................2 SECTION1.02. Interpretation...............................................................................................................................10 SECTION1.03. Ambiguities.................................................................................................................................10 ARTICLE II LEASE OF PREMISES; EASEMENTS SECTION 2.01. Lease of the Southeast Landfill,Generally..................................................................................l l SECTION 2.02. Lessee Rights Prior to Operation Commencement Date.............................................................1 I SECTION 2.03. Post-Closure Easement................................................................................................................1 1 SECTION 2.04. "AS IS"Condition of the Southeast Landfill...............................................................................l l SECTION 2.05. No Representation by the City.....................................................................................................l l SECTION 2.06. Entry on Premises by the City.....................................................................................................11 SECTION 2.07. Mining and Mineral Rights..........................................................................................................12 SECTION 2.08. Landfill Gas.................................................................................................................................12 SECTION 2.09. Pollution Credits..........................................................................................................................12 SECTION 2.10. Exclusive Use..............................................................................................................................12 SECTION 2.11. Agreement Not a Franchise.........................................................................................................12 SECTION 2.12. No Subletting of Southeast Landfill............................................................................................12 SECTION 2.13. Not a Joint Venture......................................................................................................................12 SECTION 2.14. Independent Contractor Status.....................................................................................................13 SECTION 2.I5. Reservation of Rights by City......................................................................................................13 ARTICLE III TERM SECTION3.01. Initial Term..................................................................................................................................14 SECTION3.02. Renewal Term .............................................................................................................................14 ARTICLE IV RENTS AND OTHER PAYMENTS SECTION 4.01. Development Period Rent............................................................................................................15 SECTION 4.02. Base Rent During the First Year of Operations...........................................................................15 SECTION 4.03. Base Rent During the Balance of Operations..............................................................................15 SECTION 4.04. Variable Rent(Royalty Payments)..............................................................................................16 SECTION4.05. Payment of Rent..........................................................................................................................18 SECTION4.06. Additional Rent. ..........................................................................................................................19 SECTION 4.07. Additional Rent During Period of Permit Violations...................................................................19 SECTION 4.08. Triple Net Lease..........................................................................................................................19 SECTION 4.09. No Abatement or Set-Off of Rent................................................................................................19 SECTION4.10. Termination.................................................................................................................................19 0) TABLE OF CONTENTS (continued) Page ARTICLE V PERMITS; LANDFILL EXPANSION SECTION 5.01. Landfill Expansion ......................................................................................................................20 SECTION 5.02. Applications for Initial Improvements and Landfill Expansion..................................................20 SECTION5.03. Alterations...................................................................................................................................20 SECTION 5.04. Obligation to Seek Permits;City Review....................................................................................20 SECTION 5.05. No City Obligation......................................................................................................................21 SECTION 5.06. Financial Assurances...................................................................................................................21 ARTICLE VI OBLIGATIONS OF LESSEE SECTION 6.01. Development Period Responsibilities..........................................................................................22 SECTION 6.02. Conditions Precedent to Operation Commencement Date ..........................................................22 SECTION 6.03. Obligation to Accept City Waste and City Department Waste....................................................22 SECTION 6.04. Landfill Operating Requirements................................................................................................23 SECTION 6.05. Odor Control Requirement..........................................................................................................25 SECTION 6.06. Maintenance of Facility's Equipment and Vehicles....................................................................25 SECTION 6.07. Personnel Standards.....................................................................................................................25 SECTION 6.08. Prevailing Wage Requirement.....................................................................................................25 SECTION 6.09. Contingency Plan.........................................................................................................................25 SECTION6.10. Source of Waste...........................................................................................................................26 SECTION6.11. Buffer Zone .................................................................................................................................26 SECTION 6.12. Rejection of Certain Waste..........................................................................................................26 SECTION 6.13. Weights and Measures Method...................................................................................................26 SECTION 6.14. Keeping of Premises....................................................................................................................26 SECTION 6.15. Hours of Operation......................................................................................................................26 SECTION6.16. Reporting Requirements..............................................................................................................26 SECTION 6.17. Audited Financial Report.............................................................................................................27 SECTION6.18. Records........................................................................................................................................27 SECTION 6.19. Duty to Maintain..........................................................................................................................27 SECTION6.20. Restoration...................................................................................................................................28 SECTION 6.21. Removal of Personal Property.....................................................................................................28 SECTION 6.22. City Representative......................................................................................................................28 SECTION 6.23. City Employee Space...................................................................................................................28 SECTION 6.24. Uncontrollable Circumstance affecting Lessee's Obligations.....................................................28 SECTION 6.25. Transloading Operations..............................................................................................................28 SECTION 6.26. Delivery of Acceptable Transload Waste....................................................................................30 SECTION 6.27. Rejection of Unacceptable Transload Waste...............................................................................30 SECTION 6.28. Waste Delivery Vehicles.............................................................................................................30 SECTION 6.29. Transload Waste Volume............................................................................................................30 SECTION 6.30. Pricing for Transloading Operations............................................................................................31 ARTICLE V11 USE AND OPERATION OF THE PREMISES SECTION 7.01. Operation of Southeast Landfill...................................................................................................32 (ii) TABLE OF CONTENTS (continued) Page SECTION 7.02. Certain Lessee Obligations..........................................................................................................32 SECTION 7.03. Tipping Fee-Non-City Waste....................................................................................................32 ARTICLE VIII WASTE DELIVERY AND PAYMENT OBLIGATIONS OF THE CITY SECTION 8.01. City Waste and City Department Waste-Delivery Obligation...................................................33 SECTION 8.02. Recycling Programs.....................................................................................................................33 SECTION 8.03. City Disposal Payments...............................................................................................................33 SECTION 8.04. Invoices For City Disposal Payments;Payments by City............................................................33 SECTION 8.05. Adjustments to City Disposal Fees Due to Regulation................................................................34 ARTICLE IX LANDFILL CLOSURE SECTION 9.01. Closure and Post-Closure of Southeast Landfill..........................................................................35 SECTION 9.02. Funding of Closure/Post-Closure Costs.......................................................................................35 SECTION 9.03. Closure/Post-Closure Trust—Third Party Trustee.....................................................................35 SECTION 9.04. Preservation of Landfill Integrity................................................................................................37 ARTICLE X INSURANCE AND INDEMNITY SECTION10.01. Insurance......................................................................................................................................38 SECTION10.02. Indemnity.....................................................................................................................................39 ARTICLE XI SECURITY SECTION11.01. Guarantor.....................................................................................................................................41 SECTION11.02. Bonds...........................................................................................................................................41 SECTION11.03. Letter of Credit............................................................................................................................41 SECTION 11.04. Cost of Providing Security for Performance................................................................................42 ARTICLE X1I COVENANTS AND WARRANTIES SECTION 12.01. Representations and Warranties of Each Party............................................................................43 SECTION 12.02. Additional Representations of the City........................................................................................43 SECTION 12.03. Covenant of Lessee......................................................................................................................44 SECTION12.04. Liens............................................................................................................................................44 SECTION12.05. No Warranties..............................................................................................................................44 (Ill) TABLE OF CONTENTS (continued) Page ARTICLE XIII DAMAGE, DESTRUCTION TO SOUTHEAST LANDFILL SECTION 13.01. Damage to or Destruction of all or any Portion of the Southeast Landfill...................................45 SECTION13.02. No Abatement..............................................................................................................................45 ARTICLE XIV EVENTS OF DEFAULT AND REMEDIES SECTION 14.01. Remedies for Breach...................................................................................................................46 SECTION 14.02. Events of Default by the Lessee..................................................................................................46 SECTION 14.03. Events of Default by City............................................................................................................47 SECTION 14.04. Remedies of City.........................................................................................................................48 SECTION 14.05. Remedies of Lessee.....................................................................................................................48 SECTION 14.06. Payment Disputes........................................................................................................................48 SECTION 14.07. Cumulative Remedies..................................................................................................................48 SECTION 14.08. Uncontrollable Circumstance......................................................................................................49 SECTION 14.09. Obligations of the Lessee upon Termination or Expiration.........................................................49 SECTION 14.10. No Consequential or Punitive Damages......................................................................................50 SECTION 14.11. No Waiver of Rights....................................................................................................................50 SECTION 14.12. Survival of Certain Provisions Upon Termination......................................................................51 SECTION 14.13. City's Right to Perform Lessee's Covenants...............................................................................51 SECTION 14.14. Additional Remedy of the City....................................................................................................51 ARTICLE XV NOTICES SECTION15.01. Notices.........................................................................................................................................52 ARTICLE XVI MISCELLANEOUS SECTION 16.01. City Rights as Governmental Entity............................................................................................53 SECTION16.02. Condemnation..............................................................................................................................53 SECTION16.03. Assignment..................................................................................................................................53 SECTION 16.04. Parties Bound...............................................................................................................................53 SECTION 16.05. No Third Party Rights..................................................................................................................53 SECTION 16.06. Governing Law and Applicable Venue.......................................................................................53 SECTION16.07. Non-Discrimination.....................................................................................................................54 SECTION 16.08. Entire Agreement.........................................................................................................................54 SECTION 16.09. Partial Invalidity..........................................................................................................................54 SECTION 16.10. Memorandum of Lease................................................................................................................54 (iv) TABLE OF CONTENTS (continued) Page APPENDICES 1. Property Description.....................................................................................................................................Al-1 2. Form of Guaranty Agreement.......................................................................................................................A2-1 3. Initial Improvements and Landfill Expansion...............................................................................................A3-1 4. Form of Letter of Credit................................................................................................................................A4-1 5. City Department Waste.................................................................................................................................A5-1 6. Kennedale Host Community Agreement. .....................................................................................................A6-1 7. Form of Trust Instrument..............................................................................................................................A7-1 (v) THIS AGREEMENT TO LEASE AND OPERATE SOUTHEAST LANDFILL (hereinafter the "Lease" or the "Agreement") entered into this day of January, 2003, by and between THE CITY OF FORTH WORTH, a home rule city in Tarrant, Denton and Wise Counties, Texas, as lessor (the "City"), and ALLIED WASTE SYSTEMS, INC., a Delaware corporation d/b/a TRINITY WASTE SERVICES, and duly authorized to do business in the State of Texas,as lessee(the"Lessee"). WITNESSETH: WHEREAS, the City issued a Request For Proposals (RFP: 02-0087) (together with all addenda thereto, the "RFP") for services for, among other things, the lease of the City's Southeast Landfill and Development of a Transfer Station;and WHEREAS, Lessee submitted a proposal on July 2,2002,responding to the RFP;and WHEREAS, following an evaluation and selection process, Lessee was selected as the preferred proposer for those services relating to the lease of the City's Southeast Landfill; NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, City and Lessee, intending to legally bind themselves and their respective successors and assigns, hereby covenant and agree as follows: ARTICLE 1 DEFINITIONS SECTION 1.01. Definitions. Unless the context clearly indicates otherwise, the terms below are defined for this Agreement as follows: "Acceptable Transload Waste" means Solid waste collected by the City that the City would be allowed by this Agreement to deliver to the Southeast Landfill, but specifically excludes all Unacceptable Waste, Special Waste,Hazardous Waste and Suspicious Waste as such terms apply to the Lessee Transfer Station. "Additional Rent" shall have the meaning set forth in Section 4.6. "Adjustment Factor"shall have the meaning set forth in Section 4.3. "Agreement" as used herein means the instant document, together with all Appendices and amendments. "Alleged Violation Resolved" means any allegation, charge or similar claim by a Governmental Entity that the City,the Lessee or any other operator of the Southeast Landfill is in violation of or not in compliance with any portion of the Landfill Permits or Applicable Law but which is subsequently resolved. "Appendix" means any exhibit, attachment, form, schedule or annex, which is attached to, incorporated in,or made a part of this Agreement. "Applicable Laws" means any Permits, issued for or with respect to the Southeast Landfill (or any component thereof) and/or issued for or with respect to the performance by a party of its obligations hereunder, and any statute, law, constitution, charter, ordinance, resolution, judgment, order, decree, rule, regulation, directive, interpretation, standard or similar legally binding authority, which in any case, shall be enacted, adopted, promulgated, issued or enforced by any Governmental Entity that relates to or affects the City,the Lessee and/or the Southeast Landfill(or any portion thereof),or the performance by a party of its obligations hereunder. "Base Rent"has the meaning set forth in Sections 4.2 and 4.3. "Bulky Waste" means Solid Waste that is too large, heavy or bulky to be collected during normal Garbage collection, including but not limited to trees,tree limbs, tree and shrub cuttings, refrigerators, stoves, water heaters, other large appliances, and materials resulting from minor remodeling by the householder except for roofing materials and materials generated by contractors. "C & D" means 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 and masonry, paper, cartons, gypsum board, wood, excelsior, rubber,and plastics. "Carryforward Credit"shall have the meaning set forth in Section 4.4(H). "City"means the City of Fort Worth,Texas. "City Department Waste" means waste generated by City departments and agencies or City facilities including, but not limited to, those facilities set forth in Appendix 5. City Department Waste shall not include waste collected to be delivered to the Type IV C&D site for processing or Disposal, brush or Yard Waste collected to go to a processing or composting facility,or any Recyclables earmarked for Recycling. "City Fault" means any breach, failure, non-performance or non-compliance by the City with the terms and conditions of this Agreement. 2 "City Licensed Hauler" means a solid waste hauler who by contract, license or otherwise is authorized by the City to deliver City Waste or City Department Waste to the Southeast Landfill and who is identified by the City to the Lessee as being licensed to collect and transport City Waste or City Department Waste to the Southeast Landfill. "City Waste" means all Solid Waste collected by the City or City Licensed Hauler from single or double family residences or City designated commercial establishments within the City's designated service areas, and Solid Waste deposited at the Convenience Centers. City Waste shall not include waste collected to be delivered to the Type IV C&D site for processing or disposal, brush or Yard Waste collected to go to a Processing Facility or composting facility, or any Recyclables earmarked for Recycling. City Waste shall not include City Department Waste. If the City ceases providing collection services for any commercial establishment whose waste is included in the definition of City Waste, such waste shall not be City Waste as of the date of cessation of City collection services. "Claim"has the meaning set forth in Section 10.2. "Closure" means the services necessary to physically close the Southeast Landfill in accordance with Applicable Laws and the Landfill Permits,and the provisions contained herein. "Closure Reserve Amount"has the meaning set forth in Section 9.3. "Collect" means to remove Solid Waste or Recyclables for transport elsewhere, or cause such to be done. "Collector" means the person, firm, corporation or association or the agents or employees thereof to whom the City shall have granted a franchise or a permit, or designated as duly authorized to collect, receive, carry,haul or transport solid waste and/or Recyclables within the City. "Commission" means the Texas Natural Resource Conservation Commission ("TNRCC") and/or its successor agency,the Texas Commission on Environmental Quality("TCEQ"),as the context may require. "Commission Permit" means Permit Number MSW 218-A relating to the Southeast Landfill as the same may be amended,modified and supplemented from time to time. "Contract Date" means the date of execution and delivery of this Agreement by the City after it has been executed by Lessee. "Convenience Center" means a facility which includes a vehicle receiving area and various bulk containers for deposit of selected waste and Recyclables so as to provide City residents with one-stop, drop-off service for deposit of Municipal Solid Waste and Recyclables. "Current Landfill Permits" means those permits, including but not limited to the Commission Permit, licenses and approvals currently in effect naming the City as permittee relating to the operation of the Southeast Landfill as a Type I Landfill. "Day"means calendar day, unless otherwise specified. "Development Period" means the period commencing on the Contract Date and ending one day prior to the Operation Commencement Date. "Development Period Responsibilities"has the meaning set forth in Section 6.1. "Disposal" means dumping or depositing of Solid Waste into or onto a Disposal Facility so that the waste or any constituent thereof is introduced into the environment. 3 "Disposal Facility" means a sanitary landfill or other Solid Waste disposal facility permitted by the Commission and/or other applicable regulatory agency with jurisdiction and utilized for the receipt or final disposition of Solid Waste generated within the City. "Environmental Laws" means statutes, regulations, orders, directives and common law conceming public health and safety, nuisance, pollution and protection of the environment, including, without limitation, the Solid Waste Disposal Act (42 U.S.C. §§6901, et seq.), the Clean Air Act (42 U.S.C. §§7401 et seq.), the Federal Water Pollution Control Act (33 U.S.C. §§1251, et seq.), the Comprehensive Environmental Response, Compensation,and Liability Act(42 U.S.C. §§9601 et seq.)and similar state and local laws. "Garbage" means 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. "Government Approvals" means all licenses, permits and approvals required from any Governmental Entity for operation or expansion of the Southeast Landfill or the performance of the Lessee's obligations under the Agreement. "Governmental Entity" means, 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 the Lessee or the City or their activities relating to the Southeast Landfill;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 Lessee, the Southeast Landfill or the operation thereof, the transfer, transportation, or disposal of Solid Waste or any services or utilities related to any of the foregoing. "Guarantor"means Allied Waste Industries, Inc. "Guaranty" means the Guaranty Agreement, dated as of January _, 2003 from the Guarantor to the City,a copy of which is attached hereto as Appendix 2. "Hazardous Waste" means any Solid Waste characterized, identified or listed as a Hazardous Waste by the administrator of the United States Environmental Protection Agency (EPA) 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. "Household Waste" means any Solid Waste (including Garbage and trash, but excluding sanitary waste from septic tanks) derived from households (including single and multiple residences, hotels, and motels, bunkhouses,ranger stations, crew quarters, campgrounds,picnic grounds, and day-use recreation areas)but does not include Yard Waste or brush. "Index Year" means a 12 calendar month period ending on the last day of the calendar month that is at least three(3)full calendar months prior to the day of the year that is the first day of an Operating Year. "Industrial Waste" means Solid Waste resulting from or incidental to any process of industry or manufacturing,or mining or agricultural operations, classified as follows: (A) Class I industrial Solid Waste or Class I waste is any industrial Solid Waste designated as Class I by the Commission and/or any industrial Solid Waste or mixture of industrial Solid Wastes that because of its concentration or physical or chemical characteristics is toxic,corrosive, flammable, a strong sensitizer or irritant, a generator of sudden pressure by decomposition, heat, or other means, and may pose a substantial present or potential danger to human health or the environment when improperly processed, stored, transported, or otherwise managed, including hazardous industrial waste, as defined in State or Federal law relating to definitions and determinations of Waste Classification. 4 (B) Class 11 industrial Solid Waste is any individual Solid Waste or combination of industrial Solid Wastes that cannot be described as Class I or Class III,as defined in State or Federal law relating to definitions and determinations of Waste Classification. (C) Class III industrial Solid Waste is any inert and essentially insoluble industrial Solid Waste, including materials such as rock, brick, glass, dirt, and certain plastics and rubber, etc., that are not readily decomposable as defined in State or Federal law relating to definitions and determinations of Waste Classification. "Initial Improvements"means the improvements described in Appendix 3. "Initial Term"has the meaning set forth in Section 3.1. "Kennedale Department Waste" means waste that is permitted to be disposed of at a Type I landfill and that was generated by facilities owned by Kennedale and delivered by vehicles owned and operated by Kennedale. The term "Kennedale Department Waste" does not apply to any waste from residential, commercial or other establishments that are not owned by Kennedale if Kennedale elects, in the future,to collect such waste. "Kennedale Host Community Agreement" means the agreement by and between the City of Fort Worth and the municipality of Kennedale, substantially in the form set forth in Appendix 6 and any amendments or supplements thereto. "Landfill Expansion"has the meaning set forth in Section 5.1. "Landfill Permits" means the Current Landfill Permits, as the same may be modified, amended and supplemented from time to time. "Lease" as used herein means the instant document, together with all Appendices and amendments. "Lessee" means Allied Waste Systems, Inc., a Delaware corporation, doing business as Trinity Waste Services. "Lessee Fault" means any breach, failure, non-performance or noncompliance by Lessee with the terms and conditions of this Agreement or the terms of any Permits, licenses or approvals applicable to the Southeast Landfill. "Lessee Transfer Station" means that certain Lessee Transfer Station owned and operated by Lessee located at 6200 Elliott Reeder Road, Fort Worth, Texas to which the City is permitted to deliver or caused to be delivered Acceptable Transload Waste pursuant to Article VI. "Letter of Credit"has the meaning set forth in Section 11.3. "Mandate" means an expenditure or action imposed on the Lessee by the Federal or State government, or their respective agencies, that is directly related to the operation of a landfill, mandatory in nature, and adopted or implemented subsequent to the execution of this Agreement. Mandate shall not include any costs relating to the Landfill Expansion. "Medical Waste" means Solid 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 which is comprised of animal waste, bulk blood and blood products, microbiological waste, 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 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 5 artificial, nonhuman materials removed from a patient and/or requested by a patient, including but not limited to orthopedic devices and implants. "Minimum Annual Variable Rent"has the meaning set forth in Section 4.4(D). "Minimum Permit Hours" means 3:00 a.m. to 8:00 p.m. Monday through Friday and 5:00 a.m. through 4:00 p.m. on Saturday. "Monitoring Well" means an artificial excavation constructed to measure or monitor the quantity or movement of substances, elements, chemicals, or fluids below the surface of the ground. The term shall not include any monitoring well which is used in conjunction with the production of oil, gas(except landfill gas), or any other minerals. "Municipal Solid Waste" (MSW) means Solid Waste resulting from or incidental to municipal, community, commercial, institutional, or recreational activities, and includes Garbage, Rubbish, ashes, street cleanings, and other Solid Waste other than Industrial Waste. "Non-City Waste" means all Solid Waste other than City Waste, City Department Waste, Kennedale Department Waste and waste delivered by or generated by persons exempted from paying Disposal fees by City ordinance. Non-City Waste does not include materials used by the Lessee for daily cover, alternative daily cover, intermediate cover,all construction and/or final cover. "Odor Condition"has the meaning set forth in Section 6.5. "Operating Year"means a one-year period commencing on the Operation Commencement Date or any anniversary thereof. "Operation Commencement Date" means the first date upon which all of the conditions precedent set forth in Section 6.2(A) shall be satisfied or waived as agreed to in writing by the parties pursuant to Section 6.2(B). "Overdue Rate" means the lesser of (i)the maximum rate of interest permitted by Applicable Laws or (ii) 1% over the prime rate of interest published in The Wall Street Journal, or such other daily financial publication as shall be mutually agreeable to the parties if The Wall Street Journal ceases to be published or ceases to publish such information. "Pass-Through Costs" means fees, charges, or tariffs imposed by the Federal, State or local government, or their respective agencies, after the Contract Date of this Agreement, that operators of public landfills must collect from users of a public landfill and remit to the appropriate government agency. "Performance Bond" means a corporate surety bond that guarantees compensation to the City in the event that the City must assume the obligations or duties of the Lessee in order to continue the services defined in the Agreement. "Permits" means the applicable approvals,permits, authorizations, registrations, certifications, and licenses issued by Governmental Entities required by the Lessee for the operation and maintenance of the Southeast Landfill, the Lessee Transfer Station, and with respect to any other obligations necessary to be carried out hereunder. "Person" means any individual, partnership, co-partnership, firm, company, limited liability 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 Entities. "Processing Facility" means a Facility whose activities include, but are not limited to, the extraction of materials, transfer, volume reduction, conversion to energy, or other separation and preparation of 6 Solid Waste for reuse, Recycling or Disposal, including the treatment or neutralization of Hazardous Waste, designed to change the physical, chemical, or biological character or composition of any Hazardous Waste to neutralize such waste, or to recover energy or material from the waste, or to render such waste nonhazardous or less hazardous; safer to transport, store, dispose of, or make it amenable for recovery, amenable for storage, or reduced in volume. Unless the City determines that regulation of such activity under these rules is necessary to protect human health or the environment, the definition of "processing" does not include activities relating to those materials exempted by the administrator of the Texas Natural Resource Conservation Commission. "Receiving Time"has the meaning set forth in Section 6.15. "Recyclables" means material that has been recovered or diverted from the nonhazardous 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 is 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. "Recycling" means a process by which materials that have served their intended use or are scrapped, discarded, used, surplus, or obsolete, are collected, separated, ground or processed and returned to use in the form of raw materials used in the production of new products or for any beneficial purpose. Except for mixed Municipal Solid Waste composting, that is, composting of the typical mixed Solid Waste stream generated by residential, commercial, and/or institutional sources, Recycling includes the composting process if the compost material is put to beneficial use. "Refuse"has the same meaning as Rubbish. "Renewal Term"has the meaning set forth in Section 3.2. "Rent"means Base Rent,Variable Rent and Additional Rent. "Residential Waste" means Municipal Solid Waste discarded by single-family homes or apartments occupied by not more than one family. "Rubbish" means nonputrescible Solid Waste (excluding ashes), consisting of both combustible and noncombustible waste materials. "Solid Waste" means mean any Garbage, Rubbish, sludge from a wastewater treatment plant, water supply treatment plant, or air pollution control facility, and other discarded material, including solid, liquid, semi-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; (B) 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;or (C) waste materials that result from activities associated with the exploration, development, or production of oil or gas or geothermal resources and other substance or material regulated by the Railroad Commission of Texas under the Natural Resources Code. "Southeast Landfill" means the City-owned landfill accepting Municipal Solid Waste, located at 6900 Dick Price Road, Fort Worth, Texas 76060, more fully described in Appendix 1, and all improvements thereto. 7 "Special Waste" means waste that is defined as such by applicable state or Federal regulation and which because of its quantity, concentration, physical or chemical characteristics, or biological properties requires special handling and disposal to protect the human health or environment. Special Waste shall include dead animals. "State"means the State of Texas. "Successful Landfill Expansion Permit"that has the meaning set forth in Section 5.2(B). "Suspicious Waste" means waste which the Lessee reasonably suspects may be Unacceptable Waste. "Term"means the Initial Term and any Renewal Term. "Third Party Trustee"shall have the meaning set forth in Section 9.3. "Ton"means a short ton of 2000 pounds. "Transfer Station" means a permitted or registered facility where Municipal Solid Waste is deposited and prepared for transport on larger transfer vehicles for ultimate Disposal in a Disposal Facility,or where Recyclables or organic recyclable materials are deposited for transfer on larger vehicles to a Processing Facility. "Transload Fee"shall have the meaning set forth in Section 6.30. "Treated Medical Waste" means waste from health care-related facilities that has been treated in accordance with the procedures specified by State laws or regulations and which has been identified and packaged in accordance with State law and regulations. "Trust Instrument"has the meaning set forth in Section 9.3. "Type I Landfill"means a landfill permitted to accept Type 1 Waste. "Type I Waste"means Municipal Solid Waste. "Type IV Waste" means brush such as tree and shrub limbs and trimmings, C&D, and/or Rubbish that are free of putrescible waste and Household Waste. "Unacceptable Transload Waste" means any Solid Waste or other waste which is not Acceptable Transload Waste. Unacceptable Waste, Special Waste, as such term applies at the Lessee Transfer Station, Hazardous Waste and Suspicious Waste constitute Unacceptable Transload Waste. "Unacceptable Waste" means any and all waste, including but not limited to Hazardous Waste, Medical Waste (other than Treated Medical Waste) and asbestos, the acceptance and handling of which by Lessee would cause a Violation of any Landfill Permits or Applicable Law, cause substantial damage to all or any portion of the Southeast Landfill or any improvements thereon or equipment used in connection therewith, Lessee's equipment or facilities, or present a substantial danger to the health or safety of the public or the Lessee's or the City's representatives,agents or employees. "Uncontrollable Circumstances" includes "unanticipated events," and means 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 this Agreement, if such act, event or condition is beyond the reasonable control of the party relying thereon as justification for not performing under this Agreement. Uncontrollable Circumstances shall include but is not limited to the following: S (A) an act of God, landslide, lightning, earthquake, tornado, fire, explosion, flood, 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 Southeast Landfill; (B) the suspension, termination, interruption, denial or failure of renewal or continuation of any permit, license, consent, authorization, or approval required for the provision of services to be provided under this Agreement; provided, however, that such event shall not be the result of the willful or negligent action or inaction of the party relying thereon; (C) the loss of or inability to obtain any utility services, including water, sewerage, fuel oil, gasoline and electric power other than that generated by the Landfill, necessary for operation of the Southeast Landfill if such loss or inability is not the result of the willful or negligent action or inaction of the Lessee; (D) any significant restriction on any aspect of operations of the Southeast Landfill mandated or imposed by a governmental entity with jurisdiction to do so;and (E) a public or private labor dispute relating to the collection, transportation or disposal of Solid Waste which involves persons other than those working for (or on behalf) of the Lessee or any affiliate or subcontractor hired by the Lessee. Uncontrollable Circumstances shall not include: (A) insolvency or inability to pay any amount; (B) inability to obtain any letter of credit, surety bond, payment or performance bond or any other security required by this Agreement; (C) failure of the applicable Governmental Entity to approve any of the Lessee's permit applications or modifications thereto, or the inclusion of any permit conditions or requirements in such Governmental Approvals; (D) failure of the applicable Governmental Entity to approve any of the Lessee's permit applications relating to discharge of leachate or condensate in the City's sewer system, or the inclusion of any conditions or requirements in such Government Approvals;or (E) settling of the Southeast Landfill. "USC"means United States Code. "Useful Life of the Southeast Landfill" means the period of time ending when the available airspace under Commission Permit Number MSW 218--A for Solid Waste Disposal, as it currently exists or may be modified in the future, is exhausted. "Variable Rent"means Rent payable pursuant to Section 4.4. "Vehicle" means every device in, upon, or by which any person or property is or may be transported or drawn upon a public highway,or other rolling stock used in operation of the Southeast Landfill. "Violation" means any determination by a Governmental Entity, after notice to and permitted contest by the City, the Lessee or other operator of the Southeast Landfill, that the City, the Lessee or such other operator of the Southeast Landfill is in violation of or not in compliance with any portion of the Landfill Permits or Applicable Law under its jurisdiction;however,an Alleged Violation Resolved shall not constitute a Violation. 9 "Yard Waste" means leaves, grass clippings, yard and garden debris, and brush, including clean woody vegetative material not greater than four inches in diameter, that results from landscaping maintenance and land-clearing operations. The term does not include stumps,roots,or shrubs with intact root balls. SECTION 1.02. Interpretation. Unless the context clearly indicates to the contrary, the following rules shall apply to the construction of this Agreement: (a) Words importing the singular number shall include the plural number and vice versa. (b) Words importing the feminine, masculine and neuter genders shall each include correlative words of the other genders. (c) Except where expressly provided otherwise herein, all approvals, consents and acceptances required to be given or made by any person or party hereunder shall be at the sole discretion of the person or party whose approval,consent or acceptance is required. (d) All references herein to particular articles or sections without reference to a specific document are references to articles or sections of this Agreement. (e) The captions and headings herein are solely for convenience of reference and shall not constitute a part of this Agreement nor shall they affect its meaning,construction or effect. (f) The terms "hereby", "hereof', "hereto", "herein", "hereunder" and any similar terms, as used in this Agreement, refer to this Agreement in its entirety and not the particular article or section of this Agreement in which they appear, and the term "hereafter" means after, and the term "heretofore" means before, the date of this Agreement. (g) The word"including"means"including but not limited to". (h) All exhibits and appendices to this Agreement, including any amendments and supplements hereto,are hereby incorporated herein and made a part of this Agreement. (i) Any payment due hereunder on or before a non-business day shall be due and payable on the first succeeding business day. SECTION 1.03. Ambiguities. The parties acknowledge that each party and its counsel have reviewed and revised this Agreement and that the normal rules of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or exhibits hereto. 10 ARTICLE II LEASE OF PREMISES; EASEMENTS SECTION 2.0I. Lease of the Southeast Landfill, Generally. The City for and in consideration of the rents, payments, covenants and agreements herein contained, hereby demises and leases unto the Lessee,and the Lessee does hereby take, hire and accept, subject to the terms, covenants and conditions and agreements hereinafter expressed, and any reservation of City rights expressly set forth herein,the land described in Appendix I including all expansion space; together with all the improvements, rights, ways privileges, servitudes, appurtenances and advantages thereunto belonging or in any way appertaining, including the right to use appurtenances as may be necessary for the purpose of ingress and egress, as these appurtenances exist on the Contract Date, or as they may thereafter exist(hereinafter referred to collectively as the"Southeast Landfill") all commencing as of the Operation Commencement Date. SECTION 2.02. Lessee Rights Prior to Operation Commencement Date. Prior to the Operation Commencement Date, the City and its agents and contractors shall have the exclusive right to operate the Southeast Landfill for purposes of accepting Solid Waste. The Lessee's rights under this Agreement prior to the Operation Commencement Date shall be limited to such access as is reasonably required to perform the Development Period Responsibilities and any other activities reasonable or necessary during the Development Period in furtherance of the purposes of this Agreement, and the City hereby grants the Lessee easements on, over and under the Southeast Landfill for such purposes. SECTION 2.03. Post-Closure Easement. At the end of the Term, the Lessee shall be and is hereby granted an easement on, over and under the Southeast Landfill for the performance of its Closure and post- Closure responsibilities hereunder; provided, however, that in the event the City exercises its rights pursuant to Section 9.1, and elects to perform its own final Closure and post-Closure activities at the Southeast Landfill, the Lessee shall not be granted such easement and any such easement granted by this paragraph shall terminate. Such right of easement shall cease upon Lessee's completion of its post-Closure activities (including monitoring) contained herein. SECTION 2.04. "AS IS" Condition of the Southeast Landfill. The Lessee represents that the Southeast Landfill, and the present uses and nonuses thereof,have been examined by the Lessee and that the Lessee accepts the same "AS IS" on the Operation Commencement Date. The City shall not be liable to the Lessee, its agents, servants, licensees or invitees, for any damage sustained to person or property by reason of any defects in the Southeast Landfill. SECTION 2.05. No Representation by the City. EXCEPT AS SET FORTH EXPRESSLY IN THIS AGREEMENT, THE CITY HAS MADE AND MAKES NO REPRESENTATION OR WARRANTY WHATSOEVER, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE MERCHANTABILITY, CONDITION, FITNESS, DESIGN, OPERATION OR WORKMANSHIP OF ANY PART OF THE SOUTHEAST LANDFILL, ITS FITNESS FOR ANY PARTICULAR PURPOSE, THE QUALITY OF THE MATERIALS OR CAPACITY IN THE SOUTHEAST LANDFILL, OR THE SUITABILITY OF THE SOUTHEAST LANDFILL FOR THE PURPOSES OR NEEDS OF LESSEE OR ANY MATTER AFFECTING THE SOUTHEAST LANDFILL. THE LESSEE IS SATISFIED THAT THE SOUTHEAST LANDFILL IS SUITABLE AND FIT FOR PURPOSES OF LESSEE. THE CITY SHALL NOT BE LIABLE IN ANY MANNER WHATSOEVER TO THE LESSEE OR ANY OTHER PERSON FOR ANY LOSS, DAMAGE OR EXPENSE OF ANY KIND OR NATURE CAUSED, DIRECTLY OR INDIRECTLY, BY THE PROPERTY OF THE SOUTHEAST LANDFILL OR THE USE OR MAINTENANCE THEREOF OR THE FAILURE OF OPERATION THEREOF, OR THE REPAIR, SERVICE OR ADJUSTMENT THEREOF, OR BY ANY DELAY OR FAILURE TO PROVIDE ANY SUCH MAINTENANCE, REPAIRS, SERVICE OR ADJUSTMENT, OR BY ANY INTERRUPTION OF SERVICE OR LOSS OF USE THEREOF (OTHER THAN AN INTERRUPTION OR LOSS OF USE CAUSED BY THE CITY IN BREACH OF THIS AGREEMENT)OR FOR ANY LOSS OF BUSINESS HOWSOEVER CAUSED. SECTION 2.06. Entry on Premises by the City. In addition to the City's right to entry under any other provision of this Agreement, the Lessee shall permit the City and its authorized representatives to enter the Premises upon 24 hours notice at reasonable times for inspection and other reasonable purposes. Nothing herein I1 shall create or imply any duty upon the City to make any repairs or do any work with respect to the Southeast Landfill; any performance thereof by the City shall not constitute a waiver of Lessee's default in failing to perform the same. Nothing contained in this Section is intended to limit the City's right to enter the premises at any time without notice to exercise any of its governmental functions. SECTION 2.07. Mining and Mineral Rights. The City shall retain all mining and mineral rights to the Southeast Landfill, including (without limitation) oil and gas (of all kinds except landfill gas), gravel, soil, clay, and other minerals, materials, or substances of any nature whatsoever found in, on or under the Southeast Landfill, or produced by any use of the Southeast Landfill (whether by the Lessee, the City, or some third party or natural causes). The City shall provide reasonable notice to the Lessee prior to any mineral excavation or oil drilling at the Southeast Landfill. Notwithstanding the foregoing, the Lessee shall have the right to use, or prevent the use of, any and all materials as may reasonably be needed in the design, construction, operation, and control of the Southeast Landfill and its environmental effects. This Section is not intended to relieve the Lessee of the responsibility or necessity of operating the Southeast Landfill in such a way as to preserve its integrity, prevent erosion, control methane or other gases produced by disposed waste, or otherwise comply with the other sections of this Agreement during the period the Landfill is operated, as well as after it is closed, and is being monitored by the Lessee. The City may not remove soil, gravel, sand, oil,gas or minerals from the Southeast Landfill during the term of this Agreement without the permission of the Lessee (and such permission may not be unreasonably withheld; however, interference with operations of the Southeast Landfill will be a reasonable grounds for denial of permission), provided that the City shall have the right upon a grant of such permission by the Lessee to excavate sufficient soil, gravel, or sand to meet any operational needs it may have without compensation to the Lessee. The Lessee may use soil, gravel and sand from the Southeast Landfill during the term of this Agreement for purposes of and applications at the Southeast Landfill without any compensation to the City. SECTION 2.08. Landfill Gas. The Lessee shall have the right and the obligation to control landfill gas at the Southeast Landfill in compliance with Applicable Law and Government Approvals. Rights to beneficially use or commercially exploit landfill gas will be by mutual agreement only. It is the intention of the parties that (i) the costs of capital improvements and operations required to make landfill gas commercially salable (but not costs of landfill gas collection required for operation, Closure or post-Closure of the Southeast Landfill to the extent otherwise required by this Agreement) will be shared equally between the City and the Lessee, (ii) revenues from landfill gas will be split evenly between the City and the Lessee, and (iii) any landfill gas which can be exploited for beneficial use will be available in equal portions to the City and the Lessee. SECTION 2.09. Pollution Credits. The City retains all rights in and to any pollution, greenhouse gas or similar credits that may be available with respect to the Southeast Landfill from time to time. SECTION 2.10. Exclusive Use. Except as set forth herein, and except for easements and contract rights existing as of the date hereof, commencing on the Operation Commencement Date the City grants to the Lessee, and the Lessee shall have the exclusive use of, the Southeast Landfill for the purposes permitted herein. The Lessee shall and may peacefully have, hold and enjoy the Southeast Landfill, subject to the terms of this Agreement, provided the Lessee pays the Rent and other sums required by this Agreement to be paid by the Lessee and the Lessee does not commit or suffer an Event of Default giving the City the right to terminate this Agreement. SECTION 2.11. Agreement Not a Franchise. It is the understanding and intention of the parties that this Agreement constitutes a lease and contract to operate a landfill for the Disposal of Solid Waste and that it shall not constitute a franchise and shall not be construed as such. SECTION 2.12. No Subletting_of Southeast Landfill. The Lessee shall not sublet all or any portion of the Southeast Landfill without the City's prior written consent. Nothing in this Agreement shall be deemed or construed to provide for the Lessee's full or partial sublet of the Southeast Landfill absent such written consent. SECTION 2.13. Not a Joint Venture. Notwithstanding any other provision of this Agreement, the City is not for any purpose a partner or joint venturer of the Lessee in the construction of any improvements or the operation of the Southeast Landfill or any business conducted on the Southeast Landfill. The City shall not under any circumstances (other than the City's breach of this Agreement, and then only to the extent provided 12 elsewhere in this Agreement) be responsible or obligated for any losses or liabilities of the Lessee. Neither the City nor the Lessee has any authority to assume or create any obligation or responsibility whatsoever, express or implied, on behalf of or in the name of the other or to bind the other in any manner whatsoever except as expressly provided otherwise in this Agreement. SECTION 2.14. Independent Contractor Status. The Lessee, and its officers, agents, and employees, shall act in all matters relative to this Agreement as independent contractors, and not as agents or employees of the City. SECTION 2.15. Reservation of Rights by City. The City reserves the right to use the Southeast Landfill for the City's lawful business purposes under this Agreement relating to the transportation of City Waste and City Department Waste to the Southeast Landfill and other governmental purposes, including Vehicle access to the Southeast Landfill at no charge to the City, the right of City employees and agents or representatives to be stationed at or monitor the Southeast Landfill and its operations in accordance with the terms hereof. Nothing contained herein shall constitute a limitation of the City's rights to act in its governmental capacity nor shall any act or omission by the City in its governmental capacity constitute a breach by the City under this Agreement. 13 ARTICLE III TERM SECTION 3.01. Initial Term. The initial term of this Agreement (the "Initial Term") shall commence on the Contract Date, and shall expire on the earlier of(i)midnight on the date that is the day before the 20`h anniversary of the Operation Commencement Date, (ii)the last day of the Useful Life of the Southeast Landfill and(iii)the date this Agreement is terminated pursuant to Article XIV or otherwise as permitted herein. SECTION 3.02. Renewal Term. The term of this Agreement may be extended beyond the Initial Term if there is then remaining Useful Life at the Southeast Landfill, at the option of the Lessee until the earlier of (i) midnight on the date that is the day before the 106 anniversary of the day following the end of the Initial Term, (ii)the last day of the Useful Life of the Southeast Landfill, and(iii)the date this Agreement is terminated pursuant to Article XIV (the"Renewal Term"); provided, however, that notice of the Lessee's election to extend the term of this Agreement shall have been delivered, in writing, to the City at least two (2) years prior to the scheduled expiration of the Initial Term; provided further, however,that any exercise of the foregoing right to extend the term of this Agreement shall be of no force or effect if at the time of such election or the time of the commencement of the Renewal Term there shall have occurred, and be continuing uncured, an Event of Default by the Lessee. All other terms and conditions of this Agreement will remain the same during the Renewal Term unless stated otherwise herein or otherwise agreed by the Lessee and the City in writing in connection with the renewal. 14 ARTICLE IV RENTS AND OTHER PAYMENTS SECTION 4.01. Development Period Rent. There shall be no rent payable during the period commencing on the Contract Date and ending on the day prior to the Operation Commencement Date. SECTION 4.02. Base Rent During the First Year of Operations. During the one year period commencing on the Operation Commencement Date and ending on the day preceding the first anniversary of the Operation Commencement Date, the Lessee shall pay to the City Base Rent in the amount of$500,000.00. This amount shall be due and payable in equal monthly installments, in advance, on or before the I" day of each month during that year. If the Operation Commencement Date is a day other than the first day of a month, payments for a portion of a month shall be prorated. SECTION 4.03. Base Rent During the Balance of Operations. During each Operating Year after the first Operating Year, the Lessee shall pay to the City Base Rent in the amount of Base Rent due during the preceding Operating Year, multiplied by the Adjustment Factor. This amount shall be due and payable in equal monthly installments, in advance, on or before the I" day of each month during that year. The Adjustment Factor for this Agreement, when used with respect to the second and each subsequent Operating Year, shall be determined as follows: AF„ = 1 + [(Indexr_, -Indexi_2)-Index„_21 where, AF„ = The Adjustment Factor for Operating Year"n". Index„.l = The average 12 month composite index values occurring in the Index Year preceding the Operating Year with respect to which a calculation is to be made hereunder. Indexi_2 = The average 12 month composite index value occurring in the Index Year two years preceding the Operating Year with respect to which a calculation is to be made hereunder. The composite index to be used and the method of calculating the weighted change is set forth in the example below: Index Weight Change % Weighted Change Construction, Machinery and Equipment 50% 3.0% 1.500% Employment Cost Index 40% 3.2% 1.280% Fuel&Power Cost 5% 2.8% 0.140% Diesel Fuel 5% 3.9% 1.195% Composite Index Change: 3.115% In this example,the prior year's Base Rent and Variable Rent per ton,assuming a Base Rent of $500,000 and a Variable Rent per Ton of$9.63 would increase as follows: Base Rent: $500,000 x 1.03115 = $515,575.00 Variable Rent(per Ton of Non-City Waste): $9.63 x 1.03115 = $9.929 or$9.93 (after rounding) Base Rent will be rounded up or down to the nearest whole number. Variable Rent(per Ton of Non-City Waste)will be rounded up or down to the nearest$0.01. All Components of the Index are calculated by reference to data prepared by the United States Department of Labor, Bureau of Labor Statistics. 15 The Construction, Machinery and Equipment Index shall be accessed at "http://www.bis.gov/news.release/ppi.t02.htm" Table 2 Producer price indexes and percent changes for selected commodity groupings by stage of processing. Data under the heading CAPITAL EQUIPMENT, Table 11-2, Construction and Machinery Equipment. The Employment Cost Index shall be accessed at "http://www.bls.gov/news.release/ppi.t07:.htm" Table 7: WAGES AND SALARIES (NOT SEASONALLY ADJUSTED: Employment Cost Index for wages and salaries, private industry workers, by bargaining status, region, and area. Data under Region (3) South will be used to calculate Employment Cost Index. The Fuel and Power Cost Index shall be accessed at "http://data.bls.gov.labjava/outside.jsp?survey=wp" From Table 1 select Group 05: Fuels and related products and power, and from Table 2 select Group 05, Fuels and related products and power, not seasonally adjusted, which will be used to calculate Fuel and Power Cost. The Diesel Fuel Index shall be accessed at "http://data.bis.gov.iabjava/outside.jsp?surveywp" From Table 1 select Group 05: Fuels and related products and power,and from Table 2 select No. 05730302,No. 2 diesel fuel,not seasonally adjusted, which will be used to calculate Diesel Fuel Cost. If at any time the United States Bureau of Labor Statistics ceases publishing the foregoing indices, or modifies the place or manner of publication, the City and the Lessee will use reasonable efforts to agree on a new reference index that most closely approximates the reference index being replaced. SECTION 4.04. Variable Rent(Rorty Payments). (A) Payment on the Operation Commencement Date. On or before the Operation Commencement Date, the Lessee shall pay to the City the amount of$9,617,951.00. This payment shall constitute a partial prepayment of Variable Rent for the remaining Term of this Agreement. This payment shall in no way modify those payments set forth in subsections(C)through(J)of this Section 4.4. (B) [Reserved] (C) Variable Rent During the Balance of Operations. During each Operating Year after the first Operating Year,the Lessee shall pay to the City Variable Rent in an amount equal to the Variable Rent per Ton of Non-City Waste payable during the preceding Operating Year(assuming that during the first Operating Year the Variable Rent rate is $9.63 per Ton of Non-City Waste), multiplied by the Adjustment Factor, for each Ton of Non- City Waste delivered to and accepted at the Southeast Landfill during such Operating Year. The Adjustment Factor, when used with respect to the second and each subsequent Operating Year, shall be as set forth in Section 4.3. (D) Minimum Annual Variable Rent. During the second through twentieth Operating Year, the Lessee agrees that the minimum amount of Variable Rent that will be paid to the City for each Operating Year will be as set forth below: Year Minimum Annual Variable Rent 2 $ 1,935,767 3 $ 2,053,652 4 $ 3,533,023 5 $ 5,622,283 6 $ 5,964,676 7 $ 6,327,928 8 $ 6,713,300 9 $ 7,122,136 10 $ 7,555,879 11 $ 8,016,025 16 Year Minimum Annual Variable Rent 12 $ 8,404,228 13 $ 9,022,106 14 $ 9,571,552 15 $10,154,460 16 $10,772,874 17 $11,428,939 18 $12,124,957 19 $12,863,369 20 $13,646,748 If the renewal option set forth in Section 3.2 is exercised, during the Renewal Term there shall be no Minimum Annual Variable Rent. (E) Monthly Payments. During each month of each Operating Year following the first Operating Year, the Lessee shall pay as Variable Rent the per Ton Variable Rent payable during that Operating Year multiplied by the number of Tons of Non-City Waste delivered to the Southeast Landfill during that month. (F) Payment Dates. Variable Rent shall be payable monthly, and shall be due and payable on or before the 20'b day of the month following the month during which the Non-City Waste for which such Variable Rent is payable was accepted by Lessee for disposal in the disposal area of the Southeast Landfill. For purposes of calculating the Variable Rent on Solid Waste that is not weighed, the Lessee shall estimate Tons delivered based on historical data for the previous seven(7)day period and other relevant factors. (G) Minimum Payments. Within one week following the end of each Operating Year, the Lessee will deliver to the City a"true-up"comparing the actual Variable Rent due during such year(based on actual Tons of Non-City Waste delivered and accepted) to the Minimum Annual Variable Rent applicable in such year. If the Variable Rent due during such Operating Year (based on actual Tons of Non-City Waste delivered and accepted) was less than the Minimum Annual Variable Rent and subject to application of any Carryforward Credits, the Lessee shall pay to the City no later than the 20'b Day of the first month following the end of such Operating Year the amount by which the Minimum Annual Variable Rent exceeds the Variable Rent(based on actual Tons of Non-City Waste delivered and accepted). (H) Carryforward Credit. At the end of each of the second through twentieth Operating Years, the Variable Rent paid on Tons delivered to the Southeast Landfill shall be compared to the Minimum Annual Variable Rent required to be paid for that year. If, at the end of any of the second through twentieth Operating Years the actual Variable Rent amount that would be due by the Lessee to the City for such Operating Year is more than the Minimum Variable Rent Amount for the Operating Year, then the amount of such difference is referred to in this Section 4.4 as a "Net Variable Rent Underpayment' and Lessee will pay to the City an amount equal to the actual Variable Rent amount due minus the Minimum Variable Rent Amount and minus available Carryforward Credits pursuant to the following paragraphs. Such amount shall be paid by Lessee to the City within twenty (20) Days after the end of the Operating Year, and shall be accompanied by a report summarizing the actual Variable Rent amount and the Minimum Variable Rent Amount for such Operating Year. If, at the end of any of the second through twentieth Operating Years the actual Variable Rent amount due by Lessee to the City is less than the Minimum Variable Rent Amount for that Operating Year, then such condition is referred to in this Section 4.4 as a Variable Rent Overpayment and Lessee shall be entitled to a credit (a "Carryforward Credit') against Net Variable Rent Underpayments in future years in accordance with this paragraph. If in any Operating Year after the year in which such Carry Forward Credit exists (a "Subsequent Year") there is a Net Variable Rent Underpayment, Lessee shall be entitled to credit up to the sum of all prior Carryforward Credits against the amount due to fund such Net Variable Rent Underpayment. 17 Example 1: In year 4 the Minimum Variable Rent Amount is $3,533,023, and Lessee's actual Variable Rent amount is $3,500,000. A Net Variable Rent Overpayment exists and the carryover is $33,023. In year 5 the Minimum Variable Rent Amount is $5,622,283, and Lessee's actual Variable Rent amount is $5,800,000. A Net Variable Rent Underpayment exists and Lessee would pay the City a total Variable Rent of$5,766,977($5,800,000-$33,023)as$33,023 is carryover from the previous year. Example 2: In year 4 the Minimum Variable Rent Amount is $3,533,023, and Lessee's actual Variable Rent amount is $3,500,000. A Net Variable Rent Overpayment exists and the carryover is $33,023. In year 5 the Minimum Variable Rent Amount is $5,622,283, and Lessee's actual Variable Rent amount is $5,650,000. A Net Variable Rent Underpayment exists and Lessee would pay the City a total Variable Rent of $5,622,283 and would have a new carryover of $5,306 for subsequent years ($5,650,000- $5,622,283 =$27,717;$33,023-$27,717=$5,306). If at the end of the twentieth (20`b) Operating Year of this Agreement there is a Carryforward Credit from one or more Operating Years that has not been credited against Net Variable Rent Underpayments prior to the end of the Initial Term,then the aggregate amount oaf such unused Carryforward Credits shall be credited against Variable Rent payments due during the Renewal Term. Each month that a Variable Rent payment is due, there shall be credited against such Variable Rent amount due the lesser of(i)the amount of such Variable Rent due or(ii)the remaining aggregate unused Carryforward Credits. Once the balance of unused Carryforward Credits is zero, there shall be no further crediting of Carryforward Credits. During each month that Lessee applies any Carryforward Credit to any Variable Rent amount due, Lessee shall send to City a report detailing the Carryforward Credit applied. (I) Rounding. For purposes of calculating Variable Rent in any month or year, the number of Tons of Non-City Waste delivered to the Southeast Landfill shall be rounded up or down to the nearest tenth of a Ton. (J) Proratings. If and to the extent an Operating Year includes partial months, or rate changes occur other than on the first day of a month, rates and changes will be prorated for such partial months and mid-month changes. (K) The Lessee shall pay as Additional Rent an amount equal to 50% of fees (after subtracting any State fees) or other consideration paid to the Lessee, if any, for waste other than Non-City Waste delivered to the Southeast Landfill that is used by the Lessee as cover material and that comprises material which is subject to a State fee. (L) Notwithstanding the foregoing, if the Lessee's ability to operate the Southeast Landfill is materially impaired by (i)reduction in permissible operating hours of the Southeast Landfill due to either (a) a change in Applicable Law of general applicability to Type I Landfills in similar circumstances as the Southeast Landfill or(b) revocation of a then-existing permit to operate during the Minimum Permit Hours pursuant to a third party appeal of the permit to operate during the Minimum Permit Hours below (other than for Lessee default or violation of Applicable Law) such that the Southeast Landfill may only operate fewer than the Minimum Permit Hours, (ii)any action of the City(other than an action of the City acting in its governmental capacity) not permitted under this Agreement which limits access to the Southeast Landfill for reasons other than a violation of Applicable Law at the Southeast Landfill by the Lessee or the Lessee's failure to perform the Lessee's covenants contained herein if such failure is not cured in accordance with Section 14.2(A)(1),or(iii)taking by condemnation or eminent domain of any material portion of the Southeast Landfill,then the Minimum Annual Variable Rent shall be adjusted to the extent the Lessee's inability to accept waste at the Southeast Landfill is attributable to the event being identified as the cause of the impairment. If the City and Lessee do not agree on appropriate adjustments to the Minimum Annual Variable Rate pursuant to this Section, the Lessee may terminate all its future obligations hereunder, except with respect to any applicable Closure and post-Closure requirements and with Sections 14.9 and 14.12. SECTION 4.05. Payment of Rent. The City and the Lessee intend that Rent shall be paid to the City absolutely net of all costs, expenses and obligations of every kind and nature whatsoever with respect to the Southeast Landfill. Rent shall be paid to the City by the Lessee, without notice or demand, and without abatement, deduction or set-off of any amount whatsoever, except as otherwise expressly provided herein. Nothing contained 18 in this section shall require the Lessee to pay the City's regular administrative and operations costs. The Lessee covenants to pay to the City at such place as the City may from time to time give notice, the Rent referred to in this Agreement in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. The City's acceptance of an incorrect amount with respect to Rent shall not be treated as a waiver of the City's right to the correct sum due. SECTION 4.06. Additional Rent. (A) Closure and Post-Closure Costs. The Lessee shall pay to the City as Additional Rent,not later than the twentieth (20'') Day of each month,an amount equal to the Closure Reserve Amount multiplied by the number of Tons of waste (excluding material used as cover material)delivered to the Southeast Landfill during the immediately preceding month. Pursuant to the Trust Agreement and Section 9.3 of this Agreement, the City has agreed to hold such amounts in trust to pay for Closure and post-Closure costs, and the City hereby authorizes and directs the Lessee to make such payments directly to the Third Party Trustee for deposit under the Trust Agreement for the account of the City. (B) Other Amounts. All other sums that may become payable to the City by the Lessee as provided in Articles VIII and IX, and all other charges and expenses of whatsoever nature that the Lessee assumes or agrees to pay pursuant to this Agreement, shall be deemed Additional Rent hereunder and payable as aforesaid, and the City shall have (in addition to any other right or remedy of the City) the same rights and remedies in the event of the nonpayment of any such sums by the Lessee as in the case of default by the Lessee in the payment of Rent. The Lessee, following receipt of invoices or other notice of amount payable, shall promptly pay the cost of all taxes; assessments; State and Federal fees; special charge licenses; amounts payable with respect to Permits; and utilities. The above notwithstanding, the City shall be responsible for paying any host community charge, usage charge and any other charge, as well as for paying all costs and expenses (for example, such as road improvement costs)imposed on the Southeast Landfill pursuant to the Kennedale Host Community Agreement. SECTION 4.07. Additional Rent During Period of Permit Violations. The Lessee shall pay as Additional Rent any fines, penalties, assessments, administrative costs or other amounts that may be levied against the City relating to use or operation of the Southeast Landfill by any Governmental Entity on or after the Operation Commencement Date (unless imposed for an act or omission of the City or its agent that occurred prior to the Operation Commencement Date). SECTION 4.08. Triple Net Lease. This is a triple net lease. SECTION 4.09. No Abatement or Set-Off of Rent. Lessee shall not be entitled to any abatement, deduction, deferment, suspension or reduction of or set-off, defense or counterclaim against, any Rent payable by Lessee under this Agreement, and the respective obligations of the City and Lessee shall not be otherwise affected by: (A) reason of damage to or destruction of the Southeast Landfill from whatever cause, or (B) any taking by condemnation or eminent domain or by agreement between the City and those authorized to exercise such rights, provided such taking or condemnation does not materially impair Lessee's operations at the Southeast Landfill; it being the intention of the parties that the respective obligations of the City and Lessee shall be separate and independent covenants and agreements and that the Rent and all other charges and sums payable by Lessee hereunder shall continue to be payable in all events unless the obligations to pay the same shall be terminated pursuant to the provisions of this Agreement. SECTION 4.10. Termination. No obligation for Rent or Additional Rent shall accrue after expiration or termination of this Agreement. 19 ARTICLE V PERMITS;LANDFILL EXPANSION SECTION 5.01. Landfill Expansion. The Lessee shall have the right and shall use all reasonable efforts to expand the Southeast Landfill to utilize approximately an additional 20,000,000 cubic yards of airspace, upon receipt of proper Government Approvals from appropriate Governmental Entities. The foregoing volume of airspace may be adjusted to accommodate for design and permitting issues. The Landfill Expansion shall be consistent with the schematic set forth in Appendix 3. SECTION 5.02. Applications for Initial Improvements and Landfill Expansion. (A) Landfill Expansion and Other Permit Applications. The Lessee shall, reasonably promptly following the Contract Date, use all commercially reasonable efforts to prepare and submit such applications as may be required by Governmental Entities to secure all Government Approvals for the Initial Improvements for the Landfill Expansion and for such other operations as may be required. All commercially reasonable efforts shall be used by the Lessee to obtain such Government Approvals as may be required at the earliest possible date. The Lessee, at its sole cost and expense, shall prepare and file all applicable permit applications and seek all appropriate Government Approvals, including those required for the Landfill Expansion, on behalf of the City. Where necessary or appropriate,the City will assist the Lessee in obtaining necessary Government Approvals. (B) Successful Landfill Expansion Permit. Approval by the Commission of the Permit application for the Landfill Expansion after exhaustion of all applicable appeals thereto shall be deemed successful if the Commission approves, at a minimum, an expansion of hours to the Minimum Permit Hours and an expansion by approximately 20 million cubic yards of airspace. ("Successful Landfill Expansion Permit"). In the event that the Commission does not authorize a Successful Landfill Expansion Permit, either (i) the Lessee and the City may agree on appropriate reductions to the Minimum Annual Variable Rent or(ii) if the Lessee and the City do not agree on appropriate adjustments to Minimum Annual Variable Rent, the Lessee may terminate all its future obligations hereunder,except with respect to any applicable Closure and post-Closure requirements and with respect to Sections 14.9 and 14.12. SECTION 5.03. Alterations. (A) The Lessee shall, at the Lessee's sole cost and expense, make all improvements and alterations to the Southeast Landfill, including but not limited to the relocation of scales, installation of a leachate collection system and landfill gas collection system, each consistent with prudent landfill management practices and then-current industry standards, the Landfill Expansion and preparation of the Southeast Landfill to receive the tonnage increases anticipated from the Operation Commencement Date and thereafter throughout the Term of this Agreement. The City will retain ownership of the two existing pit scales; however, the Lessee may elect to use the City scales if moved to the new scale house. The Lessee shall maintain the City's scales in the event they are moved to the new scale house. In the event the Lessee elects not to use the City's scales, the Lessee shall provide the City with reasonable opportunity to remove such scales from the Southeast Landfill. (B) Installation of Weighing, Facilities. As soon as practicable after the Contract Date, the Lessee shall relocate and install, at its sole cost and expense,weighing facilities with sufficient redundancy to ensure continuous (except for brief outages for repairs) availability during the Term. Weighing facilities shall include a minimum of one scale for vehicles entering and one scale for vehicles leaving the Southeast Landfill. (C) Gas Collection System. The Lessee shall install a landfill gas collection system, which is consistent with prudent landfill management practices and which complies with the Landfill Permits and Applicable Law and meets then-current industry standards,when and as required by Applicable Law. SECTION 5.04. Obligation to Seek Permits;City Review. (A) Current Landfill Permits are issued to the City as the permittee. All permits will be held in the City's name. The Lessee shall submit applications for each of the necessary permits or Government Approvals. The Lessee shall use all commercially reasonable efforts to obtain such amendments, modifications and supplements to such Current Landfill Permits ("Permit Modifications") as may be required to perform the Lessee's obligations hereunder. The City will cooperate with the Lessee at the City's expense in submitting applications for 20 Permit Modifications for Government Approvals. To the extent permitted by law, the City agrees that it will not, in any official capacity, directly or indirectly assist, encourage, fund or otherwise support any individual or other party in opposition to the operation and/or expansion of the Southeast Landfill in accordance with the terms of this Agreement,specifically including the issuance of a Successful Landfill Expansion Permit. (B) The City shall designate the individuals who will be responsible for reviewing Permit Modification applications and for communicating with the applicable Government Entity responsible for Government Approvals otherwise approved by the City or required by Applicable Law. The Lessee shall submit applications for Permit Modifications and any related Government Approvals to the City Manager, or his designated representative, for review and comment. The City shall complete its reviews and provide any comments to any Permit Modification application or component thereof within thirty (30) days following the City's receipt of such submission. Such review will be presumed complete if the City has not provided comments to such Permit Modification application within such thirty (30) day period. If necessary the Lessee may request a shorter review period and in such event the City will cooperate in completing reviews within such shorter review period. In no event shall the City be given less than seven (7) days for such review and comment unless the response time required by the applicable Government Entity is less than seven (7) days, in which case the City agrees to waive such 7-day review period. In no case shall the City be responsible for delays, or fines, resulting from the Lessee's failure to obtain permits or comply with regulatory deadlines. The City makes no representations concerning the duration of reviews by any Governmental Bodies other than the City. (C) Any comments to plans and specifications shall be given due consideration by the Lessee, and the Lessee shall meet with the City to discuss areas of disagreement. In the event that the Lessee and the City cannot agree on such plans and specifications, the parties agree (i) to select a mutually agreeable third-party engineer or expert to moderate such dispute and to share equally the costs of such third-party engineer or expert, and(ii)to be bound by the decision of such third-party engineer or expert. (D) Nothing herein shall be construed as transferring or authorizing the transfer of any permits, licenses or approvals from the City to the Lessee and in no event shall the Lessee request or seek a permit transfer from the City's name to the Lessee's name. (E) The Lessee will be responsible for undertaking all monitoring and developing all compliance reports and related documentation associated with the Southeast Landfill as required by the Permits and other Applicable Law. At the City's option, such documentation shall be submitted to the City or directly to the permitting authority. SECTION 5.05. No City Obligation. The City shall not be deemed to have incurred or assumed any obligation or responsibility in connection with the modification, maintenance, or operation of the Southeast Landfill, or any changes or alterations of the Southeast Landfill, by reason of its review for comment on any designs, plans or specifications, nor shall any such review be deemed a representation by the City of the sufficiency of such designs, plans or specifications, the stability or structural integrity of any part of the Southeast Landfill, or the quality or suitability of any materials or equipment or the adequacy of the designs, plans or specifications for the intended purpose. SECTION 5.06. Financial Assurances. The City agrees that it shall provide such financial assurances as may be required under Applicable Law to secure and retain the Landfill Permits, provided that such financial assurances are of the type permitted by governmental entities and provided further that such financial assurances do not require the City to deposit money, securities, a surety bond, a letter of credit or any other financial instrument to secure such financial assurances. 21 ARTICLE VI OBLIGATIONS OF LESSEE SECTION 6.01. Development Period Responsibilities. Prior to the Operation Commencement Date,the Lessee shall perform the following responsibilities(the"Development Period Responsibilities"): (i) Installation of Weiahinp, Facilities. The Lessee shall commence the process of obtaining all Government Approvals for and, upon obtaining such Government Approvals, of the relocation and installation of the weighing facilities in accordance with the terms set forth in Section 5.3. (ii) Permit Approvals. The Lessee shall commence preparation of all applicable Government Approvals, in accordance with Article V, for the Landfill Expansion and the continued operation of the Southeast Landfill. SECTION 6.02. Conditions Precedent to Operation Commencement Date. It shall be a condition precedent to the Operation Commencement Date that each of the following shall have occurred and each party shall use its good faith efforts to satisfy such conditions so the Operation Commencement Date may occur prior to April 1,2003: (A) Conditions Precedent: (i) The Lessee is authorized to operate the Southeast Landfill under Applicable Law; (ii) All computer systems and related facilities have been properly installed and all of the foregoing have been tested and are working properly; (iii) The Trust Instrument has been entered into among the Lessee, the City and the Third Party Trustee; (iv) The Lessee has certified in writing to the City that it is prepared to assume operation of the Southeast Landfill; (v) The Lessee has paid to the City the partial prepayment of Variable Rent in the amount of$9,617,951.00 as set forth in Section 4.4(A);and (vi) The Lessee shall have given the City at least 64 days' prior written notice of the Operation Commencement Date. (B) Certification of Operation Commencement Date. The parties shall give each other prompt notice when each of the conditions precedent to the Operation Commencement Date has been achieved. Upon satisfaction or waiver of all such conditions precedent to the Operation Commencement Date,the parties shall hold a formal closing on a date and at a location determined by the City acknowledging such satisfaction, delivering copies of all relevant documents, and certifying that the Operation Commencement Date has occurred. The date of such closing (or such later date as the parties agree) shall be deemed to be the Operation Commencement Date hereunder. Written documents or instruments constituting or evidencing satisfaction of the conditions precedent to the Operation Commencement Date shall be furnished to each party for review prior to the Operation Commencement Date,to the extent practicable. (C) Partial prepayment of Variable Rent. The Lessee shall make the partial prepayment of Variable Rent in the amount of$9,617,951.00 on March 1,2003. SECTION 6.03. Obligation to Accept City Waste and City Department Waste. Commencing on the Operation Commencement Date the Lessee shall accept during the Receiving Time and dispose of, at the 22 Southeast Landfill, all City Waste, all City Department Waste and all Kennedale Department Waste delivered to the Southeast Landfill. The City shall not warrant or guarantee the quantity or composition of City Waste, City Department Waste and Kennedale Department Waste to be delivered, and nothing contained herein shall be construed to guarantee or warrant such quantities or composition. The above notwithstanding, the Lessee shall have no obligation to accept from a City Licensed Hauler Non-City Waste as a substitute for City Waste in the event such City Licensed Hauler is unable to deliver City Waste during the Receiving Time. SECTION 6.04. Landfill Operating Requirements. (A) Southeast Landfill, Generally. The Lessee shall operate and maintain the Southeast Landfill in compliance with the Landfill Permits and Applicable Law. The Lessee shall be solely responsible for all costs of engineering, consulting, permitting, utilities, insurance, interconnections, materials, labor, damages, fines and penalties (whether assessed against the City or the Lessee) associated with the Southeast Landfill and the equipment utilized by Lessee at the Southeast Landfill. (B) Southeast Landfill Costs. The Lessee shall acquire at its own cost and expense, all machinery, equipment, rolling stock, daily cover material, supplies, services, labor, furniture, electronic equipment, computers, software, databases and other equipment necessary or appropriate for performing its services under this Agreement. (C) Operation of Southeast Landfill. The Lessee shall operate and maintain the Southeast Landfill (i)in a safe and sound manner, (ii)in a manner that permits weighing and delivery of City Waste, City Department Waste, and Non-City Waste at all times during the Receiving Time, (iii)in a manner that will permit weighing, delivery and exiting of vehicles delivering City Waste, City Department Waste (including City Licensed Haulers), and Non-City Waste efficiently and without undue waiting time, (iv)in a manner that will prevent vehicles delivering Solid Waste from lining-up on Dick Price Road or any future access road to the Southeast Landfill, and (v)as otherwise required by Applicable Laws and Government Approvals. (D) Lessee's Managers. The Lessee shall appoint a District Manager, a General Manager, and a full-time Site Manager (or persons performing functions similar to those who will hold those titles at the Operation Commencement Date) who shall hold the appropriate licenses and certifications from all appropriate Governmental Entities. The Site Manager shall be trained and experienced in the management and operation of a Type I Landfill comparable to the Southeast Landfill, and whose sole employment responsibility shall be managing the Lessee's operation of the Southeast Landfill. (E) Screening of Waste. The Lessee shall screen all Solid Waste entering the Southeast Landfill in accordance with the Landfill Permits and Applicable Law. The Lessee shall use and employ, at all times, inspection and screening equipment and practices consistent with prudent landfill management practices. This shall include, but not be limited to visual review of trucks and their contents, screening for radioactive materials, random inspections of dumped loads, utilizing closed circuit televisions and such other waste screening techniques as may be consistent with then current prudent landfill management practices. At least thirty(30)days prior to the submittal of the permit application to the Commission for the Landfill Expansion,the Lessee shall submit to the City proposed screening procedures and equipment for review and comment, and the Lessee shall cooperate with the City in incorporating the City's comments into its procedures. The Lessee shall post prominently at the entrance to the Southeast Landfill and near the scale house a sign indicating(i)that the Lessee employs waste screening practices at the Southeast Landfill,and(ii)what types of waste are Unacceptable Waste at the Southeast Landfill. (F) Deliveries of Unacceptable Waste. The Lessee shall reject all Solid Waste delivered to the Southeast Landfill which is not permitted in a Type I Landfill, including Unacceptable Waste. (G) Weighing and Identification of Vehicles. The Lessee shall operate and maintain weigh scales located at the Southeast Landfill, and maintain weigh scale records for determining the total Tons of City Waste and City Department Waste delivered to the Southeast Landfill and total Tons of Non-City Waste delivered to the Southeast Landfill. Vehicles delivering City Waste and City Department Waste shall be identified in a manner to be mutually agreed to by the City and Lessee. To the extent a vehicle's tare weight is unavailable, the Lessee shall weigh such vehicle (i)delivering Solid Waste to the Southeast Landfill, and (ii)once empty. The Lessee shall maintain a record of the tare weight of each such vehicle. Such tare weight shall be updated annually. The Lessee 23 shall use weighing and identification equipment and practices consistent with then current prudent landfill management practices. (H) Leachate and Condensate Collection Services. The Lessee shall perform all leachate and condensate collection and disposal services in accordance with the Landfill Permits and Applicable Law. The Lessee may deliver the collected leachate and condensate to the City's sewer system, subject to receiving appropriate Government Approvals. The Lessee shall collect leachate and condensate in a manner consistent with prudent landfill management leachate and condensate collection practices, and shall take all reasonable measures to minimize the production of leachate and condensate at the Southeast Landfill, including reinjection of leachate and condensate into the Southeast Landfill where permitted by Applicable Law. The City agrees to process the delivered leachate and condensate at no cost to the Lessee; provided, however, that the City shall not be required to accept or process the collected leachate or condensate if(i)the Lessee has not obtained the appropriate Government Approvals for the collection and delivery of the collected leachate or condensate, (ii)the processing of the delivered leachate or condensate will impair operations at the City's wastewater treatment facilities, (iii)the processing of the delivered leachate or condensate will cause the City to violate its effluent limitations or Applicable Law, or(iv)the Lessee produces quantities of leachate or condensate at the Southeast Landfill in excess of quantities typical for leachate or condensate collection systems, which are consistent with prudent landfill management practices, with leachate and condensate reinjection and other leachate and condensate minimization practices at landfills similar to the Southeast Landfill. To the extent the payment of sewer fees for leachate or condensate disposal at the City's wastewater treatment facilities is required by law,the City shall pay such sewer fees. The above notwithstanding, to the extent pretreatment and monitoring of such leachate or condensate is required before being processed at the City's wastewater treatment facilities, in order to comply with Applicable Law, the Lessee shall perform, or cause the performance of,all pretreatment and monitoring services and shall pay all costs related thereto. (I) Office. In addition to facilities required for the operation of the Southeast Landfill, the Lessee shall establish a local office or other facility within the City limits where inquiries and complaints about service may be made. Such office or facility shall be equipped with reasonably current communications technology, and shall have at least one responsible person in charge and present during all hours of operation of the Southeast Landfill. The Lessee shall provide means for the public to leave messages during hours when the office is closed. (J) Customer Service. The Lessee shall respond in a timely and effective manner to all complaints and communications received by the Lessee or the City regarding the operation of the Southeast Landfill, odor, noise, construction or any other matter related to the operation of the Southeast Landfill. The Lessee shall investigate each such complaint and communication, and if it has a valid basis,the Lessee shall promptly rectify the matter. Complaints and communications concerning emergencies shall be responded to within one (1) hour, and other communications within 24 hours. The Lessee shall establish, maintain and make freely known a telephone number, e-mail address and mailing address to which community complaints and communications may be directed, and shall provide a 24 hour (7 days a week) emergency number and contact person to respond to any emergencies relating to or affecting the Southeast Landfill. (K) City's Employees. It is the intent of the parties that current City employees meeting Lessee's job descriptions and standards, other than the current landfill manager, be offered first opportunities to fill positions with comparable pay, benefits and seniority at the Southeast Landfill. To the extent that the number of employees seeking employment with the Lessee exceeds the number of available positions, current Department of Environmental Management employees meeting the Lessee's job descriptions and standards will be offered future jobs as they become available. If eligible City employees refuse a bona fide job offer, the Lessee shall not be obligated to make future positions available to said employees. Notwithstanding any provision of this Agreement, if any collective bargaining agreement to which the Lessee is a party applies to employees of the Lessee at the Southeast Landfill,the Lessee will comply with the requirements of such collective bargaining agreement. (L) if the Lessee is in violation of Applicable Law (other than an Alleged Violation Resolved) which results in the Southeast Landfill, either (i) being a public nuisance, or (ii) causing environmental harm which may adversely affect the health of residents either within or outside the vicinity of the Southeast Landfill, and such violation is not cured promptly following notice of such violation,the City shall have the right, in addition to all other rights and remedies under this Agreement, to require the Lessee to cease all or any portion of the Lessee's operations at the Southeast Landfill until such time as the violation is remedied and the Lessee provides 24 assurances reasonably satisfactory to the City that the practices that resulted in the violation have been modified to prevent recurrences of the violation. SECTION 6.05. Odor Control Requirement. In operating the Southeast Landfill the Lessee shall comply with all limits and requirements established by Applicable Law with respect to the odor control. SECTION 6.06. Maintenance of Facility's Equipment and Vehicles. The Lessee shall maintain all of its properties, facilities and equipment used in providing service under this Agreement in a safe, neat, clean and operable condition. SECTION 6.07. Personnel Standards. The Lessee shall furnish such qualified drivers, operators, mechanical, supervisory, clerical and other personnel as may be necessary to provide the services required in a safe, economical and efficient manner. The Lessee shall provide suitable operational and safety training for all of its employees who utilize or operate equipment for Disposal of Solid Waste under the Agreement or perform other operations related services at the Southeast Landfill. The Lessee shall train its employees in Solid Waste Disposal to identify Hazardous Waste and Medical Waste. The Lessee shall not,nor shall it permit its employees to, demand or solicit, directly or indirectly, any additional compensation of gratuity from members of the public for services provided under the Agreement. The Lessee shall use its best efforts to assure that all employees present a neat appearance and conduct themselves in a courteous manner. The Lessee shall regularly train its employees in customer courtesy, and shall prohibit the use of loud or profane language in communications with customers. If any employee is found not to be courteous or not to be performing services in the manner required by the Agreement,the Lessee shall take all reasonably appropriate corrective measures. If the City has notified the Lessee of a complaint related to discourteous or improper behavior,the Lessee will notify and reprimand the employee, and on receipt of a second complaint, Lessee shall consider reassigning the employee to duties not entailing contact with the public while the Lessee is pursuing its investigation and corrective action process. The Lessee shall designate qualified employees as supervisors of field operations. Supervisors will be available by radio or phone during the Lessee's hours of operation to handle calls and complaints from the City, or to follow up on problems and inspect Lessee's operations. All employees of the Lessee performing work under this Agreement, except the Site Manager and scale operators, shall be uniformed showing their association with the Lessee while operating in the field. The Lessee shall provide a list of current employees,contractors and subcontractors to City upon request. SECTION 6.08. Prevailing Wage Requirement. (A) The Lessee shall 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 Fort Worth to be the prevailing wage rates in accordance with Chapter 2258,Texas Government Code. (B) The Lessee shall, for a period of three (3) years following the date of acceptance of any work, maintain records that show (i)the name and occupation of each worker employed by the Lessee in the work provided for in this Agreement;and(ii)the actual per diem wages paid to each worker. These records shall be open at all reasonable hours for inspection by the City. (C) The Lessee shall include in its subcontracts and/or shall otherwise require all of its subcontractors to comply with paragraphs(A)and(B)above. The Lessee shall post the prevailing wage rates in a conspicuous place at the site of the Southeast Landfill. Notwithstanding any provision of this Agreement, if any collective bargaining agreement to which Lessee is a party applies to employees of Lessee at the Southeast Landfill, Lessee will comply with the requirements of such collective bargaining agreement. SECTION 6.09. Contingency Plan. The Lessee shall provide to City within forty (40) days following the Contract Date, a written contingency plan demonstrating the Lessee's arrangements to provide 25 equipment, personnel and to maintain uninterrupted service during mechanical breakdowns, and in case of emergency. SECTION 6.10. Source of Waste. The Lessee shall accept all Solid Waste brought by public or private haulers, if the waste is of a type and quality, and is handled prior to Disposal in a manner that meets State and Federal requirements for Disposal in a Type I Landfill. The above notwithstanding, the Lessee shall not be obligated to accept Solid Waste brought by private haulers to the extent such private haulers are then in default in payment of amounts due for delivering Solid Waste to the Southeast Landfill. SECTION 6.11. Buffer Zone. The Lessee agrees to honor all terms of the Permit with respect to buffer zones and to stay within the confines of the levee at the site. SECTION 6.12. Rejection of Certain Waste. Title to Solid Waste shall pass to the Lessee when accepted for Disposal at the disposal area of the Southeast Landfill. The Lessee shall only accept Solid Waste which may be placed in a Type I Landfill in accordance with the Landfill Permits, including but not limited to Municipal Solid Waste, Yard Waste, Garbage, Refuse, Rubbish, brush, bulky refuse, bulky rubbish, and Treated Medical Waste. The Lessee shall not accept Hazardous Waste for Disposal, and may refuse to accept Suspicious Waste for Disposal; in no event shall title to any Hazardous Waste, or to any Suspicious Waste which is refused by the Lessee, pass to the Lessee. The Lessee may accept Solid Waste for Disposal that falls within the definition of Special Waste as contained herein, with the prior written consent of the City and, notwithstanding the above, shall be required to accept dead animals. The City and the Lessee shall work together to develop a list of the categories of Solid Waste constituting Special Waste, that the City has consented to accept at the Southeast Landfill,and to modify and update said list from time to time. The Lessee shall exercise due diligence and good faith in determining the nature and source of all Solid Waste brought to the Southeast Landfill. SECTION 6.13. Weights and Measures Method. The Lessee shall weigh all Solid Waste received at the Southeast Landfill and shall maintain certified scales of sufficient size and quality to accurately weigh Solid Waste. The scales shall be in operation at all times during the Receiving Time, except to the extent due to an Uncontrollable Circumstance. The Lessee will provide software for operation of the scales. The Lessee shall have the scales checked, calibrated and certified not less than every six (6) months during the term of this Agreement by a reputable company approved by the City and the Lessee. The Lessee shall provide the City with advance notice of the date and time that the scales will be tested,and allow the City to have a representative present. The Lessee will arrange for the testing company to mail a copy of the test results directly to the City. For purposes of calculating(i)the Variable Rent due in any month or year for Non-City Waste that is not weighed, or(ii)the fee payable to the Lessee by the City for any day or part of a day pursuant to Section 8.3 for City Waste that is not weighed, cubic yards of compacted or uncompacted waste shall be converted to Tons based on historical data for the previous seven(7)day period and the volume of such Non-City Waste shall be converted to Tons. SECTION 6.14. Keeping of Premises. The Lessee shall keep the Southeast Landfill in a neat, safe and sanitary condition. SECTION 6.15. Hours of Operation. The Lessee shall operate the Southeast Landfill as permitted by State law and the Landfill Permits, and, to the extent permitted by the Landfill Permits, Applicable Law and interpretation of hours of operation by the Commission, shall keep the Southeast Landfill open for accepting deliveries during the hours of 8:00 a.m. to 5:00 p.m. Monday through Friday and 8:00 a.m. and 3:00 p.m. on Saturday, and may keep the Southeast Landfill open for longer hours if permitted by the Landfill Permits (the "Receiving Time"). SECTION 6.16. Reporting Requirements. The Lessee shall maintain and submit to the City accurate reports, which detail certain activity related to services and operations under this Agreement in a format approved by the City. These reports shall include data for all materials handled at the Southeast Landfill. Monthly reports shall include the following current data: 26 (i) Total Tons received by material type, i.e., City Waste, City Department Waste,Non-City Waste,and Special Waste, (ii) All State imposed fees or similar charges based upon received tonnages, (iii) Total Rent(identified by Base Rent,Variable Rent and Additional Rent), (iv) Alleged or actual violations of Applicable Law, (v) Written results of any State inspections or inspections by any Governmental Entity,and (vi) Such other information regarding the operations of the Southeast Landfill as the City may reasonably require from time to time. Annual reports shall report all the above data for each Operating Year, following the same format as the monthly report. In addition, the annual report shall specify the capacity of the Southeast Landfill or volume used during the past year and the estimated remaining permitted capacity of the Southeast Landfill. The Lessee shall perform an annual aerial or ground survey which meets industry standards to determine such available capacity or volume used during the preceding year and the results (including density calculations) shall be included in the annual report. Records shall be kept, as appropriate or customary, on a daily,weekly,monthly,cumulative monthly, annual and cumulative annual basis, and shall be available to the City upon request. The Lessee shall file reports with the City in a timely manner, but no less frequently than monthly, specifying all inspections by any regulatory Governmental Entity during the month of the report. Reports shall detail the nature and reasons for these occurrences as well as all results, findings and actions taken to resolve such incidents. Lessee shall also notify the City immediately of any fines or penalties levied and any actions that could have an adverse impact on the Lessee or the service to the City, or both. Failure to report such data shall be a default hereunder. Copies of any inspection reports, notices of Violations and correspondence from any regulatory agency regarding the Southeast Landfill shall be included with the monthly report. SECTION 6.17. Audited Financial Report. Not later than 120 days following the end of the Guarantor's fiscal year, the Lessee shall provide the City with audited financial reports of the Guarantor prepared by an independent certified public accountant or firm. SECTION 6.18. Records. The Lessee shall maintain records of all operations at the Southeast Landfill for the Term of this Agreement. The City shall have access at reasonable hours, upon reasonable notice,to all of the Lessee's records relating to the Southeast Landfill, and all papers and documents relating to the operation of the Lessee within the City limits. The City, in its sole discretion, may employ outside consultants to audit or verify the employment records and reports of the Lessee relating to the Southeast Landfill delivered pursuant to Section 6.16 and reports and correspondence with the Commission, to ensure compliance with Applicable Law and the Lessee's obligations and performance under the terms of this Agreement. The Lessee shall cooperate with the City, its officers, employees, agents or consultants, by making its employees and records relating to the Southeast Landfill available for the purposes of this Section. Notwithstanding any other provision of this Agreement, however, in no event shall Lessee be obligated to provide to the City financial information relating to the operations of the Lessee or any affiliate or subsidiary of the Lessee. SECTION 6.19. Duty to Maintain. The Lessee shall maintain the Southeast Landfill and all personal property and permanent improvements at the Southeast Landfill in a manner so as not to constitute a nuisance. In the event the Southeast Landfill or any permanent improvement or utility is damaged by fire or other casualty, regardless of the extent of such damage or destruction, the Lessee shall, within a reasonable time, but in any event, not more than one year from the date of such damage or destruction, commence the work of repair, reconstruction or replacement of the damaged or destroyed improvement or utility, and prosecute the same with reasonable diligence so that the improvement or utility shall be restored to substantially the condition it was in prior to happening of the casualty. Any payment of insurance proceeds shall be paid jointly to the Lessee and the City, and shall be used solely for the reconstruction,repair,or replacement of the damaged or destroyed improvement. 27 SECTION 6.20. Restoration. At the expiration or termination from any cause of the Agreement, all buildings and other permanent improvements at the Southeast Landfill shall be in working order, ordinary wear and tear excepted. Title to all permanent improvements or fixtures in the Southeast Landfill constructed by the Lessee during the term of this Agreement shall vest in the City upon termination on expiration of this Agreement, without the necessity of any compensation by the City. SECTION 6.21. Removal of Personal Property. At or before the expiration or termination from any cause of this Agreement, the Lessee shall remove any and all personal property placed thereon by the Lessee. Any property not so removed shall, at the City's option, become the property of the City or the City may cause the property to be removed at the Lessee's expense. SECTION 6.22. City Representative. The City shall designate a representative of the City to act as the City's liaison with the Lessee in connection with this Agreement. SECTION 6.23. City Employee Space. The Lessee shall permit employees of the City and the City's designated consultants and representatives to have access to the Southeast Landfill and surrounding area at all times during operating hours for purposes of inspection or for observation of the waste delivered to the Southeast Landfill and general landfill operations; provided, however, that the City's employees, consultants and representative(s) shall comply with all rules and regulations of the Lessee and shall not interfere with the operation of the Southeast Landfill. The Lessee shall provide space for at least one City employee to work in the scale house and one City employee to work in an on-site facility, including locking storage space, desk and chair and communication equipment. SECTION 6.24. Uncontrollable Circumstance affecting Lessee's Obligations. (A) The Lessee shall be excused for the failure to perform its obligations with respect to the Southeast Landfill if such failure results from the occurrence of an Uncontrollable Circumstance; provided, however, that the Lessee shall not be excused from its payment obligations under this Agreement. The Lessee 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. (B) Notice of an Uncontrollable Circumstance. The Lessee shall provide written notice of an Uncontrollable Circumstance to the City within a reasonable time, but not greater than 24 hours, of the Lessee'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, a separate notice shall provide such information not provided in the first notice): (i) a description of the Uncontrollable Circumstance that has occurred; and (ii) the effect, if any, or such Uncontrollable Circumstance on the Lessee's performance or other obligations under this Agreement. (C) Reinstatement of Ability to Perform. After the resolution of an Uncontrollable Circumstance and the restoration of services at the Southeast Landfill, the Lessee shall provide written notice of a reinstatement of services at the Southeast Landfill. The City shall reinstate (or shall cause reinstatement of) deliveries of City Waste to the Southeast Landfill as promptly as is reasonably practicable following receipt from the Lessee of written notice that the Southeast Landfill is able to resume acceptance of such City Waste, unless this Agreement shall have been previously terminated as provided herein, or shall have expired in accordance with its terms. SECTION 6.25. Transloading Operations. (A) Operation of the Lessee Transfer Station. (1)During any periods that the Southeast Landfill is unable to accept City Waste or City Department Waste, and the Lessee is excused from its obligations to 28 accept such waste at the Southeast Landfill, or (2)during any period prior to the 20`h anniversary of the Operation Commencement Date following the exhaustion of the useful life of the Southeast Landfill, the City may elect, in its sole discretion, to require the Lessee to: (i) accept a minimum of 1,500 Tons per day of the City's Acceptable Transload Waste at the Lessee Transfer Station to the same extent as the Lessee does for other third party providers of waste to the Lessee Transfer Station;(ii)permit removal of Acceptable Transload Waste from the Lessee Transfer Station by the City or its contractors; (iii)keep the Lessee Transfer Station open for receiving waste and allowing the transfer out of waste during the Lessee Transfer Station's ordinary business hours and days, and (iv)provide equipment, material and personnel deemed necessary by the Lessee to perform its obligations under Sections 6.25 through 6.30. Any change in the business hours and days of the Lessee Transfer Station shall not be effective with respect to the City until reasonable advance notice thereof is given to the City. All of the inbound Acceptable Transload Waste delivered by the City at the Lessee Transfer Station hereunder shall be weighed at the Lessee Transfer Station by the Lessee and such weight or measurement shall be conclusive on the parties. If a vehicle delivering Solid Waste for the City to the Lessee Transfer Station should become incapacitated or unable to move while on the Lessee Transfer Station's premises or blocks or inhibits ingress or egress therefrom, the Lessee may, but shall not be obligated to, provide assistance in moving the vehicle in such circumstances and the Lessee may charge the City its direct and indirect costs and expenses for doing so. If the Lessee assists in moving a City vehicle, the City will hold the Lessee harmless for any damage caused during such moving. The City further agrees to include in its contracts with private haulers collecting City Waste that if the Lessee assists in moving the hauler's vehicle,the hauler will hold the Lessee harmless for any damage caused during such moving. (B) Transloading Removal Operations. The City, or its designated contractor, shall remove from the Lessee Transfer Station an amount of waste equivalent to the amount of Acceptable Transload Waste delivered by the City to, and accepted by the Lessee at,the Lessee Transfer Station. The Lessee represents that any waste loaded into City trucks or vehicles of City Licensed Haulers on behalf of the City shall be clean waste consistent with Acceptable Transload Waste and agrees to hold the City harmless against any damages or liabilities resulting from Unacceptable Waste being loaded onto City vehicles or vehicles of City Licensed Haulers. On each day that Acceptable Transload Waste is delivered by or on behalf of the City to the Lessee Transfer Station, the City shall remove or cause to be removed an equal number of Tons of waste from the Lessee Transfer Station, in accordance with this subsection. Waste that the City removes in the manner described in this subsection(B)may be either waste delivered to the Lessee Transfer Station from other sources(including waste from Lessee's own hauling operations and other third party customers that may utilize the Lessee Transfer Station) or waste delivered to the Lessee Transfer Station by the City, which may or may not be commingled with waste delivered to the Lessee Transfer Station from other sources (including waste from the Lessee's own hauling operations). The City agrees that it has no right to remove for transfer out of the Lessee Transfer Station any waste which is specifically identified as having been delivered to the Lessee Transfer Station by or on behalf of the City. The Lessee shall be responsible for loading vehicles the City designates for accepting and transporting such waste to be removed from the Lessee Transfer Station. The City shall be responsible for arranging for such vehicles, as well as for the transportation of waste from the Lessee Transfer Station to the ultimate management destination designated by the City. The City shall bear all costs associated with such waste transportation. If the City fails to remove from the Lessee Transfer Station waste delivered by it or its contractor within 24 hours after notice from the Lessee, which would allow the City to take action,the Lessee may remove or cause to be removed such waste and transport it to an ultimate management destination chosen by the Lessee with the objective of minimizing cost to the City; the City shall reimburse the Lessee for all costs incurred by it in such removal, after submission by the Lessee to the City of a monthly invoice detailing tonnage so removed and transported and the costs incurred by the Lessee in doing so. (C) Procedures. Management of the City's Acceptable Transload Waste at the Lessee Transfer Station shall be regulated by Lessee's procedures applicable generally to its customers utilizing the Lessee Transfer Station as in force from time-to-time. (D) Title to Waste. Title to, and all risk of loss and responsibility for, Acceptable Transload Waste delivered to the Lessee Transfer Station by the City or its designee shall pass to Lessee at the time the waste material is accepted by Lessee and removed from the delivery vehicle at the Lessee Transfer Station. Title to waste material (delivered by or on behalf of the City) which does not conform to the definition of Acceptable Transload Waste, or waste which is otherwise not accepted by Lessee hereunder, shall remain with the City or the City Licensed Hauler, as applicable, and shall not be deemed to pass to Lessee. Title to, and all risk of loss and responsibility for, all waste loaded on the City's designated vehicles for transportation away from the Lessee 29 Transfer Station shall pass to the City at the time the waste material is loaded on such vehicles at the Lessee Transfer Station. SECTION 6.26. Delivery of Acceptable Transload Waste. The City represents that material delivered to the Lessee Transfer Station will be Acceptable Transload Waste and that it will not deliver or cause to be delivered to the Lessee Transfer Station any Unacceptable Transload Waste. The Lessee reserves the right to refuse waste delivered by the City to the Lessee Transfer Station until the City provides the Lessee with a current waste profile or characterization. The City shall promptly notify the Lessee of any information it obtains or has obtained indicating that Unacceptable Transload Waste was delivered to the Lessee Transfer Station. If a delivery of solid waste is made which contains both Acceptable Transload Waste and Unacceptable Transload Waste, then the entire delivery shall constitute Unacceptable Transload Waste if the Unacceptable Transload Waste cannot be separated from the Acceptable Transload Waste through the reasonable efforts of the Lessee, as the City's agent to cause such separation, and with the direct and indirect costs of such separation to be paid by the City upon request by the Lessee; provided, however, the Lessee will have the discretionary right to refuse to allow the delivery of any waste which does not conform to the requirements of this Agreement or any Applicable Law, even if only a part of the waste load is non-conforming(e.g., such waste is Unacceptable Transload Waste or acceptance by the Lessee of such waste would violate a Volume Restriction as defined below in Section 6.29). The City's activities hereunder, and all waste delivered by the City hereunder, shall be in compliance with all Applicable Laws relating to the collection and transportation of solid waste at the Lessee Transfer Station. Additionally, the Lessee will have the right to inspect all waste loads and make the final determination as to whether the waste delivered by the City to the Lessee Transfer Station is acceptable or unacceptable. SECTION 6.27. Rejection of Unacceptable Transload Waste. If the City delivers Unacceptable Transload Waste to the Lessee Transfer Station, the Lessee (i)at its sole option may reject acceptance of such Unacceptable Transload Waste at the City's expense, or (ii) if the Lessee does not discover such Unacceptable Transload Waste in time to reject and reload such Unacceptable Transload Waste and the Lessee has identified the truck of origin of such Unacceptable Transload Waste as that of the City or a City Licensed Hauler,the Lessee shall promptly notify the City of the delivery of such Unacceptable Transload Waste and include in such notice the time period during which such Unacceptable Transload Waste must be removed. The City may manage removal of such Unacceptable Transload Waste during such period if doing so will not materially interfere with the Lessee's operations, however, if City does not remove such Unacceptable Transload Waste in the appropriate time or can not do so without materially interfering with the Lessee's operations,the Lessee may, as the City's agent, and subject to the procedures set forth herein, remove such Unacceptable Transload Waste to a location fully authorized to accept such type of waste in accordance with all Applicable Laws and charge the City all direct and indirect costs incurred due to delivery of such Unacceptable Transload Waste. If after electing to manage the removal of such Unacceptable Transload Waste, the City does not arrange for the management and removal of the Unacceptable Transload Waste within the prescribed time period, the Lessee may arrange for such management and removal as the City's agent, without further notice to the City, and at the City's expense. Notwithstanding the foregoing, no notice to the City shall be required for the Lessee to manage Unacceptable Transload Waste as the City's agent in emergency situations where in the reasonable, good faith judgment of the Lessee a delay in such management would constitute a hazard to the Lessee Transfer Station or any person on, about or near the premises or a violation of law. The Lessee will use reasonable efforts to provide telephonic notice to the City that such emergency disposal will occur. SECTION 6.28. Waste Delivery Vehicles. The City shall deliver Acceptable Transload Waste to the Lessee Transfer Station, at its expense, in enclosed container vehicles or enclosed compactor vehicles which shall include, but not be limited to, properly covered(but not fully enclosed)rolloffs, complying with all Applicable Laws, the Permits held by or with respect to the operation of the Lessee Transfer Station, and the Lessee's applicable rules and procedures. SECTION 6.29. Transload Waste Volume. The Lessee reserves the right to refuse to accept any Acceptable Transload Waste delivered or deliverable by the City to the Lessee Transfer Station, if acceptance of such waste would, directly or indirectly, cause the Lessee to be out of compliance with, or in breach of, any volume limitations of any host agreement, permit, regulation, rule, order, directive, restriction, license or other applicable limitation imposed on the Lessee or the Lessee Transfer Station (collectively, a "Volume Restriction"). In determining whether to refuse to accept any Acceptable Transload Waste that is delivered or deliverable by the City 30 to the Lessee Transfer Station in order to comply with any such Volume Restriction, the Lessee must first accept the Acceptable Transload Waste delivered or deliverable to the Lessee Transfer Station by or on behalf of the City prior to accepting waste that is delivered or deliverable by or on behalf of the Lessee in determining whether the City's Acceptable Transload Waste would, directly or indirectly, cause the Lessee to be out of compliance with any Volume Restriction imposed on the Lessee or the Lessee Transfer Station. The Lessee shall not refuse to accept any Acceptable Transload Waste from the City due to a Volume Restriction to the extent the Lessee has first accepted waste from a third party. SECTION 6.30. Pricing for Transloading Operations. (A) Transload Fee. For Acceptable Transload Waste delivered by the City and accepted by the Lessee for processing at the Lessee Transfer Station pursuant to this Agreement, the City shall pay to the Lessee a fee ("Transload Fee") in the amount of$4.75 per ton of Acceptable Transload Waste delivered. The Transload Fee shall be calculated at the end of each month. The amount of the Transload Fee shall escalate in accordance with the Adjustment Factor in the same manner as the Base Rent. In addition to the Transload Fees, the City shall be responsible for payment of all Federal, State and local taxes and similar charges assessed as a result of the unloading of the City's waste at the Lessee Transfer Station (other than income tax assessed against the Lessee based upon the Transload Fees paid by the City under this Article VI). (B) Billing Procedure. The Lessee shall transmit an itemized invoice to the City of all charges hereunder on a monthly basis. The City shall pay all invoices within 30 days after receipt. In the event the City fails to make payment when due, any amount remaining unpaid shall bear interest at the Overdue Rate from such time to the actual date of full payment. The City is responsible for notifying the Lessee of any question concerning an invoice prior to its due date. If the City's account is 30 days past due, then the Lessee shall have the option to terminate its obligations under this Article IV (other than for the City's payment obligations hereunder)or to temporarily suspend the City's transloading privileges at the Lessee Transfer Station until the City's account (including all interest thereon) is brought current without terminating the provisions relating to the Lessee Transfer Station or otherwise affecting the remaining terms hereof. Suspension or termination of the City's transloading privileges shall not terminate or reduce the City's obligation to pay outstanding invoices (including all interest thereon). 31 ARTICLE VII USE AND OPERATION OF THE PREMISES SECTION 7.01. Operation of Southeast Landfill. At all times after the Operation Commencement Date the Lessee shall continuously operate the Southeast Landfill as a Type I Landfill and for no other purpose. The Lessee shall operate the Southeast Landfill in compliance with the Landfill Permits, and any future modifications thereof, and all other Applicable Law. It is the intent of the parties that the Lessee agree to operate, and the Lessee agrees to operate, the Southeast Landfill in a manner comparable to other first class publicly-and privately-operated landfills in the State of Texas and the United States. SECTION 7.02. Certain Lessee Obligations. In addition to any other obligations set forth herein, the Lessee shall furnish all labor, supervision, insurance, equipment, materials, supplies and all other items necessary to perform the services required. SECTION 7.03. Tipping Fee - Non-City Waste. The Lessee may charge all Persons that deliver Non-City Waste to the Southeast Landfill a tipping fee quoted on a per Ton basis as weighed in accordance with this Agreement. The tipping fee shall include all fees mandated by any Governmental Entity to be paid by any generator or transporter of Solid Waste to a landfill. The Tipping Fee for all Non-City Waste deposited at the Southeast Landfill shall not exceed $26.90 per Ton as of the Operation Commencement Date, subject to annual escalation in the same manner as Base Rent as set forth in Section 4.3. 32 ARTICLE Vill WASTE DELIVERY AND PAYMENT OBLIGATIONS OF THE CITY SECTION 8.01. City Waste and City Department Waste - Delivery Obligation. Starting on the Operation Commencement Date,the City shall(i)deliver all City Waste collected directly by City personnel, (ii)use all reasonable efforts to deliver all City Waste deposited at City Convenience Centers, and (iii)use reasonable efforts to cause to be delivered all City Waste collected by City Licensed Haulers, to the Southeast Landfill for Disposal. The City may deliver, or cause to be delivered, all City Department Waste to the Southeast Landfill. Notwithstanding the above, prior to April 1, 2003, the City shall have no obligation to deliver or cause to be delivered City Waste to the Southeast Landfill in excess of amounts of waste which would be delivered under existing waste collection practices. Nothing in this Agreement shall be construed as being a guarantee by the City of any minimum amount of Tons of City Waste that will be delivered to the Southeast Landfill, or of the composition of any City Waste or City Department Waste delivered to the Southeast Landfill. SECTION 8.02. Recycling Programs. Both the Lessee and the City understand that the City may establish, on its own initiative or in compliance with Applicable Law, recycling programs and other Solid Waste reduction programs, such as composting programs. Nothing contained in this Agreement shall be construed to prevent the City from establishing such programs, or diverting all or a portion of the waste stream collected by the City, its employees, agents or contractors, to Recyclables processors, Yard Waste processors,Type IV Waste, Bulky Waste, and C&D processors, purchasers of recycled materials or businesses that offer other alternatives to the burial of Solid Waste. SECTION 8.03. City Disposal Payments. During the first Operating Year, the City shall pay to the Lessee an amount equal to$12.00 for each Ton(which includes all governmentally imposed charges in existence as of the Contract Date for the generation, transportation, or Disposal of Solid Waste) of City Waste (but not City Department Waste) delivered to the Southeast Landfill or required to be delivered to the Southeast Landfill by the City or City Licensed Haulers pursuant to Section 8.1. In addition, the City shall pay to the Lessee such amount for each Ton of City Waste that is delivered for Disposal at locations other than the Southeast Landfill for reasons other than the Lessee's non-performance of its obligations under this Agreement or Uncontrollable Circumstances ("Lost Waste"). During each Operating Year after the first Operating Year, the City shall pay to the Lessee an amount equal to the per Ton charge payable during the preceding Operating Year, multiplied by the Adjustment Factor, for each Ton of City Waste (but not City Department Waste) delivered to the Southeast Landfill or required to be delivered to the Southeast Landfill by the City or City Licensed Haulers pursuant to Section 8.1, or constituting Lost Waste, during such Operating Year. The Adjustment Factor, when used with respect to the second and each subsequent Operating Year,shall be as set forth in Section 4.3. No charge (which includes all governmentally imposed charges in existence as of the Contract Date for the generation,transportation, or Disposal of Solid Waste)shall be payable by the City for City Department Waste collected by or on behalf of the City and delivered to the Southeast Landfill or Kennedale Department Waste delivered to the Southeast Landfill. The City shall have no obligation to make payments with respect to any City Waste which the Lessee is unable to or refuses to accept at the Southeast Landfill during the Receiving Time for any reason whatsoever other than rightful refusal to accept waste in accordance with this Agreement, or if access to the Southeast Landfill is unavailable for any reason other than rightful refusal to accept waste in accordance with this Agreement. SECTION 8.04. Invoices For Ciiy Disposal Payments; Payments by City. The Lessee shall submit a monthly report as set forth in Section 6.16 and invoice to the City within fifteen days following the end of each month during which amounts are due from the City pursuant to Section 8.3. The report and invoice shall (i) identify each vehicle by truck number that delivered City Waste to the Southeast Landfill; (ii) identify the weight of City Waste delivered; (iii) identify the date of delivery; (iv) identify the ticket number for each load received; and (v) identify monthly totals delivered by each vehicle. Any claims by the Lessee with respect to Lost Waste shall be identified in an invoice, together with evidence supporting such claim. The burden of proof with respect to any such claim shall be on the Lessee. All undisputed amounts set forth in an invoice that are payable by the City shall be due and payable not later than thirty (30) days following receipt of the invoice by the City. The City shall have the 33 right to set off against any payments due from the City to the Lessee pursuant to this Section any amounts that are payable to the City from the Lessee as Rent that remain unpaid as of the date such payment was due. SECTION 8.05. Adjustments to City Disposal Fees Due to Regulation. (A) If Applicable Law requires the Lessee to charge fees to generators or disposers of waste delivered to Solid Waste disposal sites generally in excess of amounts of such charges currently in effect, and such charges are applicable to City Waste delivered to the Southeast Landfill, such excess amount shall be passed through to the City as a Pass-Through Cost, and such amounts shall be billed separate and apart from the Disposal fees set forth in Section 8.3. (B) If a Mandate is imposed on the Lessee, such Mandate is not caused by the action or inaction of the Lessee, and if the Lessee has used all reasonable efforts to mitigate the cost effects of the Mandate, the reasonable cost of the Mandate allocable to the City Waste may be passed through to the City. The reasonable cost of the Mandate shall be pro rated between City Waste, City Department Waste and Non-City Waste based on the relative Tons of each that were delivered during the preceding Operating Year. The portion of such costs allocable to City Waste shall be pro rated among all Tons of City Waste. The City and the Lessee agree to negotiate in good faith concerning the necessity for a rate adjustment due to a Mandate. It is the intent of the parties that the Lessee be permitted to increase its rates to the City for City Waste by the actual amount needed to recover the cost of the Mandate allocable to the City Waste, without mark-up. To the extent there is a governmental action or Mandate that results in a reduction of costs to the Lessee, similar procedures shall be followed to determine a rate reduction for City Waste. (C) If the City and the Lessee cannot reach an agreement on the necessity or amount of any increase or decrease resulting from a Mandate, the parties agree to submit the matter to binding arbitration as follows. The parties shall request a list of seven arbitrators from the American Arbitration Association, and each party shall alternately strike one name from the list until one person is left on the list who shall serve as arbitrator. The arbitrator shall apply the laws of the State of Texas and enforce the terms of this Agreement as written. The parties agree to equally share in the cost of arbitration. The arbitration shall otherwise proceed under the rules of the American Arbitration Association. The arbitration shall proceed with reasonable promptness and a determination made without undue delay. 34 ARTICLE IX LANDFILL CLOSURE SECTION 9.01. Closure and Post-Closure of Southeast Landfill. (A) At the end of the Term, or when this Agreement is terminated by either party, the Lessee shall perform such services as are necessary to physically close the Southeast Landfill in accordance with Applicable Laws and the Landfill Permits then in effect. In addition, to the extent required under Applicable Law or the Landfill Permits, prior to the termination of this Agreement or the end of the Term, the Lessee shall perform Closure activities on a cell by cell basis to the extent practical to do so. The Lessee shall also provide all necessary post-Closure monitoring services and site maintenance, including, but not limited to surface water, leachate and landfill gas management, in accordance with Applicable Laws and the Landfill Permits then in force. (B) In the event that the Southeast Landfill contains unused capacity at the end of the Term, or upon termination of the Agreement, the City shall have the right, at its sole option,to keep the Southeast Landfill in operation and waive any Lessee Closure and post-Closure responsibilities. In such event, (i) the City shall have the right to use for its own purposes all amounts held pursuant to the Trust Instruments, and (ii) the City shall perform or cause to be performed the Closure and post-Closure activities otherwise required to be performed by the Lessee under this Agreement and under applicable Landfill Permits, and (iii) Lessee shall be released of any subsequent obligation to perform or cause to be performed the Closure and post-Closure activities which it would otherwise have been required to perform hereunder and under the applicable Landfill Permits (other then those responsibilities of the Lessee arising prior to the termination of this Agreement). SECTION 9.02. Funding of Closure/Post-Closure Costs. The Lessee acknowledges that, unless the City elects pursuant to Section 9.1(B)to waive the Lessee's Closure and post-Closure obligations, the Lessee is solely responsible for(i)the appropriate Closure and post-Closure maintenance of the Southeast Landfill and(ii)the establishment and funding of any reserve funds required by Applicable Law for the purpose of providing funds for the payment of costs of Closure of the Southeast Landfill (or any cell within) or post-Closure maintenance relating to the Southeast Landfill. In no event shall the City be responsible for paying any deficiencies in such required reserves for Closure and post-Closure activities of Lessee unless the City elects to perform Closure and post-Closure responsibilities as set forth in Section 9.1(B). In addition, the City shall have no responsibility to make any payments in the event that actual Closure and post-Closure costs relating to the Southeast Landfill exceed the amount reserved by the Lessee for Closure and post-Closure activities of the Lessee unless the City elects to perform Closure and post-Closure responsibilities as set forth in Section 9.1(B). If the City elects pursuant to Section 9.1(B) to waive the Lessee's Closure and post-Closure responsibilities, then the City shall be solely responsible for(i) the appropriate Closure and post-Closure maintenance of the Southeast Landfill following the termination of this Agreement, and (ii) the costs of Closure of the Southeast Landfill (or any cell within) or post-Closure maintenance relating to the Southeast Landfill which are in excess of the Closure Reserve Amount distributed to it out of the closure trust established by the Lessee arising following termination of this Agreement. SECTION 9.03. Closure/Post-Closure Trust — Third Party Trustee. (A) Determination of Closure Reserve Amount. Prior to the Operation Commencement Date and during the month prior to the commencement of each subsequent Operating Year, the Lessee or an engineering firm designated by the Lessee that is expert in landfill operations and management and is approved by the City (such approval not to be unreasonably withheld) shall estimate the Closure and post-Closure care costs at the Southeast Landfill and calculate the per Ton amount that must be set aside and reserved for such Closure and post-Closure care of the Southeast Landfill (the "Closure Reserve Amount")pursuant to Applicable Law. Such calculation shall be based on projected Tons of Solid Waste to be accepted at the Southeast Landfill during the applicable year and shall disregard any obligation of the City under Applicable Law to make up any deficiencies. The per Ton Closure Reserve Amount and projected total annual amount shall be submitted to the City for review. If the City does not concur with the amount set forth in the Lessee's submission to the City, the per Ton Closure Reserve Amount shall be submitted, at the City's election, either to the appropriate Governmental Entity for resolution or to arbitration in the same manner as is set forth in Section 8.5, and the determination of the Governmental Entity or the arbitrator, as the case may be, shall be final and binding on the Lessee and the City. 35 The Lessee shall develop and make available to the City a calculation model for computing the appropriate Closure Reserve Amount. Such model shall calculate the appropriate Closure Reserve Amount in accordance with Applicable Law. During the first day month of each Operating Year the Lessee shall update the calculation model to account for (i)money deposited under the Trust Instrument during the previous year, (ii)airspace consumed, (iii)Applicable Law, (iv)construction costs, (v)timing of Closure and post-Closure activities, and (vi)any other factors the Lessee and the City agree are relevant. Such updated model shall be used to compute a revised Closure Reserve Amount. The City understands and agrees that the model developed and provided in accordance with this paragraph will be based on the assumption that the landfill expansion contemplated by the Lessee is approved by the appropriate Government Entities, and that if such expansion is not fully approved the model will be revised to take into account the different circumstances. In such event, any excess funds deposited to the trust under the former model that are in excess of amounts required by the new model will be paid by the Third Party Trustee to the Lessee as a refund of overpayment of Additional Rent originally paid pursuant to Section 4.6(A) within twenty (20) Days following notice of the calculation of such amount to the City and Third Party Trustee by the Lessee. (B) Establishment of Closure Trust. Prior to the Operation Commencement Date the City shall select a commercial bank or trust company meeting the standards set forth in subsection 4.7(B) of the Trust Instrument,to act as trustee(the"Third Party Trustee")of funds constituting the Closure Reserve Amount. The City and the Third Party Trustee shall enter into a trust agreement (the "Trust Instrument") which will provide, among other things: (1) All amounts held by the Third Party Trustee under the Trust Instrument shall be held in trust for the benefit of the City and shall be applied only as permitted by the Trust Instrument. (2) Amounts held by the Third Party Trustee shall be invested only in securities issued or guaranteed by the United States Government or other securities that the City is legally permitted to invest City funds in and shall be invested at the direction of the City with the consent of the Lessee. (3) Investment earnings shall be retained and held by the Third Party Trustee under the Trust Agreement. (4) Funds held under the Trust Instrument may be used solely by the City to pay the Lessee for Closure and post-Closure expenses as they are incurred, upon submission of a requisition by the Lessee; provided that prior to making any such payments the Lessee shall obtain the approval of the City for the cost of such project(such approval not to be unreasonably withheld). (5) The Lessee shall not be entitled to be paid by the City from funds held under the Trust Instrument at any time material default as defined in Section 14.2(C)has occurred and is continuing. (6) Fees and expenses of the Third Party Trustee, and costs of establishing, implementing and maintaining the trust,shall be paid by the Lessee from funds not held under the Trust Instrument. (7) If the Lessee defaults in its Closure or post-Closure obligations, the City shall be entitled to use any funds held under the Trust Instrument, first for Closure and post-Closure costs, then for any other purpose. (8) If all Closure and post-Closure obligations of the Lessee have been performed by the Lessee, or if the Lessee and the City mutually agree that funds in excess of those that will be needed for payment by the City to the Lessee for Closure and post-Closure obligations of the Lessee are on deposit under the Trust Instrument,then the Lessee shall be paid such excess. Funds held under the Trust Instrument by the Third Party Trustee shall be funds of the City, not funds of the Lessee. The Trust Instrument shall be in substantially the form set forth in Appendix 7. 36 Until such time as the City assumes responsibility for and waives the Lessee's Closure and post- Closure obligations, the City shall not amend the Trust Instrument without the prior written consent of the Lessee, provided the Lessee agrees that such consent shall not be unreasonably withheld if the proposed Amendment does not adversely affect any right,power or authority of the Lessee. SECTION 9.04. Preservation of Landfill Integrity. If, after termination of this Agreement and during post-Closure development activities, the City causes damage to cover material placed over any portion of the Southeast Landfill which the Lessee(i)operated, (ii)agreed to monitor, or(iii)has otherwise contractually agreed to indemnify the City, the City will be responsible for repairing such damage. The City's obligation in this Section shall run to any successor in interest of the City. 37 ARTICLE X INSURANCE AND INDEMNITY SECTION 10.01.Insurance. During the Term of this Agreement, the Lessee shall maintain, at its own expense,the following policies of insurance: (A) Comprehensive General Liability Insurance. Comprehensive general liability insurance in the amount of Two Million Dollars ($2,000,000)per occurrence with an aggregate of Five Million($5,000,000), combined single limit, including property damage and personal injury coverage, during the Term of the Agreement (including any Renewal Term), in order to protect and save the City harmless against any and all claims for damage to Persons,or property arising from the collection,transport,processing or Disposal of Solid Waste. (B) Excess Commercial General Liability. Excess Commercial General Liability in the amount of Ten Million Dollars($10,000,000),during the Term of the Agreement(including any Renewal Term). (C) Comprehensive Automobile Liability Insurance. Comprehensive Automobile Liability Insurance with respect to both personal injuries and property damage in the amount of Two Million Dollars ($2,000,000) per occurrence combined single limit, during the Term of the Agreement (including any Renewal Term). (D) Worker's Compensation Insurance. Worker's Compensation Insurance, including Occupational Disease and Employer's Liability Insurance, during the Term of the Agreement, (including any Renewal Term) and Closure and post-closure activities, in statutory amounts and coverages as required by Texas Workmen's Compensation and Occupational Disease Laws. (E) Environmental Impairment Liability Coverage. Lessee shall additionally purchase and maintain in force for the duration of the Agreement insurance for environmental pollution liability applicable to bodily injury, property damage, including loss of use of damaged property or of property that has not been physically injured or destroyed; cleanup costs; and defense or settlement of claims; all in connection with any loss arising from the insured site. Coverage shall be maintained in an amount of at least$10,000,000 per loss. General Requirements and/or Policy Endorsements: • The City, its officers, employees and volunteers shall be named as an Additional,Named Insured. The additional, named insured status, however, does not apply to Workers' Compensation policies. • The insurance shall not be limited in scope or coverage, cancelled or non-renewed, until after thirty(30)days prior written notice has been given to the City. • Waiver of rights of recovery(subrogation)shall be in favor of the City. • Insurers shall waive any applicable coinsurance rights. The insurers for all policies must be licensed/approved to do business in the State of Texas and have a minimum rating of A: VII in the current A.M. Best Key Rating Guide or have reasonably equivalent financial strength and solvency to the satisfaction of the City's risk management department. If insurance policies are not written for specified coverage limits, an Umbrella or Excess Liability insurance for any differences is required. Excess Liability shall follow form of the primary coverage. I.- coverage is underwritten on a claims-made basis,the retroactive date shall be coincident with or prior to the date of the contractual agreement and the certificate of insurance shall state that the coverage is claims- made and the retroactive date. The insurance coverage shall be maintained for the duration of the contractual 38 agreement and for five (5)years following completion of the service provided under the contractual agreement. An annual certificate of insurance submitted to the City shall evidence such insurance coverage. 1. The deductible or self-insured retention (SIR)affecting required insurance coverage shall be acceptable to the Risk Manager of the City in regards to asset value and stockholders' equity. In lieu of traditional insurance, alternative coverage maintained through insurance pools or risk retention groups must also be approved. 2. The City, acting in its reasonable discretion, reserves the right to review the insurance requirements and to make reasonable adjustments to insurance coverages and their limits when deemed necessary and prudent by the City based upon changes in statutory law, court decision or the claims history of the industry as well as of the contracting party to the City. The City shall be required to provide prior notice of ninety(90)days. 3. The City shall be entitled, upon request and without expense, to receive copies of policies and endorsements thereto and may make any reasonable requests for deletion or revision or modifications of particular policy terms, conditions, limitations, or exclusions except where policy provisions are established by law or regulations binding upon either party or the underwriter on any such policies. (F) Policy Approvals. The Lessee, before execution of this Agreement by the City, shall file with the City Attorney, for his/her approval, a certificate of insurance for each and every insurance policy required by the terms of this Agreement with the City. The certificates shall contain the following express obligation: This is to certify that the policies of insurance described herein have been issued to the insured for whom this certificate is executed and are in force at this time. In the event of cancellation in a policy affecting the certificate holder,thirty(30) calendar days prior written notice shall be given to the certificate holder. (City will not accept policies in which the insurer has "endeavor to notify" notice language.) SECTION 10.02.Indemnity. (A) The Lessee shall indemnify and hold harmless the City and its officers, agents, servants, and employees from and against any and all suits, actions, legal proceedings, claims, demands, damages, assessments, costs, expenses, and attorneys' fees ("Claims") to the extent resulting from an act or omission of the Lessee, its officers, agents, servants, employees or subcontractors in the performance of this Agreement. The Lessee shall not, however, be obligated to indemnify the City for any suit,action, legal proceeding, claim, demand, damage, cost, or expense arising from a negligent act or omission or the willful misconduct of or willful failure to act by the City, its officers,agents,servants or employees. (B) Indemnity from Environmental Assessments or Claims. The Lessee shall indemnify and hold harmless the City from and against any and all Claims brought by any Persons which are(1)connected with the operation, Closure, or post-Closure care of the Southeast Landfill or other Solid Waste facility owned, leased or utilized by the Lessee which is utilized in the transportation or storage of waste which is deposited by the Lessee or the City in the Southeast Landfill during the Term of this Agreement or any cleanup costs at the Southeast Landfill or other Solid Waste facility resulting from the transportation or storage of waste which is or has been deposited by the Lessee or the City in the Southeast Landfill, and(2)associated with environmental contamination at or resulting directly from the Southeast Landfill, whether such contamination or alleged contamination is air, soil, ground water or surface water contamination as determined by the governing Governmental Entity. (C) Retroactive Application. The indemnity and hold harmless provisions set forth in subsection(B) of this Section extend not only to claims and assessments occurring during the time the Lessee operates the Southeast Landfill but also apply retroactively to claims and assessments with regard to the Southeast Landfill during the time it was operated by the City or the City's contractor. (D) Application to Surrounding Property. The indemnity of subsection (B)extends to claims and assessments relating not only to the Southeast Landfill proper(whether used by the Lessee or previously by the City) but also to claims or assessments arising out of the surrounding area where runoff, leachate, other infiltration 39 or gas migration may have occurred. The purpose of this paragraph is to make the Lessee responsible for all claims or assessments relating to the site of landfills, transfer stations, or other Solid Waste facilities which are used by the Lessee in order to perform its obligations relating to the Southeast Landfill under this Agreement (but not other landfills, transfer stations or other Solid Waste facilities unrelated to and not used in connection with the performance by Lessee of its obligations under this Agreement), both during the time such sites were used either by the Lessee, or previously used by the City or its contractor. This section does not make the Lessee liable for any site never used,closed,managed or monitored by the Lessee under the terms of this Agreement. (E) The provisions of this Section shall survive the termination or expiration of this Agreement. 40 ARTICLE XI SECURITY SECTION 11.01.Guarantor. (A) Guaranty Agement. The Lessee shall cause the Guaranty Agreement to be provided and maintained by the Guarantor during the Term hereof substantially in the form attached hereto as Appendix 2. (B) Annual Reports. In the event the Guarantor is no longer required to make filings with the Securities and Exchange Commission, the Lessee shall furnish the City, within one hundred twenty(120) days after the end of each fiscal year of the Guarantor, audited year end consolidated financial statements for the Guarantor reported upon by the Guarantor's independent public accountant. SECTION 11.02.Bonds. (A) Performance Bonds. On or before the Contract Date, the Lessee shall provide the City(in care of the City Attorney's Office) financial security for the performance of its obligations hereunder through a Performance Bond issued by a surety company: (1)approved by the City having a rating of"A" in the latest revision of the A.M. Best Company's Insurance Report; (2)listed in the United States Treasury Department's Circular 570, "Companies Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and as Acceptable Reinsurance Companies"; and (3)properly registered and licensed to conduct business in the State. The Performance Bond shall be issued in the name of the Lessee and the City in the amount equal to $4,000,000, subject to annual escalation as set forth in Section 4.3. Such Performance Bond (or a replacement performance bond) shall remain open until the termination of the Agreement. The Lessee may renew and pay for the Performance Bond on an annual basis. (B) Monitoring of Sureties. The Lessee shall be responsible throughout the Term of this Agreement for monitoring the financial condition of any surety company issuing bonds under this Agreement and for making inquiries no less often than annually to confirm that each such surety company maintains at least the minimum rating level specified in this Section. In the event the rating of any issuing surety company falls below such minimum level, the Lessee shall promptly notify the City of such event and shall promptly furnish or arrange for the furnishing of a substitute or an additional bond of a surety company whose rating and other qualifications satisfy all of above requirements, unless the City agrees to accept the surety company or agrees to an alternative method of assurance. Upon such notice by the Lessee of such an event, the City shall not unreasonably withhold its approval of such assurance. In addition, the surety company must provide the City with ninety(90) days' notice of non-renewal of the Performance Bond for an additional annual term. SECTION 11.03.Letter of Credit. (A) Terms and Purpose. In lieu of providing a Performance Bond the Lessee may provide a letter of credit as follows. The letter of credit shall be an irrevocable direct pay letter of credit issued by a United States bank whose long-term debt is rated"A" or better by either Rating Service and which maintains a banking office in the State(the"Letter of Credit"). The Letter of Credit shall be in the stated amount equal to (1)one year's estimated Rent payments to the City, as set forth in Section 11.2. Upon the City's determination that the Southeast Landfill has only two (2) years' capacity remaining, the stated amount shall be equal to the amount that would be covered by the Performance Bond pursuant to Section 11.2. The Letter of Credit shall be for a term of one year, shall be continuously renewed, extended or replaced so that it remains in effect until 180 Days after the termination of the Agreement, and shall be issued substantially in the form set forth in Appendix 4, subject to reasonable modifications required by the issuing bank at the time of issuance. Such modifications shall be subject to the City's approval, which approval shall not be unreasonably withheld, and the City shall have the right to request the Lessee to find a replacement issuing bank if the City does not approve of such modifications. The City shall be authorized under the Letter of Credit to make one or more sight drawings thereon upon certification to the issuing bank that the drawing conditions described in subsection (B) of this Section have occurred. The Letter of Credit shall permit a drawing thereon in the full stated amount thereof in the event that any required renewal, extension or replacement thereof is not made prior to thirty(30)days of its expiration. The Letter of Credit shall serve as security for the performance of the Lessee's obligations hereunder, and the stated amount thereof shall in no way limit the amount of damages to which the City may be entitled for any Lessee Event of Default hereunder. 41 (B) Conditions to Drawing. It shall be a condition to the right of the City to draw on the Letter of Credit delivered pursuant to this Section 11.3, other than a draw based on a failure to renew, extend or replace the Letter of Credit or based on a bankruptcy-related event,that: (1)the City(a)has given the Lessee written notice of a breach of this Agreement, whether or not such breach constitutes an Event of Default, and attached a copy of its good faith assessment of the damages the City has suffered as a result of such breach, or(b)has given a notice of termination based on an Event of Default and attached a copy of its good faith assessment of the damages the City has suffered as a result of such breach; (2)the City Council by official action, taken not less than thirty(30) days following such notice and in the same manner as required for the adoption of a resolution, determines that the Lessee has breached this Agreement without excuse hereunder; and (3)the Lessee has had an opportunity to present to the City at or prior to such meeting evidence disputing the City's assertion of breach or assessment of damages, Upon the satisfaction of the conditions set forth in the preceding sentence, the City shall have the right to draw the amount of damages so assessed. (C) Effect of Final Determination of Damages. In the event that subsequent to any drawing on the Letter of Credit it is determined by any court of competent jurisdiction in a fmal non-appealable decision that such drawing was in excess of the amount of damages determined to be due to the City by the court, the City shall pay the amount wrongfully drawn in excess of the amount determined by the Court to the Lessee together with interest thereon at the Overdue Rate calculated from the date of the drawing to the date of payment to the Lessee. SECTION 11.04.Cost of Providing Security for Performance. The cost and expense of obtaining and maintaining the security instruments required under this Article as security for the performance of the Lessee's obligations hereunder shall be borne by the Lessee without reimbursement from the City. 42 ARTICLE XII COVENANTS AND WARRANTIES SECTION 12.01.Representations and Warranties of Each Party. Each party represents and warrants to the other as of the Contract Date (and such representations and warranties as of the Contract Date shall survive the termination or expiration of this Agreement),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 Agreement. (B) The execution and performance of this Agreement (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. (C) The execution of this Agreement and the performance of all obligations set forth herein do not conflict with, and will not, with the passage of time or the giving of notice, constitute a breach of or event of default under any charter, ordinances(with respect to the City)or resolutions of the party,or any contract, indenture, mortgage, bond, instrument or Applicable Laws to which the party is subject or by which such party is bound. This Agreement 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. (D) 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 Agreement, or any other contract or instrument entered into by the party in connection with the transactions contemplated hereby. SECTION 12.02.Additional Representations of the City. The City further represents and warrants to the Lessee as of the Contract Date (and such representations and warranties as of the Contract Date shall survive the termination or expiration of this Agreement) that: (A; The City is duly qualified and authorized to carry on the governmental functions and operations contemplated by this Agreement, and the City has the power, authority and legal right to enter into and perform its obligations set forth under this Agreement. (B) The execution, delivery and performance of this Agreement by the City (i)has been duly authorized by the governing body of the City, (ii)has been approved by all governmental bodies and/or regulatory agencies whose approval is required pursuant to the laws of the State, (iii)does not require any consent,approval or referendum of voters, and (iv)will not violate any judgment, order, law or regulations applicable to the City or any provisions of the City's charter ordinances or resolutions. (C) The City is the lawful owner of the Southeast Landfill, and the City will defend title and possession to the same against all claims whatsoever. (D) As of the Contract Date, the City Manager, the City Attorney, the Director of the Department of Environmental Management, and the Landfill Manager are not personally aware of any 43 environmental claims filed against the City in connection with the operation of the Southeast Landfill or conditions which would subject the Southeast Landfill to remedial action or liability under Environmental Laws. SECTION 12.03.Covenant of Lessee. The Lessee shall promptly notify the City of any action or action which is proposed in writing of which it has knowledge or the occurrence of any event of which it becomes aware, or which could reasonably be expected, lead to the revocation or suspension of any Landfill Permits or Government Approvals. SECTION 12.04.Liens. The Lessee shall not suffer or permit any vendor's, mechanic's, laborer's or materialman's statutory or similar lien to be filed against the Southeast Landfill or any interest of the City or the Lessee therein by reason of work, labor, services or materials supplied or claimed to have been supplied to the Lessee or anyone holding the Southeast Landfill or any part thereof through or under the Lessee (including but not limited to work, labor, services or materials supplied in connection with the Landfill Expansion any other work performed at or relating to the Southeast Landfill). If any such lien shall at any time be filed, the Lessee shall, within forty-five (45) days after notice of the filing thereof, cause the same to be discharged of record by payment, deposit, bond, order of a court of competent jurisdiction or as otherwise permitted by law. If the Lessee shall fail to cause such lien to be discharged within the period aforesaid, then, in addition to any other right or remedy of the City, the City may, but shall not be obligated to, discharge the same either by paying the amount claimed to be due or by procuring the discharge of such lien by deposit or by bonding proceedings,and in any such event the City shall be entitled, if the City so elects, to compel the prosecution of an action for the foreclosure of such mechanic's lien by the lienor and to pay the amount of the judgment for and in favor of the lienor with interest, cost and allowances. Nothing contained in this Agreement shall be deemed or construed in any way as constituting (i)the consent of the City to the filing of any such lien on the City's interest in the Southeast Landfill or this Agreement or(ii)the consent or request of the City, express or implied by inference or otherwise, to any contractor, subcontractor, laborer or materialman or the performance of any labor or the furnishing of any materials for any specific improvement, alteration or repair of the Southeast Landfill or any part thereof, nor as giving Lessee a right, power or authority to contract for or permit the rendering of any services or the furnishing of any materials that would give rise to the filing of any such liens against the Southeast Landfill. Any amounts paid by the City pursuant to this Section 12.4 shall be reimbursed by Lessee to the City upon demand. SECTION 12.05.No Warranties. The Lessee agrees that, except as expressly contained in this Agreement, no representations, statements or warranties, express or implied, have been made by or on behalf of City, in respect of the Southeast Landfill, the transaction pursuant to which City has leased the Southeast Landfill to the Lessee, or the laws applicable to this transaction, or any imposition payable with respect to the Southeast Landfill, and that the Lessee has relied on no such representations, statements or warranties and that the City shall in no event whatsoever be liable by reason of any claimed misrepresentations,misstatements or breach of warranties. 44 ARTICLE XIII DAMAGE, DESTRUCTION TO SOUTHEAST LANDFILL SECTION 13.0 1. Damage to or Destruction of all or any Portion of the Southeast Landfill. In case of damage to or destruction of the Southeast Landfill by fire or any other cause, similar or dissimilar, insured or uninsured, the Lessee shall promptly, at its sole cost and expense, restore, repair, replace or rebuild the Southeast Landfill as nearly as practicable to the value, condition and quality existing immediately prior to such damage or destruction. Such restoration,repairs,replacements or rebuilding shall be prosecuted with due diligence and in good faith, and in accordance with the requirements of this Agreement, including, without limitation, Article 10. If insurance proceeds, if any, are less than the cost of any restoration, repairs, replacement or rebuilding required by this Agreement,then the Lessee shall pay any deficiency. SECTION 13.02.Lyo Abatement. The Lessee's responsibility to pay Rent, or other payments for waste delivered to the Southeast Landfill, and Lessee's obligation to perform all other covenants and agreements under this Agreement, shall not be affected by any such damage to or destruction of the Southeast Landfill, and the Lessee hereby waives the provisions of any statute or law now or hereafter in effect that would otherwise relieve the Lessee from such obligations. 45 ARTICLE XIV EVENTS OF DEFAULT AND REMEDIES SECTION 14.01.Remedies for Breach. The parties agree that, except as otherwise provided in Sections 14.2, 14.4 and 14.5 with respect to termination rights, in the event that either party breaches this Agreement,the other party may exercise any legal rights it has under this Agreement, under the security instruments and 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. Neither party shall have the right to terminate this Agreement for cause except upon the occurrence of an Event of Default. In the event either party shall have the right to terminate this Agreement as provided herein, this Agreement may be terminated (except by expiration of the Term of this Agreement) only by a written instrument of termination executed by the appropriate party and delivered to the non-terminating party. SECTION 14.02.Events of Default by the Lessee. (A) The following shall constitute Events of Default on the part of the Lessee except to the extent caused by the occurrence of an Uncontrollable Circumstance or City Fault: (1) failure by the Lessee to timely perform any material obligation under the terms of this Agreement, except the obligations which are described in subsection 14.2(A)(2) hereof, and the continuance of such failure for a period of thirty (30) days after written notice thereof has been provided by the City specifying such failure and requesting that such condition be remedied or such longer time as is required to remedy such failure if Lessee promptly initiated and is diligently pursuing reasonable actions to cure such non performance;or (2) failure to pay amounts which are owed by the Lessee to the City under the terms of this Agreement within ten (10) days following the receipt of written notice from City that amounts are due and payable,giving due regard to the provisions of 14.6 hereof;or (3) (i) the Lessee's 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; (ii) a bankruptcy winding up, reorganization, insolvency, arrangement, or similar proceeding instituted by the Lessee, under the laws of any jurisdiction or against the Lessee, if the Lessee does not take appropriate action to dismiss said proceedings, which proceeding has not been dismissed within ninety (90) days of the institution of such proceeding; (iii) any action or answer by the Lessee approving of, consenting to, or acquiescing in, any such proceeding; or (iv) the event of any distress, execution, or attachment upon the property of the Lessee which shall substantially interfere with its performance hereunder;or (4) failure of the Guarantor to perform any obligation under the Guaranty in a timely manner. (B) If an Event of Default by the Lessee occurs and is not cured as provided herein, then the City shall have the right without further notice to terminate this Agreement, and at the City's option, the City may proceed against the surety on the Performance Bond, the Letter of Credit, the Guaranty Agreement, and any other guaranty provided by the Lessee. (C) For the purposes of this Section 14.2, the following acts or omissions by the Lessee shall constitute failure to perform material obligations under this Agreement: (1) failing to comply with its obligations under this Agreement relating to keeping the Southeast Landfill property permitted and operated materially in accordance with Federal, State, or local laws rules,permits or regulations; (2) failing to pay the monthly Base Rent, monthly Variable Rent, any Additional Rent due, any payment into the Closure-post-Closure Trust or late charge, or any payment of a governmentally 46 imposed charge relating to the Southeast Landfill to the appropriate Government Entity where applicable, as required herein; (3) refusing to accept Solid Waste meeting the requirements of this Agreement; (4) failing to use all commercially reasonable efforts to obtain all necessary Landfill Expansion permit application filings, design work and/or document preparation and submittal to the appropriate regulatory agencies; (5) failing to maintain, or provide the City with timely evidence of,the Performance Bond or the Letter of Credit in the amounts or form required herein; (6) failing to maintain, or provide the City with timely evidence of, insurance in the amounts or form required herein; (7) failing to indemnify the City as required herein; (8) falsifying of(but not unintentional mistakes in) records or reports provided to the City, State or Federal governments;or (9) failing to maintain and monitor in accordance with the requirements of this Agreement and of Applicable Laws the Southeast Landfill during Closure and post-Closure as required herein. (D) Notice of Corrective Action. City shall, as soon as practical, notify the Lessee of any failure on the Lessee's part to abide by the terms and conditions of this Agreement. After receipt of notice from the City,the Lessee shall acknowledge receipt of such notice within 7 days and within 7 days shall provide the City with notice of what corrective action has or shall be taken by the Lessee, within a period of time that is reasonable, in light of the circumstances. Failure to promptly provide acknowledgment of receipt of notice, or notice of planned corrective action as required by this subsection(D)shall constitute an Event of Default. SECTION 14.03.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 Lessee Fault: (1) failure by City to timely perform any material obligation under the terms of this Agreement,except the obligations which are described in Section 14.3(A)(3)hereof,and the continuance of such failure for a period of thirty (30) days after written notice thereof has been provided by Lessee specifying such failure and requesting that such condition be remedied or such longer time as is required to remedy such failure if the City promptly initiated and is diligently pursuing reasonable actions to cure such non-performance; (2) failure to pay (or credit) amounts which are owed by City to the Lessee under the terms of this Agreement within thirty (30) days following the time same becomes due and payable, giving due regard to the provisions of Section 14.6 hereof,or (3) (i) 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; (ii) 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 proceeding has not been dismissed within ninety (90) days of the institution of such proceeding; (iii) any action or answer by City, approving of, consenting to, or acquiescing in, any such proceeding; or (iv) the levy of any distress, execution or attachment upon the property of City, which shall substantially interfere with its performance hereunder. 47 SECTION 14.04.Remedies of City. (A) The right of termination provided under Section 14.2(B) upon an Event of Default by the Lessee is not exclusive. If this Agreement is terminated by the City for an Event of Default by the Lessee, the City shall have the right to pursue a cause of action for actual damages and to exercise all other remedies which are available to it under this Agreement, under the security instruments and under Applicable Law. Without limiting the foregoing, upon any termination of the Lessee for an Event of Default the damages payable by the Lessee to the City shall include the reasonable costs of (i) making all repairs and replacements to the Southeast Landfill, (ii)remediating any public health and safety problems, and(iii) paying all unpaid fines and penalties payable to any Governmental Entity, in each case to the extent such actions are necessitated or costs incurred as a result of the breach of this Agreement by the Lessee. (B) An Event of Default described in Section 14.2(A)(3)hereof may be waived by the City if the City determines, in its sole discretion,that the Lessee will be able to perform its obligations pursuant to the terms of this Agreement and that adequate guarantees for such performance exist. (C) In the event that the City successfully pursues an action to enforce any remedy provided in this Article XIV, the Lessee shall be liable to the City for payment of all costs and expenses which are incurred by the City in connection with such action. (D) This Section shall survive termination of this Agreement. SECTION 14.05.Remedies of Lessee. The City and the Lessee agree that the remedies for the occurrence of an Event of Default by the City under the terms of Section 14.3 hereof shall be (i) a suit seeking performance by the City of the provisions of this Agreement, including the performance by the City of its obligations hereunder and its obligations to make payment of any and all payments,credits or adjustments which are provided under the terms of this Agreement, and such ancillary equitable remedies attendant to the enforcement of a decree, judgment or order for such performance; or (ii) with respect to any default for which payments, credits or adjustments are not provided under the terms of this Agreement, a suit seeking payment of damages at law; or(iii) termination of this Agreement and a suit seeking payment of damages at law. (A) An Event of Default described in Section 14.3(A)(3)hereof may be waived by the Lessee if the Lessee determines, in its sole discretion, that the City will be able to perform its obligations pursuant to the terms of this Agreement and that adequate guarantees for such performance exist. (B) In the event that the Lessee successfully pursues an action to enforce any remedy provided in this Article XIV, the City shall be liable to the Lessee for payment of all costs and expenses which do not amount to a waiver of the City's sovereign immunity and are incurred by Lessee in connection with such action. (C) This Section shall survive termination of this Agreement. SECTION I4.06.Payment Disputes. If a party disputes any amount that is payable under this Agreement, the party disputing such amount shall provide written notice to the other party of such disputed amount, together with sufficient information to enable the other party to understand the nature of the dispute. Such notice shall be delivered by the party disputing such amount no later than the date that such amount is due and payable (or, if later, within ten (I0) days after the date on which the disputing party has information necessary to determine that it has a dispute) and (as applicable) the party disputing such amount shall make payment of any undisputed amount on the due date thereof. If the amount that is in dispute is ultimately determined to be due and payable, such disputed amount, together with interest thereon (at the Overdue Rate) shall be paid by the party disputing such amount within ten(10)business days. SECTION 14.07.Cumulative Remedies. The rights and remedies granted in this Agreement to the City and the Lessee upon an Event of Default are cumulative, and the exercise of such rights shall be without prejudice to the enforcement of any other right or remedy authorized by law or this Agreement. No waiver of any breach or default shall be deemed or construed by a court of law or an arbitrator to constitute a waiver of any other 48 breach or default or of any other breach or default of any of the other terms, provisions, and covenants contained herein. SECTION 14.08.Uncontrollable Circumstance. Neither the Lessee 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 an Uncontrollable Circumstance persists for more than thirty (30) days, or if after its cessation, the Lessee is unable to render full or substantial performance for a period of thirty(30)days,or if full or substantial performance can not be rendered within thirty (30) days and Lessee has failed to initiate and diligently take all necessary remedial action, the City may terminate this Agreement by giving the Lessee seven (7) days' advance written notice. If after pursuing all reasonable efforts to remedy the effects of an Uncontrollable Circumstance the Lessee determines that it is unable to do so, either (i) the Lessee and the City may agree on appropriate modifications to the performance obligations under this Agreement or(ii) if the Lessee and the City do not agree on appropriate modifications,the City may terminate this Agreement. SECTION 14.09.Obligations of the Lessee upon Termination or Expiration. (A) Upon a termination of the Lessee's right to perform this Agreement under Section 5.2, 14.2, 14.3, 14.4, 14.5 or 14.8 or upon the expiration of this Agreement under Section 3.1,the Lessee shall: (1) stop the Disposal services on the date and to the extent specified by the City; (2) promptly take all commercially reasonable action to protect and preserve all materials, equipment,tools,facilities and other property that belongs to the City; (3) promptly remove from the Southeast Landfill all equipment, implements, machinery, tools, temporary facilities of any kind and other property owned or leased by the Lessee (including, but not limited to sheds, trailers, workshops and toilets), and repair any damage caused by such removal; (4) leave the Southeast Landfill in a neat and orderly condition; (5) subject to subsection (B) of this Section, promptly remove all employees of the Lessee and any subcontractors and vacate the Southeast Landfill; (6) deliver to the City all computer data used at the Southeast Landfill in the performance of Disposal services, including all revisions and updates thereto; (7) deliver to the City a copy of all books and records in its possession relating to the performance of the Disposal services subject to Section 6.19; (8) deliver to the City current maps of the Southeast Landfill; (9) provide the City with a list of all files, and access and security codes with instructions and demonstrations which show how to open and change such codes; (10) advise the City promptly of any special circumstances which might limit or prohibit cancellation of any subcontract; (11) promptly deliver to the City copies of all subcontracts,together with a statement of: (a) the items ordered and not yet delivered pursuant to each agreement; (b) the expected delivery date of all such items; (c) the total cost of each agreement and the terms of payment;and 49 (d) the estimated cost of canceling each agreement; (12) assign to the City any subcontract that the City elects in writing, at its sole election and without obligation, to have assigned to it. The City shall assume, and the Lessee shall be relieved of its obligations under,any subcontract so assigned; (13) terminate all subcontracts which the City has not directed the Lessee to assign, and make no additional agreements with subcontractors; (14) as directed by the City, transfer improvements to the scale house to the City by appropriate instruments of title; (15) promptly transfer to the City all warranties given by any manufacturer or subcontractor with respect to particular components of the Agreement or the equipment; (16) notify the City promptly in writing of any legal proceedings against the Lessee by any subcontractor or other third parties relating to the termination of the Agreement or disposal services (or any subcontracts); (17) give written notice of termination, effective as of date of termination of this Agreement, promptly under each policy of insurance required under Section 10.1 (with a copy of each such notice to the City), but permit the City to elect to continue such policies in force thereafter at its own expense, if possible; and (18) take such other actions, and execute such other documents as may be reasonable and necessary to effectuate and confirm the foregoing matters. (S) Hiring of Lessee Personnel. Upon the termination or expiration of this Agreement under any provision hereof, the City or any successor operator of the Southeast Landfill designated by the City shall have the right to offer employment on any terms it may choose to the General Manager, Site Manager, or any other Lessee employee employed full-time at the Southeast Landfill. No Lessee employment agreement,job offer, letter or similar document may contravene this right. The City or its designated successor operator shall extend any such job offer within thirty (30) days of the expiration or termination of this Agreement. The Lessee shall assist and cooperate with any such employee transition. (C) Continuity of Service. Upon the termination of the Lessee's right to perform this Agreement under Section 4.4 (L), 5.2 or Article XIV or upon the expiration of this Agreement under Section 3.1 or 3.2, the Lessee, at the request and direction of the City, shall provide for an effective continuity of service and the smooth and orderly transition of management back to the City. Such service shall be for a period of up to ninety (90) days and shall include providing advice and support and delivering any plans, drawings, blueprints, operating manuals, spare parts or other information useful or necessary for the City to perform Disposal services. SECTION 14.10.No Consequential or Punitive Damages. In no event shall any party be liable to the other or obligated in any manner to pay to the other parties any special, incidental, consequential, punitive or similar damages based upon claims arising out of or in connection with the performance or non-performance of its obligations under this Agreement, or the material falseness or inaccuracy of any representation made in this Agreement, whether such claims are based upon contract, tort, negligence, warranty or other legal theory. The waiver of the foregoing damages under this Section is intended to apply to only disputes and claims as between the City and the Lessee, and specifically is not intended to limit the scope of the indemnity provisions in Section 10.2, which indemnification includes all claims by third-parties irrespective of the nature thereof or the relief sought thereby. SECTION 14.11.No Waiver of Rights. No failure by the City or by the Lessee to insist upon the strict performance of any term, covenant, agreement, provision, condition or limitation of this Agreement or to exercise any right or remedy hereunder, and no acceptance by the City of full or partial Rent during the continuance of any such breach, shall constitute a waiver of any such breach or of such term, covenant, agreement, provision, 50 condition or limitation. No term, covenant, agreement, provision, condition or limitation of this Agreement to be kept, observed or performed by the City or by the Lessee,and no breach thereof, may be waived, altered or modified except by a written instrument executed and acknowledged by and delivered to the City and the Lessee. No waiver of any breach shall affect or alter this Agreement, but each and every term, covenant, agreement, provision, condition and limitation of this Agreement shall continue in full force and effect with respect to any other then existing or subsequent breach thereof. SECTION 14.12.Survival of Certain Provisions Upon Termination. All representations and warranties of the parties contained in this Agreement, the Lessee's indemnity obligations in this Agreement with respect to events that occurred prior to the Termination Date,the rights and obligations of the parties hereto pursuant to Sections 2.3, 9.1, 9.2, 9.3, 9.4, 10.1, 10.2, 12.3, 12.4, 12.5, 14.2, 14.3, 14.4, 14.5, 14.6, 14.9, and 14.14, and all other provisions of this Agreement that so provide shall survive the termination of this Agreement. No termination of this Agreement shall (1) limit or otherwise affect the respective rights and obligations of the parties hereto accrued prior to the date of such termination, or (2) preclude either party from impleading the other party in any legal proceeding originated by a third-party as to any matter occurring during the Term of this Agreement. SECTION 14.13.City's Right to Perform Lessee's Covenants. If at any time, Lessee shall fail, within thirty (30) days' after notice from the City (except in case of emergency such number of days' notice which are reasonable in the circumstances shall suffice), to pay any imposition required herein, or to take out, pay for, maintain or deliver any of the insurance policies provided in Article X, or to cause any lien of the character referred to in Section 12.4 to be discharged as therein provided, or to perform any other act on its part to be performed as provided in this Agreement, then, without further notice or demand upon Lessee and without waiving or releasing Lessee from any of Lessee's obligations contained in this Agreement or waiving any other right or remedy of the City, the City may, but shall not be obligated to, perform any such obligation on behalf of Lessee; rop vided, however, that except for matters arising under Article X, or matters curable by the payment of money,the City shall not exercise its right to perform Lessee's obligation under this Section, unless the City has determined that doing so is reasonably necessary to protect against a significant threat to the Southeast Landfill or the safety of the Southeast Landfill's users or the general public. All sums paid by the City in connection with the City's performance of any obligation of Lessee and all reasonably necessary out-of-pocket incidental costs and expenses paid or incurred by the City in connection with the performance of any such act by the City,together with all reasonable attorneys' fees and together with interest thereon at the Overdue Rate from the date of making of such expenditures by the City, shall be payable by Lessee to the City on demand as Additional Rent. SECTION 14.14.Additional Remedy of the City. (A) Upon any termination of this Agreement, Lessee shall quit and peacefully surrender the Southeast Landfill to the City, and the City, upon or at any time after any such termination, shall have the right, without further notice, to enter upon and re-enter the Southeast Landfill and possess and repossess itself thereof, by force, summary proceedings,ejectment or otherwise,and may dispossess Lessee and remove Lessee and all other persons and property from the Southeast Landfill and may have, hold and enjoy the Southeast Landfill and the right to receive all income of and from the same. (B) If this Agreement is terminated by reason of the occurrence of any Event of Default, the Rent through the termination date shall become immediately due and be paid by Lessee up to the time of such termination, together with such expenses as the City may incur for legal expenses, attorneys' fees and disbursements. 51 ARTICLE XV NOTICES SECTION 15.01.Notices. Except as otherwise expressly provided by Law, any and all notices or other communications required or permitted by this Agreement shall be in writing and shall be deemed duly served and given when (i) hand delivered, (ii) delivered by nationally recognized overnight courier, or (iii) on the third Business Day after it is deposited in the United States mail,first-class postage prepaid,return receipt requested: (a) If to the City,personally delivered to the City Secretary,or alternatively when mailed as set forth above,to: Office of the City Manager City of Fort Worth 1000 Throckmorton Street Fort Worth, Texas 76102 Fax: (817) 871-6I34 With a copy to: City Attorney City of Fort Worth 1000 Throckmorton Street Fort Worth,Texas 76102 Fax: (817)871-8359 (b) If to the Lessee: c/o District Manager Trinity Waste Services 6200 Elliott Reeder Road Fort Worth,Texas 76117 Fax: (817)831-9916 With a copy to the Guarantor: Allied Waste Industries, Inc. Corporate Secretary 15880 N. Greenway-Hayden Loop Scottsdale,Arizona 85260 Fax: (480)627-2728 Either party may by notice given as set forth above direct that notices or communications be sent to a different address. Notwithstanding any provision of this Section 15.1, any report to be given by Lessee to the City may be given by electronic mail in addition to the means of delivery set forth herein. 52 ARTICLE XVI MISCELLANEOUS SECTION 16.01.City Rights as Governmental Entity. The Lessee acknowledges that the City is a Governmental Entity and as such has certain rights, powers and duties that may affect the Lessee's rights or obligations under the Agreement. The Lessee agrees that no action or failure to act by the City acting in its governmental capacity shall be construed as a breach or default by the City under this Agreement, nor shall any such action excuse the Lessee from performance of its obligations under this Agreement; provided, however, if such action or failure to act constitutes an Uncontrollable Circumstance, the Lessee may assert any rights it may have under this Agreement as is permitted for any other Uncontrollable Circumstances. SECTION 16.02.Condemnation. (A) If during the term of this Agreement, all of the Southeast Landfill is taken for a public purpose by condemnation, or sold to a condemning authority under threat of condemnation, this Agreement shall terminate, subject to the continuing obligation on Lessee under Section 14.12. If during the Term of this Agreement, a portion of the Southeast Landfill is taken for a public purpose by condemnation, and such condemnation materially impairs the Lessee's ability to perform its obligations hereunder, but the Lessee is able to perform services at the Southeast Landfill,the provisions of Section 4.4(L)shall apply. (B) Hold Harmless. In any condemnation proceeding in which the City is the condemning authority or in which the City is required to pay all or a portion of the cost of acquiring the property to be taken,the Lessee shall hold the City harmless for any condemnation award in excess of the fair market value of Lessee's interest as awarded in such proceeding. (C) Allocation of Award. It is the intent of the parties that in the allocation of any condemnation award between the City as owner of the Southeast Landfill, and the Lessee as lessee of the Southeast Landfill, that Lessee's portion of such award never exceed the fair market value of its interest under this Agreement at the date of the taking. City does not represent to Lessee that Lessee's interests in or rights held under this Agreement have any particular value in a condemnation proceeding. SECTION 16.03.Assignment. This Agreement may not be assigned by Lessee without the prior written consent of the governing body of the City (such consent shall not be unreasonably withheld in the case of a proposed assignment to an affiliate of Lessee, but may be withheld for any reason or for no reason in the case of a proposed assignment by Lessee to a non-affiliate). The delegation of any contractual duties shall also require the written consent of the surety on the performance bond required herein as such delegation will not relieve the Lessee or its surety of any liability or obligation to perform. In the event of a delegation of any duty required under this Agreement, the delegate shall assume responsibility for performance of that duty without affecting the Lessee's liability. The City may not assign its rights and privileges under this Agreement without the prior written consent of Lessee (such consent shall not be unreasonably withheld); in the event of any assignment by the City, this Agreement and the Lessee's rights hereunder shall not be disturbed but shall continue in full force and effect as a direct lease between the Lessee and the City's assignee. SECTION 16.04. Parties Bound. This Agreement is binding on and inures to the benefit of the parties and their respective successors and assignees when permitted by this Agreement. SECTION 16.05.No Third Party Rights. This Agreement is exclusively for the benefit of the City and the Lessee and shall not provide any third parties with any remedy, claim, liability, reimbursement, cause of action,or other rights. SECTION 16.06.Governing Law and Applicable Venue. This Agreement is made and performable in Fort Worth, Texas, and shall be interpreted in accordance with the laws of the State of Texas. Venue for any legal action arising out of this Agreement shall lie in any court of competent jurisdiction in Tarrant County, Texas. 53 SECTION 16.07.Non-Discrimination. The Lessee shall not unlawfully discriminate against any person. SECTION 16.08. Entire Agreement. This Agreement contains all of the covenants, statements, representations and promises agreed to by the parties. To the extent of any conflict, this Agreement supersedes the terms, conditions, and representations set forth in the City's Request for Proposals and the Lessee's Proposal. No agent of either party has authority to make, and the parties shall not be bound by, nor liable for, any covenant, statement, representation or promise not set forth herein. The parties may amend this Agreement only by a written amendment executed by both parties. SECTION I6.09.Partial Invalidity. In the event one or more provisions of this Agreement shall for any reason be held invalid, illegal, or unenforceable in any respect, such invalidity, illegality,or unenforceability shall not affect any other provision of this Agreement, and the Agreement shall be construed as if such invalid, illegal,or unenforceable provision had not been contained in it. SECTION 16.I0.Memorandum of Lease. Upon request of either party, each party shall join in the execution of a memorandum of lease in proper form for recording, setting forth the existence and Term of this Agreement, and the City and the Lessee shall each take such further action as may be necessary to permit such recording. The cost of recording shall be borne by the Lessee. 54 fX Executed this day of January, 2003 CITY OF FORT WORTH ALLIED WASTE Y TEMS, C. �I Gary Jackson Name: City Man ger I Title: By City Manager APPROVED FOR FORM AND LEGALITY: David Yett City Attorney By ATTEST: Gloria Person City S cr By 11 Contract Authorization ti Date CM 55 a V o u U Wp L5(n1, Appendix 1 Property Description The Southeast Landfill is an approximately 397 acre tract, a portion of which is, as of the date of this Agreement, operated by the City as a Type I landfill under Commission Permit Number MSW 218-A, together with the permanent improvements thereon, more fully described below. If the Southeast Landfill is expanded beyond the boundaries contained herein, by agreement between the City and the Lessee, and said expanded boundaries are included in the above-referenced permit, said expanded boundaries shall be included in the Southeast Landfill demised under this Agreement,without further action of the parties. AM Appendix 2 Form of Guaranty Agreement A2-1 MARSH Tannis N Mattson Assistant Vice President Marsh USA Inc. 1000 Main Street Suite 3000 Houston,TX 77002 713 276 8528 Fax 713 276 8538 Tannis.N.Mattson@marsh.com 3o r` pp February 15, 2006 o� C Diane Hildreth Z 3 Allied Waste Systems, Inc. 6100 Elliott Reeder Road Fort Worth, TX 76117 Subject: Bond Renewal Obligee: City of Fort Worth Bond No.: 850430 Dear Diane: Attached please find the executed original extension certificate for the above referenced. The document is ready for filing with the Obligee. Should you have any questions, please do not hesitate to contact me. Since ly, C Tannis Mattson Assistant Vice President 4 J�`��O 0? _06 1 : 36 IN RECEDED FEB 17 2006