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CC Resolution 2006-051 Burrtec AgrmtRESOLUTION NO. 2006-051 --- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA QUINTA APPROVING THE TRANSFER OF ITS SOLID WASTE AND RECYCLABLE MATERIAL COLLECTION FRANCHISES FROM WASTE MANAGEMENT OF CALIFORNIA, INC., a CALIFORNIA CORPORATION, dba WASTE MANAGEMENT OF THE DESERT, TO BURRTEC WASTE AND RECYCLING SERVICES, LLC. WHEREAS, Waste Management of California, Inc., a California Corporation dba Waste Management of the Desert ("Waste Management") holds two Exclusive Franchise Agreements with the City of La Quinta (the City) to provide solid waste and recycling collection and related services, and specifically an agreement entitled Amended and Restated Agreement for the Collection, Transportation, and Disposal of Municipal Solid Waste dated July 5, 2000 (the "Solid Waste Agreement") and an agreement entitled Amended and Restated Agreement for the Collection and Recycling of Recyclable Materials dated July 5, 2000 (the "Recycling Agreement"); and WHEREAS, Waste Agreement (the Asset Purchase Services, LLC ("Burrtec") which Waste Management to Burrtec, and obligations under the Solid and Management has entered an Asset Purchase Agreement) with Burrtec Waste and Recycling contemplates the transfer of various assets of including specifically Waste Management's rights Waste Agreement and the Recycling Agreement; WHEREAS, the Solid Waste Agreement and the Recycling Agreement require the consent of City before the transfer of such agreements as contemplated by the Asset Purchase Agreement may occur, and Waste Management and Burrtec have requested that City provide its consent to such a transfer; and WHEREAS, City has evaluated Burrtec's qualifications and financial strength, and determined Burrtec has the ability to satisfactorily provide the services in the City which are set forth in the Solid Waste Agreement and Recycling Agreement; and WHEREAS, as consideration for City's consent to the requested transfer, Burrtec has agreed to various amendments to the Solid Waste and Recycling Agreements, as more fully set forth herein; and Resolution No. 2006-051 Assignment to Burrtec Adopted: May 16, 2006 Page 2 WHEREAS, City is willing to provide its consent to the requested transfer of the Solid Waste Agreement and the Recycling Agreement from Waste Management to Burrtec, subject to the terms and conditions set forth in this Resolution, and thereby enter Exclusive Franchise Agreements with Burrtec for the solid waste handling services set forth in the Solid Waste and Recycling Agreements; and WHEREAS, California Public Resources Code Section 49300 requires the City Council to approve the terms of the proposed Franchise Agreements with Burrtec pursuant to a City Council Resolution. NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of La Quinta does hereby resolve as follows: SECTION 1. The City Council hereby transfer and assignment of the Solid Agreement from Waste Management contingencies set forth in this Resolution. grants its consent to and approves the Waste Agreement and the Recycling to Burrtec, subject to the terms and SECTION 2. The transfer and assignment of the Solid Waste and Recycling Agreements by Waste Management to Burrtec is subject to contingencies set forth in the Asset Purchase Agreement. It is the intention of the City Council that in the event the transaction contemplated in the Asset Purchase Agreement is not completed due to the failure of any of the contingencies set forth therein to be satisfied, Waste Management shall continue to hold of -the franchise rights and obligations set forth in the Solid Waste and Recycling Agreements, and no transfer of those Agreements shall occur. Accordingly, the City's consent to the transfer contemplated herein is contingent upon the execution by Waste Management and Burrtec, and delivery to City, of an Assignment and Assumption agreement in substantially the same form as that attached hereto as Exhibit "A" (with such modifications as may be approved by the City Manager and City Attorney). SECTION 3. The transfer and assignment of the Solid Waste and Recycling Agreements by Waste Management to Burrtec is further subject to and contingent upon Burrtec's delivery to City of executed copies of the Amendments to the Solid Waste and Recycling Agreements (the "Amendments") which are attached as Exhibits B and C to this Resolution. The City Council hereby approves the Amendments and authorizes the Mayor to execute them if and when signed copies are delivered to City by Burrtec. Resolution No. 2006-051 Assignment to Burrtec Adopted: May 16, 2006 Page 3 SECTION 4. The transfer and assignment of the Solid Waste and Recycling Agreements by Waste Management to Burrtec is further subject to and contingent upon Burrtec's affiliated company, Burrtec Waste Group Inc.'s delivery to City of executed copies of the Corporate Guarantee's which are exhibits to the Amendments to the Solid Waste and Recycling Agreements (Exhibits B & C hereto) . SECTION 5. The transfer and assignment of the Solid Waste Agreement by Waste Management to Burrtec is further subject to and contingent upon Burrtec's delivery to City of evidence of insurance and a performance bond meeting the requirements of Articles V and VI of the Solid Waste Agreement. SECTION 6. The transfer and assignment of the Recycling Agreements by Waste Management to Burrtec is further subject to and contingent upon Burrtec's delivery to City of evidence of insurance and performance bond meeting the requirements of Articles V and VI of the Recycling Agreement. SECTION 7. The transfer and assignment of the Solid Waste and Recycling Agreements by Waste Management to Burrtec is further subject to and contingent upon Waste Management's reimbursement of all costs incurred by City as a result of its consideration and approval of the transfer contemplated herein, including, without limitation, all administrative costs, legal costs and consultant costs. PASSED, APPROVED, and ADOPTED at a regular meeting of the La Quinta City Council held on this 16th day of May, 2006, by the following vote to wit: AYES: Council Members Henderson, Kirk, Osborne, Sniff, Mayor Adolph NOES: None ABSENT: None ABSTAIN: None DON ADO H, yor City of La Quinta, California Resolution No. 2006-051 Assignment to Burrtec Adopted: May 16, 2006 Page 4 ATTEST: art JUNE S. GR EK, MMC, ity Clerk City of La Quinta, California (CITY SEAL) APPROVED AS TO FORM: . KATHE INE JENSON, ity Attorney City of La Quinta, California EXHIBIT A ASSIGNMENT AND ASSUMPTION AGREEMENT THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Assignment") is made and entered into as of , 2006, by and between Waste Management of California, Inc., a California Corporation dba Waste Management of the Desert ("Assignor"), and Burrtec Waste and Recycling Services, LLC ("Assignee"), with reference to the following Recitals. Recitals A. On or about July 5, 2000, the City of La Quinta ("City") and Assignor entered into those certain agreements entitled "Amended and Restated Agreement for the Collection, Transportation, and Disposal of Municipal Solid Waste" (the "Solid Waste Agreement") and "Amended and Restated Agreement for the Collection and Recycling of Recyclable Materials" (the "Recycling Agreement"). B. Assignor is in the process of purchasing certain assets of Assignee- (the "Proposed Transaction") and Assignor now desires to assign its right, title, and interest in and to the Solid Waste Agreement and the Recycling Agreement to Assignee, and Assignee desires to accept such assignment on, and subject to, the terms and conditions set forth in this Assignment. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: Aereement 1. Assignment. Subject to the consummation of the Proposed Transaction, Assignor hereby assigns, conveys, transfers and delivers to Assignee all of Assignor's right, title, and interest in and to the Solid Waste Agreement and the Recycling Agreement, and Assignee hereby accepts such assignment and agrees. to assume performance of all terms, covenants and conditions occurring or arising under the Solid Waste and Recycling Agreements on or after the date of this Assignment, including any modifications to such terms as agreed to between Assignee and City. 2. Assumption of Obligations. By acceptance of this Assignment, Assignee hereby agrees to assume all of Assignor's right, title, and interest in and to the Solid Waste Agreement and the Recycling Agreement, and Assignee agrees to timely discharge, perform or cause to be performed and to be bound by all of the liabilities, duties and obligations imposed in connection with the Solid Waste Agreement and the Recycling Agreement from and after the date of this Assignment to the same extent as if Assignee had been the original party thereto. 3. Successors and Assigns. This Assignment shall be binding upon and shall inure to the benefit of the successors and assigns of the respective parties hereto. 4. Governing Law. This Assignment shall be governed by and construed in accordance with the laws of the State of California. 5. Further Assurances. The parties covenant and agree that they will execute such other and further instruments and documents as are or may become necessary or convenient to effectuate and carry out this Assignment. 6. 1 Authority of Signatories to Bind Principals. The persons executing this Assignment on behalf of their respective principals represent that they have been authorized to do so and that they thereby bind the principals to the terms and conditions of this Assignment. 7. Interpretation. The paragraph headings of this Assignment are for reference and convenience only and are not part of this Assignment. They have no effect upon the construction or interpretation of any part hereof. The provisions of this Assignment shall be construed in a reasonable manner to effect the purposes of the parties and of this Assignment. 8. Attorney's Fees.. In the. event that a party to this Assignment brings an action against another party hereto by reason of the breach of any condition, covenant, representation or warranty in this Assi.gn.nent, or otherwise arising out of this Assignment, the prevailing party in such action shall be entitled. to recover from the non -prevailing party expert witness fees, and its reasonable attorney's fees and costs. Attorney's fees shall include attorney's fees on any appeal, and in addition a party entitled to attorney's fees shall be entitled to all other reasonable costs for investigating. such action, including the conducting of discovery. 9. Counterparts. This Assignment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument. 10. Conflicts. In the event of any inconsistency or conflict between the terms of that certain Asset Purchase Agreement between Assignor and Assignee dated January 25, 2006 (the "Asset Purchase Agreement") and.this Assignment, the terms of the Asset Purchase Agreement shall prevail. IN NI MESS WHEREOF, this Assivrinient has been executed by the parties as of the date set forth above. "Assignor" - WASTE MANAGEMENT OF CALIFORNIA INC., a California corporation dba Waste Management of the Desert By: Its: 384/015610-0089 707861.02 a05/15/06 "Assignee" Burrtec Waste .and Recycling Services, LLC By: Its: 2 EXHIBIT B FIRST AMENDMENT TO THE AMENDED AND RESTATED AGREEMENT FOR THE COLLECTION, TRANSPORTATION AND DISPOSAL OF MUNICIPAL SOLID WASTE This first amendment (the "Amendment") to that certain agreement entitled "Amended and Restated Agreement for the Collection, Transportation, and Disposal of Municipal Solid Waste" (the "Agreement") is entered between the City of La Quinta (hereinafter "City") and Burrtec Waste and Recycling Services, LLC (hereinafter "Burrtec" and/or "Contractor") so as to be effective as of July 1, 2006. RECITALS A. City and Waste Management of California, Inc., a California Corporation dba Waste Management. of the Desert ("Waste Management") entered the Agreement, which is dated July 5, 2000. B. Waste Management's has requested that its rights and obligations as set forth in the Agreement be transferred and assigned to Burrtec, and City has consented to this request contingent upon various factors, including Burrtec's agreement to certain amendments to the Agreement, which amendments the parties desire to memorialize by entering this Amendment. COVENANTS Section 1. Contractor. The term "Contractor" as used in the Agreement shall now refer to Burrtec. Section 2. Assumption of Obligations. By executing this Amendment, Burrtec agrees to assume all of Waste Managements right, title, and interest in and to the Agreement, and Burrtec agrees to timely discharge, perform or cause to be performed and to be bound by all of the liabilities, duties and obligations imposed in connection with the Agreement as if it had been the original party designated as the "Contractor" thereto. Included specifically, without limitation, in the obligations and liabilities assumed by Burrtec are those set forth in Article X of the Agreement. In this regard, Burrtec shall specifically assume any obligations and liabilities of Waste Management resulting from the application of the hazardous substances indemnification provisions of Section 10.2 in connection with the disposal of materials at facilities chosen by Waste Management or owned by Waste Management or any of its Affiliates. While as between Contractor and City this Agreement requires Contractor to assume any obligations and liabilities of Waste Management that may exist pursuant to the terms of the Agreement, it is not intended to abrogate any rights which Contractor may have pursuant to that certain asset purchase agreement entered between Burrtec and -Waste Management, dated January 25, 2006, to seek indemnification or other remedies from Waste Management as a result of Contractor's obligations hereunder. Section 3. Maintenance of Existing Service Levels. Burrtec shall provide programs, staffinglevels, and services that meet or exceed the programs, staffing levels and services provided by Waste Management prior to City's consent to the transfer and assignment of the Agreement, without regard to whether such programs, staffing levels or services are specifically called out in the Agreement or this Amendment. For instance, Waste Management allows any Residential Customer desiring to change Cart sizes to do so at no charge, and Burrtec agrees to continue. this practice. Section 4. Insurance and Surety Bond: As a condition precedent to the effectiveness of City's consent to the transfer the Agreement to Burrtec, Burrtec shall provide evidence of insurance and a performance bond meeting the requirements of Articles V and VI of the Agreement. Section 5. Identification of Vehicles and Equipment. City understands Burrtec will utilize containers and collection vehicles in performance of the Agreement that it purchased from Waste Management. All such equipment utilized by Burrtec shall be uniformly painted as required by Article III of the Agreement. Burrtec shall not be required to repaint containers or collection vehicles purchased from Waste Management to reflect its corporate colors, however. if it chooses to do so it shall accomplish repainting as expeditiously as, reasonably possible. All collection vehicles utilized by Burrtec shall comply with applicable laws and regulations, including those related to the use of alternative fuels, and at a minimum all vehicles. used in residential and commercial routes shall be powered by low emission fuel sources. Section 6. Limitation on requests for Fuel Surcharge. As additional consideration for the City's consent to the transfer of the Agreement, Burrtec agrees that, if during the remainder of the term it seeks the City's consent to implement a "fuel surcharge," and recognizing that City has unfettered discretion as to whether to permit any such surcharge, it will not do so until after July 1, 2007. Section 7. Residential Document Shredding Program Implementation. As additional consideration for the City's consent to the transfer of the Agreement, Burrtec - agrees to implement a residential shredding program at no additional cost. The residential document shredding program shall be designed to meet at least the following minimum requirements. Not less than one time per calendar year, Contractor shall establish a location within City to which residents may deliver confidential documents, such as financial records. Contractor, or such vendor to whom it may contract. to provide this service, shall take possession of all records delivered by residents to such location on the designated day(s) and cause them to be shredded on site. Thereafter, Contractor shall make all reasonable efforts to recycle the materials remaining after the shredding process is complete, and shall properly dispose of any remaining materials. Section 8. Audited Financial Statements: Burrtec shall provide a third party designated by City, such as its City Attorney or solid waste consultant, with its audited financial statements for calendar year 2006 and calendar year 2007 within five (5) months of the end of such calendar years. The City acknowledges that these records are viewed by Burrtec as proprietary and confidential, and will endeavor to maintain the confidentiality of all proprietary information provided by Burrtec. Notwithstanding the foregoing, any documents provided to City that are Page 2 public records are subject to being disclosed as may be required by law pursuant to a Public Records Act request. Section 9. Additional Reports/Records: The parties agree that Section 7.1 of the Agreement shall be amended to require maintenance of the following records in addition to those already required: 1. Customer services and billing/payment records; 2. Number of refuse, recycling and green waste routes and rout hours by service category (residential, commercial, roll -off, and special services); 3. Facilities, equipment, and personnel used; 4. Number of refuse, recycling and green waste containers in service by frequency of collection for each customer group (residential, commercial, roll -off); and 5. Number of roll -off box pulls. Section 10. Transition Obligations: The parties agree that the Agreement shall be amended to add the following language to Section 21.2: At the end of the Term, or in the event this Agreement is terminated for cause prior to the end of the Term, Contractor shall cooperate fully with City and any subsequent solid waste enterprise it designates to assure a smooth transition of services. Contractor's cooperation shall include, but not be limited to, providing route lists, billing information and other operating records needed to service all premises covered by this Agreement. The failure to cooperate with City following termination shall be conclusively presumed to be grounds for specific performance of this covenant and/or other equitable relief necessary to enforce this covenant. Contractor shall provide any new solid waste enterprise with all keys, security codes and remote controls used to access garages, gates and bin enclosures. Contractor shall be responsible for coordinating transfer immediately after its final collection activities, so as to not disrupt services. Contractor shall provide City with detailed rout sheets containing service names and addresses, billing names and addresses, monthly rate and service levels (number and size of containers and pickup days) at least 90 days prior to the transition date, provide an updated list two weeks before the transition, and a final updated list with any changes the day before the transition. Contractor shall provide means of access to the new solid waste enterprise at least one full business day prior to its first day of collection, and within sufficient time so as to not impede in any way the new solid waste enterprise from easily servicing all containers. Section 11. Liquidated Damages: The parties agree that the Agreement shall be amended to add a new Section 9.2 which shall read as follows: Page 3 The City finds, and Contractor agrees, that as of the time of the execution of this Amendment, 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 certain specific obligations of Contractor. The factors relating to the impracticability of ascertaining damages include, but are not limited to, the fact that: (i) substantial damage results to members of the public who are denied services or denied quality or reliable service; (ii) such breaches cause inconvenience, anxiety, frustration, and deprivation of the benefits of the Agreement to individual members of the general public for whose benefit this Agreement exists, in subjective ways and in varying degrees of intensity which are incapable of measurement in precise monetary terms; (iii) that the services that are the subject of this Agreement might be available at substantially lower costs than alternative services and the monetary loss resulting from denial of services or` denial of quality or reliable services is impossible to calculate in precise monetary terms; and (iv) the termination of this Agreement for such specific breaches, and other remedies are, at best, a means of future correction and not remedies which make the public whole for past breaches. The parties further acknowledge that consistent, reliable Solid Waste collection 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 entering this Amendment and the Agreement. 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, 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, the parties agree that the following liquidated damage amounts represent a reasonable estimate of the amount of such damages for such specific breaches, considering all of the circumstances existing on the date of this Amendment, 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 impractical. In placing their initials at the places provided, each party specifically confirms the accuracy of the statements made above and the fact that each party has had ample opportunity to consult with legal counsel and obtain an explanation of the liquidated damage provisions at the time that the Agreement was made. Contractor City Initial Here Initial Here Contractor agrees to pay (as liquidated damages and not as a penalty) the amounts set forth below for each of the respective acts: Failure to provide services For each day that Contractor fails to provide any of the services required under this Agreement, commencing five (5) business days after written notice is provided by the City that Contractor is not providing required services: $500.00/day Page 4 Failure to provide reports or records For each day that required monthly reports are late or incomplete, or that records required to be produced hereunder are not made available: $50.00/day For each day that required annual reports are late or incomplete: $100.00/day Failure to Cooperate with Service Provider Transition: For each day routing information, customer data and other operation information requested by City is received after City established due dates, both for preparation of a request for proposals and for new service providers implementation of service: $1,000.00/day For each day delivery of keys, access codes, remote controls, or other means of access to containers or container locations is delayed beyond one (1) day prior to new service provider servicing containers: $5,000/day 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 incident(s)/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. Contractor may present evidence in writing and through testimony of its employees and others relevant to the incident(s)/non-performance. City 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 City shall be final. 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 the Agreement or find Contractor in default and terminate this Agreement, or both. Section 12. Guarantee of Contractor's Performance. Concurrent with executing this Amendment Contractor shall deliver to City a Corporate Guarantee, in the form attached hereto as Exhibit 1, executed by Burrtec Waste Group Inc. affirming that it shall act as guarantor of Contractor's obligations as set for in the Agreement, as amended by this Amendment. Section 13. Reimbursement of City Expenses. As a condition precedent to the effectiveness of the provisions of this Amendment, Contractor shall pay City an amount equal to all administrative, legal and consulting costs it incurred in connection with negotiating, analyzing, and entering this Amendment. Such payment shall be taken from the deposit already provided to City by Contractor, with any amounts exceeding the amount of the deposit due within 30 days of Contractor receiving an invoice from City for the foregoing expenses. Section 14. Effectiveness of Agreement. All provisions of the Agreement, excepting for those expressly amended herein, shall remain unchanged and in full force and effect. Page 5 IN WITNESS WHEREOF, the Parties hereto have executed this Amendment to be effective as of the date written above. CITY OF LA QUINTA ATTEST: JUNE S. GREEK, MMC, City Clerk APPROVED AS TO FORM: M. KATHERINE JENSON, City Attorney By: DON ADOLPH, Mayor BURRTEC WASTE AND RECYCLING SERVICES, LLC By: Its: Page 6 EXHIBIT 1 CORPORATE GUARANTY THIS GUARANTY (the "Guaranty) is given as of the 1st day of July, 2004, and is made with reference to the following facts and circumstances: A. Burrtec Waste and Recycling Services, Inc., hereinafter ("Contractor") is a an affiliate of Burrtec Waste Group (Guarantor). B. Contractor has assumed the obligations of Waste Management of California, Inc., a California Corporation dba Waste Management of the Desert ("Waste Management") in that certain agreement with the City of La Quinta ("City") dated July 5, 2000 and entitled "Amended - and Restated Agreement for the Collection, Transportation, and Disposal of Municipal Solid Waste" (the "Agreement"). C. Contractor "has additionally entered into an agreement with City dated July 1, 2006 and entitled "First Amendment to Amended and Restated Agreement for the Collection, Transportation, and Disposal of Municipal Solid Waste" (the "First Amendment") D. It is a requirement of the First Amendment, and a condition to the City approving the transfer and assignment of the Agreement to Contractor, that Guarantor guaranty Contractor's performance of the Agreement, including as it has been modified by the First Amendment. E. Guarantor is providing this Guaranty to induce the City to approve the transfer of the Agreement and enter into the First Amendment. NOW, THEREFORE, in consideration of the foregoing, Guarantor agrees as follows: 1. Guaranty of the Agreement. Guarantor hereby irrevocably and unconditionally guarantees to the City the complete and timely performance, satisfaction and observation by Contractor of each and every term and condition of the Agreement, as amended and modified by the First Amendment, which Contractor is required to perform, satisfy or observe. In the event that Contractor fails to perform, satisfy or observe any of the terms and conditions of the Agreement, as amended and modified by the First Amendment, Guarantor will promptly and fully perform, satisfy or observe them in the place of the Contractor (including by causing the services required of Contractor to be performed by a Solid Waste Enterprise acceptable to City). Guarantor hereby guarantees payment to the City of any damages, costs or expenses which might become recoverable by the City from Contractor due to its breach of the Agreement, as amended and modified by the First Amendment. 2. Guarantor's Obligations Are Absolute. The obligations of the Guarantor hereunder are direct, immediate, absolute, continuing, unconditional and unlimited, and with respect to any payment obligation of Contractor under the Agreement, or the First Amendment, shall constitute a guarantee of payment and not of collection, and are not conditional upon the genuineness, validity, regularity or enforceability of the Agreement or First Amendment.. In any action brought against the Guarantor to enforce, or for damages for breach of, its obligations hereunder, the Guarantor shall be entitled to all defenses, if any, that would be available to the Contractor in an action to enforce, or for damages for breach of, the Agreement as amended and modified by the First Amendment (other than discharge of, or stay of proceedings to enforce, obligations under the Agreement under bankruptcy law). 3. Waivers. Except as provided herein the Guarantor shall have no right to terminate this Guaranty or to be released, relieved, exonerated or discharged from its obligations under it for any reason whatsoever, including, without limitation: (1) the insolvency, bankruptcy, reorganization or cessation of existence of the Contractor; (2) the actual or purported rejection by a trustee in bankruptcy of the Agreement, or any limitation on any claim in bankruptcy resulting from the actual or purported termination of the Agreement; (3) any waiver with respect to any of the obligations of the Agreement, as amended and modified by the First Amendment, guaranteed hereunder or the impairment or suspension of any of the City's rights or remedies against the Contractor; or (4) any merger or consolidation of the Contractor with any other corporation, or any sale, lease or transfer of any or all the assets of the Contractor. Without limiting the generality of the foregoing, Guarantor hereby waives the rights and benefits under California Civil Code Section 2819. The Guarantor hereby waives any and all benefits and defenses under California Civil Code Section 2846, 2849, and 2850, including without limitation, the right to require the City to (a) proceed against Contractor, (b) proceed against or exhaust any security or collateral the City may hold now or hereafter hold, or (c) pursue any other right or remedy for Guarantor's benefit, and agrees that the City may proceed against Guarantor for the obligations guaranteed herein without taking any action against Contractor or any other guarantor or pledgor and without proceeding against or exhausting any security or collateral the City may hold now or hereafter hold. City may unqualifiedly exercise in. it sole discretion any or all rights and remedies available to it against Contractor or any other guarantor or pledgor without impairing the City's rights and remedies in enforcing this Guaranty. The Guarantor hereby waives and agrees to waive at any future time at the request of the City to the extent now or then permitted by applicable law, any and all rights which the Guarantor may have or which at any time hereafter may be conferred upon it, by statute, regulation or otherwise, to avoid any of its obligations under, or to terminate, cancel, quit or surrender this Guaranty. The Guarantor hereby expressly waives, diligence, presentment, demand for payment or performance, protest and all notices whatsoever, including, but not limited to, notices of non- payment or non-performance, notices of protest, notices of any breach or default, and notices of acceptance of this Guaranty. If all or. any portion of the obligations guaranteed hereunder are paid or performed, Guarantor's obligations hereunder shall continue and remain in full force and effect in the event that all or any part of such payment or performance is avoided or recovered directly or indirectly from the City as a preference, fraudulent transfer or otherwise, irrespective of (a) any notice of revocation given by Guarantor or Contractor prior to such avoidance or recovery, and (b) payment in full of any obligations then outstanding. Page 2 4. Term. This Guaranty is not limited to any period of time, but shall continue in full force and effect until all of the terms and conditions of the Agreement have been fully performed or otherwise discharged and Guarantor shall remain fully responsible under this Guaranty without regard to the acceptance by the City of any performance bond or other collateral to assure the performance of Contractor's obligations under the Agreement. Guarantor shall not be released of its obligations hereunder as long as there is any claim by the City against Contractor arising out of the Agreement based on Contractor's failure to perform which has not been settled or discharged. 5. No Waivers. No delay on the part of the City in exercising any rights under this Guaranty or failure to exercise such rights shall operate as a waiver of such rights. No notice to or demand on Guarantor shall be a waiver of any obligation of Guarantor. or right of the City to take other or further action without notice or demand. No modification or waiver of any of the provisions of this Guaranty shall be effective unless it is in writing and. signed by the City and by Guarantor, nor shall any waiver be effective except in the specific instance or matter for which it is given. 6. Attorney's Fees. In addition to the amounts guaranteed under this Guaranty, Guarantor agrees in the event of Guaranty's breach of its obligations including to pay reasonable attorney's fees and all other reasonable costs and expenses incurred by the City in enforcing this Guaranty, or in any action or proceeding arising out of or relating to this Guaranty, including any action instituted to determine the respective rights and obligations of the parties hereunder. 7. Governing Law: Jurisdiction. This Guaranty is and shall be deemed to be a contract entered into in, and pursuant to the laws of, the State of California and shall be governed and construed in accordance with the laws of California without regard to its conflicts of laws, rules for all purposes including, but not limited to, matters of construction, validity and performance. Guarantor agrees that any action brought by the City to enforce this Guaranty may be brought in any court of the State of California and Guarantor consents to personal jurisdiction over it by such courts. 8. Severability. If any portion of this Guaranty is held to be invalid or unenforceable, such invalidity will have no effect upon the remaining portions of this Guaranty, which shall be severable and continue in full force and effect. 9. Binding On Successors. This Guaranty shall inure to the benefit of the City and its successors and shall be binding upon Guarantor and its successors, including transferee(s) of substantially all of its assets and its shareholder(s) in the event of its dissolution or insolvency. 10. Authority. Guarantor represents and warrants that it has the corporate power and authority to give this Guaranty, that its execution of this Guaranty has been authorized by all necessary action under its Article of Incorporation and By -Laws, and that the person signing this Guaranty on its behalf has the authority to do so. 11. Notices. Notice shall be given in writing, deposited in the U.S. mail, registered or certified, first class postage prepaid, addressed as follows: Page 3 To the City: Thomas P. Genovese, City Manager City of La Quinta P. O. Box 1504 La Quinta, CA 92247 with a copy to the City's Legal Counsel at the same address. To the Guarantor: Guarantor: Burrtec Waste Group, Inc. By: (title) Page 4 EXHIBIT C FIRST AMENDMENT TO. THE AMENDED AND RESTATED AGREEMENT FOR THE COLLECTION AND RECYCLING OF RECYCLABLE MATERIALS This first amendment (the "Amendment") to that certain agreement entitled "Amended and Restated Agreement for the Collection and Recycling of Recyclable Materials" (the "Agreement") is entered between the City of La Quinta (hereinafter "City") and Burrtec Waste and Recycling Services, LLC (hereinafter "Burrtec" and/or "Contractor") so as to be effective as of July 1, 2006. RECITALS A. City and Waste Management of California, Inc., a California Corporation dba Waste Management of the Desert ("Waste Management") entered the Agreement, which is dated July 5, 2000. B. Waste Management's has requested that. its rights and obligations as set forth in the Agreement be transferred and assigned to Burrtec, and City has consented to this request contingent upon various factors, including Burrtec's agreement to certain amendments to the Agreement, which amendments the parties desire to memorialize by entering this Amendment. COVENANTS Section 1. Contractor. The term "Contractor as used in the Agreement shall now refer to Burrtec. Section 2. Assumption of Obligations. By executing this Amendment, Burrtec agrees to assume all of Waste Managements right, title, and interest in and to the Agreement, and Burrtec agrees to timely discharge, perform or cause to be performed and to be bound by all of the liabilities, duties and obligations imposed in connection with the Agreement as if it had been the original party designated as the "Contractor" thereto. Included specifically, without limitation, in the obligations and liabilities assumed by Burrtec are those set forth in Article X of the Agreement. In this regard, Burrtec shall specifically assume any obligations and liabilities of Waste Management resulting from the application of the hazardous substances indemnification provisions of Section 10.2 in connection with the disposal of materials at facilities chosen by Waste Management or owned by Waste Management or any of its Affiliates. While as between Contractor and City this Agreement requires Contractor to assume any obligations and liabilities of Waste Management that may exist pursuant to the terms of the Agreement, it is not intended to abrogate any rights which Contractor may have pursuant to that certain asset purchase agreement entered between Burrtec and Waste Management, dated January 25, 2006, to seek indemnification or other remedies from Waste Management as a result of Contractor's obligations hereunder. Section 3. Maintenance of Existing Service Levels. Burrtec shall provide programs, staffing levels, and services that meet or exceed the programs, staffing levels and services provided by Waste Management prior to City's consent to the transfer and assignment of the Agreement, without regard to whether such programs, staffing levels or services are specifically called out in the Agreement or this Amendment. For instance, Waste Management allows any Residential Customer desiring to change Cart sizes to do so at no charge, and Burrtec agrees to continue this practice. Section 4. Insurance and Surety Bond: As a condition precedent to the effectiveness of City's consent to the transfer the Agreement to Burrtec, Burrtec shall provide evidence of insurance and a performance bond meeting the requirements of Articles V and VI of the Agreement. Section 5. Identification of Vehicles and Equipment City understands Burrtec will utilize containers and collection vehicles in performance of the Agreement that it purchased from Waste Management. All such equipment utilized by Burrtec shall be uniformly painted as required by Article III of the Agreement. Burrtec shall not be required to repaint containers or collection vehicles purchased from Waste Management to reflect its corporate colors, however if it chooses to do so it shall accomplish repainting as expeditiously as reasonably possible. All collection vehicles utilized by Burrtec shall comply with applicable laws and regulations, including those related to the use of alternative fuels, and at a minimum all vehicles used in residential and commercial routes shall be powered by low emission fuel sources. Section 6. Limitation on requests for Fuel Surcharge As additional consideration for the City's consent to the transfer of the Agreement, Burrtec agrees that if during the remainder of the term it seeks the City's consent to implement a "fuel surcharge," and recognizing that City has unfettered discretion as to whether to permit any such surcharge, it will not do so until after July 1, 2007. Section 7. Residential Document Shredding Program Implementation. As additional consideration for the City's consent to the transfer of the Agreement, Burrtec agrees to implement a residential document shredding program at no additional cost. The residential shredding program shall be designed to meet at least the following minimum requirements. : Not less than one time per calendar year, Contractor shall establish a location within City to which residents may deliver confidential documents, such as financial records. Contractor, or such vendor to whom it may contract to provide this service, shall take possession of all records delivered by residents to such location on the designated day(s) and cause them to be shredded on site. Thereafter, Contractor shall make all reasonable efforts to recycle the materials remaining after the shredding process is complete, and shall properly dispose of any remaining materials. Section 8. Audited Financial Statements: Burrtec shall provide a third party designated by City, such as its City Attorney or solid waste consultant, with its audited financial statements for calendar year 2006 and calendar year 2007 within five (5) Page 2 months of the end of such calendar years. The City acknowledges that these records are -- viewed by Burrtec as proprietary and confidential, and will endeavor to maintain the confidentiality of all proprietary information provided by Burrtec. Notwithstanding the foregoing, any documents provided to City that are public records are subject to being disclosed as may be required by law pursuant to a Public Records Act request. Section 9. Additional Reports/Records: The parties agree that Section 7.1 of the Agreement shall be amended to require maintenance of the following records in addition to those already required: 1. Customer services and billing/payment records; 2. Number of refuse, recycling and green waste routes and rout hours by service category (residential, commercial, roll -off, and special services); 3. Facilities, equipment, and personnel used; 4. Number of refuse, recycling and green waste containers in service by frequency of collection for each customer group (residential, commercial, roll - off);. and 5. Number of roll -off box pulls. Section 10. Transition Obligations: The parties agree that the Agreement shall be amended to add the following language to Section 21.2: At the end of the Term, or in the event this Agreement is terminated for cause prior to the end of the Term, Contractor shall cooperate fully with City and any subsequent solid waste enterprise it designates to assure a smooth transition of services. Contractor's cooperation shall include, but not be limited to, providing route lists, billing information and other operating records needed to service all premises covered by this Agreement. The failure to cooperate with City following termination shall be conclusively presumed to be grounds for specific performance of this covenant and/or other equitable relief necessary to enforce this covenant. Contractor shall provide any new solid waste enterprise with all keys, security codes and remote controls used to access garages, gates and bin enclosures. Contractor shall be responsible for coordinating transfer immediately after its final collection activities, so as to not disrupt services. Contractor shall provide City with detailed rout sheets containing service names and addresses, billing names and addresses, monthly rate and service levels (number and size of containers and pickup days) at least 90 days prior to the transition date, provide an updated list two weeks before the transition, and a final updated list with any changes the day before the transition. Contractor shall provide means of access to the new solid waste enterprise at least one full business day prior to its first day of Page 3 collection, and within sufficient time so as to not impede in any way the new solid waste enterprise from easily servicing all containers. Section 11. Liquidated Damages: The parties agree that the Agreement shall be amended to add a new Section 9.2 which shall read as follows: The City finds, and Contractor agrees, that as of the time of the execution of this Amendment, 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 certain specific obligations of Contractor. The factors relating to the impracticability of ascertaining damages include, but are not limited to, the fact that: (1) substantial damage results to members of the public who are denied services or denied quality or reliable service; (ii) such breaches cause inconvenience, anxiety, frustration, and deprivation of the benefits of the Agreement to individual members of the general public for whose benefit this Agreement exists, in subjective ways and in varying degrees of intensity which are incapable of measurement in precise monetary terms; (iii) that the services that are the subject of this Agreement might be available at substantially lower costs than alternative services and the monetary loss resulting from denial of services or denial of quality or reliable services is impossible to calculate in precise monetary terms; and (iv) the termination of this Agreement for such specific breaches, and other remedies are, at best, a means of future correction and not remedies which make the public whole for past breaches. The parties further acknowledge that consistent, reliable Solid Waste collection 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 entering this Amendment and the Agreement. 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, 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, the parties agree that the following liquidated damage amounts represent a reasonable estimate of the amount of such damages for such specific breaches, considering all of the circumstances existing on the date of this Amendment, 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 impractical. In placing their initials at the places provided, each party specifically confirms the accuracy of the statements made above and the fact that each party has had ample opportunity to consult with legal counsel and obtain an explanation of the liquidated damage provisions at the time that the Agreement was made. Page 4 Contractor City Initial Here Initial Here Contractor agrees to pay (as liquidated damages and not as a penalty) the amounts set forth below for each of the respective acts: Failure to provide services For each day that Contractor fails to provide any of the services required under this Agreement, commencing five (5) business days after written notice is provided by the City that Contractor is not providing required services: $500.00/day Failure to provide reports or records For each day that required monthly reports are late or incomplete, or that records required to be produced hereunder are not made available: $50.00/day For each day that required annual reports are late or incomplete: $100.00/day Failure to Cooperate with Service Provider Transition. - For each day routing information, customer data and other operation information requested by City is received after City established due dates, both for preparation of a request for proposals and for new service providers implementation of service: $1,000.00/day For each day delivery of keys, access codes, remote controls, or other means of access to containers or container locations is delayed beyond one (1) day prior to new service provider servicing containers: $5,000/day 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 incident(s) /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. Contractor may present evidence in writing and through testimony of its employees and others relevant to the incident(s)/non-performance. City 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 City shall be final. 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 the Agreement or find Contractor in default and terminate this Agreement, or both. Page 5 Section 12. Guarantee of Contractor's Performance. Concurrent with executing this Amendment Contractor shall deliver to City a Corporate Guarantee, in the form attached hereto as Exhibit 1, executed by Burrtec Waste Group Inc. affirming that it shall act as guarantor of Contractor's obligations as set for in the Agreement, as amended by this Amendment. Section 13. Reimbursement of City Expenses. As a condition precedent to the effectiveness of the provisions of this Amendment, Contractor shall pay City an amount equal to all administrative, legal and consulting costs it incurred in connection with negotiating, analyzing, and entering this Amendment. Such payment shall be taken from the deposit already provided to City by Contractor, with any amounts exceeding the amount of the deposit due within 30 days of Contractor receiving an invoice from City for the foregoing expenses. Section 14. Effectiveness of Agreement. All provisions of the Agreement, excepting for those expressly amended herein, shall remain unchanged and in full force and effect. IN WITNESS WHEREOF, the Parties hereto have executed this Amendment to be effective as of the date written above. CITY OF LA QUINTA By: DON ADOLPH, Mayor Attest: By: JUNE S. GREEK, City Clerk Approved as to form: By: M. KATHERINE JENSON, City Attorney BURRTEC WASTE AND RECYCLING SERVICES, LLC By: its: Page 6 EXHIBIT 1 CORPORATE GUARANTY THIS GUARANTY (the "Guaranty) is given as of the 1" day of July, 2004, and is made with reference to the following facts and circumstances: A. Burrtec Waste and Recycling Services, Inc., hereinafter ("Contractor") is a an affiliate of Burrtec Waste Group (Guarantor). B. Contractor has assumed the obligations of Waste Management of California, Inc., a California Corporation dba Waste Management of the Desert ("Waste Management") in that certain agreement with the City of La Quinta ("City") dated July 5, 2000 and entitled "Amended and Restated Agreement for the Collection and Recycling of Recyclable Materials" (the "Agreement"). C. Contractor has additionally entered into an agreement with City dated July 1, 2006 and entitled "First Amendment to Amended and Restated Agreement for the Collection and Recycling of Recyclable Materials (the "First Amendment") D. It is a requirement of the First Amendment, and a condition to the City approving the transfer and assignment of the Agreement to Contractor, that Guarantor guaranty Contractor's performance of the Agreement, including as it has been modified by the First Amendment. E. Guarantor is providing this Guaranty to induce the City to approve the transfer of the Agreement and enter into the First Amendment. NOW, THEREFORE, in consideration of the foregoing, Guarantor agrees as follows: 1. Guaranty of the Agreement. Guarantor hereby irrevocably and unconditionally guarantees to the City the complete and timely performance, satisfaction and observation by Contractor of each and every term and condition of the Agreement, as amended and modified by the First Amendment, which Contractor is required to perform, satisfy or observe. In the event that Contractor fails to perform, satisfy or observe any of the terms and conditions of the Agreement, as amended and modified by the First Amendment, Guarantor will promptly and fully perform, satisfy or observe them in the place . of the Contractor (including by causing the services required of Contractor to be performed by a Solid Waste Enterprise acceptable to City). Guarantor hereby guarantees payment to the City of any damages, costs or expenses which might become recoverable by the City from Contractor due to its. breach of the Agreement, as amended and modified by the First Amendment. 2. Guarantor's Obligations Are Absolute. The obligations of the -- Guarantor hereunder are direct, immediate, absolute, continuing, unconditional and unlimited, and with respect to any payment obligation of Contractor under. the Agreement, or the First Amendment, shall constitute a guarantee of payment and not of collection, and are not conditional upon the genuineness, validity, regularity or enforceability of the Agreement or First Amendment. In any action brought against the Guarantor to enforce, or for damages for breach of, its obligations hereunder, the. Guarantor shall be entitled to all defenses, if any, that would be available to the Contractor in an action to enforce, or for damages for breach of, the Agreement as amended and modified by the First Amendment (other than discharge of, or stay of proceedingsto enforce, obligations under the Agreement under bankruptcy law). 3. Waivers. Except as provided herein the Guarantor shall have no right to terminate this Guaranty or to be released, relieved, exonerated or discharged from its obligations under it for any reason whatsoever, including, without limitation: (1) the insolvency, bankruptcy, reorganization or cessation of existence of the Contractor; (2) the actual or purported rejection by a trustee in bankruptcy of the Agreement, or any limitation on any claim in bankruptcy resulting from the actual or purported termination of the Agreement; (3) any waiver with respect to any of the obligations of the Agreement, as amended and modified by the First Amendment, guaranteed hereunder or the impairment or suspension of any of the City's rights or remedies against the Contractor; or (4) any merger or consolidation of the Contractor with any other corporation, or any sale, lease or transfer of any or all the assets of the Contractor. Without limiting the generality of the foregoing, Guarantor hereby waives the rights and benefits under California Civil Code Section 2819. The Guarantor hereby waives any and all benefits and defenses under California Civil Code Section 2846, 2849, and 2850, including without limitation, the right to require the City to (a) proceed against Contractor, (b) proceed against or exhaust any security or collateral the City may hold now or hereafter hold, or (c) pursue any other right or remedy for Guarantor's benefit, and agrees that the City may proceed against Guarantor for the obligations guaranteed herein without taking any action against Contractor or any other guarantor or pledgor and without proceeding against or exhausting any security or collateral the City may hold now or hereafter hold. City may I nqualifiedly exercise in it sole discretion any or all rights and remedies available to it against Contractor or any other guarantor or pledgor without impairing the City's rights and remedies in enforcing this Guaranty. The Guarantor hereby waives and agrees to waive at any future time at the request of the City to the extent now or then permitted by applicable law, any and all rights which the Guarantor may have or which at any time hereafter may be conferred upon it, by statute, regulation or otherwise, to avoid any of its obligations under, or to terminate, cancel, quit or surrender this Guaranty. The Guarantor hereby expressly waives, diligence, presentment, demand for payment or performance, protest and all notices whatsoever, including, but not limited to, Page 2 notices of non-payment or non-performance, notices of protest, notices of any breach or default, and notices of acceptance of this Guaranty. If all or any portion of the obligations guaranteed hereunder are paid or performed, Guarantor's obligations hereunder shall continue and remain in full force and effect in the event that all or any part of such payment or performance is avoided or recovered directly or indirectly from the City as a preference, fraudulent transfer or otherwise, irrespective of (a) any notice of revocation given by Guarantor or Contractor prior to such avoidance or recovery, and (b) payment in full of any obligations then outstanding. 4. Term. This Guaranty is not limited to any period of time, but shall continue in full force and effect until all of the terms and conditions of the Agreement have been fully performed or otherwise discharged and Guarantor shall remain fully responsible under this Guaranty without regard to the acceptance by the City of any performance bond or other collateral to assure the performance of Contractor's obligations under the Agreement. Guarantor shall not be released of its obligations hereunder as long as there is any claim by the City against Contractor arising out of the Agreement based on Contractor's failure to perform which has not been settled or discharged. 5. No Waivers. No delay on the part of the City in exercising any rights under this Guaranty or failure to exercise such rights shall operate as a waiver of such rights. No notice to or demand on Guarantor shall be a waiver of any obligation of Guarantor or right of the City to take other or further action without notice or demand. No modification or waiver of any of the provisions of this Guaranty shall be effective unless it is in writing and signed by the City and by Guarantor, nor shall any waiver be effective except in the specific instance or matter for which it is given. 6. Attorney's Fees. In addition to the amounts guaranteed under this Guaranty, Guarantor agrees in the event of Guaranty's breach of its obligations including to pay reasonable attorney's fees and all other reasonable costs and expenses incurred by the City in enforcing this Guaranty, or in any action or proceeding arising out of or relating to this Guaranty, including any action instituted to determine the respective rights and obligations of the parties hereunder. 7. Governing Law: Jurisdiction. This Guaranty is and shall be deemed to be a contract entered into in, and pursuant to the laws of, the State of California and shall be governed and construed in accordance with the laws of California without regard to its conflicts of laws, rules for all purposes including, but not limited to, matters of construction, validity and performance. Guarantor agrees that any action brought by the City to enforce this Guaranty may be brought in any court of the State of California and Guarantor consents to personal jurisdiction over it by such courts. 8. Severability. If any portion of this Guaranty is held to be invalid or unenforceable, such invalidity will have no effect upon the remaining portions of this Guaranty, which shall be severable and continue in full force and effect. Page 3 9. Binding On Successors. This Guaranty shall inure to the benefit of the City and its successors and shall be binding upon Guarantor and its successors, including transferee(s) of substantially all of its assets and its shareholder(s) in the event of its dissolution or insolvency. 10. Authority. Guarantor represents and warrants that it has the corporate power and authority to give this Guaranty, that its execution of this Guaranty has been authorized by all necessary action under its Article of Incorporation and By -Laws, and that the person signing this Guaranty on its behalf has the authority to do so. ll. Notices. Notice shall be given in writing, deposited in the U.S. mail, registered or certified, first class postage prepaid, addressed as follows: To the City: Thomas P. Genovese, City Manager City of La Quinta P. O. Box 1504 La Quinta, CA 92247 with a copy to the City's Legal Counsel at the same address. To the Guarantor: Guarantor: Burrtec Waste Group, Inc. M (title) Page 4