41 A PDPROVED BOAR Ve°N2Rili CALIFORNIA For the Agenda of: December 12, 2017 Clerk of the Board To: Board of Supervisors From: Department of Waste Management and Recycling Subject: Approve Retroactive Fourth Amendment To Contract No. 70629 With Recycling Industries, Inc., For Processing Of Single Stream Recyclables — North Area And Settlement Agreement Concerning Contract No. 70629 Supervisorial District(s): All Contact: Doug Kobold, 875-7087 Overview The Department of Waste Management and Recycling (DWMR) collects source-separated Single Stream Recyclables (SSR) material at the curbside on a bi-weekly basis from residents in the unincorporated area of the County. These SSR materials require sorting into marketable commodities for sale to the recycled materials market. The County entered into Contract No. 70629 with Recycling Industries, Inc. (RI) on November 6, 2012, to begin processing SSR material on March 1, 2013. Due to recent changes in the current recycled commodities market conditions and other factors and in order to settle disputes between the parties associated with those changes, County staff has negotiated the attached proposed Fourth Amendment to Contract No. 70629 and the attached proposed Settlement Agreement, which amends the compensation amount for the processing of SSR material for the months of November and December 2017, establishes an early termination clause that would allow the parties to terminate Contract No. 70629 on December 31, 2017, relieves RI of $139,241.42 in payments owed to the County for SSR material processing as of the date of this Board action today, forgives an additional $40,913.17 in Supplemental Curbside Collectors Payments (SCCP) owed by RI to the County for Calendar Year 2016, and allows RI to make monthly installment payments over a 36-month period on the remaining sum of $213,120 to the County, beginning on January 1, 2018. Additional payment amounts may be added to this $213,120 for landfill disposal costs of residuals from the SSR material processing. DWMR staff believes these amendments to Contract No. 70629 and the provisions set forth in the Settlement Agreement are in the best interest of the County and its ratepayers. Recommendations 1. Approve Retroactive Fourth Amendment to Contract No. 70629 with RI for Processing of SSR Material; and 2. Approve Settlement Agreement Concerning Contract No. 70629; and 3. Authorize the Director of DWMR, on behalf of the County, to execute the Amendment and Settlement Agreement in accordance with the attached Resolution. Approve Retroactive Fourth Amendment To Contract No. 70629 With Recycling Industries, Inc., For Processing Of Single Stream Recyclables — North Area And Settlement Agreement Concerning Contract No. 70629 Page 2 Measures/Evaluation Not applicable. Fiscal Impact This agreement affects only the Solid Waste Enterprise Fund. The net effect of the action requested is a reduction in amounts owed to the County by RI of $180,154.59 ($139,241.42 for processing + $40,913.17 for 2016 SCCP shortfall) and repayment of $213,120, plus additional amounts for SCCP and residual disposal (yet to be calculated), by RI to the County over a 36 month period. The Solid Waste Enterprise Fund has sufficient funds to cover the decrease in revenue and the delayed receipt of revenues from RI during Fiscal Year 2017-18. BACKGROUND On November 6, 2012, the Board of Supervisors approved and authorized the Director of DWMR to execute Contract No. 70629 with RI for processing SSR Materials, which went into effect on March 1, 2013. Contract No. 70629 was amended on August 5, 2013 to correct formula errors within the payment calculator and revise the residual disposal requirement. On April 24, 2014, it was again amended to adjust the pricing structure due to the discontinuance of a pricing index. Finally, on May 19, 2015 the Board of Supervisors approved a third amendment, effective July 13, 2015, to retroactively defer payments owed by RI to the County for an eight-month period; labor actions at west coast ports severely restricted exports of recycled materials affecting RI's ability to pay the County as outlined in their contract. In June 2017, DWMR staff learned of the "Environmental Protection Control Standard For Imported Solid Wastes As Raw Materials — Waste And Scrap Of Paper Or Cardboard" issued by the State Environmental Protection Administration of the People's Republic of China (PRC) on December 14, 2005 with an implementation date of February 1, 2006. This national standard, which is commonly referred to as the "National Sword" within the recycling industry, requires that certain contaminates (trash) constitute no more than 1.5%, by weight, of segregated and baled recyclable commodities, specifically imported waste paper. While National Sword was issued in 2005, there was very little to no enforcement by the PRC until 2013, when it enacted "Operation Green Fence." This 2013 action by the PRC was an attempt to reduce the amount of contaminants found in recycled material bales being imported by recyclers into China, especially those originating from the United States. By 2014, however, the PRC had relaxed enforcement of Operation Green Fence on the assumption that the recycling industry would continue, on its own, to reduce the amount of trash included in these bales of recyclable materials. As a result of inaction by the recycling industry to reduce the trash in the bales following Operation Green Fence, the PRC once again stepped up enforcement action by implementing "National Sword 2017." This latest action began on March 1, 2017 and is continuing today. Under National Sword 2017, PRC customs officials have increased inspections of imported recyclable materials, focusing on the quality of waste paper and plastics. Along with representatives of brokering companies handling the sales of baled recyclable commodities, they have also been conducting inspections of finished bales at the actual recycling facilities here in the United States, especially on the West Coast, to determine if the 1.5% standard contained in the National Sword policy is being met. Based on research by DWMR staff and other experts in Approve Retroactive Fourth Amendment To Contract No. 70629 With Recycling Industries, Inc., For Processing Of Single Stream Recyclables — North Area And Settlement Agreement Concerning Contract No. 70629 Page 3 the recycling industry, this standard can be met by using the proper equipment and processing methods for recycling. Further, while the recycling industry has been impacted by the PRC's enforcement of National Sword given that exports of waste paper and plastics to the PRC represents 30-50% of the total recovered paper and plastics in the United States and that the PRC is the biggest outlet for these materials that provides the highest rate of monetary return, the PRC is not the only market for these materials. County staff has met with RI on a number of occasions since June 22, 2017 and exchanged several communications concerning RI's request to make various changes to Contract No. 70629 in light of the PRC's recent enforcement of National Sword. DISCUSSION At its most recent meeting on November 9, 2017, County staff met and RI representatives agreed to several items that would finally resolve outstanding issues relating to Contract No. 70629, including the processing fees charged by RI for such service and the amounts owed by RI to the County for the value of the processed SSR material. The parties agreed that it would be in their best interests to undertake the following action items: • • Add a new termination option to Contract No. 70629, via a fourth amendment ("Fourth Amendment") (Attachment 1) that would allow the parties to terminate the contract on December 31, 2017 without penalty. Establish a repayment plan under which RI would make monthly installment payments on all remaining monies owed to the County pursuant to the terms and conditions set forth in the attached Settlement Agreement (Attachment 2). The Settlement Agreement stipulates the net amount owed by RI to the County and provides for a 36-month repayment schedule of such amount. It also provides that its execution constitutes the parties' exercise of the early termination option described in the Fourth Amendment and contains other standard provisions, including the release of all known and unknown claims by RI and the County against each other. In addition, as a condition of Contract No. 70629, RI must compensate the County for any shortfall in revenues received by the County from the State for Supplemental Curbside Collectors Payments (SCCP), based on reporting by RI on the County's behalf. For the Calendar Year (CY) of 2015, the shortfall was calculated to be $69,700.76, which was remitted to the County by RI. The shortfall for CY 2016 is $40,913.17. These shortfalls arise from underreporting by RI to the State of tonnages of Aluminum, PET, Glass, and HDPE beverage containers recovered from the SSR Material during processing. Under the Settlement Agreement, RI will not be required to make payment to the County for the CY 2016 SCCP shortfall, nor any shortfall the County may experience for CY 2017. Any shortfall for CY 2017 will not be known until sometime in late 2018. RI disputes this characterization and maintains that there has been no underreporting to the State. RI is also required to dispose of all residual (trash) generated through the processing of the County's SSR material at either Kiefer Landfill or the North Area Recovery Station at the current gate fee of $30.00/ton and $48.00/ton, respectively. RI maintains a revolving credit Approve Retroactive Fourth Amendment To Contract No. 70629 With Recycling Industries, Inc., For Processing Of Single Stream Recyclables — North Area And Settlement Agreement Concerning Contract No. 70629 Page 4 account with the County at these two facilities and typically carries an outstanding balance from the prior month. MEASURES/EVALUATION Not applicable. 71-J ANALYSIS This agreement is for processing of SSR material, which the County labor force does not perform; therefore, Section 71-J is not applicable. LEGAL ISSUES County Counsel has reviewed and approved the Fourth Amendment and the Settlement Agreement. FINANCIAL ANALYSIS Early termination of Contract No. 70629 and the Settlement Agreement only apply to the Solid Waste Enterprise Fund. The total amount owed by RI to the County prior to execution of the Fourth Amendment and the Settlement Agreement is $379,924.52, which includes $339,011.35 in payments for the processing of SSR material from April 2017 through December 12, 2017 (including all late payment penalties and interest) and the $40,913.17 in SCCP for CY 2016. There also may be an additional shortfall in SCCP for CY 2017 which would not be collected from RI. The parties agreed during the November 9, 2017 meeting to a credit, against monies owed by RI to the County, of $35,000/month for the months of November and December 2017 in exchange for RI continuing to accept deliveries from the County of 1,000 tons/month of SSR Material during those two months. This $70,000 in total credits is equal to a cost of $35.00/ton for the processing of SSR material paid by the County to RI for those two months and also is approximately the same amount the County would have to pay to other SSR Materials processors to take the material currently being delivered to RI. Making the Fourth Amendment retroactive to November 1, 2017 eliminates late payment penalties and interest that would have been assessed by the County from November 1, 2017 through the date of this Board action. That amount is $13,350.07. Further, as stated in the Settlement Agreement, the parties have agreed to sum of $213,120 that RI will pay to the County over a 36-month period pursuant to the Settlement Agreement. This amount represents the face value of the performance bond that RI posted for the County's benefit as required by Contract No. 70629. Additional amounts may be added to that $213,120 amount for residual disposal as discussed above. These additional amounts may be paid off by RI in lump sums as invoiced by the County, or may be added to the principal of the repayment plan described above. Deducting the amounts of $70,000 and $213,120 from the initial $379,924.52 owed by RI leaves a net amount of $96,804.52, which will not be collected by the County. This amount excludes any potential shortfall in SCCP for CY 2017. DWMR will seek relief of accountability for these amounts in a future Board action. Approve Retroactive Fourth Amendment To Contract No. 70629 With Recycling Industries, Inc., For Processing Of Single Stream Recyclables — North Area And Settlement Agreement Concerning Contract No. 70629 Page 5 The total benefit to RI as of the date of this action taken by the Board will be a total reduction of $180,154.59 in the amount owed to the County, comprised of the $55,891.35 processing revenues as uncollected debt, the $13,350.07 in eliminated late payment penalties and interest, the $70,000 Credit for SSR material processed in November and December 2017 (collectively these three items totaling $139,241.42), and the $40,913.17 in SCCP shortfall for CY 2016. Respectfully submitted, DOUGLAS SLOAN, Director Department of Waste Management and Recycling APPROVED: NAVDEEP S. GILL County Executive By: MICHAEL J. PENROSE Deputy County Executive Attachment: Resolution ATT 1 - Fourth Amendment to Contract No. 70629 (Retroactive) ATT 2 — Settlement Agreement Concerning Contract No. 70629 RESOLUTION NO. 2017-0868 RETROACTIVE FOURTH AMENDMENT TO CONTRACT NO. 70629 FOR PROCESSING OF SINGLE STREAM RECYCLABLES — NORTH AREA AND SETTLEMENT AGREEMENT CONCERNING CONTRACT NO. 70629 WHEREAS, COUNTY and CONTRACTOR previously entered into an Agreement on November 6, 2012 to process COUNTY'S Single Stream Recyclables (hereinafter "SSR Material") (hereinafter "Agreement"); and WHEREAS, COUNTY and CONTRACTOR amended the Agreement on August 5, 2013 to revise Exhibits H-1, H-2 and H-3; and WHEREAS, COUNTY and CONTRACTOR amended the Agreement on April 24, 2014 to revise the average calculation for News #6 and News #8; and WHEREAS, COUNTY and CONTRACTOR amended the Agreement on July 13, 2015 to defer CONTRACTOR'S monthly payment to the COUNTY for SSR Material delivered to the CONTRACTOR by the COUNTY; and WHEREAS, pursuant to Section 26 (Disputes) of the Agreement, COUNTY and CONTRACTOR have met and conferred concerning disputes precipitated by recent changes in the recyclables materials market and desire to resolve such disputes between them by further amending the Agreement (hereinafter "Fourth Amendment") to include an early termination option that may be exercised pursuant to the terms and conditions set forth in the settlement agreement that COUNTY and CONTRACTOR are entering into concurrent with the execution of this Fourth Amendment (hereinafter "Settlement"); and WHEREAS, in order to implement the Settlement, COUNTY and CONTRACTOR desire to exercise said termination option to terminate the Agreement on December 31, 2017. NOW, THEREFORE, BE IT RESOLVED AND ORDERED that the Board of Supervisors authorizes the Director of Waste Management and Recycling to execute the aforementioned retroactive Fourth Amendment and Settlement with the following contactor and to do and perform everything necessary to carry out the purpose of this Resolution: RECYCLING INDUSTRIES, INC., a California corporation Retroactive Fourth Amendment To Contract No. 70629 For Processing Of Single Stream Recyclables — North Area And Settlement Agreement Concerning Contract No. 70629 Page 2 BE IT FURTHER RESOLVED that the Fourth Amendment shall be effective retroactive to November 1, 2017 and the Settlement shall be effective upon execution by the parties. On a motion by Supervisor Frost, seconded by Supervisor Kennedy, the foregoing Resolution was passed and adopted by the Board of Supervisors of the County of Sacramento this 12 th day of December, 2017, by the following vote, to wit: AYES: Supervisors Frost, Kennedy, Peters, Serna, Nottoli NOES: None ABSENT: None ABSTAIN: None RECUSAL: None (PER POLITICAL REFORM ACT (§ 18702.5.) Chair of the Board of Supervisors of Sacramento County, California ATTEST: Clerk, Board of Supervisors In accordance viijO Section 25103 of the Government Code of the Stateof California a copy of the document has been delivered Id die Chait of the Board of Supenriso ,, rs, County of *wet* on BY: (.2:bnatr- Deputy Clark,goard of Supervisors FILED BOARD OF SUPERVISORS 12 2017 CLERK OF THE BOARD ATTACHMENT 1 Contract No. 70629 A4 COUNTY OF SACRAMENTO MUNICIPAL SERVICES FOURTH AMENDMENT TO AGREEMENT FOR PROCESSING OF SINGLE STREAM RECYCLABLES — NORTH AREA (RETROACTIVE) THIS FOURTH AMENDMENT is made and entered into on by and between the COUNTY OF SACRAMENTO, a political subdivision of the State of California, hereinafter referred to as "COUNTY," and RECYCLING INDUSTRIES, INC., a California Corporation, hereinafter referred to as "CONTRACTOR." RECITALS WHEREAS, COUNTY and CONTRACTOR previously entered into an Agreement on November 6, 2012 to process COUNTY'S Single Stream Recyclables (hereinafter "SSR Material") (hereinafter "Agreement"); and WHEREAS, COUNTY and CONTRACTOR amended the Agreement on August 5, 2013 to revise Exhibits H-1, H-2 and H-3; and WHEREAS, COUNTY and CONTRACTOR amended the Agreement on April 24, 2014 to revise the average calculation for News #6 and News #8; and WHEREAS, COUNTY and CONTRACTOR amended the Agreement on July 13, 2015 to defer CONTRACTOR'S monthly payment to the COUNTY for SSR Material delivered to the CONTRACTOR by the COUNTY; and WHEREAS, pursuant to Section 26 (Disputes) of the Agreement, COUNTY and CONTRACTOR have met and conferred concerning disputes precipitated by recent changes in the recyclables materials market and desire to resolve such disputes between them by agreeing to the early termination of the Agreement pursuant to the terms and conditions set forth in the settlement agreement that COUNTY and CONTRACTOR are entering into concurrent with the execution of this Fourth Amendment; and WHEREAS, COUNTY and CONTRACTOR desire to further amend said Agreement to add a new termination option that would allow COUNTY or CONTRACTOR to terminate the Agreement at either party's convenience on December 31, 2017. NOW, THEREFORE, the Agreement is amended as follows. , 1. TERMINATION A. Current paragraph (D) of Section 27 of the Agreement is renumbered as paragraph (E) and a new paragraph (D) is added to read as follows: ATTACHMENT 1 Contract No. 70629 A4 COUNTY or CONTRACTOR may terminate this Agreement pursuant to the terms and conditions set forth in the Settlement Agreement with Recycling Industries, Inc. dated December , 2017. If COUNTY or CONTRACTOR exercises this option (D), this Agreement shall terminate on December 31, 2017. B. Subsection (E) of Section 27 of the Agreement is amended to read as follows: The Director has authority to terminate this Agreement under paragraphs, (A), (B), (C), or (D), above. 2. MONTHLY PAYMENTS Section 4.8.5 of Attachment Ito the Agreement is amended to read as follows: CONTRACTOR shall make monthly payments to the COUNTY pursuant to the payment schedule set forth in the Settlement Agreement with Recycling Industries, Inc. dated December_, 2017. A Late Payment Penalty of ten percent (10%) will be assessed on all late payments, with an additional monthly interest charge of one & one half percent (1.5%) compounded monthly for every month thereafter. 3. REAFFIRMATION Except as expressly stated herein, the Agreement shall remain in full force and effect. 4. ENTIRE AGREEMENT The Agreement, as amended by this Fourth Amendment, and any attachments hereto, constitute the entire understanding between COUNTY and CONTRACTOR concerning the subject matter contained herein. 5. AUTHORITY TO EXECUTE Each person executing this Fourth Amendment represents and warrants that he or she is duly authorized and has legal authority to execute and deliver this Fourth Amendment for or on behalf of the parties to this Fourth Amendment. Each party represents and warrants to the other that the execution and delivery of this Fourth Amendment and the performance of such party's obligations hereunder have been duly authorized. 6. COUNTERPARTS This Fourth Amendment may be executed in counterparts and shall be deemed executed when signed by both parties. [SIGNATURE PAGE FOLLOWS] ATTACHMENT 1 Contract No. 70629 A4 IN WITNESS WHEREOF, the parties hereto have executed this Fourth Amendment to the Agreement as of the day and year first written above. COUNTY OF SACRAMENTO, a political subdivision of the State of California By: RECYCLING INDUSTRIES, INC., a California Corporation By: Douglas Sloan, Director Department of Waste Management and Recycling Municipal Services Date: Name: Title: Date: Agreement approved by Board of Supervisors: Agenda Date: Item Number: Resolution No.: Amendment Reviewed and Approved by County Counsel By: Date: Katrina G. Nelson Deputy County Counsel ATTACHMENT 2 SETTLEMENT AGREEMENT WITH RECYCLING INDUSTRIES, INC. THIS MUTUAL RELEASE AND SETTLEMENT AGREEMENT ("Agreement") is entered into on by and between the COUNTY OF SACRAMENTO, a political subdivision of the State of California ("COUNTY") and RECYCLING INDUSTRIES, INC., a California Corporation ("RI"). Collectively, COUNTY and RI are referred to as "Parties." RECITALS A. COUNTY and RI previously entered into Contract No. 70629 on November 6, 2012 for the processing of COUNTY'S single stream recyclables ("SSR") material ("Processing Contract"), which was amended on August 5, 2013, April 24, 2014, and July 13, 2015. B. In June 2017, RI requested several changes to the Processing Contract, including increases to processing fees paid by COUNTY to RI, as a result of enforcement actions by the government of the People's Republic of China ("PRC") of its "National Sword 2017" policy, which enforcement included the implementation of environmental protection control standards for imported solid wastes that were issued in 2005 but had not been implemented since that time and which RI asserts constitutes a force majeure event excusing its non-performance of certain obligations under the Processing Contract. C. While COUNTY recognizes that recent actions by the PRC have affected the recyclables materials markets and have led to increased uncertainty and volatility in market conditions, it disagrees with RI's position that such actions constitute a force niajeure event under the Processing Contract, contends that RI has failed to comply with the terms of the Processing Contract and has failed to remit to COUNTY approximately $350,000 for the value of processed SSR material, and has rejected RI's requested changes to the Processing Contract. D. Disputes arose between COUNTY and RI concerning the payment amounts owed by RI to COUNTY and the processing fees charged by RI for the processing of SSR material under the Processing Contract. No litigation or formal claims regarding these disputes has been commenced. E. Over the past few months, COUNTY and RI have engaged in a series of informal discussions and agree that it is in their best interests to settle their disputes without further litigation. Therefore, without admitting fault or liability, they have agreed to completely resolve all claims that exist or may exist between them as set forth below. IN CONSIDERATION OF THE MUTUAL COVENANTS SET FORTH BELOW, the Parties agree and stipulate as follows: ATTACHMENT 2 1. Amendment to Processing Contract. At the COUNTY'S Board of Supervisors ("Board") meeting during which this Agreement will be presented to the Board for consideration and approval, COUNTY staff will concurrently present a fourth amendment to the Processing Contract ("Fourth Amendment"). If approved by the Board, the Fourth Amendment will allow the Parties to terminate the Processing Contract on December 31, 2017 and permit RI to make monthly payments pursuant to the repayment plan described in Section 3 below. 2. Termination of Processing Contract. By executing this Agreement, COUNTY and RI each exercise its option to terminate the Processing Contract pursuant to the termination option described in the Fourth Amendment. RI shall continue to process at least 1,000 tons of SSR material for COUNTY until December 31, 2017, in accordance with the terms of the Processing Contract, as amended. 3. Payment of Monies Owed to County. A. RI agrees that it will pay to COUNTY the sum of $213,120, payable in 36 monthly installments of $5,920.00 beginning on January 1, 2018. Each installment payment shall be due and payable on the first of each month and shall be sent to COUNTY as follows: County of Sacramento Department of Waste Management & Recycling 9850 Goethe Road Sacramento, CA 95827 Attn: Suzanne Norris B. In addition to the sum described in paragraph 3.A above, RI agrees to pay to COUNTY any residual disposal fees associated with RI's delivery of processed SSR material to COUNTY'S Kiefer Landfill or NARS facilities as of December 31, 2017 pursuant to Section 4.4.7 of Attachment 1 to the Processing Contract. At RI's option, these sums may be paid to COUNTY as lump sum payments upon presentation by COUNTY to RI of the disposal fee invoices or in monthly installments pursuant to paragraph 3.A above. C. A late payment penalty of ten percent (10%) will be assessed on any late payments made by RI under this Agreeement, with an additional monthly interest charge of one & one half percent (1.5%), compounded monthly for every month thereafter. 4. No Claims or Litigation. The Parties agree that RI will not file a Government Code claim against COUNTY relating to the Processing Contract and that no litigation -2- ATTACHMENT 2 will occur with respect to any claims either party may have against the other under the Processing Contract. 5. General Releases and Release of Unknown Claims. A. The Parties acknowledge that all matters arising out of the claims set forth in the recitals and any other claim by RI related to the Processing Contract are fully compromised and settled. COUNTY, in consideration of the promises and covenants made in this Agreement, hereby compromises, settles, releases and discharges RI and its predecessors and assigns, and past and present employees, agents, representatives, attorneys and consultants from any and all liens, losses, claims, debts, liabilities, demands, obligations, promises, acts, agreements, costs and expenses, damages, injuries, suits, actions and causes of action of whatever kind or nature, whether known or unknown, suspected or unsuspected, contingent or fixed, based on, arising out of, incidental to, appertaining to, in connection with and/or emanating from, in any way, the Processing Contract. B. RI, on behalf of itself, its owners, heirs, executors, administrators, successors and assigns, and in consideration of the promises and covenants made in this Agreement, hereby compromises, settles, releases and discharges COUNTY and its predecessors and assigns, and past and present Board members, officers, directors, employees, agents, representatives, attorneys and consultants from any and all liens, losses, claims, debts, liabilities, demands, obligations, promises, acts, agreements, costs and expenses, damages, injuries, suits, actions and causes of action of whatever kind or nature, whether known or unknown, suspected or unsuspected, contingent or fixed, based on, arising out of, incidental to, appertaining to, in connection with and/or emanating from, in any way, the Processing Contract. C. The Parties acknowledge and agree that they have been informed by their attorneys and advisors of, and are familiar with and hereby expressly waive the provisions of, section 1542 of the California Civil Code to the fullest extent that they may waive such rights and benefits. Section 1542 provides: A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor. -3- ATTACHMENT 2 D. The Parties to this Agreement expressly consent that, notwithstanding section 1542 of the California Civil Code, this Agreement shall be given full and final effect according to each and all of its express terms and conditions, including those related to unknown and unsuspected claims, demands, and causes of action. The Parties acknowledge and agree that this waiver is an essential and material term of this Agreement and, without such waiver, this Agreement would not have been entered into. 6. Understanding of Agreement. The Parties acknowledge that they have carefully read this Agreement; that they understand its final and binding effect; that they have consulted or had the opportunity to consult legal counsel about the Agreement; and, that they understand the provisions of this Agreement and knowingly and voluntarily agree to be bound by them. 7. No Admission of Liability. The execution of this Agreement effects the settlement of claims that are disputed, contested and denied. The Parties understand and agree that nothing in this Agreement is intended or shall be deemed or construed to be an admission of liability by any other party in any respect or to any extent whatsoever, and the parties shall not make any representation to the contrary. 8. General Provisions. A. Counterparts. This Agreement may be executed in one or more counterparts but all of the counterparts shall constitute one Agreement. This Agreement shall be effective on the date first written above. B. Authority. Each person signing this Agreement on behalf of a party represents and warrants that he or she has the authority and capacity to make the releases and promises set forth in this Agreement and that each party is the owner of and has not assigned or hypothecated any of the claims encompassed by this Agreement, whether known or unknown. C. Successors and Assigns. This Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the parties hereto, and each of them. D. Integration. This Agreement constitutes the sole, final, complete, exclusive and integrated expression and statement of the terms of this contract between COUNTY and RI concerning the subject matter addressed herein, and -4- ATTACHMENT 2 supersedes all prior negotiations, representations, or agreements, either oral or written, that may be related to the subject matter of this Agreement. Each party acknowledges and represents that, in releasing, discharging and settling certain claims and entering into this Agreement, it has not acted in reliance upon any promise, covenant, representation, warranty, warning or inducement whatsoever, express or implied, as contained in this Agreement. E. Construction and Interpretation. The Parties agree and acknowledge that this Agreement has been arrived at through negotiation, and that each party has had a full and fair opportunity to revise the terms of this Agreement. Consequently, the normal rule of construction that any ambiguities are to be resolved against the drafting party shall not apply in construing or interpreting this Agreement. F. Severabilitv. In the event that any provision of this Agreement should be held to be void, voidable or unenforceable, the remaining portions hereof shall remain in full force and effect as each provision is an independent covenant and not a condition precedent to the effectiveness of any other provision herein. G. Governing Law and Venue. This Agreement shall be construed in accordance with, and be governed by, the laws of the State of California, and shall be deemed entered into, executed, and the place for performance shall be the County of Sacramento, State of California. Any action to enforce or interpret this Agreement shall be brought in the Superior Court for the County of Sacramento, California. H. Attorneys' Fees. The Parties agree that each party shall bear its own attorneys' fees, costs and expenses arising out of and/or connected with the disputes which are the subject of this Agreement. I. Breach of Agreement. If proceedings are necessary to enforce any provision of the Agreement or due to the breach of the Agreement, then the prevailing party in such proceedings shall be entitled to recover its reasonable attorneys' fees and statutory and non-statutory costs. [SIGNATURES FOLLOW ON NEXT PAGE] ATTACHMENT 2 COUNTY OF SACRAMENTO, a political subdivision of the State of California RECYCLING INDUSTRIES, INC., a California Corporation By: By: Douglas Sloan, Director Department of Waste Management and Recycling Municipal Services Name: Title: Date: Date: Agreement approved by Board of Supervisors: Agenda Date: Item Number: Resolution No.: Agreement Reviewed and Approved by County Counsel Date: By: Katrina G. Nelson Deputy County Counsel