[CONFORMED COPY]
NOW DISPOSAL AGREEMENT
This NOW Disposal Agreement (the "Agreement"), dated as of June 4,
1996, but effective as of the Effective Date (as defined below), is entered into
by and among Sanifill, Inc., a Delaware corporation ("Sanifill"), NOW Disposal
Operating Co., a Delaware corporation and an indirect wholly-owned subsidiary of
Sanifill ("Disposeco"), and Xxxxxxxx Xxxxx, Ltd., a Delaware limited
partnership, the equity interests of which are owned directly or indirectly by
Sanifill ("Xxxxxxxx Xxxxx").
WHEREAS, Xxxxxxxx Xxxxx is engaged, and Disposeco proposes to engage,
in the collection and disposal of nonhazardous oilfield waste; and
WHEREAS, the parties desire that Disposeco agree to deliver, and
Xxxxxxxx Xxxxx agree to accept at its Louisiana landfarms, certain quantities of
nonhazardous oilfield waste each year for the next 25 years; and
WHEREAS, the parties further desire to set forth the basis on which
the quantities of waste to be delivered by Disposeco and accepted by Xxxxxxxx
Xxxxx shall be calculated, the price to be paid by Disposeco to Xxxxxxxx Xxxxx
for such disposal and related activities, the procedures to be followed by the
parties in determining the locations to which waste is to be taken and the
procedures to be followed in effecting the transfer and receipt of such waste at
Xxxxxxxx Xxxxx' facilities;
NOW, THEREFORE, in consideration of the above premises and the mutual
covenants and promises contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings (unless indicated otherwise, all Article and Section
references are to Articles and Sections in this Agreement):
ACTUAL VOLUME: For any Contract Year, the aggregate amount of NOW
actually delivered by or on behalf of Disposeco and accepted for disposal by
Xxxxxxxx Xxxxx in accordance with the provisions of this Agreement.
ADJUSTMENT DATES: June 30, 1998 and each subsequent December 31 and
June 30 during the term of this Agreement.
AFFILIATE: A Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with the
Person specified. For purposes of this definition, the term "control"
(including the terms "controlling," "controlled by" and "under common control
with") of a Person means the possession, direct or indirect, of the power to (i)
vote 50% or
more of the voting interests in such Person or (ii) direct or cause the
direction of the management and policies of such Person, whether by contract
or otherwise.
ANNUAL VOLUME: For each Contract Year, the annual volume of NOW,
before consideration of Prior Years Adjustments, required to be delivered by
Disposeco to Xxxxxxxx Xxxxx for disposal at the Landfarms, which volume shall be
determined in accordance with Section 2.2.1.
COLLECTION. The collection, transfer or transportation of NOW.
CONTRACT YEAR: Twelve-month period commencing each July 1 during the
term of this Agreement; provided, however, that the first Contract Year shall be
the period commencing on the Effective Date and ending on June 30, 1997.
COVERED REGION: The States of Louisiana, Texas, Mississippi and
Alabama and the Gulf of Mexico.
CURRENT TEST PERIOD: For any Adjustment Date, the six-month period
commencing six months prior to such Adjustment Date and concluding on such
Adjustment Date.
DISPOSAL: The treatment or disposal of NOW.
EFFECTIVE DATE: The date Xxxxxxxx Xxxxx gives written notice to
Disposeco of the effectiveness of the Agreement.
EXCLUDED NOW: NOW generated and collected on land and delivered to
the Landfarms from the site where it was generated entirely by on-land
transportation.
FORCE MAJEURE: Substantial changes to laws, regulations or taxes
directly and materially affecting the rights, obligations, consideration or
ability to perform of the parties under this Agreement, including without
limitation, regulatory changes, the loss of environmental or other permits
directly and materially affecting the rights, obligations, consideration or the
ability to perform of the parties under this Agreement, acts of God, landslides,
lightning, forest fires, storms, hurricanes, floods, freezing, earthquakes,
civil disturbances, strikes, lockouts, other industrial disturbances, acts of
the public enemy, wars, blockades, public riots, breakage, explosions, accidents
to machinery, pipelines or materials or other cause, whether of the kind
enumerated or otherwise, which is not reasonably within the control of the party
claiming the existence of a Force Majeure.
LANDFARM AVERAGE VOLUME: For any Landfarm during each Contract
Year, the product of (a) the Annual Volume for such Contract Year less the Prior
Years Adjustment, if any, for such Contract Year multiplied by (b) the Median
Range for such Landfarm as set forth in Section 2.4.
LANDFARMS: The NOW disposal facilities owned and operated by Xxxxxxxx
Xxxxx designated as Elm Grove, LA (DNR Permit #OWD 89-1); Bourg, LA (DNR Permit
#90-10 OWD); Xxxxxxx Island, LA (DNR Permit #91-10 OWD); and Mermentau, LA (DNR
Permit #SWD 83-6).
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NOW: Nonhazardous oilfield waste associated with the exploration and
production of oil, gas and geothermal energy that contains less than 30
picocuries per gram of Radium 226 or 228. Without limiting the generality of
the foregoing, for waste disposed of in Louisiana, the term NOW shall include
all wastes containing less than 30 picocuries per gram of Radium 226 or 228
classified as NOW under Louisiana Statewide Order 29-B as currently in effect.
PRECEDING TEST PERIOD: For any Adjustment Date, the six month period
commencing 12 months prior to such Adjustment Date and concluding six months
prior to such Adjustment Date.
PREVAILING RATE: At any given time, the price Disposeco shall be
obligated to pay per barrel of NOW delivered to Xxxxxxxx Xxxxx and disposed at a
Landfarm in accordance with this Agreement as determined in accordance with
Section 3.1.
PERSON: Any individual, corporation, association, partnership, joint
venture, trust, estate or other entity or organization or government or any
agency or political subdivision thereof.
PRIOR YEARS ADJUSTMENT: Optional adjustments to Annual Volume
pursuant to Section 2.1 for any Contract Year as determined in accordance with
Section 2.3. The Prior Years Adjustment may be a negative number.
QUARTER: Calendar quarters commencing each January 1, April 1, July 1
and October 1; provided, however, that the first Quarter shall commence on the
Effective Date and end on September 30, 1996.
ZAPATA FACILITY: A NOW disposal facility owned and operated by
Xxxxxxxx Xxxxx located near Zapata, Texas.
ARTICLE II
DISPOSAL
2.1 DELIVERY AND ACCEPTANCE. In accordance with the terms and provisions
of this Agreement, during each Contract Year, Disposeco shall deliver to
Xxxxxxxx Xxxxx for disposal at the Landfarms a minimum amount of NOW equal to
(i) the Annual Volume of NOW for such Contract Year (ii) minus the Prior Years
Adjustment, if any, for such Contract Year as set forth in Section 2.3 (iii)
minus 92,500 barrels of NOW. Subject to the terms and conditions and the
limitations set forth in this Agreement, Xxxxxxxx Xxxxx shall accept for
disposal at the Landfarms all NOW delivered by or on behalf of Disposeco;
provided that in no event shall Xxxxxxxx Xxxxx be obligated to accept from or on
behalf of Disposeco for disposal at the Landfarms more than 2.22 million barrels
of NOW in any Contract Year. In the event Xxxxxxxx Xxxxx elects not to accept
NOW delivered by Disposeco in excess of 2.22 million barrels during any Contract
Year, Xxxxxxxx Xxxxx shall reject such waste in accordance with Section 5.6 of
this Agreement.
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2.2 ANNUAL VOLUME.
2.2.1 ANNUAL VOLUME. The Annual Volume of NOW during any Contract
Year shall be equal to the Preliminary Annual Volume (as defined in Section
2.2.2 below) (a) minus the Volume Adjustment (as defined in Section 2.2.3
below), if any, exercised by Disposeco in accordance with Section 2.2.4 during
such Contract Year, (b) minus the amount of NOW, if any, rejected by Xxxxxxxx
Xxxxx pursuant to Section 7.5(ii).
2.2.2 PRELIMINARY ANNUAL VOLUME. For each Contract Year, the
Preliminary Annual Volume of NOW shall be the lesser of (i) 33.33% of the total
barrels of NOW that Newpark Resources, Inc., a Delaware corporation ("Newpark"),
and its Affiliates accept, acquire, take possession of, procure, direct, control
or otherwise receive for processing and disposal during the Contract Year in the
Covered Region (with the exception of any NOW produced by third-party generators
which Newpark or its Affiliates treat and dispose of on the site at which the
NOW was generated) and (ii) 1,850,000 barrels of NOW, in each case excluding
injectable saltwater.
2.2.3 VOLUME ADJUSTMENT. Within 25 days after the end of each
Quarter, Xxxxxxxx Xxxxx shall determine the aggregate revenues actually received
by Sanifill, Xxxxxxxx Xxxxx and their Affiliates during such preceding Quarter
from the Collection or Disposal of NOW and other oilfield wastes, the
remediation and closure of oilfield waste pits, including related loading and
hauling, or onshore cleaning operations in the Covered Region, with the
exception of revenues attributable to extraordinary levies as described in
Section 3.5 and revenues from (i) the Disposal of Excluded NOW, (ii) the
Disposal at the Xxxxxx Facility of NOW Collected within a 200-mile radius of the
Xxxxxx Facility, including charges for such Collection or (iii) the Disposal of
NOW pursuant to this Agreement (the "Sanifill NOW Revenues"). The Volume
Adjustment for each Quarter shall be calculated by dividing the aggregate
Sanifill NOW Revenues for such Quarter by the Prevailing Rate for such Quarter.
Xxxxxxxx Xxxxx shall notify Disposeco (the "Volume Adjustment Notice") of the
Volume Adjustment within 25 days after the end of each Quarter. Notwithstanding
the foregoing, any Person who acquires any of the Landfarms, directly or
indirectly, shall become subject to this Section 2.2.3 as if it were Xxxxxxxx
Xxxxx; provided, however, that no revenues from operations of such Person or its
Affiliates that existed at the time of such acquisition shall be included in
calculations under this Section 2.2.3.
2.2.4 EXERCISE OF THE VOLUME ADJUSTMENT. Disposeco shall have the
option to decrease the Annual Volume for the current Contract Year (or, if
applicable, the subsequent Contract Year) by all or part of the Volume
Adjustment for any Quarter by notifying Xxxxxxxx Xxxxx in writing of its
intention to do so before the expiration of the fourth complete Quarter after
the end of the Quarter in which the Volume Adjustment Notice for such Volume
Adjustment is received. Volume Adjustments shall be exercised in the order in
which they are accrued. Any portion of the Volume Adjustment for any Quarter as
to which Disposeco fails to timely exercise such option shall expire.
2.3. CARRYFORWARD ACCOUNT; PRIOR YEARS ADJUSTMENT.
2.3.1 DETERMINATION OF CARRYFORWARD AMOUNT. Within 30 days after
the end of each Contract Year during the term of this Agreement, Disposeco shall
determine and notify Xxxxxxxx Xxxxx of the amount equal to the difference
between (i) the Actual Volume for such Contract Year and (ii) the Annual Volume
for such Contract Year. For any Contract Year in which the Annual
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Volume is more than the Actual Volume, the difference shall be referred to as
a "Negative Carryforward." For any Contract Year in which the Actual Volume
is more than the Annual Volume, the difference shall be referred to as a
"Positive Carryforward."
2.3.2 CARRYFORWARD ACCOUNT; INITIAL BALANCE. The parties shall
maintain a Carryforward Account. The initial balance of the Carryforward
Account shall be zero. The balance of the Carryforward Account shall be
increased by the amount of any Positive Carryforward; provided that the balance
of the Carryforward Account may not exceed 185,000 barrels. Any portion of a
Positive Carryforward which would cause the current balance of the Carryforward
Account to exceed 185,000 barrels shall be disregarded. The balance of the
Carryforward Amount shall be reduced by the amount of any Negative Carryforward.
The balance of the Carryforward Account may be negative.
2.3.3 REDUCTION IN BALANCE FROM UNUSED POSITIVE CARRYFORWARDS. In
the event that a Positive Carryforward accruing in any Contract Year is not
fully offset against Negative Carryforwards accruing prior to such Positive
Carryforward or within the two Contract Years immediately following the Contract
Year in which such Positive Carryforward accrued, the portion of such Positive
Carryforward not so offset shall be deducted from the positive balance of the
Carryforward Account as of the end of the second Contract Year after the
Contract Year in which such Positive Carryforward accrued. No such reduction
shall cause the balance in the Carryforward Account to be negative.
2.3.4 DELIVERIES FOLLOWING A NEGATIVE CARRYFORWARD ACCOUNT
BALANCE. Following any Contract Year in which a Negative Carryforward (the
"Triggering Carryforward") accrues causing the balance of the Carryforward
Account to become negative in any Contract Year, Disposeco shall be obligated to
deliver to Xxxxxxxx Xxxxx, over the two Contract Years immediately following the
Contract Year in which such Negative Carryforward accrued, amounts of NOW in
excess of the Annual Volumes for such Contract Years equal to the negative
Carryforward Account balance. In the event Disposeco fails to deliver such
amounts over the next two Contract Years, at the end of the second Contract
Year, Xxxxxxxx Xxxxx will invoice Disposeco, and Disposeco shall be obligated to
pay, an amount equal to the Prevailing Rate at the time multiplied by the
quantity of the remaining portion of the Triggering Carryforward. Upon receipt
of payment, the Carryforward Account balance shall be adjusted to reflect such
amounts as if they had been actually delivered during the preceding Contract
Year.
2.3.5 PRIOR YEARS ADJUSTMENT. In any Contract Year with a
positive Carryforward Account balance, the amount of the positive Carryforward
Account balance shall be applied as a Prior Years Adjustment pursuant to Section
2.1. Such amount so applied shall be subtracted from the Annual Volume for such
Contract Year in accordance with Section 2.1.
2.4 ALLOCATION OF NOW AMONG LANDFARMS. Unless otherwise provided in this
Agreement or agreed by the parties, on a Quarterly basis, deliveries of NOW by
Disposeco to all Landfarms shall be allocated to the individual Landfarms such
that the amount of NOW delivered to an individual Landfarm as a percentage of
NOW delivered to all Landfarms shall fall within the Permissible Range for such
Landfarm as set forth below. Upon request of any party, the parties agree to
meet at least annually to review the Permissible Ranges and to negotiate in good
faith to modify the Permissible Ranges as the parties deem appropriate. In the
event Disposeco delivers NOW to any Landfarm in
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excess of the Permissible Range for such Landfarm, Xxxxxxxx Xxxxx shall have
the right, but not the obligation, to reject such NOW in accordance with
Section 5.6. Rejection of NOW by Xxxxxxxx Xxxxx pursuant to this Section 2.4
shall not reduce the Annual Volume of NOW to be delivered by Disposeco for
such Contract Year or otherwise affect Disposeco's obligation to deliver NOW
in such quantities as are permissible or required under the terms of this
Agreement. Subject to Section 2.8, Disposeco shall use commercially
reasonable efforts to cause substantially all materials delivered by
Disposeco or its Affiliates to the Landfarm near Mermentau to be delivered by
truck.
Landfarm Median Range Permissible Range
-------- ------------ -----------------
Bourg, LA 40% 35% - 45%
Xxxxxxx Island, LA 50% 45% - 55%
Mermentau, LA 10% 5% - 15%
Xxx Xxxxx, XX X/X X/X
2.5 RADIUM CONCENTRATION. Notwithstanding anything contained in this
Agreement to the contrary, Xxxxxxxx Xxxxx shall not be obligated to accept NOW
from Disposeco at any Landfarm where such NOW (i) when combined with other NOW
in an individual treatment cell, would cause the weighted average concentration
of Radium 226 or 228 to exceed 5 pCi/gm, excluding background or (ii) would
require the loading of two or more treatment cells simultaneously to prevent the
weighted average concentration of Radium 226 or 228 from exceeding 5 pCi/gm,
excluding background. In the event Disposeco delivers NOW contravening the
foregoing sentence, Xxxxxxxx Xxxxx shall have the right, but not the obligation,
to reject such NOW in accordance with Section 5.6. Rejection of NOW by Xxxxxxxx
Xxxxx pursuant to this Section 2.5 shall not reduce the Annual Volume of NOW to
be delivered by Disposeco for such Contract Year or otherwise affect Disposeco's
obligation to deliver NOW in such quantities as are permissible or required
under the terms of this Agreement.
2.6 VARIANCE AS TO ALL LANDFARMS.
2.6.1 CONFLICT OF PROVISIONS. In the event of any irreconcilable
conflict between the provisions of Section 2.6 and the provisions of Sections
2.1 and 2.3, the provisions of Sections 2.1 and 2.3 shall control.
2.6.2 QUARTERLY VARIANCE. Subject to the other terms and
conditions of this Agreement and unless otherwise agreed in advance by the
parties, in every Quarter during the term of this Agreement, (a) Disposeco shall
be obligated to deliver to Xxxxxxxx Xxxxx for disposal at the Landfarms a
minimum of 20% of the Annual Volume of NOW for such Contract Year and (b)
Xxxxxxxx Xxxxx shall be obligated to accept from Disposeco for disposal at all
Landfarms a maximum of 555,000 barrels of NOW.
2.6.3 MONTHLY VARIANCE. Subject to the other terms and conditions
of this Agreement and unless otherwise agreed in advance by the parties,
Xxxxxxxx Xxxxx shall be obligated to accept from Disposeco for disposal at the
Landfarms a maximum of 250,000 barrels of NOW
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during any one month. The parties agree to cooperate to minimize monthly
variances in NOW delivered for disposal at the Landfarms.
2.7 VARIANCE AS TO INDIVIDUAL LANDFARMS. Subject to the other terms and
conditions of this Agreement and unless otherwise agreed in advance by the
parties, in each Quarter, Disposeco shall be obligated to deliver to each
Landfarm a minimum of 20% of the Landfarm Average Volume for such Landfarm for
such Contract Year and (b) Xxxxxxxx Xxxxx shall be obligated to accept from
Disposeco for disposal at such Landfarm a maximum of 33% of the Landfarm Average
Volume for such Landfarm for such Contract Year.
2.8 LIMITATION ON DELIVERIES TO LANDFARMS BY TRUCK. Notwithstanding
anything contained herein to the contrary, unless otherwise agreed by the
parties, Xxxxxxxx Xxxxx shall not be obligated to accept from Disposeco or its
Affiliates for disposal in any Contract Year more than 185,000 barrels of NOW
delivered by truck to the Landfarm near Mermentau or more than 75,000 barrels of
NOW delivered by truck to the Landfarm near Bourg.
2.9 ADJUSTMENTS FOR THE FIRST CONTRACT YEAR AND THE FIRST QUARTER. For
the first Contract Year, the fixed numerical volume amounts specified in
Section 2.1, Section 2.2.2(ii), Section 2.3 and Section 2.6.1 shall be
adjusted by multiplying such amounts by a fraction, the numerator of which
shall be the number of days in the first Contact Year and the denominator of
which shall be 365. For the first Quarter, the fixed numerical volume amount
specified in Section 2.6.2 shall be adjusted by multiplying such amount by a
fraction, the numerator of which shall be the number of days in the first
Quarter and the denominator of which shall be 91.
2.10 SCHEDULES ATTACHED. Attached to this Agreement are three Schedules
(Nos. 1, 2 and 3) that illustrate the operation of Sections 2.1 and 2.3. Such
Schedules are hereby incorporated into this Agreement by reference and
constitute an integral and material part of the parties' understanding.
ARTICLE III
PAYMENT
3.1 PREVAILING RATE. The initial Prevailing Rate shall be equal to $5.50
per barrel of NOW delivered to Xxxxxxxx Xxxxx and disposed of at a Landfarm, net
of all currently applicable taxes. The Prevailing Rate may be adjusted in
accordance with Section 3.2, provided that the Prevailing Rate shall never be
less than $5.50 per barrel.
3.2 ADJUSTMENTS TO THE PREVAILING RATE. On each Adjustment Date, the
Prevailing Rate shall be subject to an adjustment equal to the sum of the
following (the "Rate Adjustment"):
(i) 30% of the difference between the average waste disposal price
received by Disposeco and its Affiliates for NOW Disposal (not
including taxes and exclusive of charges to customers for
services, such as cleaning, off-loading, waste processing and
related operations) during the Current Test Period and such
average price during the Preceding Test Period; and
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(ii) 15% of the difference between the average price per barrel (not
including taxes) charged to customers received by Disposeco and
its Affiliates for NOW services (such as cleaning, off-loading,
waste processing and related operations) during the Current Test
Period and such average price during the Preceding Test Period.
Within 30 days after each Adjustment Date, Disposeco will determine the Rate
Adjustment and the adjusted Prevailing Rate (the "Current Rate") and will apply
the Current Rate retroactively to all invoices received from Xxxxxxxx Xxxxx for
the previous six-month period to determine the difference between (i) the
amounts which would have been invoiced if the Current Rate had been charged and
(ii) amounts actually invoiced under the previous Prevailing Rate (the "Invoice
Adjustment Amount"). Xxxxxxxx Xxxxx shall have 15 days to review Disposeco's
determination of the Rate Adjustment, the Current Rate and the calculation of
the Invoice Adjustment Amount. In the event the parties are not able to agree
on the proper calculation of such amounts after 15 days, the parties shall
submit the matter to Fast-Track Arbitration as set forth in Section 10.2. If
the Invoice Adjustment Amount is positive, Disposeco shall pay Xxxxxxxx Xxxxx
the Invoice Adjustment Amount within 15 days. If the Invoice Adjustment Amount
is negative, Disposeco shall be entitled to a credit for such amount against
future invoices from Xxxxxxxx Xxxxx. Disposeco hereby covenants and agrees that
it shall not during the term of this Agreement adjust fees for services covered
by clause (ii) of this Section 3.2 or fees for Disposal covered by clause (i) of
this Section 3.2 in a manner which is inconsistent with prevailing market
practice and is intended to deprive or has the effect of depriving Xxxxxxxx
Xxxxx of the full benefits of the adjustment to the Prevailing Rate provided for
herein.
3.3 ADDITIONAL SERVICES; DISPOSAL OF INJECTABLE SALTWATER. Pursuant to
this Agreement, Xxxxxxxx Xxxxx will perform standard off-loading and customary
handling services associated with disposal of NOW at no additional charge.
Xxxxxxxx Xxxxx will perform additional services, including, without limitation,
cleaning, upon request of Disposeco at the posted rates of Xxxxxxxx Xxxxx for
such services, or at such other rates as the parties may mutually agree upon.
All charges for such additional services shall be in addition to and independent
of the Prevailing Rate. Xxxxxxxx Xxxxx will accept injectable saltwater at the
Landfarms for disposal upon request of Disposeco at the posted rates of Xxxxxxxx
Xxxxx for disposal of injectable saltwater, or at such other rates as the
parties may mutually agree upon. All charges for disposal of injectable
saltwater shall be in addition to and independent of the Prevailing Rate.
3.4 BILLING. Xxxxxxxx Xxxxx shall invoice Disposeco on a monthly basis
for disposal fees, additional service fees and all other sums, including
inspection fees as set forth in Section 5.4 and Section 5.7, incurred pursuant
to this Agreement during the preceding calendar month. Disposeco agrees to pay
such charges due and owing hereunder to Xxxxxxxx Xxxxx on or before the 30th day
following the date of receipt of the invoice. In the event of a dispute as to
services rendered or payment owed, Disposeco shall pay the undisputed portion of
each invoice, and the parties shall resolve the dispute as provided in Section
10.2. Without limitation, amounts validly due and invoiced in accordance with
this Section 3.4 and all other amounts owed from one party to the other pursuant
to this Agreement, shall be payable within 30 days after invoice or notice and
thereafter shall accrue interest at a rate equal to the lower of 18% per annum
or the highest lawful rate, commencing with the date of receipt of the original
invoice or notice.
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3.5 EXTRAORDINARY LEVIES.
3.5.1 TAXES. Notwithstanding anything to the contrary contained
herein, if during the term of this Agreement there is levied upon Xxxxxxxx
Xxxxx or any of its Affiliates or upon the operations of Xxxxxxxx Xxxxx any
tax, assessment or charge (other than income taxes applicable generally) by
any governmental authority which tax, assessment or charge increases Xxxxxxxx
Xxxxx' costs to operate the Landfarms, Xxxxxxxx Xxxxx shall notify Disposeco
of the cause and the per barrel amount of the cost increase. Following the
effectiveness of the tax, assessment or charge giving rise to such fee,
Disposeco shall be obligated to pay such additional fee with regard to each
barrel of NOW delivered to a Landfarm by or on behalf of Disposeco or any of
its Affiliates, which fee shall appear on all invoices issued to Disposeco by
Xxxxxxxx Xxxxx.
3.5.2 LANDFARM ENVIRONMENTAL REGULATIONS. Notwithstanding
anything to the contrary contained herein, if during the term of this
Agreement there is a substantial change in regulatory requirements related to
the waste disposal business having general applicability to the handling,
treatment or disposal of NOW, which change increases in a material manner
Xxxxxxxx Xxxxx' costs to operate the Landfarms, (i) Xxxxxxxx Xxxxx shall
notify Disposeco of the cause and the per barrel amount of the cost increase,
(ii) Disposeco shall use commercially reasonable efforts to increase its
waste disposal prices so as to pass as much of such increased cost as is
commercially possible on to its customers and (iii) Disposeco shall pay to
Xxxxxxxx Xxxxx 100% of all revenues attributable to such increase in waste
disposal prices up to a maximum amount equal to the per barrel cost increase
multiplied by the barrels of NOW delivered to the Landfarms for disposal by
or on behalf of Disposeco or any of its Affiliates after the effectiveness of
such increase. If, after the application of this Section 3.5.2, the
difference between the increased costs of Xxxxxxxx Xxxxx resulting from such
regulatory change and the amount of the increased revenues received by
Xxxxxxxx Xxxxx pursuant to clause (iii) above is large enough to have a
material adverse effect on Xxxxxxxx Xxxxx, such change in regulation shall be
considered a Force Majeure event.
3.5.3 RIGHT OF INSPECTION. In the event Xxxxxxxx Xxxxx notifies
Disposeco of a cost increase pursuant to this Section 3.5, Disposeco shall
have the right to conduct a reasonable review of the calculations, working
papers and the books and records related to the determination of such fee
increase. All costs of such review shall be borne exclusively by Disposeco.
ARTICLE IV
TERM
The term of this Agreement shall be for a period of approximately
twenty-five years commencing on the Effective Date and ending on June 30,
2021, unless extended by mutual consent of the parties.
ARTICLE V
OPERATING PROCEDURES
5.1. COMPLIANCE WITH OPERATING PROCEDURES. Disposeco and its Affiliates
shall comply in all material respects with and abide by, and shall require their
employees, servants, agents,
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representatives, contractors, subcontractors, haulers and transporters to
comply in all material respects with and abide by, all applicable federal,
state and local laws, ordinances, permits, regulations, directives, codes,
standards and requirements relating to the subject matter of this Agreement
or the performance of services hereunder, as well as all of Xxxxxxxx Xxxxx'
rules, regulations, procedures and guidelines, written or oral, as the same
may be reasonably adopted and modified from time to time, including, without
limitation, all safety and/or security regulations, practices and procedures
and all procedures reasonably adopted by Xxxxxxxx Xxxxx in compliance with
its permits or utilized by Xxxxxxxx Xxxxx in the inspection, sampling and
testing of material delivered to the Landfarms for disposal.
5.2 INSPECTION AND TESTING BY DISPOSECO; NOTIFICATION. Disposeco
agrees that it shall inspect and test all materials accepted, acquired, taken
possession of, procured, directed, controlled or otherwise received by it
from third party generators or other parties for disposal (with the
exception of any NOW produced by third-party generators which Disposeco or
its Affiliates treat and dispose of on the site at which the NOW was
generated) to the extent required by applicable federal, state and local
laws, ordinances, permits, regulations, directives, codes, standards and
requirements. Disposeco shall promptly notify Xxxxxxxx Xxxxx if it becomes
aware of any unusual or special characteristics of any materials being
delivered to the Landfarms which cause such materials to require special
treatment, handling or care. Upon request by Xxxxxxxx Xxxxx, Disposeco shall
provide copies of all inspection and test results relating to material to be
disposed of at the Landfarms under the terms of this Agreement to Xxxxxxxx
Xxxxx upon delivery.
5.3 SHIPMENT AND DELIVERY OF NOW. Disposeco, its Affiliates and/or its
contractors and subcontractors shall be responsible for proper
containerization, preparation and labeling for shipment, shipment,
transportation and delivery to the Landfarms and shall comply fully with all
applicable federal, state and local laws, ordinances, permits, regulations,
directives, codes, standards and requirements in making such delivery to the
Landfarms. Sanifill, Xxxxxxxx Xxxxx and their Affiliates undertake no
responsibility whatsoever for the preparation, handling or transportation of
any material prior to acceptance of delivery as hereinafter provided.
5.4 INSPECTIONS.
5.4.1 BARGES. Upon arrival of any barge transporting material to
a Landfarm at the direction of Disposeco or any of its Affiliates, Xxxxxxxx
Xxxxx shall have the right to have an independent third party inspector
selected by Xxxxxxxx Xxxxx undertake an inspection of the barge transporting
material to the Landfarm for the purpose of determining (a) the volume of
materials delivered and (b) the condition of the barge on arrival at the
Landfarm. The costs of such inspector shall be split evenly between
Disposeco and Xxxxxxxx Xxxxx, and Disposeco's portion of such expense shall
be included on the monthly invoices prepared by Xxxxxxxx Xxxxx in accordance
with Section 3.4. Before any materials are off-loaded from the barge or any
inspection or testing is undertaken by Xxxxxxxx Xxxxx, the independent
inspector will provide the authorized representatives of Disposeco and
Xxxxxxxx Xxxxx with an inspector's report indicating the time and date, the
barge identification number and volume of waste materials in the barge. The
authorized representatives of the parties will indicate their acceptance of
the inspector's report by signing the report. In the event either authorized
representative disagrees with the volume determination, either authorized
representative may request that an additional independent third party
inspector prepare an inspector's report, the cost of which shall be borne by
the party requesting the same. If the parties are unable to agree on the
actual
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volume of waste after the preparation of the second inspector's report, the
two independent inspectors shall select a third independent inspector to
prepare an inspector's report, the cost of which will be borne half by
Disposeco and half by Xxxxxxxx Xxxxx. The final volume determination shall
be that volume agreed upon by the majority of the independent inspectors that
have inspected the barge. If the barge appears to be damaged in any
significant respect, the inspector shall summarize the apparent damage and
take photographs as appropriate to evidence the scope of the damage. The
authorized representative of Disposeco shall approve such damage summary by
executing the same prior to the time any material is off-loaded from the
barge. With regard to barges owned and operated by Disposeco, Xxxxxxxx Xxxxx
agrees that it shall not exercise its right to implement the procedures set
forth in this Section 5.4.1 unless the parties have previously had a dispute
or disagreement relating to the quantity of materials delivered to a Landfarm
by Disposeco or the condition of a barge owned and operated by Disposeco and
such dispute or disagreement was not amicably resolved within 30 days.
5.4.2 TRUCKS. Upon arrival of a truck transporting material to a
Landfarm on behalf of Disposeco or any of its Affiliates, Xxxxxxxx Xxxxx
personnel shall undertake an inspection to determine the volume of materials
delivered. Before any materials are off-loaded from the truck or any
inspection or testing is undertaken by Xxxxxxxx Xxxxx, Xxxxxxxx Xxxxx shall
prepare a receipt indicating the time and date and the volume of materials
in the truck. The driver of the truck shall indicate his or her acceptance of
the receipt by signing the receipt. In the event the driver disagrees with
the volume determination, Xxxxxxxx Xxxxx shall have the option of (i)
accepting the volume stated by the driver and preparing a receipt evidencing
such volume to be signed by the driver or (ii) rejecting such materials in
accordance with Section 5.6. Rejection of materials by Xxxxxxxx Xxxxx
pursuant to this Section 5.4.2 shall not reduce the Annual Volume of NOW to
be delivered by Disposeco for such Contract Year or otherwise affect
Disposeco's obligation to deliver NOW in such quantities as are required
under the terms of this Agreement.
5.5 INSPECTION AND TESTING OF MATERIAL. After all inspections, if any,
pursuant to Section 5.4 have been concluded, Xxxxxxxx Xxxxx shall conduct
inspections, testing and sampling using such equipment and procedures as are
required by or consistent with its permits. Xxxxxxxx Xxxxx may rely
exclusively on the results of its inspection in determining whether materials
delivered may be disposed at the Landfarm in accordance with its permits and
this Agreement. Disposeco authorizes Xxxxxxxx Xxxxx to retain samples and all
data relating thereto, including test results, for so long as required by
federal, state or local law, ordinance, permit, regulation, directive, code,
standard or requirement and additionally for so long as Xxxxxxxx Xxxxx in its
sole discretion shall determine.
5.6 ACCEPTANCE OR REJECTION OF MATERIAL.
5.6.1 ACCEPTANCE. Xxxxxxxx Xxxxx shall only be obligated to
accept waste materials at any Landfarm which are permissible under the permit
requirements of such Landfarm at the time of delivery. For a period of ten
days after the date of delivery, Xxxxxxxx Xxxxx shall have the right to
reject (or revoke any prior acceptance) all or any part of a shipment of
material delivered by or on behalf of Disposeco to a Landfarm if (i) such
material is not in accordance with the terms of this Agreement or (ii)
Xxxxxxxx Xxxxx concludes that such material exceeds the parameters of the
permits applicable to the Landfarm. Xxxxxxxx Xxxxx shall notify Disposeco of
any rejection in writing and shall state the reason therefor. The expiration
of such ten-day period without a rejection or a revocation of a prior
acceptance of material shall constitute "Final Acceptance" of such material.
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5.6.2 REJECTED MATERIAL. Rejected material shall remain at
Disposeco's risk and expense and shall not be deemed to be incorporated into
the Landfarm or come under the possession, custody, control or ownership of
Xxxxxxxx Xxxxx. Notwithstanding the foregoing, to the extent required by
federal, state or local law, ordinance, permit, regulation, directive, code,
standard or requirement, or by Xxxxxxxx Xxxxx' safety and/or security rules,
practices or procedures, Xxxxxxxx Xxxxx may detain any rejected materials,
including the vehicle and/or containers in which such rejected materials
arrived, and shall notify regulatory or other authorities wherever necessary
or appropriate to do so.
5.6.3 REMOVAL. In the event Xxxxxxxx Xxxxx rejects all or any
part of a shipment of material from Disposeco, after compliance in all
material respects with all regulatory and any other requirements involving
detention of such shipment, upon written request of Xxxxxxxx Xxxxx,
Disposeco, unless otherwise directed by a regulatory agency or other lawful
authority, shall promptly remove or cause to be removed from the Landfarm all
of the rejected material at Disposeco's risk and expense in a manner
consistent with all applicable federal, state and local laws, ordinances,
permits, regulations, directives, codes, standards and requirements. In the
event Disposeco fails to complete such removal by the fifth business day
after the date of the request by Xxxxxxxx Xxxxx, Xxxxxxxx Xxxxx, unless
otherwise required by law or regulation, may remove or cause to be removed
from the Landfarm any and all of the rejected material, and may containerize
and transport it or cause it to be containerized and transported to an
authorized storage site or returned to Disposeco at its nearest location.
Disposeco hereby authorizes Xxxxxxxx Xxxxx in such event to contract for such
storage for Disposeco's account. For its services, Xxxxxxxx Xxxxx shall
charge and Disposeco shall pay Xxxxxxxx Xxxxx' cost plus 15%. Any and all
material that Xxxxxxxx Xxxxx rejects shall remain property and the
responsibility of Disposeco at Disposeco's risk and expense.
5.7 THIRD-PARTY DELIVERIES. Xxxxxxxx Xxxxx may follow the procedures
set forth in this Article V with respect to any third-party generator's
vessels or vehicles containing materials that are delivered to any Landfarm
at the direction of Disposeco or its Affiliates. In addition, Xxxxxxxx Xxxxx
may establish and enforce other policies and procedures relating to the
independent inspection of any such third-party generator's vessels or
vehicles before the material contained in such vessels or vehicles shall be
accepted for disposal.
ARTICLE VI
COVENANTS, REPRESENTATIONS AND WARRANTIES OF DISPOSECO
Disposeco hereby covenants, represents and warrants to Sanifill and
Xxxxxxxx Xxxxx as follows:
6.1 ORGANIZATION AND QUALIFICATION. Disposeco (a) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (b) has all requisite power and authority to own, lease and
operate its properties and to carry on its business as it is now being conducted
and is proposed to be conducted and (c) is duly qualified or licensed and in
good standing to do business in each jurisdiction in which the properties owned,
leased or operated by it or the nature of the business conducted or proposed to
be conducted by it makes such qualification or license necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed or
12
in good standing would not have, either individually or in the aggregate, a
material adverse effect on the transactions contemplated hereby.
6.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. Disposeco has all
requisite power and authority to enter into this Agreement and to perform its
obligations hereunder and consummate the transactions contemplated hereby.
The execution, delivery and performance by Disposeco of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of Disposeco. No action or
approval of the equity owners of Disposeco is necessary to authorize
Disposeco's execution or delivery of, or the performance of its obligations
under, this Agreement. This Agreement has been duly executed and delivered
by Disposeco and is a valid and binding obligation of Disposeco, enforceable
in accordance with its terms.
6.3 NO CONFLICT. The execution and delivery by Disposeco of this
Agreement does not, and exercise by Disposeco of its rights hereunder and the
consummation of the transactions contemplated hereby will not (a) require any
consent, approval, order or authorization of or other action by any
governmental entity on the part of or with respect to Disposeco; (b) require
on the part of Disposeco any consent by or approval of or notice to any other
Person; or (c) result in a violation of any law, rule, regulation, order,
judgment or decree applicable to Disposeco, except in any case covered by
(a), (b) or (c) where failure to obtain such consent or such violation would
not, either individually or in the aggregate, have a material adverse effect
on the transactions contemplated hereby.
6.4 LICENSED CARRIERS. Any carrier with which Disposeco contracts to
transport NOW and all of Disposeco's driver personnel shall at all times
relevant to the performance of services under this Agreement remain properly
licensed and otherwise fully qualified to perform the services required
hereunder.
ARTICLE VII
COVENANTS, REPRESENTATIONS AND WARRANTIES OF XXXXXXXX XXXXX
Xxxxxxxx Xxxxx hereby covenants, represents and warrants to Disposeco as
follows:
7.1 ORGANIZATION AND QUALIFICATION. Each of Xxxxxxxx Xxxxx and
Sanifill (a) is duly organized and validly existing under the laws of the
jurisdiction of its organization (and Sanifill is in good standing under such
laws), (b) has all requisite power and authority to own, lease and operate
its properties and to carry on its business as it is now being conducted and
(c) is duly qualified or licensed and in good standing to do business in each
jurisdiction in which the properties owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or license
necessary, except in such jurisdictions where the failure to be so duly
qualified or licensed or in good standing would not have, either individually
or in the aggregate, a material adverse effect on the transactions
contemplated hereby.
7.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. Xxxxxxxx Xxxxx has all
requisite power and authority to enter into this Agreement and to perform its
obligations hereunder and consummate the transactions contemplated hereby.
The execution, delivery and performance by Xxxxxxxx Xxxxx of
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this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary action on the part of Xxxxxxxx
Xxxxx. No action or approval of the equity owners of Xxxxxxxx Xxxxx is
necessary to authorize Xxxxxxxx Xxxxx' execution or delivery of, or the
performance of its obligations under, this Agreement. This Agreement has
been duly executed and delivered by Xxxxxxxx Xxxxx and is a valid and
binding obligation of Xxxxxxxx Xxxxx, enforceable in accordance with its
terms.
7.3 NO CONFLICT. The execution and delivery by Xxxxxxxx Xxxxx of this
Agreement does not, and exercise by Xxxxxxxx Xxxxx of its rights hereunder
and the consummation of the transactions contemplated hereby will not (a)
require any consent, approval, order or authorization of or other action by
any governmental entity on the part of or with respect to Xxxxxxxx Xxxxx or
any of its Affiliates; (b) require on the part of Xxxxxxxx Xxxxx or any of
its Affiliates any consent by or approval of or notice to any other Person;
or (c) result in a violation of any law, rule, regulation, order, judgment or
decree applicable to Xxxxxxxx Xxxxx or any of its Affiliates, except in any
case covered by (a), (b) or (c) where failure to obtain such consent or such
violation would not, either individually or in the aggregate, have a material
adverse effect on the transactions contemplated hereby.
7.4 SERVICES AND EQUIPMENT. Xxxxxxxx Xxxxx possesses the business,
professional and technical expertise to handle, treat and dispose of NOW and
possesses the equipment, plant and employee resources required to perform
this Agreement. Xxxxxxxx Xxxxx shall use its commercially reasonable efforts
to turn all barges delivering materials to the Landfarms in a timely manner
consistent with the number of Disposeco and third-party generator barges on
site at such moment and with its general practice of giving priority to
third-party generators' barges. The equipment shall, at all times relevant
to the performance of services hereunder, be maintained in good and safe
condition and fit for use.
7.5 LICENSES AND PERMITS. As of the Effective Date, Xxxxxxxx Xxxxx
shall be duly licensed, permitted and authorized pursuant to all applicable
federal, state and local laws to handle, treat and dispose of NOW, and the
Landfarms will have been issued all licenses, permits and authorizations
required by all applicable federal, state and local laws. At any time during
the term of this Agreement, upon Disposeco's reasonable request, Xxxxxxxx
Xxxxx shall provide to Disposeco, at Disposeco's expense, a complete copy of
the current permits applicable to the operation of the Landfarms. During the
term of this Agreement, Xxxxxxxx Xxxxx shall use its best efforts to keep all
such licenses, permits and authorizations in effect and shall promptly notify
Disposeco if any such license, permit or authorization is to expire and not
be renewed or becomes the subject of any administrative or judicial action
seeking revocation or suspension; provided, however, that in the event any
Landfarm has not been issued all licenses, permits and authorizations
required to dispose of NOW as of the Effective Date of this Agreement or
should lose any such license, permit or authorization or for any other reason
terminate operation during the term of this Agreement, Xxxxxxxx Xxxxx shall,
subject to Article XI, have the option to (i) subject to Disposeco's
reasonable approval, direct the disposal of NOW delivered by Disposeco to any
of the other Landfarms, provided that Xxxxxxxx Xxxxx shall bear all actual
additional out-of-pocket costs arising therefrom, (ii) reject NOW delivered
by Disposeco in accordance with Section 5.6 without further obligation
hereunder, provided that the volume of such NOW shall be deducted from the
Annual Volume for the current Contract Year, or (iii) subject to Disposeco's
reasonable approval, transport NOW delivered by Disposeco and dispose of it
at any alternative disposal facility that is approved by Disposeco (which
approval shall not be unreasonably
14
withheld) and licensed and permitted to receive NOW, pursuant to all the same
terms and provisions of this Agreement, including the payment of the
Prevailing Rate established under Section 3.1.
7.6 WORKERS' COMPENSATION. Xxxxxxxx Xxxxx shall comply in all material
respects with all applicable workers' compensation laws during the term of
this Agreement. In the event any work is performed by Xxxxxxxx Xxxxx' agent
or subcontractor, Xxxxxxxx Xxxxx shall obtain certification from such agent
or subcontractor that it too is in compliance in all material respects with
such laws or does not fall within the scope of such laws.
ARTICLE VIII
INSURANCE
8.1 INSURANCE COVERAGE. Xxxxxxxx Xxxxx and Disposeco, at their own
expense, shall procure and maintain in full force and effect during the term of
this Agreement the following kinds of insurance with limits of coverage equal to
or exceeding those limits specified therefor:
8.1.1 WORKERS' COMPENSATION; EMPLOYER'S LIABILITY. Workers'
Compensation Insurance shall be obtained in accordance with the provisions of
the applicable Workers' Compensation Law or similar laws of a state having
jurisdiction over any employee. Employer's Liability Insurance shall be
obtained with a minimum limit of liability of $1,000,000. To the extent
exposures fall, or may fall, within Federal jurisdictions, including the U.S.
Xxxxxxxxx and Harbor Workers' Compensation Act, the Defense Bases Act and the
Federal Employers Liability Act, extensions of coverage shall be obtained in
accordance with the requirements of such laws. Should operations occur where
maritime liability law, the Xxxxx Act, or General Admiralty Law apply,
applicable coverages shall be required at limits of not less than $1,000,000.
8.1.2 GENERAL LIABILITY. Comprehensive or Commercial General
Liability Insurance, including Products/Completed Operations and Contractual
Liability, which shall cover the indemnity provisions contained in this
Agreement, shall be obtained with a combined single limit of not less than
$1,000,000 per occurrence for bodily injury and property damage.
8.1.3 AUTOMOBILE LIABILITY. Business or Commercial Automobile
Liability Insurance covering all owned, non-owned, and hired vehicles, shall
be obtained with a combined single limit of $1,000,000 per occurrence or
accident.
8.1.4 UMBRELLA LIABILITY. Umbrella Liability Insurance over the
foregoing coverages shall be obtained as applicable at limits of $10,000,000
per occurrence.
8.2 TERMS. All coverages shall be written through insurers authorized
to transact business in the states of operation and reasonably satisfactory
and acceptable to both parties. Each party shall be added as an additional
insured, and subrogation as to the policies of the other party shall be
waived as applicable. All policies will be endorsed to provide not less than
30 days written notice of cancellation, termination, non-renewal or material
change in the policy. Each party will furnish the other party certificates
of insurance evidencing compliance with the requires of Section 8.1.
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8.3 SITE FINANCIAL ASSURANCE AND ENVIRONMENTAL IMPAIRMENT LIABILITY.
To the extent available on commercially reasonable terms and subject to the
other terms of this Agreement, Xxxxxxxx Xxxxx shall (i) maintain policies of
environmental impairment liability insurance covering the ownership and
operation of the Landfarms in substantially such amounts and on such terms as
shall be in place on the Effective Date and (ii) comply with all applicable
federal or state governmental financial assurance requirements imposed in
connection with its operation of the Landfarms.
ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION BY SANIFILL AND XXXXXXXX XXXXX. Sanifill and
Xxxxxxxx Xxxxx shall jointly and severally defend, indemnify and hold
harmless Disposeco and its Affiliates and their employees, officers, owners,
directors and agents, from and against any and all liabilities, penalties,
fines, forfeitures, demands, claims, causes of action, suits, judgments and
costs and expenses incidental thereto, including reasonable attorneys' fees,
which any or all of them may hereafter suffer, incur, be responsible for or
pay out as a result of personal injuries, property damage, or contamination
of or adverse effects on the environment, to the extent directly or
indirectly caused by, or arising from or in connection with (i) the
negligence, gross negligence or willful act or omission or willful misconduct
of Sanifill or Xxxxxxxx Xxxxx or any of their employees, officers, owners,
directors, agents or subcontractors in the performance of this Agreement;
(ii) the violation of any environmental rule, law or regulation by Sanifill
or Xxxxxxxx Xxxxx or any of their employees, officers, owners, directors,
agents or subcontractors; (iii) operations of the Landfarms, including,
without limitation, the receipt and disposal of waste delivered to the
Landfarms by Disposeco and others; or (iv) the breach of, misrepresentation
in, untruth in or inaccuracy in any representation, warranty or covenant of
Sanifill or Xxxxxxxx Xxxxx set forth in this Agreement.
9.2 INDEMNIFICATION BY DISPOSECO. Disposeco shall defend, indemnify
and hold harmless Sanifill and Xxxxxxxx Xxxxx and their Affiliates and their
employees, officers, owners, directors, agents and subcontractors, from and
against any and all liabilities, penalties, fines, forfeitures, demands,
claims, causes of action, suits, judgments and costs and expenses incidental
thereto, including reasonable attorneys' fees, which any or all of them may
hereafter suffer, incur, be responsible for or pay out with respect to claims
by third parties for personal injuries, property damage or other loss to the
extent directly or indirectly caused by, or arising from or in connection
with (i) the negligence, gross negligence or willful act or omission of
Disposeco, any of its employees, officers, owners, directors, agents or
subcontractors or any third-party generator acting at Disposeco's direction
in the performance of this Agreement, (ii) the violation of any environmental
rule, law or regulation by Disposeco, any of its employees, officers, owners,
directors, agents or subcontractors or any third-party generator acting at
Disposeco's direction; (iii) material delivered to any of the Landfarms by
Disposeco or any third-party generator acting at Disposeco's direction which
is not in accordance with the terms of this Agreement or otherwise not
permitted to be disposed at such Landfarm; or (iv) the breach of,
misrepresentation in, untruth in or inaccuracy in any representation,
warranty or covenant of Disposeco set forth in this Agreement.
9.3 INDEMNIFICATION PROCEDURES.
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9.3.1 Promptly after receipt by an indemnified party under this
Article IX of notice of the commencement of any action or proceeding
evidenced by service of process or other legal pleading, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party hereunder, notify in writing the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party
(i) will not relieve it from any liability that it may have to any
indemnified party under this Article IX unless and to the extent that the
indemnifying party has been prejudiced in any material respect by such
omission and (ii) will not relieve the indemnifying party from any liability
that it may have to any indemnified party other than under this Article IX.
If any such action or proceeding shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate therein and, to the
extent that it shall wish, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party (who shall not, except with
the consent of the indemnified party, be counsel to the indemnifying party),
and, after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under this Article IX for any legal
or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless the named parties to such action
or proceeding (including any impleaded parties) shall include both an
indemnifying party and an indemnified party and the indemnified party shall
have been advised by counsel that there may be one or more defenses available
to such indemnified party that are different from or additional to those
available to the indemnifying party (in which case, if the indemnified party
notifies the indemnifying party that it wishes to employ separate counsel at
the expense of the indemnifying party (who shall promptly pay all such
expenses as incurred), the indemnifying party shall not have the right to
assume the defense of such action or proceeding on behalf of such indemnified
party).
9.3.2 If an indemnifying party, within a reasonable period of
time after notice by the indemnified party of the commencement of any action
or proceeding with respect to which the indemnified party is to make a claim
hereunder, fails to assume the defense thereof, the indemnified party shall
have the right (upon further notice to the indemnifying party) to undertake
the defense, compromise or settlement of such action or proceeding for the
account of the indemnifying party, subject to the right of the indemnifying
party to assume the defense of such action or proceeding at any time prior to
settlement, compromise or final determination thereof. The cost and expense
of any such defense and any judgment in any such action or proceeding shall
be borne by the indemnifying party, and, if paid by the indemnified party,
shall be reimbursed by the indemnifying party within thirty days after
receipt of invoice therefor.
9.3.3 Except as otherwise provided in Section 9.3.2, an
indemnifying party shall not be liable for any settlement of any litigation
or proceeding effected without its written consent. An indemnifying party
shall not, without the indemnified party's written consent, settle or
compromise any action or proceeding or consent to entry of any judgment that
would impose an injunction or other equitable relief upon the indemnified
party or that does not include as an unconditional term thereof the release
by the claimant or the plaintiff of such indemnified party from all liability
in respect of such action or proceeding.
ARTICLE X
DISPUTE RESOLUTION
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10.1 NEGOTIATION OF DISPUTES. In the event of any dispute or
disagreement arising out of or relating to the implementation and performance
of this Agreement, the parties agree to attempt to resolve such dispute in
good faith. Should a resolution of such dispute not be obtained within 15
days after the origination of the dispute, either party may submit the
dispute to arbitration in accordance with the provisions of this Article X by
written notice to the other party.
10.2 FAST-TRACK ARBITRATION FOR PAYMENT DISPUTES. Within 60 days
after the Effective Date of this Agreement, Xxxxxxxx Xxxxx and Disposeco
shall select an independent third party mutually acceptable to both parties
(the "Financial Arbitrator") and an alternate third party (the "Alternate")
to decide disputes to be referred to the Financial Arbitrator as provided in
Sections 3.2 and 3.4. The Financial Arbitrator and the Alternate shall have
experience in accounting and finance and the waste disposal business.
Disposeco or Xxxxxxxx Xxxxx may refer disputes arising under Sections 3.2 or
3.4 after the expiration of the negotiation period set forth in Section 10.1
by providing written notice to the Financial Arbitrator and the other party.
In the event the Financial Arbitrator is unavailable to resolve the dispute
within the time period stated in this Section 10.2, the dispute shall be
referred to the Alternate. The Financial Arbitrator or the Alternate, as
appropriate (the "Arbitrator"), shall be directed to resolve the dispute in
15 days after the referral. The parties shall cooperate in good faith in
providing the Arbitrator any information reasonably needed to resolve the
dispute. If the dispute relates to the accuracy of an invoice or a series of
invoices or to the accuracy of any calculations made by any party, the costs
and expenses of the arbitration shall be borne by the party referring the
dispute to arbitration unless the Arbitrator determines that the invoiced
amounts or calculations were in error by greater than 10% or $50,000, in
which case the costs and expenses shall be borne by the other party. If the
dispute relates to any other type of disagreement arising under Sections 3.2
and 3.4, the costs and expenses of the arbitration shall be borne by the
losing party, unless the Arbitrator finds that it would be manifestly unfair
to honor this provision and determines a different allocation of costs.
10.3 GENERAL ARBITRATION. Any claim, dispute or controversy arising
out of or relating to this Agreement or the breach thereof not settled in
accordance with the provisions of Sections 10.1 or 10.2 shall be submitted to
binding arbitration by the American Arbitration Association (the "AAA") for
arbitration in Houston, Texas, in accordance with the Commercial Arbitration
Rules of the AAA then in effect. There shall be three arbitrators, with each
party selecting one. The third arbitrator shall be selected by the two
party-selected arbitrators and shall be the chairperson of the panel. The
party requesting arbitration shall name its arbitrator in the demand for
arbitration and the other party shall name its arbitrator within 30 days
after receipt of the arbitration demand. The third arbitrator shall be named
within 30 days after the appointment of the second arbitrator. The AAA shall
be empowered to appoint any arbitrator not named in accordance with the
procedure set forth herein. The decision of the arbitrators shall be final
and binding upon the parties without the right to appeal to the courts. The
award rendered in arbitration shall be final and judgment thereon may be
entered by any court having jurisdiction thereof. The costs and expenses of
the arbitrations (including reasonable attorney's fees) will be borne by the
losing party, unless the arbitrators determine that it would be manifestly
unfair to honor this provision and determine a different allocation of costs.
10.4 APPLICABLE LAW AND ARBITRATION ACT. This agreement to arbitrate
shall be enforceable in either federal or state court. The enforcement of
this agreement to arbitrate and all procedural aspects of this agreement to
arbitrate, including, without limitation, the construction and interpretation
of this agreement to arbitrate, the scope of the arbitrable issues,
allegations of waiver,
18
delay or defenses as to arbitrability, and the rules governing the conduct of
the arbitrations, shall be governed by and construed pursuant to the United
States Arbitration Act. In deciding the substance of any such claim, dispute
or disagreement, the arbitrators shall apply the substantive laws of the
State of Texas; provided, however, that the arbitrators shall have no
authority to award punitive damages under any circumstances regardless of
whether such damages may be available under Texas law, the parties hereby
waiving their right, if any, to recover punitive or consequential damages in
connection with any such claims, disputes or disagreements.
10.5 CONTINUATION OF PERFORMANCE. In the event of a dispute arising
under this Agreement, the parties shall continue performance of their
respective obligations hereunder.
ARTICLE XI
FORCE MAJEURE
11.1 SUSPENSION OF PERFORMANCE. If, as a result of a Force Majeure
event, either Xxxxxxxx Xxxxx or Disposeco is wholly or partially unable to
meet its obligations under this Agreement, the affected party shall give the
other party or parties notice of such situation, describing it in reasonable
detail. The obligations under this Agreement of the party giving notice,
other than the payment of monies due, shall be suspended to the extent and
for the duration of the Force Majeure event. The party affected by the Force
Majeure event shall use good faith efforts to attempt to rectify the
conditions brought about by the Force Majeure event in a commercially
reasonable manner. Notwithstanding anything to the contrary expressed
herein, the parties agree that the settlement of strikes, lockouts or other
industrial disturbances, and, subject to Article IX, litigation, including
appeals, shall be entirely within the discretion of the party involved
therein, and such party may make settlement thereof at such time, and on such
terms and conditions as it may deem to be advisable, and no delay in making
such settlement shall deprive such party of the benefit of this provision.
In the event a Force Majeure event is based on a change of law or
regulations, the parties agree to negotiate in good faith to modify or amend
this Agreement, if possible, to continue the intent and purposes of the
Agreement. Following the end of a Force Majeure event giving rise to a
suspension by Xxxxxxxx Xxxxx pursuant to this Section 11.1, the suspension of
the parties' obligation to perform shall continue for such time as is
commercially reasonable to permit Disposeco to resume deliveries to the
Landfarms, provided that such continuation period shall not exceed 21 days.
In the event of a suspension of performance, the rights and obligations of
the parties for the Contract Year or Contract Years and the Quarter or
Quarters during which such suspension is in effect shall be proportionately
reduced.
11.2 TERMINATION BECAUSE OF FORCE MAJEURE. If performance by one
party under this Agreement is suspended as a result of any event of Force
Majeure and either Disposeco or Xxxxxxxx Xxxxx determines that such suspension
is likely to continue for a period of at least six consecutive months, such
party may notify the other of its desire to meet to negotiate a modification or
amendment to this Agreement (the "Negotiation Notice"); provided that if neither
Xxxxxxxx Xxxxx nor Disposeco issues a Negotiation Notice following an event of
Force Majeure, a Negotiation Notice shall be deemed to have been given on the
date that performance by one party has been suspended as a result of such event
of Force Majeure for a period of six consecutive months. For a period of 60
days after the date of the Negotiation Notice or, if longer, until such
suspension has continued for six consecutive months (the "Negotiation Period"),
the parties agree to negotiate in good faith to
19
modify or amend this Agreement, if possible, to continue the intent and
purposes of the Agreement. If no agreement is reached during the Negotiation
Period, either party may terminate this Agreement on 30 days' written notice;
provided that such termination shall only become effective if (i) the event
of Force Majeure is continuing at the end of such 30-day period, (ii) the
performance by one party under this Agreement has been suspended as a result
of the event of Force Majeure for at least six consecutive months and (iii)
the party electing to terminate will suffer a continuing material adverse
effect as a result of such event of Force Majeure after giving pro forma
effect to the final offer made by other party during the Negotiation Period
(taking into account all aspects of such offer, including without limitation
the ameliorative effects of such offer on the consequences of such Force
Majeure event and any negative effects of such offer on the party electing to
terminate). Any party with a right to terminate pursuant to this Section
11.2 must give written notice of its election to do so to the other parties
within 60 days after the end of the Negotiation Period. If such a party does
not elect to terminate the Agreement within such 60-day period, such party's
termination right with respect to such event of Force Majeure shall expire;
provided that the expiration of the former right to terminate shall not
preclude or estop such party from issuing a subsequent Negotiation Notice
under this Section 11.2 if the event of Force Majeure is continuing.
ARTICLE XII
MISCELLANEOUS
12.1 STATUS OF THE PARTIES. Each party hereto is and shall perform
this Agreement as an independent contractor, and as such, shall have and
maintain complete control over all of its employees, agents, and operations.
Except as expressly otherwise provided in this Agreement, neither party nor
anyone employed by it shall be, represent, act, purport to act or be deemed
to be the agent, representative, employee or servant of the other party.
12.2 NO SET-OFF RIGHTS. The parties hereby agree that neither party
shall have any right to set-off or apply against any sums due under this
Agreement any sums due or amounts otherwise owing pursuant to any other
provision of this Agreement or any other agreement or arrangement between the
parties.
12.3 SUBROGATION; ASSIGNMENT OF RIGHTS. In the event Disposeco
delivers and Xxxxxxxx Xxxxx accepts a delivery of materials (the
"Nonconforming Materials") containing hazardous or dangerous substances in
violation of this Agreement and in violation of Disposeco's agreement with
the third party generator producing such materials, Disposeco agrees that,
upon the request of Xxxxxxxx Xxxxx, Xxxxxxxx Xxxxx shall become fully
subrogated to the rights of Disposeco against such generator related to the
Nonconforming Materials, and Disposeco shall (i) assign or take such further
action as is necessary or desirable to transfer to Xxxxxxxx Xxxxx any and all
rights of action of Disposeco against such generator relating to such
Nonconforming Materials arising at law under Disposeco's agreement with such
generator or in equity and (ii) use its good faith best efforts to assist in
the prosecution of any claim brought by Xxxxxxxx Xxxxx against such third
party generator relating to the Nonconforming Materials.
12.4 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and assigns. Xxxxxxxx Xxxxx and Disposeco may assign their
rights, obligations and duties under this Agreement with the written
20
consent of the other parties to the Agreement, which consent shall not be
unreasonably withheld; provided that the assigning party shall remain
primarily liable for all obligations and duties arising hereunder.
12.5 NOTICES. Notices and other communications provided for herein
shall be in writing and shall be deemed to have been validly given (a) 3 days
after deposit in the United States mails, registered or certified mail with
proper postage prepaid and return receipt requested, (b) upon transmission
thereof and receipt of the appropriate confirmation if sent via telecopier or
telefax, (c) the business day after the same shall have been deposited with a
reputable overnight courier, shipping prepaid and (d) if delivered in person,
upon delivery, in each case addressed as follows:
If to Disposeco, to: with a copy to:
W. Xxxxxxx Xxx Xxxxxx X. Xxxxxxx
President Xxxxx & Xxxxx. L.L.P.
Xxxxxxxx Xxxxx, Ltd. One Shell Plaza
2014 West Pinhook Road, Ste. 900 910 Louisiana
Xxxxxxxxx, Xxxxxxxxx 00000 Xxxxxxx, Xxxxx 00000-0000
ph: 000-000-0000 ph: 000-000-0000
fax: 000-000-0000 fax: 000-000-0000
If to Xxxxxxxx Xxxxx, to: with a copy to:
W. Xxxxxxx Xxx Xxxxxx X. Xxxxxxx
President Xxxxx & Xxxxx. L.L.P.
Xxxxxxxx Xxxxx, Ltd. One Shell Plaza
2014 West Pinhook Road, Ste. 900 910 Louisiana
Xxxxxxxxx, Xxxxxxxxx 00000 Xxxxxxx, Xxxxx 00000-0000
ph: 000-000-0000 ph: 000-000-0000
fax: 000-000-0000 fax: 000-000-0000
If to Sanifill, to: with a copy to:
H. Xxxxxx Xxxxxx Xxxxxx X. Xxxxxxx
Secretary Xxxxx & Xxxxx. L.L.P.
Sanifill, Inc. Xxx Xxxxx Xxxxx
0000 Xxxxx Xxxxxxx, Ste. 700 910 Louisiana
Houston, Texas 77019-2155 Xxxxxxx, Xxxxx 00000-0000
ph: 000-000-0000 ph: 000-000-0000
fax: 000-000-0000 fax: 000-000-0000
or such other address as any party shall specify by written notice so given.
12.6 NON-WAIVER. The failure of any party to enforce its rights under
any provision of this Agreement shall not be construed to be a waiver of such
provision. No waiver of any breach of this Agreement shall be held to be a
waiver of any other breach.
21
12.7 ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the
entire agreement between the parties concerning the subject matter hereof and
supersedes any and all other communications, representations, proposals,
understandings or agreements, either written or oral, between the parties
hereto with respect to such subject matter. This Agreement may not be
modified or amended, in whole or in part, except by a writing signed by both
parties hereto.
12.8 SEVERABILITY. If any provision of this Agreement is declared
invalid or unenforceable, then such portion shall be deemed to be severable
from this Agreement and shall not affect the remainder hereof.
12.9 HEADINGS. The Article and Section headings contained herein are
for reference purposes only and shall not in any way affect the meaning and
interpretation of this Agreement.
12.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
shall constitute one instrument.
12.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
22
EXECUTED as of the day and year first above written.
NOW DISPOSAL OPERATING CO.
By:
-------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
SANIFILL, INC.
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
XXXXXXXX XXXXX, LTD.
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
23
EXECUTED as of the day and year first above written.
NOW DISPOSAL OPERATING CO.
By: /s/ W. Xxxxxxx Xxx
-----------------------------------
W. Xxxxxxx Xxx
President
SANIFILL, INC.
By: /s/ H. Xxxxxx Xxxxxx
-----------------------------------
H. Xxxxxx Xxxxxx
Secretary
XXXXXXXX XXXXX, LTD.
By: /s/ W. Xxxxxxx Xxx
-----------------------------------
W. Xxxxxxx Xxx
President
24
SCHEDULE 1: DECREASING ACTUAL VOLUME OVER 10 YEAR PERIOD.
-----------------------------------------------------------------------------------------------------------
Carryforward
Prior Years Amount
Adjustment (=Actual Carryforward
(= to positive Annual Volume Actual Volume - Account -
Contract Carryforward (Assumed to be Volume Annual Year End
Year Acct. Bal.) 1,850/year) Minimum Volume (assumed) Volume) Balance
-----------------------------------------------------------------------------------------------------------
1 NA 1,850 1,757.5 2,000 150 150
(=1,850-92.5) (=0+150)
-----------------------------------------------------------------------------------------------------------
2 150 1,850 1,607.5 2,000 150 185
(=1,850-150-92.5) (=150 + 150
subject to
maximum)
-----------------------------------------------------------------------------------------------------------
3 185 1,850 1,572.5 1,900 50 185
(=1,850-185-92.5) (=185 + 50 -
150* subject
to maximum)
-----------------------------------------------------------------------------------------------------------
4 185 1,850 1,572.5 1,900 50 85
(=1,850-185-92.5) (=185+50 -
150*)
-----------------------------------------------------------------------------------------------------------
5 100 1,850 1,657.5 1,850 0 35
(=1,850-100-92.5) (=85+0-50)*
-----------------------------------------------------------------------------------------------------------
6 50 1,850 1,707.5 1,850 0 0
(=1,850-50-92.5) (=35+0-
35**)
-----------------------------------------------------------------------------------------------------------
7 NA 1,850 1,757.5 1,800 -50 -50
(=1,850-92.5) (0+-50)
-----------------------------------------------------------------------------------------------------------
8 NA 1,850 1,757.5 1,800 -50 -100
(=1,850-92.5) (-50+-50)
-----------------------------------------------------------------------------------------------------------
9 NA 1,850 1,757.5 1,775 -75 -125
(=1,850-92.5) (=50
credit***
-50-75)
-----------------------------------------------------------------------------------------------------------
10 NA 1,850 1,757.5 1,975 125 0
(=1,850-92.5) (-125+125)
-----------------------------------------------------------------------------------------------------------
* Pursuant to Section 2.3.3, the Positive Carryforward accruing in the
Contract Year two years earlier expires.
** Under the last sentence in Section 2.3.3, the reduction in account balance
resulting from the expiration of an earlier Positive Carryforward shall not
cause the balance of the Carryforward Account to become negative.
*** Pursuant to Section 2.3.4, Disposeco would be obligated in Contract Year 9
to pay an amount equal to 50,000 barrels multiplied by the Prevailing Rate
based on the Triggering Carryforward accruing in Contract Year 7.
25
SCHEDULE 2: INCREASING ACTUAL VOLUME OVER 10 YEAR PERIOD.
-----------------------------------------------------------------------------------------------------------
Carryforward
Prior Years Amount
Adjustment (=Actual
(= to positive Annual Volume Actual Volume - Carryforward
Contract Carryforward (Assumed to be Volume Annual Account - Year
Year Acct. Bal.) 1,850/year) Minimum Volume (assumed) Volume) End Balance
-----------------------------------------------------------------------------------------------------------
1 NA 1,850 1,757.5 1,775 -75 -75
(=1,850-92.5) (=0+-75)
-----------------------------------------------------------------------------------------------------------
2 NA 1,850 1,757.5 1,775 -75 -150
(=1,850-92.5) (=-75+-75)
-----------------------------------------------------------------------------------------------------------
3 NA 1,850 1,757.5 1,800 -50 -125
(=1,850-92.5) (=75 credit*+
-75 + -50)
-----------------------------------------------------------------------------------------------------------
4 NA 1,850 1,757.5 1,800 -50 -50
(=1,850-92.5) (=75 credit*+
-50 + -50)
-----------------------------------------------------------------------------------------------------------
5 NA 1,850 1,757.5 1,850 0 0
(=1,850-92.5) (=50 credit*+
0)
-----------------------------------------------------------------------------------------------------------
6 NA 1,850 1,757.5 1,850 0 0
(=1,850-92.5) (=0+0)
-----------------------------------------------------------------------------------------------------------
7 NA 1,850 1,757.5 1,900 50 50
(=1,850-92.5) (0+50)
-----------------------------------------------------------------------------------------------------------
8 50 1,850 1,707.5 1,900 50 100
(=1,850-50-92.5) (=50+50)
-----------------------------------------------------------------------------------------------------------
9 100 1,850 1,657.5 1,950 100 150
(=1,850-100-92.5) (=100+100-
50**)
-----------------------------------------------------------------------------------------------------------
10 150 1,850 1,607.5 1,700 -150 0
(=1,850-150-92.5)
-----------------------------------------------------------------------------------------------------------
* Pursuant to Section 2.3.2, Disposeco would be obligated in each of the
marked Contract Years to pay an amount equal the then Prevailing Rate
multiplied by the volume of the Triggering Carryforward accruing in two
years earlier.
** Pursuant to Section 2.3.3, the Positive Carryforward accruing in Contract
Year 7 expires.
26
SCHEDULE 3: VARIABLE ACTUAL VOLUME OVER 10 YEAR PERIOD.
-----------------------------------------------------------------------------------------------------------
Carryforward
Prior Years Amount
Adjustment (=Actual
(= to positive Annual Volume Actual Volume - Carryforward
Contract Carryforward (Assumed to be Volume Annual Account - Year
Year Acct. Bal.) 1,850/year) Minimum Volume (assumed) Volume) End Balance
-----------------------------------------------------------------------------------------------------------
1 NA 1,850 1,757.5 2,000 150 150
(=1,850-92.5) (=0+150)
-----------------------------------------------------------------------------------------------------------
2 150 1,850 1,607.5 1,750 -100 50
(=1,850-150 - (=150+-100)
92.5)
-----------------------------------------------------------------------------------------------------------
3 50 1,850 1,707.5 1,850 0 0
(=1,850-50-92.5) (=50-unused
50 from yr 1)
-----------------------------------------------------------------------------------------------------------
4 NA 1,850 1,757.5 1,800 -50 -50
(=1,850-92.5) (=0-50)
-----------------------------------------------------------------------------------------------------------
5 NA 1,850 1,757.5 2,000 150* 100
(=1,850-92.5) (=-50+150)
-----------------------------------------------------------------------------------------------------------
6 100 1,850 1,657.5 1,750 -100 0
(=1,850-100- (=100+-100)
92.5)
-----------------------------------------------------------------------------------------------------------
7 NA 1,850 1,757.5 1,850 0 0
(=1,850-92.5) (=0+0)
-----------------------------------------------------------------------------------------------------------
8 NA 1,850 1,757.5 1,900 50 50
(=1,850-92.5) (=0+50)
-----------------------------------------------------------------------------------------------------------
9 50 1,850 1,757.5 1,775 -75 -25
(=1,850-92.5) (=50+-75)
-----------------------------------------------------------------------------------------------------------
10 NA 1,850 1,757.5 1,875 25 0
(=1,850-92.5)
-----------------------------------------------------------------------------------------------------------
* Note that Contract Year 5 above is an example of a Positive Carryforward
which is partially offset prior to the Contract year in which it is accrued
with the remainder being offset after the Contract Year in which it is
accrued.
27
