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SBWMA Page 7 April 7, 2017 Reference Section Description Modifications to Model Agreement 11 Contractor’s Compensation, Pass‐Through Costs, and Rates Updated language generally in Article 11 to shift Rate Years and dates that related to the 2009 Franchise Agreement to Rate Years and dates relevant to the amended and restated Agreement. 11.02 Determination of Contractor’s Compensation  Identified that compensation adjustment for Rate Year Eleven (the first Rate Year in the amended and restated Agreement) will involve adjusting Contractor’s proposed 2021 compensation to reflect actual changes in service levels and changes in fuel cost indices from 2016 through 2020 (in accordance with Attachment K).  Described how compensation will be adjusted in subsequent Rate Years for changes in cost indices and differences in service levels.  Documented that the depreciation amount for Rate Year Ten under the 2009 Franchise Agreement shall be adjusted and shall include some depreciation costs related to the new vehicles that will be purchased under the Term of the amended and restated Agreement. This is intended to smooth out rate adjustments from 2019 through 2021. 11.03 Annual Revenue Reconciliation Amended language to provide clarification on revenues attributable to Attachment Q charges including Agency share of Backyard Collection Service revenues pursuant to the 2013 Amendment to the 2009 Franchise Agreement. 11.05 Special Compensation Review  Added language that allows for Contractor to request special compensation review during the regular compensation adjustment process if one or more of the “special” events occur and cause an increase or decrease to Contractor’s Compensation by less than 2% for the then‐current Rate Year and to compensated Contractor retroactively. Note that current language was retained that states if events cause cost increases or decreases greater than 2%, Contractor can request a special compensation review at any time.  Removed language that pertained to Rate Years One and Three under the 2009 Franchise Agreement. 11.07 Rate‐Setting Process Identified that interest payment arrangements associated with revenue reconciliation process shall governed by the July 8, 2015 Memorandum of Understanding between Contractor and SBWMA, which is provided in new Attachment S. 13.03 Faithful Performance Bond Specified that the CPI to be used in adjusting the amount of the performance bond every two years. 13.06 Indemnification related to Various State Requirements Amended this Section, which previously focused on the Contractor’s indemnification related to AB 939, to be inclusion of indemnification related to AB 939, AB 341, AB 901, AB 1826, AB 1594, SB 1016, SB 1383, and other laws, regulations or permits issued or enforced by the CalRecycle or the LEA. Note that the indemnification is applicable to the extent it relates to Contractor’s failure to perform obligations under this Agreement. 14.09.A Excuse from Performance – Force Majeure No changes have been made to the language as of this date; however, the Parties are still discussing force majeure language related to labor unrest. ATTACHMENTS Attach A Definitions, New Definitions Added several definitions including: 2009 Franchise Agreement, AB 341, AB 1826, Bulky Item Collection, Container Relocation Service, Mixed Use Buildings, Long Distance Service, SB 1383, and Shoreway Recycling and Disposal Facility. Attach A Definitions, Minor Clarifications Provided minor clarifications to the following definitions: Commercial Diversion Level, Food Scraps, Holidays, Holiday Collection Schedule, Overall Diversion, Previous Contractor, Rate Year, Recycling Blitz, Residential Diversion Level, Revenue Requirement, Service Day, Targeted Recyclable Materials FAX Committee Final Findings Report 04/20/2017 Attachment G: Section-by Section Summary of Proposed Changes p - 7 7.A - Page 37