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HomeMy WebLinkAbout1390ORDINANCE NO. 1390 (2001 Series) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO GRANTING TO TOSCO CORPORATION, A NEVADA CORPORATION, A FRANCHISE TO CONSTRUCT, OPERATE, AND MAINTAIN PIPELINES FOR THE TRANSPORTATION OF OIL, AND OTHER SPECIFIED MATERIALS, IN THE CITY OF SAN LUIS OBISPO, STATE OF CALIFORNIA WHEREAS, the City of San Luis Obispo adopted Ordinance No. 1038 on April 2, 1985 granting a franchise to Union Oil Company of California for a term of 25 years for the transportation and distribution of oil and other specified materials in the City of San Luis Obispo; and WHEREAS, Union Oil Company of California sold or transferred a portion of its pipelines subject to Ordinance No. 1038 to TOSCO Corporation and Unocal California Pipeline Company; and WHEREAS, Union Oil Company of California informed the City of San Luis Obispo that it intends to commence the abandonment process for its remaining interests under Ordinance No. 1038 that have not been sold or transferred to TOSCO Corporation and Unocal California Pipeline Company; and WHEREAS, Union Oil Company of California's remaining pipeline interests in the City of San Luis Obispo are still subject to the existing franchise agreement granted in Ordinance No. 1038 until such time that Union Oil Company of California has abandoned such pipelines pursuant to applicable law; and WHEREAS, TOSCO Corporation and Unocal California Pipeline Company have requested the City of San Luis Obispo to enter into new franchise agreements for the oil transportation and distribution pipelines acquired from Union Oil Company of California. NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis Obispo to grant a franchise to construct, operate, and maintain pipelines for the transportation of oil, and other specified materials in the City of San Luis Obispo to TOSCO Corporation, a Nevada corporation as follows: 2): SECTION 1: Terms and Conditions of Franchise (Table of Contents begins on page 01390 Ordinance No. 1390 (2002 series) Page 2 of 29 TABLE OF CONTENTS K Page ARTICLE I NATURE OF FRANCHISE 4 A. Grant of Franchise 5 B. Limitations Upon Grant 6 C. Rights Reserved to the City of San Luis Obispo 6 ARTICLE 2 APPURTENANCES 6 ARTICLE 3 LOCATION OF PIPELINES 6 ARTICLE 4 CONSTRUCTION OF PIPELINES 7 A. Terms of Construction 7 B. Restoration of Streets 7 ARTICLE 5 COMMENCEMENT OF CONSTRUCTION 7 ARTICLE 6 MAPS AND REPORTS TO BE FURNISHED 8 ARTICLE 7 COMPENSATION TO THE CITY 9 ARTICLE 8 EMERGENCY EQUIPMENT AND CREWS 10 ARTICLE 9 REPAIR OF DEFECTIVE FACILITIES AND REPAIR OF DAMAGE TO CITY STREETS 10 ARTICLE 10 REARRANGEMENT OF FACILITIES 11 A. Expense of Grantee 11 B. Expense of Others 12 C. Rearrangement of the Facilities of Others 13 D. Notice 13 ARTICLE I I GRANTEE'S REMOVAL OR ABANDONMENT OF FACILITIES 13 ARTICLE 12 COMPLETION OF WORK 13 K Ordinance No. 1390 (2002 6eries) Page 3 of 29 TABLE OF CONTENTS, CONTINUED Page ARTICLE 13 RECOVERY OF COSTS OF REPAIRS AND 3 UNPAID FEES 16 ARTICLE 14 BOND 18 ARTICLE 15 INSURANCE 19 ARTICLE 16 INDEMNIFICATION BY GRANTEE 20 ARTICLE 17 CHANGES IN CONTROL OF FRANCHISE 21 ARTICLE 18 WAIVER OF BREACH 24 ARTICLE 19 DEFAULT 24 ARTICLE 20 SCOPE OF RESERVATION 25 ARTICLE 21 NOTICE 25 ARTICLE 22 SUCCESSORS 25 ARTICLE 23 ACCEPTANCE OF FRANCHISE 26 ARTICLE 24 FORCE MAJEURE 26 ARTICLE 25 LIQUIDATED DAMAGES 26 ARTICLE 26 ATTORNEYS' FEES 28 ARTICLE 27 CONDEMNATION 28 3 Ordinance No. 1390 (2002 series) Page 4 of 29 ARTICLE I NATURE OF FRANCHISE A. Grant of Franchise. 1. The City of San Luis Obispo (hereinafter referred to as "City "), hereby grants to TOSCO Corporation, a Nevada corporation, (hereinafter referred to as "Grantee "), pursuant to the provisions of Article X of the San Luis Obispo City Charter, Article XI, Section 9(b) of the California Constitution, and Section 39732(b) of the California Government Code, the non- exclusive right, privilege and franchise, subject, however, to all the limitations and restrictions herein contained, to construct, erect, maintain, operate, repair, renew, abandon, and change the size of and remove pipelines, not to exceed twelve (12) inches nominal internal diameter, for the transportation of oil, products thereof, hydrocarbon gases and other gas necessary for the operation and maintenance of the pipelines, water and mixtures thereof, movable by pipeline, in, under, along, and across the public streets, ways, alleys and places within the City of San Luis Obispo (hereinafter collectively referred to as "streets "), as described in Exhibit No. 1, attached hereto and made a part hereof. 2. The term of the franchise granted under this Ordinance shall be for a term often (10) years, commencing with the date on which it is accepted by Grantee. 3. Unless otherwise specifically stated, the following provisions shall govern the interpretation and construction of the franchise granted herein: (a) This franchise shall include the right, for the period and subject to the conditions hereof, to construct, erect, maintain, operate, repair, renew, abandon and change the size and remove the said pipelines, if any, of Grantee, as laid and constructed in said streets. (b) The terms and conditions of this franchise shall also apply to any pipe or other facilities of Grantee which are located within the right of way of any existing public road or street at the time such road or street becomes a City street through annexation or otherwise, subject to any other existing rights enjoyed by Grantee. (c) Grantee shall not be relieved of its obligation to promptly comply with any provision of this franchise by failure of the City to enforce prompt compliance. (d) Any right or power conferred, or duty imposed upon any officer, employee, department, or other City entity, by the terms of this franchise, may be legally transferred to any other City officer, employee, department, or other City entity. (e) Grantee shall have no recourse whatsoever against the City for any loss, cost, expense, or damage suffered by Grantee and arising out of any provision or requirement of this franchise or its lawful enforcement by the City. (f) This franchise does not relieve Grantee of any applicable requirements of the San Luis Obispo Municipal Code or of any federal, state, or City law, ordinance, rule, 4 Ordinance No. 1390 (2002 beries) Page 5 of 29 regulation, or specification, including, but not limited to, any requirement relating to street work, street excavation permits, or the use, removal or relocation of property in streets, except as specifically prescribed herein. (g) This franchise is non - exclusive. Neither the granting of this franchise nor any of the provisions contained herein shall be construed to prevent the City from granting any identical or similar franchise to any other person. (h) The compensation provided for in this franchise is for (i) the rights and privileges granted by this franchise, and (ii) the right and privilege granted to the Grantee to construct, erect, maintain, operate, repair, renew, abandon and change the size of and remove the said pipelines pursuant to this franchise within the City's streets. The City expressly reserves the right to impose and collect from Grantee, on a non - discriminatory basis, its normal, duly established processing and inspection fees from street cutting and excavation permits to the extent such fees are imposed generally on all non - governmental applicants for such permits within the City. (i) Any activities involving the use of a pipeline system for the transmitting of oil, products thereof, hydrocarbon gases and other gas necessary for the operation and maintenance of the pipelines, water and mixtures thereof, which are not specifically authorized under this franchise are prohibited under this franchise. Except as provided in Article 2, any telecommunication or other uses not authorized in this franchise Ordinance must be approved by the City under a separate franchise. 0) If any provision of this franchise, or the application of this franchise to any person or circumstance is held invalid by a court of competent jurisdiction or is not in compliance with any requirement of the City, or any other federal or state body or agency having jurisdiction over Grantee's franchise activities, the remainder of this franchise Ordinance, or the application of this franchise to persons or circumstances other than those to which it is held invalid or not in such compliance, shall not be affected thereby. B. Limitations Upon Grant. 1. No privilege or exemption is granted or conferred by this franchise except those specifically prescribed herein. 2. Any privilege claimed under this franchise by Grantee in any street shall be subordinate to any prior lawful occupancy of the street. 3. The rights and privileges of this franchise are granted solely to Grantee except as provided within this franchise Ordinance. This franchise is not be to sold, transferred, leased, assigned, or disposed of as a whole or in part, either by forced sale, merger, consolidation, or otherwise, without the City's prior consent as described in Article 17, infra, or as otherwise expressly provided herein. The City agrees that such prior consent shall not be unreasonably withheld or conditioned. Ordinance No. 1390 (2002 series) Page 6 of 29 C. Rights Reserved to the City. 1. The rights reserved to the City under this franchise Ordinance are in addition to all other rights of the City, whether authorized by the San Luis Obispo City Municipal Code, San Luis Obispo City Charter, or any other federal, state, or City law, rule, or regulation. No action, proceeding or exercise of a right shall affect any other rights which may be held by the City. Grantee, by acceptance of this franchise, shall be bound thereby and shall comply with any action or requirement of the City in its exercise of any such right or power. 2. The City shall have the power and right at all times during the term of this franchise to require Grantee to conform to the laws, rules and regulations governing the operation of pipelines now or hereafter adopted by the City Council to the extent permitted by law. 3. The City may enforce, to the maximum extent permitted by law, the inspection and testing of pipelines, pursuant to state and federal standards and require appropriate remuneration and fees to cover such enforcement activities. ARTICLE 2 APPURTENANCES The Grantee shall have the right, subject to the prior approval of the City Public Works Department, to construct and maintain such traps, manholes, conduits, valves, appliances, attachments, and appurtenances (hereinafter for convenience collectively referred to as "appurtenances "), as may be necessary or convenient for the proper maintenance and operation of the pipelines under said franchise. Said appurtenances shall be so located as to conform to any order of the City Public Works Department in regard thereto and not to interfere with the use of the streets for travel. The Grantee shall have the right, subject to such ordinances, rules, or regulation as are now or may hereafter be in force, to make all necessary excavations in said street for the construction and repair of said pipelines and appurtenances subject to the prior approval of the City Public Works Department. "Appurtenances" shall also include any adjunct communications lines and/or conduits as coaxial cable, optical fiber, wire, or other transmission lines or forms of transmission, and associated equipment and devices located in, upon, along, across, under or over the streets of the City, the sole function of which is to monitor or control the operation or safety of the pipeline system via the distribution of video, audio, voice, or data signals. An adjunct communications line shall not include any facility which distributes, through any means, to subscribers or persons other than Grantee, the signal of one or more broadcast television or radio stations or other sources of video, audio, voice, or data signals. ARTICLE 3 LOCATION OF PIPELINES So far as is practicable and within the requirements of the California State Fire Marshall, any pipeline hereinafter laid shall be located along the edge or shoulder of the streets or in the parking areas adjacent thereto so as not unreasonably to disturb the flow of traffic and where possible shall be laid in the unpaved portion of the street. on Ordinance No. 1390 (2002 aeries) Page 7 of 29 ARTICLE 4 CONSTRUCTION OF PIPELINES A. Terms of Construction. The pipelines and appurtenances laid, constructed or maintained under the provisions of this franchise shall be installed, maintained, and inspected by the Grantee in a satisfactory, safe, and workmanlike manner, of good material, and in conformity with all ordinances, rules, or regulations now or hereafter adopted or prescribed by the City Council, State, or Federal authorities. B. Restoration of Streets. The work of laying, constructing, maintaining, operating, renewing, repairing, changing size and moving any of the pipeline system contemplated by this franchise and all other work in exercise of this franchise shall be conducted according to the provisions of the City's encroachment ordinances from time to time prevailing, and otherwise in accordance with federal and state law and applicable City ordinances, and with the least possible hindrance or interference to the use of City roads by the public or by the City of San Luis Obispo, and Grantee shall provide all necessary warning, safety and traffic control devices as are or may be required by City, State or Federal regulations. All excavations shall be back filled and adequately compacted. As part of any work completed under provisions of this franchise agreement, the surface of City streets shall be repaired and replaced to meet current City standards and specifications. Under no circumstances shall the surface of City streets be placed in a manner less than as good and serviceable condition as existed at the beginning of said work, to the satisfaction of the City Public Works Department. ARTICLE 5 COMMENCEMENT OF CONSTRUCTION The Grantee, in good faith, shall commence with work of laying the pipelines and appurtenances within four (4) months from the date of passage of the approval of this franchise, and if any such pipelines be not so commenced within said time, this franchise shall be declared forfeited; provided, however, that if the Grantee is maintaining and operating an existing pipeline system over the route referred to in Article I herein, it shall be deemed to be in compliance with the foregoing. The Grantee shall not commence the construction of any new pipelines under the provision of this franchise or add to such existing pipeline system, if any there be, until it first shall have applied for and obtained a permit therefore from the City Public Works Department. The application of the Grantee shall show the following facts: the length, approximate depth and proposed location of the pipeline proposed to be laid or constructed, the size and description of the pipeline intended to be used, and such other relevant facts as the City Public Works Department may require. The Grantee shall pay any and all encroachment permit fees of the City. Upon the completion of the construction of any pipelines constructed pursuant to said franchise, the Grantee shall render a statement to the City of San Luis Obispo showing in detail the permit or permits issued and the total length of pipeline, the construction of which was 7 Ordinance No. 1390 (2002 6eries) Page 8 of 29 authorized under such permit, or permits, and the total length of pipeline actually laid, and the Grantee shall make payment to the City for the pipelines which have actually been constructed under said franchise as provided in Article 7, Section C. ARTICLE 6 MAPS AND REPORTS TO BE FURNISHED A. Within six (6) months of the effective date of this franchise for existing pipelines, and within ninety (90) days following the date in which any additional pipelines have been laid or constructed under this franchise, the Grantee shall file a map in such form as may be required by the City Public Works Department showing the accurate location and size of all its facilities then in place, and shall, upon installation of any additional facilities or upon removal, change or abandonment of all or any portion thereof, file a revised map or maps showing the location and size of all such additional and/or abandoned facilities as of this date. Cathodic protection is to be used for all facilities installed or maintained pursuant to this franchise. For facilities previously in liquid service and where the liquids have been removed and the facilities inerted, or for facilities previously in gas service that are not pressurized, cathodic protection shall be maintained consistent with State Fire Marshall or other agency requirements. A description of all the protective devices shall be furnished to the City Public Works Department which shall show the location and types of anodes, including a description of methods to be used as a protection against corrosion and electrolytic leakage. B. Grantee shall file with the City Finance Director, within thirty (30) days after the expiration of the calendar year, or fractional calendar year, following the date of the granting of this franchise and within thirty (30) days after the expiration of each calendar year thereafter, two copies of a report verified by the oath of Grantee or by the oath of a duly authorized representative of Grantee, showing, for the immediately preceding franchise period, the length of main lines in streets, the nominal internal diameter of such main lines, the rate per foot per year (when applicable) and the total amount due to the City. In this report, Grantee shall also show any change in franchise footage since the last franchise report, segregating such footage as to new main lines and adjunct communications lines laid, old main lines and adjunct communications lines removed, old main lines and adjunct communications lines abandoned in place, and the footage of main lines and adjunct communications lines in territory annexed by the City since the last franchise report. C. Grantee shall file with the City Public Works Department within sixty (60) days after the end of the calendar year a report, in duplicate, showing the permit number of each permit obtained for the installation of new main lines during the immediately preceding franchise report period, together with the length and size of said main lines. Ordinance No. 1390 (2002 aeries) Page 9 of 29 ARTICLE 7 COMPENSATION TO THE CITY A. During the term of this franchise, Grantee shall pay to the City an annual fee for this franchise, said fee to be those fees prescribed by the California Public Utilities Code section 6231. 5, provided that the rate is subject to increase to the maximum rate established in subsequent amendments of the California Public Utilities Code. Annual payments to be made pursuant to this franchise shall be due and payable in arrears April 1 of each year of this franchise. The initial payment hereunder shall be prorated for the remainder of the current calendar year based on a 365 -day year. At the time of payment of fees by Grantee, Grantee shall file a verified statement with the Clerk of the City of San Luis Obispo, with a copy to the City Public Works Department showing in detail the number of lineal feet and the diameter thereof, expressed in inches, of pipelines covered by this franchise during the previous calendar year, or portion thereof. The compensation provided for in this Article shall be subject to an increase after the first year of the franchise and each subsequent year during the term of this franchise, based on the provisions of California Public Utilities Code section 6231.5, as amended. The fees set forth will be adjusted annually each year by the annual percentage change in the U.S. Bureau of Labor Statistics (or successor agency) consumer price index for all urban consumers (CPI -U) all cities average for the prior calendar year. Notwithstanding the provisions as otherwise stated in this Article and franchise, the Grantee shall be liable to pay the City the annual fee for the period to and including the date of either actual removal of the facilities or the effective date of the abandonment "in place," and until the Grantee shall have fully complied with all of the provisions of law or ordinances relative to such abandonments. In the event of partial abandonment of facilities as provided in the Ordinance, or in the event of partial removal of such facilities by the Grantee, the payments otherwise due the City for occupancy of the streets by such facilities shall be reduced by the length and diameter of pipelines abandoned or the actual pipeline removed beginning with the first day of the next succeeding franchise year, and for each franchise year thereafter; provided, however, that the base rate shall be modified to reflect the adjustment (per this Article) applicable to such abandoned or removed pipeline at the beginning of the next succeeding franchise year following abandonment or removal. Grantee shall pay to the City, upon demand, the cost of all repairs made by the City to public property arising out of the operations of the Grantee under this franchise. Any fees charged or expenses charged to Grantee by City pursuant to this Article, or any other provision of this franchise Ordinance, unless disputed in good faith, shall be paid when due or shall be deemed delinquent. Any undisputed delinquent amounts shall be charged a 10% penalty and, in addition, shall accrue interest commencing thirty (30) days after the due date, at a rate of one so Ordinance No. 1390 (2002 series) Page 10 of 29 and one -half percent (1.5 %) per month (based upon a 30 -day calendar month) or any lesser amount if required by law. Any neglect, omission or refusal by said Grantee to pay any undisputed delinquent franchise fee with any late charges, within thirty (30) days of delinquency, at the times or in the manner herein provided, shall be grounds for a declaration of a forfeiture of this franchise and of all rights hereunder. Payments are to be made to the City Finance Director, 990 Palm Street, San Luis Obispo, California 93401, or at such place as the City shall, from time to time, designate in writing. B. Grantee shall pay the City a granting fee of $5,000.00 within thirty (30) days after the date the City Council adopts this franchise Ordinance. C. Grantee shall pay the City Public Works Department, within sixty (60) days after the end of each calendar year, for each year during the life of this franchise, an initial construction charge calculated at the rate of One Dollar ($1.00) per foot for all new main lines laid pursuant to this franchise Ordinance during the preceding year. D. Right of Inspection. The City shall have the right to inspect Grantee's pipeline accounting and other records relating to its annual report and to audit and recompute any and all accounts payable under this franchise. Costs of audit shall be borne by Grantee when an audit results in an increase of more than five percent of Grantee's annual payments to the City. Acceptance of any payment shall not be construed as a release, waiver, acquiescence, or accord and satisfaction of any claim the City may have for further or additional sums payable under this franchise or for the performance of any other obligation hereunder. ARTICLE 8 EMERGENCY EQUIPMENT AND CREWS At all times during the term of this franchise, the Grantee shall maintain or arrange for, on a 24- hour -a -day basis, adequate emergency equipment and a properly trained emergency crew within a reasonable distance from any pipelines, appurtenances and facilities installed or maintained pursuant hereto for the purpose of monitoring the leak detection system and the communications systems if applicable, and of shutting off the pressure and the flow of contents of such facilities in the event of an emergency resulting from an earthquake, act of war, civil disturbance, fire, flood, or any other cause or nature whatsoever. ARTICLE 9 REPAIR OF DEFECTIVE FACILITIES AND REPAIR OF DAMAGE TO CITY STREETS If any portion of any street shall be damaged by any reason related to the Grantee's operations pursuant to this franchise including defective facilities laid or constructed under this franchise, Grantee shall, at its own expense, repair any defect of its facilities and put such street 10 Ordinance No. 1390 (2002 aeries) Page 11 of 29 in as good condition as it was before such damage was incurred, to the satisfaction of the City Public Works Department. If Grantee, within ten (10) days after receipt of written notice from the City Public Works Department instructing it to repair such damage, fails to commence to comply with such instruction, or, thereafter, fails diligently to prosecute such work to completion, then the City Public Works Director immediately may take any actions which are, in the sole judgment and discretion of the City Public Works Director, necessary to repair said damage. Any and all costs and expenses so incurred shall be the sole responsibility of Grantee including the current rate of overhead being charged by the City for reimbursable work, which cost and expense, by the acceptance of this franchise, Grantee agrees to pay upon demand. If such damage constitutes an immediate danger to public health or safety requiring the immediate repair thereof, the City Public Works Department, without notice, may repair such damage and Grantee agrees to pay the cost thereof upon demand. ARTICLE 10 REARRANGEMENT OF FACILITIES A. Expense of Grantee. 1. If any of the Grantee's facilities, in the opinion of the City Public Works Director, shall endanger the public or interfere with the use of any street by the public or, for public purposes, the City shall have the right to require the Grantee, and the Grantee shall repair, replace, move, alter or relocate the same (hereinafter called "rearrangement ") to avoid such danger, interference or obstruction, in conformity with the written notice of the City Public Works Department, at the Grantee's sole expense. 2. The City reserves the right to change the grade, to construct grade separation facilities, to change the width or to alter or change the location, of any street which is located within the service area for which this franchise is granted. If any of the facilities heretofore or hereafter constructed, installed or maintained by Grantee pursuant to this franchise on, along, under, over, in, upon or across any street are located in a manner which prevents or interferes with the change of grade, traffic needs, operation, maintenance, improvement, repair, construction, reconstruction, widening, grade separation, alteration or relocation of the street, or any work or improvement upon the street, Grantee shall relocate permanently or temporarily, as directed at the sole discretion of the City Public Works Director, any such facility at no expense to the City, upon receipt of a written request from the City Public Works Department to do so, and shall commence such work, by beginning engineering, surveying, or other pre - construction activities, on or before the date specified in such written request, which date shall be not less than sixty (60) days from receipt of such written request. Grantee shall thereafter diligently prosecute such work to completion. Should Grantee neglect or fail to relocate its facilities in a timely manner after receipt of any such notice, in addition to the liquidated damages as set forth in Article 25, Grantee shall be responsible for and shall reimburse the City for any and all additional costs or expenses incurred by City due to or resulting from such delay in the relocation of the facilities plus, where applicable, the current rate of overhead being charged by the City for reimbursable work. If such street be subsequently constituted a state highway, 11 Ordinance No. 1390 (2002 series) Page 12 of 29 while it remains a state highway the rights of the State of California shall be as provided in Section 680 of the Streets and Highways Code of the State of California. 3. The City reserves the right to lay, construct, repair, alter, relocate and maintain subsurface, surface or other improvements of any type of description in a governmental but not proprietary capacity within, over or under the streets over which this franchise is granted. If the City finds that the location or relocation of such subsurface, surface or other improvements conflicts with the facilities laid, constructed or maintained under this franchise, whether such facilities were laid before or after the improvements of the City, Grantee shall relocate permanently or temporarily, as directed at the sole discretion of the City Public Works Director, any such facility at no expense to the City upon receipt of a written request from the City Public Works Department to do so and shall commence such work, by beginning engineering, surveying or other pre - construction activities, on or before the date specified in such written request, which date shall not be less than sixty (60) days from receipt of such written request. The Grantee shall thereafter diligently prosecute such work to completion. Should Grantee neglect or fail to relocate its facilities in a timely manner after receipt of any such notice, in addition to the liquidated damages as set forth in Article 25, Grantee shall be responsible for and shall reimburse the City for any and all additional costs or expenses incurred by City due to or resulting from such delay in the relocation of the facilities plus, where applicable, the current rate of overhead being charged by the City for reimbursable work. If such street be subsequently constituted a state highway, while it remains a state highway the rights of the State of California shall be as provided in Section 680 of the Streets and Highways Code of the State of California. 4. If Grantee, after the notice provided for herein from the City, fails or refuses to relocate permanently or temporarily its facilities located in, on, upon, along, under, over, across, or above any street, or to pave, surface, grade, repave, resurface, or regrade as required pursuant to any provision of this franchise, the City may cause the work to be done, and shall keep an itemized account of the entire costs thereof, and Grantee shall hold harmless the City, its officers and employees from any liability which may arise or be claimed to arise from the moving, cutting or alteration of any of Grantee's facilities, or any necessary relocation of the facilities of other utilities. 5. Grantee agrees to, and shall, reimburse the City for such cost within thirty (30) days after presentation to Grantee of an itemized account arising out of the actions taken in this Article 10A. B. Expense of Others. (1) The City shall have the right to require the Grantee to rearrange any part of the Grantees' facilities for the accommodation of the City when such rearrangement is done for the accommodation of any water, electric, gas or other utility system now or hereafter owned or operated by the City. Except as otherwise provided in Article 10A, such arrangement shall be at the City's expense. 12 Ordinance No. 1390 (2002 series) Page 13 of 29 (2) The City shall have the right to require the Grantee to rearrange any part of the Grantee's facilities for the accommodation of any person, firm or corporation. When such rearrangement is done for the accommodation of any person, firm or corporation, other than one of said utility systems owned or operated by the City, the cost of such rearrangement shall be borne by the accommodated party. Such accommodated party, in advance of such rearrangement, shall deposit with the Grantee or the City Clerk cash or a letter of credit or other cash equivalent in an amount, as in the reasonable discretion of the City Public Works Department, shall be required to pay the costs of such rearrangement, and such accommodated party shall execute an instrument agreeing to indemnify and hold harmless the Grantee from any and all damages or claims caused by such rearrangement. (3) The rearrangement referred to in subsection (1) and (2) of Section B of this Article 10 shall be accomplished in conformity with the written notice of the City Public Works Department. C. Rearrangement of the Facilities of Others. Nothing in this franchise shall be construed to require the City to move, alter or relocate any of its facilities upon said streets, at its own expense, for the convenience, accommodation or necessity of any other public utility, person, firm or corporation now or hereafter owning a public utility system of any type or nature, to move, alter or relocate any part of its system upon said streets for the convenience, accommodation or necessity of the Grantee. D. Notice. The Grantee shall be given not less than sixty (60) days written notice of any rearrangement of facilities which the Grantee is required to make hereunder. Such notice shall specify in reasonable detail the work to be done by the Grantee and shall specify a reasonable time that such work is to be accomplished. In the event that the City shall change the provisions of any such notice given to the Grantee, the Grantee shall be given an additional period of not less than thirty (30) days to initiate such work. ARTICLE 11 GRANTEE'S REMOVAL OR ABANDONMENT OF FACILITIES A. The City reserves the right to require Grantee to remove its facilities from the City streets and City public property in the event of the non - renewal, revocation or termination of this franchise or at any time thereafter with respect to those facilities abandoned in place, or for the facilities affected by the permanent discontinuance of all or a portion of the facilities. Further, so long as any abandoned facilities installed under the authority of this franchise remain in a City street, Grantee shall maintain a performance bond, security fund, or other form of collateral, acceptable to the City, sufficient to cover the cost of the removal of all such facilities from the City streets. 13 Ordinance No. 1390 (2002 series) Page 14 of 29 B. At the expiration, revocation or termination of this franchise or of the permanent discontinuance of the use of all or a portion of its facilities, Grantee shall, within thirty (30) days thereafter, make written application to the City Public Works Department for authority either: To abandon all or a portion of such facilities in place; or 2. To remove all or a portion of such facilities. Such application shall describe the facilities desired to be abandoned, their location with reference to City streets, and shall describe with reasonable accuracy the physical condition of such facilities. As part of the application for removal or abandonment of these facilities, Grantee shall submit a soil test, taken within thirty (30) days of the submittal of the application, for those materials to be tested annually pursuant to federal, state and local laws. A soil test shall be taken along that portion of the pipeline to be removed or abandoned at such intervals as directed in writing by the City Public Works Department and reasonably consistent with established sampling protocols. The City Public Works Department shall determine whether any abandonment or removal which is thereby proposed may be effected without detriment to the public interest and the conditions under which such proposed abandonment or removal may be effected. The City Public Works Department shall then notify Grantee of the City's determinations. Grantee shall also obtain permits to abandon or remove the pipeline from the City Public Works Department for all pipelines prior to the removal, abandonment or discontinuation of use of all or a portion of Grantee's facilities. The City also reserves the right to require removal of Grantee's abandoned facilities in place at any time following the expiration, revocation or termination of this franchise. Grantee shall be required to meet the bonding, insurance, indemnification and annual franchise fee requirements of this franchise, for facilities abandoned in place. C. Within thirty (30) days after receipt of Notification from the City Public Works Department pursuant to Article 11.B.2 above, Grantee shall apply for a permit from the City Public Works Department to abandon or remove the facility. D. Grantee shall, within sixty (60) days after obtaining such permit, commence and diligently prosecute to completion the work authorized by the City's permit. E. In the event Grantee applies to remove its facilities, and the City Public Works Department determines that any or all of the facilities cannot be removed due to a moratorium preventing work in the City streets, the payment of annual franchise fees shall be deferred during any such moratorium period, provided that Grantee promptly removes its facilities after notice by the City Public Works Department of the cessation of the moratorium and direction to remove such facilities. In the event Grantee does not promptly remove such facilities as directed, any deferred annual franchise fees shall be due and payable within thirty (30) days of notice to pay. Deferred annual franchise fees shall otherwise be waived. F. Failure to Comply with City's Orders Regarding the Removal or Abandonment of Facilities. 1. If any orders or prescribed conditions relating to the abandonment of any facilities are not complied with, the City Public Works Department may impose such additional orders 14 Ordinance No. 1390 (2002 aeries) Page 15 of 29 and conditions as the City deems appropriate, including an order that the Grantee remove any or all of such facilities. Grantee shall comply with such additional orders. 2. In the event that Grantee fails to comply with the terms and conditions of abandonment or removal as may be required by this franchise Ordinance, and within such time as may be prescribed by the City Public Works Department, then the City may remove or cause to be removed such facilities at Grantee's expense. Grantee shall pay to the City all of the costs of removing and disposing of these facilities, as well as returning the rights -of -way occupied pursuant to this franchise, including, but not limited to: (a) the cost of all environmental testing the City must conduct to determine the environmental condition of any rights -of -way occupied pursuant to this franchise and to ascertain what procedures the City must undertake, if any, to return any such rights -of -way to the environmental condition required by applicable Federal, State or local environmental laws; (b) all cleanup costs, disposal costs, and any other costs associated with returning these rights -of -way to such environmental condition; (c) all costs of removing, storing, and disposing of the Grantee's facilities; (d) all costs of returning all streets to the structural conditions they were in immediately at the beginning of Grantee's use of these streets pursuant to this franchise agreement; (e) plus the current rate of overhead being charged by the City for reimbursable work..: 3. If, at the non - renewal, revocation or termination of this franchise, or of the permanent discontinuance of the use of all or a portion of its facilities, Grantee, within thirty (30) days thereafter, fails or refuses to make written application for the above - mentioned authority to remove or abandon its facilities, the City Public Works Department shall make the determination as to whether the facilities shall be abandoned in place or removed. The City Public Works Department shall then notify Grantee of its determinations. Grantee shall thereafter comply with the applicable provisions of this Article 11. G. For those facilities Grantee abandons in place, Grantee shall be required to maintain an acceptable performance bond, letter of credit or security fund, as determined by the City Public Works Department, to cover the costs for the removal of any such abandoned facilities from the City streets for any and all periods of time, including those periods following the expiration, revocation or termination of this franchise, that Grantee's facilities remain in the City streets. Grantee shall be required to maintain insurance and to indemnify the City pursuant to this Article during any periods the abandoned facilities remain within the City streets. Provided, however, that any pipelines which cannot be removed due to a moratorium preventing work in the City streets, may be deferred from the payment of the annual franchise fee. The payment of annual franchise fees may be deferred during any such moratorium period, provided that Grantee promptly removes its facilities after notice by the City Public Works Department of the cessation of the moratorium and direction to remove such Facilities. In the event Grantee does not promptly remove such facilities as directed, any deferred annual franchise fees shall be due and payable within thirty (30) days of notice to pay. 15 Ordinance No. 1390 (2002 6eries) Page 16 of 29 ARTICLE 12 COMPLETION OF WORK In the event that the Grantee fails to commence any work or act and diligently proceed therewith or to complete any such act or work required of the Grantee by the terms of this franchise within the time limits required hereby (and except as is otherwise provided in Articles 10 and 11), the City may cause such act or work to be completed by the City or, at the election of the City, by a private contractor. The Grantee agrees to pay the City, within thirty (30) days after delivery of an itemized bill, the cost of performing such act or work plus an amount equal to fifteen percent (15 %) thereof for overhead. If the Grantee is dissatisfied with any decision made by the City Public Works Department hereunder or the determination of the cost of any work performed by the City pursuant to this Agreement, it may petition the City Council to review the same within ten (10) days after such decision or determination. ARTICLE 13 RECOVERY OF COSTS OF REPAIRS AND UNPAID FEES If the Grantee has not paid the City for such fees and expenses and/or liquidated damages incurred by or payable to the City as hereinabove set forth, the City may institute the following collection procedures (which procedures are in addition to any other rights, in law or equity, which the City has to correct amounts due under this franchise and to enforce the terms of this franchise): A. The City Public Works Department shall keep an itemized account of the expenses incurred by the City pursuant hereto, or the fees unpaid by the Grantee. Sixty (60) days after the presentation of the bill to the Grantee therefore, the City Public Works Department shall prepare and file with the City Clerk a report specifying the work done by the City, or the unpaid fees, the itemized and total cost of the work, a description of the work performed, and the name and address of the Grantee entitled to notice pursuant to this Article. B. Upon receipt of said report, the City Clerk shall present it to the City Council for consideration. The City Council shall fix a time, date and place for hearing said report, and any protest or objections thereto. The City Clerk shall cause notice of said hearing to be posted in a newspaper of general circulation in the City, and served by certified mail, postage prepaid, addressed to the Grantee as set forth herein. Such notice shall be given at least ten (10) days prior to the date set for hearing and shall specify the day, hour, and place when the City Council will hear and pass upon the City Public Works Department's report, together with any objections or protests which may be filed as hereinafter provided. C. The Grantee may file written protests or objections with the City Clerk at any time prior to the time set for the hearing on the report of the City Public Works Department. Any such protest or objection must contain a description of the work or unpaid fee or liquidated damages in which the Grantee is contesting and the grounds of such protest or objection and the date it was received by him. He shall present such protest or objection to the City Council at the 16 Ordinance No. 1390 (2002 series) Page 17 of 29 time set for the hearing, and no other protest or objection shall be considered, except as determined by the City Council for good cause shown. D. Upon the day and hour fixed for the hearing, the City Council shall hear and pass upon the report of the City Public Works Department together with any such objections or protests, make such revision, correction or modification to the charge as it may deem just; and when the City Council is satisfied with the correctness of the charge, the report (as revised, corrected or modified), together with the charge, shall be confirmed or rejected. The decision of the City Council on the report and the charge, and on all protests or objections, shall be the final and conclusive decision of the City. E. The City Council may thereupon order that such charge shall be made a personal obligation of the Grantee or assess such charge against the property of the Grantee. (1) If the City Council orders that the charge shall be a personal obligation of the Grantee, it shall direct the City Attorney to collect the same on behalf of the City by use of all appropriate legal remedies. (2) If the City Council orders that the charge shall be assessed against the property of the Grantee, it shall confirm the assessment, cause the same to be recorded on the assessment roll, and thereafter, said assessment shall constitute a special assessment against a lien upon any property held in the City of San Luis Obispo by the Grantee. F. The validity of any assessment made under the provisions of this franchise shall not be contested in any action or proceeding unless the same is commenced within ninety (90) days after the assessment is placed upon the assessment roll as provided herein. G. The City Council, in its discretion, may determine that assessments in amounts of $500.00 or more shall be payable in not more than five (5) equal annual installments. The City Council's determination to allow payment of such assessments in installments, the number of installments, whether they shall bear interest, and the rate thereof shall be adopted by a resolution prior to the confirmation of the assessment. H. Immediately upon its being placed on the assessment roll, the assessment shall be deemed to be complete, the several amounts assessed shall be payable, and the assessments shall be liens against the property of the grantee in the City of San Luis Obispo. The lien shall be subordinate to all existing special assessment liens previously imposed upon the same property, and shall be paramount to all other liens except for state, county, and municipal taxes with which it shall be upon a parity. The lien shall continue until the assessment and all interest due and payable thereon are paid. (1) All such assessments remaining unpaid after thirty (30) days from the date of recording on the assessment roll shall become delinquent and shall bear interest at the highest rate permitted by law from and after said date. 17 Ordinance No. 1390 (2002 series) Page 18 of 29 I. After confirmation of the report, certified copies of the assessment shall be filed with the County Auditor on or before August 10th. The descriptions of the parcels reported shall be those used for the same parcels on the County Assessors map books for the current year. J. The amount of the assessment shall be collected at the same time and in the same manner as ordinary county taxes are collected and shall be subject to the same penalties and procedure and sale in case of delinquency as provided for ordinary county taxes. All laws applicable to the levy collection and enforcement of taxes shall be applicable to such assessment. If the City Council has determined that the assessment shall be paid in installments, each installment and any interest thereon shall be collected in the same manner as ordinary City taxes is in successive years. If any installment is delinquent, the amount thereof is subject to the same penalties and procedure for sale as provided for ordinary county taxes. K. All money recovered by payment of the charge or assessment or from the sale of the property at foreclosure sale shall be paid to the City Finance Director. ARTICLE 14 BOND A. Grantee shall, concurrently with the filing of and acceptance of award of this franchise, file with the City Clerk, and yearly thereafter, maintain in full force and effect, a bond guaranteeing to the City of San Luis Obispo the penal sum of One Million Dollars ($1,000,000.00), with a surety to be approved by the City Public Works Director and City Risk Manager, conditioned that Grantee shall, well and truly observe, fulfill and perform each and every term and condition of this franchise, and in case of a material breach of condition of said franchise, at the discretion of the City Public Works Director, a percentage of the amount of the bond shall be paid to the City according to the following schedule, which cumulative amount for any said breach not cured within the time specified below shall not exceed the full amount of the bond, in addition to any damages recoverable by the City and shall be recoverable from the principal and sureties of the bond: Following receipt of notice by Certified Mail sent by the City, failure to cure said breach of condition, within: 10 business days 30 calendar days 60 calendar days 90 calendar days M. Penal sum paid to City: 5% of the amount of the bond 30% cumulative amount of the bond 70% cumulative amount of the bond 100% cumulative amount of the bond Ordinance No. 1390 (2002 series) Page 19 of 29 The amount of time specified above shall be tolled while City and Grantee resolve, or until the City Council rules on, any written appeal, protest or objection to the City Public Works Director's decision as set forth in Articles 12, 13, 19, and 25, and elsewhere in this agreement; however, if Grantee's appeal, protest or objection is found by the City Council to be the result of bad -faith actions or tactics that are frivolous or intended to cause unnecessary delay, such amount of time shall not be tolled. If said bond is not so filed, the award of this franchise and privileges will be set aside and any money paid therefore will be forfeited. Whenever a bond is taken and deemed to be liquidated damages for any breach of a term or condition of this franchise, the Grantee must immediately file another bond of like amount and character, and if the Grantee fails to do so within the time set by the City Public Works Director, the City Council may, by resolution, declare said franchise automatically forfeited. Nothing herein shall insulate Grantee from liability in excess of the amount of said bond or shall be construed as a waiver by the City of any remedy at law against the Grantee for any breach of the terms and conditions of this franchise, or for any damage, loss or injuries suffered by the City of San Luis Obispo in case of any damage, loss or injury suffered by any person, firm, or corporation by reason of any work done or any activity conducted by the Grantee in exercise of this franchise. B. The faithful performance bond shall continue to exist for one (1) year following the City's approval of any sale, transfer, assignment or other change of ownership of this franchise, or of the expiration or termination of this franchise. The City may release said bond prior to the end of the one (1) year period upon satisfaction by Grantee of all the obligations under this franchise. ARTICLE 15 INSURANCE A. The Grantee shall procure and shall keep in force for the term of the franchise, at the sole cost and expense of the Grantee, the following insurance. All insurance coverages are to be placed with insurers which have a Best's rating of not less than B +VIII and are admitted insurance companies in the State of California. Grantee may satisfy the requirements of this Article 15 by showing proof of self - insurance reasonably satisfactory to the City Attorney and Risk Manager. Commercial General Liability Insurance (CGL): Grantee shall maintain in full force and effect Commercial General Liability Insurance with the following coverages: 1. Personal Injury and Bodily Injury, including death resulting therefrom. 2. Property Damage. 3. Automobile coverage which shall include owned, non -owned and hired vehicles. 19 Ordinance No. 1390 (2002 series) Page 20 of 29 The amount of insurance shall not be less than the following: Single limit on the coverage applying to bodily and personal injury, including death resulting therefrom, property damage, and automobile coverage in the total amount of Ten Million Dollars ($10,000,000.00). The following endorsements must be provided in the CGL policy: 1. If the insurance policy covers on an "accident" basis, it must be changed to "occurrence." 2. The policy must cover personal injury as well as bodily injury. 3. Blanket contractual liability must be afforded and the policy must contain a cross - liability or severability of interest endorsement. 4. Broad Form Property Damage Liability must be afforded. 5. Products and Completed Operations coverage must be provided. 6. The City, its officers, employees and agents shall be named as additional insured under the policy. The policy shall include the appropriate insurance company endorsement, as required under City regulations. The policy shall provide that the insurance will operate as primary insurance. No other insurance effected by the City, whether commercial or self - insurance will be called upon to contribute to a loss hereunder. The following requirements apply to all insurance to be provided by Grantee: 1. A certificate of insurance shall be furnished to the City. Upon request by the City, Grantee shall provide a certified copy of any insurance policy to the City within forty -five working days of the City's request. 2. Certificates and policies shall state that the policies will not be canceled or reduced in coverage or changed in any other material respect without thirty days prior written notice to the City. B. Failure on the part of Grantee to procure or maintain required insurance and bonding shall constitute a material breach of this franchise upon which the City may immediately terminate or suspend this franchise. ARTICLE 16 INDEMNIFICATION BY GRANTEE The Grantee, by the acceptance or use of the franchise hereby granted, shall defend, indemnify and shall keep and save free and harmless the City, its officers, agents and/or employees against any and all claims, demands or causes of action which may be asserted, prosecuted or established against them, or any of them, for damage to persons, or property, of 20 Ordinance No. 1390 (2002 aeries) Page 21 of 29 whatsoever nature, arising out of the use by it of the City streets hereunder or arising out of any of the operations or activities of the Grantee. pursuant to this franchise, whether such damage shall be caused by its own sole negligence or negligence concurrent with the City, excepting therefrom, however, any claim or demand based on the sole negligence and willful misconduct of the City, and any claim, demand, or cause of action which may be asserted, prosecuted or established against the City under the provision of the Worker's Compensation Act for injury to or the death of any of City's officers, agents or employees while acting within the scope of their employment. Grantee shall not be responsible for any criminal, fraudulent or malicious conduct of the City. ARTICLE 17 CHANGES IN CONTROL OF FRANCHISE A. On and after the Grantee's acceptance of this franchise as provided in Article 23 herein, Grantee, its partners, its shareholders, or any other person or persons holding an interest in Grantee shall not transfer any interest in the franchise where such a transfer would lead to another person achieving a twenty -five percent (25 %) or greater interest in this franchise or change control of this franchise, unless the City approves such a transfer or change in control. The City shall approve a request for transfer or change in control only if doing so serves the public interest. As used in this franchise Ordinance, "control" includes actual working control in whatever manner exercised. 1. The City shall deny any such request for transfer or change in control if the transferor or transferee fails to comply with any applicable provision of this Article of this franchise Ordinance, or if the City determines the transferor is in non - compliance with the terms and conditions of this franchise Ordinance, or if a transferee is lacking in experience and/or financial ability to operate the pipelines authorized by this franchise Ordinance, or if the proposed transfer will be detrimental to the public interest. B. Both the Grantee and the proposed transferee shall inform the City Public Works Department of any pending change in control of this franchise or of any pending transfer of an interest in the franchise requiring the City's consent pursuant to this Article, and each shall provide applications containing all documents on which the transfer or change in control is predicated and all documents which the City Public Works Department determines are necessary to evaluate the transfer or change of control. These applications shall be signed by duly authorized representatives of the Grantee and the proposed transferee, with signatures acknowledged by a notary. The appropriate transfer fee described in Article 17(C), infra shall accompany these applications. 1. Grantee's application shall include: a. Identification and ownership of the proposed transferee in the same detail as if the proposed transferee were an applicant for an initial grant; 21 Ordinance No. 1390 (2002 series) Page 22 of 29 b. Current financial statements showing the financial condition of the Grantee as of the date of the application. In this application, the Grantee shall also agree to submit financial statements showing the condition of the franchise as of the closing. Said financial statements shall have been audited and certified by an independent certified public accountant, and shall be submitted within ninety (90) days of the closing. 2. The proposed transferee's application shall contain current financial statements of the proposed transferee and other such information and data, including but not limited to sources of capital, as will demonstrate conclusively that the proposed transferee has all the financial resources necessary to acquire the pipeline(s), carry out all of the terms and conditions of the franchise, remedy any and all defaults and violations of the provisions of this franchise in the Grantee's past and present operations, make such other improvements and additions as may be required or proposed to maintain and conduct the services and facilities required under this franchise. The proposed transferee will be required to authorize release of financial information to the City from financial institutions relating to information supplied by the proposed transferee in support of the application. The proposed transferee's application shall also include: a. A construction schedule, describing type and placement of construction, detail phases of construction, and include map(s) correlated to the phases of construction. Map(s) shall include detail on the location, length, depth, and internal diameter of any planned pipelines. b. Copies of any agreements with utility companies for the use of any facilities including, but not limited to, poles, lines and conduit. c. A description of plans for emergency equipment and personnel enabling the transferee to meet the emergency equipment personnel requirements in Article 8 herein. d. Any information indicating as specifically as possible that any principal, manager, or associate of the proposed transferee or a parent entity of the proposed transferee has previously been or is currently: i. A party to a criminal proceeding (involving felonies or misdemeanors) in which any of the following offenses have been charged: fraud, embezzlement, tax evasion, bribery, extortion, jury tampering, obstruction of justice (or other misconduct affecting public or judicial officers in the performance of their duties), false /misleading advertising, perjury, antitrust violations (state or federal), violation of environmental laws or regulations, or conspiracy to commit any of the foregoing; ii. A party to a civil proceeding concerning liability for any of the following: unfair or anticompetitive business practice, antitrust violations (state or federal) including instances in which consent decrees were entered, violations of security laws (state or federal), false /misleading advertising, racketeer influences and corrupt organizations, violation of environmental laws or regulations, or contraband forfeitures; 22 Ordinance No. 1390 (2002 Series) Page 23 of 29 iii. Subject to any penalty, criminal or civil, involving failure to comply with the requirements of a pipeline franchise; iv. Involved in instituting legal action against its franchising authorities; v. Involved in revocation/non- renewal of any other franchise; e. Any other details, statements, information or references pertinent to the subject matter of such application which shall be required or requested by the City or by any provision of law. f. An express and unconditional written acceptance of the terms and conditions of this Franchise Ordinance, in its most current form, as a condition to the transfer. C. A fee shall be submitted with the applications for the City's consent to transfer or change of control. 1. Where the City's consent to a transfer or a change of control of this franchise does not result in the modification of this franchise by adoption of an amending ordinance, this fee for each application shall be as set forth in the City's fee ordinance. 2. Where the City's consent to a transfer or a change of control of this franchise results in the modification of this franchise by adoption of an amending ordinance this fee shall be as set forth in the City's fee ordinance. 3. In the event the costs to process the applications exceed the fees detailed above, the applicants may be required to pay any additional costs incurred by the City in processing the applicants' requests for the City's consent to the transfer or_change of control of this franchise. Such costs may include the cost incurred for hiring consultants to assist in evaluating the applications. Such costs shall be paid by the applicants prior to final consideration of the request by City Public Works Department, or the City Council, as applicable. D. Within thirty (30) days of the effective date of the City's approval of the transfer or change of control, or within thirty (30) days of the date of the close of the transfer or change of control, the Grantee shall file with the City Public Works Department: (1) a certified copy of each duly executed instrument of such a transfer or change in control; and (2) the submittal of a final accounting and report of all fees due under this franchise. The proposed transferee shall be responsible for any underpayment, and shall be entitled to a credit for any overpayment. Within ninety (90) days of the closing of the transfer or change of control, the Grantee shall submit financial statements, audited and certified by an independent certified public accountant, showing the condition of the franchise as of the closing. If such duly executed instruments are not filed with the City Public Works Department by the deadlines imposed in this Article, or if the final documents are different from the preliminary documents, the City Public Works Department may inform the proposed transferee that the transfer or change in control is not deemed to be in force and effect. The City Public Works Department may then administratively 23 Ordinance No. 1390 (2002 Series) Page 24 of 29 determine that this franchise is forfeited and the City Council may, without notice, by ordinance repeal this franchise. E. As a condition to the granting of consent to such a transfer or change in control, the City Council may impose such additional terms and conditions upon this franchise and upon the proposed transferee as are in the public interest. Such additional terms and conditions shall be imposed by ordinance. Nothing herein contained shall be construed to grant Grantee the right to transfer or change control of this franchise or any part thereof, except in the manner aforesaid. This Article 17 applies to any transfer of this franchise, or of any change in control of this franchise, whether by operation of law, by voluntary act of Grantee, or otherwise. ARTICLE 18 WAIVER OF BREACH No waiver of the breach of any of the covenants, agreements, restrictions, or conditions of this franchise by the City shall be construed to be a waiver of any succeeding breach of the same or other covenant, agreements, restrictions or conditions of this franchise. No delay or omission of the City in exercising the right, power or remedy herein provided in the event of default shall be construed as a waiver thereof, or acquiescence therein, nor shall the acceptance of any payments made in a manner or at a time other than is herein provided be construed as a waiver of or variation in any of the terms of this franchise. ARTICLE 19 DEFAULT A. In the event that the Grantee shall default in the performance of any of the terms, covenants and conditions herein, the City may give written notice to the Grantee of such default by certified mail. In the event that the Grantee does not commence the work necessary to cure such default within five (5) business days after such notice is received or prosecute such work diligently to completion, the City may declare this franchise forfeited by giving written notice thereof to the Grantee, whereupon this franchise shall be void and the rights of the Grantee hereunder shall terminate and the Grantee shall execute an instrument of surrender and deliver the same to the City. If the City Council declares this franchise forfeited, it may thereupon and thereafter exclude the Grantee from further occupancy or use of all City roads and streets authorized under this franchise. A forfeiture of said franchise shall not of itself operate to release any bond filed for said franchise. Upon declaring a franchise forfeited, the City Council may elect to take and accept any bond as liquidated damages therefore or pursue any other legal remedy for any damage, loss or injury suffered by the City as a result of such breach or both. After forfeiture, any bond shall remain in full force and effect for a period of one (1) year unless exonerated by the City Council. No bond shall be exonerated unless a release is obtained from the City Public Works Department and is filed with the City Clerk. The release shall state whether all excavations have been back filled, all obstructions removed, and whether the substratum or surface of City streets occupied or used have been placed in good and serviceable condition. A release shall not constitute a waiver of any right or remedy which the City of San 24 Ordinance No. 1390 (2002 series) Page 25 of 29 Luis Obispo may have against the Grantee or any person, firm or corporation for any damage, loss or injury suffered by the City as a result of any work or activity performed by the Grantee in the exercise of this franchise. B. No provision herein made for the purpose of securing the enforcement of the terms and conditions of this franchise shall be deemed an exclusive remedy, or to afford the exclusive procedure, for the enforcement of said terms and conditions, but the remedies and procedure herein provided, in addition to those provided by law shall be deemed to be cumulative. ARTICLE 20 SCOPE OF RESERVATION Nothing herein contained shall ever be construed so as to exempt the Grantee from compliance with all ordinances of the City now in effect or which may be hereafter adopted which are not inconsistent with the terms of this franchise. The enumeration herein of specific rights reserved shall not be construed as exclusive, or as limiting the general reservation herein made or as limiting such rights as the City may now or hereafter have in law. ARTICLE 21 NOTICE Any notice required to be given under the terms of this franchise, the manner of service of which is not specifically provided for, may be served as follows: Upon the City, by serving the City Clerk, personally or by addressing a written notice to the City Clerk of the City of San Luis Obispo, 990 Palm Street, San Luis Obispo, CA 93401, and depositing such notice in the United States mail, postage prepaid. Upon the Grantee, by addressing a written notice to Grantee addressed to Tosco Corporation, c/o Tosco Refining Company, 9645 Santa Fe Springs Road, P.O. Box 2628, Santa Fe Springs, CA 90670 -0628, Attn: Supervisor, R/W Administration, or such other address as may from time to time be furnished in writing by one party to the other and depositing said notice in the United States mail, postage prepaid. When service of any such notice is made by mail, the time of such notice shall begin with and run from the date of the deposit of same in the United States mail. ARTICLE 22 SUCCESSORS The terms herein shall inure to the benefit of and shall bind, as the case may be, the successors and assigns of the parties hereto, subject, however, to the provisions of Article 17. 25 Ordinance No. 1390 (2002 series) Page 26 of 29 ARTICLE 23 ACCEPTANCE OF FRANCHISE A. This franchise is granted and shall be held and enjoyed only upon the terms and conditions herein contained. By accepting this grant of franchise, Grantee shall agree to be bound by each and all of the requirements of Article X, Sections 1001 through 1007 of the San Luis Obispo City Charter. B. Grantee shall, within ten (10) days after the passage of this franchise Ordinance, file with the City Clerk an express and unconditional written letter of acceptance of, and consent to, the terms and conditions of this franchise Ordinance, in its current version, and as subsequently amended pursuant to San Luis Obispo City Charter, Article X, Section 1004. C. The parent entity, or entities, if any, of Grantee, shall file a letter with the City, concurrent with Grantee's letter of acceptance, which guarantees the performance of each and every term, covenant and condition imposed on Grantee pursuant to the franchise Ordinance. D. Grantee's letter of acceptance shall be signed by two (2) duly authorized representatives of Grantee, whose signatures shall be acknowledged by a notary, and shall be accompanied by the performance bond and evidence of insurance required by this franchise Ordinance. ARTICLE 24 FORCE MAJEURE The time within which Grantee is obligated hereunder to construct, erect, maintain, operate, repair, renew, change the size of and remove pipelines or other improvements shall be extended for a period of time equal in duration to, and performance in the meantime shall be excused on account of, and for, and during the period of any delay caused by strikes, threats of strikes, lockouts, war, threats of war, insurrection, invasion, acts of God, calamities, violent action of the elements, fire, action or regulation of any governmental agency law or ordinance, impossibility of obtaining materials, or other things beyond the reasonable control of Grantee. ARTICLE 25 LIQUIDATED DAMAGES A. By acceptance of this franchise, Grantee understands and acknowledges that failure to timely comply with any performance requirements stipulated in this franchise Ordinance will result in damages to the City, and that it is and will be impractical to determine the actual amount of such damage in the event of delay or nonperformance. Each of the amounts set forth below has been set in recognition of the difficulty of affixing actual damages arising from breach of these time of performance requirements. Each of said amounts constitutes a reasonable estimate of these damages. This section does not limit the rights and remedies available to the City for damages other than the timely compliance with performance 26 Ordinance No. 1390 (2002 series) Page 27 of 29 requirements as described in this section. The liquidated damages set forth below shall be chargeable to the bond, letter of credit or security fund provided for in Article 14, supra, should Grantee not make payment within thirty (30) days of written notice by certified mail by the City that the following amounts are due for the following concerns: 1. Failure to provide data, documents, or reports within ten (10) business days after receipt of written request by the City, by certified mail, or such longer time as may be specified in said request: Two Hundred Fifty Dollars ($250.00) per day for each day, or part thereof that each violation continues. 2. Failure to provide to the City within ten (10) business days after receipt of written request by the City, by certified mail, current evidence of insurance and bonding: Two Hundred Fifty Dollars ($250.00) per day for each day, or part thereof, that each noncompliance continues. Nothing in this Section shall preclude immediate termination or suspension of this franchise as provided for under Article 15B., supra. 3. Failure by Grantee to timely restore public or private property after performance of work and following Grantee's receipt of written request by the City to do so within ten (10) business days thereafter by certified mail: Two Hundred Fifty Dollars ($250.00) per day or part thereof, that each non - compliance continues. Any fines paid pursuant to this Subsection 3 shall be paid solely to the Street Fund of the City Public Works Department. B. If the City Public Works Department determines that Grantee is liable for liquidated damages, the City Public Works Department shall issue to Grantee by certified mail written notice of intention to charge liquidated damages. Liquidated damages shall begin to accrue as of the date of the written notice and as set forth in said notice. The notice shall set forth the basis for the liquidated damages and give Grantee a reasonable time in which to remedy the violation. C. Grantee shall have the right to appeal any notice to the City Public Works Department by certified mail, within twenty (20) days after issuance of the notice by the City Public Works Department. The City Public Works Department shall hold an administrative hearing within sixty (60) days after receipt of an appeal. The City Public Works Director's decision shall be the final decision of the City. D. If Grantee does not appeal the notice within said twenty (20) day period, Grantee shall pay the amount(s) of liquidated damages as stated in the notice. If payment is not paid as provided for in this Article, the City may withdraw against the bond provided for in Article 14 herein. 27 Ordinance No. 1390 (2002 series) Page 28 of 29 ARTICLE 26 ATTORNEYS' FEES In the event the City or Grantee brings legal action against the other, or against Grantee's bonding companies or insurance carriers to compel performance of, or to recover for breach of any covenant, agreement or condition contained in this franchise, or for damages, the prevailing party shall be entitled to, in addition to any other relief obtained, such reasonable attorneys' fees as are fixed by the judge of the court in which such action is brought. ARTICLE 27 CONDEMNATION Notwithstanding anything to the contrary contained herein and in accordance with San Luis Obispo City Charter Article X, Section 1005, this Ordinance shall not in any way affect the right of the City to acquire the property of the Grantee thereof either by purchase or through the exercise of the right of eminent domain, and nothing herein contained shall be construed to contract away or to modify or to abridge either for a term or in perpetuity the City's right of eminent domain with respect to any public utility. The City reserves the right to purchase the property of such utility at an agreed price. In fixing the price to be paid by the City for any utility, no allowance shall be made for franchise value (other than the actual amount paid to the City at the time of the franchise acquisition), goodwill, going concern, earning power, increased cost of reproduction, severance damage, or increased value of right -of -way. SECTION 2: If any section, subsection, sentence, clause, phrase or portion of this ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council of the City of San Luis Obispo hereby declares that they would have adopted this ordinance and each sentence, clause, phrase or portion thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases or portions be declared invalid or unconstitutional. SECTION 3: This ordinance shall take effect and be in full force and effect thirty (30) days after its passage, and before the expiration of fifteen (15) days after passage of this ordinance, it shall be published once with the names of the members of the City Council voting for and against the ordinance in a newspaper of general circulation published in the City of San Luis Obispo, State of California. SECTION 4: A synopsis of this ordinance, approved by the City Attorney, together with the ayes and noes shall be published once in full at least five (5) days prior to its final passage, in a newspaper published and circulated in said City, and at the same time shall go into effect at the expiration of thirty (30) days after its said final passage. A copy of the full final Ordinance No. 1390 (2002 aeries) Page 29 of 29 text of this ordinance shall be on file in the Office of the City Clerk on and after the date following the introduction and passage to print and shall be available to any interested member of the public. INTRODUCED on the 19th day of June 2001 AND FINALLY ADOPTED by the Council of the City of San Luis Obispo on the 10' day of July 2001, on the following roll call vote: AYES: Council Members Marx, Mulholland, Schwartz, Vice Mayor Ewan and Mayor Settle NOES: None ABSENT: None '_..�e Price; Ciiy Clerk APPROVED: Yef G. Jo,.gens, Ci Attorney 29 r.. Green Waste Services Agreement ARTICLE 13 OTHER AGREEMENTS OF THE PARTIES 13.1 Relationship of Parties The parties intend that Contractor shall perform the services required by this Agreement as an independent Contractor engaged by City and not as an officer or employee of City nor as a partner of or joint venture with City. No employee or agent or Contractor shall be or shall be deemed to be an employee or agent of City. Except as expressly provided herein, Contractor shall have the exclusive control over the manner and means of conducting the Green Waste services performed under this Agreement, and all Persons performing such services. Contractor shall be solely responsible for the acts and omissions of its officers, employees, subcontractors and agents. Neither Contractor nor its officers, employees, subcontractors and agents shall obtain any rights to retirement benefits, workers compensation benefits, or any other benefits which accrue to City employees by virtue of their employment with City. 13.2 Compliance with law In providing the services required under this Agreement, Contractor shall at all times, at its sole cost, comply with all applicable laws of the United States, the State of California, City, and with all applicable regulations promulgated by federal, state, regional or local administrative and regulatory agencies, now in force and as they may be enacted, issued or amended during the Term. 13.3 Governing Law This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California. 13.4 Jurisdiction Any lawsuits between the parties arising out of this Agreement shall be brought and concluded in the courts of the State of California, which shall have exclusive jurisdiction over such lawsuits. 13.5 Assignment Except as may be provided for in Article 11, (City's Right to Perform Service), neither party shall assign its rights, nor delegate, subcontract or otherwise transfer its obligations under this Agreement to any other Person without the prior written consent of the other party. Any such assignment made without the consent of the other party shall be void and the attempted assignment shall constitute a material breach of this Agreement. The Contractor shall consent to any assignment to a joint powers authority, or any similar public entity assignee of the City. 45 I Green Waste Services Agreement For purposes of this Section when used in reference to Contractor, "assignment" shall include, but not be limited to (1) a sale, exchange or other transfer of at least fifty -one percent (51%) all of Contractor's assets dedicated to service under this Agreement to a third party; (2) a sale, exchange or other transfer of outstanding common stock of Contractor to a third party provided said sale, exchange or transfer may result in a change of control of Contractor; (3) any dissolution, reorganization, consolidation, merger, re- capitalization, stock issuance or re- issuance, voting trust, pooling agreement, escrow arrangement, liquidation or other transaction to which results in a change of ownership or control of Contractor; (4) any assignment by operation of law, including insolvency or bankruptcy, making assignment for the benefit of creditors, writ of attachment for an execution being levied against this Agreement, appointment of a receiver taking possession of Contractor's property, or transfer occurring in the event of a probate proceeding; and (5) any combination of the foregoing (whether or not in related or contemporaneous transactions) which has the effect of any such transfer or change of ownership, or change of control of Contractor. Contractor acknowledges that this Agreement involves rendering a vital service to City's residents, and that City has selected Contractor to perform the services specified herein based on (1) Contractor's experience, skill and reputation for conducting its Solid Waste management operations in a safe, effective and responsible fashion, at all times in keeping with applicable Environmental Laws, regulations and best waste management practices, and (2) Contractor's financial resources to maintain the required equipment and to support its indemnity obligations to City under this Agreement. City has relied on each of these factors, among others, in choosing Contractor to perform the services to be rendered by Contractor under this Agreement. If Contractor requests City's consideration of and consent to an assignment, City may deny or approve such request in its complete discretion. The City is concerned about the possibility that assignment could result in significant rate increases, as well as a change in the quality of service. Accordingly, the following standards have been set to ensure that assignment will result in continued quality service. In addition, the City reserves the right to solicit competitive bids for these services if the assignment results in a request by the assignee for rate increases that are higher than the inflationary index and do not reflect value changes in service standards. At a minimum, no request by Contractor for consent to an assignment need be considered by City unless and until Contractor has met the following requirements: A. Contractor shall undertake to pay City its reasonable expenses for attorney's fees and investigation costs necessary to investigate the suitability of any proposed assignee, and to review and finalize any documentation required as a condition for approving any such Green Waste Services Agreement assignment; B. Contractor shall furnish City with audited financial statements of the proposed assignee's operations for the immediately preceding three (3) operating years; C. Contractor shall furnish City with satisfactory proof: 1) that the proposed assignee has at least ten (10) years of Green Waste management experience on a scale equal to or exceeding the scale of operations conducted by Contractor under this Agreement; 2) that in the last five (5) years, the proposed assignee has not suffered any significant citations or other censure from any federal, state or local agency having jurisdiction over its Solid Waste management operations due to any significant failure to comply with state, federal or local Environmental Laws and that the assignee has provided City with a complete list of such citations and censures; 3) that the proposed assignee has at all times conducted its operations in an environmentally safe and conscientious fashion; 4) that the proposed assignee conducts its Green Waste management practices in accordance with sound waste management practices in full compliance with all federal, state and local laws regulating the Collection, transportation, processing, marketing and disposal of Solid Waste including Hazardous Wastes; and, 5) of any other information required by City to ensure the proposed assignee can fulfill the Terms of this Agreement in a timely safe and effective manner. Under no circumstances shall the City be obliged to consider any proposed assignment by City if Contractor is in default at any time during the period of consideration. 13.6 Subcontracting Except as approved in writing by the City, Contractor shall not enter into an agreement to have- another Person perform Contractor's duties of this Agreement. Contractor shall undertake to pay City its reasonable expenses for attorney's fees and investigation costs necessary to investigate the suitability of any proposed subcontractor, and to review and finalize any documentation required as a condition for approving any such subcontracting agreement. 13.7 Binding on Assigns The provisions of this Agreement shall inure to the benefit to and be binding on the permitted assigns of the parties. 13.8 Transition to Next Contractor If the transition of services to another Contractor occurs through expiration of term, default and termination, or otherwise, Contractor will cooperate with City and subsequent Contractor(s) to assist in an orderly transition which will include Contractor providing route lists and billing information. Contractor will not be obliged to sell collection 47 Green Waste Services Agreement vehicles or Containers to the next Contractor. Depending on Contractor's circumstances at the point of transition, Contractor at its option may enter into negotiations with the next Contractor to sell (in part or all) Collection vehicles and/or containers. 13.9 Parties in Interest Nothing in the Agreement, whether express or implied, is intended to confer any rights on any persons other than the parties to it and their representatives, successors and permitted assigns. 13.10 Waiver The waiver by either party of any breach or violation of any provisions of this Agreement shall not be deemed to be a waiver of any breach or violation of any other provision nor of any subsequent breach of violation of the same or any other provision. The subsequent acceptance by either party of any monies which become due hereunder shall not be deemed to be a waiver of any pre- existing or concurrent breach or violation by the other party of any provision of this Agreement. 13.11 Contractor's Investigation Contractor has relied on its own investigations, and not on any representations of the City or its agents of the conditions and circumstances surrounding the Agreement and the work to be performed by it. 13.12 Notice All notices, demands, requests, proposals, approvals, consents and other communications which this Agreement requires, authorizes or contemplates shall be in writing and shall either be personally delivered to a representative of the parties at the address below or be deposited in the United States mail, first class postage prepaid, addressed as follows: If to City: Utilities Director City of San Luis Obispo 955 Morro Street San Luis Obispo, CA 93401 If to Contractor: Tom Martin San Luis Garbage Company 970 Monterey Street San Luis Obispo, CA 93401 The address to which communications may be delivered may be changed from time to time by a notice given in accordance with this Section. The notice, if mailed, is deemed served three (3) days after the mailing. - Green Waste Services Agreement 13.13 Representatives of the Parties References in this Agreement to the "City" shall mean the City Council and all actions to be taken by City shall be taken by the City Council except as provided below. The City Council may delegate, in writing, authority to the City Administrative Officer, Utilities Director, and/or to the City employees and may permit such employees, in turn, to delegate in writing some or all of such authority to subordinate employees. Contractor may rely upon actions taken by such delegates if they are within the scope of the authority properly delegated to them. Contractor shall, by the effective date, designate in writing a responsible officer who shall serve as the representative of Contractor in all matters related to the Agreement and shall inform City in writing of such designation and of any limitations upon his or her authority to bind Contractor. City may rely upon action taken by such designated representative as actions of Contractor unless they are outside the scope of the authority delegated to him/her by Contractor as communicated to City. Green Waste Services Agreement 13.14 (City Free to Negotiate with Third Parties City may investigate all options for the Collection and processing of Green Waste after the expiration of the Term. Without limiting generality of the foregoing, City may solicit proposals from Contractor and from third parties for the provision of Green Waste services, and any combination thereof, and may negotiate and execute Agreements for such services which will take effect upon the expiration or earlier termination under Section 12.1 (Events of Default) of this Agreement. 13.15 Compliance with City Code Contractor shall comply with those provisions of the City code which are applicable, and with any and all amendments to such applicable provisions during the Term of this Agreement. 13.16 Privacy Contractor shall strictly observe and protect the rights of privacy of customers. Information identifying individual customers or the composition or contents of a customer's waste stream shall not be revealed to any person, governmental unit, private agency, or contractor, unless upon the authority of a court of law, by statute, or upon valid authorization of the customer. This provision shall not be construed to preclude Contractor from preparing, participating in, or assisting in the preparation of waste characterization studies or waste stream analyses which may be required by AB 939. 50 Green Waste Services Agreement ARTICLE 14 MISCELLANEOUS AGREEMENTS 14.1 Entire Agreement This Agreement, including the exhibits, represents the full and entire Agreement between the parties with respect to the matters covered herein. 14.2 Section Headings The article headings and section headings in this Agreement are for convenience of reference only and are not intended to be used in the construction of this Agreement nor to alter or affect any of its provisions. . . 14.3 References to laws and Other Agreements All references in this Agreement to laws shall be understood to include such laws as they may be subsequently amended or recodified, unless otherwise specifically provided. This Agreement supersedes any and all Agreements for Green Waste Collection, processing and/or marketing heretofore entered into by the parties and the City. 14.4 Interpretation This Agreement, including the exhibits attached hereto, shall be interpreted and construed reasonably and neither for nor against either party, regardless of the degree to which either party participated in its drafting. 14.5 Agreement This Agreement may not be modified or amended in any respect except by a writing signed by the parties. 14.6 Severability If any non - material provision of this Agreement is for any reason deemed to be invalid and unenforceable, the invalidity or unenforceability of such provision shall not affect any of the remaining provisions of this Agreement which shall be enforced as if such invalid or unenforceable provision had not been contained herein. 14.7 Exhibits Each of exhibit identified as Exhibit "A" is attached hereto and incorporated herein and made a part hereof by this reference. 51 Green Waste Services Agreement IN WITNESS WHEREOF, City and Contractor have executed this Agreement as of the day and year first above written. . The City of San Luis Obispo ( "City ") Mayor Approved as to Form: 52 San Luis Garbage Company ( "Contractor" sy Name Title:n�'re7l�� -0 EXHIBIT 2 Residential Recycling Services Agreement 0 U/ AGREEMENT BETWEEN THE CITY OF SAN LUIS OBSIPO AND SAN LUIS GARBAGE COMPANY For Collection and Disposal of Residential Recyclables Materials Within the City of San Luis Obispo This Agreement (Agreement) is made and entered into this 3rd day of September, 2001, in the State of California by and between the City of San Luis Obispo, A Charter Municipal Corporation of the State of California, (City) and San Luis Garbage, a California corporation, (Contractor), for the Collection, processing and marketing of residential Recyclable Materials and the Performance of other services related to meeting the goals and requirements of the California Integrated Waste Management Act of 1989. RECITALS This Agreement is entered into with reference to the following facts and circumstances: The.Legislature of the State of California, by enactment of the California Integrated Waste Management Act of 1989 (AB 939) Division 30 of the California Public Resources Code, commencing with § 40000, has declared that it is within the public interest to authorize and require local agencies to make adequate provisions for Recyclable Materials handling within their jurisdictions. AB 939 also requires a twenty -five percent (25 %) reduction in the amount of waste which is landfilled by 1995, and a fifty percent (50 %) reduction by the year 2000; and 2. The separate Collection, processing and marketing of Recyclable Materials for beneficial reuse or Recycling was selected in the City's Source Reduction and Recycling Element adopted June 1994, hereinafter referred to as the SRRE, as a means of meeting the 1995 and 2000 State mandated diversion goals of AB 939; and 3. The City has entered into an exclusive franchise with San Luis Obispo Garbage Company of the Collection, transportation, processing, diversion and disposal of refuse from residential properties, Multi- Family Dwelling Units, institutional and commercial and industrial properties; and 4. The City has determined that an Agreement granted to a private company for the Collection, processing and marketing of residential Recyclable Materials is the most effective and efficient way to collect and divert residential Recyclable Materials within the City; and The City declares its intention of maintaining reasonable rates and high quality service for the Collection, processing, and marketing of residential Recyclable Materials; and 1 Residential Recycling Services Agreement 0 6. The Contractor is responsible for arranging for residential Recyclable Materials Collection, processing and marketing services; and 7. This Franchise Agreement has been developed by and is satisfactory to the parties. NOW, THEREFORE, for and in consideration of the mutual promises herein contained, it is hereby agreed by and between the City and Contractor as follows: 2 Residential Recycling Services Agreement ARTICLE I DEFINITIONS 1.1 "AB 939 means the California Integrated Waste Management Act of 1989, as it may be amended from time to time. 1.2 "Affiliate" means all businesses (including corporations, limited and general partnerships and sole proprietorships) which are directly or indirectly related to Contractor by virtue of direct or indirect common ownership interest or common management shall be deemed to be "Affiliated with" Contractor and included within the term "Affiliates with" Contractor and included within the "Affiliates" as used herein. An Affiliate shall include a business in which Contractor owns a direct or indirect ownership interest, a business which has a direct or indirect ownership interest in Contractor and/ or a business which is also owned, controlled or managed by any business or individual which has a direct or indirect ownership interest exists, the constructive ownership provisions of Section 318(a) of the Internal Revenue Code of 1986, as in effect on the date of this Agreement, shall apply; provided, however, that (i) "ten percent (10 %)" shall be substituted for "fifty percent (50 %)" in Section 318(a)(2)(C) and in Section 318(a)(3)(C) thereof; and (ii) Section 318(a)(5)(C) shall be disregarded. For purposes of determining ownership under this paragraph and constructive or indirect ownership under Section 318(a), ownership interest of less than ten percent (10 %) shall be determined on the basis of the percentage of voting interest or value which the ownership interest represents, whichever is greater. 1.3 "Agreement" means this residential Recycling Agreement (dated , including all exhibits and attachments, and any amendments thereto) between City and Contractor for Collection, processing and marketing of residential Recyclable Materials and other services related to meeting the diversion goals and requirements of AB 939. 1.4 "Billings" means any and all statements of charges for services rendered by Contractor pursuant to this Agreement. 1.5 "California Integrated Waste Management Act of 1989" means Public Resources Code, § 40,000 t 1.6 "City" means the City of San Luis Obispo, a Charter municipal corporation, and all the territory lying within the municipal boundaries of the City as presently existing or as such boundaries may be modified during the term, acting through the City Council or the City Administrative Officer. Residential Recycling Services Agreement 1.7 "Collect" or "Collection" means to take physical possession, transport, and remove Recyclable Materials within and from the City. 1.8 "Commercially Generated Recyclable Materials" means Recyclable Materials generated at commercial and/or industrial property and separated by the Waste Generator for Collection and which are excluded from the scope of this Agreement as described in Article 4, Scope of Agreement. 1.9 "Container" means any bin, vessel, can or receptacle used for Collection and storing Recyclable Materials before removal. 1.10 "Contractor" means San Luis Garbage, a corporation organized and operating under the laws of the State of California, and its officers, directors, employees, agents, companies and subcontractors where applicable. 1.11 "Environmental Laws" means all federal and state statutes, county, local and City ordinances and regulations concerning public health, safety and the environment including, by way of example and not limitation, the comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 USC §9601 Pty; the Resource Conservation and Recovery Act, 42 USC §6902 et ; the Federal Clean Water Act, 33 USC §1251 et ; the Toxic Substances Control Act, 15 USC §1601 et�; the Occupational Safety and Health Act, 29 USC §651 et ; the California Hazardous Waste Control Act, California Health and Safety Code §25100 et ; the California Toxic Substances Account Act, California Health and Safety Code §25300 ct ; the Safe Drinking Water and Toxic Enforcement Act, California Health and Safety Code §25249.5 at ; as currently in force or as hereafter amended, and all rules and regulations promulgated thereunder. 1.12 "Facility" means any plant or site, owned or leased and maintained and/or operated or used by Contractor for the purposes of performing the duties. to fulfill this Agreement. 1.13 "Fiscal Year" means the period commencing January 1 and concluding December 31 for Contractor. For City it means the period commencing July 1 of one year and concluding June 30 of the subsequent year. 1.14 "Hazardous Waste" means any discarded material or mixture of materials, which is toxic, corrosive, flammable, radioactive or which, because of its quantity, concentration, physical, chemical or infectious characteristics may do harm to either humans, animals or the environment, or as defined in Article 2, Chapter 6.5 §25117 of the Health and Safety Code and Public Resources Code §40141. 11 Residential Recycling Services Agreement 1.15 "Materials Recovery Facility" means a permitted Facility where Solid Waste or Recyclable Materials are sorted or separated for the purposes of Recycling or reuse. 1.16 "Multifamily Dwelling Unit" means any Premises, other than a Single Family Dwelling Unit, used for residential purposes, irrespective of whether residence therein is transient, temporary or permanent. 1.17 "Owner" means the person holding the legal title to the real property constituting the Premises to which solid waste collection service is to be provided under this Agreement. 1.18 "Person" means any individual, firm, association, organization, partnership, corporation, business trust, joint venture, the United States, the State of California, the County of San Luis Obispo, local agencies, cities and special purpose districts. 1.19 "Premises" means any land or building in the City where Solid Waste is generated or accumulated. 1.20 "Recyclable Materials" means residential by- products or discards of economic value set aside, handled, packaged or offered for Collection in a manner different from Solid Waste. Including, but not limited to, aluminum, newspaper, clear and colored glass, tin and bi- metal, High density Polyethylene (HDPE), Polyethylene Terephthalate (PET), cardboard, chipboard, and mixed paper. 1.21 "Recycling" means the process of separating for Collection, Collecting, treating and/or reconstituting Recyclable Materials which would otherwise be discarded without receiving compensation or returning them to the economy in the form of raw materials for new, reused, or reconstituted products. The Collection, transfer, transportation or disposal of Recyclable Materials not intended for, or capable of, reuse is not Recycling. Recycling does not include the use of Recyclable Materials for conversion to energy. 1.22 "Related Party Entity" means any Affiliate which has financial transactions with Contractor. 1.23 "Single Family Dwelling Unit" means each Premises used for or designated as a single family residential dwelling, including each unit of a duplex or triplex in all cases in which there is separate or individual Solid Waste Collection services. 1.24 "Solid Waste" means all putrescible and non- putrescible refuse, garbage, yard waste, construction and demolition debris, rubbish, and Recyclable Materials, and as otherwise defined in Public Resources Code 40191. 5 Residential Recycling Services Agreement 1.26 "Transfer Station" includes those facilities used to receive solid wastes, temporarily store, separate, convert, or otherwise process the materials in the solid wastes, or to transfer the solid wastes directly from smaller to larger vehicles for transport and those facilities used for transformations. 1.27 "Waste Generator" means any Person as defined by the Public Resources Code, whose act or process produces Solid Waste as defined in the Public Resources Code, or whose act first causes Solid Waste to become subject to regulation. Residential Recycling Services Agreement ARTICLE 2 GRANT AND ACCEPTANCE OF AGREEMENT 2.1 Grant and Acceptance of Agreement Subject of Section 3.4 (Conditions to the Effectiveness of Agreement), City hereby grants to Contractor an exclusive franchise to collect, process and market Recyclable Materials accumulating at Single Family and Multi - family dwelling units in the City that are offered for Collection to Contractor in accordance with this Agreement. Contractor hereby accepts the Agreement on the terms and conditions set forth in this Agreement. 2.2 Effective Date The effective date of this Agreement shall be September 3, 2001. 2.3 Term of Agreement The term of this Agreement shall commence at 12:01 a.m., September 3, 2001, and expiring at midnight March 3, 2012, subject to extension as provided in Section 2.4 (Option to Extend). In the event of a change of law or technology which would render the Collection, processing and marketing services to be implemented under this Agreement obsolete, unnecessary, impractical, undesirable, or illegal, the City reserves the right to terminate this Agreement upon the giving of a six (6) month prior written notice of City's election to so terminate this Agreement. It is understood between Contractor and City that this Agreement is motivated by the passage of AB 939, and that subsequent legislation could make this Agreement unnecessary and/or adverse to the best interests of the City. In particular, City and Contractor acknowledge the possibility of future legislation changing the requirements of AB 939, and/or requiring a coordination of the collection of Solid Waste and Recyclable Materials. 2.4 Option to Extend The City shall have the sole option to extend this Agreement up to 24 months in periods of a least twelve (12) months each. If City elects to exercise this option, it shall give written notice not later than one hundred eighty (180) days prior to the initial termination date, or, if one extension has been exercised, one hundred eighty (180) days prior to the extended termination date. 2.5 Conditions to Eff c iv .mess of Aureement The obligation of City to permit this Agreement to become effective and to perform its Residential Recycling Services Agreement undertakings provided for in this Agreement is subject to the satisfaction of each and all of the conditions set out below, each of which may be waived in whole or in party by City. A. Accuracy of Representations. The representations and warranties made by Contractor throughout this Agreement are accurate, true and correct on and as of the effective date of this Agreement. B. Absence of Litigation. There is no litigation pending in any court challenging the award of this Agreement to Contractor or the execution of this Agreement or seeking to restrain or enjoin its performance. C. Furnishing of Insurance and Bonds. Contractor has furnished evidence of the insurance and bonds required by Article 10, Indemnification, insurance and Bond. D. Effectiveness of City Council Action. The City's Ordinance No. 1396, approving this Agreement, shall have become effective pursuant to California law on or prior to the effective date of this Agreement. 0 Residential Recycling Services Agreement ARTICLE 3 TERMS OF AGREEMENT 3.1 Contractor Status Contractor is duly organized, validly existing and in good standing under the laws of the State of California and has the financial ability to perform its obligations set forth in this Agreement. Additionally, the Contractor has no suits or threatened suits which would impair the financial ability of the Contractor to perform its obligations under this Agreement, and that the entering into this Agreement by Contractor will riot in any way constitute a breach of any other agreements entered into by Contractor with other parties, or constitute a violation of any law. 3.2 Contractor Authorization Contractor has the authority to enter into and perform its obligations under this Agreement. The Board of Directors of Contractor (or the shareholders, if necessary) have taken all actions required by law, its articles of incorporation, its bylaws or otherwise to authorize the execution of this Agreement. The persons signing this Agreement on behalf of Contractor have the authority to do so. 3.3 Compliance with Laws and Regulations Contractor shall comply with all existing and future City, county, state, and federal laws, including all Environmental Laws, with particular note of Article X of the City Charter and Chapter 8.04 of the Municipal Code. 3.4 Serve Without Interruption Contractor shall Collect, process and market residential Recyclable Materials throughout the term of this Agreement without interruption except as described in Section 12.4. . 3.5 Permits and Licenses Contractor shall procure, and keep in full force and affect, all permits and licenses, pay all charges and fees, and give all notices as necessary. 3.6 Preservation of City Property Contractor shall pay to the City, on demand, the cost of all repairs to public property made necessary by any of the operations of Contractor under this Agreement. 9 Residential Recycling Services. Agreement ARTICLE 4 SCOPE OF AGREEMENT 4.1 Scope of Agreement Subject to Section 4.2 (Limitations to Scope), the Agreement granted to Contractor shall be exclusive for residential Recyclable Materials, except where otherwise precluded by law. 4.2 Limitations to Scope The Agreement for the Collection, processing and marketing of Recyclable Materials granted to Contractor shall be exclusive except as to the following categories of Recyclable Materials listed in this Section. The granting of this Agreement shall not preclude the categories of Recyclable Materials listed below from being delivered to and Collected and transported by others provided that nothing in this Agreement is intended to or shall be construed to excuse any person from obtaining any authorization from City which is otherwise required by law: A. Recyclable Materials separated from Solid Waste by the Waste Generator and for which Waste Generator sells or is otherwise compensated by a collector in a manner resulting in a net payment to the Waste Generator for such Recycling or related services. B. Recyclable Materials donated to a charitable, environmental or other non - profit organization. C. Recyclable Materials which are separated at any Premises and which are transported by the owner or occupant of such Premises (or by his/her full -time employee) to a Facility; D. Containers delivered for Recycling under the California Beverage Container Recycling Litter Reduction Act, 14500, et seq. California Public Resources Code; and, E. Recyclable Materials generated at non - residential premises are also excluded from this Agreement. Contractor acknowledges and agrees that City may permit other Persons beside Contractor to Collect any or all types of the Recyclable Materials listed in this Section 4.2, without seeking or obtaining approval of Contractor under this Agreement. 10 Residential Recycling Services Agreement This Agreement to Collect, transport, process, and market Recyclable Materials shall be interpreted to be consistent with state and federal laws, now and during the term of the Agreement, and the scope of this Agreement shall be limited by current and developing state and federal laws with regard to Recyclable Materials handling, Recyclable Materials flow control, and related doctrines. In the event that future interpretations of current law, enactment or developing legal trends limit the ability of the City to lawfully provide for the scope of services as specifically set forth herein, Contractor agrees that the scope of the Agreement will be limited to those services and materials which may be lawfully provided for under this Agreement, and that the City shall not be responsible for any lost profits and/or damages claimed by the Contractor as a result of changes in law. 4.3 Administration of Agreement The City Administrative Officer shall administer this Agreement and the City's Utilities Director shall supervise Contractor compliance with the Agreement terms and conditions. 4.4 Use of City Streets Such grant of Agreement shall give Contractor the right and privilege to operate Recycling Collection vehicles and equipment on such streets, public ways, rights -of -way, or easements of the City. 4.5 Annexation Contractor shall automatically extend all services herein described to any area annexed to the City, except that the City may permit a firm franchised by the County of San Luis Obispo before the annexation to continue service the area for a period not less than five (5) years. 4.6 City Request to Direct Changes 4.6.1 General City may request Contractor to perform additional services (including new diversion programs, billing services, etc.) or modify the manner in which it performs existing services. Pilot programs and innovative services which may entail new Collection methods, different kinds of services and/or new requirements for Waste Generators are included among the kinds of changes which City may request. Contractor shall present, within 30 days of a request to do so by City, a proposal to provide additional or expanded diversion services pursuant to the terms of Section 4.6.2. Contractor shall be entitled to an adjustment in its compensation in accordance with Section 8.8 (Extraordinary Adjustments), for providing such additional or modified services. 4.6.2 New Diversion Programs Contractor shall present, within 30 days of a request to do so by City, a proposal to provide additional or expanded diversion services. The proposal shall contain a complete 11 Residential Recycling Services Agreement description of the following: O Collection methodology to be employed (equipment, manpower, etc.) O Equipment to be utilized (vehicle number, types, capacity, age, etc.). O Labor requirements (number of employees by classification). 0 Type of Containers to be utilized. 0 Provision for program publicity /education /marketing. 0 A projection of the financial results of the program's operations for the remaining Term of the Agreement in a balance sheet and operating statement format including documentation of the key assumptions underlying the projections and the support for those assumptions. o Materials processing facility to be utilized. 4.6.3 City's Right to Acquire Services Contractor acknowledges and agrees that City may permit other Persons besides Contractor to provide additional Recycling services not otherwise contemplated under Section 4.6 (City's Right to Direct Changes). If pursuant to Section 4.6.2 (New Diversion Programs), Contractor and City cannot agree on terms and conditions of such services in ninety (90) days from the date when City first requests a proposal from Contractor to perform such services, Contractor acknowledges and agrees that City may permit Persons other than Contractor to provide such services. 4.6.4 Implementing new Services If 1) Contractor is capable of performing or developing the ability to perform a requested service or modifying an existing service; 2) City has agreed to have Contractor provide such additional service in accordance with Contractor's proposal; and 3) an adjustment in Contractor's compensation has been requested but has not been agreed upon or implemented within 90 days, City may permit a third party to perform the request or modified existing service, and Contractor shall not be obligated, to perform such additional or modified service pursuant to the terms of Section 4.6.3. 4.7 Ownership of Recyclable Materials Once Recyclable Materials are placed in Containers and properly presented for Collection, ownership and the right to possession shall transfer directly from the Generator to Contractor by operation of this Agreement. Contractor is hereby granted the right to retain, recycle, process, reuse, and otherwise use such Recyclable Materials or any part thereof, in any lawful fashion or for any lawful purpose consistent with the hierarchy and goals of AB 939. Subject to the provisions of this Agreement, Contractor shall have the right to retain any benefit resulting from its right to retain, recycle, process or reuse the Recyclable Materials which it Collects. Recyclable Materials or any part thereof, which are delivered to a Facility (processing Facility, transformation Facility, transfer station, or Material Recovery Facility) shall become the property of the owner or operator 12 Residential Recycling Services Agreement of the Facility(ies) once deposited there by Contractor. The City may obtain ownership or possession of Recyclable Materials placed for Collection upon written notice of its intent to do so, however, nothing in this Agreement shall be construed as giving rise to any inference that City has such ownership or possession unless such written notice has been given to Contractor. 13 Residential Recycling Services Agreement ARTICLE 5 DIRECT SERVICES 5.1 General The work to be done by Contractor pursuant to this Agreement shall include the furnishing of all labor, supervision, equipment, materials, supplies, and all other items necessary to perform the services required as presented in the Contractor's proposal incorporated in this document as Exhibit A. The enumeration of, and specification of requirements for, particular items of labor or equipment shall not relieve Contractor of the duty to furnish all others, as may be required, whether enumerated or not. The work to be done by Contractor pursuant to this Agreement shall be accomplished in a thorough and professional manner so that the residents within the City are provided reliable, courteous and high - quality Recycling Collection service at all times. The enumeration of, and specification of requirements for, particular aspects of service quality shall not relieve Contractor of the duty of accomplishing all other aspects in the manner provided in this Section, whether such aspects are enumerated elsewhere in the Agreement or not. 5.2 Recycling Services Contractor shall Collect and remove all Recyclable Materials placed in or adjacent to Containers at the designated Collection locations for Single Family Dwelling Units and Multifamily Dwelling Units. Recyclable Material Collection shall be a minimum of once each week on the same day of the week as Solid Waste Collection service. Contractor will notify Recycling customers of holiday Collection schedules. Should the Solid Waste collection day change, Contractor shall re -route Collections within sixty (60) days of the notification by the change in Solid Waste collection days to provide same day service. 5.3 Materials To Be Collected Materials to be collected are to include but not limited to: newspaper, aluminum, tin and bi -metal cans, clear and colored glass containers, High Density Polyethylene (HDPE), Polyethylene Terephthalate (PET), corrugated cardboard, and mixed paper (Including white and colored ledger paper, chipboard, junk mail, magazines and phone books). 5.4 Refusal to Provide Collection Services Contractor may refuse to Collect Recyclable Materials and shall not be obligated to continue to provide Recycling Container(s) to any participant in the Recycling program who, after reasonable warning, fails to properly sort and set out Recyclable Materials. 14 Residential Recycling Services Agreement Contractor shall report monthly to City any warning notices issued. 15 Residential Recycling Services Agreement 5.5 Marketing and Sale of Recyclable Materials Contractor shall be responsible of the marketing and sale of all Recyclable Materials Collected pursuant to this Agreement. Revenues from the sales of these materials shall be applied to the cost of service under the Agreement to reduce Contractor's compensation. Contractor shall sell all Recyclable Materials Collected pursuant to this Agreement at not less than fair market value as described in Article 8, Contractor's Compensation and Rates. 5.6 Operations 5.6.1 Schedules To preserve peace and quiet, no Recyclable Materials shall be Collected from or within two - hundred (200) feet of residential Premises between 6:30 P.M. and 6:30 A.M. on any day and such Recyclable Materials shall be Collected, Monday through Friday on the same day as Solid Waste collection. When the regularly scheduled Collection day falls on a holiday, Collection shall take place on the following regularly scheduled collection day. In the event the Contractor misses the collection of set out recyclables, the Contractor shall collect the missed pickups with one (1) business day of notification. 5.6.2 Vehicles A. General. Contractor shall provide a fleet of Collection vehicles sufficient in number and capacity to perform the work required by this Agreement and proposed in Exhibit "A" and in strict accordance with its terms. Contractor shall have available on Collection days sufficient back -up vehicles in order to respond to complaints and emergencies. The fleet shall be maintained according to the requirements of Municipal Code 8.04.030. B. Specifications. All vehicles used by Contractor in providing Recyclable Materials Collection services under this Agreement shall comply with all federal, state, and local requirements for such vehicles as they now exist or may be amended in the future, and be registered with the California Department of Motor Vehicles. All such vehicles shall have water -tight bodies designed to prevent leakage, spillage or overflow. All such vehicles shall comply with U.S. Environmental Protection Agency noise emission regulations and other applicable noise control regulations. C. Condition 1) Contractor shall maintain all of its properties, facilities, and equipment used in providing service under this Agreement in a safe, neat, clean and operable condition at all times. 2) Contractor shall inspect each vehicle daily to ensure that all equipment is 16 Residential Recycling Services Agreement operating properly. Vehicles which are not operating properly and represent a safety hazard shall be taken out of service until they are repaired and do operate properly and safely. Contractor shall perform all scheduled maintenance functions in accordance with the manufacturer's specifications and schedule. Contractor shall keep accurate records of all vehicle maintenance, recorded according to date and mileage and shall make such records available to City upon request. 3) Contractor shall repair, or arrange for the repair of, all of its vehicles and equipment for which repairs are needed because of accident, breakdown or any other cause so as to maintain all equipment in a safe and operable condition. Contractor shall maintain accurate records of repair, which shall include the date /mileage, nature of repair and the signature of a maintenance supervisor that the repair has been properly performed. 4) Contractor shall arrange all vehicles and other equipment in safe and secure location(s) in accordance with all applicable zoning regulations. D. Vehicle Identification. Each truck shall display in a prominent place a sign as required in Municipal Code section 8.04.090. E. Operation. Vehicles shall be operated in compliance with the California Vehicle Code, and all applicable safety and local ordinances. Contractor shall not load vehicles in excess of the manufacturer's recommendations or limitations imposed by state or local weight restrictions on vehicles. 5.6.3 Recycling Containers Contractor shall supply each Single Family Dwelling Unit with a container in size consistent with the City approved curbside recycling collection program. Contractor shall supply each multi - family complex with the appropriate type of container to adequately service the needs of the complex per the solid waste handling location. Containers shall be identified for Recyclable Materials only. Contractor agrees to provide additional appropriate Containers, as required. City and Contractor acknowledge that from time to time, a customer may damage or destroy a Container. City and Contractor also acknowledge that from time to time Containers may be stolen from the curb or damaged due to normal use. When notified of such occurrence, Contractor shall replace the Container, at no charge to the customer. 5.6.4 Litter Abatement 17 Residential Recycling Services Agreement Contractor shall use due care to prevent Recyclable Materials from being spilled or scattered during the Collection or transportation process. If any Recyclable Materials are spilled during Collection, Contractor shall promptly clean up all spilled materials. Each collection vehicle shall carry a broom and shovel at all times for this purpose. Residential Recycling Services Agreement 5.6.5 Personnel A. General. Contractor shall furnish as presented in Exhibit "A" such qualified drivers, mechanical, supervisory, clerical, and other personnel as may be necessary to provide services required by this Agreement in a safe and efficient manner. B. Identification. Contractor shall ensure that while on duty each Collection worker wears a clean uniform which displays the Contractor's company name and the worker's name or identification number. C. Fees & Gratuities. Contractor shall not, nor shall it permit any agent, employee, or subcontractors employed by it to request, solicit, demand, or accept, either directly or indirectly any compensation or gratuity for any services performed under this Agreement except as provided in Article 8 of this Agreement. D. Training. All drivers shall be trained and qualified in the operation of vehicles they operate and must possess a valid license, of the appropriate class, issued by the California Department of Motor Vehicles. Contractor shall provide adequate operations, health and safety training, and Hazardous Waste identification and handling training for all of.its employees who use or operate equipment or who are otherwise directly involved in Collection or other related operations. E. Customer Courtesy. Contractor shall train its employees in customer courtesy, shall prohibit the use of loud or profane language, and shall instruct Collection crews to perform the work quietly. Contractor shall use its best efforts to ensure that all employees present a neat appearance and conduct themselves in a courteous manner. If any employee is found to be discourteous or not to be performing services in the manner required by this Agreement, Contractor shall take all necessary corrective measures. If City has notified Contractor of a complaint related to a discourteous or improper behavior, Contractor will reassign the employee to duties not entailing contact with the public while Contractor is pursuing its investigation and corrective action process. 5.7 Material Processinu 5.7.1 Receipt of Solid Waste Commencing September 3, 2001, the Contractor shall have in place or have made arrangements for a Materials Recovery Facility to receive and accept all deliveries of Recyclable Materials generated in the city. Contractor has designated the Cold Canyon 1&11 Residential Recycling Services Agreement Landfill facility to be utilized as of the Effective date. 20 Residential Recycling Services Agreement 5.7.2 Status of Materials Recovery Facility Any Materials Recovery Facility used by contractor must be designed and constructed in accordance with all applicable state and local laws (e.g., CEQA, California Code of Regulations, etc). The Materials Recovery Facility must have all permits from federal, state, regional, county and city agencies necessary for it to operate as a Material Recovery Facility and must be in full regulatory compliance with all such permits. The selected Materials Recovery Facility must be authorized to accept, under its existing permit, and have sufficient uncommitted capacity to accept, all Recyclable Materials delivered to it by, or on behalf of, the City for the term of this Agreement. Contractor shall immediately notify City of any notice of breach or default received from Materials Recovery Facility. 5.7.3 Alternative Processing Facility If Contractor becomes unable to deliver the City's Recyclable Materials to the Materials Recovery Facility due to causes within its control and which could have been avoided by the exercise of due care, the Contractor shall arrange for it to be accepted at another Materials Recovery Facility, in which case Contractor shall pay for any increased transportation costs, any differences in the fees charged at such Materials Recovery Facility and the fees then in effect under this Agreement. If Contractor's inability to deliver the City's Recyclable Materials to the Materials Recovery Facility is not due to causes within its control or which could have been avoided by the exercise of due care, then Contractor shall propose alternative Material Recovery Facilities including all related costs and City shall select the alternative to be used. 5.7.4 Disposition of Unauthorized Waste Contractor shall ensure that procedures to identify and'reject materials delivered to the Materials Recovery Facility which are Hazardous Waste, or which otherwise may not be legally accepted at the Materials Recovery Facility under their permits, are in place. Contractor may, in the course of implementing such procedures, refuse to accept Recyclable Materials deposited from the City if they constitute Hazardous Waste, or otherwise may not be legally accepted at the Materials Recovery Facility, and Contractor shall be solely responsible of the materials which are accepted. If Contractor discovers Hazardous Waste, or other material which may not be legally accepted, among materials which it has accepted, it shall dispose of such waste at its own expense. Contractor may pursue all legal rights and remedies it may have against the Waste Generator(s) of such Solid Waste, if the Waste Generator(s) can be identified. 5.8 Disposal Contractor shall ensure that the residual Solid Waste from the City's Recyclable Materials delivered to the Materials Recovery Facility by the Contractor are disposed of at a 21 Residential Recycling Services Agreement permitted disposal site in full regulatory compliance. 5.9 implementation Plan The parties recognize that substantial planning will be required in order to assure an orderly initiation of Residential Curbside Recycling Collection services on September 3, 2001, To that end, City has required Contractor to submit, as part of its proposal, a detailed implementation plan addressing, among other things, the steps Contractor will take and the schedule on which it will take them, to prepare for such an orderly initiation of.service. The implementation plan shall cover Contractor's schedule for acquiring necessary equipment, personnel, storage and maintenance facilities, administrative offices, customer relations materials (including Collection schedules, route maps, billing forms, complaint forms, service request forms, etc.). Contractor agrees to adhere strictly to the implementation plan. The implementation shall be subject to the City's review and approval. Failure to adhere to the implementation schedule will constitute a breach of this Agreement, and, if incurred, an event of default, under Article 12, Default, Remedies, and Liquidated Damages. 22 Residential Recycling Services Agreement ARTICLE 6 OTHER SERVICES 6.1 Billin The City Council shall establish an integrated rate for the Green Waste, Recycling and Solid Waste services. Contractor shall bill and collect for its services at no more nor less than these rates. Contractor's billing plan, including billing frequency, and format shall be subject to approval by City, and City shall have the right to revise the billing format to itemize certain charges. The City may also direct Contractor to insert mailers relating to contractor provided services with the billings and shall be responsible 'for all labor costs with respect to the mailing inserts. The mailers must fit in standard envelopes and not increase the required postage. The City will provide not less than thirty (30) days notice to Contractor prior to the mailing date of any proposed mailers to permit Contractor to make appropriate arrangements for inclusion of City materials. Contractor shall maintain copies of said billings and receipts, each in chronological order, for a period of three (3) years after the date of service for inspection by the City. Contractor may, at its option, maintain those records in computer form, on microfiche, or in any other manner, provided that the records cannot be altered, and can be preserved and retrieved for inspection and verification in a timely manner. The owner of occupied Premises shall be responsible and liable for paying the Recycling fees for that property. 6.2 Collection of Bills from Delinquent Customers Once each year, prior to a date established by the City, Contractor may take actions pursuant to Chapter 8.04 of the Municipal Code to collect delinquent accounts. 6.3 Periodic Performance or Billing Audit The City shall have the right to periodically, not less than annually, request a performance audit or billing audit be completed by the Contractor, the City or an independent third party. The City shall be entitled to select the type of consultant that it deems qualified to conduct said audits. The cost of such audits will be an allowable cost under the rate setting methodology unless there are findings pursuant to Section 12.5. 6.4 Customer Service 6.4.1 Office Office hours shall be, at a minimum, from 8:00 A.M. to 5:00 P.M., Monday through Friday, exclusive of holidays. A responsible and qualified representative of Contractor shall be available during office hours for communication with the public.. Telephone 23 Residential Recycling Services Agreement numbers shall either be a local or a toll free call to residents and businesses of the City. Contractor's telephone system shall be adequate to handle the volume of calls typically experienced on the busiest days. Contractor shall also maintain a local or toll free telephone number for use during other than normal business hours. Contractor shall have a representative, answering or message providing/receiving (voice -mail) service available at said after hours telephone number. 6.4.2 Complaint documentation All service complaints related to Recyclable Materials Collection shall be directed to Contractor. Daily logs of complaints concerning Collection of Recyclable Materials shall be retained for a minimum of twenty -four (24) months and shall be available to City at all times during this Agreement upon twenty -four (24) hour notice. Contractor shall log all complaints received orally or in writing and said log shall include the date and.time the complaint was received, name, address and telephone number of complainant to the extent that such information is provided by complainant, description of complaint, employee recording complaint and the action taken by Contractor to respond to and remedy complaint. All complaints received shall be responded to within twenty four (24) working hours of receipt. All customer service records and logs kept by Contractor shall be available at all times during this Agreement to City upon twenty four (24) hour notice and at no cost to City. City shall, at any time during regular Contractor business hours, have access to Contractor's customer service department for purposes of monitoring the quality of customer service or researching customer complaints assessing liquidated damages or other matters related to Contractor's performance under this Agreement. 6.4.3 Resolution of Customer Complaints Contractor shall notify customers of this complaint procedure at the time customers apply for or are provided service, and subsequently, annually. A customer dissatisfied with Contractor's decision regarding a complaint may ask the City to review the complaint. The City's Utilities Director shall determine if the customer's complaint is justified, and if so, what remedy, if any shall be provided. The remedy under this Section shall be limited to a rebate of customer charges related to the period of breach of any of the Terms of this Agreement. Any resolution of these customer complaints shall not affect the City's rights to liquidated damages. 6.4.4 Government Liaison Contractor shall designate in writing a "Government Liaison" who shall be responsible for working with the City Administrative Officer, Utilities Director and/or one of their W Residential Recycling Services Agreement designated representative(s) to resolve customer complaints. 6.5 Education and Public Awareness Contractor acknowledges and agrees that education and public awareness are critical, key and essential elements of any efforts to achieve AB 939 requirements and has submitted a plan to this effect in Exhibit "A ". Accordingly, Contractor agrees to cooperate with City in exploring opportunities to expand public and customer knowledge concerning needs and methods to reduce, reuse and recycle Solid Waste and to cooperate fully with City in this regard. Contractor shall perform all necessary public education activities related to the Recycling services as presented in Exhibit "A ". This shall include, but not be limited to, annual mailings to all customers explaining the recycling program, mailings prior to the start of services, flyers handed out with Container delivery and follow -up mailings or handouts related to the collection of new materials. All Public education materials shall be approved in advance by the City. At the direction of the City Administrative Officer and/or Utilities Director, Contractor shall participate in and promote Recycling and other diversion techniques at community events and local activities. Such participation would normally include providing, without cost to the City, educational and publicity information promoting the goals of the City's AB 939 programs. -25 Residential Recycling Services Agreement ARTICLE 7 PAYMENTS TO CITY 7.1 Franchise Fee In consideration of the exclusive franchise provided for in this Agreement, Contractor shall pay the City six percent (6 %) of its gross revenues for residential recycling services. Such franchise fee shall be a "pass- through" expense for purposes of rate review. 7.2 AB 939 Fee If requested by City, Contractor shall pay an AB 939 fee, to be specified annually by the City. All AB 939 fees paid to the City shall be considered a pass through cost for purposes of rate setting. 7.3 Business License Tax Contractor shall pay each annual business license tax. 7.4 Other Fees The City shall reserve the right to set "Other" Fees, as it deems necessary. These expenses will be determined and a fee designed to reimburse the City. Such fees shall be set annually by City resolution and may be considered a pass through cost for purposes of rate setting. 7.5 Time and Method of Payment If Contractor is directed to pay an AB 939, Franchise Fee or "Other" Fee, it shall do so on or before the fifteenth (15th) day of each month during the Term. Contractor shall remit to City a sum of money equal to the designated percentage of the gross revenue, including Recyclable Materials revenue, or a flat monthly fee as determined by the City.. If any fees are not paid on or before the fifteenth (15th) day of any month, Contractor shall pay to City a late payment penalty in an amount equal to one percent (1 %) of the amount owing for that month. Contractor shall pay an additional late payment penalty of one percent (1 %) owing on any unpaid balance for each following thirty (30) day period the fee remains unpaid. Late payment penalty amounts shall not be included in any revenue requirement. 7.6 Adjustment of Fees The City may adjust the amount of fees annually. Such adjustment shall be reflected in - the rates that the Contractor is allowed to charge and collect from customers. 7.7 Review of Fee Payments The City, or its agent, reserves the right to annually perform an independent review of fee payments, to verify that fees are being paid in accordance with Agreement. The cost of 26 Residential Recycling Services Agreement such reviews will be an allowable cost under the rate setting methodology unless there are findings pursuant to Section 12.5. 27 Residential Recycling Services Agreement ARTICLE 8 CONTRACTOR'S COMPENSATION AND RATES 8.1 General Contractor's compensation provided for in this Article shall be the full, entire and complete compensation due to Contractor pursuant to this Agreement for all labor, equipment, materials and supplies, taxes, insurance, bonds, overhead, profit and all other things necessary to perform all the services required by this Agreement in the manner and at the times prescribed. The Contractor does not look to the City for payment of any sums under this Agreement. Contractor will perform the responsibilities and duties described in this Agreement in consideration of the right to charge and collect from customers for services rendered at rates fixed by the City from time -to -time and the right to sell compost generated from Green Waste. The City shall have the right to structure those rates as it deems appropriate so long as the revenues forecasted to be received by Contractor from charging such rates can reasonably be expected to generate sufficient revenues to provide for Contractor's compensation. 8.2 Contractor's Compensation for Subsequent Rate Years Contractor's compensation for performance of all its responsibilities and duties in subsequent years of this Agreement will be set using the guidelines and approach outlined in the City's "Rate Setting Process and Methodology Manual for Integrated Solid Waste Management Rates ". An operating ratio of 7% will be applied to Contractor's costs to determine the allowable level of profit. 8.3 Initial Rates Contractor will submit required financial documentation for this service as part of an integrated solid waste rate application. The rate application will comply with the guidelines set forth in the City's "Rate Setting Process and Methodology Manual for Integrated Solid Waste Management Rates". The portion of the rate attributable to this service shall be identified as part of the Council rate - setting process but will not be separated from the integrated rate. 8.4 Subsequent Rates Contractor may request rate revisions in future solid waste rate applications. The rate application must comply with the City's "Rate Setting Process and Methodology Manual for Solid Waste Management ". W. Residential Recycling Services Agreement 8.5 Right to Perform Rate Reviews City reserves the right to perform, or have a qualified third party perform, a detailed review of Contractor's expenses and revenues for the purposes of adjusting rates. The results of this detailed rate review will be used to adjust rates, and the Contractor's calculated revenue requirements will be used the following year to adjust rates according to Section 8.3 Contractor's Compensation for subsequent Rate Years. An operating ratio of 7% will be applied to Contractor's costs to determine the allowable level of profit. 8.6 Extraordinary Adjustments Contractor or City may request an adjustment to rates at times other than that required in Section 8.3 for unusual changes in the cost of providing service under this Agreement. Such changes may include, but are not limited to, changes in laws, ordinances, or regulations, and significant changes in Contractor's workload due to new residential or commercial development. However, when an extraordinary adjustment is requested, such adjustment shall consider changes in all costs and revenues from Contractor's proposed revenue requirement. For each such request, Contractor shall prepare a schedule comparing the original proposed costs and revenues by line item to the then current costs and revenues, including an estimates of the cost impact of the change, using an operating ratio of 8 %, applied to Contractor's costs as calculated in Contractor's proposed revenue requirement. Such request shall be prepared in a form acceptable to City with support for assumptions made by Contractor in preparing the estimate. Contractor and City shall negotiate a mutually acceptable adjustment amount. 29 Residential Recycling Services Agreement ARTICLE 9 RECORDS, REPORTS AND INFORMATION, STUDIES AND HEARING REQUIREMENTS 9.1 . Records 9.1.1 General Contractor shall maintain records required to conduct its operations, to support requests it may make to City, and to respond to requests from City in the conduct of City business. Additionally, the Contractor shall also keep and maintain records reasonably necessary for audits, as required by this Agreement, and shall keep and maintain all records reasonably necessary to develop reports and financial statements required with respect to this Agreement. Adequate record security shall be maintained to preserve records from events that can be reasonably anticipated such as a fire, theft and earthquake. Electronically maintained data/records shall be protected and backed up. 9.1.2 Financial Records Financial records shall separate all records related to the services performed under this Agreement from any and all other types of businesses and operations conducted by the Contractor. 9.1.3 General Records City approved records (format) shall be maintained for the City separate from other jurisdictions relating to: • Customer services; • Weight of Recyclable Materials by type of materials. • Routes; • Facilities, inventory of equipment and personnel used; • Facilities and equipment operations, maintenance and repair; • Processing, marketing and sale of Recyclable Materials including name of the purchaser, the date of sales transaction, processing cost per ton, quantity purchased, value per ton and net sales records; • Complaints; and, • Missed pick ups. Contractor shall maintain records of all Recyclable Materials Collected in the City for the period of this Agreement. In the event Contractor discontinues providing Recycling services to City, Contractor shall provide all records of all Recyclable Materials Collected in City to City within thirty (30) days of discontinuing service. Records shall be in chronological and organized form and readily and easily interpreted. 30 Residential Recycling Services Agreement 9.2 Reports 9.2.1 Report Formats and Schedule Records shall be maintained in forms and by methods that facilitate flexible use of data contained in them to structure reports, as needed. Contractor may propose report formats that are responsive to the objectives and audiences for each report. The format of each report shall be approved by the City. Monthly reports shall be submitted within twenty (20) calendar days after the end of the month being reported. Annual reports shall be submitted before September 30th, for the previous reporting year. 9.2.2 Monthly Reports The information listed shall be the minimum reported: O Recyclable Materials collected, sorted by type of Generator, in tons, by month, and cumulative for report year. • Complaint summary, for month and cumulative for report year. • Narrative summary assessment of problems encountered and actions taken with recommendations to City for improvement. • Number of accounts by category for each month of reporting year. • Participation rates. • Recyclable Materials Container distribution. • Materials Sales. Sales statement showing: kinds of material, quantity sold (in tons), value per ton, and net sales. The City may designate any additional information that it wishes provided in the monthly reports. 9.2.3 Annual Report The Annual Report is to be essentially in the form and content of the monthly reports. In addition, Contractor's annual audited financial reports /statements, with the operations related to the City services segregated, shall be included. The annual report shall also include a complete inventory of equipment used to provide all services. Financial statements shall include a supplemental schedule combining Contractor's results of operations, separating the specific revenues and expenses, including detailed information with respect to general overhead claimed by the Contractor, in connection with the operations provided for in this Agreement from others included in such financial statements. The financial statements, supplemental schedule, management letter and footnotes shall be prepared in accordance with Generally Accepted Accounting Principles (GAAP) and audited, in accordance with Generally Accepted Auditing Standards (GAAS) by a certified public accountant (CPA) licensed (in good standing) to practice public accounting in the State of California as determined by the State of California 31 t Residential Recycling Services Agreement Department of Consumer Affairs Board of Accountancy. The CPA opinion on Contractor's annual financial statements and supplemental schedule shall be unqualified, except as to uncertainties for which the ultimate outcome cannot be determined by the date of the CPA's opinion. 32 Residential Recycling Services Agreement 9.3 Right to Inspect Records City shall have the right to inspect or review the payroll tax reports, specific documents or records required expressly or by inference pursuant to this Agreement, or any other similar records or reports of Contractor that City shall deem, in its sole discretion, necessary to evaluate annual reports, compensation applications provided for in this Agreement and Contractor's performance provided for in this Agreement. The City retains the right to have an independent third party or agent of the City's choosing, such as a CPA, participate in the records inspection. The cost of such inspection or review will be an allowable cost under the rate setting methodology unless there are findings pursuant to Section 12.5. 9.3.1 Right to Review Basis for Landfill Tipping Fee Increases The Contractor shall provide to the City a copy of Cold Canyon Landfill's request for an increase in tipping fees no later than five (5) days following submittal of said request to the County of San Luis Obispo. Additionally, the Contractor shall notify the City of the action taken by the Board of Supervisors regarding said request within five (5) days following said action, including letter to the Board of Supervisors and related executed resolution. The City retains the right to have an independent third party or agent of the City's choosing, such as a CPA, participate in the review. The cost of such inspection or review will be an allowable cost under the rate setting methodology unless there are findings pursuant to Section 12.5. 9.4 Waste Generation/Characterization Studies Contractor acknowledges that the city must perform Solid Waste generation and disposal characterization studies periodically to comply with AB 939 requirements. Contractor agrees to participate and cooperate with City and its agents to accomplish studies and data collection and prepare reports as needed to determine weights and volumes of Solid Waste generated, diverted, disposed, transformed, or otherwise handled/processed to satisfy AB 939 requirements. 9.5 Performance Hearing The City maintains the right to hold a public hearing at any time, not more than once each year, at which the Contractor shall be present and shall participate, to review its services and performance. The purpose of the hearing is to provide for a discussion and review of technological, economic, and regulatory changes in order to achieve a continuing, advanced Solid Waste management system; and to ensure customer service quality and any other areas that may be addressed regarding services are being provided with adequate quality, efficiency and economy. Sixty (60) days after receiving notice from City of a Performance Hearing, Contractor shall, at a minimum, submit a report to City indicating (1) changes recommended and/or 33 a Residential Recycling Services Agreement new services to improve City's ability to meet the goals of AB 939 and to contain costs and minimize impacts on rates; and (2) any specific plans for provision of changed or new services by Contractor. ON f Residential Recycling Services Agreement ARTICLE 10 INDEMNIFICATION, INSURANCE AND BOND 10.1 Indemnification Contractor shall indemnify and hold harmless City, its officers, Directors, employees, and agents from and against any and all loss, liability, penalty, forfeiture, claim, demand, action proceeding or suit of any and every kind and description (including, but not limited to, injury to and death of any Person and damage to property, or for contribution or indemnity claimed by third parties) arising or resulting from and in any way connected with (1) the negligence or willful misconduct of Contractor, its officers, employees agents and/or sub Contractors in performing services under this Agreement; (2) the failure of Contractor, its officers, employees, agents and/or subcontractors to comply in all respects with the provisions of this Agreement, applicable laws (including, without limitation, the Environmental Laws) and regulations, and/or applicable permits and licenses; (3) the acts of Contractor, its officers, employees, agents and/or subcontractors in performing services under this Agreement for which strict liability is imposed by law (including, without limitation, the Environmental Laws). Contractor further agrees to and shall, upon demand of City, at Contractor's sole cost and expense, defend (with attorneys acceptable to City) the City, its officers, directors, employees, and agents against any claims, actions, suits or other proceedings, whether judicial, quasi-judicial or administrative in nature, arising or resulting from any events described in the immediately preceding paragraph. Contractor's duty to indemnify and defend shall survive the expiration or earlier termination of this Agreement. 10.2 Landfill Diversion The Contractor acknowledges that the City has adopted a SRRE which selects a single family curbside Recycling program as a means of diverting an estimated 3,643 tons in 1995 and 3,903 tons per year by the year 2000, and a multi - family curbside Recycling program as a means of diverting an estimated 308 tons in 1995 and 330 tons per year by the year 2000. It is therefore of foremost importance that the Recyclable Materials collected under this Agreement be converted into a functional and marketable product in order that the materials may be diverted from landfill disposal in compliance with the City's SRRE, and AB 939. The Contractor shall therefore ensure that the processing method used shall, at all times, meet the intent of the City's SRRE and AB 939. Should the Contractor find it necessary to utilize another method of processing in order to meet the intent of the SRRE and AB 939, the City shall be given an opportunity to make its own determination as to the suitability and cost - effectiveness of such process and shall approve such process in writing. The City shall have the right to terminate this Agreement upon the giving of a six (6) month prior written notice to Contractor should it be determined that the Recycling program being implemented and/or proposed under this 35 W Residential Recycling Services Agreement Agreement is ineffective in meeting the City's diversion goals and objectives. Upon termination, the Contractor shall be entitled only to revenues less expenses incurred to that date. All revenues received thereafter, including from Recyclable Materials sales, shall be the property of the City unless otherwise agreed. 10.3 AB 939 Indemnification Contractor agrees to indemnify and hold harmless City, its officers, Directors, employees, and agents from and against all fines and/or penalties imposed by the California Integrated Waste Management Board in the event the source reduction and Recycling goals or any other requirement of AB 939 are not met by City with respect to the waste stream Collected under this Agreement and such failure is due in substantial part due to the failure of Contractor to meet its obligations under this Agreement or for delays in providing information that prevents City from submitting reports required by AB 939 in a timely manner. 10.4 Insurance A. Minimum Limits of Insurance. Contractor shall maintain limits no less than: 1. Comprehensive General Liability: One Million Dollars ($1,000,000) combined single limit per occurrence for bodily injury, Personal injury and property damage. 2. Automobile Liability: One Million Dollars ($1,000,000) combined single limit per accident for bodily injury and property damage. 3. Workers' Compensation and Employers Liability: Workers' compensation limits as required by the Labor Code of the State of California and Employers Liability limits of $1,000,000 per accident. B. Deductibles and Self- Insured Retentions. Any deductibles or self- insured retentions must be declared to and approved by the City. At the option of the City, either: the insurer shall reduce or eliminate such deductibles or self - insured retentions as respects the City, its officials, directors and employees; or Contractor shall procure a bond guaranteeing payment of losses and related investigations, claim administration and defense expenses. C. Other Insurance Provisions. The policies are to contain, or be endorsed to contain, the following provisions: 1. General Liability and Automobile Liability Coverages a) The City, its officials, employees, directors, and volunteers are to be covered as insured as respects: liability arising out of activities performed by or on behalf of Contractor; products and completed operations of Contractor; Premises owned, leased or used by Contractor; or automobiles owned, leased, hired or borrowed by Contractor. The coverage shall contain no special limitations on the scope of protection afforded to the City, its officials, employees or volunteers. 36 Residential Recycling Services Agreement b) Contractor's insurance coverage shall be primary insurance as respects City, its officials, directors, employees and volunteers. Any insurance or self- insurance maintained by City, its officials, employees or volunteers shall be excess of Contractor's insurance and shall not contribute with it. c) Any failure to comply with reporting provisions of the policies shall not affect coverage provided to City, its officials, employees or volunteers. d) Coverage shall state that Contractor's insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer's liability. 2. Workers' Compensation and Employers Liability Coverage - The insurer shall agree to waive all rights of subrogation against City, its officials, employees and volunteers for losses arising from work performed by Contractor for City. 3. All Coverages - Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended, voided, canceled by either party, reduced in coverage or limits except after thirty (30) days prior written notice by certified mail, return receipt requested, has been given to City. D. Acceptability of Insurers. The insurance policies required by this Section shall be issued by an insurance contractor or companies admitted to do business in the State of California subject to the jurisdiction of the California Insurance Commissioner and with a rating in the most recent edition of Best's Insurance Reports of size category VII or larger and a rating classification of A or better. E. Verification of Coverage. Contractor shall furnish City with certificates of insurance and with original endorsements affecting coverage required by this clause. The certificates and endorsements for each insurance policy are to be signed by a Person authorized by that insurer to bind coverage on its behalf. The certificates and endorsements are to be on forms provided by or acceptable to City and are to be received and approved by City before work commences. City reserves the right to require complete, certified copies of all required insurance policies, at any time. 10.5 Faithful Performance Bond Simultaneously with the execution of this Agreement, Contractor shall file with City surety bond, payable to City, securing Contractor's faithful performance of its obligations under this Agreement. The bond shall be in the amount of 125% of the total annual contract price guaranteeing the faithful performance of the contract, including any 37 Residential Recycling Services Agreement attorney's fees or other collection costs. N Residential Recycling Services Agreement ARTICLE 11 CITY'S RIGHT TO PERFORM SERVICE 11.1 General In the event that Contractor, for any reason whatsoever, fails, refuses or is unable to Collect, transport, process or market any or all recyclable Materials which it is required by this Agreement to Collect, process and market, at the time and in the manner provided in this Agreement, for a period of more than seven (7) calendar days, and if, as a result thereof, Recyclable Materials should accumulate in the City to such an extent, in such a manner, or for such a time that the City Administrative Officer should find that such accumulation endangers or menaces the public health, safety or welfare, then City shall have the right, but not the obligation, upon twenty -four (24) hour prior written notice to Contractor during the period of such emergency as determined by the City Administrative Officer, (1) to perform, or cause to be performed, such services itself with its own or other personnel without liability to Contractor; and/or (2) to take possession of any or all of Contractor's land, equipment and other property to Collect, transport, process and/or market any Recyclable Materials generated within the City which Contractor would otherwise be obligated to Collect, transport, process or market pursuant to this Agreement. In the event the City takes possession of the Contractor's equipment and other property, the City shall be entitled to have another contractor operate such equipment and property under City direction. Additionally, in the event the City takes possession of the Contractor's equipment and other property, the City does not guarantee repair of existing problems with equipment and facilities. Notice. of Contractor's failure, refusal or neglect to Collect, transport, process or market Recyclable Materials may be given orally by telephone to Contractor at its principal office and shall be effective immediately. Written confirmation of such oral notification shall be sent to Contractor within twenty -four (24) hours of the oral notification. Contractor further agrees that in such event: o It will take direction from City to effect the transfer of possession of property to City for City's use. O It will, if City so requests, keep in good repair and condition all of such property, provide all motor vehicles with fuel, oil and other service, and provide such other service as may be necessary to maintain said property in operational condition. O City may immediately engage all or any personnel necessary or useful for the Collection, transportation, processing and/or marketing of Recyclable Materials, including, if City so desires, employees previously or then employed by Contractor, Contractor further agrees, if City so requests, to furnish City the services of any or all 39 Residential Recycling Services Agreement management or office personnel employed by Contractor whose services are necessary or useful for Recyclable Materials Collection, Transportation, processing and marketing operations and for the billing and collection of fees for these services. City agrees that it assumes complete responsibility for the proper and normal use of such equipment and facilities while in its possession. If the interruption or discontinuance in service is caused by any of the reasons listed in Section 12.4 (Excuse From Performance), City shall pay to Contractor the reasonable rental value of the equipment and facilities, possession of which is taken by City, for the period of City's possession, if any, which extends beyond the period of time for which Contractor has rendered bills in advance of service. Except as otherwise expressly provided in the previous paragraph, City's exercise of its rights under this Article 11 (1) does not constitute a taking of private property for which compensation must be paid; (2) will not create any liability on the part of City to Contractor; and (3) does not exempt Contractor from the indemnity provisions of Article 10, Indemnification, Insurance and Bond, which are meant to extend to circumstances arising under this Section, provided that Contractor is not required to indemnify City against claims and damages arising from the sole negligence of City officers, employees and agents in the operation of Collection vehicles during the time City has taken possession of such vehicles. 11.2 Temporary Possession of Contractor's Property If the City suffers an interruption or discontinuance of service as described in Section 11.1 (including interruptions and discontinuance due to events described in Section 12.4, Excuse from Performance), City may take possession of and use all of Contractor's property described above until other suitable arrangements can be made for the provision of Recycling Services which may include the grant of a Contract to another company. The same notice requirements of Section 11.1 are applicable. 11.3 Billing and Compensation to City During City's Possession During such time that city is providing Recycling services, as above provided, Contractor shall continue to bill and collect payment from all users of the above - mentioned services. Contractor further agrees that, in such event, it shall reimburse City for any and all costs and expenses incurred by City in taking over possession of the above - mentioned property for Recycling service in such manner and to an extent as would otherwise be required of Contractor under the Terms of this Agreement. Such reimbursement shall be made from time to time after submission by City to Contractor of each statement listing such costs and expenses, but in no event later than five (5) working days from and after each such submission. The City shall have the right, at its sole discretion, to take over billing and we Residential Recycling Services Agreement payment collection activities. The City shall then pay any net revenues to the Contractor, after deducting all expenses, including City - incurred expenses. 11.4 City's Right to Relinquish Possession It is further mutually agreed that City may at any time at its discretion relinquish possession of any or all of the above - mentioned property to Contractor and thereupon demand that Contractor resume the Recycling services as provided in this Agreement, whereupon Contractor shall be bound to resume the same. 11.5 Duration of City's Possession City's right pursuant to this Article to retain temporary possession of Contractor's facilities and equipment, and to render Collection services, shall terminate when City determines that such services can be resumed by Contractor, or when City no longer reasonably requires such facilities or equipment. In any case, City has no obligation to maintain possession of Contractor's property and/or continue its use for any period of time and may at any time, in its sole discretion, relinquish possession to Contractor. 41 Residential Recycling Services Agreement ARTICLE 12 DEFAULT, REMEDIES AND LIQUIDATED DAMAGES 12.1 Events of Default All provisions of this Agreement to be performed by Contractor are considered material. Each of the following shall constitute an event of default. A. Fraud or Deceit. If Contractor practices, or attempts to practice, any fraud or deceit upon city. B. Insolvency or Bankruptcy. If Contractor becomes insolvent, unable, or unwilling to pay its debts when due, or upon listing of an order for relief in favor of Contractor in a bankruptcy proceeding. The Contractor is also in default if there is an assignment for the benefit of its creditors. C. Failure to Maintain Coverage. If Contractor fails to provide or maintain in full force and effect the Workers' Compensation, liability, indemnification coverage or any insurance coverage or bond required under this Agreement. D. Violations of Regulation. If Contractor facilities fall out of full regulatory compliance or if Contractor violates any orders or filings of any regulatory body having jurisdiction over Contractor relative to this Agreement, provided that Contractor may contest any such orders or filings by appropriate proceedings conducted in good faith, in which case no breach of the Agreement shall be deemed to have occurred. E. Failure to Perform. If Contractor ceases to provide Recycling services as required under this Agreement for a period of two (2) days or more, for any reason within the control of Contractor. F. Failure to Pay/Report. If Contractor fails to make any timely payments, including liquidated damages and penalties, required under this Agreement and/or fails to provide City with required information, reports, and/or records in a timely manner as provided for in the Agreement. G. Acts or Omissions. Any other act or omission by Contractor which violates the terms, conditions, or requirements of this Agreement, the California Integrated Waste Management Act of 1989, as it may be amended from time to time, or any order, directive, rule, or regulation issued thereunder and which is not corrected or remedied within the time set in the written notice the violation or, if Contractor cannot reasonably correct or remedy the breach within the time set forth in such notice, if Contractor should fail to commence to correct or remedy such violation within the time set forth in such 42 or- Residential Recycling Services Agreement notice and diligently effect such correction or remedy thereafter. H. False or Misleading Statements. Any representation or disclosure made to City by Contractor in connection with or as an inducement to entering into this Agreement, or any future amendment to this Agreement, which proves to be false or misleading in any material respect as of the time such representation or disclosure is made, whether or not any such representation or disclosure appears as part of this Agreement. I. Attachment. There is a seizure of attachment of, or levy on, the operating equipment of Contractor, including without limits its equipment, maintenance or office facilities, or any part thereof. J. Suspension or Termination of Service. There is any termination or suspension of the transaction of business by Contractor, including without limit, due to labor unrest including strike, work stoppage or slowdown, sickout, picketing, or other concerted job action lasting more than two (2) days. Upon default by the Contractor, the City Administrative Officer shall provide written notice to Contractor of the violation. The City Administrative Officer shall include in the notice, a demand that the Contractor correct the violation within 10 days following the delivery of said notice. For purposes of this Agreement and any notice required thereunder, the term "days" shall mean calendar days. 12.2 Right to Terminate Upon Default Upon a default by Contractor, City shall have the right to terminate this Agreement upon a ten (10) days notice if the public health or safety is threatened, or otherwise a thirty (30) days notice, but without the need for any hearing, suit or legal action. This right of termination is in addition to any other rights of City upon a failure of Contractor to perform its obligations under this Agreement. City's right to terminate this Agreement and to take possession of Contractor's equipment and facilities are not exclusive, and City's termination of this Agreement shall not constitute an election of remedies. Instead, they shall be in addition to any and all other legal and equitable rights and remedies which City may have. By virtue of the nature of this Agreement, the urgency of timely, continuous and high - quality service, the lead time required to effect alternative service, and the rights granted by City to Contractor, the remedy of damages for a breach hereof by Contractor is inadequate and City shall be entitled in injunctive relief. 12.3 Liquidated Damages M1 1 Residential Recycling Services Agreement A. General. City finds, and Contractor agrees, that as of the time of the execution of this Agreement, it is impractical, if not impossible, to reasonably ascertain the extent of damages which shall be incurred by City as a result of a breach by Contractor of its obligations under this Agreement. B. Service Performance Standards; Liquidated Damages for Failure to Meet Standards. The parties acknowledge that consistent, reliable Recycling service is of utmost importance to City and that city has considered and relied on Contractor's representations as to its quality of service commitment in awarding the Agreement to it. The parties further recognize that some quantified standards of performance are necessary and appropriate to ensure consistent and reliable service and performance. The parties further recognize that if Contractor fails to achieve the performance standards, comply with complaint resolution criteria, or fails to submit required documents in a timely manner, City and its residents will suffer damages and that it is and will be impractical and extremely difficult to ascertain and determine the exact amount of damages which City will suffer. Therefore, without prejudice to City's right to treat such non- performance as an event of default under this Article 12, the parties agree that the following liquidated damage amounts represent a reasonable estimate of the amount of such damages considering all of the circumstances existing on the date of this Agreement, including the relationship of the sums to the range of harm to City that reasonably could be anticipated and the anticipation that proof of actual damages would be costly or inconvenient. Recognizing the importance of resolving any failure to meet the service performance standard, the City shall contact Contractor within two (2) days of any failing reported directly to the City. Contractor agrees to pay (as liquidated damages and not as a penalty) the amounts set forth below: Collection Reliability and Quality 0 For each failure over five (5) annually to commence service to a new customer account within seven (7) days after order: $150.00 O For each failure over ten (10) annually to Collect Recyclable Materials, which as been properly set out for Collection, from an established customer account on the scheduled Collection day: $150.00 0 For each failure to Collect Recyclable Materials which have been properly set out for Collection, from the same customer on two (2) consecutive scheduled pickup days: $150.00 O For each occurrence over five (5) annually of damage to private property: $250.00 • For each occurrence of discourteous behavior: $250.00 • For each failure over ten (10) annually to clean up Recyclable M Residential Recycling Services Agreement Materials spilled from Bins: $150.00 o For each occurrence over five (5) annually of Collecting Recyclable Materials during unauthorized hours: $250.00 0 For each failure to respond to a customer complaint within twenty -four (24) working hours: $100.00 Timeliness of Submissions to City REPORTS Any report shall be considered late until such time as a correct and complete report is received by City. For each calendar a report is late, the daily assessment shall be: Monthly Reports: For each infraction $100 per day Annual Reports: For each infraction $500 per day Liquidated damages will only be assessed after Contractor has been given the opportunity but failed to rectify the damages, as described in this Agreement (e.g., twenty -four (24) working hours to respond to a complaint). City may determine the occurrence of events giving rise to liquidated damages through the observation of its own employees or representative or investigation of customer complaints. Prior to assessing liquidated damages, City shall give Contractor notice of its intention to do so. The notice will include a brief description of the incidents) /non - performance. Contractor may review (and make copies at its own expense) all information in the possession of City relating to incident(s) /non - performance. Contractor may, within ten (10) days after receiving the notice, request a meeting with City. If a meeting is requested, it shall be held by the City Administrative Officer or his /her designee. Contractor may present evidence in writing and through testimony of its employees and others relevant to the incident(s) /non performance. The City Administrative Officer or designee will provide Contractor with a written explanation of his or her determination on each incident(s) /non - performance prior to authorizing the assessment of liquidated damages. The decision of the City Administrative Officer or designee shall be final. C. Amount. The City Administrative Officer may assess liquidated damages for each calendar day or event, as appropriate, that Contractor is determined to be liable in accordance with this Agreement. D. Timing of Payment. Contractor shall pay any liquidated damages assessed by City within ten (10) days after they are assessed. If they are not paid within the ten (10) day period, City may proceed against the performance bond required by this Agreement or order the termination of this Agreement, or both. 45 Residential Recycling Services Agreement 12.4 Excuse from Performance The parties shall be excused from performing their respective obligations hereunder in the event they are prevented from so performing by reason of floods, earthquakes, other "acts of God ", war, civil insurrection, riots, acts of any government (including judicial action), and other similar catastrophic events which are beyond the control of and not the fault of the party claiming excuse from performance hereunder. Labor unrest, including but not limited to strike, work stoppage or slowdown, sick -out, picketing, or other concerted job action conducted by Contractor's employees or directed at Contractor or its selected facilities is not an excuse from performance and Contractor shall be obligated to continue to provide service notwithstanding the occurrence of any or all such events. The party claiming excuse from performance shall, within two (2) days after such party has notice of such cause, give the other party notice of the facts constituting such cause and asserting its claim to excuse under this Section. The interruption or discontinuance of Contractor's services caused by one or more of the events excused shall not constitute a default by Contractor under this Agreement. Notwithstanding the foregoing, however, if Contractor is excused from performing its obligations hereunder for any of the causes listed in this Section for a period of seven (7) days or more, City shall have the right to review the circumstances under which the excuse from performance was granted. After such review, if the City determines the excuse from service is no longer valid, the City shall notify the Contractor in writing to resume service within two (2) days from the receipt of such notification. If the Contractor fails to resume service within the two (2) days, the City shall have the right to terminate this Agreement by giving ten (10) days notice, in which case the provisions relative to taking possession of Contractor's land, equipment and other property and engaging Contractor's personnel in Article 11, City's Right to Perform Services, and this Article 12 shall apply. 12.5 Financial Material Errors Omissions or Irregularities The City may review, test and audit the books and records of the Contractor for the purpose of determining whether the Contractor is complying with the terms of the Agreement. In the event that material errors or omissions or irregularities are identified, then the cost associated with the audit, test or review shall be paid by the Contractor to the City. In the case of errors, materiality shall be deemed to be two percent (2 %) or greater of the gross revenues of the Contractor from activities performed under this agreement. Recovery of any over payment will be negotiated on a case by case basis, either immediately or through the next rate setting evaluation. i, Residential Recycling Services Agreement ARTICLE 13 OTHER AGREEMENTS OF THE PARTIES 13.1 Relationship of Parties The parties intend that Contractor shall perform the services required by this Agreement as an independent Contractor engaged by City and not as an officer or employee of City nor as a partner of or joint venture with City. No employee or agent or Contractor shall be or shall be deemed to be an employee or agent of City. Except as expressly provided herein, Contractor shall have the exclusive control over the manner and means of conducting the Recycling services performed under this Agreement, and all Persons performing such services. Contractor shall be solely responsible for the acts and omissions of its officers, employees, subcontractors and agents. Neither Contractor nor its officers, employees, subcontractors and agents shall obtain any rights to retirement benefits, workers compensation benefits, or any other benefits which accrue to City employees by virtue of their employment with City. 13.2 Compliance with law In providing the services required under this Agreement, Contractor shall at all times, at its sole cost, comply with all applicable laws of the United States, the State of California, City, and with all applicable regulations promulgated by federal, state, regional or local administrative and regulatory agencies, now in force and as they may be enacted, issued or amended during the Term. 13.3 Governing Law This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California. 13.4 Jurisdiction Any lawsuits between the parties arising out of this Agreement shall be brought and concluded in the courts of the State of California, which shall have exclusive jurisdiction over such lawsuits. 13.5 Assignment Except as may be provided for in Article 11, (City's Right to Perform Service), neither party shall assign its rights, nor delegate, subcontract or otherwise transfer its obligations under this Agreement to any other Person without the prior written consent of the other party. Any such assignment made without the consent of the other party shall be void and the attempted assignment shall constitute a material breach of this Agreement. The Contractor shall consent to any assignment to a joint powers authority, or any similar public entity assignee of the City. 47 Residential Recycling Services Agreement For purposes of this Section when used in reference to Contractor, "assignment" shall include, but not be limited to (1) a sale, exchange or other transfer of at least fifty -one percent (51 %) all of Contractor's assets dedicated to service under this Agreement to a third party; (2) a sale, exchange or other transfer of outstanding common stock of Contractor to a third party provided said sale, exchange or transfer may result in a change of control of Contractor; (3) any dissolution, reorganization, consolidation, merger, re- capitalization, stock issuance or re- issuance, voting trust, pooling agreement, escrow arrangement, liquidation or other transaction to which results in a change of ownership or control of Contractor; (4) any assignment by operation of law, including insolvency or bankruptcy, making assignment for the benefit of creditors, writ of attachment for an execution being levied against this Agreement, appointment of a receiver taking possession of Contractor's property, or transfer occurring in the event of a probate proceeding; and (5) any combination of the foregoing (whether or not in related or contemporaneous transactions) which has the effect of any such transfer or change of ownership, or change of control of Contractor. Contractor acknowledges that this Agreement involves rendering a vital service to City's residents and businesses, and that City has selected Contractor to perform the services specified herein based on (1) Contractor's experience, skill and reputation for conducting its Solid Waste management operations in a safe, effective and responsible fashion, at all times in keeping with applicable Environmental Laws, regulations and best waste management practices, and (2) Contractor's financial resources to maintain the required equipment and to support its indemnity obligations to City under this Agreement. City has relied on each of these factors, among others, in choosing Contractor to perform the services to be rendered by Contractor under this Agreement. If Contractor requests City's consideration of and consent to an assignment, City may deny or approve such request in its complete discretion. The City is concerned about the possibility that assignment could result in significant rate increases, as well as a change in the quality of service. Accordingly, the following standards have been set to ensure that assignment will result in continued quality service. In addition, the City reserves the right to solicit competitive bids for these services if the assignment results in a request by the assignee for rate increases that are higher than the inflationary index and do not reflect value changes in service standards. At a minimum, no request by Contractor for consent to an assignment need be considered by City unless and until Contractor has met the following requirements: A. Contractor shall undertake to pay City its reasonable expenses for attorney's fees and investigation costs necessary to investigate the suitability of any proposed assignee, and to review and finalize any documentation required as a condition for approving any such assignment; i Residential Recycling Services Agreement B. Contractor shall furnish City with audited financial statements of the proposed assignee's operations for the immediately preceding three (3) operating years; C. Contractor shall furnish City with satisfactory proof: 1) that the proposed assignee has at least ten (10) years of Recyclable Material management experience on a scale equal to or exceeding the scale of operations conducted by Contractor under this Agreement; 2) that in the last five (5) years, the proposed assignee has not suffered any significant citations or other censure from any federal, state or local agency having jurisdiction over its Solid Waste management operations due to any significant failure to comply with state, federal or local Environmental Laws and that the assignee has provided City with a complete list of such citations and censures; 3) that the proposed assignee has at all times conducted its operations in an environmentally safe and conscientious fashion; 4) that the proposed assignee conducts its Recyclable Materials management practices in accordance with sound waste management practices in full compliance with all federal, state and local laws regulating the Collection, transportation, processing, marketing and disposal of Solid Waste including Hazardous Wastes; and, 5) of any other information required by City to ensure the proposed assignee can fulfill the Terms of this Agreement in a timely safe and effective manner. Under no circumstances shall the City be obliged to consider any proposed assignment by Contractor if Contractor is in default at any time during the period of consideration. 13.6 Subcontracting Except as approved in writing by the City, Contractor shall not enter into an agreement to have another Person perform Contractor's duties of this Agreement. Contractor shall undertake to pay City its reasonable expenses for attorney's fees and investigation costs necessary to investigate the suitability of any proposed subcontractor, and to review and finalize any documentation required as a condition for approving any such subcontracting agreement. 13.7 Binding on Assigns The provisions of this Agreement shall inure to the benefit to and be binding on the permitted assigns of the parties. 13.8 Transition to Next Contractor If the transition of services to another Contractor occurs through expiration of term, default and termination, or otherwise, Contractor will cooperate with City and subsequent Contractor(s) to assist in an orderly transition which will include Contractor providing route lists and billing information. Contractor will not be obliged to sell collection vehicles or Containers to the next Contractor. Depending on Contractor's circumstances at the point of transition, Contractor at its option may enter into negotiations with the next Mwe :� Residential Recycling Services Agreement Contractor to sell (in part or all) Collection vehicles and/or containers. 13.9 Parties in Interest Nothing in the Agreement, whether express or implied, is intended to confer any rights on any persons other than the parties to it and their representatives, successors and permitted assigns. 13.10 Waiver The waiver by either party of any breach or violation of any provisions of this Agreement shall not be deemed to be a waiver of any breach or violation of any other provision nor of any subsequent breach of violation of the same or any other provision. The subsequent acceptance by either party of any monies which become due hereunder shall not be deemed to be a waiver of any pre- existing or concurrent breach or violation by the other party of any provision of this Agreement. 13.11 Contractor's Investigation Contractor has relied on its own investigations, and not on any representations of the City or its agents of the conditions and circumstances surrounding the Agreement and the work to be performed by it. 13.12 Notice All notices, demands, requests, proposals, approvals, consents and other communications which this Agreement requires, authorizes or contemplates shall be in writing and shall either be personally delivered to a representative of the parties at the address below or be deposited in the United States mail, first class postage prepaid, addressed as follows: If to City: Utilities Director City of San Luis Obispo 955 Morro Street San Luis Obispo, CA 93401 If to Contractor: Tom Martin San Luis Garbage Company 970 Monterey Street San Luis Obispo, CA 93401 The address to which communications may be delivered may be changed from time to time by a notice given in accordance with this Section. The notice, if mailed, is deemed served three (3) days after the mailing. 50 • Residential Recycling Services Agreement 13.13 Representatives of the Parties References in this Agreement to the "City" shall mean the City Council and all actions to be taken by City shall be taken by the City Council except as provided below. The City Council may delegate, in writing, authority to the City Administrative Officer, Utilities Director, and/or to the City employees and may permit such employees, in turn, to delegate in writing some or all of such authority to subordinate employees. Contractor may rely upon actions taken by such delegates if they are within the scope of the authority properly delegated to them. Contractor shall, by the effective date, designate in writing a responsible officer who shall serve as the representative of Contractor in all matters related to the Agreement and shall inform City in writing of such designation and of any limitations upon his or her authority to bind Contractor. City may rely upon action taken by such designated representative as actions of Contractor unless they are outside the scope of the authority delegated to him/her by Contractor as communicated to City. 13.14 City Free to Negotiate with Third Parties City may investigate all options for the Collection, processing and marketing of Recyclable Materials after the expiration of the Term. Without limiting generality of the foregoing, City may solicit proposals from Contractor and from third parties for the provision of Recycling services, and any combination thereof, and may negotiate and execute Agreements for such services which will take effect upon the expiration or earlier termination under Section 12.1 (Events of Default) of this Agreement. 13.15 Compliance with City Code Contractor shall comply with those provisions of the City code which are applicable, and with any and all amendments to such applicable provisions during the Term of this Agreement. 13.16 Privacy Contractor shall strictly observe and protect the rights of privacy of customers. Information identifying individual customers or the composition or contents of a customer's waste stream shall not be revealed to any person, governmental unit, private agency, or contractor, unless upon the authority of a court of law, by statute, or upon valid authorization of the customer. This provision shall not be construed to preclude Contractor from preparing, participating in, or assisting in the preparation of waste characterization studies or waste stream analyses which may be required by AB 939. 51 • Residential Recycling Services Agreement ARTICLE 14 MISCELLANEOUS AGREEMENTS 14.1 Entire Agreement This Agreement, including the exhibits, represents the full and entire Agreement between the parties with respect to the matters covered herein. 14.2 Section Headings The article headings and section headings in this Agreement are for convenience of reference only and are not intended to be used in the construction of this Agreement nor to alter or affect any of its provisions. 14.3 References to laws and Other Agreements All references in this Agreement to laws shall be understood to include such laws as they may be subsequently amended or recodified, unless otherwise specifically provided. This Agreement supersedes any and all Agreements for Recyclable Materials Collection, processing and/or marketing heretofore entered into by the parties and the City. 14.4 Interpretation This Agreement, including the exhibits attached hereto, shall be interpreted and construed reasonably and neither for nor against either party, regardless of the degree to which either party participated in its drafting. 14.5 Agreement This Agreement may not be modified or amended in any respect except by a writing signed by the parties. 14.6 Severability If any non - material provision of this Agreement is for any reason deemed to be invalid and unenforceable, the invalidity or unenforceability of such provision shall not affect any of the remaining provisions of this Agreement which shall be enforced as if such invalid or unenforceable provision had not been contained herein. 14.7 Exhibits Each of exhibits identified as Exhibit "A" is attached hereto and incorporated herein and made a part hereof by this reference. 52 a Residential Recycling Services Agreement IN WITNESS WHEREOF, City and Contractor have executed this Agreement as of the day and year first above written. The City of San Luis Obispo ( "City ") City Clerk Approved as to Form: /Y t rney 53 San Luis Garbage Company ( "Contractor ") B Name: Title: