Agreement of Purchase And Sale And Joint Escrow

EXHIBIT 10.50


AGREEMENT OF PURCHASE AND SALE


AND JOINT ESCROW INSTRUCTIONS


THIS AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS (the "PURCHASE AGREEMENT") is made and entered into as of this 29th day of November, 1999, and constitutes an agreement by and between CITY GARBAGE COMPANY OF EUREKA, INC., a California corporation ("SELLER"), and HUMBOLDT WASTE MANAGEMENT AUTHORITY, a California joint powers authority duly organized under California Government Code Sections 6500 et seq. ("BUYER").


RECITALS AND REPRESENTATIONS


WHEREAS, Seller is the owner of that certain real property, together with the improvements and fixtures located thereon, located in the City of Eureka, County of Humboldt, State of California, more particularly described in EXHIBIT A, attached hereto and incorporated by reference herein (the "TRANSFER STATION PROPERTY"), on a portion of which Seller currently operates a solid waste transfer station (the "TRANSFER STATION");


WHEREAS, Seller is the owner of that certain real property, together with the improvements and fixtures located thereon, located in the County of Humboldt, State of California, more particularly described in EXHIBIT B attached hereto and incorporated by reference herein (the "LANDFILL PROPERTY"), on which Seller currently operates a solid waste landfill known as the Cummings Road Landfill (the "LANDFILL");


WHEREAS, Buyer is a joint powers authority duly organized under California Government Code Sections 6500 et seq. and formed by the Cities of Arcata, Blue Lake, Eureka, Ferndale, and Rio Dell, and the County of Humboldt;


WHEREAS, the Transfer Station and the Landfill have received solid waste from, among other sources, residents and businesses of those local jurisdictions which have joined together to form Buyer;


WHEREAS, subject to the terms and conditions hereof: (i) Seller will sell and transfer to Buyer, and Buyer will purchase and accept from Seller, the Transfer Station Property, subject to Seller leasing back a portion of such property; (ii) Seller will transfer to Buyer, and Buyer will accept from Seller, the Landfill Property, and in connection therewith, Buyer will assume certain operational, closure and post-closure responsibilities with respect to the Landfill; (iii) Seller will assign and transfer to Buyer and Buyer will accept from Seller rights with respect to certain statutorily-mandated trust funds and related agreements established in connection with the operation of the Landfill; (iv) Buyer will pay to Seller a termination payment in exchange for which the Seller and affiliated companies will cease certain refuse disposal activities; (v) Buyer will cooperate with Seller in its efforts to obtain extensions of certain collection and recycling contracts Seller has with the City of Eureka and the County of Humboldt; and (vi) the parties will agree to certain other matters as specified herein; and


WHEREAS, to facilitate the transactions contemplated herein, this Purchase Agreement will serve as the joint instructions of Buyer and Seller to


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Humboldt Land Title Company ("ESCROW HOLDER") with regard to the escrow (the "ESCROW") created pursuant hereto.


AGREEMENT


NOW THEREFORE, in light of the foregoing premises, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:


1.0 Transfer Station Property and Related Agreements.


1.1 Purchase and Sale.


(a) At the Close of Escrow (as defined in Section 6.1 hereof), Seller shall transfer and convey to Buyer all of Seller's right, title and interest in and to the Transfer Station Property, and Buyer shall acquire the same from Seller, upon the terms and conditions herein set forth. Notwithstanding the foregoing, the Transfer Station Property shall not include the moveable truck wash container and the truck wash equipment located therein or the oil/water separator located near the truck wash pad to the extent any of the same might be deemed an improvement or fixture otherwise within the definition of the Transfer Station Property, it being understood that Seller will retain ownership of such property.


(b) At the Close of Escrow, Seller shall assign and transfer to Buyer to the extent permitted by law all of Seller's right, title and interest in and to the licenses and permits relating to the use of the Transfer Station as a solid waste transfer station set forth in EXHIBIT C, attached hereto and incorporated herein by this reference (collectively, the "TS PERMITS").


(c) Seller has no obligation to transfer to Buyer any license or permit other than the TS Permits. To the extent the consent of any third party is required for any such assignment or transfer to Buyer of any TS Permit, Seller and Buyer will cooperate in good faith to obtain such consent (collectively, the "TS THIRD PARTY CONSENTS") prior to the Close of Escrow. Notwithstanding the provisions of Paragraph 1.1(b) hereof, to the extent any such TS Third Party Consent is not obtainable with respect to any TS Permit, or if any TS Permit is not transferable, Seller will have no obligation to transfer or assign such TS Permit to Buyer, but Seller and Buyer will each use its best efforts to attempt to have issued to Buyer a similar license or permit to such TS Permit by the relevant governmental agency.


1.2 Consideration. In consideration of the transfer and conveyance to Buyer of Seller's right, title and interest in and to the Transfer Station Property, and the assignment and transfer to Buyer of Seller's right, title and interest in and to the TS Permits, Buyer will, at the Close of Escrow:


(a) Pay to Seller the sum of Two Million Six Hundred Thousand Dollars ($2,600,000.00) (the "CASH PAYMENT") in immediately available funds, which amount shall be paid into the Escrow at least one (1) business day prior to the Close of Escrow; and


(b) Enter into that certain Transfer Station Assignment and Assumption Agreement in the form attached hereto as EXHIBIT D (the "TS ASSIGNMENT AGREEMENT").


1.3 Certain Credits. Buyer shall receive a credit against the Cash Payment at the Close of Escrow in the amount of (i) Twenty-Five Thousand Dollars


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($25,000.00) to compensate Buyer for the cost of updating the closure/post-closure plan for the Landfill; and (ii) One Hundred Thousand Dollars ($100,000.00) to compensate Buyer for the cost of certain environmental mitigation improvements required at the Transfer Station Property, which will not be the responsibility of Seller after the Close of Escrow.


1.4 Leaseback. Effective on the Close of Escrow, Buyer will lease back to Seller, pursuant to a lease agreement in the form attached hereto as EXHIBIT E (the "LEASE"), the waste collection company office, maintenance facility and parking/truck storage facility located on the Transfer Station Property. The Lease will provide for a term of ten (10) years, with certain rights to extend the term, and an initial rental rate of Six Thousand Two Hundred Eighty Three Dollars ($6, 283.00) per month subject to annual increases based on the Consumer Price Index.


1.5 Central Drop-off Recycling Site.


(a) Effective on the Close of Escrow, Buyer will assume all of the obligations of Seller to the City of Eureka pursuant to Section 4.2.5 of that certain Agreement Between the City of Eureka and City Garbage Company of Eureka, Inc. For Collection, Transportation and Disposal of Residential, Commercial and Industrial Solid Waste dated December 19, 1997 (the "EUREKA COLLECTION AGREEMENT"), for providing a central drop-off recycling site, and all reporting obligations of Seller under the Eureka Collection Agreement with respect to recycling materials received at the Transfer Station. From and after the Close of Escrow, Buyer shall accept recyclable materials delivered to the Transfer Station by Seller, subject to the same terms and conditions such materials would be accepted from other customers, such as recyclers, residents, generators of recyclables, etc. At this time, Buyer anticipates that "traditional" recyclables, including paper, newspaper, cardboard, glass, tin cans, aluminum cans, bi-metal cans, #1 PETE plastic, #2 HDPE colored plastic bottles, and #2 HDPE natural bottles will be accepted at no charge. Other material, such as greenwaste, appliances, tires, metals, and used motor oil, will be accepted at a cost sufficient to cover the cost of handling and processing. Buyer and Seller recognize that conditions such as marketability and processing costs can alter Buyer's terms of acceptance of recyclables. On or before the Close of Escrow, Seller shall cause the City of Eureka to execute an amendment to the Eureka Collection Agreement authorizing Buyer to assume the above-referenced recycling obligations and releasing Seller from said obligations, the form of which amendment shall be reasonably acceptable to Seller.


2.0 Landfill Property and Related Agreements.


2.1 Transfer and Assignment.


(a) At the Close of Escrow, Seller agrees to transfer and convey to Buyer all of Seller's right, title and interest in and to the Landfill Property, and Buyer agrees to acquire the same from Seller, upon the terms and conditions herein set forth.


(b) At the Close of Escrow, Seller agrees to assign and transfer to Buyer to the extent permitted by law all of Seller's right, title and interest in and to the following:


(1) as further described and subject to the limitations set forth in Paragraph 3.0 hereof, the trust funds and related trust agreements described under the headings Closure Post-Closure Trust Fund and Article 5 Corrective Action


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Trust Fund in EXHIBIT F attached hereto and incorporated by reference herein (collectively, the "TRUST FUNDS"); and


(2) all of the licenses and permits relating to the use of the Landfill as a sanitary landfill as set forth under the heading "Permits" in EXHIBIT F (collectively, the "LF PERMITS").


(c) Seller has no obligation to transfer to Buyer any license or permit relating to the use of the Landfill Property as a sanitary landfill other than the LF Permits. To the extent the consent of any third party is required for any such assignment and transfer to Buyer of any Trust Funds or LF Permits, Seller and Buyer agree to cooperate in good faith to obtain such consent (collectively, the "LF THIRD PARTY CONSENTS") prior to the Close of Escrow. Notwithstanding the provisions of Paragraph 2.1(b)( 2) above, to the extent any such LF Third Party Consent is not obtainable with respect to any LF Permit, or if any LF Permit is not transferable, Seller will have no obligation to transfer or assign such LF Permit to Buyer, but Seller and Buyer will cooperate with each other and use diligent efforts to attempt to have issued to Buyer a similar license or permit to such LF Permit by the relevant governmental agency. In furtherance of the foregoing, upon execution of this Purchase Agreement, Seller and Buyer agree to sign and deliver to the California Regional Water Quality Control Board, North Coast Region a letter in the form attached hereto as EXHIBIT G, which letter relates to the waste discharge requirements relating to the Landfill.


2.2 Consideration. In consideration of the transfer and conveyance to Buyer of Seller's right, title and interest in and to the Landfill Property, the assignment, transfer and conveyance to Buyer of Seller's right, title and interest in and to the Trust Funds and LF Permits, Buyer will enter into that certain Landfill Assignment and Assumption Agreement with Seller, effective as of the Close of Escrow, in substantially the form attached hereto as EXHIBIT H (the "LF ASSIGNMENT AGREEMENT").


2.3 Easements. The parties acknowledge that subsequent to the Close of Escrow, Seller will continue to own approximately 277 acres of additional real property (the "RETAINED PROPERTY") in the vicinity of the Landfill Property and will continue to need access to such property over and across the Landfill Property for logging and other purposes. Accordingly, at the Close of Escrow, Seller shall reserve from the conveyance of the Landfill Property one or more ingress/egress easements (the "ACCESS EASEMENT") over and across the Landfill Property as is reasonably necessary to allow Seller to access the Retained Property and to harvest efficiently timber from such property , and the language of such easement shall be acceptable to both parties. The Access Easement shall be located such that it will not materially interfere with corrective actions and closure/post-closure activities being performed by Buyer at the Landfill. Furthermore, at the Close of Escrow, Seller shall grant to Buyer easements over the Retained Property for purpose of access to and maintenance of the existing ground water diversion trench sedimentation pond (the "POND EASEMENT") and access to the existing monitoring wells relating to the Landfill Property (the "MONITORING WELLS EASEMENT"), the language of which shall be acceptable to both parties.


2.4 Baseline Assessment. Prior to the Close of Escrow, the parties shall prepare a baseline environmental assessment of the Landfill (the "ASSESSMENT"), which Assessment shall consist of a compilation of existing reports, studies and analyses of the Landfill previously prepared by consultants/engineers of Seller and the County of Humboldt as set forth in EXHIBIT N. The parties shall bear equally


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the cost of the Assessment and the cost of taking any necessary aerial photographs of the Landfill Property.


3.0 Trust Funds and Related Obligations.


3.1 Closure/Post-Closure Trust.


(a) On or before the Close of Escrow, Seller and Buyer shall execute all documents necessary and obtain all approvals necessary to amend or replace the Closure/Post-Closure Trust Agreements, as identified on EXHIBIT F, to transfer all Seller's right, title, interest, and obligation pursuant to the Trust Agreements to Buyer and to substitute Buyer as grantor under the Trust Agreements.


(b) The parties understand that prior to the Close of Escrow, Buyer desires to replace the mechanism for providing financial assurances for post-closure obligations with respect to the Landfill with a pledge of revenues mechanism. Accordingly, Seller will cooperate in good faith with Buyer's effort to obtain all governmental approvals necessary to substitute a pledge of revenues mechanism and cause the funds contained in the Closure/Post-Closure Trust Fund to be released into the Escrow prior to the Close of Escrow.


(c) From and after the Close of Escrow, Seller shall be replaced as grantor under the Closure/Post-Closure Trust Agreement and shall have no further obligation to make payments into the Closure/Post-Closure Trust Fund, nor to pay for or participate in any way in future closure/post-closure operations. From and after the Close of Escrow, Buyer will assume all legal responsibility for closure/post-closure obligations with respect to the Landfill, including without limitation, the obligation to provide adequate financial assurances with respect to such obligations. Seller makes no representations as to the adequacy of the Closure/Post-Closure Trust Fund and shall have no responsibility or liability to Buyer or any other party with respect to the failure of such funds to cover adequately any closure and post-closure costs with respect to the Landfill.


(d) To the extent that this Purchase Agreement between Buyer and Seller may be inconsistent with paragraph 7 of the 1996 Amendment to the Solid Waste Disposal Agreement between the County of Humboldt and Seller (the "1996 AMENDMENT"), this Purchase Agreement shall supersede such 1996 Amendment. On or before the Close of Escrow, Buyer will cause the County of Humboldt to acknowledge in writing the foregoing, which writing will be reasonably acceptable to Seller.


3.2 Operator Liability Trust.


(a) On or before the Close of Escrow, Seller and Buyer shall execute all documents necessary and obtain all approvals necessary to amend or replace the Operator Liability Trust Agreement, as identified on EXHIBIT F, to transfer all Seller's right, title, interest, and obligation pursuant to the Trust Agreement to Buyer, subject to the provisions of Paragraphs 3.2(b)-(f), and to substitute Buyer as grantor under such Trust Agreement.


(b) On or before the Close of Escrow, (i) Buyer shall cause the County of Humboldt to release and transfer to Seller all of the County's right, title and interest pursuant to paragraph 5 of the 1996 Amendment in the funds held in the Operator Liability Trust Fund, as identified on EXHIBIT F, as of the date of this Purchase Agreement, together with all interest accrued thereon until the funds are released from the Trust (the "OPERATOR LIABILITY FUNDS").


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(c) On or before the Close of Escrow, Buyer may substitute a pledge of revenues or insurance mechanism for the Operator Liability Funds, and shall cause such funds to be paid into escrow at least one (1) business day prior to the Close of Escrow.


(d) In consideration of Seller's retention of certain liabilities as set forth in this Paragraph 3.2(d) hereof, Buyer shall transfer to Seller the Operator Liability Funds at the Close of Escrow. After the Close of Escrow, the funds released to Seller from the Operator Liability Trust Fund shall be available for the exclusive use by Seller to pay liability claims, if any, arising from its operation of the Landfill prior to the Close of Escrow in accordance with state law and regulations. Any unused funds in said trust shall belong to Seller as its sole property.


(e) Seller shall retain any liabilities that are covered by the Operator Liability Trust Fund that it may otherwise have for its activities at the Landfill occurring prior to the Close of Escrow.


(f) From and after the Close of Escrow, Seller shall be replaced as grantor under the Operator Liability Trust Agreement and shall have no further obligation to make payments into the Operator Liability Trust Fund. Buyer shall be legally responsible for any replacement funds required to be deposited in the Operator Liability Trust Fund or other financial assurance mechanism, and such additional funds shall be available only to meet its own operator liabilities.


3.3 Article 5 Corrective Action Trust Fund.


(a) On or before the Close of Escrow, Seller and Buyer shall execute all documents necessary and obtain all approvals necessary to amend or replace the Article 5 Corrective Action Trust Agreement, as identified on EXHIBIT F, to transfer all Seller's right, title, interest and obligation pursuant to the Trust Agreement to Buyer and to substitute Buyer as grantor under the Trust Agreement, subject to the limitations contained in Paragraph 3.3(b).


(b) Both prior to and after the Close of Escrow, the funds in the Article 5 Corrective Action Trust Fund shall be available to reimburse Seller for expenses incurred prior to the Close of Escrow to implement any state-approved Article 5 corrective action. At the Close of Escrow, Buyer shall also cause the County of Humboldt to pay into the Article 5 Corrective Action Trust Fund any additional funds required to reimburse Seller for expenses incurred prior to the Close of Escrow to implement any state approved Article 5 corrective actions (with the exception of additional funds which may be necessary to reimburse Seller for expenses related to the groundwater diversion trench and toe-berm repair, construction or design), subject to regulatory approval of disbursement requests submitted by Seller.


(c) From and after the Close of Escrow, Seller shall be replaced as grantor under the Article 5 Corrective Action Trust Agreement and shall have no further obligation to make payments into the Article 5 Corrective Action Trust Fund, or to pay for or participate in any way in future corrective actions.


(d) Subject to the limitations contained in Paragraph 3.3(e) hereof, Seller shall retain whatever legal liability it may have for any defect or deficiency in the work performed by Seller or its contractors or consultants at the Landfill.


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(e) At such time as Seller and the County of Humboldt resolve by written agreement the question of the County's obligation, if any, to pay certain additional Article 5 corrective action costs related to the grou ...