Common use of Franchise Fee Clause in Contracts

Franchise Fee. The Franchise Fee shall be a percentage of 1192 CONTRACTOR’S gross revenue collected each month under the terms of this Agreement. Gross 1193 revenue shall specifically include revenue received by the CONTRACTOR from any entity, 1194 including Federal, State, County or other local facilities within the Service Area for the provision 1195 of Collection Services by the CONTRACTOR. However, revenue received by the CONTRACTOR 1196 from the sale of Recyclable Materials and from related California Redemption Value (CRV) 1197 payments shall not be considered as gross revenues for purpose of the calculation of Franchise 1198 Fees. The Franchise Fee percentage shall be ten percent (10%) unless otherwise adjusted by 1199 the TOWN. 1200 4.07.2 Proposal Development Fee. Within thirty (30) days after the Collection 1201 Agreement is executed, CONTRACTOR shall submit proposal development fees to the TOWN in 1202 the amount of Two Hundred Twenty-Five Thousand Dollars ($225,000.00) representing 1203 reimbursement for the cost of procurement and transition assistance. 1204 4.07.3 AB 939 Program/Agreement Management Fee. CONTRACTOR shall pay 1205 TOWN an amount equal to Seventy-Five Thousand ($75,000.00) no later than October 1, 2017, 1206 and annually thereafter no later than October 1st during the term of the Agreement. Starting on 1207 October 1, 2018, the AB 939 Program/Agreement Management Fee will be adjusted in an equal 1208 amount as the percent change in Service Recipient Rate. 1209 4.07.4 Use of Non-Sonoma County Landfill/Transfer System. If the event that 1210 CONTRACTOR does not utilize the Sonoma County Landfill/Transfer System for the transfer and 1211 transport of Organic Waste collected under the terms of this Agreement, CONTRACTOR shall 1212 pay any and all fees imposed by Sonoma County or the SCWMA levied against the Town or 1213 Contractor for such non-use of the Sonoma County Landfill/Transfer System for Organic Waste 1214 transfer and transport. Any and all payments due by CONTRACTOR shall be paid within thirty 1215 (30) days of receipt of written notice by the TOWN. 1216 4.07.5 No acceptance by TOWN of any payment shall be construed as an accord 1217 that the amount is in-fact the correct amount, nor shall such acceptance of payment be construed 1218 as a release of any claim TOWN may have against CONTRACTOR for any additional sums 1219 payable under the provisions of this Agreement. All amounts paid shall be subject to independent 1220 financial audit and recompilation by TOWN. If, after the financial audit, such recompilation 1221 indicates an underpayment CONTRACTOR shall pay to TOWN the amount of the underpayment 1222 and shall reimburse TOWN for all reasonable costs and expenses incurred in connection with the 1223 audit and recompilation within ten (10) Work Days of receipt of written notice from TOWN that 1224 such is the case. If, after audit, such recompilation indicates an overpayment, TOWN shall notify 1225 CONTRACTOR in writing of the amount of the overpayment, less costs and expenses incurred in 1226 connection with the audit and recompilation. CONTRACTOR may offset the amounts next due 1227 following receipt of such notice by the amount specified therein. 1228 4.07.6 Reimbursement for Detailed Rate Review and/or RRI Rate Application. 1229 CONTRACTOR shall reimburse the TOWN for all costs associated with the TOWN’s review of 1230 CONTRACTOR’s Detailed Rate Review and/or RRI rate application within thirty (30) days of 1231 TOWN submitting invoice or request to CONTRACTOR. 1232 4.07.7 Liquidated Damages. CONTRACTOR shall make payment to TOWN for 1233 any assessed liquidated damages as specified in Article 19. 1234 ARTICLE 5. Diversion Requirements 1235 5.01 CONTRACTOR’S Diversion Requirement. CONTRACTOR shall fully implement 1236 the Diversion Plan listed in Exhibit 10. Beginning calendar year 2018 and during each remaining 1237 calendar year throughout the term of this Agreement, CONTRACTOR shall divert a minimum of 1238 fifty percent (50%) of the Solid Waste it collects pursuant to this Agreement (such 50% 1239 requirement, identified as CONTRACTOR’s “diversion requirement”). In addition, CONTRACTOR 1240 shall assist TOWN in reaching CalRecycle’s 75% diversion goal by December 31, 2020. 1241 5.01.1 For calendar years 2018 and onwards, if CONTRACTOR does not meet 1242 the fifty percent (50%) minimum diversion requirement, then, at TOWN’s option, the Town may 1243 take any or all of the following actions: (a) TOWN may assess liquidated damages in accordance 1244 with Article 19, (b) CONTRACTOR shall implement additional diversion program(s) at no cost to 1245 TOWN or rate payers (such program(s) to be proposed by CONTRACTOR and approved by 1246 TOWN, such approval not to be unreasonably withheld), (c) TOWN may deny any adjustments to 1247 Service Recipient Rates as otherwise allowable under Article 4, and/or (d) if the minimum 1248 diversion requirements are not met for two (2) consecutive years, CONTRACTOR shall be 1249 deemed to be in default of this Agreement and Town may terminate CONTRACTOR’s services in 1250 accordance with Article 24. 1251 5.01.2 For purposes of determining if CONTRACTOR achieves 1252 CONTRACTOR’S diversion requirement, TOWN and CONTRACTOR agree that the annual 1253 diversion rate will be calculated using the following formula: “The tons of materials collected by 1254 CONTRACTOR from the provision of Collection Services in TOWN that are delivered to the 1255 Materials Recovery Facility, Organic Waste Processing Facility, or any other processing facility 1256 approved by TOWN, or that are otherwise handled in a manner that counts as diversion under 1257 applicable CalRecycle regulations (in each case, net of all residue from processing), divided by 1258 the total tons of materials collected in the Service Area by CONTRACTOR from the provision of 1259 Collection Services in each calendar year.” The annual diversion rate shall not include Solid 1260 Waste resulting from Temporary Debris Box and Roll-off Collection Service. 1261 5.01.3 As part of the Quarterly Reports submitted in accordance with Section 1262 16.02.1, CONTRACTOR shall provide documentation acceptable to TOWN in its sole discretion 1263 stating and supporting each calendar quarter's diversion rate. Diversion from other sources other 1264 than CONTRACTOR'S collection and diversion efforts shall not be counted as diversion achieved 1265 by CONTRACTOR. 1266 5.02 End Uses for Organic Waste. CONTRACTOR shall divert Organic Waste materials 1267 collected through Organics Collection, Holiday Tree Collection, and Large Item Collection, from 1268 disposal. CONTRACTOR must provide or arrange for end uses for such Organic Waste that 1269 provides diversion credits for TOWN according to regulations established by CalRecycle. 1270 5.03 Prohibited Use of Alternative Daily Cover (ADC). CONTRACTOR may not utilize 1271 Organic Waste as Alternative Daily Cover (ADC). 1272 5.04 Changes in the Market Conditions for Recyclable Material. Upon notice to and prior 1273 approval by TOWN, CONTRACTOR may deem additional materials or groups of materials to be 1274 Recyclable Material if they become capable of recycling at CONTRACTOR’s facilities in or near 1275 the Service Area. CONTRACTOR reserves the right, upon written notice to and prior written 1276 approval by TOWN, to discontinue acceptance of any category of Recyclable Material as a result 1277 of market conditions related to such materials. With regard to the preceding two sentences, 1278 TOWN’s approval shall not be unreasonably withheld. Such TOWN approval for reducing the type 1279 of Recyclable Material discontinued shall not exceed twelve (12) months. Discontinued 1280 acceptance of Recyclable Material pursuant to this Section 5.04 shall not relieve CONTRACTOR 1281 of CONTRACTOR’S Diversion Requirement set forth in Section 5.01 of this Agreement. 1282 5.05 Warranties and Representations. CONTRACTOR warrants and represents that it 1283 is aware of and familiar with TOWN’s waste stream, and that it has the ability to and will provide 1284 the programs and services required to be provided by it hereunder, with a view to facilitating 1285 TOWN’s meeting or exceeding the diversion requirements as set forth in CONTACTOR’S 1286 Diversion Guarantee. CONTRACTOR further warrants that it understands the diversion 1287 requirements of the Applicable Laws, (including, without limitation, amounts of Solid Waste to be 1288 diverted, time frames for diversion, and any other requirements governing this Agreement in 1289 accordance with AB 341, AB 939, AB 1594, AB 1826, SB 1016 and all amendments and related 1290 subsequent legislation), and that it shall provide such programs and services without imposing 1291 any costs or fees other than those set forth in Exhibit 1 (as adjusted), unless new programs are 1292 required by the State or TOWN which are not called out herein, in which case Service Recipient 1293 Rates may be adjusted in accordance with this Agreement. The programs identified herein are 1294 minimum requirements that must be met, and CONTRACTOR may (but is not required to) 1295 implement other programs that may be necessary to achieve the foregoing.

Franchise Fee. The Franchise Fee shall be a percentage of 1192 1186 CONTRACTOR’S gross revenue collected each month under the terms of this Agreement. 1187 Gross 1193 revenue shall specifically include revenue received by the CONTRACTOR from any 1188 entity, 1194 including Federal, State, County or other local facilities within the Service Area for the 1189 provision 1195 of Collection Services by the CONTRACTOR. However, revenue received by the 1190 CONTRACTOR 1196 from the sale of Recyclable Materials and from related California Redemption 1191 Value (CRV) 1197 payments shall not be considered as gross revenues for purpose of the calculation 1192 of Franchise 1198 Fees. The Franchise Fee percentage shall be ten percent (10%) unless otherwise 1193 adjusted by 1199 the TOWN. 1200 1194 4.07.2 Proposal Development Fee. Within thirty (30) days after the Collection 1201 1195 Agreement is executed, CONTRACTOR shall submit proposal development fees to the TOWN 1196 in 1202 the amount of Two One Hundred and Twenty-Five Thousand Dollars ($225,000.00125,000.00) 1197 representing 1203 reimbursement for the cost of procurement and transition assistance. 1204 If the full cost 1198 to the Town, including Town staff, Town legal and Town Consultant exceeds $125,000, the 1199 Contractor will be required to pay the Town accordingly, up to a maximum of Two Hundred and 1200 Twenty-Five Thousand Dollars ($225,000). 1201 4.07.3 AB 939 Program/Agreement Management Fee. CONTRACTOR shall 1202 pay 1205 TOWN an amount equal to Seventy-Five Thousand ($75,000.00) no later than October 1, 1203 2017, 1206 and annually thereafter no later than October 1st during the term of the Agreement. 1204 Starting on 1207 October 1, 2018, the AB 939 Program/Agreement Management Fee will be adjusted 1205 in an equal 1208 amount as the percent change in Service Recipient Rate. 1209 1206 4.07.4 Use of Non-Sonoma County Landfill/Transfer System. If the event that 1210 1207 CONTRACTOR does not utilize the Sonoma County Landfill/Transfer System for the transfer 1208 and 1211 transport of Organic Waste collected under the terms of this Agreement, CONTRACTOR 1209 shall 1212 pay any and all fees imposed by Sonoma County or the SCWMA levied against the Town 1210 or 1213 Contractor for such non-use of the Sonoma County Landfill/Transfer System for Organic 1211 Waste 1214 transfer and transport. Any and all payments due by CONTRACTOR shall be paid within 1212 thirty 1215 (30) days of receipt of written notice by the TOWN. 1216 1213 4.07.5 No acceptance by TOWN of any payment shall be construed as an 1214 accord 1217 that the amount is in-fact the correct amount, nor shall such acceptance of payment be 1215 construed 1218 as a release of any claim TOWN may have against CONTRACTOR for any additional 1216 sums 1219 payable under the provisions of this Agreement. All amounts paid shall be subject to 1217 independent 1220 financial audit and recompilation by TOWN. If, after the financial audit, such 1218 recompilation 1221 indicates an underpayment CONTRACTOR shall pay to TOWN the amount of the 1219 underpayment 1222 and shall reimburse TOWN for all reasonable costs and expenses incurred in 1220 connection with the 1223 audit and recompilation within ten (10) Work Days of receipt of written 1221 notice from TOWN that 1224 such is the case. If, after audit, such recompilation indicates an 1222 overpayment, TOWN shall notify 1225 CONTRACTOR in writing of the amount of the overpayment, 1223 less costs and expenses incurred in 1226 connection with the audit and recompilation. 1224 CONTRACTOR may offset the amounts next due 1227 following receipt of such notice by the amount 1225 specified therein. 1228 1226 4.07.6 Reimbursement for Detailed Rate Review and/or RRI Rate Application. 1229 1227 CONTRACTOR shall reimburse the TOWN for all costs associated with the TOWN’s review of 1230 1228 CONTRACTOR’s Detailed Rate Review and/or RRI rate application within thirty (30) days of 1231 TOWN submitting invoice or request to CONTRACTORapplication. 1232 1229 4.07.7 Liquidated Damages. CONTRACTOR shall make payment to TOWN for 1233 1230 any assessed liquidated damages as specified in Article 19. 1234 1231 ARTICLE 5. Diversion Requirements 1235 1232 5.01 CONTRACTOR’S Diversion Requirement. CONTRACTOR shall fully implement 1236 1233 the Diversion Plan listed in Exhibit 10. Beginning calendar year 2018 and during each 1234 remaining 1237 calendar year throughout the term of this Agreement, CONTRACTOR shall divert a 1235 minimum of 1238 fifty percent (50%) of the Solid Waste it collects pursuant to this Agreement (such 1236 50% 1239 requirement, identified as CONTRACTOR’s “diversion requirement”). In addition, 1237 CONTRACTOR 1240 shall assist TOWN in reaching CalRecycle’s 75% diversion goal by December 1238 31, 2020. 1241 1239 5.01.1 For calendar years 2018 and onwards, if CONTRACTOR does not meet 1242 1240 the fifty percent (50%) minimum diversion requirement, then, at TOWN’s option, the Town may 1243 1241 take any or all of the following actions: (a) TOWN may assess liquidated damages in 1242 accordance 1244 with Article 19, (b) CONTRACTOR shall implement additional diversion program(s) 1243 at no cost to 1245 TOWN or rate payers (such program(s) to be proposed by CONTRACTOR and 1244 approved by 1246 TOWN, such approval not to be unreasonably withheld), (c) TOWN may deny any 1245 adjustments to 1247 Service Recipient Rates as otherwise allowable under Article 4, and/or (d) if the 1246 minimum 1248 diversion requirements are not met for two (2) consecutive years, CONTRACTOR 1247 shall be 1249 deemed to be in default of this Agreement and Town may terminate CONTRACTOR’s 1248 services in 1250 accordance with Article 24. 1251 1249 5.01.2 For purposes of determining if CONTRACTOR achieves 1252 1250 CONTRACTOR’S diversion requirement, TOWN and CONTRACTOR agree that the annual 1253 1251 diversion rate will be calculated using the following formula: “The tons of materials collected by 1254 1252 CONTRACTOR from the provision of Collection Services in TOWN that are delivered to the 1255 1253 Materials Recovery Facility, Organic Waste Processing Facility, or any other processing facility 1256 1254 approved by TOWN, or that are otherwise handled in a manner that counts as diversion under 1257 1255 applicable CalRecycle regulations (in each case, net of all residue from processing), divided by 1258 1256 the total tons of materials collected in the Service Area by CONTRACTOR from the provision of 1259 1257 Collection Services in each calendar year.” The annual diversion rate shall not include Solid 1260 1258 Waste resulting from Temporary Debris Box and Roll-off Collection Service. 1261 1259 5.01.3 As part of the Quarterly Reports submitted in accordance with Section 1262 1260 16.02.1, CONTRACTOR shall provide documentation acceptable to TOWN in its sole discretion 1263 1261 stating and supporting each calendar quarter's diversion rate. Diversion from other sources 1262 other 1264 than CONTRACTOR'S collection and diversion efforts shall not be counted as diversion 1263 achieved 1265 by CONTRACTOR. 1266 1264 5.02 End Uses for Organic Waste. CONTRACTOR shall divert Organic Waste 1265 materials 1267 collected through Organics Collection, Holiday Tree Collection, and Large Item 1266 Collection, from 1268 disposal. CONTRACTOR must provide or arrange for end uses for such 1267 Organic Waste that 1269 provides diversion credits for TOWN according to regulations established by 1268 CalRecycle. 1270 1269 5.03 Prohibited Use of Alternative Daily Cover (ADC). CONTRACTOR may not utilize 1271 1270 Organic Waste as Alternative Daily Cover (ADC). 1272 1271 5.04 Changes in the Market Conditions for Recyclable Material. Upon notice to and 1272 prior 1273 approval by TOWN, CONTRACTOR may deem additional materials or groups of materials 1273 to be 1274 Recyclable Material if they become capable of recycling at CONTRACTOR’s facilities in or 1274 near 1275 the Service Area. CONTRACTOR reserves the right, upon written notice to and prior 1275 written 1276 approval by TOWN, to discontinue acceptance of any category of Recyclable Material as 1276 a result 1277 of market conditions related to such materials. With regard to the preceding two 1277 sentences, 1278 TOWN’s approval shall not be unreasonably withheld. Such TOWN approval for 1278 reducing the type 1279 of Recyclable Material discontinued shall not exceed twelve (12) months. 1279 Discontinued 1280 acceptance of Recyclable Material pursuant to this Section 5.04 shall not relieve 1280 CONTRACTOR 1281 of CONTRACTOR’S Diversion Requirement set forth in Section 5.01 of this 1281 Agreement. 1282 5.05 Warranties and Representations. CONTRACTOR warrants and represents that 1283 it 1283 is aware of and familiar with TOWN’s waste stream, and that it has the ability to and will 1284 provide 1284 the programs and services required to be provided by it hereunder, with a view to 1285 facilitating 1285 TOWN’s meeting or exceeding the diversion requirements as set forth in 1286 CONTACTOR’S 1286 Diversion Guarantee. CONTRACTOR further warrants that it understands 1287 the diversion 1287 requirements of the Applicable Laws, (including, without limitation, amounts of 1288 Solid Waste to be 1288 diverted, time frames for diversion, and any other requirements governing 1289 this Agreement in 1289 accordance with AB 341, AB 939, AB 1594, AB 1826, SB 1016 and all 1290 amendments and related 1290 subsequent legislation), and that it shall provide such programs and 1291 services without imposing 1291 any costs or fees other than those set forth in Exhibit 1 (as 1292 adjusted), unless new programs are 1292 required by the State or TOWN which are not called out 1293 herein, in which case Service Recipient 1293 Rates may be adjusted in accordance with this 1294 Agreement. The programs identified herein are 1294 minimum requirements that must be met, and 1295 CONTRACTOR may (but is not required to) 1295 implement other programs that may be 1296 necessary to achieve the foregoing. 1297 5.06 Mutual Cooperation. TOWN shall cooperate in good faith, so long as there is no 1298 additional cost to TOWN, with CONTRACTOR in CONTRACTOR’s efforts to meet TOWN’S 1299 diversion and other compliance requirements imposed by AB 939 and other such Applicable 1300 Laws, and to meet the diversion requirements of this Agreement and the State. In this regard, 1301 TOWN’S obligations shall include, without limitation, making such petitions and applications 1302 as may be reasonably requested by CONTRACTOR for time extensions in meeting State 1303 diversion goals, or other exceptions from the terms of such Applicable Laws, and authorizing 1304 such changes to CONTRACTOR’S Recycling or Solid Waste programs as may be 1305 reasonably requested by CONTRACTOR for CONTRACTOR to satisfy diversion 1306 requirements. 1307 5.07 Waste Reduction and Program Implementation. CONTRACTOR shall be 1308 responsible for providing data and information as reasonably requested by TOWN regarding 1309 its programs and services hereunder, for purposes including but not limited to TOWN’S 1310 preparation of reports and other information as may be required by any agency, including 1311 specifically, the State of California, in order to comply with AB 939 and other such Applicable 1312 Laws. 1313 5.08 Compliance with Law. CONTRACTOR agrees that it will carry out its obligations 1314 under this Agreement in a manner consistent with Applicable Laws including specifically AB 1315 939, AB 341, AB 1594 and AB 1826 and all amendments thereto. 1316 5.09 Solid Waste Generation/Characterization Studies. CONTRACTOR 1317 acknowledges that TOWN must perform Solid Waste generation and disposal 1318 characterization studies periodically to comply with the requirements of the Applicable Laws, 1319 including AB 939. CONTRACTOR agrees to participate and cooperate with TOWN and its 1320 agents to accomplish such studies, as reasonably requested by TOWN, provided that such 1321 participation and cooperation can be accomplished at no additional cost to CONTRACTOR 1322 and without substantially interfering with CONTRACTOR’s operations. 1323 5.10 Implementation of Additional Diversion Services. If TOWN determines that 1324 CONTRACTOR has not fulfilled its diversion requirements set forth in this Agreement, TOWN 1325 may require CONTRACTOR to implement additional diversion programs with no additional 1326 compensation for CONTRACTOR or adjustments to the Service Recipient Rates.

Franchise Fee. The Franchise Fee shall be a percentage of 1192 1209 CONTRACTOR’S gross revenue collected each month under the terms of this Agreement. 1210 Gross 1193 revenue shall specifically include revenue received by the CONTRACTOR from any 1211 entity, 1194 including Federal, State, County or other local facilities within the Service Area for the 1212 provision 1195 of Collection Services by the CONTRACTOR. However, revenue received by the 1213 CONTRACTOR 1196 from the sale of Recyclable Materials and from related California Redemption 1214 Value (CRV) 1197 payments shall not be considered as gross revenues for purpose of the calculation 1215 of Franchise 1198 Fees. The Franchise Fee percentage shall be ten percent (10%) unless otherwise 1216 adjusted by 1199 the TOWN. 1200 1217 4.07.2 Proposal Development Fee. Within thirty (30) days after the Collection 1201 1218 Agreement is executed, CONTRACTOR shall submit proposal development fees to the TOWN 1219 in 1202 the amount of Two Hundred Twenty-Five Thousand Dollars ($225,000.00) representing 1203 1220 reimbursement for the cost of procurement and transition assistance. 1204 1221 4.07.3 AB 939 Program/Agreement Management Fee. CONTRACTOR shall 1222 pay 1205 TOWN an amount equal to Seventy-Five Thousand ($75,000.00) no later than October 1, 1223 2017, 1206 and annually thereafter no later than October 1st during the term of the Agreement. 1224 Starting on 1207 October 1, 2018, the AB 939 Program/Agreement Management Fee will be adjusted 1225 in an equal 1208 amount as the percent change in Service Recipient Rate. 1209 1226 4.07.4 Use of Non-Sonoma County Landfill/Transfer System. If the event that 1210 1227 CONTRACTOR does not utilize the Sonoma County Landfill/Transfer System for the transfer 1228 and 1211 transport of Organic Waste collected under the terms of this Agreement, CONTRACTOR 1229 shall 1212 pay any and all fees imposed by Sonoma County or the SCWMA levied against the Town 1230 or 1213 Contractor for such non-use of the Sonoma County Landfill/Transfer System for Organic 1231 Waste 1214 transfer and transport. Any and all payments due by CONTRACTOR shall be paid within 1232 thirty 1215 (30) days of receipt of written notice by the TOWN. 1216 1233 4.07.5 No acceptance by TOWN of any payment shall be construed as an 1234 accord 1217 that the amount is in-fact the correct amount, nor shall such acceptance of payment be 1235 construed 1218 as a release of any claim TOWN may have against CONTRACTOR for any additional 1236 sums 1219 payable under the provisions of this Agreement. All amounts paid shall be subject to 1237 independent 1220 financial audit and recompilation by TOWN. If, after the financial audit, such 1238 recompilation 1221 indicates an underpayment CONTRACTOR shall pay to TOWN the amount of the 1239 underpayment 1222 and shall reimburse TOWN for all reasonable costs and expenses incurred in 1240 connection with the 1223 audit and recompilation within ten (10) Work Days of receipt of written 1241 notice from TOWN that 1224 such is the case. If, after audit, such recompilation indicates an 1242 overpayment, TOWN shall notify 1225 CONTRACTOR in writing of the amount of the overpayment, 1243 less costs and expenses incurred in 1226 connection with the audit and recompilation. 1244 CONTRACTOR may offset the amounts next due 1227 following receipt of such notice by the amount 1245 specified therein. 1228 1246 4.07.6 Reimbursement for Detailed Rate Review and/or RRI Rate Application. 1229 1247 CONTRACTOR shall reimburse the TOWN for all costs associated with the TOWN’s review of 1230 1248 CONTRACTOR’s Detailed Rate Review and/or RRI rate application within thirty (30) days of 1231 1249 TOWN submitting invoice or request to CONTRACTOR. 1232 1250 4.07.7 Liquidated Damages. CONTRACTOR shall make payment to TOWN for 1233 1251 any assessed liquidated damages as specified in Article 19. 1234 1252 ARTICLE 5. Diversion Requirements 1235 1253 5.01 CONTRACTOR’S Diversion Requirement. CONTRACTOR shall fully implement 1236 1254 the Diversion Plan listed in Exhibit 10. Beginning calendar year 2018 and during each 1255 remaining 1237 calendar year throughout the term of this Agreement, CONTRACTOR shall divert a 1256 minimum of 1238 fifty percent (50%) of the Solid Waste it collects pursuant to this Agreement (such 1257 50% 1239 requirement, identified as CONTRACTOR’s “diversion requirement”). In addition, 1258 CONTRACTOR 1240 shall assist TOWN in reaching CalRecycle’s 75% diversion goal by December 1259 31, 2020. 1241 1260 5.01.1 For calendar years 2018 and onwards, if CONTRACTOR does not meet 1242 1261 the fifty percent (50%) minimum diversion requirement, then, at TOWN’s option, the Town may 1243 1262 take any or all of the following actions: (a) TOWN may assess liquidated damages in 1263 accordance 1244 with Article 19, (b) CONTRACTOR shall implement additional diversion program(s) 1264 at no cost to 1245 TOWN or rate payers (such program(s) to be proposed by CONTRACTOR and 1265 approved by 1246 TOWN, such approval not to be unreasonably withheld), (c) TOWN may deny any 1266 adjustments to 1247 Service Recipient Rates as otherwise allowable under Article 4, and/or (d) if the 1267 minimum 1248 diversion requirements are not met for two (2) consecutive years, CONTRACTOR 1268 shall be 1249 deemed to be in default of this Agreement and Town may terminate CONTRACTOR’s 1269 services in 1250 accordance with Article 24. 1251 1270 5.01.2 For purposes of determining if CONTRACTOR achieves 1252 1271 CONTRACTOR’S diversion requirement, TOWN and CONTRACTOR agree that the annual 1253 1272 diversion rate will be calculated using the following formula: “The tons of materials collected by 1254 1273 CONTRACTOR from the provision of Collection Services in TOWN that are delivered to the 1255 1274 Materials Recovery Facility, Organic Waste Processing Facility, or any other processing facility 1256 1275 approved by TOWN, or that are otherwise handled in a manner that counts as diversion under 1257 1276 applicable CalRecycle regulations (in each case, net of all residue from processing), divided by 1258 1277 the total tons of materials collected in the Service Area by CONTRACTOR from the provision of 1259 1278 Collection Services in each calendar year.” The annual diversion rate shall not include Solid 1260 1279 Waste resulting from Temporary Debris Box and Roll-off Collection Service. 1261 1280 5.01.3 As part of the Quarterly Reports submitted in accordance with Section 1262 1281 16.02.1, CONTRACTOR shall provide documentation acceptable to TOWN in its sole discretion 1263 1282 stating and supporting each calendar quarter's diversion rate. Diversion from other sources 1283 other 1264 than CONTRACTOR'S collection and diversion efforts shall not be counted as diversion 1284 achieved 1265 by CONTRACTOR. 1266 1285 5.02 End Uses for Organic Waste. CONTRACTOR shall divert Organic Waste 1286 materials 1267 collected through Organics Collection, Holiday Tree Collection, and Large Item 1287 Collection, from 1268 disposal. CONTRACTOR must provide or arrange for end uses for such 1288 Organic Waste that 1269 provides diversion credits for TOWN according to regulations established by 1289 CalRecycle. 1270 1290 5.03 Prohibited Use of Alternative Daily Cover (ADC). CONTRACTOR may not utilize 1271 1291 Organic Waste as Alternative Daily Cover (ADC). 1272 1292 5.04 Changes in the Market Conditions for Recyclable Material. Upon notice to and 1293 prior 1273 approval by TOWN, CONTRACTOR may deem additional materials or groups of materials 1294 to be 1274 Recyclable Material if they become capable of recycling at CONTRACTOR’s facilities in or 1295 near 1275 the Service Area. CONTRACTOR reserves the right, upon written notice to and prior 1296 written 1276 approval by TOWN, to discontinue acceptance of any category of Recyclable Material as 1297 a result 1277 of market conditions related to such materials. With regard to the preceding two 1298 sentences, 1278 TOWN’s approval shall not be unreasonably withheld. Such TOWN approval for 1299 reducing the type 1279 of Recyclable Material discontinued shall not exceed twelve (12) months. 1300 Discontinued 1280 acceptance of Recyclable Material pursuant to this Section 5.04 shall not relieve 1301 CONTRACTOR 1281 of CONTRACTOR’S Diversion Requirement set forth in Section 5.01 of this 1302 Agreement. 1282 1303 5.05 Warranties and Representations. CONTRACTOR warrants and represents that 1304 it 1283 is aware of and familiar with TOWN’s waste stream, and that it has the ability to and will 1305 provide 1284 the programs and services required to be provided by it hereunder, with a view to 1306 facilitating 1285 TOWN’s meeting or exceeding the diversion requirements as set forth in 1307 CONTACTOR’S 1286 Diversion Guarantee. CONTRACTOR further warrants that it understands the 1308 diversion 1287 requirements of the Applicable Laws, (including, without limitation, amounts of Solid 1309 Waste to be 1288 diverted, time frames for diversion, and any other requirements governing this 1310 Agreement in 1289 accordance with AB 341, AB 939, AB 1594, AB 1826, SB 1016 and all 1311 amendments and related 1290 subsequent legislation), and that it shall provide such programs and 1312 services without imposing 1291 any costs or fees other than those set forth in Exhibit 1 (as adjusted), 1313 unless new programs are 1292 required by the State or TOWN which are not called out herein, in 1314 which case Service Recipient 1293 Rates may be adjusted in accordance with this Agreement. The 1315 programs identified herein are 1294 minimum requirements that must be met, and CONTRACTOR 1316 may (but is not required to) 1295 implement other programs that may be necessary to achieve the 1317 foregoing.

Franchise Fee. The Franchise Fee shall be a percentage of 1192 CONTRACTOR’S gross revenue collected each month under the terms of this Agreement. Gross 1193 revenue shall specifically include revenue received by the CONTRACTOR from any entity, 1194 including Federal, State, County or other local facilities within the Service Area for the provision 1195 of Collection Services by the CONTRACTOR. However, revenue received by the CONTRACTOR 1196 from the sale of Recyclable Materials and from related California Redemption Value (CRV) 1197 payments shall not be considered as gross revenues for purpose of the calculation of Franchise 1198 Fees. The Franchise Fee percentage shall be ten percent (10%) unless otherwise adjusted by 1199 the TOWN. 1200 4.07.2 Proposal Development Fee. Within thirty (30) days after the Collection 1201 Agreement is executed, CONTRACTOR shall submit proposal development fees to the TOWN in 1202 the amount of Two Hundred Twenty-Five Thousand Dollars ($225,000.00) representing 1203 reimbursement for the cost of procurement and transition assistance. 1204 4.07.3 AB 939 Program/Agreement Management Fee. CONTRACTOR shall pay 1205 TOWN an amount equal to Seventy-Five Thousand ($75,000.00) no later than October 1, 2017, 1206 and annually thereafter no later than October 1st during the term of the Agreement. Starting on 1207 October 1, 2018, the AB 939 Program/Agreement Management Fee will be adjusted in an equal 1208 amount as the percent change in Service Recipient Rate. 1209 4.07.4 Use of Non-Sonoma County Landfill/Transfer System. If the event that 1210 CONTRACTOR does not utilize the Sonoma County Landfill/Transfer System for the transfer and 1211 transport of Organic Waste collected under the terms of this Agreement, CONTRACTOR shall 1212 pay any and all fees imposed by Sonoma County or the SCWMA levied against the Town or 1213 Contractor for such non-use of the Sonoma County Landfill/Transfer System for Organic Waste 1214 transfer and transport. Any and all payments due by CONTRACTOR shall be paid within thirty 1215 (30) days of receipt of written notice by the TOWN. 1216 4.07.5 No acceptance by TOWN of any payment shall be construed as an accord 1217 that the amount is in-fact the correct amount, nor shall such acceptance of payment be construed 1218 as a release of any claim TOWN may have against CONTRACTOR for any additional sums 1219 payable under the provisions of this Agreement. All amounts paid shall be subject to independent 1220 financial audit and recompilation by TOWN. If, after the financial audit, such recompilation 1221 indicates an underpayment CONTRACTOR shall pay to TOWN the amount of the underpayment 1222 and shall reimburse TOWN for all reasonable costs and expenses incurred in connection with the 1223 audit and recompilation within ten (10) Work Days of receipt of written notice from TOWN that 1224 such is the case. If, after audit, such recompilation indicates an overpayment, TOWN shall notify 1225 CONTRACTOR in writing of the amount of the overpayment, less costs and expenses incurred in 1226 connection with the audit and recompilation. CONTRACTOR may offset the amounts next due 1227 following receipt of such notice by the amount specified therein. 1228 4.07.6 Reimbursement for Detailed Rate Review and/or RRI Rate Application. 1229 CONTRACTOR shall reimburse the TOWN for all costs associated with the TOWN’s review of 1230 CONTRACTOR’s Detailed Rate Review and/or RRI rate application within thirty (30) days of 1231 TOWN submitting invoice or request to CONTRACTOR. 1232 4.07.7 Liquidated Damages. CONTRACTOR shall make payment to TOWN for 1233 any assessed liquidated damages as specified in Article 19. 1234 ARTICLE 5. Diversion Requirements 1235 5.01 CONTRACTOR’S Diversion Requirement. CONTRACTOR shall fully implement 1236 the Diversion Plan listed in Exhibit 10. Beginning calendar year 2018 and during each remaining 1237 calendar year throughout the term of this Agreement, CONTRACTOR shall divert a minimum of 1238 fifty percent (50%) of the Solid Waste it collects pursuant to this Agreement (such 50% 1239 requirement, identified as CONTRACTOR’s “diversion requirement”). In addition, CONTRACTOR 1240 shall assist TOWN in reaching CalRecycle’s 75% diversion goal by December 31, 2020. 1241 5.01.1 For calendar years 2018 and onwards, if CONTRACTOR does not meet 1242 the fifty percent (50%) minimum diversion requirement, then, at TOWN’s option, the Town may 1243 take any or all of the following actions: (a) TOWN may assess liquidated damages in accordance 1244 with Article 19, (b) CONTRACTOR shall implement additional diversion program(s) at no cost to 1245 TOWN or rate payers (such program(s) to be proposed by CONTRACTOR and approved by 1246 TOWN, such approval not to be unreasonably withheld), (c) TOWN may deny any adjustments to 1247 Service Recipient Rates as otherwise allowable under Article 4, and/or (d) if the minimum 1248 diversion requirements are not met for two (2) consecutive years, CONTRACTOR shall be 1249 deemed to be in default of this Agreement and Town may terminate CONTRACTOR’s services in 1250 accordance with Article 24. 1251 5.01.2 For purposes of determining if CONTRACTOR achieves 1252 CONTRACTOR’S diversion requirement, TOWN and CONTRACTOR agree that the annual 1253 diversion rate will be calculated using the following formula: “The tons of materials collected by 1254 CONTRACTOR from the provision of Collection Services in TOWN that are delivered to the 1255 Materials Recovery Facility, Organic Waste Processing Facility, or any other processing facility 1256 approved by TOWN, or that are otherwise handled in a manner that counts as diversion under 1257 applicable CalRecycle regulations (in each case, net of all residue from processing), divided by 1258 the total tons of materials collected in the Service Area by CONTRACTOR from the provision of 1259 Collection Services in each calendar year.” The annual diversion rate shall not include Solid 1260 Waste resulting from Temporary Debris Box and Roll-off Collection Service. 1261 5.01.3 As part of the Quarterly Reports submitted in accordance with Section 1262 16.02.1, CONTRACTOR shall provide documentation acceptable to TOWN in its sole discretion 1263 stating and supporting each calendar quarter's diversion rate. Diversion from other sources other 1264 than CONTRACTOR'S collection and diversion efforts shall not be counted as diversion achieved 1265 by CONTRACTOR. 1266 5.02 End Uses for Organic Waste. CONTRACTOR shall divert Organic Waste materials 1267 collected through Organics Collection, Holiday Tree Collection, and Large Item Collection, from 1268 disposal. CONTRACTOR must provide or arrange for end uses for such Organic Waste that 1269 provides diversion credits for TOWN according to regulations established by CalRecycle. 1270 5.03 Prohibited Use of Alternative Daily Cover (ADC). CONTRACTOR may not utilize 1271 Organic Waste as Alternative Daily Cover (ADC). 1272 5.04 Changes in the Market Conditions for Recyclable Material. Upon notice to and prior 1273 approval by TOWN, CONTRACTOR may deem additional materials or groups of materials to be 1274 Recyclable Material if they become capable of recycling at CONTRACTOR’s facilities in or near 1275 the Service Area. CONTRACTOR reserves the right, upon written notice to and prior written 1276 approval by TOWN, to discontinue acceptance of any category of Recyclable Material as a result 1277 of market conditions related to such materials. With regard to the preceding two sentences, 1278 TOWN’s approval shall not be unreasonably withheld. Such TOWN approval for reducing the type 1279 of Recyclable Material discontinued shall not exceed twelve (12) months. Discontinued 1280 acceptance of Recyclable Material pursuant to this Section 5.04 shall not relieve CONTRACTOR 1281 of CONTRACTOR’S Diversion Requirement set forth in Section 5.01 of this Agreement. 1282 5.05 Warranties and Representations. CONTRACTOR warrants and represents that it 1283 is aware of and familiar with TOWN’s waste stream, and that it has the ability to and will provide 1284 the programs and services required to be provided by it hereunder, with a view to facilitating 1285 TOWN’s meeting or exceeding the diversion requirements as set forth in CONTACTOR’S 1286 Diversion Guarantee. CONTRACTOR further warrants that it understands the diversion 1287 requirements of the Applicable Laws, (including, without limitation, amounts of Solid Waste to be 1288 diverted, time frames for diversion, and any other requirements governing this Agreement in 1289 accordance with AB 341, AB 939, AB 1594, AB 1826, SB 1016 and all amendments and related 1290 subsequent legislation), and that it shall provide such programs and services without imposing 1291 any costs or fees other than those set forth in Exhibit 1 (as adjusted), unless new programs are 1292 required by the State or TOWN which are not called out herein, in which case Service Recipient 1293 Rates may be adjusted in accordance with this Agreement. The programs identified herein are 1294 minimum requirements that must be met, and CONTRACTOR may (but is not required to) 1295 implement other programs that may be necessary to achieve the foregoing.

Franchise Fee. The Franchise Fee shall be a percentage of 1192 1209 CONTRACTOR’S gross revenue collected each month under the terms of this Agreement. 1210 Gross 1193 revenue shall specifically include revenue received by the CONTRACTOR from any 1211 entity, 1194 including Federal, State, County or other local facilities within the Service Area for the 1212 provision 1195 of Collection Services by the CONTRACTOR. However, revenue received by the 1213 CONTRACTOR 1196 from the sale of Recyclable Materials and from related California Redemption 1214 Value (CRV) 1197 payments shall not be considered as gross revenues for purpose of the calculation 1215 of Franchise 1198 Fees. The Franchise Fee percentage shall be ten percent (10%) unless otherwise 1216 adjusted by 1199 the TOWN. 1200 1217 4.07.2 Proposal Development Fee. Within thirty (30) days after the Collection 1201 1218 Agreement is executed, CONTRACTOR shall submit proposal development fees to the TOWN 1219 in 1202 the amount of Two Hundred Twenty-Five Thousand Dollars ($225,000.00) representing 1203 1220 reimbursement for the cost of procurement and transition assistance. 1204 1221 4.07.3 AB 939 Program/Agreement Management Fee. CONTRACTOR shall 1222 pay 1205 TOWN an amount equal to Seventy-Five Thousand ($75,000.00) no later than October 1, 1223 1224 2017, 1206 and annually thereafter no later than October 1st during the term of the Agreement. Starting on 1207 October 1, 2018, the AB 939 Program/Agreement Management Fee will be adjusted 1225 in an equal 1208 amount as the percent change in Service Recipient Rate. 1209 1226 4.07.4 Use of Non-Sonoma County Landfill/Transfer System. If the event that 1210 1227 CONTRACTOR does not utilize the Sonoma County Landfill/Transfer System for the transfer 1228 and 1211 transport of Organic Waste collected under the terms of this Agreement, CONTRACTOR 1229 shall 1212 pay any and all fees imposed by Sonoma County or the SCWMA levied against the Town 1230 or 1213 Contractor for such non-use of the Sonoma County Landfill/Transfer System for Organic 1231 Waste 1214 transfer and transport. Any and all payments due by CONTRACTOR shall be paid within 1232 thirty 1215 (30) days of receipt of written notice by the TOWN. 1216 1233 4.07.5 No acceptance by TOWN of any payment shall be construed as an 1234 accord 1217 that the amount is in-fact the correct amount, nor shall such acceptance of payment be 1235 construed 1218 as a release of any claim TOWN may have against CONTRACTOR for any additional 1236 sums 1219 payable under the provisions of this Agreement. All amounts paid shall be subject to 1237 independent 1220 financial audit and recompilation by TOWN. If, after the financial audit, such 1238 recompilation 1221 indicates an underpayment CONTRACTOR shall pay to TOWN the amount of the 1239 underpayment 1222 and shall reimburse TOWN for all reasonable costs and expenses incurred in 1240 connection with the 1223 audit and recompilation within ten (10) Work Days of receipt of written 1241 notice from TOWN that 1224 such is the case. If, after audit, such recompilation indicates an 1242 overpayment, TOWN shall notify 1225 CONTRACTOR in writing of the amount of the overpayment, 1243 less costs and expenses incurred in 1226 connection with the audit and recompilation. 1244 CONTRACTOR may offset the amounts next due 1227 following receipt of such notice by the amount 1245 specified therein. 1228 1246 4.07.6 Reimbursement for Detailed Rate Review and/or RRI Rate Application. 1229 1247 CONTRACTOR shall reimburse the TOWN for all costs associated with the TOWN’s review of 1230 1248 CONTRACTOR’s Detailed Rate Review and/or RRI rate application within thirty (30) days of 1231 1249 TOWN submitting invoice or request to CONTRACTOR. 1232 1250 4.07.7 Liquidated Damages. CONTRACTOR shall make payment to TOWN for 1233 1251 any assessed liquidated damages as specified in Article 19. 1234 1252 ARTICLE 5. Diversion Requirements 1235 1253 5.01 CONTRACTOR’S Diversion Requirement. CONTRACTOR shall fully implement 1236 1254 the Diversion Plan listed in Exhibit 10. Beginning calendar year 2018 and during each 1255 remaining 1237 calendar year throughout the term of this Agreement, CONTRACTOR shall divert a 1256 minimum of 1238 fifty percent (50%) of the Solid Waste it collects pursuant to this Agreement (such 1257 50% 1239 requirement, identified as CONTRACTOR’s “diversion requirement”). In addition, 1258 CONTRACTOR 1240 shall assist TOWN in reaching CalRecycle’s 75% diversion goal by December 1259 31, 2020. 1241 1260 5.01.1 For calendar years 2018 and onwards, if CONTRACTOR does not meet 1242 1261 the fifty percent (50%) minimum diversion requirement, then, at TOWN’s option, the Town may 1243 1262 take any or all of the following actions: (a) TOWN may assess liquidated damages in 1263 accordance 1244 with Article 19, (b) CONTRACTOR shall implement additional diversion program(s) 1264 at no cost to 1245 TOWN or rate payers (such program(s) to be proposed by CONTRACTOR and 1265 approved by 1246 TOWN, such approval not to be unreasonably withheld), (c) TOWN may deny any 1266 adjustments to 1247 Service Recipient Rates as otherwise allowable under Article 4, and/or (d) if the 1267 minimum 1248 diversion requirements are not met for two (2) consecutive years, CONTRACTOR 1268 shall be 1249 deemed to be in default of this Agreement and Town may terminate CONTRACTOR’s 1269 services in 1250 accordance with Article 24. 1251 1270 1271 5.01.2 For purposes of determining if CONTRACTOR achieves 1252 CONTRACTOR’S diversion requirement, TOWN and CONTRACTOR agree that the annual 1253 1272 diversion rate will be calculated using the following formula: “The tons of materials collected by 1254 1273 CONTRACTOR from the provision of Collection Services in TOWN that are delivered to the 1255 1274 Materials Recovery Facility, Organic Waste Processing Facility, or any other processing facility 1256 1275 approved by TOWN, or that are otherwise handled in a manner that counts as diversion under 1257 1276 applicable CalRecycle regulations (in each case, net of all residue from processing), divided by 1258 1277 the total tons of materials collected in the Service Area by CONTRACTOR from the provision of 1259 1278 Collection Services in each calendar year.” The annual diversion rate shall not include Solid 1260 1279 Waste resulting from Temporary Debris Box and Roll-off Collection Service. 1261 1280 5.01.3 As part of the Quarterly Reports submitted in accordance with Section 1262 1281 16.02.1, CONTRACTOR shall provide documentation acceptable to TOWN in its sole discretion 1263 1282 stating and supporting each calendar quarter's diversion rate. Diversion from other sources 1283 other 1264 than CONTRACTOR'S collection and diversion efforts shall not be counted as diversion 1284 achieved 1265 by CONTRACTOR. 1266 1285 5.02 End Uses for Organic Waste. CONTRACTOR shall divert Organic Waste 1286 materials 1267 collected through Organics Collection, Holiday Tree Collection, and Large Item 1287 Collection, from 1268 disposal. CONTRACTOR must provide or arrange for end uses for such 1288 Organic Waste that 1269 provides diversion credits for TOWN according to regulations established by 1289 CalRecycle. 1270 1290 5.03 Prohibited Use of Alternative Daily Cover (ADC). CONTRACTOR may not utilize 1271 1291 Organic Waste as Alternative Daily Cover (ADC). 1272 1292 5.04 Changes in the Market Conditions for Recyclable Material. Upon notice to and 1293 prior 1273 approval by TOWN, CONTRACTOR may deem additional materials or groups of materials 1294 to be 1274 Recyclable Material if they become capable of recycling at CONTRACTOR’s facilities in or 1295 near 1275 the Service Area. CONTRACTOR reserves the right, upon written notice to and prior 1296 written 1276 approval by TOWN, to discontinue acceptance of any category of Recyclable Material as 1297 a result 1277 of market conditions related to such materials. With regard to the preceding two 1298 sentences, 1278 TOWN’s approval shall not be unreasonably withheld. Such TOWN approval for 1299 reducing the type 1279 of Recyclable Material discontinued shall not exceed twelve (12) months. 1300 Discontinued 1280 acceptance of Recyclable Material pursuant to this Section 5.04 shall not relieve 1301 CONTRACTOR 1281 of CONTRACTOR’S Diversion Requirement set forth in Section 5.01 of this 1302 Agreement. 1282 1303 5.05 Warranties and Representations. CONTRACTOR warrants and represents that 1304 it 1283 is aware of and familiar with TOWN’s waste stream, and that it has the ability to and will 1305 provide 1284 the programs and services required to be provided by it hereunder, with a view to 1306 facilitating 1285 TOWN’s meeting or exceeding the diversion requirements as set forth in 1307 CONTACTOR’S 1286 Diversion Guarantee. CONTRACTOR further warrants that it understands the 1308 diversion 1287 requirements of the Applicable Laws, (including, without limitation, amounts of Solid 1309 Waste to be 1288 diverted, time frames for diversion, and any other requirements governing this 1310 Agreement in 1289 accordance with AB 341, AB 939, AB 1594, AB 1826, SB 1016 and all 1311 amendments and related 1290 subsequent legislation), and that it shall provide such programs and 1312 services without imposing 1291 any costs or fees other than those set forth in Exhibit 1 (as adjusted), 1313 unless new programs are 1292 required by the State or TOWN which are not called out herein, in 1314 which case Service Recipient 1293 Rates may be adjusted in accordance with this Agreement. The 1315 programs identified herein are 1294 minimum requirements that must be met, and CONTRACTOR 1316 may (but is not required to) 1295 implement other programs that may be necessary to achieve the 1317 foregoing.