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HomeMy WebLinkAboutSITE LEASE BETWEEN AUGUSTA, GEORGIA AND AUGUSTA WASTE TO ENERGY, LLC SITE LEASE between AUGUSTA, GEORGIA and AUGUSTA WASTE TO ENERGY, LLC Dated as of September 26, 2017 SITE LEASE AGREEMENT THIS SITE LEASE(this "Lease") is made this 26th day of September, 2017 by and between AUGUSTA, GEORGIA, a political subdivision of the State of Georgia, with its offices located at 535 Telfair Street, Augusta, Georgia 30901 (the "Lessor"), and AUGUSTA WASTE TO ENERGY, LLC, a Nevada limited liability company with principal offices located at 1506 Klondike Road, Suite 150, Conyers, Georgia 30094 (the "Lessee"). WITNESSETH: Whereas, Lessee has agreed to lease the Processing Site for use as a recycling and manufacturing facility; and Whereas, Lessor desires to lease the Processing Site to Lessee, and Lessee desires to lease the Processing Site from Lessor for the term and at the rental amount set forth herein; and Whereas, Lessor desires to reduce the amount of municipal solid waste that Lessor disposes of in its landfill through Lessee's recovery of recyclables and other beneficial products from such waste; and Whereas, Lessor desires to allow Lessee to install cutting-edge technology at the Processing Site to recycle and obtain other beneficial products from municipal solid waste; and Whereas, Lessee desires to create recyclables and other beneficial products as set forth in this Lease. Whereas, Lessee has not employed or retained any person or selling agency to solicit or secure this Lease upon an agreement or understanding for a commission, percentage, brokerage, or contingent fee, excepting bona fide employees or bona fide established commercial or selling agencies maintained by Lessee for the purpose of securing business, and Lessee has not received any non-Lessor fee related to this Lease without the prior written consent of the Lessor. Lessee acknowledges that any breach or violation of the foregoing provides the Lessor with the right to annul this Lease without liability or, at its discretion, to deduct from Lessor payments of consideration, if any, the full amount of such commission, percentage, brokerage or contingent fee. Now, therefore, Lessor and Lessee agree to the terms of this Lease. 1. DEFINITIONS. Unless otherwise specifically required by the context in which any defined term appears, the following terms shall have the meaning assigned to them in this Section for all purposes: a. Lessee's Equipment has the meaning set forth in Section 5. 2. 2 b. Environmental Attributes means any and all credits,benefits, emissions reductions, environmental air quality credits, emission reduction credits, renewable energy credits, renewable energy certificates, offsets, and allowances attributable to the generation, destruction,purchase, sale, or use of LFG from the Landfill, including, but not limited to, tags, certificates, credits, allowances, offsets, and similar products or rights attributable to the generation, destruction, purchase, sale, or use of LFG from the Landfill that can be used to claim responsibility for, ownership of, or any avoidance or reduction of emissions or pollutants, including,but not limited to, carbon dioxide, mercury, nitrogen oxide, sulfur oxide, carbon monoxide, particulate matter or similar pollutants or contaminants of air, water or soil, under any governmental, regulatory or voluntary program, including the United Nations Framework Convention on Climate Change and related Kyoto Protocol or other program. c. Force Majeure means acts of God, fires, storms, lightning, floods, hurricanes,high water washouts, earthquakes, landslides, explosions, war, blockade, public disorder, acts of the public enemy, terrorist act(s), insurrections, riots, epidemics, accidents, casualty, labor disturbances, arrests and restraints of governments and people, catastrophic events such as explosions, breakage or accident to equipment caused by an event of Force Majeure, or any other event of similar cause not reasonably within the control of the affected party and which, by the exercise of reasonable diligence, such party is unable to prevent or overcome in a timely fashion. Force Majeure shall not include the unavailability of or delays in delivery of any product,labor, fuel,service or materials unless caused by an event that would otherwise be defined herein as an event of Force Majeure or other unusual circumstances. Force Majeure shall in no event include (a) any change in the economy or in the markets, pricing or demand for products manufactured at the Processing Site or for recycled materials, processed or unprocessed, that affects Lessee's or Lessor's ability to use municipal solid waste,processed or unprocessed, or any component or product thereof, or the price at which recovered materials can be sold, or (b) increases in the cost of constructing or operating Lessee's Equipment. d. Good Engineering Practice shall mean practices, methods, or acts which, in the exercise of reasonable judgment in light of the facts known, would have been expected to accomplish the desired result in a manner consistent with reliability, safety, project economics, and applicable laws and regulations for similar projects in the State of Georgia. This term is not intended to be limited to one practice or method to the exclusion of all others. e. Governmental Authority means any federal, state, or city government, any political subdivision thereof, or any judicial authority. f. Hazardous Materials means all materials which have been determined to be hazardous to health or the environment by virtue of being defined by the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, 3 Compensation and Liability Act, regulated by the Toxic Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act, or regulated by any other applicable federal, state, or local law. Reference to specific statutes includes amendments as they are made from time to time, as well as the regulations promulgated thereunder. g. Holiday means New Year's Day, Martin Luther King, Jr. Day, Good Friday, Memorial Day Monday, Independence Day, Labor Day, Veterans Day, Thanksgiving Day, Day after Thanksgiving, Christmas Eve and Christmas Day. h. Landfill shall mean the Lessor's Deans Bridge Road Municipal Solid Waste Landfill and any supporting, contiguous or adjacent real property owned by Lessor in Blythe, Georgia. i. Landfill Gas or LFG means any and all gases resulting from the anaerobic decomposition of refuse material within the Landfill disposal cells, consisting principally of methane, carbon dioxide, and other constituent gases. j. Legal Requirements means any applicable law, order, judgment, current Lessor code, ordinance, rule and/or regulation and any permit of any Governmental Authority. k. Municipal Solid Waste or MSW means solid waste accepted and acceptable for disposal at the Landfill, including garbage and trash from single family and multifamily residences, hotels and motels, bunkhouses, campgrounds, picnic grounds, and day use recreation areas, yard trimmings and commercial solid waste. MSW does not include construction or demolition waste or debris, bulk pickup waste(other than yard waste or trimmings), white goods, tires, sanitary waste from septic tanks, publicly-owned treatment works sludge or other sludges or residue, solid waste from mining/industrial processes or operations, biomedical waste, special or manifested waste, recovered materials and recyclables segregated prior to collection. 1. Permit(s) means all actions, reviews, approvals, consents, waivers, exemptions, variances, franchises, orders, permits, authorizations, rights, licenses, filings, zoning changes or variances, and entitlements of whatever kind and however described which are required under applicable law to be obtained or maintained by any person with respect to the activities contemplated herein. m. Processing Site means the real property having an approximate size of ten(10)acres within the Landfill, as set forth in Exhibit A. n. Processing System means all buildings, conveyors, screens, pressure vessels, piping, valves, pumps, monitoring devices, compressors, generators and/or related equipment installed on the Processing Site and utilized by Lessee to process MSW 4 into recyclables and material for product production and one or more products and/or other beneficial uses. o. Scheduled Interruptions means an interruption resulting when all or a portion of the respective Landfill-based systems and/or operations owned by either Lessee or Lessor is deliberately taken out of service at a selected time for purposes of maintenance, replacement, repair or construction. 2. LEASE AND SITE DESCRIPTION AND CONDITION. 2.1 Lessor, in consideration of the rent herein stipulated to be paid by Lessee, does hereby grant, demise and lease unto Lessee, the Processing Site as more fully described in Exhibit A attached hereto and hereby incorporated herein. 2.2 The Lessor shall cooperate with Lessee's acquisition of electricity, water, sewer and other utilities to the Processing Site. In addition, Lessor shall support Lessee's efforts to accomplish, and Lessee shall have the right to undertake, such needed specifications, upgrades and/or improvements of the Processing Site (all soil and final grade leveling, compaction and/or other site preparation requirements, including those activities set forth in Section 3.6), so that Lessee may construct the Processing System. 2.3 The Processing Site shall not contain, nor be known to have contained, refuse from landfilling operations, and it shall be free of recognized environmental conditions, except as otherwise acceptable to Lessee. The Processing Site shall be on soil believed to be native that is above the 100-year flood elevation and as otherwise mutually agreed upon by the Lessor and Lessee. If for some unanticipated reason the initial site mutually agreed upon by the Lessor and Lessee is not acceptable for the Processing System, the parties shall identify an alternative site on the Landfill that is mutually acceptable to the parties. Acceptance of an alternative site, if necessary, shall not be unreasonably refused by either party. Lessor and Lessee shall cooperate in good faith to facilitate, coordinate and conduct their respective due diligence investigations of the feasibility of the Projects to be undertaken, and the parties shall provide each other with access to information in their possession reasonably related thereto. 2.4 Lessor also shall provide Lessee with suitable road access to the Processing Site as may be reasonably necessary for Lessee's enjoyment of its rights and performance of its obligations in this Lease. Any access, including its associated easements, ingress and egress and/or rights-of-way over Lessor's property shall be identified through mutual efforts and good faith collaboration by the parties. Lessor may from time to time change the locations of any such rights of way to the extent Lessor reasonably deems necessary in connection with Lessor's operations at the Landfill, in which event Lessor shall reimburse Lessee for the reasonable cost of relocating any of Lessee's facilities that may be incurred in connection with such relocation. As to any easements, access, ingress and egress S and/or rights-of-way over real property not owned or controlled by Lessor, Lessee shall be obligated to obtain any such right at its cost. 3. PROCESSING SITE RENT, TERM AND CONDITIONS. 3.1 Processing Site Lease Payment. Lessee shall pay Lessor for the use of the Processing Site Ten Thousand($10,000.00) and no/100 Dollars upon the execution of this Lease and $833.33 each month that commercial operations have not commenced. As long as Lessor is in material compliance with its obligations in this Lease and this Lease is in full force and effect, Lessee, within ten (10) days of commencement of commercial operations of the Processing System, shall pay Lessor Forty Thousand ($40,000.00) and no/100 Dollars ("Initial Rent Payment"). Lessee shall pay Lessor Forty Thousand ($40,000.00) and no/100 Dollars each year thereafter within ten days of the anniversary date of the Initial Rent Payment. In addition to the foregoing, Lessee shall pay to Lessor as a lease payment(on each anniversary date) $0.05 per ton for acceptable material delivered by Lessor and processed by Lessee through its Processing System. Lessor shall not require Lessee's payment of any other fees or amounts arising out of, or related to, its lease or use of the Processing Site and/or its Ownership of the Processing System, except to the extent specifically provided for in this Lease. 3.2 Lease Term. Lessor hereby leases the Processing Site to Lessee, and Lessee hereby leases the same from Lessor, for an "Initial Term" as specified in Section 4.1. Sublease. Lessee shall not sublease all or any part of the Processing Site without Lessor's written consent, which shall not be unreasonably withheld. The granting of a sublease does not absolve Lessee of any of the obligations contained in this lease. 3.3 Utilities. Lessee shall pay all charges for water, sewer, gas, electricity, telephone and other services and utilities used by Lessee on the Processing Site during the term of this Lease unless otherwise expressly agreed in writing by Lessor. In the event that any utility or service provided to the Processing Site is not separately metered, Lessor shall pay the amount due and separately invoice Lessee for Lessee's pro rata share of the charges. Lessee shall pay such amounts within fifteen (15) days of invoice. Lessee shall coordinate (and be responsible for) all utility work and upgrades on the Processing Site as may be required to service Lessee's Equipment and Processing System after Lessor has delivered all required utilities (and any required upgrades)to the Processing Site boundary location designated by Lessee. 3.4 Inspection of Processing Site. Lessee and its agents and representatives shall have the right to enter upon the proposed Processing Site after the execution of this Lease to inspect the Processing Site, including inspecting, surveying, engineering, test boring, performance of environmental tests and such other work as Lessee shall consider appropriate and shall have the further right to make such inquiries of 6 governmental agencies and utility companies, etc., and to make such feasibility studies and analyses as it considers appropriate (collectively, the "Inspections"). Lessee shall provide copies of the reports and results of any inspections to Lessor. Lessee shall conduct all inspections, if any, at Lessee's sole expense. Lessee (or Lessee's Lessees) shall provide evidence of a commercially reasonable policy of general liability insurance to Lessor prior to entering the Processing Site. 3.5 Security. Lessee agrees to provide manned-security for the premises during non- operational hours. Such security shall be coordinated with Lessor through the Environmental Services Departmental Director to ensure that said security complies with the operational guidelines and requirements of the Georgia Environmental Division and the Environmental Protection Agency. 3.6 Conditions Precedent to Lessee's Obligation to Lease Processing Site. Lessee's obligation to lease the Processing Site and to perform all other obligations of Lessee under the terms and conditions of this Lease are subject to fulfillment of the following "Conditions Precedent"on or before nine(9)months after the execution of the Lease, except that any of the same may be waived by Lessee in its sole discretion, in writing: (a) The completion of waste study by an independent third party at Lessee's sole expense to confirm that the volume and/or percentage of recyclables found in MSW currently being accepted at the Landfill is at an acceptable level to Lessee. (b) Satisfactory completion of the Inspections by Lessee to confirm that the Processing Site is an appropriate location for Lessee to operate a Processing Facility (c) Satisfactory ALTA/ACSM survey of the Processing Site and any improvements (the "Survey"); (d) Satisfactory environmental reports and condition, including a Phase I report; (e) Satisfactory soil borings to confirm geotechnical characteristics of the Processing Site; (f) Satisfactory cross access and other appropriate easements, which Lessor shall provide to Lessee as required by Lessee. (g) Lessor's completion of its obligations set forth in Section 2. 2 above. Additionally, the obligations of Lessee under this Lease are subject to fulfillment of the following "Additional Condition Precedent" on or before nine (9) months after the execution of this Lease: Lessee shall have entered into agreements and received Permits and all other necessary governmental authorizations on terms and conditions acceptable to Lessee, in Lessee's sole discretion, that shall: (i) enable Lessee to accept delivery of Municipal Solid Waste from Lessor and process it in accordance with Lessee's business model and facility design; and (ii) enable Lessee to finance, build and operate the Processing Facility on the Processing Site. 3.7 Lessee shall have the option to extend the contingency period with respect to the Additional Condition Precedent for two (2) ninety (90) days periods (each an "Extension Option"). An Extension Option shall be exercised, if at all,by delivery to Lessor of written notice no later than the date of the then expiring contingency period together with copies of applications delivered to applicable regulatory agencies (or summaries thereof) and delivery to the Lessor of Ten Thousand ($10,000.00) and no/100 Dollars (each an "Extension Fee")per Extension Option. Each Extension Fee shall be nonrefundable by Lessor and become part of this Lease. Lessee may acknowledge satisfaction or waiver of the foregoing Conditions Precedent and the Additional Condition Precedent, only by delivering written notice of satisfaction or waiver to Lessor. 3.8 If Lessee does not acknowledge in writing the satisfaction of the foregoing Conditions Precedent and Additional Condition Precedent (or otherwise waive the same in writing) on or before the applicable contingency date, the Lessor shall provide notice of termination to Lessee. If Lessee does not satisfy the foregoing requirements of this Section 3.8 within thirty(30) days after receipt of the Lessor's notice, this Lease shall automatically be deemed to be terminated, without action required of either party, any Extension Fee which shall have been paid will be retained by Lessor, and Lessee and Lessor shall thereafter be released from any liability or obligation hereunder. In the event this Lease expires in accordance with this Section 3.8,the parties shall acknowledge such expiration and termination in a commercially reasonable writing mutually acceptable to the parties, upon the request of either party. 4. TERM,TERMINATION,AND DEFAULTS 4.1 Term. Subject to the conditions contained herein,this Lease shall become effective on the date of execution and shall continue in effect up to,and for a period of twenty (20) years after, the commencement of commercial operations of the Processing System ("Initial Term"). No later than twelve (12) months prior to expiration of this Lease, including the first five (5) year extension thereof(if applicable), the parties shall confer and negotiate in good faith regarding the extension of the Initial Term (or the second extension term, if applicable) of this Lease. Any extension beyond the Initial Term set forth above shall be by agreement between both Lessor and the Lessee. Upon the expiration of the lease,the parties may renegotiate a new lease for the premises. 4.2 Lessor's Right to Terminate. Subject to Lessee's right to cure set forth in Section - 4. 2 (f) below, Lessor shall have the right to terminate this Lease by written notice to Lessee submitted not later than thirty(30) days following the occurrence of any of the following: (a) Should Lessee fail to make an annual rental payment required under this Lease within thirty(30)Days after receipt of a written notice from Lessor to Lessee that such payment is at least ten(10) days overdue. (b) Should Lessee commit a material breach of this Lease and such breach remains uncured following written notice of such breach from Lessor. (c) Should any involuntary proceeding be initiated against Lessee under the bankruptcy or insolvency laws, which involuntary proceeding remains un-dismissed for ninety(90)consecutive days, or in the event of the initiation by Lessee of a voluntary proceeding under the bankruptcy or insolvency laws. Neither of the foregoing shall provide a basis for termination where Lessee assumes this Lease in bankruptcy and/or continues to perform its obligations under this Lease. (d) Notwithstanding anything set forth in this Lease to the contrary, Lessor's right to terminate pursuant to the terms of this Section 4.2 shall be in addition to any damages that Lessor may be entitled to under this Lease and is not an express limitation of damages related to Lessee's default or failure to perform its obligations under this Lease. (e) Lessor may terminate this Lease in the event that Lessee's failures in the operation of the Processing System cause the final and unappealable denial of a Lessor permit to operate the Landfill. (f) Lessor shall promptly notify Lessee of the specifics and circumstances of any alleged default and,excepting Lessee's rent payment obligation that shall be due as set forth above in this Section, Lessee shall have the right to cure,or commence the cure of,any default within the thirty (30) day period immediately following receipt of Lessor's written notice of default and, after said period,to diligently pursue the cure to completion, and complete the cure within 90 days. Where the cure cannot be completed within ninety (90) days, but Lessee has commenced the cure and has been diligently pursuing the cure to completion, Lessee shall have the continuing right to cure such default. (g) Should Lessor have the right, and Lessor exercises such right(subject to Lessee's right to challenge such right/exercise), to terminate this Lease under any State of Georgia statute or other law, at no fault of the Lessee, then Lessor shall be obligated to pay to Lessee at the time of such termination, the following: the fair market value of the value of Lessee's improvements to the site, (as measured at the time of the termination) and all costs and expenditures incurred by Lessee in connection with the termination of this project(e.g., costs incurred in shutdown, clean-up and close-out). However, should Lessor exercise its right to terminate this Lease based upon Lessee's default, Lessor shall not be obligated to pay any unamortized costs or any costs and expenditures incurred by Lessee in connection with the termination of 9 this project. (The unamortized costs' portion of this payment shall be the historical cost of any asset less only any depreciation that Lessee has been able to benefit from in its tax filings.) Provided, however, Lessee shall have the right to remove any Lessee improvement (owned and/or paid for by Lessee). In the event the Lessee's improvements located on the Processing Site are partially or totally damaged or destroyed and Lessee has not undertaken steps to repair or replace such improvements, Lessor may elect to terminate this Lease by giving notice to Lessee no earlier than ninety(90)days following the date of such damage or destruction. 4.3 Lessee's Right to Terminate. Subject to Lessor's right to cure set forth in Section 4. 3(e) below, Lessee shall have the right to terminate this Lease by written notice to Lessor, submitted no later than thirty(30) days following the occurrence of the following: (a) Should Lessor commit a material breach of this Lease and such breach remains uncured following written notice of such breach from Lessee. (b) Should any involuntary proceeding be initiated against Lessor under the bankruptcy or insolvency laws, which involuntary proceeding remains un-dismissed for ninety (90) consecutive days, or in the event of the initiation by Lessor of a voluntary proceeding under the bankruptcy or insolvency laws. Neither of the foregoing shall provide a basis for termination where Lessor assumes this Lease in bankruptcy and continues to perform its obligations under the Lease. (c) Notwithstanding anything set forth in this Lease to the contrary, Lessee's right to terminate pursuant to the terms of this Section 4. 3 shall be in addition to Lessee's right to seek injunctive relief, specific performance, and/or any damages that Lessee may be entitled to under this Lease, law or equity, and Lessee's right to terminate is not an express or implied limitation of equitable or legal relief or damages related to Lessor's default or failure to perform its obligations under this Lease. (d) Lessee shall promptly notify Lessor of the specifics and circumstances of any alleged default, and Lessor shall have the right to cure, or commence the cure of, any default within the thirty (30) day period immediately following receipt of Lessee's written notice of default and, after said period, to diligently pursue the cure to completion, and complete the cure within 90 days. Where the cure cannot be completed within ninety (90) days, but Lessor has commenced the cure and has been diligently pursuing the cure to 10 completion, Lessor shall have the continuing right to cure such default. In the event the Lessee's improvements located on the Premises are partially or totally damaged or destroyed, Lessee may elect to terminate this Lease as of the date of the damage or destruction, by giving notice to Lessor no more than ninety (90) days following the date of such damage or destruction. 4.4 Improvements. Lessor and Lessee intend and agree that, subject to the terms and conditions of this Lease, the Lessee's improvements including the Processing System, shall be and remain the personal property of Lessee, and shall at no time become a fixture with respect to the Processing Site. Upon termination or expiration of this Lease, title to any improvements situated or erected on the Processing Site, and any alteration, change or addition thereto, shall remain solely in Lessee. Within one hundred and eighty (180) days of the expiration or earlier termination of the Initial Term(or any extension thereof), all processing equipment installed, including any building or other improvement, shall, at the option of Lessee: remain the property of the Lessee and be removed; Lessee may demolish and dispose of any or all of the foregoing; and/or Lessee may abandon the same on the Processing Site if the Lessor has consented to such abandonment in writing. Provided, however, should the Lessor desire that any of the foregoing improvements remain at the Processing Site despite Lessee's desire to remove the same, Lessor shall pay Lessee the fair market value, as determined at the time of the acquisition, for such improvement(s). Should Lessee decide to remove any equipment and/or other improvement, such removal shall be done in such a manner that it does not damage the integrity of any abandoned or purchased improvement that the Lessor has elected to retain. 4.5 Effect of Termination or Expiration.Any provision of this Lease which specifically states it survives the termination or expiration of this Lease, shall survive any termination or expiration of this Lease. 5. EQUIPMENT AND CONSTRUCTION OF PROCESSING SYSTEM. 5.1 Lessor's Equipment. Lessor shall be solely responsible and liable for designing, constructing, operating, maintaining, and repairing the scales for the Landfill, the Landfill and meeting all Legal Requirements applicable to the Landfill. 5.2 Lessee's Equipment and Processing System. Lessee has the right to, and Lessee shall at its sole cost, construct, own and operate the Processing System. Lessee shall be solely responsible and liable for designing, constructing, operating, maintaining, and repairing any equipment and facility necessary to process the MSW as required for its performance of its obligations under this Lease. Lessee 11 shall commence the construction of the Processing System on or before three (3) years from the date of this Lease. Lessee may segregate the Processing Site and/or its Processing System for one or more operations including, but not limited to, a "recovered materials processing facility," as defined by law. Lessee shall be responsible for obtaining all Permits relating to the construction and operation of the Processing System, subject to Section 5.3 below. The Processing Site may be used by Lessee for any purposes consistent with this Lease, and Lessee shall have the right to enter the Processing Site at any time as Lessee deems necessary, in Lessee's sole judgment, for Lessee's conduct of its operations. Lessee has the right to erect,maintain and operate on the Processing Site the Processing System, communications facilities, utility lines, fences, transmission lines, and supporting equipment and structures thereto, as Lessee deems necessary, in Lessee's sole judgment, for Lessee's conduct of its operations, subject to mutual agreements regarding utility easements. 5.3 Mutual Support. Each party shall exercise reasonable efforts to support and assist the other party in making application for and obtaining all Permits and authorizations and in fulfilling the obligations described above. Such support shall include participating in regulatory proceedings and providing information concerning each party's operations to the extent required. 6. LESSOR'S DELIVERY OF MSW, LESSEE'S PROCESSING OF MSW, RECYCLABLES AND PRODUCT AND LESSOR'S DISPOSAL OBLIGATIONS. 6.1 Lessor's Delivery. As partial consideration for Lessee's lease of the Processing Site, the Lessor shall supply and tender(or arrange for the supply of and tender) to Lessee approximately 175,000 tons of the MSW that Lessor accepts at the Landfill annually. In addition to the $40,000 per year as provided in Section 3.1, Lessee shall pay$0.05 per ton for such MSW. Lessee shall have the right to accept more than 175,000 tons annually at a rate of$0.05 per ton over 175,000 tons. Lessor's deliveries to Lessee shall be made five (5) days per week (except for holidays recognized by Lessor), and Lessor shall deliver MSW to the location mutually agreed upon by Lessor and Lessee to facilitate Lessee's operations. Lessor and Lessee agree to regular and frequent communications, including regarding Lessee's then-existing Processing System throughput capability and Lessee's direct communications with the Lessor's Landfill scale house, so that Lessor's deliveries of MSW optimize Lessee's storage and throughput capacities. Delivery"optimization" shall mean that Lessor(and/or its customer(s)) deliver a sufficient quantity of MSW to: a) allow Lessee to operate its Processing System at Lessee's then-scheduled capacity; and b) allow Lessee to maintain compliance with Permits. Lessor's deliveries shall commence no later than the date that Lessee specifies as 12 its Processing System operational date, which Lessee shall provide to Lessor not less than five (5) days in advance. Lessor shall tender to Lessee, and Lessee shall accept and process,all the Municipal Solid Waste that is delivered to the Processing System, subject to and consistent with this Section 6. Lessee shall have the right to refuse any volume of MSW tendered by Lessor. 6.2 Quantity of MSW and Lessee's Option. Lessor shall annually make available approximately 175,000 tons of municipal solid waste to Lessee for Lessee's maximization of its then-applicable MSW processing capacity, but Lessee shall not be required to accept or process any particular volume of MSW. Lessor and Lessee shall communicate regarding the Lessor's long-term management and/or control of MSW volumes for the potential expansion of Lessee's capacity. Lessee shall have the right, but not the obligation, to expand its Processing System to accept such MSW. Prior to any system expansion, Lessee shall specify the amount of such additional Municipal Solid Waste that it would accept over the long-term, and the Lessor and Lessee may mutually agree upon the terms for Lessor's delivery to, and Lessee's acceptance of such volume of MSW. 6.3 Use of Municipal Solid Waste Not Taken. Lessor shall be free to utilize, dispose of, or sell to a third party all municipal solid waste tendered to Lessee under Section 6.1 and Section 6.2 above, but not accepted and/or processed by Lessee for any reason. 6.4 Quality of Municipal Solid Waste. Lessee understands and acknowledges that, due to the unpredictable nature of municipal solid waste generation, the nature of the MSW may vary and there may be changes within the MSW. Lessee further understands and acknowledges that Lessor is not providing any guarantees, warranties, or representations as to any quality of the MSW delivered to Lessee. Provided,however, Lessor shall not deliver, and Lessee shall not be obligated to accept, any unacceptable waste, as described in the MSW definition. Should Lessee and/or Lessor identify loads that are problematic for Lessee's handling,the parties will take steps to thereafter divert such loads from the Processing Site. Lessor may implement household hazardous waste collection efforts to minimize the amount of such waste delivered to Lessee and/or the Landfill, and Lessor may continue and increase its efforts to maximize the segregated collection of recyclables and/or recovered materials. 6.5 Lessee's Processing. Subject to Lessee's rights and the processing and other limitations set forth in this Lease, as added consideration for its lease of the Processing Site,Lessee shall undertake one or more of the following: extract recoverable materials from,and/or recycle, MSW accepted by Lessee at the Processing System; and process, source- separated recyclables collected or controlled by Lessor. The Processing System shall be capable of one or more of the foregoing processes to segregate and/or process for Lessee's sole benefit certain "recoverable materials" and/or "recovered materials," as defined by law, and/or recyclables, at no cost to Lessor. Lessee shall have title to all 13 such materials and recyclables processed, removed and/or recovered by Lessee. The Processing System also may develop one or more products from MSW, which product(s) Lessee may process to obtain refined products, e.g., diesel fuel, to be owned and controlled by Lessee. Lessee's processing of recovered materials or source-separated recyclables and/or extraction of recoverable materials from, and/or recycling, MSW accepted by Lessee at the Processing System shall be limited to the extent that such processing, extraction and/or recycling is commercially practicable and consistent with Lessee's operation of its Processing System. 6.6 Operating Standard. Lessee shall install, operate, and maintain Lessee's Equipment in accordance with Good Engineering Practice. Lessee shall operate the Processing System in accordance with its Permits. Notices of violations or consent orders for Lessee's failure to operate in accordance with any permits, laws, or regulations as related to the Lessee's operations shall be communicated to the Lessor, and Lessee shall promptly comply with its Permits and orders. 6.7 Municipal Solid Waste's and Recyclables' Residuals and Gray Water. Lessor shall accept and dispose of, at no cost to Lessee, all MSW, all MSW and/or recyclables processing residuals and any product production and/or any product residuals from the Processing Site or the Processing System. Lessee will transport all residual waste to Lessor to be disposed of. Lessor shall have the right, but not the obligation, to accept and use and/or dispose of, at no cost to (or payment to) Lessee, all gray water(or other water)generated by Lessee at the Processing Site,currently estimated to be four million four hundred thousand (4,400,000) gallons per year. The parties expect that the gray water may be used for dust control and/or other such beneficial use. Lessor understands and acknowledges that, due to the unpredictable nature of Municipal Solid Waste delivered to Lessee, the constituents and the nature of the gray water may vary over time. The parties shall arrange for efficient delivery of the gray water to the Lessor on the Processing Site. If the Lessor does not exercise its right to accept the gray water, the Lessor shall reasonably cooperate with Lessee to accomplish the disposal of the gray water, but Lessee shall pay for its disposal, if necessary. 6.8 Priority of Landfill Operations. Lessee acknowledges and agrees that Lessor's primary use of the Landfill is as a sanitary landfill. Subject to Lessor's delivery of MSW to Lessee as set forth in this Lease, at all times during the Term hereof, Lessor shall have the right to operate the sanitary landfill, and to take all actions at its own cost and expense that Lessor deems in good faith necessary or appropriate in connection with the operation and maintenance of the landfill including actions to comply with any Legal Requirements. 6.9 MSW and Residuals Removal and Disposal and Volume Tracking. Lessor shall cooperate with Lessee to electronically record weights (by use of the Landfill scales) of each category of recyclables/recovered materials that Lessee may produce,including the materials set forth in Section 6. 5 above. If applicable, the gray water may be 14 metered as agreed by the parties. The Lessee shall collect the referenced MSW and residuals for Lessor's disposal, use and/or sale, free of charge to Lessee. 6.10 Lessee Shall Not Sell the Municipal Solid Waste. Notwithstanding anything to the contrary set forth in this Lease, Lessee agrees and covenants that it shall not sell, redirect, redeliver, transport or market the Municipal Solid Waste, or any unprocessed portion thereof to any third party. Moreover, and without limiting the generality of the foregoing, Lessee represents and warrants that it shall attempt to process all Municipal Solid Waste that it accepts at the Processing Site. 7. ENVIRONMENTAL ATTRIBUTES AND MATTERS 7.1 Destruction of Sanitary Landfill LFG or Methane and Benefits. Lessor retains one hundred percent (100%) of any and all Environmental Attributes associated with the LFG whether this LFG is sold to Lessee, flared at the Landfill, or otherwise destroyed, that is, any Environmental Attributes attributable to the generation, destruction, purchase, sale, or use of LFG from the sanitary landfill. The parties agree that the responsibility to apply for, qualify for and obtain any LFG emission credits, tax credits, offsets, demonstrations of regulatory compliance and other rights is the responsibility of Lessor and Lessor shall be wholly responsible for the costs associated therewith. Lessee shall not take any action that would in any way reduce the amount, or diminish or impair the value of the foregoing to which Lessor may be entitled. 7.2 Each party shall obtain any and all required or necessary consents, approvals,permits and the like from any and all governmental agencies or entities having jurisdiction over their respective operations. 7.3 If Lessee's unlawful release or disposal at the Processing Site of any Hazardous Materials: (1) gives rise to liability(including,but not limited to, a response action, remedial action, or removal action)under federal or state law;or(ii)causes a significant public health effect, Lessee shall promptly take any and all remedial and removal action necessary to clean up the Processing Site and mitigate the exposure to liability arising from such unlawful release or disposal. Lessee shall indemnify, defend and hold Lessor harmless from all damages and losses arising from or attributable to any Lessee's release or disposal as set forth above, and Lessee's obligations under this Section 7.3 shall survive the termination of this Lease. 7.4 Lessee agrees to obtain all required or necessary consents, approvals,permits and the like from any and all governmental agencies or entities having jurisdiction over the Processing Site, and Lessee's approvals shall not adversely impact the Landfill's approvals. 7.5 Lessor shall indemnify, defend and hold Lessee harmless from all damages and losses arising from or attributable to any Lessor's unlawful release or disposal at, or onto, the Processing Site of any Hazardous Materials that: (1) gives rise to liability(including, but not limited to,a response action,remedial action, or removal action)under federal or state 15 law; or (ii) causes a significant public health effect, and Lessor's obligations under this Section 7.5 shall survive the termination of this Lease. 8. COORDINATION OF INTERRUPTIONS 8.1 Scheduled Interruption. Lessee and Lessor shall coordinate timing of any Scheduled Interruption of their respective systems in order to minimize overall project downtime. Notice of a Scheduled Interruption by either Lessee or Lessor shall be given to the other party as soon as practicable and not less than three (3) days prior to occurrence of the Scheduled Interruption. Notice shall include the reason for and expected duration of the Scheduled Interruption. 8.2 Unscheduled Interruption. In the event that an Unscheduled Interruption occurs on either Lessee's Processing Site or Processing System or Lessor's system, notice of the Unscheduled Interruption including the cause and estimated duration of the Unscheduled Interruption shall be given to the other party as soon as practicable and not more than eight(8)hours following the occurrence of the Unscheduled Interruption, with written notice to follow expeditiously.Notice shall also be given to the other party as soon as the Unscheduled Interruption has been remedied and regular delivery of Municipal Solid Waste can resume. 9. TAXES AND BENEFITS 9.1 Credits and other Benefits. Lessee shall have and retain the rights and benefits to any and all credits, benefits, emissions reductions, environmental air quality credits, emission reduction credits, renewable energy credits, renewable energy certificates, offsets, and allowances attributable to, arising out of, or derived from, Lessee's Equipment, the Processing System, and including their construction, costs, components, operation and/or products. Lessor shall not take any action that would in any way reduce the amount, or diminish or impair the value of the foregoing to which Lessee may be entitled. 9.2 Lessee shall be responsible for all taxes (real and personal) and assessments allocable to the Processing Site and to the Lessee's improvements situated on the Processing Site. Lessee shall have the right but not the obligation, to contest the validity of any assessment of such taxes or assessments. 10. REPRESENTATIONS AND WARRANTIES 10.1 Representations and Warranties of Lessor. Lessor represents and warrants that: (a) This Lease has been duly and validly authorized by all necessary action, persons and bodies; Lessor has full power and authority to enter into this Lease and perform its obligations hereunder; and the execution and delivery of this Lease by Lessor and the performance 16 of the terms, covenants and conditions contained herein is permitted under all laws and permits (to which the Lessor is a party). (b) Lessor is not a party to any litigation, or subject to any judgment, order, or decree, or party to any other contract, which would adversely affect its performance of its obligation under this Lease. (c) The Lessor shall not take any action to divert the volume of municipal solid waste received by the Landfill, which is needed to fulfill the Lessee's operational capacities that it will make available at the Processing Site, to some other site. Lessor shall continue to deliver MSW to Lessee as required by its capacity, even if the Landfill were to close. Provided, however, the parties understand that any action taken by the Lessor to encourage reduction of waste generally, including but not limited to organic management programs and product stewardship initiatives, shall not be deemed to be in any way a violation of the provisions of this Lease. (d) Lessor shall deliver (or cause to be delivered) to Lessee all MSW generated within Richmond County that Lessor collects(or causes to be collected) and any additional volume delivered to the Landfill, all subject to the then-current capacity that Lessee has available in its Processing System. If the foregoing volumes are inadequate to meet the Processing System's capacity, Lessor shall exercise reasonable efforts to attract the shortfall in MSW volume for delivery to Lessee. (e) Lessor owns the Processing Site, and Lessee, so long as Lessee pays the rent, shall lawfully and peaceably hold, occupy and enjoy the Processing Site during the term hereof. 10.2 Representations and d Warranties of Lessee. Lessee represents and warrants that: (a) Lessee has done its due diligence and agrees that the municipal solid waste to be delivered to Processing System will be acceptable for use in its Processing System. Lessee shall be solely responsible for all compliance with all Legal Requirements after the municipal solid waste is delivered to the Processing Site, and shall hold Lessor harmless from and against all claims, suits, actions, damages, losses, costs,and expenses of every kind and character arising from each and every claim of any and all persons against the municipal solid waste after its delivery to the Processing Site. (b) This Lease has been duly authorized and Lessee has full power and authority to enter into this Lease and perform its obligations hereunder. (c) Lessee is not a party to any litigation, or subject to any judgment, order, or decree, or party to any other contract, which would materially affect its performance of its obligations under this Lease. 17 10.3. Representation and Warranty of Lessor and Lessee. Lessor and Lessee represent that they have dealt with no broker or agent with respect to this Lease or the negotiation and execution hereof. 11. FORCE MAJEURE 11.1 Force Majeure. If Lessee or Lessor is rendered unable,wholly or in part,by an event of Force Majeure to carry out its obligations under this Lease, other than to make a payment for amounts accrued, such Party shall give to the other Party prompt written notice of the event of Force Majeure with a detailed description of the events or circumstances that constitute such Force Majeure, including the nature of the occurrence and its expected duration, and continue to furnish timely regular reports with respect thereto during the period of Force Majeure; thereupon, the obligations of the Party giving the notice so far as they are affected by the Force Majeure shall be suspended during the continuance of the event (other than accrued - prior to the Force Majeure event - obligations to make payments, if any); provided that the suspension of performance is of no greater scope and of no longer duration than is required by the Force Majeure. A party whose performance is affected by an event of Force Majeure shall use all reasonable efforts to remove the event of Force Majeure as quickly as practicable. No Force Majeure event shall extend this Lease beyond its stated term. 11.2. Strikes and Lockouts. It is understood and agreed that the settlement of strikes or lockouts shall be entirely within the discretion of the party experiencing the strike or lockout or having the difficulty, and that the foregoing requirement that any Force Majeure shall be remedied with all reasonable dispatch shall not require the settlement of strikes or lockouts by acceding to the demands of the opposing party when such course is inadvisable in the discretion of the party having the difficulty. 12. INDEMNITY 12.1. Lessee's Environmental Indemnity. Lessee agrees to indemnify and hold Lessor, its agents,contractors,subcontractors,employees,or invitees harmless from any and all claims, damages, fines,judgments, penalties, costs, liabilities, or losses arising from or due to the presence of Hazardous Materials on Lessee's Processing Site either existing at the time of or which may have been brought to its property after the execution of this Agreement,provided that Lessee shall have no obligation under this Article for Hazardous Materials which are introduced to or released on Lessee's Processing Site by Lessor, its agents, contractors, subcontractors, employees, or invitees. Lessee's Indemnity. Lessee shall indemnify,defend,and hold harmless Lessor from and against any claims, loss, damage, liabilities, fines, penalties, cost, and expense, including court costs and reasonable attorneys' fees, incurred or suffered by Lessor: 18 (a) To the extent relating to the municipal solid waste while in Lessee's control or possession. (b) For personal injury, death, or property damage caused by Lessee or its agents' negligent acts or omissions arising from or relating to this Agreement. (c) Arising from claims or liens for labor performed or materials furnished for Lessee's Facility or relating to Lessee's Equipment. 12.2. Lessor's Indemnity. Lessor shall indemnify, defend, and hold harmless Lessee from and against any claims, loss, damage, liabilities, fines, penalties, cost, and expense, including court costs and reasonable attorneys' fees, incurred or suffered by Lessee: (a) To the extent caused by Lessor's breach of this Lease. (b) For personal injury, death, or property damage caused by Lessor or its agents' negligent acts or omissions arising from or relating to this Lease. 12.3. Partial Limitation of Liability. Notwithstanding any other term of this Lease to the contrary, in no event shall either party be liable to the other for any indirect, special, incidental, or consequential loss or damage of any type, including, but not limited to lost profits and damage to goodwill or reputation with respect to any claim, whether based on contract, tort (including negligence), warranty, strict liability, implied warranty, or otherwise. Provided,however, notwithstanding the foregoing, each party shall indemnify, defend and hold the other party harmless from all damages, costs, losses, expenses arising from, or attributable to, any breach by a party of any of its warranties or representations in this Lease. Such obligations under this Section 12. shall survive the termination of this Lease.12.1. 13. INSURANCE 13.1. Lessee's Insurance. Lessee shall at all times carry and maintain, at its own expense,the minimum insurance coverage set forth in this Section 13. 1. The terms and conditions of such insurance policies (including the amount, scope of coverage, deductibles and self-insured retentions) shall be commercially reasonable and the coverage shall be on an occurrence basis. (a) Commercial GL: no less than $1,000,000. (b) Auto Liability — single limit: no less than $1,000,000, including coverage for owned, non-owned and hired vehicles for both bodily injury and property damage. 19 (c) Property/Machinery Breakdown"all risk" insurance for replacement cost for Processing System and shall include business interruption coverage. (d) Pollution Liability Coverage: no less than $ 2,000,000. (e) Worker's Compensation insurance, covering liability under applicable worker's compensation law, at the statutory coverage levels; and (f) 1,000,000 Employer Liability. 14. MISCELLANEOUS PROVISIONS 14.1. Assignability. Subject to the conditions provided for herein, Lessee may assign this Lease and the rights hereunder with 30 days'notice to Owner, However, Lessee shall remain bound to all the terms and conditions of this lease and shall become the guarantor of the Lease. Neither party may at any time transfer, assign, or delegate its rights or duties under this Lease without the express prior written consent of the other party, which shall not be unreasonably withheld; and the terms of this Lease shall be binding on and inure to the benefit of the successors and assigns of the parties. Any attempted assignment in violation of this Section 14.1 shall be null and void. 14.2. Severability and Non-Waiver. In the event any provision, sentence or section of this Lease is declared by a court of competent jurisdiction to be invalid or unenforceable under applicable law, such provision shall, insofar as possible, be construed or applied in such manner as will permit enforcement, and the balance of this Lease shall remain in effect. Either party's waiver of any breach, or failure to enforce any of the terms and conditions of this Lease, shall not in any way affect, limit, or waive such party's right thereafter to enforce and compel compliance with every term and condition of this Lease or to terminate this Lease for breach. 14.3. Patents. (a) The Lessee shall hold and save the Lessor, its engineer and their agents harmless from liability of any kind, including cost and expenses, reasonable attorney's fees, for, or on account of, any patented or unpatented invention, process, article, or appliance manufactured or used by the Lessee. (b) If the Lessee uses any design, process, device or materials covered by letters, trademarks, patent or copyright, the Lessee shall provide for such use by suitable agreement between the Lessee and the holder of such patented or copyrighted design, device or material. The Lessee shall indemnify and save harmless the Lessor,its engineer and their agents from claims for infringement by reason of the use of such patented or copyrighted design, process, device or materials or any trademark or copyright in connection with Work agreed to be 20 performed under this Lease, and shall indemnify the Lessor, its Engineer and their agents for any cost, expense, damage and reasonable attorney's fees which it may be obliged to pay by reason of such infringement, at any time during the prosecution of the Work or after completion of the Work. 14.4. Rights and Remedies. In the event of a material breach of this Lease by either party, the non-breaching party shall have the right to non-binding arbitration in efforts of resolving the breach. If nonbinding arbitration is not successful, the non-breaching party shall have all rights and remedies available under the laws of the State of Georgia, except as may be limited in this Lease. All claims, disputes and other matter in question between the Lessor and the Lessee arising out of or relating to the Lease, or the breach thereof, shall be decided in the Superior Court of Richmond County, Georgia. The Lessee, by executing this Lease, specifically consents to venue in Augusta and waives any right to contest the venue in the Superior Court of Richmond County, Georgia. 14.5. Notices. Any notice which is permitted or required under this Lease shall be duly given if in writing and either delivered personally to the person whom it is required to be given or sent registered or certified mail, return receipt requested, postage prepaid as follows: If to Lessee: Allied Energy Services, LLC 1506 Klondike Road, Suite 150 Conyers, Georgia 30094 Attention: C. Dean Alford If to Lessor: Augusta, Georgia Office of the Mayor 535 Telfair Street, Suite 200 Augusta, GA 30901 With copy to: Augusta Environmental Services Department Deans Bridge Road Blyth, Georgia 30805 Each Party shall have the right, from time to time, to designate a different address by notice given in conformity with this Section. 21 14.6. Access. Upon reasonable advance notice (not less than 24 hours), each party agrees to provide the other, and its agents, representatives, and Lessees with access to its property and equipment during normal business hours (not including nights,weekends, and holidays)for the limited purpose of carrying out its rights and obligations under this Lease. While on Lessee's property, Lessor, its agents, and Lessees shall conduct themselves in a safe and prudent manner. While on Lessor's property, Lessee, it agents, and Lessees shall conduct themselves in a safe and prudent manner. A party's inspection of the other party's records, if any, shall be limited to tonnage records and, in the event of a Permit non-compliance,the records applicable to such event. 14.7. Counterparts. This Lease may be executed in several counterparts, and as executed shall constitute one agreement binding on the parties hereto. 14.8. Captions. Captions in this Lease are solely for the convenience of the parties and are not part of the Lease, and shall not be used for the interpretation or determination of the validity of the Lease or any provision thereof. 14.9. Entire Agreement. This Lease, inclusive of all Exhibits attached hereto, constitutes the entire understanding between the parties with respect to the subject matter hereof and supersedes all previous written and oral negotiations, commitments, proposals and writings. 14.10. Governing Law and Venue. This Lease shall be governed by the substantive laws of the State of Georgia without reference to its conflicts of law provisions. Should any provision of this Lease shall be determined to be invalid or unenforceable under applicable law, such provision shall, insofar as possible, be construed or applied in such manner as will permit enforcement. All claims,disputes and other matters in question between all parties arising out of or relating to this Agreement, shall be decided in the Superior Court of Richmond County, Georgia. 14.11 Amendments. This Lease and any part thereof may be amended at any time by written mutual agreement of the parties; however, no modifications, alteration, amendment, or revision of this Lease shall be binding upon either party unless executed in writing by the party to be bound. 14.12 Independent Lessees. Lessor and Lessee are independent Lessees. Neither party is or shall be deemed an agent, servant, or employee of or a joint venture with the other party, and neither party shall have the authority to incur debts or liabilities in the name of the other or otherwise bind the other party to any contract, debt, or other obligation. 14.13 Educational Considerations. Lessee agrees to participate in internship programs with local Universities, including the placement of two interns annually. Selection of interns will be done in partnership with the Lessor as well as the 22 participating University. Additionally, Lessee agrees to work with the Lessor on providing facility tours to groups of interested parties. IN WITNESS WHEREOF,the parties have executed this agreement the day and year first above written. LESSOR: AUGUSTA, GEORGIA /11 117By: �`' 11 Printed Name: ardie Davis, Jr. / �/� Title: lV yor A j l , ea,�.raaa,",, ATTEST: w/,,,,,,/..."„.. r., !� By: 1r /1/' > �e .f rY 'PT-0.11, 4:-I It 1 Printed Name$ a ., s-1, t 0 4 ® w ' % t` ® ®O*•oa... :r Title: Clerk of Co s s I' =C,1t,�.'� AUGUSTA .TE TOE At'/ / L ig By: A ' / 6 Printed Name: . Dean Alfo Title: President and CEO 23 EXHIBIT A PROCESSING SITE DESCRIPTION 24 7 y , t jj d , a ts • F: tt all , . •,,, • > ,,, , CIJcd' -,,-;.,.,......-,,,,, • -} • � , • > . .. 1 (gr) ,:,,.. c.,* ,,,,„ ,,,,...4 :1.' ‘•'',..t,"'-`,` V ' `",' •{ -4- (I5 - ".. ,,„'f..C . - •'. •3, '\,.b„, 1_0 . . ,. \fa v °.!:;N a F yr • '\"M* ^}t „.„,„,„,„„v„ Y .5 . 143444. ,