Brea City Council
March 18, 2025

City of Brea
Revenue Recovery from Current Rates
Table 2 shows the forecasted revenue recovery from the City’s current monthly service rate of $27.80.

Under current rates, residential collection service is projected to under-recover the revenue requirement by approximately $647,000 in FY 2024 – 2025. The under-recovery of revenue from current rates is detailed on lines 1 – 19 of Schedule 2.

Table 2
Revenue Recovery from Current Rates
FY 2024 – 2025
Revenue from Current Rates
Standard Cart Service Revenue $ 3,756,002
Additional Cart Revenue 101,939
Total Annual Solid Waste Revenue $ 3,857,941
Total Annual Solid Waste Revenue $ 3,857,941
Solid Waste Revenue Requirement 4,504,926
Over/(Under) Recovery at Current Rates $ (646,985)
Proposed Rates
Table 3 shows the proposed rate increase required to fully recover the City’s residential revenue requirement for FY 2024 – 2025. In order to recover the $646,985 revenue shortfall, the City needs to increase the monthly rate by $4.79 for a total rate of $32.59 per month. Of the $4.79 increase, approximately 75% is related to the additional organics diversion collection cost (e.g. SB 1383), while the other 25% is needed to recover the City’s normal increase in budgeted residential solid waste expenses.

See Schedule 2 for more detail.

Table 3
Proposed Rates
FY 2024 – 2025
Over/(Under) Recovery at Current Rates $ (646,985)
Monthly Residential Customers 11,259
Rate Increase needed to Recover Revenue Requirement1 $ 4.79

1. Rate increase needed to recover Revenue Requirement= $646,985 / 11,259 customers / 12 months = $4.79.

Recommendations
This analysis confirms that the City’s residential collection service is under-recovering the required revenue requirement for FY 2024 – 2025. In addition to the $3.61 monthly rate increase proposed by Republic Services to provide organics diversion collection services, NewGen also recommends a $1.18

ATTACHMENT B
Final Memorandum

City of Brea
monthly rate increase to fully recover operational costs for FY 2024 – 2025. These adjustments bring the proposed monthly residential rate adjustment to $4.79, resulting in a monthly bill of $32.59 per month.

NewGen would note that in working with our municipal clients throughout the United States, we are observing cost based residential rates that are now in the $30 to $35 per month range, with some exceeding $40 per month. Therefore, NewGen does not find this rate increase unreasonable given that Republic Services is offering an additional service to the City.

ATTACHMENT B
Schedule 1
Line Item FY 2020-2021 FY 2021-2022 FY 2021-2022 FY 2022-2023 FY 2023-2024 FY 2024-2025 Test No. No. Description Actual Budget Actual Budget Budget Budget Adjustments Year Notes 1 Expenses
2 4098 APPROPRIATION (NON-SPEC) $ - $ - $ 4,332 $ - $ - $ - $ - $ - 3 4111 FULL TIME 71,923 94,816 94,415 175,151 132,979 140,732 (21,110) 119,622 A 4 4112 PART-TIME & SEASONAL 62,576 64,169 66,458 68,604 67,346 71,193 (10,679) 60,514 A 5 4113 OVERTIME 1 121 8,263 188 188 192 (29) 163 A
6 41230045 VACATION PAYOFF - - 4,537 - 1,512 1,512 (227) 1,285 A 7 41230048 VACATION BUYDOWN 1,441 1213 150.7 1,200 716 716 (107) 609 A 8 41230064 COMP TERMINATION PAYOFF - - 56 - - - - - A
9 41230137 HOLIDAY BANKS PAID - - 59 - - - - - A
10 41230140 PERFORMANCE AWARD - 1,334 - 1,100 600 600 (90) 510 A 11 41230190 UNIFORM ALLOWANCE - 13 - 13 13 - - - A
12 41230192 WORK SHOE REIMBURSEMENT 17 - 13 - - - - - A 13 41230196 FITNESS/WELLNESS PROGRAM 238 506 193 956 731 765 (115) 650 A 14 4131 RETIREMENT PERS 25,942 32,120 34,105 57,989 44,265 50,843 (7,626) 43,217 A 15 4131A PERS COST SHARING (128) - (268) - - - - - A
16 4134 WORKERS' COMPENSATION 8,371 10,700 10,829 16,502 9,234 10,020 (1,503) 8,517 A 17 4141 MEDICARE 1,964 2,500 2,601 3,918 3,105 3,280 (492) 2,788 A 18 4151 FLEXIBLE BENEFITS 8,658 13,166 11,192 25,856 13,481 13,217 (1,983) 11,234 A 19 4152 TUITION REIMBURSEMENT - - - 413 413 421 (63) 358 A 20 4153 AUTOMOBILE ALLOWANCE 1,218 1,200 1,203 1,200 1,200 1,200 (180) 1,020 A 21 4173 UNPAID COMPENSATED ABSENC 1,029 - (6,428) - 400 - - 22 4212 TELEPHONE & FAXES 623 - 581 - - - -
23 4231 ADVERTISING 501 - 543 - - - -
24 4232 SUBSCRIPTIONS 130 - - - - - -
25 4244 LEGAL 6,242 - 16,321 - - - -
26 4249 PROFESSIONAL SVC-OTHER 26,424 50,000 31,671 65,000 65,000 66,300 66,300 27 4267 CONTR SVC-TRASH COLLECT 1,998,678 2,034,200 2,041,606 2,034,200 2,469,000 2,543,000 2,543,000 28 4268 CONTR SVC-TRASH DISPOSAL 875,144 936,230 754,581 869,657 871,214 897,310 897,310 29 4271 MILEAGE REIMBT - AUTO - - - - - - -
30 4279 TRAVEL & MEETING EXPENSE - - - - 3,100 1,950 1,950 31 4311 FOOD & CLOTHING - - 101 - - - -
32 4327 MINOR TOOLS & EQUIPMENT - - 97 - - - -
33 4329 OFFICE SUPPLIES-OTHER - - 1,354 - - - -
34 4332 JANITORIAL SUPPLIES - - - - 11,000 - -
35 4334 ROCK ASPHALT SAND ETC - - - 15,000 900 13,350 13,350 36 4432 UNCOLLECTIBLE ACCOUNTS 5,963 3,000 2,097 3,000 3,000 3,060 3,060 37 4441 MISCELLANEOUS EXPENSE - - - - - - -
38 5819 VEHICLES - OTHER - - - - 153,625 153,625 153,625 39 5822 TECHNOLOGY CHARGES 9,530 11,789 11,789 12,277 11,627 11,627 11,627 40 5826 RETIREE BENEFIT CHARGES 2,394 3,220 3,220 3,376 4,088 4,169 4,169 41 5827 GENERAL LIABILITY CHG 5,202 7,547 7,547 8,932 8,505 8,788 8,788 42 5828 INDIRECT OVERHD-CITYWIDE 39,700 48,800 48,800 51,790 61,940 63,520 63,520 43 Additional Organic Recycling Hauling Fee 487,740 $ 487,740 B 45 TOTAL EXPENSES $ 3,153,782 $ 3,316,644 $ 3,152,018 $ 3,416,322 $ 3,939,182 $ 4,061,390 $ 443,536 $ 4,504,926 46 47 Revenues
48 3621 REFUSE COLLECTION $ 2,923,934 $ 3,092,375 $ 3,053,833 $ 2,989,637 $ 3,643,000 $ 3,760,000 $ 3,760,000 49 TOTAL REVENUES $ 2,923,934 $ 3,092,375 $ 3,053,833 $ 2,989,637 $ 3,643,000 $ 3,760,000 $ - $ 3,760,000 50 51 Over/Under Recovery $ (229,848) $ (224,269) $ (98,185) $ (426,685) $ (296,182) $ (301,390) $ (744,926) Notes:

A Adjustments were made to remove the portion of expense that is used to fund commercial solid waste collection, which according to City staff is 15% of salary expenses.

B Additional organic recycling hauling cost per Republic cost proposal 8.14.24 set at $3.61 per household per month. $3.61 x 11,259 customers x 12 months = $487,740
City of Brea
Solid Waste Cost of Service
Residential Solid Waste Budget
Prepared by NewGen Strategies and Services

10/1/2024

ATTACHMENT B
Schedule 2
Line
No.

FY
2021-2022
FY
2022-2023
FY
2023-2024
FY
2024-2025
Notes
1 Monthly Billed Rate
2 Net to Hauler $ 14.75 $ 15.95 $ 16.76 $ 16.68 A
3 Tonnage Fees 6.57 6.19 6.14 7.16 A
4 Less Recycling Credit (0.25) (0.33) (0.29) (0.29) A
5 Franchise Fee 2.04 2.12 2.20 2.29 A
6 Public Works/Utility Billing 1.27 1.35 1.65 1.96 A
7 Total $ 24.38 $ 25.28 $ 26.46 $ 27.80 A
8 Additional Fees
9 Additional Trash Cart ($/month) $ 11.74 $ 12.24 $ 12.54 $ 13.15 A 10 Cost of Service
11 FY 2024 - 2025 $ 4,504,926 B
12 Customer Count
13 Residential Customers 11,219 11,276 11,234 11,259 C
14 Number of Households with addt'l cart 523 555 561 646 C 15 Revenue from Rates
16 Est. Solid Waste Revenue (Standard Service) $ 3,756,002 D 17 Est. Additional Cart Revenue 101,939 E
18 Total (Annual) $ 3,857,941
19 Over / Under $ (646,985) F
20 Increase per Month to recover Additional Organic Recycling Hauling $ 3.61 I 21 Increase per Month required in Addition to Republic Increase 1.18 J 22 Increase per Month to Recover Cost of Service $ 4.79 G 23 Monthly Rate to Recover the Cost of Service $ 32.59 H Notes:

A
B
C
D
E
F
G
H
I
J
Calculated by dividing the Variance (Line 19) by the number of Residential Customers (Line 13) divided by 12 months.

The required rate of $32.59 per month is calculated by adding the amount needed to increase the billed rate per month to recover the total Cost of Service (Line 22) to the current Monthly Billed Rate (Line 7).

From Republic Memo 8.14. Increase includes Franchise Fee.

The remaining shortfall required to be recovered for FY 2024 - 2025 after including a $3.61 per month increase City of Brea
Solid Waste Cost of Service
Contracted Rates
Rate components as itemized in City's Finance Committee Memorandums dated May 12, 2020, May 11, 2021, May 9, 2023, and May 2024 which were provided as part of the data request.

The cost of service calculated per NewGen based on the FY 2024 - 2025 Budget and adjustments, as noted in Schedule 1.

Per Republic memo 8.14.

Calculated by multiplying the Number of Residential Customers (Line 13) by the monthly fee (Line 7) for a year (12 months):
11,259 X $27.80 X 12 = $3,756,002
Calculated by multiplying the Number of Households with an Additional Trash Cart (Line 14) by the monthly fee (Line 9) for a year (12 months):
646 X $13.15 X 12 = $101,939
The Variance between the FY 2024 - 2025 Cost of Service (Line 11) and the Estimated Revenue Generated from Rates (Line 18):
$3,857,941 -$4,504,926 = - $646,985.
$646,985 / 11,259 customers / 12 months = $4.79
Monthly Rate to Recover the Cost of Service = $27.80 + $4.79 = $32.59 Prepared by NewGen Strategies and Solutions

10/1/2024

ATTACHMENT B
Combined Resolution- approving agreement and rates
RESOLUTION NO. 2025-_____

A RESOLUTION OF THE BREA CITY COUNCIL APPROVING

ADJUSTMENTS TO THE SOLID WASTE AND RECYCLING SERVICE
RATES; APPROVING A SECOND AMENDED AND RESTATED

FRANCHISE AGREEMENT WITH REPUBLIC WASTE SERVICES OF
SOUTHERN CALIFORNIA, LLC; MAKING A DETERMINATION OF

EXEMPTION UNDER THE CALIFORNIA ENVIRONMENTAL QUALITY
ACT; AND TAKING RELATED ACTIONS
A. RECITALS:
(i) By enactment of the California Integrated Waste Management Act of 1989 (Public Resources Code Section 40000 et seq.), the Legislature has declared that it is in the public interest to require local agencies to make adequate provision for solid waste handling within their respective jurisdictions to meet the statute’s objectives. (ii) Pursuant to Public Resources Code Sections 40059 and 49300, and pursuant to Brea City Code Sections 8.28.030 and 8.28.070, the City is authorized to grant a qualified solid waste enterprise an exclusive franchise for the collection, transportation, recycling, composting and disposal of solid waste (“Solid Waste Services”).
(iii) The City and Republic Waste Services of Southern California, LLC (“Brea Disposal”) (successor to Taormina Industries, LLC) are parties to a September 3, 2002 Restated and Amended Agreement for the Collection, Transportation, Recycling, Composting and Disposal of Solid Waste, Recyclable and Compostable Materials (“2002 Franchise Agreement”).
(iv) The City and Brea Disposal have supplemented the 2002 Franchise Agreement by executing a November 19, 2019 Commercial Organics Recycling Program Agreement (“2019 CORP Agreement”), and have amended the 2002 Franchise Agreement by executing a January 21, 2020 Amendment No. 1 to Restated and Amended Agreement for the Collection, Transportation, Recycling, Composting and Disposal of Solid Waste, Recyclable and Compostable Materials (“2020 Amendment”). (v) The 2002 Franchise Agreement, as amended by the 2020 Amendment, is referred to herein as the “Current Agreement.”
(vi) Senate Bill 1383 (2016) and implementing California Department of Resources Recycling and Recovery (“CalRecycle”) regulations (collectively, “SB 1383”) require jurisdictions to provide organic waste collection services to all solid waste generators, and, in connection therewith, meet processing facility requirements, conduct contamination monitoring, provide education, maintain records, submit reports, monitor compliance, conduct enforcement, and fulfill other mandates. (vii) Brea Disposal represents and warrants to the City that it has the experience, responsibility, and qualifications to perform services required by SB 1383.

ATTACHMENT C
Resolution No. 2025-____

(viii) The City and Brea Disposal have negotiated in good faith a Second Amended and Restated Franchise Agreement (“2025 Franchise Agreement”), a copy of which is attached to the staff report for this item and on file in the office of the City Clerk, that amends and restates the Current Agreement, incorporates provisions of the 2019 CORP Agreement, and memorializes the rights and obligations of the City and Brea Disposal in a single document that facilitates implementation of new programs mandated by SB 1383.
(ix) Implementing the new programs mandated by SB 1383 will result in additional costs being incurred by Brea Disposal, and Brea Disposal has requested the City Council to approve adjustments to the solid waste and recycling service rates for all Brea solid waste customers.
(x) In accordance with the requirements of Section 6 of Article XIII D of the California Constitution (also known as Proposition 218) and the Proposition 218 Omnibus Implementation Act (Government Code Section 53750 et seq.), the City identified the parcels which receive Solid Waste Services (the “Identified Parcels”), calculated the proposed adjustments to the solid waste and recycling service rates for the Identified Parcels (the “Proposed Rate Adjustments”), and provided written notice by mail of the time and place of a public hearing by the City Council on the Proposed Rate Adjustments to the record owner of each Identified Parcel and any tenant directly responsible for the payment of the solid waste and recycling service rates. (xi) The City Council held a public hearing on the Proposed Rate Adjustments on February 4, 2025, and, prior to the conclusion of the public hearing, any owner of an Identified Parcel and any tenant directly responsible for the payment of the solid waste and recycling service rates was allowed to submit a written protest against the Proposed Rate Adjustments, provided that only one written protest per parcel, filed by an owner of the parcel or a tenant, shall be counted in calculating whether there is a majority protest against the Proposed Rate Adjustments.
(xii) At the public hearing, the City Council considered all oral testimony, written materials, and written protests concerning the Proposed Rate Adjustments, and at the close of the public hearing, the City Council determined that there were not written protests against the Proposed Rate Adjustments submitted (and not withdrawn) representing a majority of the Identified Parcels, and, therefore, there was not a majority protest filed against the Proposed Rate Adjustments.
(xiii) In order to protect the public health, safety, and well-being, the City Council now desires to approve the 2025 Franchise Agreement and the Proposed Rate Adjustments.
(xiv) Health and Safety Code Section 5471 authorizes the City Council, by a twothirds vote of its members, to approve the Proposed Rate Adjustments by resolution. (xv) The solid waste and recycling service rates, as adjusted by the Proposed Rate Adjustments (the “Initial Maximum Rates”), are set forth in Exhibit D to the 2025 Franchise Agreement and Exhibit A to this Resolution.

ATTACHMENT C
Resolution No. 2025-____

B. RESOLUTION:

NOW, THEREFORE, it is found, determined and resolved by the Brea City Council as follows:

1. The facts set forth in the Recitals are true and correct.

2. The City Council finds and determines that approval of the 2025 Franchise Agreement and the Proposed Rate Adjustments is exempt from California Environmental Quality Act (“CEQA”) review pursuant to statutory and categorical exemptions including those set forth at California Code of Regulations Title 14, Sections 15061(b)(3), 15273(a), 15301, and 15308. Development and implementation of the amended organic waste collection services pursuant to the 2025 Agreement is a requirement of SB 1383 and CalRecycle, and is exempt from CEQA because it is an action pursuant to a regulatory requirement to assure the protection of the environment and involves procedures for protection of the environment. Furthermore, the amended organic waste collection services apply to the City’s existing volume of generated solid waste where there is no expansion of use. The Proposed Rate Adjustments are necessary to meet operating expenses of the organic waste collection program. These approvals additionally are exempt pursuant to the general rule that CEQA applies only to projects that have the potential to cause a significant effect on the environment.

3. The City Council finds that the public health, safety, and well-being require Solid Waste Services to be provided pursuant to an exclusive franchise agreement. The proposed 2025 Franchise Agreement with Brea Disposal, in substantially the form attached to the staff report for this item and on file in the office of the City Clerk, is approved. The Mayor is authorized to and shall execute the 2025 Franchise Agreement subject to any clerical or otherwise nonsubstantive revisions deemed necessary or appropriate by the City Attorney.

4. The City Council approves the Initial Maximum Rates, which are for the rate period ending June 30, 2025. The Initial Maximum Rates may be adjusted for inflation in accordance with the methodology and formulas set forth in the 2025 Franchise Agreement on July 1, 2025, July 1, 2026, July 1, 2027, and July 1, 2028, without the City holding additional public hearings pursuant to Proposition 218, provided that the City will provide, or cause to be provided, written notice each year to the record owners of parcels receiving Solid Waste Services and tenants who are directly responsible for paying the fee for Solid Waste Services at least 30 days in advance of each annual inflationary increase taking effect.

5. The City Manager is authorized to do all things necessary and proper to implement this resolution.

6. The City Clerk shall certify to the adoption of this resolution and shall cause a certified resolution to be filed in the book of original resolutions.

PASSED AND ADOPTED this ____ day of ______, 2025.

ATTACHMENT C
Resolution No. 2025-____

________________________________
Blair Stewart, Mayor
ATTEST:
______________________________________
Lillian Harris-Neal, City Clerk
Attachment: Exhibit A (Initial Maximum Rates)

ATTACHMENT C
3074601.79

SECOND AMENDED AND RESTATED FRANCHISE AGREEMENT

BETWEEN

CITY OF BREA
AND

REPUBLIC WASTE SERVICES OF SOUTHERN CALIFORNIA, LLC

DBA BREA DISPOSAL
3074601.79
This page intenƟonally leŌ blank
City of Brea Second Amended/Restated Franchise Agreement Table of Contents
-i- City of Brea
3074601.79

TABLE OF CONTENTS
ARTICLE 1. INTRODUCTORY MATTERS ................................................................................... 2

1.1 Definitions ................................................................................................................. 2

1.2 Exhibits ..................................................................................................................... 2

1.3 Cross-References ..................................................................................................... 2

1.4 External References ................................................................................................. 2

1.5 Rules of Construction ................................................................................................ 2

1.6 City Manager Authority .............................................................................................. 3 ARTICLE 2. CONTRACT PERIOD .............................................................................................. 3

2.1 Base Term ................................................................................................................. 3

2.2 Extension Option ....................................................................................................... 3

2.3 Conditions Precedent ................................................................................................ 3 ARTICLE 3. EXCLUSIVE FRANCHISE ....................................................................................... 4

3.1 Grant and Acceptance of Franchise .......................................................................... 4

3.2 Limitations to Franchise ............................................................................................ 4

3.3 Obligations of Parties ................................................................................................ 6

3.4 Prior Contracts .......................................................................................................... 6

3.5 Mutual Determinations .............................................................................................. 6 ARTICLE 4. SCOPE OF AGREEMENT ....................................................................................... 7

4.2 Flow Control Option .................................................................................................. 7

4.3 Use of Approved and Designated Facilities .............................................................. 9

4.4 Subcontracting .......................................................................................................... 9

4.5 Responsibility for Materials ....................................................................................... 9

4.6 City-Directed Changes to Scope ............................................................................. 10 ARTICLE 5. SCOPE OF SERVICES .......................................................................................... 10

5.1 Recyclable and Organic Materials .......................................................................... 10

5.2 Solid Waste ............................................................................................................. 12

5.3 Miscellaneous Service Provisions ........................................................................... 13

5.4 Bulky Goods and Reusable Materials ..................................................................... 14

5.5 City Sponsored Events ........................................................................................... 14

5.6 Public Education and Outreach .............................................................................. 15

5.7 Billing ...................................................................................................................... 16

5.8 Customer Service Program ..................................................................................... 19

5.9 Access to Customer Service and Billing Systems .................................................. 22

5.10 Service Exemptions ................................................................................................ 22

5.11 Contamination Monitoring ...................................................................................... 23

5.12 Route Audit ............................................................................................................. 27

5.13 Preparation of CalRecycle Electronic Annual Report (EAR) ................................... 29 ARTICLE 6. STANDARD OF PERFORMANCE ........................................................................ 29

6.1 General ................................................................................................................... 29

6.2 Operating Hours and Schedules ............................................................................. 29

6.3 Collection Standards ............................................................................................... 30

6.4 Transfer and Processing Standards ........................................................................ 32

6.5 Collection Vehicle Requirements ............................................................................ 33 City of Brea Second Amended/Restated Franchise Agreement Table of Contents
-ii- City of Brea
3074601.79

6.6 Container Requirements ......................................................................................... 35

6.7 Personnel ................................................................................................................ 39

6.8 Hazardous Waste Inspection and Handling ............................................................ 41

6.9 Contract Management ............................................................................................ 42

6.10 Minimum Diversion Requirements .......................................................................... 42

6.11 Customer Participation Compliance Requirements ................................................ 43 ARTICLE 7. RECORD KEEPING AND REPORTING ................................................................ 43

7.1 Record Keeping ...................................................................................................... 43

7.2 Report Submittal Requirements .............................................................................. 44

7.3 System and Services Review ................................................................................. 45

7.4 Biennial Audit .......................................................................................................... 46

7.5 SB 1383 Record Keeping Software ........................................................................ 46 ARTICLE 8. CONTRACTOR’S CONSIDERATION .................................................................... 47

8.1 Franchise Fee ......................................................................................................... 47

8.2 AB 939 Administrative Fees .................................................................................... 47

8.3 Recyclable Materials Revenues .............................................................................. 47

8.4 Edible Food Recovery Funding ............................................................................... 47

8.5 Payment Schedule and Late Fees .......................................................................... 48

8.6 Other Fees .............................................................................................................. 48 ARTICLE 9. CONTRACTOR’S COMPENSATION AND RATE SETTING ................................. 48

9.1 General ................................................................................................................... 48

9.2 Initial Rates ............................................................................................................. 48

9.3 Schedule of Future Adjustments ............................................................................. 48

9.4 Method of Adjustments ........................................................................................... 49

9.5 Extraordinary Adjustments ...................................................................................... 50

9.6 Limitations on Rate Adjustments ............................................................................. 51 ARTICLE 10. INDEMNITY, INSURANCE, AND PERFORMANCE BOND ................................ 51

10.1 Indemnification ........................................................................................................ 51

10.2 Insurance ................................................................................................................ 53

10.3 Faithful Performance Bond or Irrevocable Letter of Credit ..................................... 55

10.4 Performance Security Beyond Service Term .......................................................... 55 ARTICLE 11. CITY'S RIGHT TO PERFORM SERVICE ............................................................ 56

11.1 General ................................................................................................................... 56

11.2 Billing and Compensation to City During City's Possession ................................... 56

11.3 Disaster Preparedness Plan ................................................................................... 56 ARTICLE 12. DEFAULT AND REMEDIES ................................................................................. 57

12.1 Events of Default ..................................................................................................... 57

12.2 Contractor’s Right to Cure; Right to Terminate Upon Event of Default ................... 58

12.3 City’s Remedies in the Event of Default .................................................................. 59

12.4 Possession of Records Upon Termination .............................................................. 59

12.5 City’s Remedies Cumulative; Specific Performance ............................................... 59

12.6 Performance Standards and Liquidated Damages ................................................. 60

12.7 Excuse from Performance ...................................................................................... 65

12.8 Right to Demand Assurances of Performance ........................................................ 67

12.9 Dispute Resolution .................................................................................................. 67 City of Brea Second Amended/Restated Franchise Agreement Table of Contents
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3074601.79
ARTICLE 13. REPRESENTATIONS AND WARRANTIES OF THE PARTIES .......................... 67

13.1 Contractor’s Status ................................................................................................. 67

13.2 Contractor’s Authorization ....................................................................................... 68

13.3 Agreement Will Not Cause Breach ......................................................................... 68

13.4 No Litigation ............................................................................................................ 68

13.5 No Adverse Judicial Decisions ................................................................................ 68

13.6 No Legal Prohibition ................................................................................................ 68

13.7 Contractor’s Ability to Perform ................................................................................ 68 ARTICLE 14. MISCELLANEOUS .............................................................................................. 69

14.1 Relationship of Parties ............................................................................................ 69

14.2 Compliance with Law .............................................................................................. 69

14.3 Governing Law ........................................................................................................ 69

14.4 Jurisdiction .............................................................................................................. 69

14.5 Binding on Successors ........................................................................................... 69

14.6 Assignment ............................................................................................................. 69

14.7 No Third-Party Beneficiaries ................................................................................... 71

14.8 Waiver ..................................................................................................................... 71

14.9 Affiliated Companies ............................................................................................... 71

14.10 Transition to Next Contractor .................................................................................. 71

14.11 Contractor’s Investigation ....................................................................................... 72

14.12 Condemnation ......................................................................................................... 72

14.13 Notice Procedures .................................................................................................. 72

14.14 Compliance with City Code ..................................................................................... 73

14.15 Compliance with Immigration Laws ........................................................................ 73

14.16 Guarantee of Contractor's Performance ................................................................. 74

14.17 Incorporation of Mandatory Language .................................................................... 74

14.18 Interpretation ........................................................................................................... 74

14.19 Severability ............................................................................................................. 74

14.20 Attorney’s Fees ....................................................................................................... 74

14.21 Non-Discrimination .................................................................................................. 74

14.22 Integration ............................................................................................................... 75

14.23 Counterparts ........................................................................................................... 75 City of Brea Second Amended/Restated Franchise Agreement List of Exhibits
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3074601.79

LIST OF EXHIBITS
A. DefiniƟons
B. Direct Services
B1. Single-Family ResidenƟal Services
B2. MulƟ-Family ResidenƟal Services
B3. Commercial Services
B4. City And Community Services and Data
C. Public EducaƟon and Outreach Requirements
D. IniƟal Maximum Rates
E. Example Rate Adjustment Formula
F. ReporƟng Requirements
G. Corporate Guaranty
H. Contractor’s Faithful Performance Bond
I. Notary CerƟficaƟon
J. Contractor’s SB 1383 ImplementaƟon Plan and Schedule K. County Waste Disposal Agreement
L. FaciliƟes List
M. DocumentaƟon of ResidenƟal Organics Cost Per Ton
N. Customer Credit for Missed Pick-Ups During a Work Stoppage O. City Non-Extension NoƟce
City of Brea Second Amended/Restated Franchise Agreement

3074601.79
THIS SECOND AMENDED AND RESTATED FRANCHISE AGREEMENT (“Agreement”) is dated ________________,March 18, 2025 for reference purposes and is executed by the CITY OF BREA (“City”), a California municipal corporaƟon, and Republic Waste Services of Southern California, LLC (“Contractor”), a Delaware limited liability company (formerly known as Taormina Industries, LLC (“Taormina LLC”)), which is a wholly owned subsidiary of Republic Services, Inc. and does business as Brea Disposal.

R E C I T A L S
A. City and Jaycox Disposal Company (“Jaycox”) executed an April 1, 1986 Agreement for the Collection and Disposal of Refuse, Rubbish, Garbage and Waste Materials (“1986 Franchise Agreement”). The 1986 Franchise Agreement granted Jaycox an exclusive franchise for the picking up of trash, garbage, and construction debris.

B. Taormina Industries Inc. (“Taormina Inc.”) purchased Jaycox in 1988 and was assigned the 1986 Franchise Agreement.

C. City and Taormina Inc. executed a December 19, 1989 Agreement for the Collection and Disposal of Refuse, Rubbish, Garbage and Waste Materials (“1989 Franchise Agreement”). The 1989 Franchise Agreement superseded the 1986 Franchise Agreement and granted Taormina Inc. an exclusive franchise for the collection, transportation, and disposal of refuse, recyclables, and construction debris.

D. City and Taormina Inc. executed a July 16, 1996 Agreement Between the City of Brea and Taormina Industries Incorporated for the Collection, Transportation, Recycling, Composting and Disposal of Solid Waste, Recyclable and Compostable Materials (“1996 Franchise Agreement”). The 1996 Franchise Agreement superseded the 1989 Franchise Agreement and granted Taormina Inc. an exclusive franchise for the collection, transportation, and disposal of municipal solid waste, recyclables, green waste, and construction debris.

E. City and Taormina Inc. executed a March 4, 1997 Amendment to Agreement (“1997 Amendment”).

The 1997 Amendment amended the 1996 Franchise Agreement and memorialized City’s approval of a sale and transfer of Taormina Inc. to Republic Industries Inc.

F. Taormina Inc. and Taormina LLC executed a June 22, 1998 Agreement and Plan of Merger (“Merger”). The Merger provided for Taormina Inc.’s merger with and into Taormina LLC.

G. City and Taormina LLC executed a September 3, 2002 Restated and Amended Agreement Between the City of Brea and Taormina Industries, LLC for the Collection, Transportation, Recycling, Composting and Disposal of Solid Waste, Recyclable and Compostable Materials (“2002 Franchise Agreement”). The 2002 Franchise Agreement superseded the 1996 Franchise Agreement and granted Taormina LLC an exclusive franchise for the collection, transportation, and disposal of municipal solid waste, recyclables, green waste, and construction debris.

H. On July 3, 2008, Taormina LLC filed paperwork with the California Secretary of State to change its corporate name to Republic Waste Services of Southern California LLC.

I. On December 10, 2018, City issued a Non-Extension Notice (a copy of which is set forth in Exhibit P) ending the automatic annual extension of the 2002 Franchise Agreement and setting a December 31, 2038 expiration date for such contract.

J. City and Contractor executed a November 19, 2019 Commercial Organics Recycling Program Agreement (“2019 CORP Agreement”). The 2019 CORP Agreement supplemented the 2002 City of Brea Second Amended/Restated Franchise Agreement

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Franchise Agreement and provided for Contractor’s implementation of a commercial organics recycling program in compliance with AB 1826 (2014).

K. City and Contractor executed a January 21, 2020 Amendment No. 1 to Restated and Amended Agreement for the Collection, Transportation, Recycling, Composting and Disposal of Solid Waste, Recyclable and Compostable Materials (“2020 Amendment”). The 2020 Amendment amended the 2002 Franchise Agreement to: (i) increase the residential rate schedule based on green waste disposal cost at an Orange County landfill; (ii) grant City discretion to change the facility used for green waste disposal; and, (iii) provide for a further adjustment of the residential rate schedule in the event City exercises such discretion.

L. The parties desire to amend and restate the 2002 Franchise Agreement (as amended by the 2020 Amendment), and to incorporate provisions of the 2019 CORP, in order to memorialize their respective rights and obligations in a single document that facilitates implementation of new programs mandated by state law.

NOW, THEREFORE, based upon the foregoing Recitals and for good and valuable consideraƟon, the receipt and sufficiency of which is acknowledged, the parƟes agree as follows:

ARTICLE 1.

INTRODUCTORY MATTERS

1.1 Definitions
Unless otherwise indicated or apparent from the context, the definiƟons set forth in the aƩached Exhibit A shall apply regardless of whether the defined term is capitalized. The meaning of terms not defined in Exhibit A shall be as commonly understood in the solid waste collecƟon services industry.

1.2 Exhibits
The aƩached Exhibits A through __O are incorporated into this Agreement by reference. In the event of any material discrepancy between the express provisions of this Agreement and the provisions of an Exhibit, the provisions of this Agreement shall prevail.

1.3 Cross-References
Cross-references to “ArƟcle __”, “SecƟon __”, “Paragraph __,” or “Page __” refer to an ArƟcle, SecƟon, Paragraph, or Page of this Agreement unless otherwise indicated or apparent from the context.

1.4 External References
References to a statutory code or legislaƟve bill refer to California law unless otherwise indicated or apparent from the context. References to a statute, regulaƟon, or ordinance shall be deemed to refer to the then-current version of the statute, regulaƟon, or ordinance.

1.5 Rules of Construction
As the context may require, the singular tense includes the plural tense and vice versa; “shall” is mandatory and “may” is permissive; and “include,” “includes,” and “including” are illustraƟve and non-exhausƟve.

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1.6 City Manager Authority
The administraƟon of this Agreement by City shall be under the supervision and direcƟon of the City Manager. Unless otherwise stated, the City Manager is authorized to issue noƟces and grant approvals that may be allowed or required from City under this Agreement. City Council approval is required for amendments of this Agreement and for City’s exercise of its extension opƟon.

ARTICLE 2.

CONTRACT PERIOD

2.1 Base Term
A. Subject to satisfaction of the conditions precedent specified in Section 2.3 or waiver by City, this Agreement shall commence on __________,April 1, 2025 (“Effective Date”) at 12:00 a.m.

B. Unless extended or earlier terminated, this Agreement shall expire on December 31, 2038 at 11:59 p.m.

C. Commercial Organics Recycling Program Termination. Notwithstanding any other provision of this Agreement, if there are changes to state law (including material amendment or repeal of SB 1383), or if there are technological advances that modify or eliminate the need for a commercial organics recycling program as currently structured, then City may terminate Contractor’s SB 1383 commercial organics recycling program services upon 60 days’ notice.

D. Evergreen Contract Invalidation Ruling. Notwithstanding any other provision of this Agreement, if there is a binding federal or state published appellate court ruling upholding a constitutional amendment or statute that retroactively declares automatic contract renewal clauses to be invalid for all public agency contracts then in effect with a remaining term longer than 10 years, then City may terminate this Agreement upon 12 month’s written notice. For purposes of this Paragraph, “binding” means a decision that is issued by the U.S. Supreme Court, the Ninth Circuit Court of Appeals, the California Supreme Court, or the California Court of Appeal and from which no further appeals may be taken or where further review is denied.

2.2 Extension Option
City shall have one opƟon to extend the term of this Agreement on a month-to-month basis. To exercise this opƟon, City shall give noƟce to Contractor on or before September 1, 2038. The extension period shall not exceed 36 months and may be terminated by City on 90 days’ prior wriƩen noƟce without cause.

2.3 Conditions Precedent
EffecƟveness of this Agreement is conƟngent upon saƟsfacƟon of the following condiƟons precedent unless waived by City.

A. Accuracy of Representations. All representations and warranties made by Contractor set forth in this Agreement shall be accurate, true, and correct on and as of the Effective Date.

B. Furnishing of Insurance, Bond, Letter of Credit, and Corporate Guarantee. Contractor shall have furnished evidence of the insurance and surety required by Sections 10.2 and 10.3, and shall have provided the Corporate Guarantee required by Exhibit G.

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C. Absence of Litigation. There is no actual or threatened litigation involving Contractor or Republic Services, Inc. that would do any of the following:

1. Adversely impact Contractor’s performance of this Agreement.

2. Make this Agreement invalid or unenforceable.

3. Adversely impact the financial condition of Contractor, Republic Services, Inc., or any other entity guaranteeing Contractor’s performance under this Agreement.

D. Permits Furnished. Contractor has provided City with copies of permits necessary for operation of approved facilities owned or operated by Contractor or any subcontractor for use under this Agreement.

E. Payment of Fees and Costs. Contractor has paid City all fees, costs, and other payments due as of the Effective Date.

ARTICLE 3.

EXCLUSIVE FRANCHISE

3.1 Grant and Acceptance of Franchise
City grants to Contractor, and Contractor accepts, a wholly exclusive franchise for the scope of services specified in this Agreement. Such franchise is subject to the limitaƟons specified in SecƟon 3.2 and applicable law including Public Resources Code SecƟon 49520.

3.2 Limitations to Franchise
A. This franchise does not preclude the categories of recyclable materials, organic materials, solid waste, or other materials listed below from being delivered to, and collected and transported by, other persons. City may permit such activity without seeking or obtaining approval of Contractor.

1. Recyclable and Organic Materials. Other persons may: (1) accept source separated recyclable materials and source separated organic materials; or, (2) sell, in a commercial transaction, source separated recyclable materials and source separated organic materials provided that there is no net payment made by a generator to such a third person.

2. Self-Hauled Materials. Using its own vehicles, equipment, and employees, a commercial business or residential owner may transport recyclable materials and organic materials for processing if those materials are generated in or on its own premises. Self-hauler must deliver any recyclable materials or organic materials to a permitted facility and have proof of transactions, such as weight tickets, to document any self-haul transaction in compliance with the City Code.

3. Construction and Demolition Debris (C&D). Using its own vehicles, equipment, and employees, a duly licensed construction or demolition company may remove construction and demolition debris that is part of a total construction and demolition service offered by it.

4. Donated or Sold Materials. A generator may sell or donate to youth, civic, or charitable organizations items that are source separated at the premises. Materials will not be deemed donated if they are collected by a non-franchised solid waste enterprise that is not a 501(c)(3) organization.

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5. Edible Food. A food recovery organization, food recovery service, and other persons may collect edible food from a generator for the purposes of food recovery. Additionally, a generator may self-haul edible food to a food recovery organization, food recovery service, or other person for the purposes of food recovery. This category applies regardless of whether the generator donates, sells, or pays a fee to the other person for collection or receipt of the edible food.

6. Food Scraps. A generator may separate food scraps for use by the generator or distribution to other persons for animal feed in accordance with 14 CCR Section 18983.1(b)(7). Food scraps intended for animal feed may be self-hauled by a generator or hauled by another person.

7. Beverage Containers. Containers delivered for recycling under the California Beverage Container Recycling and Litter Reduction Act (Public Resources Code Section 14500 et seq.).

8. Incidental Material Removal Services. A gardener, landscaper, tree-trimming service, construction firm, residential clean-out service, or similar entity may remove recyclable materials, organic materials, solid waste, and bulky goods from a premises as an incidental part of a service being performed at the premises.

9. On-site or Community Composting. A generator may compost organic materials at the site where they are generated (e.g., backyard composting or on-site anaerobic digestion) or at a community composting site.

10. Animal Waste, Grease, and Used Cooking Oil. Animal waste and remains from slaughterhouses or butcher shops, grease, or used cooking oil.

11. Sewage Treatment By-Product. By-products of sewage treatment, including sludge, sludge ash, grit, and screenings.

12. Excluded Waste. Excluded waste regardless of its source.

13. Materials Generated by Agency Facilities. Materials generated by state, county, school district, or other public agency facilities provided that the generator has arranged services with other persons or has arranged services with Contractor through a separate agreement.

School district services shall continue consistent with the practice under the 2002 Franchise Agreement. However, nothing in this Agreement will prevent the Brea Olinda Unified School District from contracting with Contractor separate from this Agreement.

14. Manure. A generator may contract with other persons for removal of manure from the premises. Contractor may provide customers whose premises are zoned in a manner authorizing equestrian or other large animals to be kept on site, and who so request, with containers for the collection of manure at rates that do not exceed the maximum rates set forth in Exhibit D.

15. Agricultural or Industrial Sources. The hauling of byproducts from agricultural or industrial sources in accordance with Public Resources Code Section 40059.4.

16. Junk Removal. Solid waste removed by cleanup services whose primary business is the cleanup of solid waste on the property of another person and, incidental to such business, where all of the following apply: (i) the cleanup service hauls only the solid waste that it is contracted to clean up and no other solid waste; (ii) performs onsite cleanup services that includes removing junk from commercial premises, garages, and residential premises as part of the overall cleanup service, but does not remove solid waste or construction and City of Brea Second Amended/Restated Franchise Agreement

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demolition debris from construction and demolition sites; (iii) uses their own vehicle to haul the solid waste that is contracted for clean up; and, (iv) does not use a bin, roll-off box, or other container to accomplish the cleanup, collection, or transportation of the solid waste.

B. If a law or court decision after the Effective Date limits City’s ability to award a franchise for the scope of services and materials covered by this Agreement, then this Agreement shall be limited to those services and materials that lawfully may be included. City shall not be liable for any lost profits claimed by Contractor to result from new laws or court decisions.

3.3 Obligations of Parties
In addiƟon to the specific performance required under this Agreement, the parƟes shall:

A. Provide timely notice to one another of a perceived failure to perform any obligations under this Agreement and access to information demonstrating such failure.

B. Provide timely access to the City Manager and the Contract Administrator in accordance with the terms of this Agreement.

C. Provide complete and timely responses to requests of the other party.

D. Provide timely notice of matters that may affect either party’s ability to perform under the Agreement.

3.4 Prior Contracts
A. Contractor waives any right or claim to serve City or any part of Brea under any prior grant of franchise, contract, license, or permit issued or granted by any governmental entity. This Agreement supersedes the 1986 Franchise Agreement, the 1989 Franchise Agreement, the 1996 Franchise Agreement (as amended by the 1997 Amendment), the 2002 Franchise Agreement (as amended by the 2020 Amendment), and the 2019 CORP Agreement. Subject to Paragraph B below, to the extent not already void all such contracts shall be of no further force or effect as of the Effective Date.

B. This Section does not excuse any prior breach of, or liability arising under, the 2002 Franchise Agreement or the 2019 CORP Agreement; provided, however, that this Section does not allow either party to pursue a breach or liability claim that is barred by the statute of limitations. Nor does this Section relieve Contractor from such contracts’ insurance obligations, indemnity obligations, and obligations that are designated as surviving expiration or termination.

3.5 Mutual Determinations
The parƟes jointly acknowledge that Public Resources Code SecƟon 40059 authorizes City to determine whether the services covered by this Agreement will be provided by parƟally exclusive franchise, wholly exclusive franchise, or otherwise. The parƟes have mutually and independently determined that: (i) the exclusive franchise conferred by this Agreement provides Contractor a specific benefit or privilege that is not provided to other persons; and, (ii) the fees and charges imposed on Contractor by this Agreement do not exceed the reasonable costs to City of conferring such benefit or granƟng such privilege. The parƟes also have mutually and independently determined that this Agreement imposes fees and charges on Contractor for the use of City property, negoƟated at arm’s length.

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ARTICLE 4.

SCOPE OF AGREEMENT

4.1 Summary Scope of Services
A. This Agreement applies to recyclable materials, organic materials, and solid waste collected by Contractor within Brea. Contractor shall be responsible for the following:

1. Providing a program for the separate collection of recyclable materials, organic materials, and solid waste generated by and placed for collection by customers.

2. Transporting collected materials to the appropriate approved facilities or designated disposal facilities.

3. Processing collected recyclable materials and organic materials at the appropriate approved facilities.

4. Performing all other services required by this Agreement including commercial customer billing, public education, customer service, contamination monitoring, record keeping, and reporting.

5. Furnishing all labor, supervision, vehicles, containers, other equipment, materials, supplies, and all other items and services necessary to perform its obligations under this Agreement.

6. Paying all expenses related to provision of the services including taxes, regulatory fees (including City fees and reimbursements), and utilities.

7. Performing or providing all services necessary to fulfill its obligations in full accordance with this Agreement at all times using best industry practice for comparable operations.

8. Complying with applicable laws.

B. The enumeration and specification of particular aspects of service, labor, or equipment requirements shall not relieve Contractor of the duty to perform all other tasks and activities necessary to fulfill its obligations under this Agreement, regardless of whether such requirements are enumerated elsewhere in the Agreement.

4.2 Flow Control Option
A. Solid Waste Disposal Flow Control Option. City shall have the absolute right to choose the location for the delivery and disposal of all solid waste destined for landfill collected pursuant to this Agreement (“Flow Control Option”). Contractor waives the right to challenge City’s ability to do so including any rights under the Commerce Clause of the United States Constitution. As used herein, “County Agreement" means that certain waste disposal agreement, as the same may be amended from time to time, entered into among various County municipalities, including specifically City and the County relating to the use of County landfills for the disposal of solid waste collected in such municipalities, and which is on file in the office of City's City Clerk. Exhibit K contains the County waste disposal agreement, which was current as of the Effective Date. As of the Effective Date, City shall be deemed to have exercised its Flow Control Option so as to require delivery of all solid waste to the County landfill system in a manner consistent with its obligations under the County Agreement (including its obligations related to solid waste that is delivered to a processing/transfer facility prior to being delivered to a landfill for disposal), and Contractor has agreed to handle all solid waste in a manner consistent with City’s exercise of its Flow Control Option. At any time City City of Brea Second Amended/Restated Franchise Agreement

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may notify Contractor that City no longer desires to exercise its Flow Control Option. In such event, Contractor shall have the absolute discretion to utilize any disposal facility, transfer station, recycling facility, material recovery facility, landfill, or other facility of its choosing to dispose of solid waste generated within Brea provided that the use of such facility by Contractor enables it to meet all other requirements of this Agreement and applicable law.

B. Organic Materials.

1. Residential Organic Materials.
a. Contractor will deliver residential source separated organic materials collected from City’s residential customers to the approved organic materials processing facilities included in Exhibit L.
b. City shall retain the right to choose the location for the delivery of residential source separated organic materials, and that the rate paid by the customer will be reduced or increased accordingly if the transfer, transportation, and processing costs of using such facility are lower or higher than the costs of using the approved organic materials processing facilities included in Exhibit L. The parties acknowledge and agree that the designated facilities in Exhibit L are approved at the time of entering into this Agreement and that Contractor’s rates are premised on the use of the designated facilities as set forth in Exhibit L.
c. The current residential contractor rates to divert residential organic materials are based on the organic materials transfer, transportation, and processing cost of $136.98 per ton as documented in Exhibit M. The total cost of $136.98 is based on transfer, transportation, and processing costs per ton originating at the approved transfer facility [CVT Facility] for the approved organic materials processing facilities to process residential organic materials as shown in Exhibit L. d. Contractor will notify City in connection with Contractor’s regular annual rate adjustment effective July 1 of each year if a lower cost option becomes available to divert the residential organic materials to initiate a cost reduction to City’s residential customers. Additionally, at any time, City can notify Contractor of the availability of a lower cost option to divert the residential organic materials to initiate a cost reduction to City’s residential customers.

2. Commercial Organics Materials. ContractorCity shall have the absolute right to choose the location for the delivery and processing of source separated organic materials generated at multi-family or commercial premises collected pursuant to this Agreement to the approved organic processing facilities included in Exhibit L. As of the Effective Date, Contractor shall deliver collected multi-family and commercial organic materials to the approved organics materials processing facilities listed in Exhibit L.
a. Contractor will deliver multi-family or commercial source separated organic materials collected from City’s multi-family or commercial customers to the approved organic materials processing facilities included in Exhibit L.
b. The current multi-family and commercial contractor rates to divert multi-family and commercial organic materials are based on the organic materials transfer, transportation, and processing cost of $136.98 per ton as documented in Exhibit M.

The total cost of $136.98 is based on transfer, transportation, and processing costs per ton originating at the approved transfer facility [CVT Facility] for the approved organic City of Brea Second Amended/Restated Franchise Agreement

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materials processing facilities to process multi-family and commercial organic materials as shown in Exhibit L.
c. Contractor will notify City in connection with Contractor’s regular annual rate adjustment effective July 1 of each year if a lower cost option becomes available to divert the multi-family and commercial organic materials to initiate a cost reduction to City’s multi-family and commercial customers. Additionally, at any time, City can notify Contractor of the availability of a lower cost option to divert the multi-family and commercial organic materials to initiate a cost reduction to City’s multi-family and commercial customers.

C. Recyclable Materials. Contractor shall have the absolute right to choose the location for the delivery and processing of all source separated recyclable materials collected pursuant to this Agreement to the approved recyclable materials processing facilities included in Exhibit L. As of the Effective Date, Contractor shall deliver collected recyclable materials to the approved recyclable materials processing facilities listed in Exhibit L.

D. County Agreement. Contractor expressly acknowledges its awareness of the County Agreement, which has been adopted and entered into by City. Moreover, Contractor acknowledges that it is aware that all solid waste collected within Brea is to be disposed of in the County landfill system.

Contractor further acknowledges that the County is an intended third-party beneficiary of Contractor's obligations relating in any way to the disposal of solid waste pursuant to this Agreement and the County Agreement.

4.3 Use of Approved and Designated Facilities
Contractor, without constraint and as a free-market business decision in accepƟng this Agreement, agrees to use the approved and designated faciliƟes for the purposes of transferring, processing, and disposal of all recyclable materials, organic materials, and other materials collected in Brea.

4.4 Subcontracting
Contractor shall not engage any subcontractors for collecƟon, transportaƟon, or processing of recyclable materials, organic materials, or solid waste services without the prior wriƩen consent of City, which consent shall not be unreasonably withheld. If Contractor plans to engage subcontractors in the provision of services, Contractor shall provide City with 30 days’ wriƩen noƟficaƟon of its plans and provide an explanaƟon of any potenƟal impacts related to the quality, Ɵmeliness, or cost of providing services.

Contractor shall require that all subcontractors comply with the insurance provisions in this Agreement, file insurance endorsements with City, name City as an addiƟonal insured, and comply with all other material terms of this Agreement.

4.5 Responsibility for Materials
A. Once recyclable materials, organic materials, or solid waste are placed in Contractor’s containers and at the collection location, the responsibility for their proper handling shall transfer from the generator to Contractor, with the exception of excluded waste that is identified and responded to pursuant to Section 6.8.B. Once recyclable materials, organic materials, or solid waste are deposited by Contractor at the appropriate approved facility, such materials shall become the responsibility of the owner or operator of the approved facility except for excluded waste pursuant to Section

6.8.C.

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B. Title to and liability for excluded waste shall at no time pass to Contractor. If excluded waste is discovered before it is collected by Contractor, Contractor may refuse to collect the entire container that contains the excluded waste. In such situations, Contractor shall contact City and City shall promptly undertake appropriate action to ensure that such excluded waste is removed and properly disposed of by the depositor or generator of the excluded waste. In the event excluded waste is present but not discovered until after it has been collected by Contractor, Contractor may, in its sole discretion, remove, transport, and dispose of such excluded waste at a facility authorized to accept such excluded waste in accordance with applicable law and charge the depositor or generator of such excluded waste for all direct and indirect costs incurred due to the removal, remediation, handling, transportation, delivery, and disposal of such excluded waste. City shall provide all reasonable assistance to Contractor to conduct an investigation to determine the identity of the depositor or generator of the excluded waste and to collect the costs incurred by Contractor in connection with such excluded waste.

4.6 City-Directed Changes to Scope
A. City may require a proposal from Contractor to establish the scope of any modification to existing services (which may include use of approved facilities) or additional services to be provided under this Agreement. In such case, Contractor shall present, within 30 calendar days of City’s request unless an alternate schedule is mutually agreed-upon, a written proposal to provide such modified or additional services. City shall review Contractor’s proposal for the change in scope of services.

The parties may meet and confer to negotiate Contractor’s proposed revisions and costs and shall amend this Agreement, as appropriate, to reflect the mutually agreed-upon changes in scope. If the parties are unable to agree on terms and conditions within 180 calendar days from City’s receipt of Contractor’s proposal for such services, then City may permit other persons to provide such services. Nothing herein shall prevent City from soliciting cost and operating information from other persons in order to inform the evaluation of Contractor’s proposal.

B. Upon CalRecycle’s final adoption of regulations to implement SB 54, the parties shall meet and confer in good faith to negotiate revisions to Contractor’s services and costs that are necessary or appropriate to ensure compliance with such regulations. The final adoption of SB 54 regulations by CalRecycle, with approval by the Office of Administrative Law (“OAL”), shall be considered a change in law in this Agreement.

ARTICLE 5.

SCOPE OF SERVICES

5.1 Recyclable and Organic Materials
A. Collection. Contractor shall provide recyclable materials and organic materials collection services as described in Exhibit B.

B. Transfer. Contractor shall transport recyclable materials and organic materials to the approved transfer facility where the materials will be unloaded from collection vehicles, loaded into largecapacity vehicles, and transported to the approved processing facilities. Contractor shall keep all permits necessary for use of the approved transfer facility in full regulatory compliance. Upon request, Contractor shall provide City with copies of facility permits and/or notices of violations (obtained from its transfer facility subcontractor if necessary). If Contractor is unable to use the approved transfer facility, then Contractor shall be responsible for making other transportation City of Brea Second Amended/Restated Franchise Agreement

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arrangements. In such event, Contractor shall not be compensated for any additional costs.

Contractor shall obtain written approval from City prior to changing the transfer method.

C. Processing. Contractor shall transport and deliver customer-generated source separated recyclable materials to the approved recyclable materials processing facility. Contractor shall transport and deliver customer-generated source separated organic materials to the approved organic materials processing facility. All tipping fees and other costs associated with transportation and processing of such materials at the approved processing facilities and disposing of the residue shall be paid by Contractor.

D. Capacity Guarantee. Contractor guarantees sufficient capacity at the approved processing facilities to process all source separated recyclable materials and organic materials collected by Contractor under this Agreement throughout the term of the Agreement; provided, however, that Contractor makes no guaranty with respect to the capacity of any County facilities to the extent organic materials are handled at County facilities.

E. Notification of Emergency Conditions. Within 48 hours of discovery, Contractor shall notify City whenever (i) any unforeseen operational restrictions have been imposed upon an approved facility or the designated disposal facility by a regulatory agency; or, (ii) any unforeseen equipment or operational failure temporarily prevents the facility from processing the discarded materials collected under this Agreement.

F. Approved Facility Unavailable/Use of Alternative Facility.

1. If Contractor is unable to use an approved processing facility due to an event specified in Section 12.7, Contractor shall use an alternative processing facility provided that Contractor provides written notice to City. Within 48 hours of an emergency or sudden and unforeseen closure, Contractor shall provide a written description of the reasons the use of the approved processing facility is not feasible and the period of time Contractor proposes to use the alternative processing facility. Such a change in processing facility shall be temporarily permitted until such time as City is able to consider and respond to the use of the proposed alternative processing facility. If the use of the proposed alternative processing facility is anticipated to or actually does exceed 30 days in a consecutive 12-month period, the use of such processing facility shall be subject to approval by City. City may approve, conditionally approve, temporarily approve, or disapprove of the use of the proposed alternative processing facility. If City disapproves the use of the proposed alternative processing facility, the parties shall meet and confer to determine an acceptable processing facility.

2. If the use of an alternative processing facility is for reasons within Contractor’s control, then Contractor’s compensation shall not be adjusted for any change in transportation and processing costs associated with use of the alternative processing facility. However, if the use of an alternative processing facility is due to an uncontrollable circumstance, including events of force majeure, then Contractor’s compensation shall be increased or decreased for changes in transportation and processing costs associated with the use of the alternative processing facility. In the event that the change in the processing facility results in increased costs, City may identify and direct Contractor to an alternative processing facility, at Contractor’s expense, that results in less cost than the Contractor-identified alternative.

3. Except for the emergency conditions described in this Section, Contractor shall not change its selection of the approved processing facilities without City’s written approval, which may not be unreasonably withheld. If Contractor elects to use a processing facility that is different than the initial approved processing facilities, it shall request written approval from City 30 City of Brea Second Amended/Restated Franchise Agreement

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calendar days prior to use of the site and obtain such approval no later than 10 calendar days prior to use of the site. Failure to meet the requirements of this Section may result in liquidated damages in accordance with Section 12.6 of this Agreement.

4. Contractor shall observe and comply with all regulations in effect at the approved processing facilities and cooperate with respect to delivery of recyclable materials and organic materials.

Contractor shall actively work with the approved processing facility operators to ensure that contamination of the recyclable materials and organic materials remains below the limits established by applicable law including SB 1383.

G. Marketing. Contractor shall be responsible for marketing recyclable materials and organic materials that it collects and delivers for processing at the approved processing facilities. Contractor’s marketing strategy shall promote the highest and best use of materials presented in the waste management hierarchy in accordance with AB 939. Where practical, the marketing strategy shall include use of local markets for recyclable materials and organic materials.

H. Residue Disposal. Residue from the processing of recyclable materials and organic materials collected under this Agreement at the approved processing facilities that cannot be marketed shall be disposed of by Contractor or the processing facility subcontractor. Residue delivered for disposal shall not include any excluded waste.

I. Compostable Plastics. Contractor may allow customers to place compostable plastics in the organic materials container for collection. Contractor may collect and transport such materials for processing at the approved organic materials processing facility. Within 10 calendar days of the Effective Date, and annually thereafter, Contractor shall provide a written notification to City confirming that the facility has the capability to process and recover the compostable plastics.

Contractor shall not revoke this confirmation at any time. If Contractor does not submit such notification, or if at any time the approved organic materials processing facility can no longer accept and process compostable plastics, then City may assess liquidated damages in accordance with Section 12.6. Contractor shall notify City within seven days of the facility’s inability to accept the compostable plastics. The notification shall, at a minimum, include: the date and a description of the reasons that the facility is not able to process and recover the compostable plastics; the period of time the facility will not process and recover these materials; and, Contractor’s proposed plan to find an alternative facility or arrangement to process the compostable plastics, subject to City approval. Upon execution of this Agreement, City may prohibit or restrict the use of compostable plastics, with a six month notice to Contractor. This shall not constitute a City-directed change in scope or change in law.

5.2 Solid Waste
A. Contractor shall offer and provide solid waste collection services as described in Exhibit B.

B. Contractor acknowledges that City is committed to diverting materials from disposal through the implementation of source reduction, reuse, recycling, composting, and other programs, and that City may implement new programs other than discarded materials collection programs. Examples of new programs City may implement include reuse programs, drop-off programs, community composting, and other diversion programs, with or without the involvement of Contractor, that may impact the overall quantity or composition of solid waste to be collected by Contractor.

Contractor shall not be entitled to any compensation or other relief resulting from a decline in solid waste volumes or tonnage or from a change in the composition of solid waste.

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C. Contractor shall transport all solid waste to the designated disposal facility. Contractor shall pay all costs associated with transportation and disposal of solid waste including payment of any gate fees charged at the designated disposal facility. Contractor shall observe and comply with all regulations and posted rules in effect at the designated disposal facility and cooperate with respect to delivery of solid waste.

5.3 Miscellaneous Service Provisions

5.3.1 Bin Pullout Service
A. Upon customer request and approval by the City Manager, Contractor shall provide bin pullout service in accordance with the approved rate schedule, whereby Contractor will access bins using a small vehicle either to move bins to street or other public right-of-way for collection or retrieve a bin when operationally required in order to safely position the bin for collection. Pullout service charge shall only be assessed for bins and not assessed for carts. In the event of a dispute between Contractor and a customer as to whether bin pullout service will be used, City will make the final determination.

B. Customers requiring bin pushout service shall only be charged for bin pullout service in accordance with the approved rate schedule.

C. If Contractor must place a container in the public right-of-way to facilitate collection, Contractor shall not permit the bin to remain in the public right-of-way over four hours. City and Contractor will annually review the customer list that identifies areas of high traffic where bins cannot remain in the public right-of-way for more than two hours, and City will make the final determination for removing or placing customers on the list. If the bin is stored under a chute for collection, the customer shall have a spare or standby bin to be in place while the primary bin is being serviced in the event the chute cannot be closed to prevent discarded materials from spilling.

D. Any changes to the customer bin pullout service list shall be approved by City prior to Contractor adding or removing this service for any customer.

5.3.2 Container Over-Filling
A. A container may be considered overfilled when discarded materials project above its rim in a manner that impedes the complete closure of the container’s lid and/or when discarded materials are placed outside the container or allowed to accumulate, making access to the container unsafe for collection.

B. In the event that a multi-family premise or bin commercial customer overfills its bin(s), Contractor shall implement the following procedures in an effort to correct the problem, charge customer in accordance with the approved rate schedule, and, if necessary, increase service levels. For any over-fill occurrences, Contractor shall document occurrence with a photograph. Contractor shall send a notification to the customer, including a photograph of the overage, and a statement advising of service alternatives including right-sizing opportunities, as well as notify the customer of an overflow charge and of a possible increase in service level and the related costs. Notification of over-fill can occur via e-mail, invoice statement, or other City approved method. Contactor shall document the location of the encountered overage, a photograph, as well as the outreach material provided to the customer. Contractor shall provide this information to City upon request.

C. Effective July 1, 2026, Contractor may charge commercial, multi-family, and industrial customers for bin overage special services a per-occurrence charge of $65.00 in accordance with Paragraph B above. Beginning with rate period three (July 1, 2027 to June 30, 2028) and for all subsequent rate City of Brea Second Amended/Restated Franchise Agreement

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periods, Contractor may make an inflationary adjustment to the per-occurrence charge for bin overage special services for commercial, multi-family, and industrial customers, subject to review and approval by City in accordance with Article 9.

5.4 Bulky Goods and Reusable Materials
Contractor shall offer bulky goods and reusable materials collecƟon services as described in Exhibit B. Oncall bulky goods and reusable materials collecƟon services shall be offered to customers within a reasonable Ɵme but not longer than seven calendar days of Contractor’s receipt of such a request for service. Contractor shall make reasonable efforts to schedule on-call bulky goods and reusable materials collecƟons on a day that is convenient to the customer. Contractor shall transport all bulky goods or reusable materials to the approved reusable materials processing facility. Contractor shall pay all costs associated with transporƟng and processing bulky goods and reusable materials. Contractor shall observe and comply with all regulaƟons in effect at the approved reusable materials processing facility and cooperate with respect to delivery of bulky goods and reusable materials.

5.5 City Sponsored Events
A. Contractor shall provide recyclable materials, organic materials, and solid waste collection services to City-sponsored events at no cost to the event organizer or City. City shall provide Contractor with a minimum of 10 business days’ notice prior to any City-sponsored event where Contractor is requested to provide collection services. Special event services include all of the following.

1. Event Collection Stations. Contractor shall provide and set-up event collection stations for collection of recyclable materials, organic materials, and solid waste at City-sponsored events. Each event collection station shall include a separate collection area for recyclable materials, organic materials, and solid waste, as appropriate. Contractor shall provide a sufficient number of event collection stations of sufficient capacity to meet the needs of the event as determined by Contractor in cooperation with City and the event organizer.

Collection stations shall utilize cardboard boxes for solid waste and recyclable materials and shall use carts for organic materials unless alternative containers are approved by City.

Contractor shall provide liners/bags for the containers at the collection stations. Collection stations shall include adequate signs and labeling.

2. Roll-Off Boxes. Upon request, Contractor shall provide up to eight containers annually (or monthly) for the aggregation of material removed from event collection stations during the course of the event. Contractor shall provide containers in sufficient number of appropriate types, subject to the cap, for the needs of the event as determined by Contractor in cooperation with City and the event organizer. Contractor shall service containers, as agreedupon with City and the event organizer, and deliver collected materials to the appropriate approved facility for processing and disposal.

3. Public Education Booth. Upon request of either City or the event organizer, Contractor shall staff a booth or exhibit at the event for the purpose of educating the public about the services and programs provided by Contractor and the benefits of source reduction, reuse, recycling, and composting.

4. Reporting. Within 14 calendar days of the end of the event, Contractor shall submit a report to City and the event organizer. The report shall include: the number of collection stations deployed at the event; the tonnage of each material type (i.e., recyclable materials, organic materials, and solid waste) collected; the landfilled and diverted tonnage from each stream; City of Brea Second Amended/Restated Franchise Agreement

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the name and address of disposal site utilized; and, a description of the public education provided at the event. Weight receipts shall be made available to City upon request.

B. Contractor may, at its sole discretion and expense, coordinate with local youth, community, or charitable organizations to provide some or all of the required services. Regardless of Contractor’s use of such an organization, Contractor shall be responsible for ensuring that service is provided to the customer in a professional and timely manner.

C. For special events that are not identified in Exhibit B4 or otherwise hosted or sponsored by City, Contractor shall provide the above-described special event services and may negotiate the charges for such services with the event organizer based on the specific needs of the event, or provide the services at its sole expense, at no cost to City or ratepayers.

5.6 Public Education and Outreach
A. Contractor shall perform the public education and outreach activities specified in Exhibit C.

B. Program Objectives. City’s public education and outreach strategy shall focus on improving generator understanding of the benefits of, and opportunities for, source reduction, reuse, and landfill disposal reduction and supporting compliance with applicable laws including AB 939, AB 341, AB 1826, and SB 1383. Examples of goals of the City-provided public education and outreach program include: (i) informing generators about the services that are provided under this Agreement with specific focus on describing the methods and benefits of source reduction, reuse, recycling, and composting; (ii) instructing generators on the proper method for placing materials in containers for collection and setting containers out for collection, with specific focus on minimizing contamination of recyclable materials and organic materials; (iii) clearly defining excluded waste and educating generators about the hazards of such materials and their opportunities for proper handling; (iv) discouraging generators from buying products if the product and its packaging are not readily reusable, recyclable, or compostable; (v) informing generators subject to food recovery requirements under SB 1383 of their obligation to recover edible food and actions they can take to prevent the creation of food waste; (vi) encouraging the use of compost and recovered organic waste products; and, (vii) encouraging generators to purchase products/packaging made with recycled content materials. The cumulative intended effect of these efforts is to reduce generation of solid waste and, ultimately, disposal of solid waste by each generator. Contractor shall support and not undermine or interfere with such efforts.

C. Contractor Public Education Requirements. Contractor shall print, produce, and distribute education materials and conduct outreach detailed in Exhibit C at no additional cost to ratepayers or City. Contractor shall obtain approval from City on all Contractor-provided promotional and service-related materials used within Brea before publication, distribution, or release. City shall have final approval of any materials or content distributed or made available to customers. Upon City’s request, Contractor shall include City identification and contact information on such materials.

D. Non-English Language Requirements. Contractor shall make all public education and outreach materials in English, Spanish, Korean, and Traditional Chinese. Contractor may use Quick Response (“QR”) codes to assist customers with specific languages and for specific programs. Upon City’s request, Contractor shall provide materials in additional languages in response to shifting demographics, changes in applicable law, or any other reason reasonably deemed appropriate by City.

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5.7 Billing

5.7.1 General
A. Contractor shall develop, maintain, and regularly update a customer account information database, which shall include:

1. Customer name.

2. Phone number.

3. Service address.

4. E-mail address.

5. Customer service levels, including:
a. Customer service levels exceptions.
b. Customer service waivers.

B. Contractor shall make access to such database available, upon no more than five working days’ request from City, in accordance with this Section and Section 7.1. Contractor shall additionally, on an annual basis, reconcile all customer accounts with City’s billing information (i.e., via GIS and parcel data). Failure to maintain a database in accordance with this Section shall result in liquidated damages in accordance with Section 12.6.

C. Contractor shall provide direct-billed customers the option to receive invoices electronically using paperless invoices or by standard mail using standard (paper) invoices. Contractor shall allow customers to pay bills through an electronic check or credit card and shall include the ability for customer billings to be automatically charged on a recurring basis. Contractor shall prepare, mail, and collect bills from customers who decline to use such internet-based billing system. Contractor shall make arrangements to allow such customers to pay bills by check, electronic check, money order, and credit card.

D. Up to once per month, City may direct Contractor to include a billing note directly onto the customer invoices. Contractor shall provide electronic bill inserts to customers who are billed electronically, and paper bill inserts to customers who receive paper bills. Electronic bill inserts must be readily available for the customer to view upon receipt of the invoice (attachments shall not be provided as links). Upon City request for such attachments, Contractor shall comply with such request during its next billing cycle for the targeted customer group. Contractor shall perform this service with no additional requirement for compensation.

E. Contractor shall maintain copies of all billings and receipts, each in chronological order for inspection and verification by City.

F. If Contractor fails to invoice a customer, or otherwise undercharges a customer for services provided for more than six months, Contractor may not subsequently attempt to collect the undercharged amount for more than six months of service. If Contractor overcharges a customer for a period of more than six months, Contractor shall reimburse or credit the customer for six months of the overcharged service. Contractor is not prohibited from reimbursing or crediting a customer for more than six months of overcharges.

G. If a customer reduces or cancels service during a billing cycle, the customer shall be entitled to a proration of the billing from the date that the service change was requested, in the case of City of Brea Second Amended/Restated Franchise Agreement

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cancellations or reductions in the customer’s bill, or the date the service change was fulfilled, in the case of increases in the customer’s bill.

5.7.2 City’s Billing Responsibility
A. Contractor shall accept as full compensation from City for the complete collection and disposal of single-family waste, organic materials, and recyclable materials the amount specified in Exhibit D less the franchise fee specified in Section 8.1 below. City shall bill single-family customers. Such compensation for single-family services shall be based on the number of single-family customers in each residential category reflected in Exhibit D. The number of single-family customers shall be established by City as of the Effective Date and shall be reviewed monthly by the parties. In the event such a review results in an increase or decrease in the number of single-family customers, the subsequent payments to Contractor shall be adjusted accordingly.

B. City shall pay Contractor for single-family disposal charges on or before the 20th of the month following the close of each month. City shall pay Contractor for single-family collection services on or before the 15th of the month following the close of each month. Separate checks for disposal charges and collection services shall be payable to Brea Disposal and shall be mailed or otherwise delivered as agreed to by City and Contractor to Accounting Manager, 1131 North Blue Gum Street, Anaheim, CA 92806.

5.7.3 Contractor’s Billing Responsibility
Contractor shall direct bill customers that are not billed by City pursuant to SecƟon 5.7.2 above (i.e., commercial customers, residenƟal customers with bin service, and residenƟal customers with five or more dwelling units). Contractor’s billing shall be on a monthly basis, except as may be otherwise specified, in wriƟng, by City. Contractor may charge the rates specified in Exhibit D for commercial and industrial services, as such rates may be amended from Ɵme to Ɵme pursuant to the provisions of ArƟcle 9 and any AB 939 fees imposed by City.

5.7.4 Vacant Premises

5.7.4.1 City Billed
Contractor shall disconƟnue service to customers billed by City if instructed to do so by City and will resume service upon instrucƟon from City. Contractor shall not invoice City for periods during which service is not provided to a customer. Contractor shall cooperate with all reasonable requests of City that relate to the collecƟon of accounts receivable. Bad debt from City-billed customers will be assumed by City.

5.7.4.2 Contractor Billed
Contractor shall not provide collecƟon services to a premises, and shall not bill such premises, during any Ɵme when Contractor has actual noƟce such premises is vacant and the customer has provided Contractor wriƩen noƟce of the vacancy. The customer at any such premises shall be responsible for providing reasonable evidence to Contractor, pursuant to such guidelines as Contractor shall develop and City shall approve, demonstraƟng the premises is vacant. Any customer grievance regarding a claim that a premises was vacant and received no service, and hence should not be billed for a given period, may be appealed by the customer to City. The City Manager’s decision, following an opportunity for the parƟes to present informaƟon, shall be final. It is the intent of the parƟes that Contractor shall not be enƟtled to charge for services that are not needed or used. Notwithstanding the foregoing, it is the intent of the parƟes that City of Brea Second Amended/Restated Franchise Agreement

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premises shall not be deemed vacant due only to a temporary absence of the owner(s) or occupant(s), such as a period during which the owner(s) or occupant(s) are merely on vacaƟon.

5.7.5 Delinquent Accounts
A. Customers Billed by City. Residential customers billed directly by City with delinquent amounts will be handled in accordance with City’s internal billing procedures for delinquent accounts.

B. Customers Billed by Contractor.

1. Any service account unpaid by the due date listed on the billing statement shall be deemed delinquent. Except to the extent otherwise provided herein, it shall be the sole responsibility of Contractor to take any authorized measures to collect any delinquent sums owed for commercial customers.

2. Any delinquent fees or service charges to be imposed in connection with delinquent accounts shall be set by Contractor and be subject to City review.

3. Contractor may discontinue service to any customer whose account is delinquent in the manner set forth in this Section. Customers who have not remitted required payments within 30 days after the date of billing shall be notified on forms approved by City. Such forms shall contain a statement that services may be discontinued 15 days from the date of notice if payment is not made before that time. If payment is not made by the expiration of such 15- day period, Contractor may discontinue service 48 hours thereafter.

4. Contractor shall resume collection services on the next regularly scheduled collection day for any customer whose service is discontinued upon receipt of payment of delinquent fees and any related service restart charges, or at such sooner time as directed to do so by City.

5. A deposit as set forth in the approved rate schedule, as such rates may be amended from time to time, may be required of accounts that have been discontinued for non-payment prior to re-instituting service at such accounts.

6. Contractor shall make all reasonable efforts to diligently pursue and collect all delinquent sums owed by customers. Following exhaustion of all such reasonable efforts by Contractor, Contractor may request City’s assistance in collecting any remaining delinquent sums owed, and City shall endeavor, in good faith, to assist Contractor with its collection efforts.

Notwithstanding the foregoing, City shall have no liability to Contractor for failure to collect any such delinquent sums from customers. Contractor shall reimburse City for any and all costs incurred by City in assisting Contractor in the collection of delinquent sums owed.

5.7.6 Collection and Processing of Payments.

A. Accounting and Deposit of Funds. All payments received by Contractor shall be appropriately credited to customer accounts, deposited in a bank account, and accounted for in a businesslike manner utilizing generally accepted accounting principles. To facilitate audits and record keeping, Contractor shall make all withdrawals from its bank accounts by check, ACH debit/credit, or wire, regardless of whether the withdrawal is to provide funds to City, Contractor, or any permissible subcontractor, vendor, or supplier of Contractor.

B. Allocation of Funds. With respect to payments received from each customer, unless a customer specifically directs a different allocation, funds shall be allocated first to outstanding charges for collection services, then to any related delinquency fees or other administrative charges, up to the City of Brea Second Amended/Restated Franchise Agreement

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amount of any outstanding balance. Any overpayment shall be credited to future bills in the same sequence or returned to customers, as appropriate.

5.8 Customer Service Program
A. Program Requirements.

1. Office Locations.
a. Customer Service Office. Contractor maintains an office located at 1131 North Blue Gum Street, Anaheim. No change in this location shall occur without City’s approval if such change would result in Contractor not having an office within 25 miles of the Brea Civic and Cultural Center. Such office shall be open, at a minimum, from 8:00 a.m. to 5:00 p.m. Monday through Friday, and 8:00 a.m. to 12:00 p.m. Saturday, holidays excepted. At least one responsible and qualified representative of Contractor, capable of communicating in English and Spanish, shall be present and available during office hours, for personal communication with the public. A similarly qualified person(s) capable of communicating in Korean, Traditional Chinese, and other languages by way of translation services shall be available for communication with the public by phone during any times other than office hours when collection is occurring. b. Principal Office. In the event that the principal office of Contractor is not maintained in the County of Orange, State of California, City may terminate this Agreement upon the giving of 365 calendar days’ notice.

2. Telephone Customer Service Requirements.
a. Contractor shall maintain either a local or toll-free telephone number that rings at an office within North Orange County at all times during office hours, except during periods of high call volume when calls may be routed to Contractor’s available southwest area regional call centers. English and Spanish speaking personnel shall be available during office hours to assist customers with telephone inquiries. All such personnel shall be polite and responsive, and shall be sufficiently knowledgeable, and have the authority to respond and/or advise customers seeking assistance.

Contractor's telephone system shall be adequate to handle the volume of calls typically experienced, subject to high call volume events when southwest area regional call centers may be utilized to manage call volume. Contractor shall provide City with a 24-hour emergency number to a live person. Contractor shall provide and maintain a current emergency list of responsible personnel to be contacted in the event of an emergency.
b. Contractor shall make reasonable attempts to answer all phone calls within five rings.

If a call has been placed on hold for three minutes, the caller will either be switched to a message center that shall be responsible to obtain the caller's address and phone number or a customer service representative will obtain the customer’s address and a number at which the call can be returned. Contractor shall make at least one attempt within the next 24-hour period to return the call and will leave a voicemail with the customer. If Contractor is unsuccessful in contacting the customer after following this procedure, Contractor shall maintain a record of the unsuccessful attempts. c. Contractor shall maintain an emergency telephone number for use outside office hours. Contractor shall have a representative, or an answering service to contact such City of Brea Second Amended/Restated Franchise Agreement

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representative, available at such emergency telephone number during all hours other than normal office hours.
d. Contractor shall be able to respond to inquiries in English, Spanish, Korean, Traditional Chinese, and other languages as reasonably directed by City. Customer may subscribe to a telecommunications device for the deaf (“TDD”) service for use by persons with hearing or speech difficulties.

3. Complaint Documentation.
a. Contractor shall retain daily logs of complaints for 24 months. b. Contractor shall log all complaints received by telephone, mail, and e-mail, and such log shall include the date and time the complaint was received, name, address, and telephone number of callers, description of complaint, employee recording complaint, and the action taken by Contractor to respond to and remedy complaint. Missed pickups shall be included in this log. c. Customer complaints and inquiries shall be date-stamped when received and shall be initially responded to within the same day for a customer complaint received before 12:00 p.m. and the following business day for a complaint received after 12:00 p.m. (excluding Saturday, Sunday, and holidays) of receipt. Contractor shall log its actions taken to respond to and remedy the complaint.
d. All customer service records and logs kept by Contractor shall be available to City upon request and at no cost to City. City shall, at any time during regular business hours, have access to Contractor’s City Liaison for purposes that may include monitoring the quality of customer service or researching customer complaints.

4. Resolution of Customer Complaints.
a. Disputes between Contractor and customers regarding the services may be resolved by City, except for customer claims for personal injury or damages to property.

Contractor shall have the right to present evidence in connection with any customer claim. City’s decision shall be final and binding. Contractor shall reimburse City’s legal and consultant costs for each City intervention in a dispute between Contractor and a customer if City reasonably deems intervention is required and the customer’s dispute is valid.
b. Should Contractor and customers not be able to establish a mutually acceptable fee to be charged for special hauling services, the matter shall also be determined by City, and City’s decision shall be final.
c. Intervention by City is not a condition precedent to any rights or remedies customers or third parties might otherwise have in any dispute with Contractor. Nothing in this Section is intended to affect the remedies of third parties against Contractor or to customer claims for personal injury or property damage.

5. Website and E-mail Access. Contractor shall develop and maintain a website with Brea specific links that is accessible by the public and solely dedicated to the operations under this Agreement. Contractor’s website shall include all public education and outreach materials produced and distributed under this Agreement and provide the public the ability to e-mail Contractor questions, service requests, or complaints. Contractor shall respond within 24 City of Brea Second Amended/Restated Franchise Agreement

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hours to all customers who leave e-mail messages on any given business day. Contractor may respond to customer e-mails via e-mail or phone.

B. Missed Collections.

1. Missed Collection Complaints. In the event that a customer has placed its container for collection during the established or designated collection time and reports a missed or incomplete collection directly to the customer service line, Contractor’s customer service representative shall not question or contest the customer’s claim that the collection was missed or incomplete. In cases where the route driver recorded the container(s) in question as already “collected” or “not out,” Contractor shall resolve the complaint as noted in the below subsections.

2. Schedule for Resolution.
a. Contractor shall resolve every customer complaint of a missed or incomplete collection by returning to the customer address and completing the collection. For all complaints related to missed collections that are received by 12:00 p.m. on a business day, Contractor shall return to the customer address and collect the missed materials on the same business day on which the missed collection was reported. For those complaints related to missed collections that are received after 12:00 p.m. on a business day, Contractor shall have until the end of the following business day to resolve the complaint. Contractor’s failure to comply with this Section may be subject to liquidated damages in accordance with Section 12.6.
b. Contractor shall not be required to return and complete a collection in response to a complaint if Contractor’s driver has left a non-collection notice in accordance with Section 5.11.A.4.

3. Courtesy Collections for Admitted Late Set-Outs. In the event that a customer: (i) reports that its container(s) were placed for collection after Contractor’s collection vehicle had already passed the premises for regularly scheduled collection; (ii) does not claim that Contractor missed the collection; and, (iii) requests that Contractor return and collect the containers, Contractor shall return to the customer’s premises and provide a courtesy collection at no charge to the customer. Contractor is not required to provide more than one courtesy collection for admitted late set-outs per customer per calendar year. For residential customers, one courtesy collection represents collection of up to three carts (recyclable materials, organic materials, solid waste) per incident. Contractor shall complete the courtesy collection by the end of the following business day. The provisions of this Section shall only apply if the customer acknowledges during the initial call to the customer service line that the event did not constitute a missed or incomplete collection event by Contractor.

C. SB 1383 Non-Compliance Complaints. For complaints received directly by Contractor in which the person alleges that an entity is in violation of SB 1383 requirements, Contractor shall document the information listed in Exhibit F. Contractor shall provide this information in a brief complaint report to City for each SB 1383 non-compliance complaint within seven days of receipt of such complaint and a monthly summary report of SB 1383 non-compliance complaints in accordance with Exhibit F. Upon City request, Contractor shall conduct follow-up inspections and/or outreach to the violating entity and shall document the information in the reports provided pursuant to Exhibit F.

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5.9 Access to Customer Service and Billing Systems
Contractor shall provide access to customer contact informaƟon (including e-mail addresses) for purposes of City-provided public educaƟon and outreach acƟviƟes. In addiƟon, Contractor shall ensure that the City Manager and any other City staff, as requested by City, have read-only access to all service order, billing, and customer service records in Contractor’s internal informaƟon systems. Such read-only access is intended to provide City the ability to review notes related to customer service and billing issues.

5.10 Service Exemptions
A. General Exemptions. Upon customer request, and with written approval from City, Contractor shall cease providing and collecting payment for collection services to a premises that is anticipated to be vacant for no less than 30 days based on verified information from the customer. In addition, upon written direction from City, Contractor shall modify or otherwise cease providing collection services to customers requesting other service exemptions, provided that such customers consistently demonstrate the ability to responsibly manage discarded materials generated at the premises in question, in a manner consistent with applicable law.

B. Commercial and Multi-Family Customer Waivers.

1. General. City may grant waivers described in this Section 5.10.B to commercial or multifamily generators that impact the scope of Contractor’s provision of service for those customers, provided the generator shall continue to subscribe with Contractor for franchised collection services to the extent such services are not waived by City. Waivers issued shall be subject to compliance with SB 1383 requirements, pursuant to 14 CCR Section 18984.11, or other requirements specified by City in compliance with applicable law.

2. Types of Generator Waivers.
a. De Minimis Waivers. City may waive a commercial or multi-family generator’s obligation to comply with some or all of the recyclable materials and organic materials requirements set forth in this Agreement, SB 1383, and the City Code if the generator provides documentation or City has evidence demonstrating one of the following de minimis conditions:
i. The generator’s total discarded materials collection service is two cubic yards or more per week, and organic waste subject to collection in a recyclable materials container or organic materials container comprises less than 20 gallons per week, per applicable container, of the commercial business’ total waste.
ii. The generator’s total discarded materials collection service is less than two cubic yards per week, and organic waste subject to collection in a recyclable materials container or organic materials container comprises less than 10 gallons per week, per applicable container, of the generator’s total waste. b. Physical Space Waivers. City may waive a commercial or multi-family generator’s obligation to comply with some or all of the recyclable materials and organic materials requirements set forth in this Agreement, SB 1383, and the City Code if the generator provides documentation, or City has evidence from its staff, Contractor, licensed architect, engineer, or similarly qualified source demonstrating that the premises lacks City of Brea Second Amended/Restated Franchise Agreement

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adequate space for recyclable materials containers and/or organic materials containers.

3. Contractor Review of Waiver Requests. Generators may submit requests for de minimis waivers and physical space waivers to City or Contractor. Within seven days of being notified by City of a waiver request, Contractor shall inspect the generator’s premises to verify the accuracy of the application. Contractor shall provide documentation of the inspection, including the date of the inspection, customer name and address, a description of the premises, evaluation of each criterion of the relevant waiver type, and photographic evidence. Contractor shall send this information and documentation to City within three days after the inspection date. City ultimately retains the right to approve or deny any application, regardless of the information provided by Contractor. Contractor shall report information regarding waivers reviewed within the month, if any, in accordance with this Section and Exhibit F.

4. Service Level Updates. When City grants a waiver to a customer, or the customer’s waiver status changes after a re-verification determination, City shall notify Contractor within seven days with information on the customer and any changes to service level or collection service requirements for the customer. Contractor shall have seven days to modify the customer’s service level, customer account data, and billing statement, as needed.

5. Waiver Re-verification. City shall be responsible for re-verification of waivers. Upon request, Contractor shall support City in this re-verification process by providing requested customer information as per customer database requirements in Section 5.7. In the event that a waiver status changes, Contractor shall update the customer’s information and service level in accordance with Section 5.10.B.4.

C. Contractor Service Exemptions.

1. Disaster Waivers. In the event of a disaster, City may grant Contractor a waiver of some or all discarded materials collection requirements under this Agreement and 14 CCR 18984 et seq. in the disaster-affected areas for the duration of the waiver, provided that such waiver has been approved by CalRecycle. Any resulting changes in collection requirements shall be addressed as a change in scope in accordance with Section 4.6.

2. Quarantined Waste. If approved by City, Contractor may dispose of, rather than process, specific types of organic materials and/or recyclable materials that are subject to quarantine and meet the requirements described in 14 CCR Section 18984.13(d) for a period of time specified by City or until City provides notice that the quarantine has been removed and directs Contractor to transport the materials to the approved facilities for such material.

In accordance with Exhibit F, Contractor shall maintain records and submit reports regarding compliance agreements for quarantined organic materials and recyclable materials that are disposed of pursuant to this Section 5.10.C.

5.11 Contamination Monitoring
A. Annual Route Reviews.

1. Methodology.

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a. Contractor shall conduct route reviews of containers for prohibited container contaminants in a manner that is approved by City and results in all routes being reviewed at least annually.
b. Contractor’s route review shall include all container types in service (recyclable materials, organic materials, and solid waste containers) for all customer types. The containers shall be selected prior to beginning the route review. c. Contractor shall ensure that a minimum of 1% of accounts or 25 accounts, whichever is larger, on each and every hauler route are inspected annually to ensure the requirements of SB 1383 contamination minimization route reviews are met. d. Contractor shall develop a specific route review methodology to accomplish the above container inspection requirements, and such methodology shall comply with the requirements of 14 CCR Section 18984.5(b). Contractor shall submit its proposed route review methodology for the coming year to City no later than January 15 of each year.

Contractor’s proposed methodology shall include the schedule for performance of each route’s annual review and Contractor’s plan for prioritizing the inspection of customers that are more likely to be out of compliance. Contractor may commence with the proposed methodology upon approval by City or CalRecycle. e. If City or CalRecycle notifies Contractor that the methodology is inadequate to meet the requirements of 14 CCR Section 18984.5(b), Contractor shall, at its sole expense, revise the methodology and, after obtaining City or CalRecycle approval, conduct additional route reviews, increased container inspections, or implement other changes using the revised procedure. If Contractor’s proposed methodology meets the requirements of 14 CCR Section 18984.5(b), but has been deemed inadequate by City, then Contractor shall, at the expense of City, revise the methodology and implement the necessary changes using the revised procedure.
f. City may require modifications to the schedule to permit observation of the route reviews by City. In addition, Contractor shall provide an e-mail notice to City no less than 10 working days prior to each scheduled route review that includes the specific time(s), which shall be within City’s normal business hours, and location(s).

2. Contamination Notification. Upon identification of prohibited container contaminants in a container, Contractor shall provide the customer with a notice of contamination in the form of either a courtesy pick-up notice or a non-collection notice.

3. Courtesy Pick-Up Notice.
a. Upon identification of prohibited container contaminants in a container, Contractor shall provide the customer a courtesy pick-up notice at the customer’s door or gate or, subject to City’s approval, may deliver the notice by mail, e-mail, or phone.

Contractor may also attach courtesy pick-up notices if verified visually while conducting the collection service to the contaminated containers. b. The courtesy pick-up notice shall:
i. Inform the customer of the observed presence of prohibited container contaminants.
ii. Include the date and time the prohibited container contaminants were observed.

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iii. Include information on the customer’s requirement to properly separate materials into the appropriate containers, and the accepted and prohibited materials for collection in each container.
iv. Inform the customer of the courtesy pick-up of the contaminated materials on this occasion with information that Contractor may assess contamination fees following one instance of contaminated materials for commercial customers (provided that the foregoing shall not apply to excluded waste identified and responded to pursuant to Section 6.8.B).
v. Include photographic evidence via mail or e-mail.
c. The format of the courtesy pick-up notice shall be approved by City. d. Contractor shall collect the contaminated recyclable materials and organic materials and either transport the material to the appropriate approved facility for processing or Contractor may collect the contaminated materials with solid waste and transport the contaminated materials to the designated disposal facility. A courtesy collection of contaminated recyclable materials or organic materials where the materials are sent to the designated disposal facility may be made with a solid waste collection vehicle, provided that the contaminants may safely and lawfully be collected as solid waste.

4. Non-Collection Notices.
a. Non-Collection Notice. Upon identification of prohibited container contaminants in a container in excess of 10% or more, by volume, or that contain excluded waste, Contractor shall provide a non-collection notice to the generator. b. The non-collection notice shall, at a minimum:
i. Inform the customer of the reason(s) for non-collection. ii. Include the date and time the notice was left or issued. iii. Describe the premium (extra pick-up) charge to customer for Contractor to return and collect the container after the customer removes the prohibited container contaminants to the extent safe to do so.
iv. Provide a warning statement that a contamination processing fee may be assessed for commercial and multi-family bin customers. v. Document photographic evidence of the violation(s).
c. Communications with Customer. Whenever a container at the premises of a commercial or multi-family customer is not collected, Contractor shall contact the customer on the scheduled collection day or within 24 hours of the scheduled collection day by telephone, e-mail, text message, or other verbal or electronic message to explain why the container was not collected. Whenever a container is not collected because of prohibited container contaminants, a customer service representative shall contact the customer to discuss and encourage the customer to adopt proper discarded materials preparation and separation procedures. d. Contractor Return for Collection. Upon request from a customer, Contractor shall collect containers that received non-collection notices within one working day of the customer’s request if the request is made at least two working days prior to the City of Brea Second Amended/Restated Franchise Agreement

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regularly scheduled collection day. Contractor shall bill the customer for the extra collection service event (“extra pick-up”) at the applicable rates only if Contractor notifies the customer of the premium rate for this service at the time the request is made.

5. Assessment of Contamination Processing Fees.
a. For commercial and multi-family bin customers, if Contractor observes 10% or more, by volume, of prohibited container contaminants on more than one occasion and issues a prior courtesy pick-up notice on that initial instance of contamination, then Contractor may impose a contamination fee for that customer’s service level. The intent of commercial contamination fees is to provide a behavioral tool to educate and prevent customers from placing source separated discarded materials into the improper designated container(s), as well as to cover the increased costs to dispose of the contaminated loads. To ensure that the assessment of fees is to be used for the intended purposes and not as a form of revenue generation, contamination fees shall not exceed the following percent of Contractor’s gross receipts in any calendar quarter: 1% for the first two years after the Effective Date; 3% for the following three years; and 5% for the remainder of the term of this Agreement. In the event that contamination fees exceed the applicable limit in any calendar quarter, the assessment of contamination fees shall be suspended immediately and indefinitely pending a program assessment by the parties. Upon program suspension or at the request of City, the parties shall meet and confer regarding the application and effectiveness of contamination fees in accomplishing the behavior change. If the program is suspended due to excessive revenue generation, City may require Contractor to either: (i) modify the program parameters; (ii) modify the amount of the contamination fee; or, (iii) return to City any funds generated by the contamination fee that exceed the thresholds noted above of Contractor’s gross receipts for a given period of time, with such funds to be used for customer education and outreach and/or related programs to reduce contamination. The foregoing limitations on the contamination fee shall not apply to excluded waste for which the customer (once identified in accordance with this Agreement) shall pay Contractor for all costs and fees associated with the inclusion of such excluded waste. b. Failure to comply with the requirements of this Section 5 may be subject to liquated damages in accordance with Section 12.6.
c. Contractor shall provide a notice of the contamination fee as required by 3.a above prior to assessing the contamination fee.
d. Contamination Processing Fee Notice. Contamination processing fee notices shall be in a format approved by City. Contractor shall notify City in its monthly report of customers for which contamination processing fees were assessed per this Section.

Each contamination processing fee notice shall:
i. Describe the specific material(s) of issue.
ii. Explain how to correct future set-outs.
iii. Indicate that the customer will be charged a contamination processing fee on the next bill.

6. Reporting Requirements.

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a. Container Contaminant Log. The driver or other Contractor representative shall record each event of identification of prohibited container contaminants in a written log or in the on-board computer system including date, time, customer’s address, type of container, and photographic evidence. Photographic evidence by the driver or other Contractor representative shall be provided to City if requested by the customer or City for identified occurrences.
b. Contaminant Fees Assessment Report. Contractor’s contract administrator or their designee shall update the customer’s account records to note the contaminant event(s) as identified by driver(s) and/or other Contractor personnel upon identification. Contractor shall maintain records and report to City monthly on contamination monitoring activities and actions taken, consistent with the submittal timing and content requirements of Exhibit F. Failure to meet the requirements of this Section may be subject to liquidated damages in accordance with Section 12.6. c. Monthly Report. The monthly report shall include: list of customers that were assessed charges; photographic evidence of each contamination event where a fee was assessed if requested by the customer or City for identified occurrences; verification processes to assure accurate fee assessment; date of notification, form(s) of notification given to customer; list of efforts made in educating the customer that was assessed a fee; list of customer complaints in response to fee assessment; Contractor’s response and actions taken in response to customer complaints; and, the dollar amount of contamination fees assessed during the reporting period. Failure to meet the requirements of this Section may be subject to liquidated damages in accordance with Section 12.6.

5.12 Route Audit
A. Upon City’s request (but not more than once every four years), Contractor shall conduct an audit of its collection routes in Brea. City may use information from the audit to develop a request for proposals for a new service provider. City may instruct Contractor when to conduct the audit in order for the results to be available for use in preparation of a request for proposals or for other City uses provided that City provides Contractor with reasonable notice of such audit. City may also instruct Contractor to conduct an audit at a time that would produce the most accurate customer service information for a new service provider to use in establishing service with customers. In setting these audit dates, City will reasonably establish deadlines for Contractor to provide routing and account information, and later the report, to City.

B. The route audit, at minimum, shall consist of an independent physical observation by a Cityapproved person other than the route driver, or observation by onboard technology, if available, and if approved by City, which approval shall not be unreasonably withheld. The route audit information shall include, as a minimum, the following information for each account:

1. For cart customers:
a. Route number.
b. Truck number.
c. Number and size of carts by waste stream (solid waste, recyclable materials, and organic materials).
d. Cart condition.

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2. For bin and roll-off customers:
a. Route number.
b. Truck number.
c. Account name.
d. Account number.
e. Account service address.
f. Account type (residential, commercial, roll-off box). g. Service level per contractor billing system (quantity, size, frequency, waste stream). h. Observed containers (quantity, size, frequency, waste stream). i. Container condition.
j. Proper signage.
k. Graffiti.

3. Within 30 days after the completion of the route audit, Contractor shall submit to City a report summarizing the results of the audit. This summary shall include:
a. Identification of the routes.
b. Route map.
c. Truck numbers.
d. Number of accounts, by route and in total (residential, commercial, and roll-off box). e. Confirmation that all routes are dedicated exclusively to Brea customers. f. Number and type of exceptions observed.
g. Name and addresses of customers that do not have source separated recyclable materials collection services and documentation of waivers if any for each account. h. Name and addresses of customers that do not have source separated organic materials collection services and documentation of waivers, if any, for each account. i. Total monthly service charge (residential, commercial, and roll-off box), pre-audit for each customer.
j. Total monthly service charge (residential, commercial, and roll-off box), post-audit (subsequent to corrections of identified exceptions) for each customer.

4. The report shall include a description of the procedures followed to complete the route audit.

This description shall include the names and titles of those supervising the route audits and the name and titles of those performing the observations. The report shall also include a description of the changes and Contractor’s plans to resolve the exceptions. The results of the audit and supporting back-up data shall be available for review by City.

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5.13 Preparation of CalRecycle Electronic Annual Report (EAR) Contractor shall prepare, and submit to City for review and approval, the draŌ EAR by July 1 of each calendar year. Contractor shall revise the EAR upon receipt of revisions made by City, and City will submit the final draŌ EAR to CalRecycle.

ARTICLE 6.

STANDARD OF PERFORMANCE

6.1 General
Contractor shall at all Ɵmes comply with applicable law and provide services in a manner that is safe to its employees and the public. Except to the extent that a higher performance standard is specified in this Agreement, Contractor shall perform services in accordance with recyclable materials, organic materials, and solid waste management pracƟces common to the County area.

6.2 Operating Hours and Schedules
A. Hours of Collection. Unless otherwise authorized by City, Contractor’s days and hours for Collection operations shall be as follows:

1. Residential Premises. Collection from residential premises shall only occur between the hours of 7:00 a.m. and 8:00 p.m., Monday through Saturday, unless otherwise provided for in Chapter 8.28 of the City Code. Collection at residential premises shall not occur on Saturdays; excepting temporary bin services and collection occurring on Saturdays following such holidays as may be approved by City, or as required for special collections or to address a missed collection or failure to set out event. No collection services shall occur on Sundays at residential premises, except in exceptional circumstances for which specific approval is given by City.

2. Commercial Premises. Collection from commercial premises in close proximity to residential premises shall only occur between the hours of 7:00 a.m. and 8:00 p.m., Monday through Saturday, unless otherwise provided for in Chapter 8.28 of the City Code. Collection from commercial premises otherwise may occur between the hours of 5:00 a.m. and 8:00 p.m.

Collection services may occur at commercial premises on Sundays; provided, however, no such service shall occur on Sundays in connection with any premises at which City determines such service would be contrary to the public interest. City may require Contractor to comply with time frames applicable to residential premises in connection with collection services for customers at commercial premises whose premises are in close proximity to residential premises.

3. City Facilities. The collection schedule for City facilities shall be the same as commercial premises.

B. Changes in Collection Routes. Contractor shall establish collection routes and a collection schedule that shall be approved by City such that customers at all residential and commercial premises will have not less than one established collection day each week. Contractor shall provide City with route maps identifying at a minimum the type of route (e.g., single-family, multi-family, commercial) and the service day. Contractor may propose changes or additional routes for City approval, which shall not be unreasonably withheld. If a standard collection route change is City of Brea Second Amended/Restated Franchise Agreement

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approved, Contractor shall notify all affected customers 14 days prior to implementing the new route. Failure to obtain City approval on route changes resulting in service day changes for customers shall be subject to liquidated damages in accordance with Section 12.6 of this Agreement.

C. Commingling of Routes.

1. During its collection process, Contractor shall not commingle solid waste collected within Brea with solid waste collected in other jurisdictions based on Contractor’s methodology to account for solid waste collected within Brea, any other jurisdiction, or on behalf of any other entity operating or existing within Brea that is not subject to this Agreement, and Contractor is specifically prohibited from combining collection routes related to services provided pursuant to this Agreement with collection routes for other jurisdictions. Notwithstanding the forgoing, if written consent of CalRecycle and City is obtained, then Contractor may commingle such solid waste collected within Brea in a collection vehicle with solid waste collected from premises in other jurisdictions.

2. City may grant consent for such commingling in its absolute and sole discretion if it determines the methodology used to account for commingled solid waste is reasonably likely to result in City being in compliance with applicable laws. City may withdraw consent if it determines the methodology used to account for commingled solid waste is reasonably likely to result in City not being in compliance with applicable laws. As of the Effective Date, commingling of routes for the collection of recyclable materials and organic materials from customers at commercial premises and multi-family dwellings is approved by City, using a methodology for tracking such types of solid waste generated in Brea and in other jurisdictions that is premised upon container capacity.

D. Holiday Collection. Contractor, at its sole discretion, may choose not to provide collection services on a holiday. In such event, Contractor shall provide single-family collection services on the day following the holiday thereby adjusting subsequent work that week with normally scheduled Friday collection services being performed on Saturday; however, customer service days shall be returned to the normal schedule within one week of the holiday. Multi-family, commercial, and City collection services shall be adjusted as agreed between Contractor and the customer but must meet the minimum frequency requirement of one time per week. Contractor shall provide customers notice of holiday-related changes in collection schedules at least two weeks prior to the change.

6.3 Collection Standards
A. Servicing Containers. Contractor shall collect and return each container to the approximate location where the occupant placed the container for collection. Contractor shall place the containers upright with lids properly secured. For customers other than single-family residential customers, Contractor may provide scout service, pullout service, accessing container enclosures with a key or access code, or locking bin service as described in Exhibit B3.

B. Non-Collection, Courtesy Pick-Up Noticing.

1. Within 30 days of the Effective Date, Contractor shall develop and submit to City for review and approval:
a. A template non-collection notice, for use in instances of acceptable non-collection of discarded materials.

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b. A template courtesy pick-up notice, for use in instances of improper set-out of discarded materials, which Contractor, at its sole option, elects to collect as a courtesy to the customer.

2. In the event that Contractor is prevented from collecting discarded materials that have been placed for collection, Contractor shall leave a non-collection notice at the customer premises clearly explaining Contractor’s refusal to collect the discarded materials. Contractor shall not be required to collect discarded materials that are reasonably believed to contain excluded waste. Contractor may propose an alternative to a paper non-collection notice left at customer premises (e.g., customer notification via a phone call or e-mail) subject to City approval. Such an alternative must involve pro-active communication with the customer, initiated by Contractor.

3. In the event that Contractor encounters circumstances at a premises that allow for safe collection of discarded materials but do not otherwise reflect proper set-out procedures (including spills not caused by Contractor, carts placed too close together, carts placed in front of one another, and carts placed too close to parked cars), Contractor shall collect the material and leave a courtesy pick-up notice clearly explaining how the customer failed to comply with proper set-out procedures.

4. Contractor may educate the public on proper set-out procedures designed to maximize the efficiency of collection (e.g., carts spaced three feet apart). However, Contractor acknowledges that such procedures are not practical in all circumstances and failure of the customer to follow such procedures does not constitute a reason for non-collection if the discarded materials may be safely and reasonably serviced. Contractor’s route drivers shall dismount their collection vehicles and reposition containers as necessary to provide collection service. Contractor may not require a customer to set out the customer’s containers in such a manner that would block vehicle access to the customer’s driveway.

Contractor and customers may mutually agree to uncommon service locations if necessary for collection in specific areas (e.g., setting out all of the carts in a court in a line down the middle of the court as opposed to curbside.)

5. Contractor may refuse to collect recyclable materials or organic materials containers that are contaminated and shall leave an approved non-collection notice informing customer how to properly separate materials.

C. Litter Abatement.

1. Contractor shall use due care to prevent spills or leaks of material placed for collection, fuel, and other vehicle fluids while providing services. If any materials are spilled or leaked during collection and transportation by Contractor, then Contractor shall clean up all spills or leaks before leaving the site of the spill.

2. Contractor shall not transfer loads from one vehicle to another on any public street, unless it is necessary to do so because of mechanical failure, combustion of material in the truck, or accidental damage to a vehicle.

3. Contractor shall cover all open roll-off boxes at the pick-up location before transporting materials to an approved facility or the designated disposal facility.

4. Contractor shall conduct public outreach and staff training to customers on best management practices for litter abatement at no extra charge. Such best management practices include:

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a. Closing container lids and right-sizing service: Contractor shall tag overfilled containers with courtesy pick-up notices, which will serve as outreach and education to the customer. Photographs of the container shall be taken by drivers, attached to the customer’s account, and will be available to outreach and customer service staff in order to demonstrate to the customer where a problem exists. b. Outreach to customers on the importance of bagging lightweight materials such as plastic bags, film plastics, foam peanuts, and other materials that can easily become litter due to their lightweight nature.
c. Driver training on litter reduction techniques and litter removal best management practices.
d. Affixing to the back of Contractor trucks signage that provides a phone number for residents to report material spills.

D. Development and Review of Collection Specifications. Contractor shall work with City to develop standard specifications for collection container enclosures at commercial and multi-family premises in compliance with the City Code. These specifications shall be developed to ensure that the container enclosures are built to provide adequate space and suitable configuration to allow Contractor to safely and efficiently service the containers. Contractor’s operations manager or other appropriately qualified staff shall, upon request by City, provide a review of plans for new multi-family and commercial development or project design drawings. Contractor shall provide comments and recommendations in writing within 10 working days of receipt of the documents for review. In each review report, Contractor shall comment on the acceptability of the proposed enclosure arrangements in terms of the: (i) adequacy of space for recyclable materials, organic materials, and solid waste containers; (ii) accessibility of the containers for collection, including whether additional charges (e.g., pullout or scout service) would apply; and, (iii) ease of use by tenants.

E. No Commingling of Materials. Contractor shall not commingle materials that have been properly source separated with other material types (for example, source separated recyclable materials that have been properly placed for collection shall not be combined with solid waste or source separated organic materials).

6.4 Transfer and Processing Standards
A. Equipment and Supplies.

1. Contractor shall equip and operate the approved processing facilities in a manner to fulfill its obligations under this Agreement. Contractor is solely responsible for the adequacy, safety, and suitability of the approved processing facilities. Contractor shall modify the approved processing facilities as needed to perform this Agreement.

2. Contractor or its approved processing facility subcontractors, as applicable, shall provide all rolling stock, stationary equipment, material storage containers, spare parts, maintenance supplies, transfer, transport, processing equipment, and other consumables as appropriate and necessary to operate the approved processing facilities and provide all services required by this Agreement. Contractor or its approved processing facility subcontractors shall place the equipment in the charge of competent operators and shall repair and maintain all equipment at its own cost and expense.

B. Scales and Weighing.

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1. Accurate Weighing. Contractor is solely responsible for ensuring accurate weighing of all materials delivered pursuant to this Agreement as they are entering and/or leaving the approved processing facilities.

2. Facility Scales. Contractor shall maintain state-certified motor vehicle scales in accordance with applicable law. All scales shall be linked to a centralized computer recording system at the approved processing facilities to record weights for all incoming and outgoing materials.

Contractor shall provide back-up generators capable of supplying power to the scales in the event of a power outage. Contractor shall promptly arrange for use of substitute portable scales should its usual scales be unavailable. Pending substitution of portable scales, Contractor shall, as necessary, estimate the tonnages of materials delivered to and transported from the approved processing facilities on the basis of delivery vehicle and transfer trailer volumes, unloaded (“tare”) weights, and other available facility weight records. These estimates shall take the place of actual weights while scales are inoperable and shall be identified as estimates in electronic records and reporting. The requirements in this Section shall apply only to scales at facilities owned or operated by Contractor and utilized for disposal or processing pursuant to this Agreement.

3. Tare Weights. Within 30 calendar days of the Effective Date, Contractor shall ensure that all vehicles used by Contractor to deliver recyclable materials, organic materials, and solid waste to the approved processing facilities are weighed to determine tare weights. Contractor shall electronically record the tare weight, identify vehicle as Contractor-owned, and provide a distinct vehicle identification number for each vehicle. Contractor shall provide City with a report listing the vehicle tare weight information upon request. Contractor shall promptly weigh additional or replacement vehicles prior to placing them into service. Contractor shall check tare weights annually and within 14 calendar days of a City request. Contractor shall re-tare vehicles immediately after any major maintenance or service event.

4. Testing. At any facilities owned or operated by Contractor and utilized for disposal or processing pursuant to this Agreement, Contractor shall test and calibrate all scales in accordance with applicable law but at least one test and recalibration per scale every 12 months or upon City request.

5. Records. Contractor shall maintain computerized scale records and reports that provide information including date of receipt, inbound time, inbound and outbound weights of vehicles, and vehicle identification number. Contractor shall also maintain computerized scale records and reports providing historical vehicle tare weights for each vehicle and the date and location for each tare weight recorded.

6. Upon-Request Reporting. If vehicles receiving and unloading operations are recorded on video cameras at the approved processing facilities, Contractor shall (to the extent Contractor owns or operates such facilities) make those videos available for City review during the approved processing facility’s operating hours, upon request of City, and shall provide the name of the driver of any particular load if available.

6.5 Collection Vehicle Requirements
A. Vehicle Requirements.

1. Contractor shall provide a fleet of collection vehicles sufficient in number and capacity to efficiently perform the work required by this Agreement. Contractor shall have available City of Brea Second Amended/Restated Franchise Agreement

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sufficient back-up vehicles for each type of collection vehicle used to respond to scheduled and unscheduled maintenance, service requests, complaints, and emergencies.

2. All vehicles used by Contractor shall be of size, weight, nature, and type to be minimally intrusive on the community with respect to noise, emissions, maneuverability, safety, fuel efficiency, and other factors necessary to minimize impacts of Contractor’s services. All such vehicles shall have watertight bodies designed to prevent leakage, spillage, or overflow and shall comply with applicable laws. In the event a particular vehicle used by Contractor causes complaints as a result of fluid spills or leakage, Contractor will remove the vehicle immediately (same day) from service and repair the vehicle before returning to service or replace the vehicle in the fleet as necessary. Each piece of equipment used by Contractor shall carry at all times a broom and shovel to be used for the immediate removal of any spilled material. Contractor’s vehicles shall utilize recycled motor oil to the extent practicable.

3. Contractor shall annually investigate the ability to procure qualified RNG with its fueling provider and shall implement the use of such fuel to the maximum available extent provided that the premium cost of qualified RNG does not cause Contractor’s total fuel expense to increase by more than 10%. Contractor shall make commercially best efforts to seek and utilize RNG that is purchased through a wheeling agreement, provided that the wheeling agreement is for purchase of gas derived from organic waste that has been diverted from a landfill and processed at an in-vessel digestion facility that is permitted to recycle organic waste and meets SB 1383 requirements. Contractor shall maintain records of the amount of RNG purchased and shall report this information in accordance with Exhibit F. Contractor shall allow City to report this RNG usage toward City’s fulfilment of its annual recovered organic waste product procurement target.

4. Collection vehicles shall have the capacity to collect and transport loose cardboard overages to ensure that Contractor is capable of complying with Exhibit B.

5. Collection vehicles shall present a clean appearance while providing service. Solid waste collection vehicles shall be washed at least once every seven days.

6. The body of each truck of Contractor shall have a metal cover covering at least 50% of the truck body at all times and the remaining 50% shall be covered by a tight fitting, waterproof tarpaulin, which shall be securely tied in order to cover discarded materials when the vehicle is being used to transport its contents to the place of disposal or otherwise of a design and construction approved by the City Manager.

7. All collection vehicles shall comply at all times with applicable laws including CARB’s truck and bus regulation (13 CCR 2025) and advanced clean trucks regulation (13 CCR 1963-1963.5 and 2012-2012.2). The parties acknowledge the requirements of the advanced clean fleets regulation, and Contractor acknowledges that vehicles with a gross vehicle weight rating greater than 8,500 pounds and light-duty package delivery vehicles operated in California may be subject to the advanced clean fleets regulation. Contractor’s collection vehicles may therefore be subject to requirements to reduce emissions of air pollutants. All collection vehicles shall meet on-road heavy duty vehicle emissions requirements for model year purchased if newer. Contractor is aware that the advanced clean fleets regulation is a current state law and Contractor’s compliance with the advanced clean fleets regulation, as it may be amended, throughout the term shall be eligible to request an extraordinary adjustment pursuant to Section 9.5. The parties agree to meet and confer regarding Contractor’s City of Brea Second Amended/Restated Franchise Agreement

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obligation to transition to zero-emission fleet and to incur costs associated with such transition in order to not burden City disproportionately relative to other jurisdictions or agencies serviced by Contractor or its affiliates. The parties understand and agree that each municipality served by Contractor is a unique service model based on the specific contractual requirements and service requirements of the particular municipality.

B. Vehicle Display. Contractor's name and a vehicle number shall be visibly printed or painted in letters not less than five inches in height on both sides and the rear of each collection vehicle, including vehicles rented from a subcontractor that are being utilized to provide collection services in Brea. Additionally, the words "Serving the City of Brea" shall be displayed on both sides of every residential collection vehicle in letters not less than three inches in height.

C. Vehicle Inspection. Contractor shall inspect each vehicle daily to ensure that all equipment is operating properly. Vehicles that are not operating properly shall be taken out of service until they are repaired and operate properly. Contractor shall repair or arrange for the repair of all its vehicles and equipment for which repairs are needed because of accident, breakdown, or any other cause so as to maintain all equipment in a safe and operable condition. City may inspect vehicles at any reasonable time to determine compliance with sanitation requirements.

D. Vehicle Operations. All collection operations shall be conducted as quietly as possible and shall conform to applicable noise level regulations, including the requirement that the noise level during the stationary compaction process not exceed 60 decibels with the exception of 65 decibels for one minute duration. All decibel readings shall be based on a distance of 10 feet from the vehicle. City may request Contractor to check any piece of equipment for conformance with the noise limits in response to complaints and when City deems necessary.

E. Leaks and Spill Mitigation. Contractor shall clean up any leaks or spills from its vehicles per the NPDES permit. Contractor shall notify City of any leaks or spills reported to Contractor or observed by any employee of Contractor. Contractor shall ensure that it initiates remediation of leaks or spills within two hours of notification or observation. Contractor shall notify City immediately upon remediation of leaks or spills. No pollutant that leaks, spills, or otherwise escapes from any Contractor vehicle shall be allowed to enter a storm drain. All NPDES dry-cleaning measures shall be complied with. All collection vehicles shall be equipped with absorbent for such cleanup efforts.

Contractor shall provide photographic evidence to City for each clean up. Payment of liquidated damages for failure to clean up leaks or spills within the required timeframe, or for failure to follow the cleanup procedures, does not excuse Contractor from the clean-up requirements.

F. Costs of Operation and Damages. Contractor shall be responsible for any costs incurred in connection with ensuring all collection vehicles comply with applicable laws including laws relating to noise, fuels, emission standards, or weight limits.

6.6 Container Requirements
A. Containers Provided to Customers. Contractor shall provide containers to new customers within three working days of Contractor’s first receipt of a service initiation request. Containers shall be new or fully refurbished in as-new condition and shall comply with the container standards set forth in this Section. All containers shall display Contractor’s name, logo, telephone number, website, capacity (yards or gallons), and an identifying inventory or serial number.

B. Container Standards.

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1. All carts shall be manufactured by injection or rotational molding methods. The cart handles and handle mounts may be an integrally molded part of the cart body or molded as part of the lid. The cart handles shall provide comfortable gripping area for pulling or pushing the cart or lifting the lid. Pinch points are unacceptable. Carts shall have a useful life of 10 or more years as evidenced by a manufacturer’s warranty or other documentation acceptable to City.

2. Carts shall meet the following durability requirements: maintain original shape and appearance; be resistant to kicks and blows; require no routine maintenance and essentially be maintenance free; not warp, crack, rust, discolor, or otherwise deteriorate over time in a manner that shall interfere with intended use; resist degradation from ultraviolet radiation; be incapable of penetration by biting or clawing of household pets (i.e., dogs and cats); have bottoms that remain impervious to damage that would interfere with the cart’s intended use after repeated contact with gravel, concrete, asphalt, or any other rough and abrasive surface; and, have wheel and axle assemblies to provide continuous maneuverability and mobility as originally designed and intended.

3. Carts shall be resistant to: common household or residential products and chemicals; human and animal urine and feces; and, airborne gases or particulate matter present in the ambient air.

4. All bins with a capacity of one cubic yard or more shall meet applicable safety laws and be covered with attached lids.

5. Contractor shall obtain City’s written approval of container material, design, colors, labeling, and other specifications before acquisition, painting, labeling, or distribution occurs.

6. When purchasing plastic collection containers, Contractor shall purchase containers that contain a minimum of 10% post-consumer recycled plastic content, unless such requirement is waived by City.

7. Container lids shall be designed such that the following requirements are met when properly utilized by the customer:
a. Prevents the intrusion of rainwater and vectors.
b. Prevents the emissions of odors.
c. Enables the free and complete flow of material from the container during the dump cycle without interference with the material already deposited in the truck body or the truck body itself and its lifting mechanism.
d. Permits users of the cart to conveniently and easily open and shut the lid throughout the serviceable life of the cart.
e. Hinges to the cart body in such a manner to enable the lid to be fully opened, free of tension, to a position whereby it may rest against the backside of the cart body. f. Prevents damage to the container body, the lid itself, or any component parts through repeated opening and closing of the lid by generators or in the dumping process. g. Remains closed in 25 miles per hour winds. All lid hinges shall remain fully functional and continually hold the lid in the original designed and intended positions when either opened or closed or any position between the two extremes.

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h. Designed and constructed such that it prevents physical injury to the user while opening and closing the cart.

8. Containers shall be stable and self-balancing in the upright position, when either empty or loaded to maximum design capacity with an evenly distributed load, and with the lid in either a closed or an open position. Containers shall be capable of maintaining upright position in 25 miles per hour winds.

9. Containers shall be capable of being easily moved and maneuvered, if applicable, with an evenly distributed load equal in weight to its maximum design capacity on a level, sloped or stepped surface.

10. Containers shall be recyclable at the end of their useful life.

11. Containers shall be designed and constructed to be watertight and prevent the leakage of liquids.

C. Container Colors.

1. Contractor shall provide customers with collection containers that comply with the color requirements specified in this Section, or as otherwise specified in 14 CCR Section 18982; 14 CCR, Division 7, Chapter 12, Article 3; or other applicable law. Colors shall be colorfast and resistant to fading as a result of weathering or ultraviolet degradation, and the lids and bodies shall be uniform for each container type, as follows:
a. Recyclable materials container lids shall be blue.
b. Organic materials container lids shall be green.
c. Solid waste container lids shall be black or grey.
d. Source separated food waste container lids shall be brown.

2. Hardware such as hinges and wheels on the containers may be a different color than specified above. All containers, including split-bins, shall comply with these color requirements. Each section of the split-bin shall be painted in accordance with the color requirements in this Section for the applicable discarded material type intended for that segregated section of the bin (e.g., a split-bin for solid waste and recyclable materials shall be half gray and half blue, respectively).

D. Container Labeling.

1. Solid waste, recyclable materials, and organic materials carts shall carry stickers, labels, or other identifying markings indicating the materials that can and cannot be placed in each container.

2. All containers that are not currently in Contractor’s inventory shall include a label with the following: primary materials accepted; a clear indication of prohibited container contaminants; and, notification forbidding hazardous waste and describing proper disposal thereof. Design for the labels shall be approved by City prior to Contractor’s ordering of labels. Lids shall be replaced when current in-mold labels or other container markings become worn but no later than 90 days of request from City or customer. Information on the containers shall include the telephone number to call Contractor for bulky item pick-ups and for general customer service. Contractor may also add to the required label information a QR code that can be scanned by the customer’s personal digital devices, including cell phones, to allow the customer to review information including container materials accepted, City of Brea Second Amended/Restated Franchise Agreement

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prohibited container contaminants, and other information concerning SB 1383 programs that can be updated over time to reflect new information or program changes. All containers shall be labeled in accordance with CalRecycle requirements and applicable law. Labels shall be designed to include English, Spanish, and Korean, and Traditional Chinese. If utilized, container labeling shall be on the top of the lid and/or on the body of the cart and shall be reviewed and approved by City.

E. Repair and Replacement of Containers; Inventory.

1. Contractor shall be responsible for repairing or replacing containers when Contractor determines the container is no longer suitable for service or when City or the customer requests replacement of a container that does not properly function, leaks, is damaged, or is otherwise not fit for service. Contractor shall be responsible for acquiring and providing the replacement containers. Contractor shall repair or replace all damaged or broken containers within three working days of a customer or City request. Minor cracks, holes, and other damages to hinges, wheels, axle, hardware, and other component parts shall be readily repairable by Contractor personnel. All repairs shall restore the cart to its full functionality.

2. Contractor shall maintain a sufficient inventory of containers to accommodate new customer requests for service, requests for change in service levels (size, type, or number of containers) from current customers, and requests for replacement due to damage. All replacement containers requested by customers and any newly deployed containers for new services shall be new and SB 1383 color compliant.

3. Contractor shall provide to single-family residential customers at least one free cart replacement for the 12-month period July 1 – June 30 of any contract year for any reason, upon customer request. If a customer requests more than one cart replacement during the period July 1 to June 30 of any contract year, then Contractor shall make carts available at the City-approved rate for such services. In addition, single-family residential customers may also request one cart size exchange per rate period at no charge. All such containers shall be provided within three working days of request. Contractor’s failure to comply with the container requirements may result in assessment of liquidated damages in accordance with Section 12.6.

4. Bins shall be replaced on Contractor’s normal replacement schedule and any new bins placed into service shall comply with the color and labeling requirements of SB 1383. All refuse, source separated recyclable materials, and/or organic materials bins at a customer location shall be uniform in color.

F. Maintenance, Cleaning, Painting.

1. Containers shall be maintained in a safe, serviceable, and functional condition, and present a clean appearance. Contractor shall repair or replace all customer containers damaged by collection operations in accordance with standards specified in this Section unless damage is caused by the customer’s gross negligence, in which case, the customer may be billed for repair or replacement of container at the City-approved rate. All containers shall be maintained in a functional condition.

2. Contractor shall steam clean and/or repaint all customer containers as needed to present a clean appearance. Contractor shall offer steam cleaning service (or clean container exchange) to customers requesting such service and may charge customers for such cleaning (or container exchange).

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3. Contractor shall remove graffiti from all customer containers within two working days or notification at no additional charge.

G. Monitoring of Container Enclosures.

1. A container may be considered overfilled when discarded materials project above its rim in a manner that impedes the complete closure of a container’s lid and/or when discarded materials are placed outside the container and/or allowed to accumulate, making access to the container unsafe for collection.

2. In the event that a multi-family dwelling or bin commercial customer overfills its bin(s), Contractor shall follow the following procedures in an effort to correct the problem, charge customer in accordance with the approved rate schedule, and/or, if necessary, increase service levels. For any over-fill occurrences, Contractor will document occurrence with a photograph. Contractor shall send a notification to the customer, including a photograph of the overage, and a statement advising of service alternatives including right-sizing opportunities, as well as notifying the customer of an overflow charge and of a possible increase in service level and the related costs. Notification of over-fill can occur via e-mail, invoice statement, or other City approved method. Contractor shall document in its records the location of the encountered overage, a photograph, as well as the outreach material provided to the customer. Contractor shall provide this information to City upon request.

6.7 Personnel
A. General. Contractor shall furnish such qualified personnel as may be necessary to perform this Agreement in a safe and efficient manner. Contractor shall assure that its employees present a neat appearance and conduct themselves in a courteous manner. Contractor shall not permit its employees to accept, demand, or solicit, directly or indirectly, any additional compensation, or gratuity from customers or members of the public.

B. Driver Qualifications. Drivers shall have in effect a valid license, of the appropriate class, issued by the DMV. Contractor shall use the DMV’s Class II employer “Pull Notice Program” to monitor its drivers for safety.

C. Safety Training. Contractor shall provide suitable operational and safety training for all employees who operate collection vehicles or equipment. Contractor shall train its employees to identify, and not to collect, excluded waste. Upon request, Contractor shall provide City a copy of Contractor’s safety policy and safety training program, the name of its safety officer, and the frequency of its trainings.

D. Designated Staff.

1. Contractor’s Contract Administrator. Contractor shall designate at least one qualified employee as City’s primary point of contact with Contractor who is principally responsible for collection operations and resolution of service requests and complaints. Such individual shall be empowered to negotiate on behalf of and bind Contractor with respect to any changes in scope, dispute resolution, compensation adjustments, and service-related matters. Such individual is defined as Contractor’s Contract Administrator. The City Manager shall be made aware of the name, position, e-mail, and telephone number of this individual, and in the event the Contractor’s Contract Administrator is changed, Contractor shall notify the City Manager within 48 hours of the change.

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2. Field Supervisor. Contractor shall designate one qualified full-time employee as supervisor of field operations. At least 50% of the field supervisor’s time shall be dedicated to field checking on collection operations, including responding to customer requests, inquiries, and complaints.

3. Recycling Coordinator/Sustainability Advisors; Route Auditors. Contractor shall dedicate the equivalent of one full-time recycling coordinator/sustainability advisor and the equivalent of one-half of a full-time route auditor or compliance monitor to City to complete outreach to customers and develop and implement all public education and outreach activities required under this Agreement. The recycling coordinator/sustainability advisor and route auditors shall conduct outreach, promote waste reduction, recycling, diversion programs, provide technical assistance to multi-family and commercial customers, and upon City request, assist with the distribution of City purchased kitchen pails. a. The recycling coordinator/sustainability advisor shall work exclusively on City programs and services and shall not have other non-City responsibilities or other City responsibilities not related to recycling coordinator/sustainability advisor responsibilities in Brea.
b. The recycling coordinator/sustainability advisor shall visit each school located within Brea each rate period to discuss environmental issues with students, read books, and facilitate craft activities.
c. Contractor shall provide a fully trained and experienced recycling coordinator/ sustainability advisor. In the event of a resignation, Contractor shall have 90 calendar days to provide a replacement.
d. At any time, City may, for good cause, request that a Recycling Coordinator/Sustainability Advisor be reassigned to no longer perform any work relating to this Agreement and City shall provide a statement describing the specific good cause reason for such request. Contractor shall promptly review the request and meet and confer with City. Upon confirmation of good cause, Contractor shall remove the identified employee(s) from performing any work related to this Agreement as allowed by and subject to the provisions of any applicable collective bargaining agreement. As used herein, “good cause” means: adjudicated criminal conduct following a trial or plea; conduct that is agreed by the parties to be a threat or harm to persons or property; or, that is agreed by the parties to be socially unacceptable. e. Contractor shall afford City a reasonable opportunity to review, request modifications to, and approve all outreach and educational materials including print, radio, television, or internet media before publication, distribution, and/or release. The recycling coordinator/sustainability advisor shall also work cooperatively with any City-appointed outreach and education consultant.

E. Key Personnel.

1. Contractor shall make every reasonable effort to maintain the stability and continuity of its staff assigned to perform this Agreement. Contractor shall notify City of any changes in Contractor’s key staff assigned to perform this Agreement.

2. Notwithstanding City’s approval of Contractor’s personnel, Contractor shall not be relieved from any liability resulting from the work performed under this Agreement, nor shall City of Brea Second Amended/Restated Franchise Agreement

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Contractor be relieved from its obligation to ensure that its personnel maintain all requisite certifications, licenses, and the like.

3. At any time, City may, for good cause, request that any of Contractor’s non-management employees be reassigned such that they no longer perform any work relating to this Agreement and City shall provide a statement describing the specific good cause reason for such request. Contractor shall promptly review the request and meet and confer with City.

Upon confirmation of good cause, Contractor shall remove the identified employee(s) from performing any work related to this Agreement as allowed by and subject to the provisions of any applicable collective bargaining agreement. The vacated position(s) shall be filled by Contractor with a suitable replacement within 10 calendar days or as soon thereafter as practicable. As used herein, “good cause” means: adjudicated criminal conduct following a trial or plea; conduct that is agreed by the parties to be a threat or harm to persons or property; or, conduct that is agreed by the parties to be socially unacceptable.

6.8 Hazardous Waste Inspection and Handling
A. Inspection Program and Training.

1. Contractor shall develop a load inspection program that includes the following components:
(i) personnel and training; (ii) load checking activities; (iii) management of wastes; and, (iv) record keeping and emergency procedures.

2. Contractor’s load checking personnel, including its collection vehicle drivers, shall be trained in: (i) the effects of hazardous substances on human health and the environment; (ii) identification of prohibited materials; and, (iii) emergency notification and response procedures. Collection vehicle drivers shall inspect containers before collection when practical.

B. Response to Excluded Waste Identified During Collection.

1. If Contractor determines that material placed in any container is excluded waste or presents a hazard to Contractor’s employees, then Contractor may refuse to accept such material. The generator shall be contacted by Contractor and requested to arrange proper disposal. If the generator cannot be reached immediately, then Contractor shall, before leaving the premises, leave a non-collection notice that indicates the reason for refusing to collect the material and lists the phone number of a facility that accepts the excluded waste or a phone number of an entity that can provide information on proper disposal of the excluded waste.

Under no circumstances shall Contractor’s employees knowingly collect excluded waste or remove unsafe or poorly containerized excluded waste from a container.

2. If excluded waste is found in a container or collection area that could possibly result in imminent danger to people or property, Contractor shall immediately notify the Brea Fire Department.

C. Response to Excluded Waste Identified at Processing or Disposal Facility. Materials collected by Contractor shall be delivered to the approved facilities for purposes of processing or disposal. In the event that load checkers or equipment operators at such facility identify excluded waste in the loads delivered by Contractor, such personnel shall remove these materials for storage in approved, on-site, excluded waste storage container(s). Contractor shall arrange for removal of the excluded wastes at its cost by permitted haulers in accordance with applicable laws. Contractor may at its sole expense attempt to identify and recover the cost of disposal from the generator. If the City of Brea Second Amended/Restated Franchise Agreement

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generator can be successfully identified, the cost of this effort, as well as the cost of disposal shall be chargeable to the generator.

6.9 Contract Management
A. Contractor’s Contract Administrator shall be responsible for working closely with the City Manager in the monitoring and administration of this Agreement.

B. Contractor’s Contract Administrator shall meet and confer with the City Manager to resolve differences of interpretation and implement and execute the requirements of this Agreement in an efficient and effective manner that is consistent with the stated objectives.

C. The City Manager and Contractor’s Contract Administrator shall hold contract management meetings monthly or at such other frequency as designated by the City Manager. This meeting is intended to review the status of Contractor’s implementation of programs and services, coordinate shared efforts, and such other agenda items as are deemed appropriate.

D. From time to time the City Manager may designate other agents of City to work with Contractor on specific matters. In the event of a dispute between the City Manager’s designee and Contractor, the City Manager’s determination shall be conclusive.

E. The City Manager shall have the right to observe and review Contractor operations and Contractor’s processing facilities and enter premises for the purposes of such observation and review, including review of Contractor’s operations, maintenance, and safety records, during reasonable hours with reasonable notice. In no event shall Contractor prevent access to such premises for a period of more than three calendar days after receiving such a request.

6.10 Minimum Diversion Requirements
A. General.

1. Contractor warrants and represents that it is aware of and familiar with City’s current Source Reduction and Recycling Element, that it is familiar with City’s waste stream, and that it has the ability to provide sufficient programs and services to ensure City will meet or exceed the diversion goals (including amounts of discarded materials to be diverted, time frames for diversion, and any other requirements) set forth in AB 939, AB 341, AB 1826, and SB 1383, and that it shall do so without imposing any costs or fees other than those set forth in the attached Exhibit D, subject to changes in applicable laws. Contractor acknowledges that it is responsible for ensuring that its various programs achieve the applicable CalRecycle 50% per capita diversion requirements at the Effective Date and that in the absence of a change in applicable laws it may be required to modify its programs from time to time, at no additional cost to City or customers, to meet such diversion requirements. Contractor specifically acknowledges that City’s current mandated diversion goal upon the Effective Date as set forth pursuant to the applicable laws is 50% of all solid waste (currently set per AB 939) and that this diversion rate is subject to modification by the Legislature. In the event of a change in applicable laws, including that new programs are required to meet a diversion goal in excess of 50% of all solid waste, the parties shall meet and confer in good faith in advance to determine a fair and reasonable adjustment to the maximum rates set forth in Exhibit D in order to compensate Contractor for implementing such new programs.

2. Contractor shall divert from landfilling the state-mandated construction and demolition debris diversion percentage of all construction and demolition debris loads. Contractor shall City of Brea Second Amended/Restated Franchise Agreement

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provide a diversion report for each construction and demolition project performed by Contractor.

B. Implementation of Additional Diversion Services. In the event City does not meet the CalRecycle 50% per capita of all solid waste generated diversion goal, City may direct Contractor to perform additional services (including the implementation of new diversion programs) or modify the manner in which it performs existing services, and Contractor shall do so and may request a compensation adjustment under Section 4.6. Pilot programs and innovative services that may entail new collection methods, and use of new or alternative waste processing and disposal technologies, are included among the kinds of changes that City may direct.

6.11 Customer Participation Compliance Requirements
General. The minimum required level of customer parƟcipaƟon that must be achieved by Contractor on or before May 1, 2025 for residenƟal customers and July 1, 2025 for commercial customers and annually thereaŌer includes the following:

6.11.1 SB 1383 Programs
A. Residential Premises. Contractor shall fully implement a residential organic materials diversion program where all residential premises are provided the required containers to comply with SB 1383.

B. Commercial Premises. Contractor shall implement and maintain an SB 1383 compliant commercial recycling and organic materials diversion program with the goal of providing recycling and organic materials containers to all customers required to have such containers under CalRecycle requirements, unless the customer has been granted a waiver per the City Code or the customer otherwise complies via third-party program, self-haul, or back-haul programs.

6.11.2 Contractor Has Maintained Full Implementation of All AB 341 and AB 1826 Diversion Programs
Contractor shall implement and maintain AB 341 and AB 1826 diversion programs such that all commercial customers required to have such programs are subscribed to the Contractor-provided program, unless the customer has been granted a waiver per the City Code or the customer otherwise complies via third-party program, self-haul, or back-haul programs.

6.11.3 Non-Compliant Customers
Contractor shall document any customers that are not in compliance with the required mandatory programs per AB 341, AB 1826, and SB 1383, and forward the list of non-compliant customers to City.

ARTICLE 7.

RECORD KEEPING AND REPORTING

7.1 Record Keeping
A. Contractor shall maintain customer contact data, customer service, accounting, statistical, operational, programmatic, and other records, and associated documentation, related to its performance as shall be necessary to provide detailed and accurate reports under this Agreement and to demonstrate compliance with this Agreement and applicable law. Unless otherwise required in this Article, Contractor shall retain all such records and data for four years after expiration or City of Brea Second Amended/Restated Franchise Agreement

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termination of this Agreement or such longer period as required by applicable law. Records and data shall be in chronological and organized form that is readily and easily interpreted to facilitate the flexible use of data to structure reports. Contractor’s records shall be stored in one on site central location, physical or electronic, or at such off-site storage location that can be readily accessed by Contractor. Upon request, and subject to limitations on non-disclosure of confidential and proprietary customer information of Contractor, any such non-confidential records shall be made available to City within five working days for City to review at Contractor’s office. As used herein, “confidential and proprietary information” means customer identifying information and service or credit history and other customer financial information that is subject to state or federal privacy laws protecting customers.

B. Contractor shall maintain adequate record security to preserve records from events that can be reasonably anticipated such as a fire, theft, and an earthquake. Electronically maintained data and records shall be protected and backed-up. City may require Contractor to maintain customer service and compliance records using a City-approved web-based software platform, at Contractor’s expense. To the extent that Contractor utilizes its computer systems to comply with record keeping and reporting requirements, Contractor shall, on a monthly basis, save all systemgenerated reports supporting those record keeping and reporting requirements in a static format in order to provide an audit trail for all data required by City.

C. At a mutually agreed upon time during normal business hours, but within five working days of a request from City, Contractor shall provide access to City at its offices its data and records with respect to the matters covered by this Agreement and applicable law. Contractor shall permit City to audit, examine, and make excerpts or transcripts from such data and records and make copies of all data relating to all matters covered by this Agreement and applicable law, all at City’s expense.

D. If City receives a CPRA request seeking disclosure of information Contractor has designated as confidential and proprietary, then City shall promptly notify Contractor of the request and provide Contractor a reasonable opportunity to comment on the pending request before City acts upon it.

Contractor may seek a court order to limit or enjoin disclosure of such records. In the event City is subject to an action seeking to enforce the CPRA for any Contractor information designated confidential and proprietary and withheld from disclosure, Contractor shall defend and indemnify City in such litigation, which indemnity shall cover all of City’s costs and expenses including attorney’s fees.

E. City views its ability to defend itself against CERCLA and related litigation as a matter of great importance. Contractor shall maintain records that can establish where recyclable materials, organic materials, and solid waste collected were transferred, processed, or disposed. This provision shall survive the expiration or termination of this Agreement. Contractor shall maintain these records for a minimum of five years beyond expiration or termination of this Agreement or such longer period as required by applicable law. Contractor shall provide these records to City (upon request or at the end of the record retention period) in an organized and indexed manner rather than destroying or disposing of them.

7.2 Report Submittal Requirements
A. The parties acknowledge that City will require reporting by Contractor at various intervals by which information important to City can be compiled and analyzed. The parties shall work together to address City’s needs with respect to the information to be contained in reports prepared by Contractor. The following is intended as a starting point to have established an objective baseline for reporting, but the frequency and content of the reports may be changed by consensus of the City of Brea Second Amended/Restated Franchise Agreement

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parties, which shall be memorialized in a writing signed by the City Manager and Contractor’s Contract Administrator. Records related to performance of this Agreement shall be maintained by Contractor in forms and by methods that facilitate flexible use of data contained in them to structure reports, as needed. The format of each report shall be approved by City. Contractor shall submit all reports in an electronic format compatible with City’s software/computers at no charge to City. Monthly reports shall be submitted within 20 calendar days after the end of the report month. Quarterly reports shall be submitted within 20 calendar days after the end of the calendar quarter. Annual reports shall be submitted within 45 calendar days after the end of the calendar year.

B. Monthly, quarterly, and annual reports shall include all data and information described in Exhibit F, unless otherwise specified under this Agreement.

C. Contractor may propose report formats that are responsive to the objectives and audiences for each report. The format of each report shall be approved by City in its sole discretion. City may review and request changes to Contractor’s report formats and content and Contractor shall not unreasonably deny such requests.

D. Contractor shall submit all reports to City electronically via e-mail using software acceptable to City.

City may require Contractor to maintain records and submit the reports through use of a Cityselected web-based software platform, at Contractor’s expense.

E. City reserves the right to require Contractor to provide additional reports or documents as required for the administration of this Agreement or compliance with applicable law.

F. Upon request of either of the parties, but no more than two times per year, City and Contractor will meet and confer about the current reporting requirements and templates utilized for the prior calendar year to discuss updates or modifications to the formatting or additional information as required by applicable law.

7.3 System and Services Review
A. Hearing. City may hold an administrative hearing each year at which Contractor shall be present and shall participate to review the solid waste collection, processing, and recycling system and services. It is City’s intent to conduct any system and services review concurrently with any performance review.

B. Contractor Report. Sixty days after receiving notice from City, Contractor shall submit a report to City regarding the solid waste collection, processing, and recycling system.

C. Review; Scope. Topics for discussion and review at the system and services review hearing shall include services provided, Contractor’s performance, cost and economic and technological feasibility of providing new services, application of new technologies, customer complaints, rights of privacy, amendments to this Agreement, developments in the law, new initiatives for meeting or exceeding AB 939 and SB 1383, or goals and regulatory constraints of other applicable law.

D. Additional Topics. Each party may select additional topics for discussion at any systems and services review hearing.

E. City Report. Not later than 60 days after the conclusion of each system and service review hearing, City shall issue a report. The report shall include a listing of any solid waste, processing, and recycling services not then being provided to City that are considered technically and economically City of Brea Second Amended/Restated Franchise Agreement

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feasible by City, together with the anticipated costs associated with such services and proposals for generating program revenue to pay for such services in alignment with Sections 4.6 and 9.3.

7.4 Biennial Audit
A. General.

1. Contractor shall fund biennial audits as described below. The scope of the audit, and auditing party, will be determined by City and the scope may include:
a. Compliance with this Agreement.
b. Customer service levels and billing.
c. Fee payments.
d. Receipts.
e. Tonnage.
f. Complaint log.
g. Compliance with mandatory commercial recycling, mandatory commercial organics recycling, and SB 1383.
h. Verification of diversion rate.

2. The first audit is to be performed during the fourth quarter of 2025, and every two years thereafter. Contractor shall reimburse City the cost of such audits up to $50,000 for the first audit and up to $50,000 for each subsequent biennial audit. The up to $50,000 amount in subsequent years shall be adjusted annually by 3% per year.

3. Should an audit by City disclose that franchise or other fees payable by Contractor were underpaid by 3% or more, or that more than 2% of customers were inaccurately billed, Contractor shall reimburse City for the actual cost of the audit to the extent it exceeded $50,000.

B. Payments and Refunds. Should an audit by City disclose that the franchise fees payable by Contractor were underpaid or that customers were overcharged for the period under review, Contractor shall pay to City any underpayment of franchise fees and/or refund to customers any overcharges within 30 calendar days following the date of the audit. In the event customers were undercharged, single-family customers may be billed for up to 12 months of services not previously billed and all other customers may be billed for up to 24 months of services not previously billed.

In the event customers were overcharged, Contractor shall provide a refund for up to 24 months of overcharged services.

7.5 SB 1383 Record Keeping Software
Contractor shall uƟlize the City provided SB 1383 soŌware that allows access to both parƟes, to integrate outreach efforts to customers within Brea, store certain reports required by this ArƟcle and Exhibit F, and monitor addiƟonal data required to be made available to CalRecycle. City shall provide Contractor on-line access to the database for real-Ɵme uploading and monitoring of data.

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ARTICLE 8.

CONTRACTOR’S CONSIDERATION

8.1 Franchise Fee
A. General. Contractor acknowledges that it, and not customers, is to pay a 10% franchise fee to City as consideration for this Agreement. Accordingly, neither Contractor’s bills nor City’s bills shall include separate itemization of a “franchise fee” or other similar designation. Finally, Contractor acknowledges the franchise fee is a cost paid solely by Contractor from its profits.

B. Contractor Franchise Fee. Contractor shall pay City an amount equal to 10% of all gross receipts, excluding compactor rental charges, as and for a franchise fee for services directly billed by Contractor pursuant to Section 5.7.3 above. The payment of a franchise fee by an end user shall not be considered payment for franchised services. Contractor shall remit the franchise fee to City pursuant to the provisions of Exhibit D, and without invoice from City. For the avoidance of doubt, the franchise fee shall be based on Contractor’s actual receipts from Contractor’s billings to its Customers.

C. Contractor Billed Fee Remittance. The franchise fee for customers billed directly by Contractor shall be paid to City monthly on or before the 20th day of each month. Should any such due date fall on a weekend or holiday in which City's business offices are closed, payment shall be due on the first day thereafter in which City’s business offices are open.

D. City Billed Fee Retention. City will deduct the 10% franchise fee from its payments to Contractor for customers billed directly by City pursuant to Section 5.7.2 above.

E. Fee Remittance After Term. The franchise fee shall apply to gross receipts of Contractor actually collected after expiration or termination of this Agreement and relating to Contractor's performance of this Agreement. Franchise fee payments shall be accompanied by a statement certified by an officer of Contractor attesting to the accuracy of the amounts paid and setting forth the basis for their calculation in a manner acceptable to City.

8.2 AB 939 Administrative Fees
Pursuant to Public Resources Code SecƟon 41902, Contractor shall pay or collect, as the case may be, an AB 939 administraƟve fee as may be established by City Council resoluƟon. Following 30 days’ prior wriƩen noƟce by City to Contractor, any fee established pursuant to this SecƟon shall be payable by Contractor to City concurrent with the payment of franchise fees.

8.3 Recyclable Materials Revenues
Contractor shall provide to City residenƟal customers 50% of the Contractor revenues from the sales of recovered residenƟal recyclable materials by calculaƟng a residenƟal customer rebate as shown in Exhibit E, Page 5, together with supporƟng data. This rebate shall be applied annually to the rate adjustment calculaƟons as shown in Exhibit E, Page 1.

8.4 Edible Food Recovery Funding
On or before June 30, 2025, and annually thereaŌer during the term, Contractor shall provide City with funding (the “Edible Food Recovery Payment”) to assist City with contracƟng with third parƟes that will facilitate compliance with City’s obligaƟons under 14 CCR Chapter 12, ArƟcle 10. The Edible Food Recovery City of Brea Second Amended/Restated Franchise Agreement

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Payment due on or before June 30, 2025, shall be $45,000. ThereaŌer, the amount of the Edible Food Recovery Payment shall be increased based on the percentage change in the applicable published index as specifically set forth in Exhibit E herein for commercial rate adjustments.

8.5 Payment Schedule and Late Fees
A. Checks for franchise fee and recyclable revenue shall be payable to the City of Brea and shall be mailed or otherwise delivered to City’s Finance Department.

B. Contractor payments are due on the 20th day of the month and shall be considered late if they are received after the 25th day of any month. In the event Contractor fails to timely make any of the payments required by this Agreement by the 25th day of any month, Contractor shall pay to City an additional sum of money equal to 5% of the amount due. This amount is required to defray those additional expenses and costs incurred by City by reason of the late payment including the cost of administering, accounting for, and collecting the late payment and the cost to City of postponing services and projects necessitated by the delay in receiving the revenue. In addition to any other remedy provided by law, any amounts not paid to City by Contractor within 60 days of the due date shall be subject to interest in the amount of 10% per annum, calculated on a daily basis for each day such sums remain past due.

8.6 Other Fees
City shall reserve the right to establish other fees, or negoƟate changes to fees beyond the regular annual adjustments described above as it deems necessary, to the extent that such further adjustments are also included in the adjustments to the approved rates.

ARTICLE 9.

CONTRACTOR’S COMPENSATION AND RATE SETTING

9.1 General
Contractor shall perform the responsibiliƟes and duƟes described in this Agreement in consideraƟon of the right to receive compensaƟon for services. CompensaƟon provided for in this ArƟcle shall be the complete compensaƟon due to Contractor pursuant to this Agreement for all labor, equipment, materials and supplies, taxes, insurance, bonds, overhead, disposal, recycling, processing, transfer, profit, and all other things necessary to perform all the services required by this Agreement.

9.2 Initial Rates
The rates for the rate period ending June 30, 2026, shall not exceed those set forth in Exhibit D. Contractor has reviewed these maximum rates and agrees they are reasonably expected to generate sufficient revenues to provide adequate compensaƟon. Unless and unƟl the maximum rates set forth in Exhibit D are adjusted, Contractor will provide the services required by this Agreement, charging no more than the maximum rates authorized by Exhibit D, except as provided herein in this ArƟcle.

9.3 Schedule of Future Adjustments
Beginning with rate period two (July 1, 2026 to June 30, 2027) and for all subsequent rate periods, either party may request an annual adjustment to the maximum rates shown in Exhibit D, excepƟng that City of Brea Second Amended/Restated Franchise Agreement

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Contractor shall be enƟtled to those adjustments in rates as provided in SecƟon 9.4. For all inflaƟonary adjustments, Contractor shall submit noƟce in wriƟng by March 1 of the same year based on the method of adjustment described in SecƟon 9.4. Failure to submit a wriƩen request by March 1 shall be conclusive as to Contractor’s decision not to proceed with an increase for the subsequent year. If any rates would decline based upon SecƟon 9.4 calculaƟons and a rate decrease is not implemented, the subsequent rate adjustment shall be based upon the changes in indices since the previous rate adjustment instead of the change over the prior year.

9.4 Method of Adjustments

9.4.1 General
Pursuant to SecƟon 9.3, the Contractor may request an adjustment to the maximum rates according to the method described below and the formulas shown in Exhibit E, subject to review and approval of City.

All future adjustments are to be effecƟve July 1. The rate adjustment calculaƟons shall be separately performed for all rates (Exhibit E).

9.4.2 Cost Component and Rate Adjustment Indexes
The approved rates consist of the following cost components, followed by the iniƟal weighƟngs of each component. Each cost component may be adjusted by the change in the corresponding index as provided below. See SecƟon 9.4.3 for detailed rate adjustment procedures and Exhibit E for examples of rate adjustment calculaƟons.

RESIDENTIAL AND COMMERCIAL/INDUSTRIAL SERVICES COST COMPONENTS

Cost
Component
% of Costs Rate Adjustment Index Residen
Ɵal
Commercial/
Industrial
A. CollecƟon 85.0% 85.0% Stair step collecƟon component from CPI to GTCI as shown in Exhibit E, Page 3.

B. Disposal 15.0% 15.0% Gate rate at the County landfills as of July 1 (as established under the County Waste and Recycling
WDA).

Total 100.0% 100.0%
Annual Adjustments to Landfill Disposal Component of Rates It is the intenƟon of the parƟes that the landfill disposal component associated with any of the maximum rates as set forth in Exhibit D shall be a pass-through component included in the rates subject to City and Contractor agreeing on the allocaƟon of the landfill disposal component of the rate across residenƟal, commercial, industrial, and mulƟfamily sectors. AŌer the effecƟve date of this Agreement, rates shall be adjusted annually on each adjustment date as adjusted by the County pursuant to the County Agreement or any successor agreement then in effect to reflect the direct increase or decrease in the actual landfill disposal (Ɵpping) fees incurred by Contractor for disposal of solid waste collected pursuant to this Agreement. On the effecƟve date of this Agreement, the County Agreement rate is $42.55 per ton City of Brea Second Amended/Restated Franchise Agreement

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delivered to the County system. In the event an increase occurs in applicable landfill Ɵpping fees at a Ɵme other than an annual adjustment date, Contractor shall receive an adjustment to the maximum rates applicable to the landfill disposal component pursuant to this secƟon.

9.4.3 Rate Adjustment Calculations
A. Residential services rates and commercial/industrial services rates will be adjusted using the same method but will be calculated separately due to the differences in the weightings of the collection and disposal components, as well as the collection component stair step for each customer type, as listed in Section 9.4.2 and Exhibit E, Page 3.

1. Step One. Calculate the percentage increase or decrease in collection and disposal component indices listed in Section 9.4.2. The increase or decrease in the collection indices will be for the change in the average annual published indices as shown in Exhibit E, Pages 3 and 4. The average annual change for the CPI or GTCI (as shown in Exhibit E, Pages 3 and 4) will be calculated based on the 12 months ended December prior to the rate adjustment date, and the 12 months ended the prior December.

The disposal component will be based on the actual percentage change in the gate rate at the County landfills.

2. Step Two. For the first-rate adjustment, cost components are weighted as listed in Section

9.4.2. For subsequent rate adjustments, the relative weights of the collection and disposal cost components will be determined in Step Four of the prior year’s rate adjustment.

Multiply the percentage changes for the collection and disposal cost components, as determined in Step One, by that component’s weighting as a percentage of total cost.

3. Step Three. Multiply the total weighted percent change from Step Two by the existing maximum residential services rates and commercial/industrial services rates to determine the increase or decrease in maximum rates. Then add (subtract) the changes in rates to (from) the existing maximum rates to determine the new maximum rates.

Apply any City maintenance service costs and the residential recycling rebate per Section 8.3.

4. Step Four. Recalculate weightings for the following year based on these changes.

9.5 Extraordinary Adjustments
A. Either party may request an adjustment to maximum rates at reasonable times other than that allowed under Section 9.3 in the event of extraordinary changes in the cost of providing service under this Agreement, including requests related to change in law. Such changes shall not include changes in recyclable materials or organic waste processing costs, changes in the market value of recyclable materials, inaccurate estimates by Contractor of its proposed cost of operations, unionization of Contractor’s work force, or change in wage rates or employee benefits.

Extraordinary rate adjustments may not be applied retroactively.

B. For each request for an adjustment to the maximum rates Contractor shall prepare a schedule documenting the extraordinary costs. Such request shall be prepared in a form acceptable to City with support for assumptions made by Contractor in preparing the estimate. Contractor shall also submit a schedule showing how its total costs and total revenues have changed over the past three years for the services provided under this Agreement.

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C. Contractor shall provide to City a report of its annual revenues and expenses for the services provided in Brea, and City shall have right to audit this information in connection with City’s review of Contractor’s rate adjustment request. City may consider increases or decreases in the Contractor’s total revenues and total cost of services when reviewing an extraordinary rate adjustment request and City’s determination will be final. A rate adjustment request made in response to a new service requested by City will be determined in accordance with Section 4.6.

9.6 Limitations on Rate Adjustments
At least 45 days prior to adjusƟng any rate(s) charged to customers, Contractor shall provide wriƩen noƟce to City of its intent to adjust such rate(s) and the amount of such adjustment. Contractor shall be enƟtled to implement the intended adjustment to such rate(s) unless City determines that the adjusted rates will exceed the then-current maximum rates as set forth in Exhibit D.established pursuant to the ProposiƟon 218 NoƟce for the applicable rate year.

ARTICLE 10.

INDEMNITY, INSURANCE, AND PERFORMANCE BOND

10.1 Indemnification
A. General. To the maximum extent permitted by law, Contractor shall indemnify, defend with counsel acceptable to City, and hold harmless City and its officers, officials, employees, volunteers, and agents from and against any and all claims, liability, loss, injuries, damage, expense, and costs (including costs and fees of litigation, including reasonable attorney’s and expert witness fees) (collectively, “Damages”) of every nature arising out of or in connection with Contractor’s performance, and the performance of any subcontractor or agent of Contractor, under this Agreement or Contractor’s failure to comply with any of its obligations contained in the Agreement, except to the extent such loss or damage was caused by the negligence or willful misconduct of City. This Section shall survive the expiration or termination of this Agreement and shall not be construed as a waiver of City’s legal and/or equitable rights.

B. Excluded Waste.

1. Contractor acknowledges that it is responsible for compliance with applicable law.

Contractor shall not knowingly store, transport, use, or dispose of any excluded waste except in strict compliance with applicable law.

2. If Contractor negligently or willfully mishandles excluded waste, Contractor shall at its sole expense promptly take all investigatory and/or remedial action reasonably required for the remediation of such environmental contamination. Prior to undertaking any investigatory or remedial action, however, Contractor shall first obtain City’s approval of any proposed investigatory or remedial action. Should Contractor fail at any time to promptly take such action, City may undertake such action at Contractor’s sole cost and expense, and Contractor shall reimburse City for all such expenses within 30 calendar days of being billed for those expenses. These obligations are in addition to Contractor’s indemnity, defense, and hold harmless obligations.

3. Notwithstanding the foregoing, Contractor’s duties under this Paragraph shall not extend to any claims arising from the disposal of solid waste at the designated disposal facility, City of Brea Second Amended/Restated Franchise Agreement

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including claims arising under CERCLA, unless such claim is a direct result of Contractor’s negligence or willful misconduct.

C. Related to AB 939, AB 341, and SB 1383. Contractor’s duty to defend and indemnify herein includes all fines and/or penalties imposed by CalRecycle, if the requirements of AB 939, AB 341, AB 1826, and/or SB 1383 are not met by Contractor with respect to Contractor’s obligations under this Agreement, and such failure is: (i) solely due to the failure of Contractor to meet its obligations under this Agreement; or, (ii) solely due to Contractor delays in providing information that prevents Contractor or City from submitting reports to regulators in a timely manner. This indemnity is subject to the provisions of Public Resources Code Section 40059.1.

D. Related to Proposition 218.

1. Should there be a change in law or a new judicial interpretation of applicable law, including California Constitution Articles XIII C and XIII D, that impacts the rates for the collection services, the parties shall meet to discuss the impact of such change in law on this Agreement.

2. If a rate adjustment determined by the parties to be appropriate to compensate Contractor for increases in costs as described in this Agreement cannot be implemented for any reason, then Contractor shall be granted the option to negotiate with City, in good faith, a reduction of services equal to the value of the rate adjustment that cannot be implemented. If the parties are unable to reach agreement about such a reduction in services, then Contractor may terminate this Agreement upon one year’s prior written notice to City. In such event the parties shall each be entitled to payment of amounts due for contract performance through the date of termination but otherwise will have no further obligation to one another unless this Agreement specifically states otherwise, after the date of such termination. Should a court of competent jurisdiction determine that Contractor cannot charge and/or increase its rates for charges related to franchise fees and governmental fees and charges, Contractor shall reduce the rates it charges customers a corresponding amount, providing such fees, reimbursements, rates and/or charges disallowed by the court are not related to the cost of providing service hereunder and had been incorporated in the rates charged by Contractor.

3. Nothing herein is intended to imply that California Constitution, Articles XIII C or XIII D, apply to the rates established for services provided under this Agreement. Rather this Section

10.1.D is provided merely to allocate risk of an adverse judicial interpretation between the parties.

4. The cost of all printing, copying, and mailing notices related to such procedural requirements shall be Contractor’s sole responsibility.

5. In the event that any rate adjustments provided for in Section 9.3, 9.4, or 9.5 are not implemented by City solely by reason of a 50% protest lawfully lodged with City in accordance with the requirements of Proposition 218, Contractor may, in its sole discretion, either: (i) accept that the rates will remain at the rates in effect prior to the scheduled adjustment or the requested rate increase; (ii) request in writing that City negotiate in good faith regarding reductions in programs, services, or fees under this Agreement to accommodate any materially adverse financial impact on Contractor’s ability to provide any collection services under the Agreement that has been caused by the failure to approve the adjustment; or, (iii) terminate this Agreement by providing City with 180 days’ prior written notice.

E. CalPERS Eligibility Indemnification.

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1. Contractor’s employees, agents, or subcontractors providing service under this Agreement shall not: (i) qualify for any compensation and benefit under CalPERS; (ii) be entitled to any benefits under CalPERS; (iii) enroll in CalPERS as an employee of City; (iv) receive any employer contributions paid by City for CalPERS benefits; or, (v) be entitled to any other CalPERS-related benefit by reason of the services provided under this Agreement that would accrue to a City employee. Contractor’s employees, agents, or subcontractors waive any claims to benefits or compensation described in this Section. This Section applies to Contractor notwithstanding any other law to the contrary.

2. If Contractor’s employees, agents, or subcontractors providing services under this Agreement claim, or are determined by a court of competent jurisdiction or the CalPERS to be eligible for enrollment in CalPERS, Contractor shall indemnify, defend, and hold harmless City for the payment of any employer and employee contributions for CalPERS benefits on behalf of the employee as well as for payment of any penalties and interest on such contributions that would otherwise be the responsibility of City.

3. Contractor’s compensation under this Agreement shall be the full and complete compensation to which Contractor and Contractor’s officers, employees, agents, and subcontractors are entitled for performance of any work under this Agreement. Neither Contractor nor its officers, employees, agents, and subcontractors are entitled to any salary or wages, or retirement, health, leave, or other fringe benefits applicable to City employees.

City shall not make any federal or state tax withholdings on behalf of Contractor. City is not required to pay any workers’ compensation insurance on behalf of Contractor.

4. Contractor shall defend and indemnify City for any obligation, claim, suit, or demand for tax, retirement contribution including any contribution to CalPERS, social security, salary or wages, overtime payment, or workers’ compensation payment that City may be required to make on behalf of Contractor, any employee of Contractor, or any employee of Contractor construed to be an employee of City for work performed under this Agreement.

10.2 Insurance
A. Coverages and Requirements. Contractor shall at all times maintain, at its expense, the following coverages and requirements. The comprehensive general liability insurance shall include broad form property damage insurance and public liability insurance.

1. Minimum Coverages. Insurance coverage shall be with limits not less than the following:
a. Comprehensive General Liability – $10,000,000 combined single limit per occurrence for bodily injury, personal injury, and property damage. b. Automobile Liability – $10,000,000 combined single limit per accident for bodily injury and property damage (include coverage for Hired and Non-owned vehicles). c. Workers’ Compensation – Statutory Limits/Employers’ Liability – $1,000,000/accident for bodily injury or disease.
d. Contractor’s Pollution Liability – $10,000,000 per contamination incident and annual aggregate applicable to bodily injury; property damage, including loss of use of damaged property or of property that has not been physically damaged or destroyed; clean-up costs, including first-party cleanup of City’s property and third-party cleanup, and bodily injury costs if pollutants impact other properties; and, defense, including costs, fees and expenses incurred in the investigation, defense, or resolution of claims.

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Coverage shall include completed operations and shall apply to sudden and nonsudden pollution conditions. Coverage shall apply to acts, errors or omissions arising out of, or in connection with, Contractor’s scope of work under this Agreement.

Coverage shall also apply to non-owned deposit sites that shall protect against, for example, claims regarding bodily injury, property damage, and/or cleanup costs involving non-owned deposit sites. Coverage is preferred by City to be occurrence based. However, if provided on a claims-made basis, Contractor warrants that any retroactive date applicable to coverage under the policy precedes the Effective Date and that continuous coverage shall be maintained or an extended discovery period will be exercised through expiration or termination of this Agreement for a minimum of five years. This provision does not limit or alter any rights or remedies to City allowable under this Agreement or applicable law in perpetuity.

2. Additional Insured. City, its officers, agents, employees, and volunteers shall be named as additional insured on all but the workers’ compensation and coverage via blanket-form endorsement.

3. Such policies shall remain in force through the term of this Agreement and shall be payable on a “per occurrence” basis unless City’s Risk Manager specifically consents in writing to a “claims made” basis. For all “claims made” coverage, if Contractor changes insurance carriers Contractor shall purchase “tail” coverage or otherwise provide for continuous coverage covering the term of this Agreement and not less than three years thereafter, except for the five-year tail of Pollution Liability Coverage as described above. Proof of such “tail” or other continuous coverage shall be required at any time that Contractor changes to a new carrier prior to receipt of any payments due.

4. The deductibles or self-insured retentions are for the account of Contractor and shall be the sole responsibility of Contractor.

5. Each insurance policy, except Workers’ Compensation/Employer’s Liability shall be endorsed via blanket-form endorsement to state that coverage shall not be canceled, non-renewed, or materially changed limits except after 30 calendar days’ prior written notice has been given to City (10 calendar days for delinquent insurance premium payments) via e-mail to an email address provided by City.

6. Insurance shall be placed with insurers with a current A.M. Best’s rating of no less than A-VII, or with a surplus line carrier with a Best’s Key Rating Guide of at least “B.”

7. The policies shall cover all activities of Contractor, its officers, employees, agents, and volunteers arising out of or in connection with this Agreement.

8. For any claims relating to this Agreement, Contractor’s insurance coverage shall be primary, including as respects City, its officers, agents, employees, and volunteers. Any insurance maintained by City shall apply in excess of, and not contribute with, insurance provided by Contractor’s liability insurance policy.

9. Contractor shall waive all rights of subrogation against City, its officers, employees, agents, and volunteers via blanket-form endorsement.

B. Certificates of Insurance/Endorsements. Within five calendar days of the Effective Date, Contractor shall furnish City with an ACORD 25 Certificate of Insurance reflecting coverage required by this Agreement and supplemented with all applicable blanket-form endorsements as required City of Brea Second Amended/Restated Franchise Agreement

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herein. The certificate and blanket-form endorsements shall be signed by an authorized representative of the insurer.

C. Renewals. Contractor shall furnish City with certificate(s) of insurance reflecting renewals, changes in insurance companies, and any other information affecting. The endorsements shall be signed by an authorized representative of the insurer.

D. No Cap on Indemnity. The minimum amounts of coverage described in this Section shall not constitute any limitations or cap on Contractor’s indemnification obligations under this Agreement.

E. Workers' Compensation. Contractor shall provide workers’ compensation coverage as required by state law and shall comply with Labor Code Section 3700.

10.3 Faithful Performance Bond or Irrevocable Letter of Credit A. Contemporaneously with execution of this Agreement, as security for Contractor's faithful performance of all obligations of this Agreement, Contractor shall provide a surety mechanism (“Surety”) as more fully defined below in the amount of $822,000. The Surety may be comprised of either a performance bond or an irrevocable letter of credit, or a combination of both. If a letter of credit is utilized to satisfy some or all of the Surety requirement it shall be drawn upon a financial institution with an office within 50 miles of the Brea Civic and Cultural Center and otherwise in a form acceptable to the City Attorney. The performance bond, if any, shall be issued by a duly authorized corporate surety company authorized to do business in California, in a form reasonably acceptable to the City Attorney, and in full compliance with the provisions of Code of Civil Procedure Section 995.610 et seq. The cost of the Surety shall be the sole obligation of Contractor. The Surety shall be released within 30 days after both: (i) expiration of this Agreement; and, (ii) Contractor's satisfactory performance of all obligations hereunder.

B. In the event Contractor shall for any reason become unable to, or fail in any way to, perform as required by this Agreement, City may declare a portion or all of the Surety, as may be necessary to recompense and make whole City, forfeited to City. Upon partial or full forfeiture of the Surety, Contractor shall restore the Surety to its original amount within 30 days of City's notice to do so.

C. Upon City providing Contractor with written notice of its failure to pay City any amount owing under this Agreement, either the letter of credit or performance bond comprising the Surety may be utilized by City for purposes including:

1. Payment of sums due under this Agreement that Contractor has failed to timely pay to City including liquidated damages.

2. Reimbursement of costs borne by City to correct violations of this Agreement not corrected by Contractor.

D. City may draw upon the entire letter of credit (if any) utilized to meet Contractor's obligations pertaining to the Surety, and convert it to a cash deposit, if Contractor fails to cause the letter of credit to be extended or replaced with another satisfactory letter of credit no later than 60 days prior to its expiration.

10.4 Performance Security Beyond Service Term
Contractor shall not terminate the performance bond or leƩer of credit and will renew them to ensure conƟnuous availability to City, unƟl receiving a wriƩen release from City. City will provide such a release when City, in its reasonable judgment, is fully saƟsfied that all requirements have been met; provided, City of Brea Second Amended/Restated Franchise Agreement

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however, in no event may City require that the Surety conƟnue more than one year aŌer the terminaƟon of this Agreement. However, permission from City to disconƟnue holding these performance securiƟes does not relieve Contractor of payments to City that may be due or may become due.

ARTICLE 11.

CITY'S RIGHT TO PERFORM SERVICE

11.1 General
A. Subject to events of force majeure, in the event that Contractor fails, refuses, or is unable to collect, recycle, process, transport, or dispose of any or all discarded materials for a period of more than two working days, and if, as a result thereof, discarded materials should accumulate in Brea to such an extent, in such a manner, or for such a time that such accumulation endangers or menaces the public health, safety, or welfare, then City shall have the right, but not the obligation, upon 24 hours’ prior written notice to Contractor to perform, or cause to be performed, such services itself with its own or other personnel without liability to Contractor.

B. Notwithstanding Section 14.13, notice of Contractor's failure, refusal, or neglect to collect, transport, and dispose of or process discarded materials may be given orally by telephone to Contractor at its principal office and shall be effective immediately. Written confirmation of such oral notification shall be sent to Contractor within one working day of the oral notification.

11.2 Billing and Compensation to City During City's Possession During such Ɵme that City is providing discarded materials services, as above provided, Contractor shall bill and collect payment from all users of the above-menƟoned services as described in SecƟon 5. In such event, Contractor shall reimburse City for any and all costs and expenses incurred by City beyond that billed and received by City in such manner and to an extent as would otherwise be required of Contractor under this Agreement. Such reimbursement shall be made from Ɵme to Ɵme aŌer submission by City to Contractor of each statement lisƟng such costs and expenses but in no event later than five working days from and aŌer each such submission.

11.3 Disaster Preparedness Plan
A. Within 12 months of the Effective Date, Contractor shall, with City assistance, prepare a written plan detailing how discarded materials services will be delivered in a time of emergency or natural disaster. For the plan, City shall provide Contractor with a written list of critical facilities that City deems in need of special consideration in a time of emergency. Contractor’s written plan shall contain a protocol for contacting Contractor management in the event of an emergency, an overview of Contractor’s resources available for emergency response, a plan for collection, disposal, and recycling of discarded materials generated by critical facilities until the time of emergency passes and a plan for resuming normal operations following an emergency.

B. In the event of a disaster, City may grant Contractor a waiver of some or all collection requirements under this Agreement and 14 CCR Section 18984 et seq. in the disaster-affected areas for the duration of the waiver. Any resulting changes in collection requirements shall be addressed as a change in scope in accordance with Section 4.6.

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ARTICLE 12.

DEFAULT AND REMEDIES

12.1 Events of Default
A. The following are Category 1 events of default:

1. Fraud or Deceit. Contractor practices, or attempts to practice, any fraud or deceit upon City.

2. Insolvency or Bankruptcy. Contractor becomes insolvent, unable, or unwilling to pay its debts, or upon listing of an order for relief in favor of Contractor in a bankruptcy proceeding.

3. False, Misleading, or Inaccurate Statements. Any representation or disclosure made to City by Contractor in connection with or as an inducement to entering into this Agreement, or any future amendment to this Agreement, that proves to be false or misleading in any material respect as of the time such representation or disclosure is made, whether or not any such representation or disclosure appears as part of this Agreement. Additionally, a default occurs if any Contractor-provided report contains a misstatement, misrepresentation, data manipulation, or an omission of fact or content explicitly defined by the Agreement, excepting non-numerical typographical and grammatical errors.

4. Criminal Activity. Contractor or its officers, managers, or employees are found guilty of criminal activity in connection with the performance of this Agreement or any other contract with City.

5. Assignment without Approval. Contractor transfers or assigns this Agreement without the prior written approval of City.

B. The following are Category 2 events of default, however, subject to events of force majeure:

1. Failure to Maintain Coverage. Contractor fails to provide or maintain in full force the workers’ compensation and insurance coverage required by this Agreement.

2. Violations of Regulation. Contractor violates a regulatory agency order in connection with the performance of this Agreement. If Contractor contests any such order by appropriate proceedings conducted in good faith, and the regulatory agency determines no violation occurred, then no default of this Agreement shall be deemed to have occurred.

3. Violations of Applicable Law. Contractor violates applicable law in connection with the performance of this Agreement.

4. Failure to Perform Direct Services. Contractor ceases to provide collection, transportation, or processing services as required under this Agreement for a period of two consecutive calendar days or more for any reason within the control of Contractor.

5. Failure to Pay. Contractor fails to make a required payment to City by the applicable deadline.

6. Failure to Report. Contractor fails to provide City with required information, reports, or records by the applicable deadline.

7. Seizure or Attachment. There is a seizure of, attachment of, or levy on some or all of Contractor’s equipment or facilities other than standard liens in connection with any bank financing.

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8. Suspension or Termination of Service. There is any termination or suspension of the transaction of business by Contractor related to this Agreement, including due to labor unrest including strike, work stoppage or slowdown, sick-out, picketing, or other concerted job action lasting more than seven calendar days for residential customers and three calendar days for commercial customers.

9. Failure to Provide Proposal or Implement Change in Service. Contractor fails to provide a proposal for new services or changes to services or fails to implement a change in service as requested by City.

10. Failure to Implement Collection Program. Contractor fails to implement a collection program that complies with the requirements of Article 5 and Exhibit B.

11. Failure to Provide Processing Capacity. Contractor fails to provide processing capacity in accordance with Articles 5 and 6.

12. Failure to Achieve Processing Standards. Contractor fails to achieve the processing standards specified in Articles 4 and 5 including achievement of minimum organic waste recovery rates.

13. Failure to Comply with Other Requirements of SB 1383. Contractor fails to comply with other SB 1383 requirements including public education, reporting, contamination monitoring, record keeping and reporting, or other obligations of this Agreement that delegate City’s responsibility and authority under SB 1383 to Contractor, which results in a final judgment against City pursuant to an enforcement action brought by CalRecycle for failing to achieve SB 1383 compliance pursuant to CCR title 14 § 18997. 5.

14. Failure to Dispose of Solid Waste at the Designated Disposal Facility. Contractor fails to dispose of solid waste collected within Brea at the designated disposal facility unless use of facility is no longer required or available.

15. Acts or Omissions. Any other act or omission by Contractor that violates this Agreement or applicable law. All provisions of this Agreement are considered material.

12.2 Contractor’s Right to Cure; Right to Terminate Upon Event of Default A. If City issues a notice of default for a Category 1 event of default, then Contractor shall not be entitled to an opportunity to cure the default. Subject to this Paragraph and Section 12.2.C below, Contractor has a right to cure for Category 2 events of default. City shall afford Contractor 30 days or a reasonable period of time under the circumstances to cure the default unless City reasonably determines the default presents an immediate threat to public health or safety. In such event, Contractor shall not be entitled to an opportunity to cure the default.

B. If a Category 2 default does not present an immediate threat to public health or safety and cannot reasonably be cured within 30 calendar days, then City may not terminate this Agreement based upon such default if Contractor promptly commences and diligently pursues the cure to completion.

C. After the initial five years of the term of this Agreement, subject to events of force majeure, Contractor shall not be entitled to an opportunity to cure the default in the instance where Contractor has within a 24-month period twice committed the same item 1, 5, 7, 9, or 11 Category 2 default in Section 12.1 B above. City may determine to allow Contractor to cure the default as set forth in Section 12.2.A above.

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12.3 City’s Remedies in the Event of Default
Upon Contractor’s default, City has the following remedies in the event of Contractor default:

A. Waiver of Default. City may waive any event of default or may waive Contractor’s requirement to cure a default event if City determines that such waiver would be in the best interest of City. City’s waiver of an event of default is not a waiver of future events of default that may have the same or similar conditions.

B. Suspension of Contractor’s Obligation. City may suspend Contractor’s performance of its obligations if Contractor fails to cure default in the time frame specified in Section 12.2 until such time Contractor can provide assurance of performance in accordance with Section 12.8.

C. Liquidated Damages. City may assess liquidated damages for Contractor’s failure to meet specific performance standards in accordance with Section 12.6.

D. Termination. Subject to the provisions of Section 12.2 above,

1. City may, in its discretion, set a public hearing for the City Council to determine whether to terminate this Agreement.

2. If City terminates this Agreement for default, Contractor shall be given 30 calendar days’ notice. Contractor shall thereafter be relieved on a going-forward basis of all liabilities and obligations required by this Agreement, except for Section 10.1 and any other provisions specifically identified to survive termination of this Agreement. Upon expiration of the 30 day notice, City may, in its sole discretion, do any of the following:
a. Directly undertake performance of the services.
b. Arrange with other persons to perform the services with or without a written agreement.
c. Permit Contractor to continue operating under this Agreement including Contractor’s compensation until such time that City is able to find substitute services.

3. This right of termination is in addition to any other rights upon a failure of Contractor to perform this Agreement.

4. Contractor shall not be entitled to any further revenues from collection operations after the termination date.

12.4 Possession of Records Upon Termination
In the event of terminaƟon for an event of default, Contractor shall furnish City with immediate access to its business records that are required to be maintained pursuant to this Agreement in a format compaƟble with City’s computer systems, including customer informaƟon, collecƟon routes, compliance records, and billing of accounts for collecƟon services.

12.5 City’s Remedies Cumulative; Specific Performance
A. City's rights to terminate this Agreement under Section 12.2 and to take possession of the Contractor's records under Section 12.4 are not exclusive, and City's termination of this Agreement or imposition of liquidated damages shall not constitute an election of remedies. Instead, these City of Brea Second Amended/Restated Franchise Agreement

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rights shall be in addition to any and all other legal and equitable rights and remedies that City may have.

B. By virtue of the nature of this Agreement, the urgency of timely, continuous, and high-quality service; the lead time required to effect alternative service; and, the rights granted by City to the Contractor, the remedy of damages for a breach hereof by Contractor is inadequate and City shall be entitled to injunctive relief (including specific performance).

12.6 Performance Standards and Liquidated Damages
A. General. The parties acknowledge that it is impractical, if not impossible, to reasonably ascertain the extent of damages that shall be incurred by City as a result of a breach by Contractor of this Agreement. The impracticability of ascertaining damages is due to multiple factors including 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 that are incapable of measurement in precise monetary terms; (iii) exclusive services 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) termination of this Agreement for such breaches, and other remedies are, at best, a means of future correction and not remedies that make the public whole for past breaches.

B. Service Performance Standards; Liquidated Damages for Failure to Meet Standards.

1. The parties further acknowledge that consistent, reliable collection services are of utmost importance to City and that City has considered and relied on Contractor’s representations regarding its quality-of-service commitment in awarding this Agreement. The parties 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, then City and Brea residents and businesses will suffer damages, and that it is, and will be, impractical and extremely difficult to ascertain and determine the exact amount of damages that City will suffer.

2. City may determine the occurrence of events giving rise to liquidated damages through the observation of its own employees or representatives or investigation of customer complaints. It is the desire of the parties to work together to avoid the imposition of liquidated damages, and accordingly City will endeavor to timely communicate to Contractor any information that City receives that might give rise to the imposition of liquidated damages in order to facilitate Contractor’s ability to correct any deficiency or prevent the recurrence of any conduct for which liquidated damages might eventually be imposed.

3. Prior to assessing liquidated damages, City shall give Contractor a pre-assessment notice; however, Contractor will not be provided notice for those breaches identified under Sections

12.6.C.1.b, 12.6.C.1.c, 12.6.C.3.a, 12.6.C.3.b, and 12.6.C.3.d because it would not be possible to rectify these breaches in a timely manner after the stated period for correction has passed.

Such notice will include a brief description of the incident(s)/non-performance(s) for which liquidated damages are to be assessed. Contractor may review (and make copies at its own expense) all information in the possession of City relating to the identified incident(s)/nonperformance(s). Contractor may, within 10 days after receiving the pre-assessment notice, City of Brea Second Amended/Restated Franchise Agreement

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request a hearing before the City Manager. Contractor may present evidence in writing and through testimony of its employees and others relevant to the incident(s)/nonperformance(s). City will provide Contractor with a written explanation of the City Manager’s determination on each incident/non-performance prior to assessing liquidated damages.

The decision of the City Manager shall be final.

Therefore, without prejudice to City’s right to treat such non-performance as an event of default, and Contractor’s right to cure outlined above, the parties agree that the liquidated damages amounts established in this Section 12.6 represent a reasonable estimate of the amount of such damages considering all of the circumstances existing on the Effective Date, 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.

Contractor City
IniƟal Here IniƟal Here
C. Contractor shall pay as liquidated damages, and not as a penalty, the amounts set forth below:

1. CollecƟon Reliability
a For each failure to commence service to a new customer account within seven days aŌer order.
$100 per occurrence
b For each failure to collect discarded materials, which has been properly set out for collecƟon.
$100 per occurrence
c For each failure to correct and collect a missed service within the Ɵmeframe set forth in SecƟon 5.8.B.2.
$100 per occurrence;
Each addiƟonal 24-hour
period: $50 per occurrence
d For each failure to comply with the provisions in SecƟon 12.7 Contractor’s acƟons during a work stoppage.
$1,000 per day
e For each failure to collect illegally dumped bulky goods within two days of noƟficaƟon by City per Exhibit B4, Item 7.
$100 per day illegally
dumped bulky goods
remains uncollected.

2. CollecƟon Quality
a For failure to properly return empty containers to avoid pedestrian or vehicular traffic impediments or to place containers upright, which exceeds 10 containers annually.
$50 per container
b For each occurrence of excessive noise or discourteous behavior, which exceed 10 occurrences annually.
$100 per occurrence
c For each occurrence of collecƟng discarded materials during unauthorized hours, which exceeds 10 such occurrences annually. $100 per occurrence
d For each occurrence of damage to private property, which exceeds five such occurrences annually.
$100 per occurrence
e For each failure to clean up discarded materials spilled from collecƟon containers within 90 minutes that exceeds 10 such failures annually.
$100 per occurrence
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f For each failure to clean up vehicle leaks or spills within the Ɵmeframe required by SecƟon 6.5.E.
$500 per occurrence
g For each failure to follow the cleanup procedures included in SecƟon 6.5.E.
$500 per square foot of
affected area
h For each incidence of commingling of solid waste with recyclable materials and/or green waste/food scraps in collecƟon vehicles except as provided in the event of contaminaƟon (when
contaminated materials may be placed in truck with solid waste). $1,000 per incident

3. Customer Responsiveness
a For each failure to iniƟally respond to a customer complaint within one working day, and for each addiƟonal day in which the complaint is not addressed, which exceed five annually. $50 per day
b For each failure to process customer complaints as required by ArƟcle 5, which exceed five annually.
$50 per occurrence
c For each failure to record a response to a customer complaint or request within 24 hours of resoluƟon.

Each addiƟonal 24-hour period.
$100 per occurrence
$50 per occurrence
d For each failure to respond to a wriƩen inquiry from City’s solid waste contract manager regarding service requests or requests for informaƟon within two working days, and for each addiƟonal day in which the inquiry is not addressed, which exceed five occurrences annually.
$100 per occurrence
e For each failure to remove graffiƟ from containers, or to replace with containers bearing no graffiƟ, within two working days of request from City or customer.

Each addiƟonal day problem not resolved.
$50 per day
$25 per day
f For each failure to repair or replace a damaged or missing container within two working days of request from City or a customer. $50 per day
g For each failure to process a claim for damages within 30 days from the date submiƩed to Contractor.
$100 per occurrence
h For each failure to issue a warning noƟce to a container or materials not collected due to improper set-out, which exceeds 10 such occurrences annually.
$100 per day per
occurrence

4. Failure to Submit Reports or Allow Access to Records For each failure to submit any individual report or provide access to records in compliance with and in the Ɵmeframe specified in this Agreement. Incomplete and/or inaccurate reports shall be considered a failure to submit unƟl such Ɵme as all informaƟon in the report has been provided in a complete and accurate form. In the event City determines a report to be errant or incomplete more than 10 working days aŌer submiƩal by Contractor, Contractor shall be given 10 working days to complete and correct and any pending liquidated damages shall be tolled during that period. a Monthly Reports $100 per day
b Quarterly Reports $250 per day
c Annual Reports $500 per day
d All Other Reports $100 per day
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5. Accuracy of Billing
a Each customer invoice that is not prepared in accordance with the approved rate schedule, which exceeds 10 annually.
$25 per invoice not to
exceed $2,500 per billing
run
b For each instance or invoice in which Contractor imposes a special service fee not in accordance with the approved rate schedule and not approved in advance in wriƟng by City, or not requested by the service recipient, which exceeds 10 such occurrences annually. $50 per occurrence
c Failure to provide a customer with a response, including an explanaƟon and/or correcƟon, to a billing complaint within seven working days from the complaint.

Each addiƟonal day response not provided.
$100 per occurrence
$50

6. Public EducaƟon and Outreach
a Failure to perform public educaƟon and outreach acƟviƟes:
1st violaƟon $50
2nd violaƟon $100
3rd and subsequent violaƟons $250 per occurrence

7. CooperaƟon with Service Provider TransiƟon
a For each day rouƟng informaƟon requested by City in accordance with SecƟon 14.10 is received aŌer City-established due dates, both for preparaƟon of a request for proposals and for new service provider’s implementaƟon of service.
$1,000 per day
b For each day delivery of keys, access codes, remote controls, or other means of access to discarded materials containers is delayed beyond one day prior to new service provider servicing customers with access issues, as described in SecƟon 14.10.
$1,000 per day

8. SB 1383 Requirements
a Use of Unauthorized FaciliƟes. For each individual occurrence of delivering discarded materials to a facility other than an approved facility for each discarded material type.
1st violaƟon - $50 per ton
2nd violaƟon - $100 per ton
3rd and subsequent
violaƟons - $250 per ton
per offense
b Failure to Implement Three- /Three-plus Container System. For each occurrence of failing to provide customers with the three- /three-plus container system required by with SB 1383 (excluding generators and customers that have been granted waivers or that demonstrate compliance with recycling and organic waste selfhauling requirements). Damages are per generator or customer per occurrence (minor, moderate, and major violaƟons are as defined in 14 CCR SecƟon 18997.3).
$250 – Minor violaƟon
$500 – Moderate violaƟon
$1,000 – Major violaƟon
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8. SB 1383 Requirements
c Failure of Approved Facility to Meet Limits on Organic Waste in Materials Sent to Disposal. For each ton of mixed waste, source separate recyclable materials, source separated blue container organic waste, source separated green container organic waste, or organic materials received at the facility in a quarterly reporƟng period when organic waste in the materials sent to disposal exceeds the thresholds included in SB 1383 if limits on organic waste in materials sent to disposal apply. Liquidated damages are assessed in the quarterly reporƟng period when the failure occurred.
1st violaƟon - $50 per ton
per offense
2nd violaƟon - $100 per ton
per offense
3rd and subsequent
violaƟons - $250 per ton
per offense
d Failure to Perform ContaminaƟon Monitoring Requirements. For each failure to conduct contaminaƟon monitoring in accordance with SecƟon 5.11.
1st violaƟon - $50 per route
per occurrence
2nd violaƟon - $100 per
route per occurrence
3rd and subsequent
violaƟons - $250 per route
per occurrence
e Failure to Comply with Container Labeling and Colors. For each occurrence of failure to comply with container labeling and color requirements.
1st violaƟon - $50
2nd violaƟon - $100
3rd and subsequent
violaƟons - $250 per
container
f Failure to Conduct Compliance Tasks. For each failure to conduct any compliance review, discarded materials evaluaƟons pursuant to SB 1383, and/or other inspecƟon required by this Agreement. 1st violaƟon - $50
2nd violaƟon - $100
3rd and subsequent
violaƟons - $250 per
occurrence
g Failure to Issue ContaminaƟon Processing Fee NoƟces. For each failure to issue contaminaƟon noƟces and contaminaƟon
processing fee noƟces and maintain documentaƟon of issuance as required by SecƟon 5.11.
1st violaƟon - $50
2nd violaƟon - $100
3rd and subsequent
violaƟons - $250 per route
per day
h Failure to Conduct Follow-Up InspecƟons. For each failure to conduct a follow-up inspecƟon as required by SecƟon 5.8.C. 1st violaƟon - $50
2nd violaƟon - $100
3rd and subsequent
violaƟons - $250 per
occurrence
i Failure to Provide non-confidenƟal Customer InformaƟon Requested from Contractor’s InformaƟon Systems within 3 business days.
$250 per day

9. General Contract Adherence
a For each day that Contractor fails to provide services required under this Agreement, or comply with terms of this Agreement, $100 per day
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five working days aŌer receipt of wriƩen noƟficaƟon from City that such services are not being provided or terms are not being met.

D. Amount. City may assess liquidated damages for each calendar day or event, as appropriate, that Contractor is determined to be liable in accordance with this Agreement.

E. Timing of Payment. Contractor shall pay any liquidated damages assessed by City within 30 calendar days of notice of assessment. If payment is not made by the deadline, then City may proceed against the performance bond, find Contractor in default and terminate this Agreement pursuant to Section 12.1, or both.

F. Payment. City may deduct the amount of liquidated damages owed by Contractor from City’s monthly payments to Contractor for services rendered pursuant to this Agreement or may invoice Contractor directly.

G. City’s Right to Recover. City’s right to recover liquidated damages for Contractor’s failure to meet the service performance standards shall not preclude City from obtaining equitable relief for persistent failures to meet such standards nor from terminating the Agreement for such persistent failures.

12.7 Excuse from Performance
A. Force Majeure.

1. A party shall be excused from performing its obligations and from any obligation to pay liquidated damages and Contractor shall not be in default under this Agreement if Contractor is prevented from performing the collection, transportation, and/or disposal services for any of the following reasons: riots; wars; sabotage; civil disturbances, pandemics; government restrictions and orders; insurrections; explosion; natural disasters such as floods, earthquakes, landslides and fires; strikes, lockouts, and other labor disturbances by persons other than Contractor’s employees; and, other similar catastrophic events that are beyond the control of and not the fault of the party claiming excuse from performance hereunder.

The party claiming excuse from performance shall, within two calendar days after such party has notice of such cause, give the other party notice of the facts constituting such cause and asserting its claim to excuse under this Section. If either party validly exercises its rights under this Section, the parties waive any claim against each other for any damages sustained thereby.

2. The partial or complete interruption or discontinuance of Contractor's services caused by one or more of the events described in this Section shall not constitute a default by Contractor under this Agreement. Notwithstanding the foregoing, however, if Contractor is excused from performing its obligations for any of the causes listed in this Section for a period of 30 calendar days or more, City shall nevertheless have the right, in its sole discretion, to terminate this Agreement by giving 10 working days’ notice to Contractor, in which case the provisions of Section 12.4 shall apply.

3. In the event of a labor disturbance that interrupts collection, transportation, and/or disposal of discarded materials by Contractor as required under this Agreement, the provisions of Section 12.7.B shall apply.

B. Labor Disputes.

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1. Labor Unrest Directed at Third Party. In the case of labor unrest or job action directed at a third party over whom Contractor has no control, the inability of Contractor to provide services in accordance with this Agreement due to the unwillingness or failure of the third party to: (i) provide reasonable assurance of the safety of Contractor's employees while providing such services; or, (ii) make reasonable accommodations with respect to container placement and point of delivery, time of collection, or other operating circumstances to minimize any confrontation with pickets or the number of persons necessary to make collections shall, to that limited extent, excuse performance. The foregoing excuse shall be conditioned on Contractor’s cooperation in performing collection services at different times and in different locations.

2. Contractor Labor Disruptions.
a. Contractor shall advise City in writing at the time any negotiations are undertaken between Contractor and its employees relating to wages and benefits, and Contractor shall regularly report the status of such negotiations from time to time including any pending strike, lock out, walk out, boycott, or other labor dispute to City. Contractor agrees that in the event service is disrupted due to a labor dispute, Contractor shall place a minimum of five 40-yard roll-off boxes or other containers of equivalent capacity at locations designated by City to serve as collection points for customers within two days of such service interruption. Contractor also shall procure and distribute plastic bags for use by customers. City shall specify distribution locations, and may create the schedule for Contractor distribution. Contractor shall notify City within 24 hours of a notice from a labor union of a possible work stoppage. Containers shall be collected by Contractor for no additional charge as necessary to accommodate the waste volume disposed in such containers.
b. During labor unrest (including strike, work stoppage or slowdown, sick-out, picketing, or other concerted job action) conducted by Contractor's employees or directed at Contractor the following provisions shall apply.
i. Contractor shall be excused from performance only to the extent that the following requirements are met:

A. Within 90 days of the Effective Date, Contractor provides City a lawful and commercially reasonable contingency plan demonstrating how services will be provided during the period of labor unrest. The contingency plan is subject to City approval and Contractor shall amend the plan until it meets City requirements, including reasonably demonstrating how City’s basic collection and sanitary needs will be met to City’s satisfaction.

B. Contractor shall meet all requirements of the approved contingency plan.
ii. Contractor shall reimburse City for direct third-party costs (including attorney’s fees) incurred by City as a result of the labor unrest. Payment shall be made within 30 days following Contractor’s receipt of an invoice from City for such costs.
iii. Contractor shall provide rebates to customers in accordance with the attached Exhibit N.

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3. Collection During Labor Disruption. Contractor shall prioritize those collection activities it is able to perform during the pendency of the labor disruption, with hospitals, essential services, restaurants, and other six services days per week customers prioritized for collection on the basis of health and sanitation. In the event that a labor strike or disruption to collection services should last longer than seven consecutive days, City may contract with a third party to provide collection services for the period of time limited to the time Contractor is unable to provide such services until the labor strike or disruption has concluded. Contractor shall notify City when the labor disruption has ended and the date Contractor will resume collection services.

12.8 Right to Demand Assurances of Performance
A. The parties acknowledge that it is of the utmost importance to City and the health and safety of all those members of the public residing or doing business within Brea who will be adversely affected by interrupted waste management service that there be no material interruption in services provided under this Agreement.

B. If Contractor: (i) appears in the reasonable judgment of City to be unable to regularly pay its bills as they become due; or, (ii) is the subject of a civil or criminal judgment or order entered by a regulatory agency, and City believes in good faith that Contractor’s ability to perform under the Agreement has thereby been placed in substantial jeopardy, City may, at its sole option and in addition to all other remedies it may have, demand from Contractor reasonable assurances of timely and proper performance of this Agreement, in such form and substance as City believes in good faith is reasonably necessary in the circumstances to evidence continued ability to perform under the Agreement. If Contractor fails or refuses to provide satisfactory assurances of timely and proper performance in the form and by the date required by City, such failure or refusal shall be an event of default for purposes of Section 12.1.

12.9 Dispute Resolution
A. Meet and Confer. In the event of disputes regarding the performance of any obligation under this Agreement that result in a material impact to the Contractor’s revenue and/or cost of operations, the parties shall promptly meet and confer to attempt to resolve the matter between themselves.

B. Mediation. If a dispute cannot be resolved satisfactorily through the meet and confer process, the dispute shall be submitted to mandatory, non-binding mediation by a mutually agreed upon independent third party.

C. Period of Time. To the extent permitted by law, the deadline for filing a claim against City shall be tolled during the period of time for which meet and confer or mediation procedures are pending.

D. Litigation. Litigation may be commenced only after all reasonable efforts to resolve the dispute(s) pursuant to this Section have failed and any necessary claim(s) have been denied.

ARTICLE 13.

REPRESENTATIONS AND WARRANTIES OF THE PARTIES

13.1 Contractor’s Status
Contractor represents and warrants that it is a limited liability company duly organized, validly exisƟng, and in good standing under the laws of the State of Delaware. It is qualified to transact business in the City of Brea Second Amended/Restated Franchise Agreement

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State of California and has the power to own its properƟes and to carry on its business as now owned and operated and as required by this Agreement.

13.2 Contractor’s Authorization
Contractor represents and warrants that it has the authority to enter this Agreement and perform its obligaƟons under this Agreement. The Board of Directors of Contractor (or the sole member, if necessary) has taken all acƟons required by law, its arƟcles of organizaƟon, or otherwise, to authorize the execuƟon of this Agreement. The persons signing this Agreement on behalf of Contractor represent and warrant that they have authority to do so. This Agreement consƟtutes the legal, valid, and binding obligaƟon of Contractor.

13.3 Agreement Will Not Cause Breach
Each party represents and warrants that, to the best of its knowledge aŌer reasonable invesƟgaƟon, the execuƟon or delivery of this Agreement or the performance by either party of its obligaƟons hereunder does not conflict with, violate, or result in a breach of: (i) any applicable law; or, (ii) any term or condiƟon of any judgment, order, or decree of any court, administraƟve agency, or other governmental authority, or any agreement or instrument executed by such party or by which such party or any of its properƟes or assets are bound.

13.4 No Litigation
Each party represents and warrants that, to the best of its knowledge aŌer reasonable invesƟgaƟon, there is no acƟon, suit, proceeding, or invesƟgaƟon, at law or in equity, before or by any court or governmental authority, commission, board, agency, or instrumentality decided, pending, or threatened against it wherein an unfavorable decision, ruling, or finding, in any single case or in the aggregate, would:

A. Materially adversely affect the performance by such party of its obligations hereunder.

B. Adversely affect the validity or enforceability of this Agreement.

C. Have a material adverse effect on the financial condition of Contractor, or any surety or entity guaranteeing Contractor’s performance under this Agreement.

13.5 No Adverse Judicial Decisions
Each party represents and warrants that, to the best of its knowledge aŌer reasonable invesƟgaƟon, there is no judicial decision that would prohibit this Agreement or subject this Agreement to legal challenge.

13.6 No Legal Prohibition
Each party represents and warrants that, to the best of its knowledge aŌer reasonable invesƟgaƟon, there is no law on the date that it signed this Agreement that would prohibit the performance of either party’s obligaƟons under this Agreement.

13.7 Contractor’s Ability to Perform
Contractor represents and warrants that it possesses the business, professional, and technical experƟse to perform all services, obligaƟons, and duƟes as described in and required by this Agreement. Contractor City of Brea Second Amended/Restated Franchise Agreement

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possesses the ability to secure equipment, facility, and employee resources required to perform its obligaƟons under this Agreement.

ARTICLE 14.

MISCELLANEOUS

14.1 Relationship of Parties
Contractor shall perform the services required by this Agreement as an independent contractor engaged by City and not as an officer nor employee of City, nor as a partner or agent of, or joint venture with, City.

No employee or agent of Contractor shall be, or shall be deemed to be, an employee or agent of City.

Contractor shall have the exclusive control over the manner and means of performing services under this Agreement, except as expressly provided herein. Contractor shall be solely responsible for the acts and omissions of its officers, employees, subcontractors, and agents. Neither Contractor nor its officers, employees, subcontractors, and agents shall obtain any rights to reƟrement benefits, workers’ compensaƟon benefits, or any other benefits that accrue to City employees by virtue of their employment with City.

14.2 Compliance with Law
Contractor shall at all Ɵmes, at its sole cost, comply with applicable law in force as of the EffecƟve Date and as may subsequently be enacted.

14.3 Governing Law
This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California.

14.4 Jurisdiction
Any lawsuits between the parƟes arising out of this Agreement shall be filed exclusively in a court of competent jurisdicƟon in the County of Orange, California. The parƟes waive all provisions of law providing for a change of venue in these proceedings to any other county.

14.5 Binding on Successors
The provisions of this Agreement shall inure to the benefit to and be binding on the successors and permiƩed assigns of the parƟes.

14.6 Assignment
A. Contractor shall not assign its rights, nor delegate, subcontract, or otherwise transfer its obligations under this Agreement to any other person without the prior written consent of City. Any such assignment made without City’s consent shall be void and the attempted assignment shall constitute a material breach of this Agreement.

B. For purposes of this Section, “assignment” shall include: (i) a sale, exchange, or other transfer of substantially all of Contractor’s assets dedicated to service under this Agreement to a third party; (ii) a sale, exchange, or other transfer of outstanding common stock of Contractor to a third party City of Brea Second Amended/Restated Franchise Agreement

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provided such sale, exchange, or transfer may result in a change of control of Contractor; (iii) any dissolution, reorganization, consolidation, merger, re-capitalization, stock issuance or re-issuance, voting trust, pooling agreement, escrow arrangement, liquidation, or other transaction to which results in a change of ownership or control of Contractor; (iv) any assignment by operation of law, including insolvency or bankruptcy, making assignment for the benefit of creditors, writ of attachment for an execution being levied against this Agreement, appointment of a receiver taking possession of Contractor’s property, or transfer occurring in the event of a probate proceeding; and, (v) any combination of the foregoing (whether or not in related or contemporaneous transactions) that has the effect of any such transfer or change of ownership, or change of control of Contractor.

C. Contractor acknowledges that this Agreement involves rendering a vital service to City’s residents and businesses, and that City has selected Contractor to perform the services specified herein based on: (i) Contractor’s experience, skill, and reputation for conducting its discarded materials management operations in a safe, effective, and responsible fashion, at all times in keeping with applicable laws pertaining to excluded waste, regulations, and best discarded materials management practices; and, (ii) Contractor’s financial resources to maintain the required equipment and to support its indemnity obligations to City under this Agreement. City has relied on each of these factors, among others, in choosing Contractor to perform the services to be rendered by Contractor under this Agreement.

D. If Contractor requests City’s consideration of and consent to an assignment, City may deny or approve such request in its complete discretion. No request by Contractor for consent to an assignment need be considered by City unless and until Contractor has met all of the following requirements:

1. Contractor shall undertake to pay City its reasonable expenses for attorney’s fees and investigation costs necessary to investigate the suitability of any proposed assignee and to review and finalize any documentation required as a condition for approving any such assignment.

2. Contractor shall pay City a transfer fee to cover the cost of all direct and indirect administrative expenses (including consultants and attorneys) necessary for City to analyze the transfer application.

3. Contractor shall furnish City with audited financial statements of the proposed assignee’s operations for the immediately preceding three operating years.

4. Contractor shall furnish City with a pro forma financial statement (income statement and balance sheet) for the proposed assignee with the projected results of operations assuming that the assignment is completed. Such pro forma financial statement shall reflect any debt to be incurred by the assignee as part of the acquisition of Contractor’s operations.

5. Contractor shall furnish City with satisfactory proof: (i) that the proposed assignee has at least 10 years of discarded materials management experience on a scale equal to or exceeding the scale of operations conducted by Contractor under this Agreement; (ii) that in the last five years, the proposed assignee has not suffered any significant citations or other censure from any regulatory agency having jurisdiction over its discarded materials management operations due to any significant failure to comply with applicable laws pertaining to excluded waste and that the assignee has provided City with a complete list of such citations and censures; (iii) that the proposed assignee has at all times conducted its operations in an environmentally safe and conscientious fashion; (iv) that the proposed City of Brea Second Amended/Restated Franchise Agreement

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assignee conducts its discarded materials management practices in accordance with sound discarded materials management practices in full compliance with applicable laws regulating the collection and disposal of discarded materials including hazardous waste; and, (v) of any other information required by City to ensure the proposed assignee can perform this Agreement in a timely, safe, and effective manner.

E. Under no circumstances shall City be obliged to consider any proposed assignment by City if Contractor is in default at any time during the period of consideration.

14.7 No Third-Party Beneficiaries
This Agreement is not intended to, and will not be construed to, create any right on the part of any third party to bring an acƟon to enforce any of its terms.

14.8 Waiver
The waiver by either party of any breach or violaƟon of any provisions of this Agreement shall not be deemed to be a waiver of any breach or violaƟon of any other provision nor of any subsequent breach of violaƟon of the same or any other provision. The subsequent acceptance by either party of any monies that become due hereunder shall not be deemed to be a waiver of any pre-exisƟng or concurrent breach or violaƟon by the other party of any provision of this Agreement.

14.9 Affiliated Companies
A. Contractor’s accounting records with respect to this Agreement shall be maintained on a basis showing the results of Contractor’s operations under this Agreement separately from operations in other locations, as if Contractor were an independent entity providing service only to City. The financial records of costs and revenues associated with providing service to City shall not be combined, consolidated, or in any other way incorporated with those of other operations conducted by Contractor in other locations or with those of an affiliate.

B. If Contractor enters into any financial transactions with a related party entity for the provision of labor, equipment, supplies, services, capital, etc., related to the furnishing of service under this Agreement, that relationship shall be disclosed to City and in the financial reports submitted to City.

In such event, City’s rights to inspect records and obtain financial data shall extend to such related party entity or entities.

14.10 Transition to Next Contractor
A. At expiration or termination of this Agreement, Contractor shall cooperate fully with City and any successor franchisee to assure a smooth transition of discarded materials handling services.

Contractor’s cooperation shall include providing both City and the successor franchisee with route lists, billing information, lists of gate or other access codes and information needed for entry to service areas, container placement areas by address, levels of service including any special needs or services required by each location, and other operating records needed to service all premises covered by this Agreement. In recognition of the impracticality of customers storing two sets of containers, Contractor shall remove its containers in coordination with the distribution of containers by the successor franchisee. Contractor shall cooperate with City and the successor franchisee on the timing of container removal; if the parties cannot agree on a phase-out schedule and Contractor does not remove containers in a timely manner that avoids customers having to City of Brea Second Amended/Restated Franchise Agreement

3074601.79
store two sets of containers, City, the successor franchisee, or another entity may remove Contractor’s containers and seek cost reimbursement from Contractor through its performance bond, letter of credit, or other means. 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.

B. Contractor shall, to the maximum extent feasible, provide the successor franchisee with all keys, security codes, and remote controls used to access garages and bin enclosures. Contractor shall be responsible for coordinating transfer immediately after Contractor’s final pick-ups, so as not to disrupt service. Contractor shall provide City with detailed route sheets containing service names and addresses, billing names and addresses, monthly rate, and service levels (quantity, material type, and size of containers and pick-up days) at least 90 days prior to the transition date and provide an updated list two weeks before the transition and a final list of changes the day before the transition. Contractor shall provide means of access to the successor franchisee at least one full working day (excluding Saturday, Sunday, and holidays as defined in Exhibit A) prior to the first day of collection by the successor franchisee and always within sufficient time so as not to impede in any way the successor franchisee from easily servicing all containers.

C. Contractor shall provide documentation of any customer declining request to provide keys, security codes, and/or remote controls used to access garages and container enclosures.

14.11 Contractor’s Investigation
Contractor has made an independent invesƟgaƟon (saƟsfactory to it) of the condiƟons and circumstances surrounding the Agreement and the work to be performed by it.

14.12 Condemnation
City fully reserves the rights to acquire Contractor’s property uƟlized in the performance of this Agreement by purchase or through the exercise of the right of eminent domain. This provision is addiƟve and not intended to alter the rights of the parƟes set forth in ArƟcle 11.

14.13 Notice Procedures
NoƟces, invoices, or other documents related to this Agreement shall be delivered as provided in this SecƟon and shall be deemed received on: (a) the day of delivery, if delivered by hand during the receiving party’s regular business hours or by e-mail before or during the receiving party’s regular business hours; (b) the business day aŌer delivery, if delivered by e-mail aŌer the receiving party’s regular business hours; or, (c) on the second business day following deposit in the United States mail, postage prepaid, to the addresses listed below, or to such other addresses as the parƟes may, from Ɵme to Ɵme, designate in wriƟng. Any noƟce delivered by e-mail that concerns breach or terminaƟon of this Agreement shall concurrently be sent by deposit in the United States mail, postage prepaid, but such noƟce shall be deemed received on the day of e-mail delivery.

If to City:

City of Brea
AƩn: City Manager
1 Civic Center Circle
Brea, California 92821
City of Brea Second Amended/Restated Franchise Agreement

3074601.79
krisƟ[email protected]
Copy to:

Richards, Watson & Gershon
1 Civic Center Circle
Post Office Box 1059
Brea, California 92822-1059
AƩenƟon: City AƩorney
[email protected]
If to Contractor:

General Manager
Republic Services
1131 N. Blue Gum Street
Anaheim, California 92806
E-mail to be sent to the acƟve General Manager at the Ɵme of such noƟce.

Copy to:

Republic Services, Inc.

AƩn: Legal Department
18500 N. Allied Way
Phoenix, Arizona 85054

14.14 Compliance with City Code
Contractor shall comply with those applicable provisions of the City Code, and with any and all amendments to such applicable provisions enacted aŌer the EffecƟve Date, that further consƟtute a change in applicable law within the meaning of this Agreement.

14.15 Compliance with Immigration Laws
Contractor shall be knowledgeable of and comply with applicable laws. Contractor warrants and represents that all of its employees, including any and all prospecƟve employees hired to perform services under this Agreement and the employees of any subcontractor retained by Contractor to perform a porƟon of the services under this Agreement, are and will be authorized to perform the services contemplated by this Agreement in full compliance with all applicable laws including the ImmigraƟon NaƟonality Act of 1952 (commencing with SecƟon 1101 of Title 8 of the United States Code) and the ImmigraƟon NaƟonality and the ImmigraƟon Reform and Control Act of 1986 (commencing with SecƟon 1324a of Title 8 of the United States Code). Contractor shall verify the legal status of all of its employees and provide confirmaƟon of such verificaƟon whenever requested by City. If Contractor discovers that any employee it has retained is not in compliance with immigraƟon laws, Contractor shall not allow such employee to provide services under this Agreement.

City of Brea Second Amended/Restated Franchise Agreement

3074601.79

14.16 Guarantee of Contractor's Performance
Pursuant to a guarantee in substanƟally the form aƩached as Exhibit G, Republic Services, Inc., a Delaware corporaƟon that is the sole member of Contractor, has agreed to guarantee Contractor's performance of this Agreement. The guarantee shall be provided within 10 calendar days of the EffecƟve Date.

14.17 Incorporation of Mandatory Language
Each and every provision required by law to be inserted in this Agreement shall be deemed to be inserted and this Agreement shall be read and enforced as though such provision were included. If through mistake or otherwise any such provision is not inserted, or is not correctly inserted, then upon request of either party this Agreement shall promptly be amended to make such inserƟon or correcƟon.

14.18 Interpretation
This Agreement, including the Exhibits aƩached hereto, shall be interpreted and construed reasonably and neither for nor against either party, regardless of the degree to which either party parƟcipated in its draŌing.

14.19 Severability
If any provision of this Agreement is for any reason deemed to be invalid and unenforceable, the invalidity or unenforceability of such provision shall not affect any of the remaining provisions of this Agreement.

14.20 Attorney’s Fees
If either party is required to iniƟate or defend or is made a party to any acƟon or proceeding in any way connected with this Agreement, the prevailing party in such acƟon or proceeding, in addiƟon to any other relief that may be granted, whether legal or equitable, shall be enƟtled to reasonable aƩorney’s fees.

AƩorney’s fees shall include aƩorney’s fees on any appeal, and, in addiƟon, a party enƟtled to aƩorney’s fees shall be enƟtled to all other reasonable costs for invesƟgaƟng such acƟon, taking deposiƟons and discovery and all other necessary costs the court allows that are incurred in such liƟgaƟon. All such fees shall be deemed to have accrued on commencement of such acƟon and shall be enforceable whether or not such acƟon is prosecuted to judgment.

14.21 Non-Discrimination
A. Contractor shall not discriminate against any employee or applicant for employment because of age, race, religion, creed, color, sex, marital status, sexual orientation, political ideology, ancestry, national origin, or the presence of any mental or physical handicap, unless based upon a bona fide occupational qualification. Contractor shall take affirmative action to ensure that applicants are employed and that employees are treated during employment without regard to their creed, color, sex, marital status, sexual orientation, political ideology, ancestry, national origin, or the presence of any mental or physical handicap. Such action shall include to the following: employment upgrading; demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and, selection for training.

B. Contractor understands and agrees that if it violates this nondiscrimination provision, this Agreement may be terminated by City, as provided for in Section 12, and further that Contractor City of Brea Second Amended/Restated Franchise Agreement

3074601.79
shall be barred from performing any services for City now or in the future, unless a showing is made satisfactorily to City that discriminatory practices have been terminated and that a recurrence of such action is unlikely.

14.22 Integration
This Agreement is the enƟre agreement between the parƟes with respect to the subject maƩer hereof and supersedes all prior and contemporaneous oral and wriƩen agreements and discussions. This Agreement may be amended only by an agreement in wriƟng, signed by each of the parƟes hereto.

14.23 Counterparts
This Agreement may be executed in counterparts, each of which shall be considered an original.

City of Brea Second Amended/Restated Franchise Agreement

3074601.79
IN WITNESS WHEREOF, this Agreement is entered by the ParƟes hereto in the County of Orange, California on the day and year first above wriƩen.

City of Brea,
A Municipal CorporaƟon
Republic Waste Services of Southern
California, LLC

Blair Stewart Date
Mayor
Signature Date

Print Name of Signatory

Title of Signatory

Signature Date

Print Name of Signatory
Title of Signatory

APPROVED AS TO FORM:

Terence Boga Date
City AƩorney
City Business License #

ATTEST:

Lillian Harris-Neal Date
City Clerk

3074601.9

SECOND AMENDED AND RESTATED FRANCHISE AGREEMENT

BETWEEN

CITY OF BREA
AND

REPUBLIC WASTE SERVICES OF SOUTHERN CALIFORNIA, LLC

DBA BREA DISPOSAL
3074601.9
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City of Brea Second Amended/Restated Franchise Agreement Table of Contents
-i- City of Brea
3074601.9

TABLE OF CONTENTS
ARTICLE 1. INTRODUCTORY MATTERS ................................................................................... 2

1.1 Definitions ................................................................................................................. 2

1.2 Exhibits ..................................................................................................................... 2

1.3 Cross-References ..................................................................................................... 2

1.4 External References ................................................................................................. 2

1.5 Rules of Construction ................................................................................................ 2

1.6 City Manager Authority .............................................................................................. 3 ARTICLE 2. CONTRACT PERIOD .............................................................................................. 3

2.1 Base Term ................................................................................................................. 3

2.2 Extension Option ....................................................................................................... 3

2.3 Conditions Precedent ................................................................................................ 3 ARTICLE 3. EXCLUSIVE FRANCHISE ....................................................................................... 4

3.1 Grant and Acceptance of Franchise .......................................................................... 4

3.2 Limitations to Franchise ............................................................................................ 4

3.3 Obligations of Parties ................................................................................................ 6

3.4 Prior Contracts .......................................................................................................... 6

3.5 Mutual Determinations .............................................................................................. 6 ARTICLE 4. SCOPE OF AGREEMENT ....................................................................................... 7

4.2 Flow Control Option .................................................................................................. 7

4.3 Use of Approved and Designated Facilities .............................................................. 9

4.4 Subcontracting .......................................................................................................... 9

4.5 Responsibility for Materials ....................................................................................... 9

4.6 City-Directed Changes to Scope ............................................................................. 10 ARTICLE 5. SCOPE OF SERVICES .......................................................................................... 10

5.1 Recyclable and Organic Materials .......................................................................... 10

5.2 Solid Waste ............................................................................................................. 12

5.3 Miscellaneous Service Provisions ........................................................................... 13

5.4 Bulky Goods and Reusable Materials ..................................................................... 14

5.5 City Sponsored Events ........................................................................................... 14

5.6 Public Education and Outreach .............................................................................. 15

5.7 Billing ...................................................................................................................... 16

5.8 Customer Service Program ..................................................................................... 19

5.9 Access to Customer Service and Billing Systems .................................................. 22

5.10 Service Exemptions ................................................................................................ 22

5.11 Contamination Monitoring ...................................................................................... 23

5.12 Route Audit ............................................................................................................. 27

5.13 Preparation of CalRecycle Electronic Annual Report (EAR) ................................... 29 ARTICLE 6. STANDARD OF PERFORMANCE ........................................................................ 29

6.1 General ................................................................................................................... 29

6.2 Operating Hours and Schedules ............................................................................. 29

6.3 Collection Standards ............................................................................................... 30

6.4 Transfer and Processing Standards ........................................................................ 32

6.5 Collection Vehicle Requirements ............................................................................ 33 City of Brea Second Amended/Restated Franchise Agreement Table of Contents
-ii- City of Brea
3074601.9

6.6 Container Requirements ......................................................................................... 35

6.7 Personnel ................................................................................................................ 39

6.8 Hazardous Waste Inspection and Handling ............................................................ 41

6.9 Contract Management ............................................................................................ 42

6.10 Minimum Diversion Requirements .......................................................................... 42

6.11 Customer Participation Compliance Requirements ................................................ 43 ARTICLE 7. RECORD KEEPING AND REPORTING ................................................................ 43

7.1 Record Keeping ...................................................................................................... 43

7.2 Report Submittal Requirements .............................................................................. 44

7.3 System and Services Review ................................................................................. 45

7.4 Biennial Audit .......................................................................................................... 46

7.5 SB 1383 Record Keeping Software ........................................................................ 46 ARTICLE 8. CONTRACTOR’S CONSIDERATION .................................................................... 47

8.1 Franchise Fee ......................................................................................................... 47

8.2 AB 939 Administrative Fees .................................................................................... 47

8.3 Recyclable Materials Revenues .............................................................................. 47

8.4 Edible Food Recovery Funding ............................................................................... 47

8.5 Payment Schedule and Late Fees .......................................................................... 48

8.6 Other Fees .............................................................................................................. 48 ARTICLE 9. CONTRACTOR’S COMPENSATION AND RATE SETTING ................................. 48

9.1 General ................................................................................................................... 48

9.2 Initial Rates ............................................................................................................. 48

9.3 Schedule of Future Adjustments ............................................................................. 48

9.4 Method of Adjustments ........................................................................................... 49

9.5 Extraordinary Adjustments ...................................................................................... 50

9.6 Limitations on Rate Adjustments ............................................................................. 51 ARTICLE 10. INDEMNITY, INSURANCE, AND PERFORMANCE BOND ................................ 51

10.1 Indemnification ........................................................................................................ 51

10.2 Insurance ................................................................................................................ 53

10.3 Faithful Performance Bond or Irrevocable Letter of Credit ..................................... 55

10.4 Performance Security Beyond Service Term .......................................................... 55 ARTICLE 11. CITY'S RIGHT TO PERFORM SERVICE ............................................................ 56

11.1 General ................................................................................................................... 56

11.2 Billing and Compensation to City During City's Possession ................................... 56

11.3 Disaster Preparedness Plan ................................................................................... 56 ARTICLE 12. DEFAULT AND REMEDIES ................................................................................. 57

12.1 Events of Default ..................................................................................................... 57

12.2 Contractor’s Right to Cure; Right to Terminate Upon Event of Default ................... 58

12.3 City’s Remedies in the Event of Default .................................................................. 59

12.4 Possession of Records Upon Termination .............................................................. 59

12.5 City’s Remedies Cumulative; Specific Performance ............................................... 59

12.6 Performance Standards and Liquidated Damages ................................................. 60

12.7 Excuse from Performance ...................................................................................... 65

12.8 Right to Demand Assurances of Performance ........................................................ 67

12.9 Dispute Resolution .................................................................................................. 67 City of Brea Second Amended/Restated Franchise Agreement Table of Contents
-iii- City of Brea
3074601.9
ARTICLE 13. REPRESENTATIONS AND WARRANTIES OF THE PARTIES .......................... 67

13.1 Contractor’s Status ................................................................................................. 67

13.2 Contractor’s Authorization ....................................................................................... 68

13.3 Agreement Will Not Cause Breach ......................................................................... 68

13.4 No Litigation ............................................................................................................ 68

13.5 No Adverse Judicial Decisions ................................................................................ 68

13.6 No Legal Prohibition ................................................................................................ 68

13.7 Contractor’s Ability to Perform ................................................................................ 68 ARTICLE 14. MISCELLANEOUS .............................................................................................. 69

14.1 Relationship of Parties ............................................................................................ 69

14.2 Compliance with Law .............................................................................................. 69

14.3 Governing Law ........................................................................................................ 69

14.4 Jurisdiction .............................................................................................................. 69

14.5 Binding on Successors ........................................................................................... 69

14.6 Assignment ............................................................................................................. 69

14.7 No Third-Party Beneficiaries ................................................................................... 71

14.8 Waiver ..................................................................................................................... 71

14.9 Affiliated Companies ............................................................................................... 71

14.10 Transition to Next Contractor .................................................................................. 71

14.11 Contractor’s Investigation ....................................................................................... 72

14.12 Condemnation ......................................................................................................... 72

14.13 Notice Procedures .................................................................................................. 72

14.14 Compliance with City Code ..................................................................................... 73

14.15 Compliance with Immigration Laws ........................................................................ 73

14.16 Guarantee of Contractor's Performance ................................................................. 74

14.17 Incorporation of Mandatory Language .................................................................... 74

14.18 Interpretation ........................................................................................................... 74

14.19 Severability ............................................................................................................. 74

14.20 Attorney’s Fees ....................................................................................................... 74

14.21 Non-Discrimination .................................................................................................. 74

14.22 Integration ............................................................................................................... 75

14.23 Counterparts ........................................................................................................... 75 City of Brea Second Amended/Restated Franchise Agreement List of Exhibits
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3074601.9

LIST OF EXHIBITS
A. DefiniƟons
B. Direct Services
B1. Single-Family ResidenƟal Services
B2. MulƟ-Family ResidenƟal Services
B3. Commercial Services
B4. City And Community Services and Data
C. Public EducaƟon and Outreach Requirements
D. IniƟal Maximum Rates
E. Example Rate Adjustment Formula
F. ReporƟng Requirements
G. Corporate Guaranty
H. Contractor’s Faithful Performance Bond
I. Notary CerƟficaƟon
J. Contractor’s SB 1383 ImplementaƟon Plan and Schedule K. County Waste Disposal Agreement
L. FaciliƟes List
M. DocumentaƟon of ResidenƟal Organics Cost Per Ton
N. Customer Credit for Missed Pick-Ups During a Work Stoppage O. City Non-Extension NoƟce
City of Brea Second Amended/Restated Franchise Agreement