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Home My WebLink AboutTrucking of Materials from SWMDELIZABETH A. NEVILLE, RMC, CMC TOWN CLERK REGISTRAR OF VITAL STATISTICS MARRIAGE OFFICER RECORDS MANAGEMENT OFFICER FREEDOM OF INFORMATION OFFICER Town Hall, 53095 Main Road P.O. Box 1179 Southold, New York 11971 Fax (631) 765-6145 Telephone (631) 765-1800 southoldtown.north for k.net OFFICE OF THE TOWN CLERK TOWN OF SOUTHOLD August 31, 2010 Trinity Transportation Corporation 214 Blydcnburgh Road Islandia, NY 11749 Dear Sirs: This office has been informed that the following project has been completed and your bid bond/check can be released: Hauling of Construction & Demolition material Enclosed please find your bid bond dated March 19, 2009 & check no. 800502613 dated March 23, 2009. Thank you for your bid. Very truly yours, Lynda M Rudder Deputy Town Clerk Enos. rtJ r-'1 Return Receipt Fee Here [~[ (En~torsement Required) 1~3 Restlicted Deliver/Fee (Endomement Required) rtJ cD Total P~Stage & Fees ° [ .................... ..~...q. .......... ~.a~.n.~.h....~x'...~...~ · Complete items 1, 2, and 3. Also comf3~ item 4 if Restricted Delivery Is desired. · Print your name and address on the reverse so that we can tatum the card to you. · Attach this card to the back of the mallplsoe, or on the front if space permits. 1. Article Addressed to: \ da',.,&'~ M"4 2. Article Number ('rmnsfer from service la~l) O. Is dailve~y a Yes ~'Ce~fled Mall [] F-x~3a~ Mail [] Registered [] Retum Receipt for Merchandise [] Insured Mall [] C.O.D. - 4. Restricted Daii~ (~xtra Fee) [] Yes 7009 0820 000t 7820 5937 PS Form 381 1, February 2004 Domestic ~ ~ 102595-02-M-1540 #9204 STATE OF NEW YORK) ) SS: COUNTY OF SUFFOLK) Karen Kine of Mattituck, in said county, being duly sworn, says that she is Principal Clerk of THE SUFFOLK TIMES, a weekly newspaper, published at Mattituck, in the Town of Southold, County of Suffolk and State of New York, and that the Notice of which the annexed is a printed copy, has been regularly published in said Newspaper once each week for 1__ week(s), successively, commencing on the 12th day of March, 2009. "Principal Clerk Sworn to before me this LEGAL NOTICE NOTICE TO BIDDERS NOTICE IS HEREBY GIVEN, In ac- cordance, with the provisions of Section 103 of the General Municipal Law, that ~ealetl ~ ate ~lt ~ requested for Ma~h~ llamNmg Se~vicea by t he Town of Southold for one year. Specifications and bid proposal form may be obtained at the Office of the Town Clerk, Town of Southold, Town Hall, PO Box 1179. 53095 Main Road, Southold~ New York 11971. The sealed bid, together with a Non collusive Bid Certificate and bank raft or certified check in the amount of $100.00, will be received by the Town Clerk~ at the Southold Town Hall, PO Box 1179, 53095 Main Road, Southold, New York, until 10~0 a.m., 'Ihmsday, March 26, 2009, at which time they will be opened and read aloud in public. The Town Board of the Town of Southold rescrve~ day of .~r~/_ ~, j/'-~2009, CHRISTINA VOLINSKI NOTARY PUBLIC-STATE OF NEW YORK No. 01-VO6105050 Qualified in Suffolk County My Commlsslort Expires February 28, 2012 ELIZABETH A. NEVILLE, RMC, CMC TOWN CLERK REGISTRAR OF VITAL STATISTICS MARRIAGE OFFICER RECORDS MANAGEMENT OFFICER FREEDOM OF INFORMATION OFFICER Town Hall, 53095 Main Road P.O. Box 1179 Southold, New York 11971 Fax (631) 765-6145 Telephone (631) 765-1800 southoldtown.northfork.net OFFICE OF THE TOWN CLERK TOWN OF SOUTHOLD Winter Brothers Recycling 1198 Prospect Avenue Westbury, NY 11590 Total for Winters: BID OPENING Trucking of Materials from SWMD Bid Opening 3/26/09 10:00 A.M. Task #1 / trip Task #2 / trip $ 214.28 $ 267.85 $ 41,664.60 $16,579.51 Trinity Transportation Corp Patricia DiMatteo 214 Blydenburgh Road Islandia, NY 11749 $160.00 $175.00 Total for Trinity: $ 31,040.00 $10,850.00 PRICE BID SCHEDULE, MATERIALS HAULING SERVICES, SOUTHOLD TOWN, NEW YORK TASK 1 C&D HAULED TO BROOKHAVEN LF Container Type (i.e., trailer, roll-off, etc.): Container Size (in cu. Yds): Estimated # Trips (@ 18 tons per 100 yds) (assume 3500 tons per year) Pdce per trip (in words): 0~. TASK 2 Price per trip (in numerals): ,/~,0.~ ITASK 1 ESTIMATED TOTAL COST (Price per trip X # of Trips): 7'/4l~/M o~fl~ TNolZs~//:) F'O~3'Y Dou.~ NEWSPAPER TO ISLIP RRA Container Type (i.e., trailer, roll-off, etc.): Container Size (in cu. Yds): Estimated # Trips (@ 21 tons per 100 yds) (assume 1,300 tons per year) Price per trip (in words): Price per trip (in numerals): ITASK 2 ESTIMATED TOTAL COST a la. 8~.'~ I (Price per trip X # 6f Trips): 1tEN -~louo4,VO ~'/~'/' ~,/U~V~b2b F'/PTY Z:o. ufgS I PAGE 25 Town of Southold Bid - Materials Hauling Services SIGNATURE PAGE The undersigned hereby submits the foregoing as described in this solicitation: ~rices to fumish Materials Hauling Services~ Finn-Corporation By: Signature - Authorized Representative 2.#$ ~ybF~/~4a~ Address Date Title 26 _ Town of Southold Bid - Materials Hauling Services APPENDIX A - SURETY VERIFICATION This is identification that will be the Surety Company for the Bidder, on this project and that the named Surety Company herein provides written certification that the named Surety Company will provide the Performance Bond, specified in the Contract Documents, in the event the Bidder enters into an Agreement with the Town. The Surety Company that such Company is licensed to do business in the State of New York. (Seal) By: (L.S.) Principal Surety Company Surety Verification Appendix A 27 Town of Southold Bid - Materials Hauling Services APPENDIX B - SUBCONTRACTORS The Bidder hereby states that it proposes, if awarded an Agreement to use following haul subcontractors on this project. I~/}lq Subcontractor/ Contract Trade Individual Address Phone # Specialties 1. Name_ofBidder:_'"Y~mct,t 'T'~q~l~P~--~'no~ Coho. By: ~~, Date: (Authorized Si~amre) NOTE: If blank not applicable, filI in with N/A Town of Southold Bid - Materials Hauling Services APPENDIX C - FORM OF BID BOND KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned, firmly bound unto The Town of Southold the sum of Five ThoUsand Dollars ($ 5,000.00) as Principal, and as Surety, are hereby held and as Owner in for the payment of which, will end truly be made, we hereby jointly and severally bind ourselves, our heirs, executors, administrators, successors and assigns. Signed this day of 12o The condition 0fthe above obligation is such that whereas the Principal has submitted to the Town of Southold a certain Bid, attached hereto and hereby made a part hereof to enter into contract in writing, for the hauling of construction debris material and/or i'ecycled newspaper; NOW, THEREFORE, (a) If said Bid shall be rejected or in the alternate, (b) If said Bid shall be accepted, and the Principal shall execute and deliver an Agreement in the form of the Sample Operating Agreement attached hereto (properly completed in accordance with said Bid) and shall furnish certificates of insurance and a bond for this faithful performance of said Agreement, and for the payment of all persons performing labor or furnishing materials in connection therewith, and shall in all other respects perform the Agreement created by the acceptance of said Bid, then this obligation shall be void, otherwise the same shall remain in force and effect; it being expressly understood end agreed that the liability of the Surety for any and all claims hereunder shall, in no event, exceed the penal amount of this obligation as herein stated.. Form of Bid Bond Appendix C Page 1 of 3 29 Town of Southold Bid - Materials Hauling Services The Surety, for value received, hereby stipulates and agrees that the obligations of said Surety and its bond shall be in no way impaired or affected by any extension of the time within which the Owner may accept such Bid; and said Surety does hereby waive notice of any such extension, 1N WITNESS WHEREOF, the Principal and the Surety have hereunto set their hands and seals, and such of Them as are corporations have caused their corporate seals to be hereto affixed and these presents to be signed by their proper officers, the day and year first set forth above· (L.S.) Principal Surety By: Address of Surety: SEAL (ACKNOWLEDGEMENT BY CONTRACTOR, IF A CORPORATION) STATE OF: ) COUNTY ) SSN On this day of ,20 , before me personally came · to me known, who being duly sworn, did depose and say that he resides in ; that he is the of the corporation described in and which executed the foregoing instrument: that he knows the seal of the corporation; that the seal affixed to the instrument is such corporate seal; that it was so affixed by the order of the Board of Directors of the corporation; and that he signed his name thereto by like order, Notary Public Form of Bid Bond Appendix C Page 2 of 3 30 Town of Southold Bid - Materials Hauling Services (ACKNOWLEDGEMENT BY-CONTRACTOR. IF A PARTNERSHIP) STATE OF: ) COUNTY OF: ) SSN: On this day of ,20 , before me personally came , to ms known, and known to me to be a member of the firm of and known to me to be an individual described in, and who executed the foregoing instrument in the Firm name of and he duly acknowledged to me that he executed the same for and in the behalf of said finn for the uses and purposes mentioned therein. Notary Public (ACKNOWLEDGEMENT BY INDIVIDUAL CONTRACTOR) STATE OF: COUNTY OF: On this day of ) ) SSN: ~ 20 ~ before me personally came · to me known and known to be the person described in and who executed the foregoing instrument and duly Acknowledged that he executed the same. Notary Public Form of Bid Bond Appendix C Page3 0£3 31 Town of Southold Bid - Materials Hauling Services APPENDIX D - PERFORMANCE BOND Bond No. KNOW ALL MEN BY THESE PRESENTS, that (hereinafter called the "principal") and (hereinafter called the "Surety") are held and firmly bound to the Town of Southold (hereinafter called the "Owner") in the full and just sum of dollars (Fifty Thousand ($ 50,000) ) good and lawful money of the United States of America, for the payment of which sum of money, well and truly to be made and done, the Principal binds himself, his heirs, executors, administrators and assigns and the Sure~y binds itself, its successors and assigns, jointly and severally, firmly by these presents. WHEREAS, the Principal has entered into a certain written Agreement bearing date on the __ day of ,20 , with the Owner for the Town of Southold construction debris and recycled newspaper Haul S~rvices, a copy of which Agreement is annexed to and hereby made part of this bond as though herein set forth in full. NOW, THEREFORE, the conditions of this obligation are such that if the Principal, his or its representatives or assigns, shall well and faithfully comply with and perform all the terms, covenants and conditions of said Agreement or his (their, its) part to be kept and performed and all modifications, amendments, additions and alterations thereto that may hereafter be made, according to the tree intent and meaning of said Agreement, and shall fully indemnify and save harmless the Owner from all cost and damage which it may suffer by reason of failure soto do, and shall fully reimburse and repay the Owner for all outlaw and expense which the Owner may incur in making good any such default, and shall protect the said Owner against, and pay any and all amounts, damages, costs and Judgments which may or shall be recovered against said Owner or its officers or agents or which the said Owner may be called upon to pay to any person or corporation by reason of any damages arising or growing out of the doing of said work, or the repair of maintenance thereof, or the manner of doing the same, or the neglect of the said Principal, or his (their, its) agents or servants or the improper performance of the said work by the said Principal, or his (their, its) agents or servants, or the infringement of any patent or patent fights by reason of the use of any materials furnished or work done as aforesaid or otherwise, then this obligation shall be null and void, otherwise to remain in full force and effect; Performance Bond Appendix D Page 1 of 2 32 Town of Southold Bid - Materials Hauling Services PROVIDED, HOWEVER, the Surety, for value received hereby stipulates and agrees, if requested to do so by the Owner, fully perform and complete the work mentioned and described in said Agreement, pursuant to the terms, conditions, and covenants thereof, if for any cause the Principal fails or neglects to so fully perform and complete such work and the Surety further agrees to commence such work of completion within ten (10) calendar days after written notice thereof from the Owner and to complete such work within ten (10) calendar days from the expiration of the time allowed the Principal in the Agreement the completion thereof; and further PROVIDED, HOWEVER, the Surety, for value received, for itself and its successors and assigns, hereby stipulates and agrees that the obligation of said Surety and its bond shail be in no way impaired or affected by an extension of time, modification, work to be performed thereunder, or by any payment thereunder before the time required herein, or by any waiver of any provisions . thereof, or by any assignment, subletting or other transfer of any work to be performed or any monies due or to become due thereunder; and said Surety does hereby waive notice of any and all of such extensions, modifications, omissions, additions, changes, payments, waivers, assignments, subcontracts and transfers, and hereby expressly stipulates and agrees that any and ail things done and omitted to be done by and in relation to assignees, subcontractors, and other transferees shall have the same effect as to said Surety as though done or omitted to be done be or in relation to said Principal. 1N WITNESS WHEREOF, the Principal has hereunto set his (their, its) hand and seal and the Surety has caused this instrument to be signed by its , and its corporate seal to be hereunto affixed this day of 20 (If Corporation add Seal and Attestation) By; Attest: Principal Surety (If Corporation add Seai and Attestation) By: Attest: Address of Surety Performance Bond Appendix D Page 2 of 2 33 NON-COLLUSIVE BID CERTIFICATE The undersigned bidder certifies that this bid has been arrived at by the bidder independently and has been submitted without collusion with any other vendor of materials, supplies or equipment of the type described in the invitation for bids, and the contents of this bid have not been communicated by the bidder, nor, to its best knowledge and belief, by any of its employees or agents, to any person not an employee or agent of the bidder or its surety on any bond furnished herewith prior to the official opening of the bid. Signed: /~d~~/ ~.~ Printname I~7'.~,~a,.~ -~; ]'tt,~rf~o Corporate Title (if any) Company Name '~,~ -7~/.a~'.$A~t;rnnt~ U.s~. Mailing Address Phone Number BID ON Materials Trucking 3/26/09 THE AMERICAN INSTITUTE OF ARCHITECTS AIA Document A310 Bid Bond Trinity Transportation Corporation KNOW ALL MEN BY THESE PRESENTS, that we 214 Blydenburgh Road. Island/a, NY 11749 as Principal, hereinafter called the Principal, and Berkley Regional Insurance Company 66 East 42nd Street. New York, NY 10165 Delaware a corporatiOn duly organized under the laws of the State of as Surety, hereinafter called the Surety, are held and firmly bound unto Town of Southold 53095 Main Road. Southold, NY t 1971 as Obliges, hereinafter called the Obliges, in the sum of Five Thousand Dollam 001100 Dollars ( $5,000 ), for the payment of which sum well and truly to be made, the said Principal and the said Surety, bind ourselVes, our heirs, executors, administrators, successors and assigns, jointly and severally, firmly by these presents. Hauling of construction, demolition materialand newspapers WHEREAS, the Principal has submitted a bid for to designated facilities located on Long Island. NOW, THEREFORE, if the Ob#gee shall accept the bid of the Principal and th~ Principal shall entar into a Contract with the Obliges In accordance with the terms of such bid, and give such bond or b~3nda as may he apes/fled in tho biddir~ or Contract D~eumects with good and sufficient suraW for the faithful pedctmance of eush Contract and for the i~ompt payment of labor and material furnished in the prosecution thereof, or In the event of the failure of the Principal to enter such Contract and give such bond or bonds, if the Principal shaft pay to the Obliges the difference not to exceed the penalty hereof between the amount specified in said bid and svch larger amount for whioh the Obllgee may In good faith contact with another part'/to perform the Work covered by said bid, th~n thla obligation shall be null and void; otherwise to remain irt foil force and effect. Signed and sealed this I~T.I~. day of March , 2009 . Al~l'rY TRA~I~P/O~TATIpN CORPORATION BERKLEY REGIONAL INSURAN~,,~OMPANY , ~ Jeff~W. Radovich A~omey In-~act AIA DOCUMENT A310 * etd aOND * AIA~ * FEBRUARY 1970 ED * THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 N.Y. AVE., N.W.. WASHINGTON, D,C. 20006 9t93 f C0037698-50.0 State of County of On this day of ,20 __, before me personally came ___to ma knorr, and knova~ to me to be the Indlviduai described in and w'no executed the foregoing instrument, and acknowledged to me that s/he executed the same. My commission expir~ No~ ~blic State of County On this day of ,20 . before me personally came to ma know~ and knowT~ to me to be a member of the firm of described in and who executed the foregoing instrument, and s/he thereupon acknowledged to me that s,"ne executed the same as and for the act and deed of said firm, My commission expires Nota~/Public county of On this C~ 3 ~ day of ~ ,20 ~) ~J' , befo(e me p~onalV Came ~e corp~at~n ~cri~ed ' ' e uted the above ~Om~l; ~at ~he ~o~ the seal of said c~p~ti~; that fi! seal ~e signed hl~ name thereto by I~ke ~d~, ..... ' ...................................... ~ ~~ ............. State el New York County of Nassau J O~ this t9th day of Jeffrey W. Radovich March , aO 09 , before me peesonafly oame to me known, who, being by me duly sworn, did depose and Say that s/he is an attorney-in-fact ct Berkley Regional Insurance Company b'3e coqx>raUon closoribed ~ a~ ~h ex~ut~ t~ within ~t; ~at ~e ~s~ c~ ~of ~ ~t~; ~1 affix~ to ~e wl~ln instmm~t Is such c~s~ ~1. ~d that ~ si~ ~e ~id i~st~t a~ affix~ t~ ~ ~ as Afl~- Nota~ Pu~ic VIRGINIA CAPPIELLO ~ N~ Public, State of New ~ No. 01CA8157198 ~alEi~ In N~ ~ No. 125a POWER OF ATTORNEY BERKLEY REGIONAL INSURANCE COMPANY WILMINGTON, DELAWARE NOTICE: The warning found elsewhere in this Power of Attorney affects the validity thereof. Please review carefully. KNOW ALL MEN BY THESE PRESENTS, that BERKLEY REGIONAL INSURANCE COMPANY (the "Company"), a corporation duly organized and existing under the laws of the State of Delaware; having its principal office in Greenwich, Connecticut, has made, constituted and appointed, and does by these presents make, constitute and appoint: Glen J. Radovich, John 1~ Keane or Jeffrey W. Radovich of lnsight Companies, ln~ of Plainview, NY its true and lawful Attorney-in-Fact, to sign its name as surety only as delineated below and to i~xecute, seal, acknowledge and deliver any and all bonds and undertakings, with the exception of Financial Guaranty Insurance, providing that no single obligation shall exceed Fifteen Million and 00/100 Dollars ($15,000,000.00), to the same extent as if such bonds had been duly executed and acknowledged by the regularly elected officers of the Company at its principal office in their own proper persons. This Power of Attorney shall be construed and enforced in accordance with, and governed by, the laws of the State of Delaware without giving effect to the principles of conflicts of laws thereof. This Power of Attorney is granted pursuant to the following resolutions which were duly and validly adopted at a meeting of the Board of Directors of the Company held on August 21, 2000: "RESOLVED, that the proper officers of the Company are hereby authorized to execute powers of attorney authorizing and qualifying the attorney-in-fact named therein to execute bonds, undertakings, recognizances, or other suretyship obligations on behalf of the Company, and to affix the corporate seal Of the Company to powers of attorney executed pursuant hereto; and further e RESOLVED, that such power of attorney limits the acts of thnse named therein to the bonds, undertakings, recognizances, or other suretyship obligations specifically named therein, and they have no authority to hind the Company except in the manner dt tth d; dfurth an o the exten erein state an er RESOLVED, that such power of attorney revokes all previous powers issued on behalf of the attorney-in-fact named; and further RESOLVED, that the signature of any authorized officer and the seal of the Company may be affixed by facsimile to any power of attorney or certification thereof authorizing the execution and delivery of any bond, undertaking, recognizance, or other suretyship obligation of the Company; and such signature and seal when so used shall have the same force and effect as though manually affixed. The Company may continue to use for the purposes herein stated the facsimile signature of.any person or persons who shall have been such officer or officers of the Company, notwithstanding the fact that they may have ceased to be such at the time when such instruments shall be issued." IN WITNESS WHEREOF, the Company has caused these presents to be signed and aCcested by its appropriate officers and its corporate seal hereunto affixed this ~ day of ~ ,2007. ~u ~Seal) Attest: ~ Senior Vice President & Secretary :;rkleoY e~ p~¢~ Company Senior Vice President wARNING: THIS POWER INVALID IF NOT PRINTED ON BLUE "BERKLEY' SECURITY PAPER. STATE OF CONNECTICUT ) COUNTY OF FAIRFIELD ) ~ ~ Swom to before me, a Notaly Public in the State of Colmecticut, this .*-5/.) day of ~ 2007, by Robert p. Cole and ira S. Lederman who are sworn to me to be the Senior Vice President and the Senior Vice President'and Secretary, respectively, of Berkley Regional Insurance Company. NOTARY PUBLIC Noteo, Public, State df Connecticut CERTIFICATE I, the undersigned, Assistant Secretary of BERKLEY REGIONAL INSURANCE COMPANY, DO HEREBY CERTIFY that the foregoing is a true, correct ,and complete copy of the original Power of Attorney; that said Power of Attorney has not been revoked or rescinded and that the authority of the Attorney-in-Fact set forth therein, who executed the bond or undertaking to which this Power of Attorney is attached, is in full force and effect as of this date. Given ander my hand and seal of the Company, this tal '1't''~ dayof /~ ~c ~-.C ~.& , lohn ~cers Inquiry and Notification Rider Berkle~x Surety Group, Inc. manages all of the surety business of the following affiliated companies: Acadia Insurance Company, Berkley Regional Insurance Company, Carolina Casualty Insurance Company, Union Standard lnsnrance Company and the companies of Continental Western Group. To verity, tile autheuticity of this bond please call: (866) 768-3534 or Telefax (973) 301-4869 Any written notices~ inquiries, claims or demands to the soret) on the bond to which this Rider is attached should be directed to: Berkley Surety Group, Inc. 325 ColuInbia l'urnpike Suite 203 Florham Park, NJ 07932 Attention: Surety Claims Departmeut Telefax: (866) 408-2421 Please include with all notices thc bond number and the name of the principal on the bond. Where a claim is being asserted please set forth generally the basis of' tile claim, lu the case of a payment or performance bond please identify the project to which the bond pertains. Inquiry and Notification Rider Berkley Surety Group, LLC is the affiliated underwriting manager for all of the surety business of the following affiliated companies: Acadia Insurance Company, Berkley Regional Insurance Company, Carolina Casualty Insurance Company, Union Standard Insurance Company, Union Insurance Company and Continental Western Group Insurance Company. To verify the authenticity of this bond please call: (973) 775-5021 or Telefax (973) 775-5024 Any written notices, inquh'ies, claims or demands to the surety on the bond'to which this Rider is attached should be directed to: Berkley Surety Group, LLC 412 Mt. Kemble Ave. Suite 310N Morristown, NJ 07960 Attention: Surety Claims Department Or Telefax: (866) 408-2421 Please include with all notices the bond number and the name of the principal on the bond. Where a claim is being asserted please set forth generally the basis of the claim. In the case ora payment or performance bond please identify the project to which the bond pertains. BERKLEY SURETY GROUP BERKLEY REGIONAL INSURANCE COMPANY STATUTORY BALANCE SHEET DECEMBER 31, 2008 (AMOUNTS 1N THOUSANDS) Admitted Assets Bonds Cotmnon & Preferred Stocks Cash & Short Term Investments Premiums Receivable Other Assets 1,301,991 509,539 134,989 294,484 424,453 Total AdmiRed Assets $ 2,665,456 Liabilities & Surplus Losa & LAE Reserves Unearned Premium Reserves Other Liabilities 1,445,679 582,180 27,296 Total Liabilities 2,055,155 Capital Stock 'Additional Paid In Capital Unassigned Surplus 4,000 347,723 25S,~78 Total Policyholders' Surolus $ 610,;~01 Total Liabilities & Surplus 2,665,456 Officers: President: Treasurer: Secretary: Sr. Vice President: Sr. Vice President: Vice President: William Robert Berkley Robert Floyd Buehlcr Ira Seth Lederman Eugene George Ballard Robert Paul Cole Clement Patrick Patafio Directors: Eugene George Ballard William Robert Berklcy William Robert Berkley, Jr. Robert Paul Cole Paul James Hancock Robert Carnsthers HcwiR Ira Seth Lederman Clement Patrick Patafio James Gerald Shiel PRICE BID SCHEDULE, MATERIALS HAULING SERVICES, SOUTHOLD TOWN, NEW YORK TASK 1 C&D HAULED TO BROOKHAVEN LF Container Type (i.e., trailer, roll-off, etc.): Container Size (in cu. Yds): Estimated # Trips (@ 18 tons per 100 yds) (assume 3500 tons per year) Price per trip (in words): 'r,~ Price per trip (in numerals): TASK '1 ESTIMATED TOTAL COST (Price per trip X # of Trips): TASK 2 NEWSPAPER TO ISLIP RRA Container Type (i.e., trailer, roll-off, etc.): Container Size (in cu. Yds): Estimated # Trips (@ 21 tons per 100 yds) (assume 1,300 tons per year) Price per trip (in words): Price per trip (in numerals): TASK 2 ESTIMATED TOTAL COST (Price per trip X # of Trips): PAGE 25 Town of Southold Bid - Materials Hauling Services SIGNATURE PAGE The undersigned hereby submits the foregoing prices to furnish Materials Hauling Services as described in this solicitation: Firm-Corporation Signature - Authorized Representative By: Date Title 26 Town of Southold Bid - Materials Hauling Services APPENDIX B - SUBCONTRACTORS The Bidder hereby states that it proposes, if awarded an. Agreement to use following haul subcontractors on this pr~oje.~ct. Subcontractor/ Contract Individual 1. Trade Address Phone # Specialties Nan~e of Bidder: ['~ $ (Authorized Signature) By.m NOTE: If blank not applicable, fill in with N/A 28 NON-COLLUSIVE BID CERTIFICATE The undersigned bidder certifies that this bid has been arrived at by the bidder independently and has been submitted without collusion with any other vendor of materials, supplies or equipment of the type described in the invitation for bids, and the contents of this bid have not been communicated by the bidder, nor, to its best knowledge and belief, by any of its employees or agents, to any person not an employee or agent of the bidder or its surety on any bond furnished herewith prior to the official opening of the bid. Signed: ~/~ ~ Print name JP~ ~-[~ Corporate Title (if any) Company Name Mailing Address Phone Number BID ON Trucking Town of Southold Bid - Materials Hauling Services March 2009 SECTION C CONTRACTOR BID FORM 21 Town of Southold Bid - Materials Hauling Services March 2009 SECTION C TOWN OF SOUTHOLD CONSTRUCTION MATERIAL AND/OR DEMOLITION DEBRIS SERVICES CONTRACTOR BID FORM 1.0 GENERAL BID STATEMENT TO: TOWN OF SOUTHOLD STATE OF NEW YORK PO BOX 1179 53095 MAIN ROAD SOUTHOLD, NEW YORK 11971 Gentlemen: The undersigned Bidder has carefully examined the forms and content of the Bid Solicitation, including notice to bidders, bid bond, sample operating agreement, performance bond, certificates of insurance, general conditions, bid specifications, and addenda, has familiarized itself with the sites of work, and hereby proposes to furnish all necessary services, permits, labor, materials, equipment, vehicles, and tools required to perform and complete the work in strict accordance with all of the bid documents written by or on behalf of the Town of Southold for this project. The undersigned Bidder agrees to abide by all conditions stated, intended, implied both particularly and generally by the terms of this Bid Solicitation, the Agreement to be provided by the Town, and the unit price Bid herein stated. 1. The Undersigned Bidder also agrees as follows: FIRST: If this bid is accepted, to execute the Agreement and furnish to the Town a satisfactory performance bond, and notification of insurance within ten (10) calendar days. SECOND: To begin Materials hauling services operations on the commencement date of any Agreement awarded hereunder. THIRD: To pay the Town any and all damages it may incur as a result of the Contractor's failure to perform all acts necessary to the execution of the Agreement as the Bid Solicitation. provided in FOURTH: During the performance of this Agreement, the Contractor hereby agrees as follows: a. The Contractor shall not discriminate against any employee or applicant for employment because of age, race, creed, color, sex, sexual orientation, marital status, national origin, or physical disability. 22 Town of Southold Bid - Materials Hauling Services March 2009 b. The Contractor shall comply with the provisions of Sections 290 through 301 of the Executive Law, shall furnish all information and reports deemed necessary by the State Commission for Human Rights under these nondiscrimination clauses and such sections of the Executive Law, and shall permit access to his books, records, and accounts by the State Commission for Human Rights, the Attorney General, and the Industrial Commissioner for purposes of investigation to ascertain compliance with these on discrimination clauses and such sections of the Executive Law and Civil Rights Law, c. This Agreement may be forthwith cancelled, terminated, or suspended, in whole or in part, by the Town upon the basis of a finding made by the State Commission for Human Rights that the Contractor has not complied with these nondiscrimination clauses. d. No laborer, workman or mechanic in the employ of the Contractor or subcontractor shall be permitted or required to work more than eight hours in any one calendar day, or mom than five days in any one week except as otherwise provided in Labor Code Section 220. e. The Contractor shall include the provisions of clauses (a) through (e) in every subcontract or purchase order in such a manner that such provisions will be binding upon each subcontractor or vendor as to operations to be performed within the State of New York. FIFTH: By submission of this bid, the Bidder and each person signing on behalf of any Bidder certifies, and in case of a joint bid each party thereto certifies as to its own organization, under penalty of perjury that to the best of his knowledge and beliefi a. The prices in this bid have been arrived at independently without collusion, consultation, communication, or agreement for the purpose of restricting competition. b. Unless otherwise required by law, the prices which have been quoted in this bid have not been knowingly disclosed by the Bidder and will not knowingly be disclosed by the Bidder prior to opening. c. No attempt has been made nor will be made by the Bidder to induce any other person, partnership, or corporation to submit or not to submit a bid for the purpose of restricting competition. 2. The undersigned also declares that it has or they have carefully examined the Bid Solicitation requirements and sample operating agreement and that it has or they have personally inspected the actual location of work, together with the local sources of supply, has or have satisfied itself or themselves as to all the quantities and conditions, and waives all rights to claim any misunderstanding, omissions or errors regarding the same which such inspection and observation would have disclosed. 3. The undersigned submits herewith a bid guaranty within the form provided by the applicable bid documents in the amount of $5,000.00 (Appendix A) for any option or combination thereof. In the event this proposal is accepted, and the undersigned fails, within ten (10) calendar days after date of receipt of Notice Of Award from the Town to execute and deliver an Agreement in the form provided by the Town or fails to execute and deliver evidence of proper insurance 23 Town of Southold Bid - Materials Hauling Services March 2009 coverage and performance bond in the amounts required and in the prescribed form within ten (10) days after Notice of Award, the bid guaranty shall be forfeited and be retained by the Town toward the satisfaction of liquidated damages and not as a penalty. Otherwise, the total amount of bid guaranty liquidated will be returned to the Bidder. both words and numerals in accordance with these bid requirements. The Bidder has completed the Contract Bid Form and Unit Price Schedules in 24 Town o£$outhold Bid - Malerials Hauling Services Bond #559688 APPENDIX C - FORM OF BID BOND KNOW ALL MEN BY THESE PRESENTS, that we,'the undersigned, Winters Bros. Recycling Corp. as Principal, and Evergreen National Indemnity Company as Surety, are hereby held and firmly bound unto The Town of Southold the sum of Five Thousand Dollars ($ 5~000.00) as Owner in for the payment of which, will end t~ruly be made, we hereby jointly and severally bind ourselves, our heirs, executors, administrators, successors and assigns. Signed this 26th day of March ,20. 09 The condition ofthe above obhgatton ~s such that whereas the Pnm.~nal h s submitted to the Town of Southold a certain Bid, attached hereto and hereby made a part hereof'to enter into contract in writing, for the hauling of construction debris material and/or recycled newspaper; NOW, THEREFORE, (a) If said Bid shall be rejected or in the alternate, (b) If said Bid shall be accepted, and the Principal shall execute and deliver an Agreement in the form of the Sample Operating Agreemenl attached hereto (pruperly completed in accordance with said Bid) and shall furnish certificates of insurance and a bond for this faithful performance of scad Agreement, and for the payment &all persons performing labor or furnishing materials in connection therewith, and shall in all other respects perfonn the Agreement created by the acceptance of said Bid, then this obligation shall be void, otherwise the same shall remain in force and effect; it being expressly understood end agreed that the liability of the Surety for any and all claims hereunder shall, in no event, exceed the penal amount of this obligation as herein staled. Form of Bid Bond Appendix C Page I of 3 29 Town o£Southold Bid - Mamria]s Haul,n§ Services The Surety, For value received, hereby stipulates and agrees that the obligations of said Surety and its bond shall be in no way impaired or affected by any extension of the time within which the Owner may accept such Bid; and said Surety does hereby waive notice of any such extension, IN WITNESS WHEREOF, the Principal and the Surety have hereunto set their hands and seals and such of Them as are corporations have caused their corporate seals to be hereto affixed and these presents to be signed by their proper officers, the day and year :first set forth above. ~F~n~er.s ~ros. Recycling Corp. l\lk l vl , Evergreen Nationa,1 Indemnity Company Nicole Skedel, Attorney-In-Fact Address of Surety:6140 Parkland Blvd., Ste. 321, Cleveland, OH 44124 SEAL (ACK.NOWLE/~GEME,N~F_BY.,__.,~}/1 CONTRACTOR, IFA CO~O~TION) CO~TY . ~ )SSN : On ~is ~ day of ~ ., 2~ , before me personally came _~ ~, ~ , to me ~own, who being duly swom, did depose ~d say thal eresidesin ~~ hq ; -- 0 ~ that he is the ~t~ *~ _~ of the I~ '~ ~ ~ ~ co~omtion described in and w~ch executed the foregoing instrument; that hi Imo~s the ~eal of the co~oration; that the seal affixed lo the ins~xmaent ~such co.orate seal; that it was so affixed by the Not~y Public No. ~01701S Form of Bid Bond Appendix C Page 2 of 3 (ACKNOWLEDGEMENT BY CONTRACTOR. IF A PARTNERSHIP) 30 Town of Soulhold Bid - Materials Hauling Services STATE OF: COUNTY OF: On this. day of ) ) SSN: ,20 ,., before me personally came , to ms known, and known to me to be a member of the firm of and known to me to be an individual described in, mud who executed lhe foregoing instrument in lhe Firm name of , and he duly acknowledged to me that he executed the same for and in the behalf of said firm 'for the uses and purposes mentioned therein. Notary Public (ACKNOWLEDGEMENT BY INDIVIDUAL CONTRACTOR) STATE OF: COUNTY OF: On this day of ) ) SSN: __, 20 , before me personally came · to me Kanwn and known to be the person described in and who executed the foregoing instrument and duly Acknowledged that he executed the same. Nolary Public Form of Bid Bond Appendix C Page 3 of 3 31 EVERGREEN NATIONAL INDEMNITY COMPANY COLUMBUS, OHIO POWER OF ATTORNEY PRINCIPAL Wint:ers Bros. Recycling Co~:)- EFFECTIVE DATE Ma~:Cj:L2~-.._2OO9 CONTRACT AMOUNT AMOUNT OF BOND $ 5,~ 000.00 KNOW ALL MEN BY THESE PRESENTS: That the Evergreen National tndemnity Company, a corporation in the State of Ohio does hereby nomiqate, ~;onstitute and appoint: ',%t~¥~'~ico le its true and lawful Attorney(s)qn-Fact to make, execute, allest, seal and deliver for and on its behalf, as Surety, and as ils act and deed, where required, any and all bonds, undertakings, recognizances and written obligations in the nature Ibereof, PROVIDED, however, that the obligation of the Company under Ibis Power of Attorney shah hal exceed One Million Five Hundred Thou sand Dollars ($1,500,000,00). This Power of Attorney is granted and is signed by facsimile pursuant to tile following Resolution adopted by its Board of Direclors on the 23rd day of July, 2004: '"RESOLVED, That any two officers of lbo Company have tile aulhority to make, execute and deliver a Power of Attorney constituting as Atton'~y(s)-in-fact such persons, firms, or corporations as may be selecled from time to time. FURTHER RESOLVED, that the signatures of such officers and the Seal of Ihe Company may be affixed to any such Power et Attorney or any cerfil~cate relating Iherelo by facsimile; and any such Power of Attorney or cedificate beadng such facsimile signatures or facsimile seal shall be valid and binding upon fha Company; and any such powers so executed and certified by facsimile signatures and facsimile seal shall be valid and binding upon the Company in lbo future with respecl to any bond or undedaking to which it is attached," tN WITNESS WHEREOF, Ihe Evergreen National Indemnify' Company has caused ils corporale seal [o be affixed hereunto, and tbese presents to be signed by its duly authorized officers this 15"' day of September, 2004. EVERGREEN NATIONAL iNDEMNITY COMPANY Notary PubJJc) Slate of Ohio) SS: Roswell P. Ellis, President Craig L.,~tout, Vice President On this 15th day of September, 2004, before the subscriber, a Notary for the State of Cilia, duty commissioned and qualified, personally came Roswell P. Ellis and Craig L. Stout of the Evergreen National Indemnity Company, to me pe~-sonally known to be the individuals and officers described herein, and who executed the preceding instrument and acknowledged the execution of the same and being by me duly sworn, deposed and said that they are the officers of said Company aforesaid, and Ihat the seat affixed [o Ihe preceding instrumeni is the Corporate Seat of said Company, and the said Corporate Seal and signatures as officers were duly affixed and subscribed to the said instrument by the authority and direction of said Corporation, and that the resolution of said Company, referred to in the precedm§ instrument is now in force IN TESTIMONY WHEREOF. I have hereunto set my band and affixed my officia seal at Columbus, Ohio, the day and year above wnaen. State of Ohio ) SS: SU~ E, DUFFY Notary Public Slate of Ohio My Commission expires August 5, 2009 the undersigned, Secretary of the Evergreen National indemnity Company, a stock corporation of fha State of Ohio, DO HERESY CERTIFY that tbe foregoing Power of Attorney, remains in full force aha I~as not been revoked; and furthermore that the Resolution of the Board of Directors set fodh herein above is now m force. Signed and sealed in Columbus Ohio Ibis 26 th _ day of March 2009 .~ Cud C. Anderson, Secretary Any reproduction or facsimile of this form is void and invalid. Stoic of York INSURANCt! DEPARTMENT Evergreen National Indemnity Company Home Office Address Mayfield Heights, Ohio Organized under the Laws of Okio has complied with the necessary requirements of or pursuant to taw, it is hereby licensed to do within this 5tare the business of fire, miscellaneous property, water damage, burglary and theft, glass, boiler and machinery, collision, personal injury liability, property damage liability, workers' compensation and employers' liability, fidelity and surety, motor vehicle and aircraR physical damage, marine and inland marine, marine protection and indemnity, and service contract reimbursement insurance, as specified in paragraph(s) 4, 5, 6, 7, 8, 9, 12, 13, 14, 15, 16, 19, 20, 21, and 28 ofSectinn 1 l13(a) of the New York Insurance Law, and also such workers' compensation insurance as may be incident to coverages contemplated under paragraphs 20 and 21 of Section 1113(a), including insurances described in the Longshoremen's and Harbor Workers' Compensation Act (Public Law No. 803, 69 Cong. as amended; 33 USC Section 901 et seq. as amended) to the extent permitted by certified copy of its charter document on file in this Department until July 1, 2009. l'n Witness Whereof, I have hereunto set my hand and affixed the official seal of this Department at the City of Albany, New York, this ist day of J'uly, 2008 Eric R. binallo Superintendent 8y Clark ,1. Williams Special Deputy Superintendent Original on Watermarked Paper Evergreen National Indemnity Company Certificate 2008 Thc following financial information wa~ excerpted fi.om the Statutory Annual Statement filed by Evergreen National Indemnity Company with the Ohio Department of Insurance. STATEMENT OF INCOME Direct Written Premium Reinsurance Assumed Reinsurance Ceded Net Written Premium Cbange in Unearned Net Earned Premium Loses & LAE Incurred Net Commission Expense Other Expenses Underwriting Gain/(Loss) Investment Gain Other Income/' (Expense) Income Before FIT Federal Income Tax Net hmome $ 36,533,007 3,800,266 (29,140,334) 11,192,939 (3~9,518) I 0,823,42 I 608,279 4,729,395 3,157,893 2,327,854 887,605 21,686 3,237,145 1 ~95,56g 1,941,577 Invested Assets Agent's Balances (ncl of Reins.) Reinsurance Recoverable Other AsseL~ Total Assets BALANCE SHEET 45,257,280 2,507,054 241,033 2,046,719 50,052,086 Liabilities & Surplus Unearned Premium Reserve Loss & LAE Reserves Other Liabilities Total Liabilities Surplus 4,613~85 4,089,551 9,536,437 18~3~,273 31,812,813 I hereby certify that the above information is that contained in the Statutory Annual Statement filed by Evergreen Nation~lndemnity Company with the Ohio Department o£1nsurance for the year ending Decembe~~ Charle~e'l~)c'Hamm, Jr., President and Secretary Town of Southold Bid - Materials Hauling Services APPENDIX A - SURETY VERIFICATION T12s is identification that Evergreen National Indemnity Company will be tl~e Surety Company for Winters Bros. Recycling Corp. the Bidder, on this project and that the named Surety Company herein provides written certification that the named Surety Company Will provide the Performance Bond, specified in the Contract Documents, in the event the Bidder enters into an Agreement with the Town. The Surety Company that such Company is licensed to do business in the State of New York. Principal (Seal) Evergreen National Indemnity Core,any Surety Company,7 Nicole Skedei~ Attorney-In-Pact (L.S.) Surety Verification Appendix A 27 NO~YJ.5 ~NYW. $0~ 1006 i; ..... ~19~8 I T~OR ~.~ t6,~0 E~T~C ~ 2o~TR 20~ I~R 536732-18 10782C 1~ 1 ~wxaxr2~l ~09 ~OR ~.~ 16,~ E~C ~ 2529~ 20~ 'I~R 5~731-18 107821 1~1 1mlad61~9x~2708 ~CTOR 80.~ ' 18.~0 ~T~C ~ 55~2PA 1~9 ~ 1~110-t8 107824 I~ 1 xkwdb0x41 J872088 ~OR ~,~ 17.970 EH-~C ~ ~2PA 2001 ~ 1~112-18 10782~ 1~ 1xkw~kn~l{871039 ~OR 102,~ 18.~0 ~T~C ~00 3~91~ . 2~1 ~ 1~111-18 10782~ 1~ IxpSdbgx0~07630 T~CTOR 102.~0 17.779 E~T~C W~ 55~3PA 1~9 H~I~ 1~108-18 107~( 1~ tmta311~1~033357 ~CTOR ~.~ 18,5~ ~-~C ~ 31~f1~ 20~ MACK 83~ I~ 1 m1~11~x~03~41 ~OR 80.~ 18.~0 ~-T~C ~00 31935~ 20~ ~CK 83~97 t010 lm1~11~1~39742 ~OR ~.~ 18.500 E~T~C ~ 31938~ 2~ MACK 83~94 1011 lmia911~3~033358 ~CT~ ~.0~ 18,500 EH-T~C ~ 319~ 20~ ~CK 83~95 11/24/200612:18 PMHUT Sticker Trucks TOWN OF BROOKHAVEN DEPARTMENT OF WASTE MANAGEMENT One Independence Hill, Fan~ingville, NY 11738 631 451 6222 Company Name:WZNTERS BROS. RECYCLING CORP. Railing Address:Il98 PROPECT AVENUE,WESTBURY , NY 11590 Storage Address:971NAVERLY AVE., HOLTSVILLE, NY 11742 2000 2002 2004 2005 2005 2002 2001 2000 2006 2000 !006 2002 2002 1999 2004 2000 2003 ~KE ~0~ MACK DUHP MACK DUflP MACK DUHP MACK DUHP MACK DUHP MACK DUHP MACK DUHP MACK DUHP INTERNA'I DUHP STERLINC' DUHP MACK DUHP MACK DUHP KENWOR' DUHP pETERBU DUHP MACK DUHP MACK DUHP MACK OUHP REGISTERED VEHICLES 36408JV 88718JV 34854JS 68675JT 97678JS 88716JV 88942JV 44023JW 91741JV 36624JV 60263JV 76458JW 88738JA 76480JW 24689JP 36580J¥ 36~4JV 1M2K195C72M021142 1525 IM2K195C.,52M019941 1381 1M2K195c04M024547 1183 1M2K189C35M026492 1255 1M2K189C55M026493 1367 1M2K195C32M019940 1528 1M2K195C71M018062 1384 1M2K195C3YM015766 1498 1HTWGAZT16J36200 1529 2FZXKMDB8YAF13888 1227 1M2AG1 lc16M033598 1229 1M2P267C02M063022 1502 1NKDXU'TX52J884154 1364 1NPAXUTX3XN4.78578 1437 1M2AG11c24M010926 1245 1M2AG 11 cXM029907 1382 IM2AGI 1CX3M005763 1566 KEEP REHOVE TOJ Uj _Onl y LICENSE FOR REMOVAL AND DISPOSAL Of GARBAGE AND RUBIEH TO TOWN DISPOSAL AREAS KNOW YE, THIS IS TO CEm'IFY THAT .~..1~....~.(~..~, ....................................... WHOSE PLACE OF BUSINESS IS AT....~.~..9.8..~..C?..&..V..E~...U.~.: ...~...S~,....I~'.* :....~....T.O..]~.. .......................... IS HEREBY UCENSED IN ACCORDANCE WITH CHAPTER 21 OF THE CODE OF THE TOWN OF ISUP, REGULATING THE REMOVAL AND DISPOSAL OF GARBAGE AND RUBBISH COLLECTED WITHIN THE TOWN OF ISLIP, FOR THE PERIOD ENDING DECEMBER 31, 2008 iN WITNESS WHEREOF, Ihaveletmyhlndlnciofflclalseal, thl$ .l.l~t,:~.. cMyof ....... 3AKI~.A..1.1.Ry ............... TOWN I't~TE lb...291.,.293... --'~---"- 390 Town of Babylon This Is To Certify That Winter Bros. ecycling Corp. Is Hereby Approved by: The Sanitation Commission for a Class 3 License For the Year 2008 On: February 7, 2008 NUMBER SOLID WASTE LICENSE 12/31/08 LICENSE HOLDER: WINTERS BROS· RECYCLING CORP ADDRESS: 1198 PROSPECT AVE WESTBURY NY 11590 DAY TIME PHONE NUMBER: 516 937-0900 VEItlCLE ID NUMBER (VIN) VEHICLE MAKE AND YEAR VECHICLE TYPE VEHICLE VEHICLE TARE VEHICLE CONTAINER REGISTRATION WEIGHT PERMIT No. PERMIT No. 1M2AG11C16M033598 2006 MACK DUMP 60283JV 58,000 ~ ~ M2AG11C86M033582 2006 MACK DUMP 37468JU 58,000 1M2AG11CX6M029906 2006 MACK DUMP 36580JV 54,000 1M2AG11CX3M005763 2003 MACK DUMP 36644JV 54,000 1M2AG11CX2M001937 2002 MACK DUMP 36415JV 54,000 1M2K185CXXM007284 1999 MACK DUMP 36413JV 70,000 1M2P268C51M056869 2001 MACK DUMP 99009JA 69,080 1M2AG11C24M010926 2004 MACK DUMP 24689JP 56,000 1M2K195C52M021088 2002 MACK DUMP 36642JV 54,000 1M2K195C6WM011823 1998 MACK DUMP 77257JW 65,740 "G11C44M012449 ~ ~- 2004 MACK DUMP 40963JS 56,000 1M2AG11CX4M010916 2004 MACK DUMP 53366JR 56,000 2FZXKMDB8YAF13868 2000 STERL DUMP 36624JV 53,000 1M2AG11C82M001936 2002 MACK DUMP 36416JV 54,000 1M2P19909LM006966 1990 MACK DUMP 36406JV 76,000 1M2AG11C05M020209 2005 MACK DUMP 30167JU 58,000 1HTMMAAL86H319051 2006 INTER DUMP 86338JV 25,999 1M2P268C51M056869 2001 MACK DUMP 99009JA 69,080 'WENTY (20) GONTAINERS THE 8OLID WASTE INVESTIGATIONS DIVI81ON IS TO BE HOTIFIED OF ANY' CHANGES issued this VINCENT PULEO, TOWN CLERK TOWN OF SMITHTOWN DPS235 2008 ~o.~ TOWN OF HUNTINGTON ~WASTE MANAGEM~NT DIVISION sot~ t.~( ) WASTE CO~ON LICENSE Expires 12/31/08 WTNTF, R~ BRO. T~RR~ RRC¥CLTNC. ~ I~Q oo~co~ ~VE. T.T~C~TTDV MV REFERENCES The following are considered reliable references as to the operational capability, experience and rel/ability of Winters for projects of similar nature and magrdtude: City of Glen Cove Mike Solentino Department of Public Works Contract: August 1, 1992 to August 1, 2012 500 TPD Solid Waste 516-369-5069 Town of Babylon Ronald Kluesener, Chief of Staff Contract: January 1, 2006 to December 31, 2010 Commercial Waste Collection and Recycling Service Management 631-957-3074 Town of Oyster Bay Commissioner James M. Byrne, P.E. Department of Public Works Contract: March 6, 2000 to March 5, 2010 1,000 TPD Solid Waste 516-677-5706 Town of Islip Al Sanchez, Vice President of Operations Islip Resource Recovery Agency Contract: January 1, 2007 to December 31, 2009 350 TPD Solid Waste 631-224-5644 Town of North Hempstead Michael Engelmann Acting Executive Director Solid Waste Management Authority Contract: May 1, 2005 to April 30, 2010 1,000 TPD Solid Waste 516-767-4836 SUFFOLK COUNTY HEALTH SERVICES Yo~k Date Issued: 11/30/2007 Permit Number: RD-280 Date Revised: Firm Name: WINTERS BROTHERS RECYCLING CORP. Address: 1198 PROSPECT AVE WESTBURY NY 11590 Date Expires: 12/31/2009 Pursuant to the authority vested in me by the Suffolk County Sanitary Code and subject to the conditions and requirements therein prescribed and further based upon the application submitted therefore, this permit is hereby issued to the above named applicant for the transportation and disposal of offensive materials. A listing of trucks authorized under this permit is attached. This permit is valid under the following conditions: Garbage to be transported in tight body truck(s), maintained so as to prevent the creation of a public health nuisance, or the loss or discharge of material in any place; failure to do so may result in the issuance of a violation notice and/or imposition of fines. Garbage to be disposed of at public dump(s) at the following town disposal areas or transfer station sites: WINTERS BROS. TRANSFER STATION WINTERS WASTE SERVICES SMITHTOWN HUNTINGTON ISLIP Director, Division of Environmental Quality SUFFOLK COUNTY DEPARTMENT OF HEALTH SERVICES List of Trucks Authorized To Remove, Collect, Transport or Dispose of Offensive Materials (Article III, Section le, Suffolk County Sanitary Code) Permit No. : RD-280 Firm Name: WINTERS BROTHERS RECYCLING CORP. LIST OF TRUCKS USED FOR W~TE HAULING MAKE LICENSE DATE APPROVED 1987 M3~CK 26989-AR 11/30/2007 1990 ~L~CK 36406-JV 11/30/2007 1990 M_ACK 36622-JV 11/30/2007 1992 FORD 25873-AR 11/30/2007 1992 FL~CK 36613-JV 11/30/2007 1993 M3~CK 36607-~V 11/30/2007 1993 ~L~CK 36645-JV 11/30/2007 1994 MACK 36542-JV 11/30/2007 1994 MACK 36641-JV 11/30/2007 1994 M3tCK 14768-JT 11/30/2007 1994 MACK 36620-JV 01/09/2008 1995 INTEP~NATIONAL 57007-AP 11/30/2007 1995 MACK 76483-JW 11/30/2007 1995 ~ACK 88707-JAr 11/30/2007 1995 MACK 88717-JAr 11/30/2007 1996 CHEV~f 49510-J~ 11/30/2007 1996 MACK 36540-JV 11/30/2007 1997 MACK 76452-JW 11/30/2007 1997 MITSU 76668-JW 11/30/2007 1998 MACK 44021-J7~ 11/30/2007 1998 M_ACK 77257-JW 12/08/2008 1998 MACK 88715-JV 11/30/2007 1998 MACK 31920-TR 11/30/2007 1998 MACK 91805-kN 11/30/2007 1999 FREIGHTLINER 57129-AP 11/30/2007 1999 INTERNATIONAL 76481-J7~ 11/30/2007 1999 MACK 17743JT 11/30/2007 1999 MACK 36405-JV 11/30/2007 1999 MACK 36413-~A; 11/30/2007 1999 MACK 36414-0~; 11/30/2007 1999 MACK 61582JS 11/30/2007 1999 Fd%CK 88709-JV 11/30/2007 1999 MACK 88712-JV 11/30/2007 1999 MACK 88939-0A; 11/30/2007 1999 MACK 34491-AW 11/30/2007 1999 MACK 34492-AW 11/30/2007 1999 MACK 34493-AW 11/30/2007 1999 MACK 36404-JV 01/09/2008 1999 MACK 36581-JV 11/30/2007 1999 MACK 46353-~ 11/30/2007 1999 MACK 56539-AP 11/30/2007 2000 CHEVY 17676-JT 11/30/2007 2000 GMC 14766-JT 11/30/2007 Printed on Dece~er 4, 2008. Authorized Truck Listing - Page 1 of 4 SUFFOLK COUNTY DEPARTMENT OF HEALTH SERVICES List of Trucks Authorized To Remove, Collect, Transport or Dispose of Offensive Materials (Article III, Section le, Suffolk County Sanitary Code) Permit No. : RD-280 Firm Name: WINTERS BROTHERS RECYCLING CORP. LIST OF TRUCKS USED FOR WASTE HAULING YEAR MAKE LICENSE DATE APPROVED 2000 INTER 76470-JW 11/30/2007 2000 INTERNATIONAL 90618-JX 11/30/2007 2000 KENWORTH 76404-AV 11/30/2007 2000 MACK 36585-JV 11/30/2007 2000 MACK 36609-JV 11/30/2007 2000 MACK 44023-JW 11/30/2007 2000 MACK 76496-J~ 11/30/2007 2000 MACK 14762-JT 11/30/2007 2000 MACK 14763-JT 11/30/2007 2000 MACK 14765-JT 11/30/2007 2000 MACK 88708-JV 01/09/2008 2000 MACK 88721-JV 11/30/2007 2000 MACK 88946-JV 11/30/2007 2000 MACK 88948-JV 01/09/2008 2000 STERL 36402-JV 11/30/2007 2000 STERL 36624-JV 11/30/2007 2000 STERLING 36403-JV 01/09/2008 2001 FREIGHTLINER 87423-JA 11/30/2007 2001 INTER 76465-JW 06/24/2008 2001 INTER 76466-JW 11/30/2007 2001 INTER 76469-JW 11/30/2007 2001 MACK 88710-JV 11/24/2008 2001 MACK 88719-JV 11/30/2007 2001 MACK 88721 JV 12/08/2008 2001 MACK 88723-JV 11/30/2007 2001 MACK 88724-JV 11/30/2007 2001 MACK 88925-JV 11/30/2007 2001 MACK 88933-JV 11/30/2007 2001 MACK 88935-JV 11/30/2007 2001 MACK 88937-JV 11/30/2007 2001 MACK 88942-JV 11/30/2007 2001 MACK 88945-JV 11/30/2007 2001 MACK 22860-JA 11/30/2007 2001 MACK 99009-JA 11/30/2007 2002 FREIG 88929-JV 11/30/2007 2002 KENWORTH 88738-JA 11/30/2007 2002 MACK 36408-JV 11/30/2007 2002 MACK 36409-JV 11/30/2007 2002 MACK 36416-JV 11/30/2007 2002 MACK 36642-JV 11/30/2007 2002 MACK 76455-JW 11/30/2007 2002 MACK 76482-JW 11/30/2007 2002 MACK 88711-JV 11/30/2007 Printed on December 4, 2008. Authorized Truck Listing - Page 2 of 4 SUFFOLK COUNTY DEPARTMENT OF HEALTH SERVICES List of Trucks Authorized To Remove, Collect, Transport or Dispose of Offensive Materials (Article III, Section le, Suffolk County Sanitary Code) permit No. : RD-280 Firm Name: WINTERS BROTHERS RECYCLING CORP. LIST OF TRUCKS USED FOR WASTE HAULING YEAR MAKE LICENSE DATE APPROVED 2002 MACK 88716-JV 11/30/2007 2002 MACK 88718-JV 11/30/2007 2002 MACK 88720-JV 11/30/2007 2002 MACK 88930-JV 11/30/2007 2002 MACK 88931-JV 11/30/2007 2002 MACK 88938-JV 11/30/2007 2002 MACK 88941-JV 11/30/2007 2002 MACK 36415-JV 01/09/2008 2002 MACK 36578-JV 01/09/2008 2002 MACK 76458-JW 11/30/2007 2002 MITSUBISHI 95708-JH 11/30/2007 2003 CHEV~f 83319-JU 11/30/2007 2003 FORD 24747-JP 11/30/2007 2003 FREIGHTLINER 29912-JK 11/30/2007 2003 FREIGHTLINER 29921-JK 11/30/2007 2003 MACK 76454-JW 11/30/2007 2003 MACK 88722-JV 11/30/2007 2003 MACK 36644-JV 11/30/2007 2003 MACK 49110-JW 01/09/2008 2003 MACK 59658-JL 11/30/2007 2003 MACK 81158-JF 11/30/2007 2003 MACK 83324-JU 11/30/2007 2004 KENWORTH 36244-JK 11/30/2007 2004 MACK 36411-JV 11/30/2007 2004 MACK 36412-JV 11/30/2007 2004 MACK 70270JR 11/30/2007 2004 MACK 24689-JP 11/30/2007 2004 MACK 34853-JS 11/30/2007 2004 MACK 34854-JS 11/30/2007 2004 MACK 34863-JS 11/30/2007 2004 MACK 40963-JS 11/30/2007 2004 MACK 40964-JS 11/30/2007 2004 MACK 53366-JR 11/30/2007 2004 MITSU 40708JS 11/30/2007 2004 MITSU 40709JS 11/30/2007 2004 MITSU 40715JS 11/30/2007 2005 CHEVI~ 76467-g~ 11/30/2007 2005 MACK 36646-JV 12/08/2008 2005 MACK 36647-JV 11/30/2007 2005 MACK 88932-0%; 11/30/2007 2005 MACK 30154-JU 11/30/2007 2005 MACK 30167-JU 11/30/2007 2005 MACK 68675-JT 11/30/2007 Printed on December 4, 2008. Authorized Truck Listing - Page 3 of 4 SUFFOLK COUNTY DEPARTMENT OF HEALTH SERVICES List of Trucks Authorized To Remove, Collect, Transport or Dispose of Offensive Materials (Article III, Section le, Suffolk County Sanitary Code) Permit No. : RD-280 Firm Name: WINTERS BROTHERS RECYCLING CORP. LIST OF TRUCKS USED FOR WASTE HAULING YEAR MA~E LICENSE DATE APPROVED 2005 MACK 97678-JS 11/30/2007 2005 MACK 97679-JS 11/30/2007 2006 CHEVR 76489-JW 11/30/2007 2006 CHEVR 76490-JW 11/30/2007 2006 CHEVR 88947-JV 11/30/2007 2006 INTERNATIONAL 86338-JV 11/30/2007 2006 INTERNATIONAL 91741-JV 11/30/2007 2006 MACK 60282 JV 11/30/2007 2006 MACK 36580-JV 11/30/2007 2006 MACK 37468-073 11/30/2007 2006 MACK 60283-JV 11/30/2007 2007 MACK 36599-J5; 11/24/2008 Printed on December 4, 2008~ Authorized Truck Listing - Page 4 of 4 BFI CANADA INCOME FUND BFI Canada Income Fund (the"Fund"or "Company") is one of North America's largest full-service waste management companies, providing nomhazardous solid waste collection and landfill disposal services for commercial, industrial, municipal and residential customers in five provinces and ten U.S. states, Through our operating brands, BFI Canada and IESI, we are leaders in our respective markets, serving more than 1.8 million customers with our vertically integrated assets. Our trust units are listed on the Toronto Stock Exchange under the symbol BFCUN. To learn more, visit our website at www. bficanada.com. REVENUE'~ 1000 917.4 aoo 771,8 677.4 6OO 400 EBITDA'.°, 300 250 200 150 100 FREE CASH FLOW AVAILABLE FOR DISTRIBUTION'~ 200 150 120.7 lOO DISTRIBUTIONS AND DIVIDENDS DECLARED® 2.0 1.5 50 0.5 36.7 24,1 0.0 Addressing Tomorrow, DEAR STAKEHOLDERS: More specifically, consolidated revenues grew 18.9% or $145.5 million over 2006 to $917.4 million (and increased 23.1% excluding the impact of foreign currency translation). EBITD^ increased 16.8% or $39.6 million to $275.5 million (a 20.5% growth rate excluding foreign currency translation) and free cash flow available for distribution reached $168.5 million, an 18.8% or $26.6 million increase over 2006. In 2007, organic revenues, excluding acquisitions, fuel and environmental surcharges, and foreign currency translation, grew 12.6°/6 in Canada and 7.5% in the U.S. Contributions from acquisitions in 2007 represented a substantial portion of growth in the year. We completed 18 tuck-in and platform acquisitions for aggregate cash consideration of approximately $366.2 million. The largest of these acquisitions was the purchase of Winters Bros. Waste Systems, Inc. (*Winters Bros.'~ a leading, integrated non-hazardous solid waste services provider serving the complete Long Island market. Winters Bros. gave us another strategic foothold in the northeast U.S. market and allows us to better leverage our transfer and landfill assets. The acquisition dosed in August and we have successfully brought these high quality assets into our team. We are delig hted with our progress last year. However, as a Company, our focus is no longer on 2007. It's on tomorrow. For this reason, I have dedicated the balance of my letter to outlining what [ see as our greatest challenges and opportunities for the future. ADDRESSING FUTURE GROWTH The questions we are asking ourselves today may be some of the same questions you have of us: Whatis our plan for future growth ? How will we fund growth Can we continue to achieve high levels of productivity and efl$ciency and main tain our local customer and market focus as our organization expands? How will public concern over the environment play a role in ourcontinuing operations? Let's address each of these questions, beginning with our plan for future growth. At our present rate of growth, revenue is on track to exceed one billion dollars in 2008, a clear milestone for a company whose annual revenues were approximately $150 million five years ago. Over this period, we have been successful in growing our business organically - the result of adding commercial customers to our routes, winning municipal and residential collection contracts, and employing a combination of price and volume strategies. On the acquisition front, we have identified and completed scores of "tuck-in" and several platform acquisitions, which have provided us with the extremely competitive asset base and market positioning we enjoy today. As the financial performance of the business demonstrates in 2007 - and each year since our initial public offering - our team has been highly active and successful in generating results. Clearly, however, the economy must also support growth and, recently, there has been softening in the U.S., although we take comfort in knowing that the waste services sector has traditionally been more recession resistant than most. Therefore, if we are to outpace industry growth as we have consistently over the years, we must always look forward to achieve continuous improvement and we must address opportunity where it lies. After all, we are on a long journey with many milestones ahead that we still need to meet. The question then is: where does opportunity lie for our business and how will we address it? The answer is, despite how far we have come in the past five years, there remains unrealized potential for growth - and therefore opportunity for us to intensify efforts. For example, while we now have more than 1.8 million customers, there are millions more who do not use our services today in urbanized areas of North America - our target markets. We will address this opportunity through our continuous improvement process that has increased organic growth on an industry-leading basis. The same unrealized potentia[ exists for acquisitions in the markets we already serve and in new markets. Despite our sizable number of acquisitions since 2002, and noting that companies have acted as consolidators, North America still supports thousands of private waste management providers. In our opinion, many of these companies would benefit from joining a larger organization. A tougher economy may also lead to more acquisition opportunities at more attractive valuations. We will address this opportunity through our active and dedicated business development group which is tasked with identifying potential acquisition candidates. These facts underscore the size of our long-term opportunity and the potential for our business. However, it will continue to be the quality and execution of our strategies that will provide the opportunity to sustain high growth. ADDRESSING FUTURE CAPITAL Achieving growth will increase our ongoing growth capital and landfill expenditure needs, as will investments in acquisitions. In 2008, we have planned maintenance expenditures in the range of $22 million to $24 million Canadian for our Canadian operations and US$37 million to $39 million for our U.S. operations. many other companies, we funded the acquisition of Winters Bros. by increasing our existing U.S. revolving credit facility by $320 million. However, finding the most efficient and non-dilutive sources of capita[ is, in the short term, likely to be harder for all companies given the volatility in current debt and equity markets. Income trusts also face unique challenges due to pending 2011 tax changes and limitations on the issuance of new equity. We will also invest in several of our key landfills in 2008 to build cells and develop airspace. In particular, the permit we received in 2007 to expand our Seneca Meadows landfill ushers in a period of additional investment. The capital allocated today will benefit us tomorrow, as we will be able to accept waste volumes for many years to come with little additional spending. We continue to view acquisitions as a core element for future growth and will identify and pursue both tuck-in and platform acquisitions that are both strategic and accretive. Now, the main question: How will we fund our growth plans? Since going public, we have funded our maintenance capital through internally-generated free cash flow. We have funded growth capital requirements through a combination of excess internally generated cash and debt. In addition, funds raised in the markets through equity have been used for acquisitions. We believe this strategy has served our business and our stakeholders well. We have maintained an annual payout ratio below 90% since inception - with a 73.2% payout ratio in 2007. And the Company's debt-to-EBITDA leverage ratio, an indicator of our ability to finance and digest growth, has continually remained below or in line with the industry average. As we look ahead, we believe the value we deliver to our owners and customers will continue to come through a creative but disciplined approach to growth internally and by way of acquisition. This will require free and unfettered access to a broad capital market. We successfully accessed the capital markets in 2007 with a $93 million offering of trust units in April - an offering that was oversubscribed and demonstrated support in the market for our strategies. Also, in August, a period in which the credit markets were unkind to To address this challenge, we decided in 2007 that the prudent course of action was to conserve free cash flow generated in excess of distributions paid. To that end, we did not increase distributions in 2007. By addressing the challenge in this way, we gain some additional financial flexibility yet remain comfortably positioned to pay distributions. As to whether we can continue to grow within the confines of the income trust structure, I think the past year demonstrates that we have been able to do so. However, we continue to work actively with the Fund's trustees to review the trust structure to ensure that we can continue to secure capital in the most cost efficient way, as the need arises. ADDRESSING PRODUCTIVITY AND EFFICIENCY As we expand, can we continue to increase productivity and efficiency and maintain the same style of relationships with our customers and markets that have been integral to our past success? We believe so and we intend to prove it every day. Our decentralized style of decision-making, which empowers local managers to employ market-focused strategies, is designed to work as well for a larger company as a smaller one. This management style is made possible through the strength of our employees, whom we believe are among the most talented and respected individuals in the industry. Many of our senior managers are leaders of, and long*time volunteers in, industry organizations. Recently, Mickey Flood, the President of our Company, was selected for induction into the Environmental Industry Associations Hall of Fame, in recognition of his significant achievements and contributions to the industry during his career. 4 With a high level of industry expertise present throughout our Company, each of our districts has come to understand the factors that drive productivity, profitability and cash flow and how to use the levers we have at our disposal. Our employees also deeply appreciate customer needs and the needs of the communities they serve. Our local emphasis has not wavered even as we grew from a company of 670 em ployees in 2002 to a company of more than 3,700 employees in 2007. This is not because of happenstance. We spend many hours each year coaching our team in the application of our market-focused strategies through ongoing onsite and offsite training programs. This level of coaching has increased substantially as we have grown and will continue to accelerate as we add new people. As we expand into new markets, we remind ourselves that we cannot lose our local touch. We need to continue hiring the right people who can execute sophisticated market-focused strategies. And we need to remember that it is our personalized service that has built our loyal customer base. is it possible to be a one billion dollar company still focused on market-by-market continuous improvement? Our answer is absolutely yes. ADDRESSING THE ENVIRONMENT In 2008, the waste services industry is at a fascinating place in its history. Recent projections suggest industry revenues will exceed $60 billion by 2010, as North Americans produce more and more solid waste for collection, recycling and disposal At the same time, we are witnessing increasing efforts to divert waste from landfills, and the emergence of new practices and technologies to make the industry "greener". The convergence of these two trends places us in a unique position. The opportunity for continued long- term expansion has never been greater; but to grow, we must continue to earn community trust by staying current with environmental best practices, offering sound landfill solutions and "green"services as well. To address these trends, we are implementing new technologies at our landfills and on our fleets, and offering services to our customers that promote a healthy relationship with the environment. We are taking an active role in environmental management through our dedicated recycling facilities and through gas-to-energy plants. At our landfill sites, we beneficially reuse materials such as tire shreds as alternative daily cover. We increasingly use global positioning system technology to more ef~ciently compact waste so we can maximize landfill density and use the airspace as effectively as possible. And we collect landfill gas and convert it into energy to power homes and heat greenhouses at two of our landfills - with more planned in the future as volume and environmentai conditions allow. On our fleets, we upgrade and replace our trucks frequently, which ensures that they are more environmentally friendly. As new emission and fuel conservation technologies are developed and proven, we will continue to be active participants. For customers, we offer recycling of many kinds of materials, a fast- growing segment of our service offering. To provide transparency into our initiatives, and to demonstrate that we are committed to addressing the environmental needs of society in the future, we are participating in the Carbon Disclosure Project. This is a global program which surveys leading companies on their carbon emission levels and looks for year-over- year improvement. Our business is to keep communities clean - but our larger mission is to help preserve our environment for generations to come. Read more about how we are helping to create a sustainable future on page 12 of this report. THANKS We thank our unitholders, customers and employees for giving us the means to effectively address the needs of our business tomorrow. Thanks also to our experienced Trustees who take an active and productive role in the betterment of our business. In particular, I would like to thank lain Ronald. Since 2002, lain served with distinction as a Trustee and nomexecutive chairman. He retired effective November 11,2007. lain will continue to be available for future counsel. I would like to once again welcome Doug Knight, President of St. Joseph Media, Inc., as a Trustee of the Fu nd. Doug is a familiar face to many of our owners, having served as a Trustee between 2002 and 2005. With his extensive business and entrepreneurial experience in the U.S. and Canada, Doug will once again be a valuable member of our Board. ADDRESSING TOMORROW TODAY We are looking forward to what tomorrow offers, but recognize that we cannot lose touch with today. We remain focused on the daily business of serving our customers and are proud that we are making a difference for them and the communities in which we operate. But don't just take it from us. In this report, you will hear from our customers on how we are helping them address the opportunities and solve the challenges that they are facing. From a grocery chain in Alberta to a national convenience store operator, and from communities in Louisiana to New York City, we are there with a solution for today and for tomorrow. To conclude, we believe that we have addressed many of our short-term needs - and some of our long-term ones as well. We are well positioned to employ our market focused strategies to further improve our performance in 2008. We are planning a great future and we welcome you to be part of it. Yours sincerely, Keith A. Carrigan vice Chairman and Chief Executive Officer M~mhA2008 6 CALGARY CO-OPERATIVE ASSOCIATION LTD. Calgary Co-op is one of the largest retail co-operatives in North America with 425,000 members, 4,000 employees and annual sales of nearly $1 billion. It operates 22 retail shopping centres, 26 gas bars, 15 liquor stores and nine travel offices in Calgary, Alberta, Canada. The Calgary Co-op sign is as familiar to the people of Alberta as the Rocky Mountains that border the province. To become the shopping destination of choice, Calgary Co-op has always thought ahead about how it can best serve the future needs of its communities and to this end, has made a long-term commitment to environmental best practices. As part of this commitment, Calgary Co-op first engaged BFI Canada for its waste collection needs more than 15 years ago. Today, we not only collect their solid waste, but thanks to the responsible, forward-thinking actions of Calgary Co-op, recover 300 tonnes of cardboard for recycling every month. Calgary Co-op plans to continue increasing the percentage of waste it recycles and we are focused on helping the company meet this future challenge while managing collection expenses. 'Through BFI Canada's recycling services, we are on our way to meeting our waste diversion goals,"says Will Harms, Vice President, Facilities Development and Real Estate, Calgary Co-op."For our business and for the environment, we see this as a very positive partnership for the future:' ADDRESSING THE RECYCLING OPPORTUNITY Today and increasingly for tomorrow, we see recycling as an important and growing service and revenue opportunity within our markets. Driven by increasing public awareness of the environmental and energy savings benefits, recycling rates have increased sharply. According to the U.S. Environmental Protection Agency, recycling in the United States diverted 82 million tons of material away from landfills and incinerators in 2006, representing a recycle rate of 32.$%, up from 15 million tons and a recycle rate of 10% in 1980. Recycling also prevented the release of some 49.7 million metric tons of carbon in 2006 - equal to the amount emitted annually by 39 million cars. In Canada, 93% of households had access to at least one form of recycling program in 2006. Of these households, 97% made use of at least one recycling program, according to Statistics Canada. To address this opportunity and fundamental environmental need, we provide one of the leading recycling and recovery service offerings as part of our integrated waste collection business model. We work closely with our commercial, industrial and municipal customers to ensure they can advance their waste diversion strategies for the future. Today, through eight material recovery facilities in Canada and 10 in the U.S., we receive and process newspaper, cardboard, office paper, plastic containers, glass bottles, fibreboard, wood and ferrous and aluminum metals. Quality recoverable material is harvested and then marketed to post-consumer mills for the best attainable product value. As demand grows, our challenge is to perform this service as effectively as possible. To this end, we approach recycling as we do all other forms of collection - with a focus on maximizing efficiency and productivity on a route-by-route, market-by-market basis. Along with our customers, we are proud to be a part of a vital environmental solution. Together, we recycled the equivalent of nearly five mil lion trees and reused more than two million tires in 2007. 7 8 ST. LANDRY PARISH, LOUISIANA IESI started serving the communities of St. Landry Parish, Louisiana when we were awarded an exclusive five-year contract for all residential, roll-off and front-load collection. Finding and switching to a new waste services provider for more than 33,000 homes and thousands of businesses was a challenge that kept Katry Martin, Executive Jeanette M. Olman Dispatcher, lESI DirectoroftheSolid Keasha Boxie O~ce Manager, I£SI Waste Board in St. Landry Parish, awake at night. The growing parish needed to partner with a company that had the right experience to serve its citizens, not just today but for years to come. "We heard that IESI had done a good job in neighboring communities and it was apparent that it was a responsible and responsive bidder"says Mr. Martin.'lESl became a partner at the right moment in time when it became obvious that waste collection was beginning to deteriorate in the parish:' Even before introducing service, IESI started preparing itself in order to ensure a seamless transition. The community appreciated this extra effort. "Everything I ESI promised has come to pass;' says Mr. Martin.*We have been overwhelmed with positive comments from our citizens and IESl has done a very good job for our business community too:' The parish feels comfortable that IESI will meet its waste services needs regardless of how quickly its population grows. "We don't have a fear of the future with IESI," says Mr. Martin.~We feel they will be here for the long haul and we expect to enjoy a long-term relationship." GREATER NEW ORLEANS, LOUISIANA In 2007, as we continued to invest for our future growth, we purchased a waste management company in Slidell, Louisiana, just north of New Orleans. The operations gave us entry into a new market and complemented our existing operations in the broader Louisiana area. We now serve approximately 80,000 homes, as well as commercial and industrial customers in communities throughout greater New Orleans. One of these communities is the City of Mandeville. As the city grows in size and prosperity, its need for a reliable waste services provider is growing too. Mandeville wants to stand out from other coastal communities as a place to live and visit - keeping the city clean is part of its strategy to attract more residents and visitors in the future. Experience has taught Mandeville Mayor Edward Price that not every waste services provider is the same. In the past, the city faced challenges with providers whose service was not consistent or thorough."We needed a reliable company like IESl that had a plan for operating in the community," he says. We developed a collection plan for Mandeville that scheduled different pick-up days for each quadrant of the city."lESl's daily presence is important and has created a lot of confidence in the community," says Mayor Price. Our commitment to the community is anchored in our belief that we must always be a good neighbor. We sponsor Keep Mandeville Krisralyn Holden Beautiful, an affiliate of Keep America Beautifule, as we do in many other cities in order to address litter reduction, beautification and community environmental awareness. Mayor Price believes that planned and managed growth will protect the quality of life that the community values. He often says that, UA comm unity that fails to plan, plans to fail." We are proud to help keep Mandeviile, and all of the communities we operate in, beautiful for citizens today and for generations to come. 10 7-ELEVEN CANADA, INC. Since opening its first store on June 29, 1969, 7-Eleven Canada, Inc. has had a single focus: to provide its customers with the products and services that they want, when they want them, and in a clean, safe and friendly environment. This is not a simple task for a company that operates close to 500 stores from British Columbia to Ontario that are open 24 hours a day, 7 days a week. What makes it even tougher is that 7-Eleven Canada is growing, as convenience and quality become increasingly important Sonny Akyan Mechanic, BFI Canada in today's time- GersonLiw~g Mechanic, BFIConodo constrained society. BFI Canada works behind-the-scenes to help this leading retailer maintain its high standard for super-clean stores while it grows by providing nomhazardous solid waste collection and recycling services to all 7-Eleven Canada stores across the country, 7-Eleven Canada believes that the most important trait for a waste services provider to possess is integrity, it wants to work with a partner that can be trusted to deliver timely, responsive and cost-effective services - now and in the future. "BFI Canada treats us fairly, responds to us quickly, and does what it says it will do?says Mike Sugden, Division Facilities Manager, Canada Division."As a consequence, our relationship runs smoothly and they have earned the opportunity to serve us as we grow. In my view, it is BFI Canada's people that make it work so well:' ADDRESSING A NATIONAL OPPORTUNITY We know that every Customer has a unique set of waste management challenges. When a company grows, those challenges become greater and when that company becomes national, it needs an integrated solution that will comply with local environmental regulations - and the high standards of performance expected by the corporate head office. Based on this knowledge, we recognize that one of our challenges for the future is to manage our business so it can address the ever-changing local and national needs of our customers. To meet this challenge, we've insisted on keeping decisiommaking authority in the hands of our local teams who have direct knowledge of, and can respond quickly to, the local service needs of their customers. We've also entered new North American markets and increased our presence within those markets so we can be of greater service to national customers. And we constantly review acquisition opportunities that would further expand our footprint within existing territories and in new markets. To make our service offering match the needs of our customers' corporate head offices, we provide consolidated billing, electronic invoicing, customized monthly reporting and a single point of contact through our National Accounts program. We've also equipped our teams with tools that allow us to perform waste audits, formulate waste reduction work plans and develop recycling and organics solutions on a local and national basis. As we grow, we will continue to challenge ourselves to offer the best, most efficient and environmentally responsible solid waste solution for multi-location customers - one location at a time. Richard Poirier District Manager, BFI Canada 11 12 CREATING A SUSTAINABLE FUTURE In 2007, we diverted the equivalent recyclables of nearly five million trees from landfills, beneficially reused more than two million tires, generated enough equivalent energy to power approximately 17,500 homes annually, and invested millions of dollars to upgrade our fleet and make our trucks as environmentally responsible as possible. We did all of this because it was the right thing to do. Our corporate challenge is the same challenge that we all face as citizens - trying our best to harmonize with natu re and preserve the world for our children. We are addressing the future by adopting sustainable practices throughout our operations. As the operator of 22 landfill sites in Canada and the U.S., we are in a position to reduce greenhouse gas emissions and are putting in place the technology to do just that. We operate landfill gas recovery systems at six landfill sites and will implement similar systems at several of our other sites in 2008. On our two largest landfill sites - Seneca Meadows in central New York and Lachenaie outside Montreal - we operate landfill gas-to-energy plants. Seneca Meadows and Lachenaie are at the forefront of landfill innovation. At Seneca Meadows, 18 generators produce 17 megawatts of electricity per hour. We have also dedicated 200 acres to a "Renewable Resource Park"which will be home to businesses such as H2Gro, a hydroponic greenhouse company that will use the heat from the engines in our waste-to-energy plant to produce vegetables. In 2007 we received a permit that extends the life of Seneca Meadows into 2023, allowing us to continue serving the needs of the NewYork population and contributing to the Seneca Falls community. At Lachenaie, our gas recovery systems provide a capture rate of emissions in excess of 90%. From our engine building onsite, we generate four megawatts of electricity per hour, enough to power 2,500 homes annually, and deliver much of this energy straight into the Quebec electrical grid. Seneca Meadows and Lachenaie are just two examples of how landfills can make a difference for the environment. Going forward, we plan to build gas-to-energy plants at our other sites as our landfills develop, and we will continue seeking out and developing new technologies to improve the environmental performance of all of our Pete Jani$ Material Recycling FddfiO, Manager, IESI landfills. For example, at our Calgary, Alberta landfill, we are introducing a methane oxidation process to reduce methane greenhouse gas emissions. For BFI Canada and IESI, the environment and the community are synonymous: care for the environment, and the communities we serve benefit and prosper; treat our communities with respect, and the environment will be safeguarded. This doesn't just mean being first-rate environmental stewards; it means raising the profile of the environment in our communities and raising awareness among our employees and our neighbours. Helping to make our communities a better place to live benefits us all. CONTRIBUTING TO OUR COMMUNITIES Giving back in more ways than one is our way of being a good neighbour. We are proud of the resources we bring to our communities. In all of our communities, we work with local suppliers and contractors to create and sustain local jobs. We make donations, both at the corporate and local level, to many charitable organizations. We typically provide hosting fees to the local communities in which we operate landfills, which has helped build community centres, skating rinks and libraries. And every year, we offer scholarships to students of environmental technology and environmental science. Aside from financial contributions, we also donate our resources. Our people volunteer their time to clean-up projects in their cities and to local clubs and boards. We also give of our time to teach. We have worked in partnership with school boards and schools in both Canada and the U.S. to enhance their environmental curriculum. At our Lachenaie landfill site, we have reached thousands of students through our Mobius program and taught them about the benefits of recycling. At Seneca Meadows, we are constructing a community education center that is scheduled to open in 2008. It will include a fully equipped science laboratory and an educational exhibit room that will educate students and other members of the community about wetlands, recycling, waste management, alternative energy, environmental protection and environmental monitoring, 13 14 BFI Canada Income Fund - MD&A for the year ended December 31, 2007 Disclaimer This document may contain forward-looking information relating to the operations of BFI Canada Income Fund (the "Fund") or to the environment in which it operates, which are based on estimates, forecasts, and projections. Forward-looking information is not a guarantee of future performance and involves risks and uncertainties that are difficult to predict, or are beyond the Fund's control. A number of factors could cause actual outcomes and results to differ materially from those estimated, forecast or projected. These factors include those set forth in the Fund's Annual Information Form ("AIF") for the year ended December 31, 2007. Consequently, readers should not rely on such forward-looking statements. In addition, these forward-looking statements relate to the date on which they are made. Although the forward-looking information contained herein is based on what management believes to be reasonable assumptions, unitholders are cautioned that actual results may differ. Management disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise. Introduction The following is a discussion of the consolidated financial condition and results of operations of the Fund for the year ended December 31, 2007 and has been prepared with all information available up to and including March 6, 2008. All amounts are reported in Canadian dollars, unless otherwise stated. The consolidated financial statements {"financial statements") of the Fund have been prepared in accordance with Canadian generally accepted accounting principles ("GAAP"). This discussion should be read in conjunction with the financial statements of the Fund, including notes thereto, and management's discussion and analysis ("MD&A") for the years ended December 31, 2006 and 2005 filed on www. sedar, com. Corporate Overview The Fund, through its operating subsidiaries, is one of North America's largest full-service waste management companies, providing non-hazardous solid waste ("waste") collection and disposal services to commercial, industrial, municipal and residential customers in five Canadian provinces and ten states in the United States ("U.S."). The Fund provides service to over 1.8 million customers with vertically integrated collection and disposal assets. The Fund's Canadian segment operates under the BFI Canada brand and is Canada's second largest full-service waste management company providing vertically integrated waste collection and disposal services in the provinces of British Columbia, Alberta, Manitoba, Ontario, and Quebec. This segment provides service to 20 Canadian markets and operates five landfills, four transfer collection stations, seven material recovery facilities ("MRFs"), and one landfill gas to energy facility. The Fund's U.S. south and northeast segments, collectively the U.S. segment or U.S. segments, operate under the IESI brand and provide vertically integrated waste collection and disposal services in two geographic regions: the south, consisting of various service areas in Texas, Louisiana, Oklahoma, Arkansas, Mississippi, and Missouri, and the northeast, consisting of various service areas in New York, New Jersey, Pennsylvania, and Maryland. This segment provides service to 38 U.S. markets and operates 17 landfills, 31 transfer collection stations, 10 MRFs, and one transportation operation. The Fund makes cash distributions to unitholders based on all amounts received by the Fund, and IESI Corporation ("lESl"), an indirect subsidiary of the Fund, pays equivalent dividends to participating preferred shareholders ("non- controlling interest"). Distributions and dividends are determined by the Trustees from time to time. The Fund's declaration of trust provides that distributions declared are to be paid on or about the 15~h day of the succeeding month (see Disclosure of outstanding trust unit data for additional details). 15 Highlights - For the year ended December 31, 2007 (all amoun ts are in thousands of Canadian dollars, except per trust unit and participating preferred share (#PPS~), unless otherwise stated) Financial highlights Year ended December 31 i~ ~2007.~¢~ 2006 Operating results Revenues Operating expenses Selling, general and administration expenses CSG&A") Income before the following CEBITDA(^)'') Amor:ization Interest on long-term debt Financing costs Net gain on sale of capital assets Net loss on financial instruments Net foreign exchange loss (gain) Other expenses Income before income taxes and non-controllin~ interest Non-controlling interest 771,819 436,311 99,591 235,917 79 (443) 3,363 (2,578) 210 52,851 12,917 7,191 Net income 32,743 Net income per weighted average trust unit, basic & diluted Trust units and PPSs outstanding Weighted average number of trust units outstanding Weighted average number of PPSs outstanding Weighted average number of trust units and PPSs outstanding Aggregate number of trust units and PPSs outstanding S 0.61 53,506 11,885 65,391 Maintenance and growth expenditures Maintenance capital and landfill expenditures ("maintenance expenditures") - (see page 24) Growth capital and landfill expenditures Cc~ rowt h expenditures") Total maintenance and growth expenditures S 52,504 77,372 129,876 Operating and free cash flow Cash generated from operating activities Free cash flow available for distributionI~) (see page 23) Free cash flow available for distributionIaI per weighted average trust unit and PPS Distributions and dividends Distributions declared, trust units Dividends declared, PPSs S 185,698 S 141,857 $ 2.17 S 93,721 20,582 Total distributions and dividends declared ? $ ~;~ 123,326~ $ 114,303 Total distributions and dividends declared per weighted average trust unit and PPS .75 16 Financial highlights for the year ended December 3 I, 2007 Increase in consolidated revenues Total consolidated revenue percentage increase Total consolidated revenue percentage increase, excluding the impact of foreign currency translation Total consolidated EBITDA(^1 percentage increase, excluding the impact of foreign currency translation increase in cash generated from operating activities Increase in free cash flow available for distribution(B) Percentage increase in free cash flow available for distribution~B) Payout ratio Payout ratio, excluding the effect of foreign currency hedge agreements Other highlights · Effective August 31, 2007, the Fund acquired Winters Bros. Waste Systems, Inc. ("Winters Bros.") for total cash consideration of approximately U.S. $277,200. · Effective August 31, 2007, the Fund amended its U.S. long-term debt facility. Concurrently, the Fund's U.S. $160,000 note receivable ("U.S. note") from IESl was effectively cancelled through a restructuring. · Effective August 28, 2007, the Fund received all of the necessary permits for the expansion of its Seneca Meadows landfill. · Effective August 31, 2007, the Fund received an operating permit to continue accepting waste at its Calgary landfill through 2010. · Effective April 5, 2007, the Fund closed a 3,565 trust unit offering, inclusive of the exercised over-allotment option, for net proceeds of approximately $87,600. Proceeds from the offering were used to repay U.S. revolving credit facility advances. · Effective March 21, 2007, the Fund amended its Canadian long-term debt facility. · Effective March 28, 2007, the Fund entered into a new 15 year agreement for variable rate demand solid waste disposal revenue bonds ("IRBs") in the state of Texas. · For the year ended December 31, 2007, and excluding the acquisition of Winters Bros., the Fund completed 17 acquisitions. · The Trustees continue to actively work with management to review the Fund's corporate structure in light of changes to the taxation of income trusts as it relates to the Fund's continuous improvement and growth strategy. To date no definitive conclusions have been reached. 17 Review of Operations - For the year ended December 31, 2007 (all amounts are in thousands of Canadian dollars, except foreign currency exchange rate amounts, unless otherwise stated) Foreign Currency Exchange Rates The Fund reports its financial results in Canadian dollars, and consequently changes in the foreign currency exchange rate between Canada and the U.S. impacts the translated value of the Fund's U.S. operating results. U.S. operating results are translated to Canadian dollars using the current rate method of accounting which applies the average foreign currency exchange rate in effect between Canada and the U.S. during the reporting period. U.S. assets and liabilities are translated to Canadian dollars at the foreign currency exchange rate in effect at the consolidated balance sheet date. Translation adjustments are included in other comprehensive (loss) income and are only included in the determination of net income when a reduction in the Fund's investment in its foreign operations is realized. Effective August 31, 2007, concurrent with the closing of the Winters Bros. acquisition and U.S. long-term debt facility amendment, the Fund's U.S. note was cancelled. The resulting realized foreign exchange loss, approximately $7,700, is recorded in the consolidated statement of operations and comprehensive (loss) income. The U.S. segments' financial position and operating results have been translated to Canadian dollars applying the following foreign currency exchange rates: March 31 June30 September30 December31 Cumulative Current Average Avera~le $ 1.167 $ 1.155 $ 1.155 S 1.115 $ 1.122 S 1.138 $ 1.115 S 1.121 $ 1.133 $ 1.165 $ 1.139 $ 1.134 Foreign Currency Hedge A significant portion of the Fund's operating results, maintenance expenditures, interest on long-term debt, and cash income taxes reported in Canadian dollars, originate in the U.S. Operating expenses, maintenance expenditures, interest on long-term debt, and cash income taxes originating in the U.S. are settled in U.S. dollars generated from U.S. operations which results in a natural cash flow hedge. A portion of the resulting free cash flow available for distribution~B) is hedged by three single rate hedge agreements through February 2008 to purchase 4,$00 Canadian dollars monthly at an average foreign currency exchange rate of approximately $1.222. The purpose of these hedge agreements is to protect a portion of Canadian dollar denominated distributions, which are supported by U.S. dollar denominated cash flows, from fluctuations in the foreign currency exchange rate between Canada and the U.S. The Fund has not designated these derivative financial instruments as a hedge. Accordingly, changes in the fair value of these derivative financial instruments, non-cash items, are included in the determination of net income. Foreign Currency Exchange Impact on Consolidated Results Readers are reminded that a significant portion of the Fund's financial results originate in the U.S. The following table has been prepared to assist readers in assessing the impact of foreign currency exchange on the Fund's consolidated results for the year ended December 31, 2007. 18 Organic growth, acquisitions Impact of and other foreign non- currency operating exchange changes Financial highlights Revenues Operating expenses SG&A income before the following ("EBITDA(^)") Amortization Interest on long-term debt Financing costs Net gain on sale of capital assets Net loss on financial instruments Net foreign exchange loss (gain) Other expenses S (32,582) S 178,120 (19,987) 115,290 (3,854) 14,471 (8,741) 48,359 (5,804) 18,682 (1,817) 10,474 (114) 7,227 52 (1,043) (536) 6,557 209 16,040 (3) (159) Income before income taxes and non-controlling interest (10,147) (728) (9,419) Income tax expense 190 (8,410) Non-controlling interest (871) Net income $ . (1;056) $ (918) $ (138) '$ :q7;887: S $ 47,887 S (17,653} $ 65,222 $ (14,929) $ 65,011 Review of Operations Revenues-Canada Revenues-U.S. south Revenues-U.S. northeast Operating expenses - Canada Operating expenses - U.S. south Operating expenses- U.S. northeast S S 28,740 S (11,462) S 38,522 S (8,525) S 48,028 SG&A - Canada $ $ 1,418 SG&A - U.S. south $ (2,286) S 6,459 SG&A - U.S. northeast $ (1,568) $ 6,594 Cash generated from operating activities Free cash flow available for distributionm) (see page 23) (5,089) $ 36,806 $ (4,565) $ 31,194 Maintenance and growth expenditures Total Maintenance - Canada Maintenance - U.S. Growth - Canada Growth - U.S. (6,063) $ 29,672 S 1,525 (2,049) S 4,483 $ (5,250) (4,014) S 28,914 Notes: U.S. segment results, stated in U.S. dollars, for the year ended December 31, 2007 multiplied by the difference average foreign currency exchange rates. between the 2007 and 2006 The discussions to follow are in addition to the impact of foreign currency exchange fluctuations detailed in the table above. Revenues 19 Year ended December 31 Canada U.S. south U.S. northeast 2006 $ Change $ 771,819 $ 145,538 288,640 S 47,887 267,121 $ 47,569 216,058 $ 50,082 The increase in consolidated revenues for the year ended is due in part to organic Canadian and U.S. segment growth, approximately $35,000 and $35,600 or 12.6% and 7.5%, respectively, where organic growth excludes the impact of fuel and environmental surcharges, acquisitions and foreign currency translation. Revenue growth attributable to acquisitions and fuel and environmental surcharges accounts for the balance of the increase. The Fund's U.S. northeast segment experienced some revenue softness at its landfills in the latter half of the year. The decline is due to an increase in overall disposal capacity within the segment coupled with an overall economic softening in the region leading primarily to lower volumes entering Fund-owned landfills. The unfavourable impact of foreign currency translation was partially offset by higher fuel and environmental surcharges. Operating expenses Year ended December 31 Canada U.S. south U.S. no~heast ~2007~?~ 2006 $Chan~e 436,311 $ 95,303 146,565 $ 2&740 177,263 $ 27,060 112,483 $ 3~803 Higher total disposal and labour costs amount to approximately $60,300 and $28,600, respectively, and are attributable to higher internally collected waste volumes and higher costs to service new and existing customers, contracts, and acquisitions. The balance of the change is due principally to higher vehicle operating costs and repairs and maintenance expense partially offset by a decline in insurance and equipment and facility rent. SG&A Total Canada U.S.$outh U.S. no~heast $ 40,086 $ 1,418 S 36,570 $ 4,173 $ 22,935$ 5,026 Higher total salaries represent approximately $8,000 of the total increase. Acquisition and organic growth are the primary reasons for the increase in total salaries. Higher facility and office costs and travel expenditures, as a result of acquisition and organic growth, are the primary reasons for the balance of the change. 2O Amortization Year ended December 31 ~ ~ ~- ~ 2007~.~ 2006 $ Change Total $ 148,128 S 12,878 Canada S $6,215 $ 1,323 U.S. south $ 45,193 $ 5,368 U.S. noKcheast $ 46,720 $ 6,187 Higher amortization totaling approximately $12,900 is due in large part to acquisitions and acquired growth capital through 2006 and 2007. Interest on long-term debt Year ended December 31 2007 · ~ 2006 $ Change Total Canada U.S. 32,397 34,307 $ 8,657 g, 120 $ 1,447 25,187 $ 7,210 Financing growth expenditures, working capital, and acquisitions, partially offset by the application of net proceeds from the Fund's trust unit offering against U.S. revolving credit facility advances and lower borrowing costs attributable to IRB financings completed in the year, are the primary causes of the increase in interest expense for the Fund's U.S. segment. Financing growth expenditures, working capital, and acquisitions has also increased interest expense for the Fund's Canadian segment. Financing costs Year ended December 31 2006 $ Change Total Canada 192 $ $ $ 79 $ 7,113 79 $ 71 7,042 Financing costs were incurred to amend the Fund's U.S. and Canadian revolving credit facilities and to raise IRBs in the state of Texas. Net gain on sale of capital assets Year ended December 31 ~ 2007~%' 2006 $ Change Total $ (443) $ (991) Canada $ (77) S (431) U.S. $ (366) $ (560) The disposition and replacement of landfill equipment in Canada and the U.S. and the sale of certain equipment in the U.S. resulted in the net gains on sale. Net loss on financial instruments 21 Year ended December 31 Total Canada 2006 $ 3,363 $ 6,021 $ S (176) $ 3,363 S 6,197 Effective January 1, 2007, the Fund adopted the Canadian Institute of Chartered Accountants ("CICA") accounting standard for financial instruments. This standard resulted in the Fund recognizing and measuring fair value changes in certain financial assets and liabilities. The transitional provisions of this standard did not require retroactive application and accordingly no amounts were recognized in the Canadian segment for the comparative year. The Canadian segment gain on financial instruments relates to changes in the fair value of funded landfill post~ closure costs, approximately ($200). U.S. segment losses are due largely to interest rate swaps, approximately $8,300. A comparative reduction in losses on foreign currency exchange agreements and old corrugated cardboard ("OCC") hedge agreements accounts for the balance of the change. Net foreign exchange loss (gain) Year ended December 31 2006 S Change Total Canada S (2,s78) $ 16,249 S 94 $ 17,296 S (2,672) $ (1,047) For the period from January 1 through August 31, 2007, the Fund's U.S. note was translated as if it was a third-party foreign currency trade balance. The resulting net unrealized and realized foreign exchange losses on translation of the U.S. note, approximately $9,700 and $7,700, respectively, were recorded in the Fund's Canadian segment results. Net foreign exchange gains realized by the Fund's U.S. segment are principally attributable to gains realized on the settlement of foreign currency exchange agreements. Other expenses Year ended December 31 2006 Total Canada U.S, S 210 Other expenses are comprised of various management bonus costs related to certain acquisitions. $ Change 210 S (162) $ (162) 22 Income tax expense Year ended December 31 2006 $ Chan~;e Total Canada $ 12,917 $ (8,220) $ 5,885 $ 2,206 $ 7,032 $ (10,426) Current income taxes increased approximately $3,300, for the Fund's Canadian segment, and was partially offset by an approximately $1,100 decline in future income tax expense. Cash taxes payable by certain Canadian operating subsidiaries is the primary cause of the increase in current income taxes. A rise in unutilized tax loss carryfowards in certain Canadian nomoperating subsidiaries was partially offset by the erosion of tax loss carryforwards in certain Canadian operating subsidiaries, and collectively are the primary reasons for the decline in future income tax expense. The increase in U.S. segment income tax recoveries is due almost entirely to a decline in future income tax expense, approximately $10,300. The decline in future income tax expense is the result of a decline in non-deductible expenses, approximately $3,300, coupled with recoveries recognized on U.S. to Canadian GAAP adjusted balances, approximately $4,500, comprised principally of movements in capitalized interest amounts and financing cost expense. The balance of the change is due largely to a decline in valuation allowances recognized in the prior versus current year. Non-controlling interest The non-controlling interest's share of net income amounts to $6,320 (2006 - $7,191) for the year ended December 31, 2007. Non-controlling interest, recorded on the Fund's consolidated balance sheet, represents the initial value of issued PPSs, net of exchanges and cancellations since issuance, plus or minus the non-controlling interest's share of net income or loss, transition adjustments, and distributions declared. Financial highlights - For the three months ended December 31, 2007 (all amounts are in thousands of Canadian dollars) Three months ended December 31 Revenues Operating expenses SG&A 2006 U.S. Canada U.S. south northeast Total 74,943 $ 70,097 S 55,279 S 200,319 38,573 45,260 28,045 111,878 12,199 10,138 5,869 28,206 Income before the following Amortization Interest on long-term debt Net gain on sale of capital assets Net loss on derivative financial instruments Net foreign exchange gain Other expenses Nomcontrollin~) interest Net income 24,171 14,699 21,36S 6~235 37,297 9,311 (34) 3,902 (8,629) 23 18,365 6,351 1.846 $4922 S 10,168 23 Review of Operations - For the three months ended December 31, 2007 Revenues The increase in consolidated revenues is due in part to solid organic Canadian and U.S. segment growth of 14.6% and 7.7%, respectively, coupled with contributions from acquisitions and fuel and environmental surcharges, approximately $72,700. The U.S. segment revenue increases were partially offset by a decline in the average foreign currency exchange rate versus the comparative quarter, approximately $22,000. The Fund's U.S. northeast segment experienced a decline in landfill revenues quarter over quarter. The decline is due to an increase in overall disposal capacity within the segment coupled with an overall economic softening in the region leading primarily to lower volumes entering Fund-owned landfills. Operating expenses Higher total disposal and labour costs amount to approximately $27,200 and $9,100, respectively, and are attributable to higher internally collected waste volumes and higher costs to service acquired, new and existing customers. The balance of the total change is due principally to higher vehicle operating costs and repairs and maintenance expense partially offset by a decline in the average foreign currency exchange rate. SG&A Higher total salaries represent approximately $1,200 of the total increase. Acquisition and organic growth are the primary reasons for the increase in total salaries. Higher facility and office costs and travel expenditures, as a result of acquisition and organic growth, also contributed to the increase. U.S. segment SG&A increases were partially offset by a decline in the average foreign currency exchange rate. Amortization An approximately $3,100 increase in total capital asset amortization was offset by a similar decline in landfill asset amortization. Capital asset purchases to service existing and new customers, including capital assets acquired, is the primary reason for the comparative increase. Revisions to estimated landfill closure and post-closure cash flow obligations resulted in a reduction to accrued landfill closure and post-closure costs and a similar decline in amortization expense, and is the primary reason for the comparative decrease in landfill asset amortization. The balance of the change is attributable to an increase in intangible asset amortization due largely to intangibles recognized on various acquisitions completed in the current and prior year partially offset by a decline in deferred financing cost amortization. Explanations of quarterly changes for the following: interest on long-term debt, net gain on sale of capital assets, net loss on derivative financial instruments, net foreign exchange gain, other expenses, income tax expense, and non- controlling interest, are consistent with those outlined in the Review of Operations - For the year ended December 31,2007 section of this MD&A. Other Performance Measu res - For the year ended December 31, 2007 (all amounts are in thousands of Canadian dollars, excel; t per trust unit and PPS amounts) Free cash flow available for distribution~BI Purpose and objective The purpose of presenting this non-GAAP measure is to calculate the amount available for distribution to unitholders and non-controlling interests. The Fund's primary objective is to grow free cash flow. 24 Change in calculation Effective July 6, 2007, the Canadian Securities Administrators ("CSA") amended National Policy 41-201 - Income Trusts and Other Indirect Offerings. Amended policy changes, which includes the concept of maintaining productive capacity, have resulted in a change to the Fund's calculation of free cash flow available for distribution~B~. The Fund has historically viewed costs to maintain the productive capacity of its limited life landfills as a cost funded from excess free cash flow available for distribution~cl. Accordingly, these amounts have not been included in the Fund's determination of free cash flow available for distribution~BI. Costs incurred to maintain the productive capacity of landfills are included in the Fund's landfill asset amortization rate per tonne and effective July 6, 2007 the Fund has elected to charge these amounts to the calculation of free cash flow available for distribution~B~. The impact of this change is reflected through all free cash flow available for distribution~B~ amounts disclosed in this MD&A. Costs incurred to develop a replacement or new landfill site are deferred until such time as the site is successfully permitted. Upon successful permitting, these costs are included in the Fund's landfill asset amortization rate per tonne and are charged to free cash flow available for distribution(BI. Costs included in the Fund's landfill asset amortization rate per tonne are subject to estimates and assumptions, including but not limited to cost projections and estimated disposal capacities. At least annually, management updates both cost and disposal capacity estimates based on projections or invoices received, the procurement of similar service, its historical and current pattern of spending, management's planned course of action, and survey information provided by independent engineers. The impact of changes in both cost and disposal capacity estimates is accounted for prospectively and is reflected through the Fund's determination of free cash flow available for distribution181 on a similar basis. Obtaining future disposal capacity expansions is critical to the maintenance of a landfills' productive capacity. These expansions, and the related costs, are contingent upon economic, political, environmental and social factors, some of which are out of management's control. In the event the Fund is not successful in securing an expansion, it may have to develop or acquire additional disposal capacity and incur costs which differ materially from those currently estimated. The inherent variability of disposal capacity expansion costs may have a significant effect on the Fund's ability to generate and distribute cash at similar levels. Management remains confident that approval for its landfill expansions will be obtained prior to the expiry of its current permits and all estimates reflect this assumption. Payout ratio Management's distribution philosophy is to maintain an annual payout ratio which is less than 90.0%. The annual payout ratio represents the percentage of distributions and dividends declared divided by free cash flow available for distributioncB~. Establishing an annual payout ratio which is less than 90.0% permits the Fund to use excess free cash flow available for distribution©, representing the difference between free cash flow available for distribution~B~ and distributions and dividends declared, for the following primary purposes: invest in strategic and accretive acquisitions; invest in growth capital; invest in infrastructure, including but not limited to new buildings; repay long- term debt to lower interest expense; absorb financing costs; and, maintain distributions during periods of lower earnings, lower cash flows and or periods of significant investment in maintenance expenditures or changes in working capital. Excess free cash flow available for distribution;c~ For the year ended December 31, 2007, the Fund used all of its excess free cash flow available for distribution©, excluding the repayment of long-term debt, for the purposes outlined above. Covenants The Fund is not in default of restrictive covenants or compliance matters on its term loan, revolving credit facilities, IRi3s and senior secured series A and B debentures ("debentures"), collectively the long-term debt facilities. Accordingly, the Fund is not restricted by its various long-term debt facilities to meet its current or anticipated distributions. An event of default, if not remedied, would typically result in the acceleration of repayment and ultimately restrict the Fund's ability to meet its current or anticipated distribution and dividend payments. Current and future income taxes The Fund has unutilized tax losses available to shelter future taxable earnings from income tax. Management actively monitors its unutilized tax losses resident throughout the structure and works with various advisors to derive the maximum benefit from its remaining unutilized tax losses. As unutilized tax losses are utilized or expire, the taxable earnings derived from the Fund's operating entities may be subject to tax. Accordingly, higher cash taxes will reduce the availability of free cash flow available for distribution~B~. Tax incurred on taxable earnings is included in current income tax expense in the Fund's consolidated statement of operations and comprehensive (loss) income. Long-term debt The Fund's long-term debt facilities have various dates of maturity. Under normal operating conditions, these facilities are not subject to scheduled principal repayment in advance of their maturity dates and the Fund expects to extend, renew or replace its current long-term debt facilities at or before maturity with similar or other long-term debt instruments or net proceeds derived from further trust unit offerings. Accordingly, the Fund does not include any principal repayment of its long-term debt facilities in the determination of free cash flow available for distribution(B). Distributions In periods where distributions and dividends declared exceed free cash flow available for distribution(BI, the Fund is permitted under its revolving credit facilities, subject to various restrictions, to borrow amounts to honour its declared distribution. In the event that monies were not available from the Fund's revolving credit facilities, the Fund would consider curtailing all or a portion of its current and or future distributions. The Fund's distribution philosophy is to distribute less than 90.0% of free cash flow available for distributionIBI in a given year. The Fund has no intention or ability to satisfy its distributions through revolving credit facility advances for a prolonged period of time. Results Free cash flow available for distribution(~ totaled $168,486 for the year ended December 31, 2007 versus $141,857 (see Other Performance Measures - Free Cash Flow Available for Distribution~ - Change in calculation section of this MD&A) for the comparative year ended December 31,2006. The resulting increase is due in large part to higher cash generated from operating activities, approximately $31,700, attributable to organic and acquisition growth. Higher cash generated from operating activities was due in part to an approximately $9,700 decline in non-cash working capital uses. The decline in working capital uses is due largely to fluctuations in foreign currency exchange rates. The add back of financing costs absorbed through revolving credit facility advances, approximately $7,900, was partially offset by the net change in landfill closure and post-closure costs. The net change in landfill closure and post-closure costs is due principally to the timing of expenditures when compared to the previous year. Higher maintenance expenditures also contributed to the comparative change, details of which are included in the Other Performance Measures - Maintenance and growth expenditures section of this MD&A. The realized foreign currency exchange loss on the U.S. note was recorded on its cancellation. Free cash flow available for distribution(~/per weighted average trust unit and PPS for the year ended December 31, 2007 amounted to $2.48 and is $0.31 higher than the comparative year ended December 31,2006. 26 Free cash flow available for distributionIm- cash flow approach Cash generated from operating activities (per statement of cash flows) Operating Changes in non-cash working capital items Net change in landfill closure and post-closure costs12) Maintenance expenditures Financing Amortization of gain on settlement of bond forward contracts Financing and deferred costs (net of non-cash portion} Effect of foreign currency hedges to support Canadian dollar distributions Realized foreign exchange gain Realized foreign exchange loss on U.S. note Year ended December 31 $ 185,698 S 31,717 3,529 (9,706) 4,546 (8,657) (52,504) (3,959) 224 (847) 7,910 3,885 2,662 {2,674) (1,031) 7,693 Free cash flow available for distributionlB) 68~486' $ 141,857 $ 26,629 Notes: Net change in landfill closure and post-closure costs exclude acquired landfill closure and post-closure costs, foreign currency translation adjustments, revisions to estimated cash flows recorded to operating expense, and amounts reimbursable by various holders of PPSs. Canadian Securities Administrators ('CSA') Staff Notice 52-306 and National Policy 41-201 concludes that distributable cash or free cash flow available for distribution~m is, in all circumstances, a cash flow measure, and that distributable cash is fairly presented only when reconciled to cash flows from operating activities as presented in the issuer's financial statements. To arrive at free cash flow available for distributionIBIvarious adjustments, all of which are derived from actual financial results, are made to cash generated from operating activities, details of which are as follows: Operating Changes in non-cash working capital items: management of the Fund expects changes in non-cash working capital items to be insignificant year over year. Various working capital items, including but not limited to the timing of receivables collected and payment of payables and accruals, can have a significant impact on the determination of free cash flow available for distribution~BI. Accordingly, management excludes the impact of changes in non-cash working capital items to remove the resulting variability of including such amounts in the determination of free cash flow available for distribution~. Realized changes in working capital are typically funded from excess free cash flow available for distribution© or the Fund's revolving credit facilities. Net change in landfill closure andpost-closure costs: amounts capitalized to landfill assets in respect of landfill closure and post-closure costs are immediately amortized. Amortization of landfill assets represents an item not affecting cash in the determination of cash generated from operating activities. In addition, landfill closure and post-closure expenditures are removed from the determination of cash generated from operating activities. It is management's intention to effectively charge unitholders with the accrued costs of closure and post-closure obligations as they are incurred. It is management's view that closure and post-closure accruals are obligatory in nature even though there is some discretion as to when these obligations are satisfied. Accordingly, management deducts the net change in landfill closure and post-closure costs from cash generated from operating activities. Maintenance expenditures: see Other Performance Measures - Maintenance and growth expenditures section of this MD&A. Financing Amortization of gain on settlement of bond forward contracts: the Fund realized a gain on the settlement of two bond forward contracts in the second quarter of 2004. The bond forward contracts were entered into in advance of closing the debt private placement to manage the risk of interest rate volatility prior to its closing. For accounting purposes, the Fund recognized a $1,550 gain on the settlement of the bond forward contracts. Management is of the view that the gain is directly related to the underlying debt private placement and the gain is therefore amortized to free cash flow available for distribution~B~ on a basis consistent with the terms of the underlying debt. 27 Financing and deferred costs (net of non-cash portion): financing costs represent costs incurred to amend long-term distribution or the debt facilities. These amounts are typically funded from excess free cash flow available for · ~c~ Fund's revolving credit facilities. Effect of foreign currency hedges to support Canadian dollar distributions: the Fund has three single rate hedge agreements to protect a portion of its Canadian dollar denominated distributions, which are supported by U.S. dollar denominated cash flows, from fluctuations in the foreign currency exchange rate between Canada and the U.S. Realized foreign exchange gains are included in net foreign exchange loss or (gain) in the Fund's consolidated statement of operations and comprehensive (loss) income. Realized gains or losses affect the Fund's ability to distribute cash and accordingly management includes realized gains or losses on foreign currency hedges in the determination of free cash flow available for distribution(BI. Realized foreign exchange gain: realized foreign exchange gains are included in the determination of cash generated from operating activities. These amounts are also included in the effect of foreign currency hedges to support Canadian dollar distributions. Accordingly, realized foreign exchange gain amounts are removed from the determination of free cash flow available for distributionIBI to avoid including the benefit twice. Realized foreign exchange loss on U.S. note: the realized foreign exchange loss did not result in the payment of cash to a third party and does not affect the Fund's ability to distribute cash. Free cash flow available for distributionIBI - operations approach Trustees and management of the Fund typically calculate free cash flow available for distributionc~ using an operations approach. Management views EBITDA~^1 as a proxy for cash derived from operations and is required under the terms of its long-term debt facilities to prepare a similar calculation for its lenders. Accordingly, Trustees and management continue to use the operations approach when calculating free cash flow available for distribution~1 and when assessing the Fund's payout ratio. EBiTDAiAI $ 235,917 $ 39,618 Amortization of capitalized landfill asset closure and post<losure costs, including revisions to estimated cash flows not recorded to operating expense Interest on long-term debt Management transaction bonuses (other expenses) Current income taxes Maintenance expenditures Effect of foreign currency hedges to support Canadian dollar distributions Amortization of gain on settlement of bond forward contracts Free cash flow available for distribution(8) (5,538) (28) (34,307) (8,657) (210) 162 (5,610) (3,169) (52,504) (3,959) 3,885 2,662 224 141,857 $ 26,629 Amortization of capitalized landfill asset closure and post-closure costs, including revisions to estimated cash flows: see Free cash flow available for distribution~"~ - cash flow approach - Financing section of this MD&A. Interest on long-term debt: interest on long-term debt represents a cash cost of carrying long-term debt to finance the Fund's continuing operations. Interest on long-term debt reduces the amount of cash available for distribution as these monies are paid to the Fund's lenders. Accordingly, interest on long-term debt is deducted from EBITDA~^~ in the determination of free cash flow available for distribution~"l. Management transaction bonuses (other expenses): management transaction bonuses represent cash costs associated with fulfilling obligations to certain management that were not funded from proceeds of the related transaction. 28 Current income taxes: current income taxes represent a cash cost to the Fund in respect of provincial, state and federal taxes, including withholding taxes on certain payments received by the Fund from foreign sources. Current income taxes reduce the amount of cash available for distribution as these monies are paid to various government authorities. Accordingly, current income taxes are deducted from EBITDAI^l in the determination of free cash flow available for distribution~B~. Maintenance expenditures: see Other Performance Measures - Maintenance andgrowth expenditures section of this MD&A. Effect of foreign currency hedges to support Canadian dollar distributions: the Fund has three single rate hedge agreements to protect a portion of its Canadian dollar denominated distributions, which are supported by U.S. dollar denominated cash flows, from fluctuations in the foreign currency exchange rate between Canada and the U.S. Realized foreign exchange gains or losses are included in foreign exchange loss or (gain) in the Fund's consolidated statement of operations and comprehensive (loss) income. The realization of gains or losses on foreign currency hedges increases or reduces the amount of cash available for distribution as these monies are paid to parties to the hedge transactions. Accordingly, gains or losses on foreign currency hedges to support Canadian dollar distributions are included in or deducted from EBITDA~ in the determination of free cash flow available for distribution~B~. see Free cash flow available for distribution - cash flow Amortization of gain on settlement of bond fopward contracts: . ~B~ approach - Financing section of this MD&A. Free cash flow available for distribution~B~ - sources of funding In accordance with OSC National Policy 41-201, the following table compares both cash generated from operating activities and net income to distributions and dividends paid to unitholders and participating preferred shareholders. Year ended December 31 2006 2005 $ 18S,698 $ 124,656 Cash generated from operating activities Net income ) $ ~ 31;687 $ 32,743 $ 10,643 Distributions and dividends paid to unitholders and participating preferred shareholders $ 113,649 $ 97,545 Excess of cash generated from operating activities over distributions and dividends paid to unitholders and participating preferred shareholders Shortfall of net income over distributions and dividends paid to unitholders and participating preferred shareholders $ 72,049 $ 27,111 $ (80,906) $ (86,902) Cash generated from operating activities is significantly higher than distributions and dividends paid to unitholders and participating preferred shareholders. The use of the resulting excess free cash flow available for distributionIcl is outlined in the Free cash flow available for distribution~1 - cash flow approach, Payout ratio and Excess free cash flow available for distribution~c~ sections of this MD&A. 29 Free cash flow available for distributionmI - shortfall of net income over distributions paid Distributions paid to unitholders and participating preferred shareholders are in excess of net income for ail years presented in the previous table. The following table outlines the primary reasons for the shortfall. Year ended December 31 ~ ~2007~ 2006 2005 Shortfal[ of net income over distributions and dividends paid to unitholders and participating preferred shareholders 137) $ (80,906} $ (86,902) Distributions and dividends paid to unitholders include amounts paid to participating preferred shareholders while net income excludes the participating preferred shareholders ("non- controlling interests") share of net income. Accordingly, the non- controlling interests share of net income is added back to arrive at a similar basis of comparison. Non-controlling interest Subtotal Net income includes various non-cash items which have no effect on the Fund's ability to generate or distribute free cash flow. Net gain on sale of capital assets Net loss (gain) on financial instruments Net foreign exchange loss (gain) Future income tax (recovery) expense 7,191 3,062 (73,715) (83,840) (443) (127) 3,363 (10,361} (2,578) 10,081 7,307 (23,708) Subtotal Net income includes the payment of break fees related to the extinguishment of IESI indebtedness that was financed from proceeds of the transaction or financing fees incurred on the amendment of lending facilities which were financed from revolving credit facilities proceeds or excess free cash flow available for distribution(c). Financing costs Subtotal Amortization includes fair value adjustments for capital, landfill and intangible assets that are not required to sustain cash flows from operating activities. Amortization also includes amortization of deferred financing costs which were financed from proceeds of the related financing or from excess free cash flow available for distributionlO. Accordingly, all amortization amounts are added back and replaced with management's calculation of maintenance expenditures as outlined in the Other Performance Measures - Maintenc~nce and growth expenditures section of this MD&A. Amortization Maintenance expenditures (66,066) (107,955) 192 79 36,710 (65,987) (71,245) 148,128 145,974 (52,504) (45,398) Adjusted excess of net income over distributions and dividends paid to unitholders and participating preferred shareholders $ $ 29,637 $ 29,331 To arrive at excess free cash flow available for distributionI~l the following adjustments are made to the adjusted excess of net income over distributions and dividends paid to unitholders and participating preferred shareholders: amortization of capitalized landfill asset closure and post-closure costs, including revisions to estimated cash flows, deferred costs, effect of foreign currency hedges to support Canadian dollar distributions and amortization of gain on settlement of bond forward contracts. The rationale for each adjustment is outlined in the Other Performance Measures - Free cash flow available for distribution® - operations approach section of this MD&A. 3O Management of the Fund contends that distributions and dividends paid to unitholders and participating preferred shareholders excludes an economic return of capital and that no cash shortfall exists based on the rationale presented in the previous table. Distributions and dividends paid to unitholders and participating preferred shareholders were all funded from cash generated from operating activities. Management of the Fund is of the opinion that cash generated from operating activities will continue into the foreseeable future and expects such amounts will be sufficient to meet current annualized distribution and dividend amounts per trust unit and PPS as established by the Trustees. Return on investment and distributions Returns on an investment in trust units issued by the Fund are not comparable to returns on a fixed income security. The recovery of an investment in the Fund is at risk, and the total return is subject to the variability of many factors. Distributions are dependent on a variety of factors including the Fund's ability to operate effectively, the Fund's financial and cash flow performance, efficient and continued sources of financing, variable interest rates, fluctuations in working capital, sustainability of margins, maintenance expenditure requirements, the deductibility of intercompany interest for tax purposes, cash taxes, foreign currency exchange rates, and distribution levels established by the Trustees from time to time. In addition, the market value of the Fund's trust units may decline if the Fund is unable to meet its current or future distribution declarations or expectations and the resulting decline may be significant. Distributions are established by the Trustees from time to time and are not guaranteed. It is important for investors to consider all risk factors that affect the Fund and to assess the stability and sustainability of its distributions. Risk factors affecting the Fund are detailed in the Fund's Annual Information Form which is filed on www. sedar, com. The composition of the Fund's distributions may change over time and may affect an investor's after-tax rate of return. Distributions may contain both a return on and/or return of capital. Returns on capital are generally taxed as ordinary income or dividends in the hands of unitholders while returns of capital are generally tax-deferred and reduce the unitholders cost base of their original investment in trust units of the Fund. Maintenance and growth expenditures Year ended December 31 Total Maintenance: (see page 24) Canada U.S. 2006 $ Change 129,876 $ 23,609 $ 18,406 $ 1,525 34,098 2,434 Total maintenance ~3~t~ $ 52,504 $ 3,959 Growth: Canada $ 30,717 S (5,2S0) U.S. 46,655 24,900 $ 97,022 $ 77,372 $ 19,650 Total growth Maintenance and growth expenditures include amounts accrued for capital and landfill assets received but for which payment remains outstanding. Accordingly, total maintenance and growth expenditure amounts presented in the table above will differ from total capital and landfill asset purchases presented in the Fund's consolidated statement of cash flows. 31 Maintenance Maintenance expenditures generally represent the outlay of monies to sustain current cash flows. Maintenance expenditures typically include the replacement of existing capital assets, including vehicles, equipment, containers, compactors, furniture, fixtures and computer equipment. Maintenance expenditures also include a charge for the consumption and maintenance of landfill airspace calculated as follows: the cost of landfill airspace from the date of purchase together with estimated landfill construction costs, including costs to maintain landfill disposal capacity, for the balance of the landfill's permitted or deemed permitted useful life, is divided by the total remaining permitted or deemed permitted capacity, where capacity is measured in tonnes. The resulting amount is multiplied by capacity consumed in the respective period or year and represents the maintenance expenditure charge for the consumption of landfill airspace. The cost to construct and maintain landfill airspace is not linear. Accordingly, there may be periods or years where landfill construction and airspace maintenance costs exceed the maintenance expenditure charge for landfill airspace consumed. Landfill construction and airspace maintenance costs incurred in any period or year which exceeds the maintenance expenditure charge is reflected as growth expenditures. In periods or years where landfill construction and airspace maintenance costs are lower than the maintenance expenditure charge for landfill airspace consumed, the resulting difference is reflected as a reduction of growth expenditures. The Canadian segment increase is largely attributable to the replacement of landfill equipment at the Fund's Lachenaie landfill. The U.S. segment increase is due principally to a larger business base, which is the result of organic and acquisition growth, and increasing costs to purchase maintenance capital. Foreign currency exchange fluctuations partially offset the foregoing. Growth Growth expenditures generally represent the outlay of monies to generate new or future cash flows. Growth expenditures typically include the purchase of vehicles, equipment, containers, compactors, furniture, fixtures and computer equipment to support new contract wins and organic business growth, incurred landfill construction costs, including costs to maintain landfill disposal capacity, which exceed the maintenance expenditure charge for consumed landfill airspace are characterized as growth expenditures until airspace is consumed in a subsequent period or year. Growth expenditures are funded from excess free cash flow available for distribution(c) or from the Fund's revolving credit facilities. Canadian segment residential contract wins which commenced in 2006 exceeded those that commenced in 2007 resulting in a decline in comparative growth expenditures. The timing of landfill expenditures, primarily at the Seneca Meadows landfill, and an increase in municipal contract wins are the primary reasons for the U.S. segment increase in growth expenditures. Readers are reminded that revenue, EBITDA(^), and cash flow contributions derived from vehicles, equipment and container growth expenditures will materialize over the assets useful life. The Fund's typical pay back benchmark is three to five years. Maintenance expenditures - risks and uncertainties The Fund is required to maintain the productive capacity of various capital and landfill assets, including but not limited to vehicles and equipment and landfill disposal capacity. A failure to maintain or replace vehicles and equipment will typically result in higher operating and maintenance costs, and could impact revenues if the Fund cannot adequately service its customer base. A failure to maintain or replace landfill disposal capacity will ultimately result in a reduction of landfill revenues. The Fund is dependent on various suppliers to maintain satisfactory maintenance expenditure levels and costs. Supply disruptions or curtailments, rising procurement costs, the cost of technological advancement, government imposed regulation with regards to emissions or other regulations may impact revenues and operating costs, and all of these factors may impact free cash flow available for distribution~"~. 32 Distributions (all amounts ~re in thousands of Canadian dollars, except per trust unit and PPS omounts) The following table summarizes various details of the Fund's 2007 and 2006 distributions and dividends: Year ended December 31 Total trust unit Percentage Monthly Annual distributions increase in total distribution per distribution per and PPS distributions trust unit and trust unit and dividends and PPS Period PPS dividend PPS dividend declared dividends 2006 August-December $ 0.1515 $ 1.8180 $ 49,534 January-July $ 0.1415 $ 1.6980 S 64,769 S 114,303 The following tables present the Fund's payout ratio by quarter and annually and on a cumulative quarterly and annual basis, from inception: 2006 Q4 Q3 Q2 Q1 Total Free cash flow available for distribution181 (see page 23) $ 39,283 $ 38,762 $ 33,250 $ 30,562 $ 141,857 Distributions declared, trust units $ 24,369 $ 23,802 $ 22,775 $ 22,775 $ 93,721 Dividends declared, PPSs 5,351 5,227 5,002 5,002 20,582 Total distributions and dividends declared $ 29,720 $ 29,029 $ 27,777 $ 27,777 $ 114,303 Payout ratio 75.7% 74.9% 83.5% 90.9% 80.6% Cumulative payout ratio, from inception 84.3% 85.4% 86.8% 87.2% 84.3% 2005 Q4 Q3 Q2 Q1 Total Free cash flow available for distribution(BI (see page 23) $ 30,542 $ 32,913 $ 33,131 $ 24,151 $ 120,737 Distributions declared, trust units $ 21,595 $ 20,672 $ 18,739 $ 15,624 76,630 Distributions declared, subscription receipts 1,175 1,175 Dividends declared, PPSs 6,130 6,429 6,963 6,374 25,896 Total distributions and dividends declared $ 27,725 $ 27,101 $ 25,702 $ 23,173 $ 103,701 Payout ratio 90.8% 82.3% 77.6% 96.0% 85.9% Cumulative payout ratio, from inception 86.7% 86.0% 86.8% 89,2% 86.7% 33 Selected Annual Information (all amounts are in thousands of Conadian dollars, except per trust unit, PPS, and subscription receipt amounts) Year ended December 31 2006 2005 2004 Netincome Net income per trust unit, basic and diluted Total assets Total long-term liabilities Distributions and dividends declared, per weighted average trust unit, subscription receipt, and PPS 771,819 $ 677,424 $ 193,389 32,743 $ 10,643$ 19,962 0.61 S 0.22 S 0.75 1,766,660 $ 1,717,742 S 397,670 634,470 S 498,261 S 125,290 Notes: (3) Revenues have been reclassified to conform to the current year's presentation. Revenues 2004-2005 The increase of approximately $484,000 is due primarily to the acquisition and consolidation of IESI for the period January 21 to December 31, 2005. Contributions from the IESI acquisition totaled approximately $429,800. The balance of the increase is due in large part to Canadian segment acquisitions which contributed approximately $32,700 to the year over year change. The remainder of the increase relates to price increases, organic growth, higher fuel surcharges, and higher volumes of accepted waste entering Fund-owned landfills. 2005-2006 The increase in consolidated revenues is due in part to solid organic Canadian and U.S. segment growth of approximately $31,300 and $46,000 or 12.9% and 10.7%, respectively. Strategic Canadian and U.S. "tuck-in" acquisitions also contributed to the total increase. 2006-2007 The increase in revenues is detailed in the Review of Operations - Revenues section of this MD&A. Net income Included in net income are some or all of the following: amortization, interest on long-term debt, financing costs, net (gain) loss on sale of capital and/or capital and landfill assets, net loss (gain) on financial instruments and/or derivative financial instruments, net foreign exchange (gain) loss, write-off of deferred financing costs, other expenses, income taxes, and non-controlling interest. 2004-2005 The decrease, approximately $9,300, is primarily a function of the Fund's acquisition of IESI. IESI incurred a net loss for the period January 21 to December 31, 2005 due largely to the retirement of their U.S. $150,000 10.25% senior subordinated notes. These notes were cancelled on the closing of the Fund's acquisition of IESI. 2005-2006 The increase, approximately $22,100, is due largely to an increase in revenues which translated to EBITDA/^l growth, approximately $29,900. In addition, a decline in 2006 financing costs, net of the related tax effect, approximately $22,800 versus the comparative year also contributed to the increase in net income. The foregoing was partially offset by higher amortization and interest expense, due in part to the consolidation of IESI for a period of 344 days in 2005 compared to 365 in 2006, and a larger business base due to organic and acquisition growth, approximately $9,200. The balance of the change is due to higher future income tax expense, excluding recoveries recognized on financing costs, approximately $17,100, and higher non-controlling interest participation in net income, approximately S4,100. Higher future income tax expense is due largely to strong financial results which eroded tax losses available to shelter taxable income and results in a decline in future income tax assets. 2006-200? The increase in net income is detailed in the Review of Operations section of this MD&A. 34 Totalassets 2004-2005 Theincrease in totalassets ofapproximately $1,320,100 is due principally to assets recognized on the acquisitions of IESland the Ridgelandfilltotaling approximately $1,384,000, in aggregate. 2005-2006 The increase in total assets is approximately $48,900. The increase is due largely to a rise in goodwill, approximately $14,700, attributable to acquisitions completed in 2006 net of foreign currency exchange fluctuations. The increase in capital assets, approximately $29,900 is attributable to completed acquisitions coupled with an increase in purchases to accommodate growth, net of amortization and foreign currency fluctuations. Lower landfill asset balances, approximately $8,900, are due principally to amortization and foreign currency fluctuations. Intangible assets also declined, approximately $7,300, due to amortization outpacing acquired intangibles and foreign currency fluctuations. The approximately $4,900 decline in cash and cash equivalents is due largely to the timing of cash receipts and payments, partially offset by higher restricted cash balances. An approximately $6,600 increase in amounts due from non-controlling interest represented amounts due from various IESI selling shareholders in satisfaction of various representations and warranties agreed to on the Fund's acquisition of IESL Accounts receivable increased approximately $20,500 due to the timing of collections and acquisitions. 2006-2007 The increase in total assets is approximately $204,600. The increase is due largely to a rise in goodwill and intangibles, approximately $135,200 and $67,500, respectively, and is attributable to acquisitions completed in the current year net of amortization and foreign currency exchange fluctuations. The increase in capital assets, approximately $82,500, was offset by a like decline in landfill assets, approximately $85,600. Higher capital asset balances are due principally to completed acquisitions coupled with higher purchases to accommodate growth, net of amortization and foreign currency fluctuations. Lower landfill asset balances are due principally to amortization and foreign currency fluctuations. Other notables include, an approximately $6,600 decline in amounts due from non-controlling interests, the balance of which was repaid on the cancellation of PPS's, and an approximately $7,000 decline in deferred financing costs which were written-off on the adoption of the CICA's guidance on financial instruments. Increases in cash and cash equivalents, accounts receivable and prepaid expenses, approximately $4,100, $13,500 and $3,300, respectively, contributed to the increase in total assets. Acquisitions coupled with the timing of cash receipts, payments and collections are the primary reasons for the increase in the aforementioned assets. Total long-term liabilities 2004-2005 The increase in total long-term liabilities of approximately $373,000 is primarily attributable to the Fund's acquisitions of IESI and the Ridge landfill in January 2005. 2005-2006 Of the $136,200 increase in long-term liabilities, approximately $77,100 is in respect of U.S. segment acquisition and growth spending. In addition, approximately $44,000 is due to the Fund's renegotiation of its Canadian revolving credit facility, which resulted in the reclassification of $29,500 previously recorded in current liabilities to long-term liabilities, and to acquisition and growth spending. The balance of the increase is due largely to an approximately $8,100 increase in closure and post-closure cost accruals, primarily on account of provisions for landfill closure and post-closure costs, and an approximately $5,200 increase in future income tax liabilities, due in large part to an approximately $4,300 valuation allowance established on certain U.S. loss carryforwards in the current year. 2006-2007 Total long-term liabilities increased by approximately $286,200. An increase of $258,500 in long-term debt, due in large part to the acquisition of Winters Bros. and growth expenditures, was partially offset by the application of net proceeds from the Fund's trust unit offering to long-term debt balances. Future income tax liabilities increased by approximately $25,700, due in large part to the acquisition of Winters Bros. Additional details with respect to movements in future income tax balances can be found in the Review of Operations - for the year ended December 31, 2007- Income tax expense (recovery) section of this MD&A. 35 Summary of Quarterly Results 2006 Q4 Q3 Q2 Q1 Total Revenues Canada $ 74,943 $ 76,891 $ 72,329 $ 64,477 $ 288,640 U.S. south 70,097 67,183 66,021 63,820 267,121 U.S. northeast 55,279 55,907 54,305 50,567 216,058 Total revenues $ 200,319 $ 199,981 $ 192,655 $ 178,864 $ 771,819 Net income $ 10,168 $ 10,457 $ 7,190 $ 4,928 $ 32,743 Net income per weighted average trust unit, basic and diluted $ 0.19 $ 0.20 $ 0.13 $ 0.09 $ 0.61 2005 Q4 Q3 Q2 Q1 Total Revenues Canada $ 61,948 $ 65,573 $ 65,073 $ 55,000 $ 247,594 U.S. south 63,196 62,710 62,760 45,079 233,745 U.S. northeast 52,743 54,433 53,933 34,976 196,085 Total revenues $ 177,887 $ 182,716 $ 181,766 $ 135,055 $ 677,424 Net income $ 5,053 $ 6,296 $ 7,756 $ (8,462) $ 10,643 Net income per weighted average trust unit, basic and diluted $ 0.10 $ 0.13 $ 0.16 $ (0.21) $ 0.22 Notes: ;4) See New Accounting Policies Adopted - Financial instruments section of this MD&A. Total approximate quarterly revenue growth from O 12005 to 04 2007 Revenues- Q1 2005 $ 135,100 Revenue growth additions: Acquisitions completed from 2005 to 2007 48,700 Net price, volume, and fuel and environmental surcharge growth 67,200 Revenues - Q4 2007 $ 251,000 36 Financial Condition (all amounts are in thousands of Canadian dollars, unless otherwise stated) Selected Consolidated Balance Sheet Information Canada - U.S. - Consolidated - December 31, December 31, December 31, 2006 2006 2006 Accounts receivable $ 46,084 $ 56,266 S 102,350 intangibles S 45,375 $ 31,829 $ 77,204 Goodwill $ 53,760 $ 427,574 $ 481,334 Deferred costs $ 1,208 S 2,843 $ 4,051 Capital assets $ 124,418 S 197,954 $ 322,372 Landfill assets $ 203,421 S 526,869 $ 730,290 Workin( (deficit)-(current assets less cur rent liabilities) S (6,690) $ (10,520) $ {17,210) Accounts receivable S Change - Consolidated December 31, 2007 versus December 31, 2006 $ Change - Canada - December 31, 2007 versus December 31, 2006 $ Change - U.S. - December 31, 2007 versus December 31,2006 Solid organic growth and the timing of collections are the primary reasons for the increase in Canadian segment accounts receivable, approximately $3,800. Acquisitions completed in 2007 also contributed approximately $2,000 to the increase. Acquisitions completed in 2007 resulted in an approximately $23,700 increase in U.S. segment accounts receivable. This increase was partially offset by an approximately $9,000 decline in amounts owing from a single customer in the U.S. and an approximately $10,000 decline due to foreign currency translation. Solid organic growth and the timing of collections are the primary reasons for the balance of the change. Intangibles Change - Consolidated December 31,2007 versus December 31,2006 Change - Canada - December 31,2007 versus December 31,2006 Change - U.S. - December 31,2007 versus December 31, 2006 Amortization represents approximately $13,900 of the decline in Canadian segment intangibles. Intangibles recognized on current year acquisitions totaled $2,300, which partially offset amortization. Intangibles recognized on acquisitions completed in the Fund's U.S. segment through 2007 total approximately $106,100, the most notable being the approximately $89,800 recognized on the acquisition of Winters Bros. Normal course amortization, approximately $11,500, and foreign currency translation, approximately $1 $,$00, represents the balance of the change. 37 Goodwill Change - Consolidated December 31, 2007 versus December 31, 2006 Change - Canada - December 31,2007 versus December 31,2006 $ Change - U.S. December 31,2007 versus December 3 I, 2006 Goodwill recognized on acquisitions completed in the year represents the entire Canadian segment change. Goodwill recognized on U.S. segment acquisitions completed in the year totals approximately $195,000, while recognized goodwill attributable to contingent landfill payments amounted to $20,200. These increases were partially offset by foreign currency translation, approximately $87,700. Deferred costs $ Change - Consolidated December 31,2007 versus December 31,2006 $ Change - Canada - December 31, 2007 versus December 31,2006 $ Change - U.S.- December 31, 2007 versus December 31, 2006 The increase in Canadian segment deferred costs is due entirely to landfill development initiatives. The increase in U.S. segment deferred costs is due principally to corporate development activities, approximately $2,200, partially offset by foreign currency translation. Capital assets $ Change - Consolidated December 31, 2007 versus December 31, 2006 $ Change - Canada - December 31, 2007 versus December 31, 2006 $ Change - U.S, - December 31, 2007 versus December 31, 2006 The increase in Canadian segment capital asset additions is primarily attributable to vehicle, equipment, and container purchases, totaling $36,900 while acquired capital assets totaled approximately $5,900. Capital asset additions were incurred in respect of new contract wins and solid organic growth with the balance due to capital asset maintenance. Additions were partially offset by normal course amortization, approximately $21,600, and working capital adjustments, representing additions which remain unpaid, approximately $900. Capital asset purchases, approximately $59,300, coupled with capital assets acquired, approximately $89,500, are the pdmary reasons for the increase in the U.S. segment capital asset balance. Totaling approximately $71,200, the Winters Bros. acquisition represents the bulk of acquired capital assets while U.S. segment purchases increased for the same reasons outlined for the Fund's Canadian segment. Amortization, foreign currency translation, and working capital adjustments, approximately $44,700, $41,000, and $$00, respectively, partially offset the foregoing increases. The balance of the U.S. segment change is due to the sale of various capital assets. Landfill assets $ Change - Consolidated December 31,2007 versus December 31,2006 $ Change - Canada - December 31, 2007 versus December 31, 2006 $ Change - U.S, ~ December 31, 2007 versus December 31, 2006 Amortization, including the amortization of capitalized landfill asset closure and post-closure costs, approximately $22,000, coupled with working capital adjustments, representing landfill asset additions which remain unpaid, approximately $800, are the primary reasons for the Canadian segment decline in landfill assets. These amounts were partially offset by additions, approximately $10,000, coupled with capitalized landfill closure and post~closure costs, a non-cash item, approximately $3,400. Landfill construction efforts were prindpally carried out at the Fund's Lachenaie and Winnipeg landfills during the year. Foreign currency translation, approximately $80,500, coupled with amortization, including amortization of capitalized landfill asset closure and post-closure costs, approximately $47,300, and working capital adjustments, approximately $200, is the primary reason for the U.S. segment decline. Additions, approximately $49,700, and capitalized landfill closure and post-closure costs, a non-cash item, approximately $2,100, accounts for the balance of the U.S. segment change. Landfill construction at the Fund's Seneca Meadow site is the primary contributor to landfill asset additions. 38 Working capital position (deficit) $ Change Consolidated December 31,2007 versus December 31, 2006 $ Change - Canada - December 31, 2007 versus December 31, 2006 $ Change - U.S. - December 3 I, 2007 versus December 31, 2006 The Fund's Canadian segment experienced a rise in accounts receivable, approximately $5,800, and an approximately $5,000 decline in accounts payable, both of which result in a strengthening of the Fund's working capital position. The increase in accounts receivable is largely on account of solid organic growth and acquisitions, while the decline in accounts payables is due principally to the timing of capital and landfill asset purchases and payment thereof. A decline in other receivables coupled with an increase in deferred revenues and accrued charges, approximately $1,300, $1,800 and $2,100, respectively, partially offset the strengthening working capital position attributable to accounts receivable and payables. The balance of the change is due to an increase in the distribution payable coupled with a decline in prepaid expense and cash and cash equivalent amounts. Upon approval of the Seneca Meadow's landfill expansion, the Fund accrued amounts payable to the original seller totaling approximately U.S. $15,000. This accrual is the primary cause of the decline in the Fund's U.S. segment working capital position. Disclosure of outstanding trust unit data Effective April 5, 2007, the Fund closed a 3,565 trust unit offering, including the exercised over-allotment option, at $26.10 per trust unit. Trust units An unlimited number of trust units may be issued. Each trust unit is transferable, voting and represents an equal and undivided beneficial interest in any distributions from the Fund whether of income, net realized capital gains or other amounts and in any net assets of the Fund in the event of termination or wind-up. Class A unit IESI, as holder of the Class A unit, has the right to vote with trust units of the Fund on all matters on a basis of one vote for each trust unit receivable on exercise of the exchange rights for each PPS. The Class A unit will generally vote together with trust units of the Fund at all unitholder meetings or in respect of any written resolutions of unitholders. The holder of the Class A unit has the right to designate up to two Trustees of the Fund. The entitlement to designate Trustees is dependent on the ownership interest of the non-controlling interest and the right to designate two Trustees is conditional on the non-controlling interest holding an ownership interest in the Fund, on a fully diluted basis, in excess of 20%. If the ownership interest of the non-controlling interest falls below 20%, but is greater than 10%, the Class A unitholder has the right to designate one Trustee of the Fund. If the ownership interest of the non-controlling interest falls below 10%, the Class A unitholder has no right to designate any Trustees of the Fund. At December 31, 2007, the indirect ownership interest held by the non-controlling interest is approximately 16.2 %. The Second Amended and Restated Declaration of Trust approved at the special unitholder meeting provides that, for so long as any PPSs remain outstanding, the Trustees shall not declare payable, pay or make any distribution of distributable cash flow, as defined therein, or any other distribution of cash or property on a trust unit of the Fund unless lES1 declares a payment or dividend to holders of the PPSs in an amount equal to the per trust unit distribution payable to unitholders of the Fund. The Class A unit is redeemable at the option of the holder at any time or at the option of the Fund at any time after the date that no PPSs are outstanding and the Class A unit rights against the Fund have ceased. The redemption price of the Class A unit will be for a nominal amount. 39 Withholding taxes on foreign source income Withholding tax paid on foreign source income is available for pass through for the benefit of the Fund's unitholders. Withholding taxes on foreign source income represents a charge to current income tax expense on the Fund's consolidated statement of operations and comprehensive (loss) income. Effective August 31, 2007, and concurrent with the acquisition of Winters Bros. and U.S. revolving credit facility amendment, the Fund cancelled its U.S. note. Accordingly, the Fund has no foreign source interest income which is subject to withholding taxes effective August 31, 2007. Non-controlling interest As of March 6, 2008, 10,878 PPSs have been converted into trust units of the Fund since issuance on January 21, 2005. Each holder of a PPS receives dividends equivalent to those received by holders of the Fund's trust units. In satisfaction of various representations and warranties made by certain IESI selling shareholders, 250 PPSs were redeemed and cancelled by the Fund in February 2007. Assuming exchange of all PPSs, for trust units of the Fund, 68,706 equivalent trust units would be outstanding at December 31, 2007. Liquidity and Capital Resources (all omoun ts are in thousands of Canadian dollars, except per tonne amoun ts, unless otherwise stated) Contractual obligations Long-term debt Landfill closure and post-closure costs, undiscounted Operating leases Other long-term obligations(5) Total contractual obligations Notes: Other long-term obligations include the following: a $1.50 per tonne royalty at the Lachenaie landfill site, estimated at the maximum annual payout of $1,500, and payments on account of a license agreement to use the trade name ~BFI~ and the related Iago for the period from June 30, 2015 to June 30, 2034. Contingent consideration in respect of certain acquisitions is not included in the table above. Long-term debt Summarized details of the Fund's long-term debt facilities are as follows: Canadian long-term debt facilities - stated in Canadian dollars Senior secured debentures, series A Senior secured debentures, series B Revolving credit facility U.S. long-term debt facilities- stated in U.S. dollars Term loan Revolving credit facility IRBs Effective August 31, 2007 and concurrent with the closing of the Winters Bros. acquisition, the Fund entered into a third amendment to its Amended and Restated Revolving Credit and Term Loan Agreement. The amendment makes available an additional U.S. $320,000 bringing the total available capacity under the U.S. revolving credit facility to U.S. $$75,000. With the exception of certain modified financial covenants and the maintenance of interest rate swaps, all significant terms, including but not limited to pricing and maturity, remain unchanged. The previous long- term debt facility required IESI to maintain interest rate swaps for not less than 60% of its variable rate interest payable on the term loan, but not more than 50% of the total drawn facility. This condition has been modified and now requires IESI to maintain not less than 40% of total funded debt on a fixed rate basis within 30 days from the third amendment date. Effective April 5, 2007, the Fund closed its trust unit offering and applied the net proceeds from the offering, approximately $87,600, against advances on its U.S. revolving credit facility. Effective March 21, 2007, the Fund entered into a Second Amending Agreement to its Fourth Amended and Restated Credit Agreement. The second amendment increases the total committed Canadian segment credit to $150,000 from $80,000 and the total available credit from this facility, subject to lender consent, to $200,000 from $120,000. The maturity date was extended to May 30, 2011 from June 30, 2010, and the maturity date remains subject to one year extensions. Effective March 28, 2007, IESI entered into a new 15 year agreement for IRBs in the state of Texas. The IRBs are made available, to a maximum of U.S. $24,000 and are available to fund a portion of landfill construction activities, and equipment, vehicle, and container expenditures in the Fund's Texas operations. The IRBs bear interest at a discount to LIBOR. A portion of the Fund's drawings under this facility were used to repay the Fund's U.S. revolving credit facility with the balance used to finance landfill construction activities, and equipment, vehicle, and container expenditures. At December 31, 2007, approximately U.S. $1,600 of cash was restricted for the purpose of financing future activities and expenditures. Both the Canadian and U.S. long-term debt facilities have an accordion feature which can increase the available capacity of the Canadian revolving credit facility from $150,000 to $200,000 and can increase the available capacity of the U.S. term loan and revolving credit facility from U.S. $770,000, in aggregate, to U.S. $825,000, in aggregate, subject to certain restrictions. At December 31, 2007 the Fund is not in default of its long-term debt facility covenants. On a consolidated basis, the Fund's long-term debt to last twelve months EBITDAI^l ratio is 2.91 times. Readers are reminded that contributions to EBITDA~^~ from acquisitions completed within the last twelve months are not included in the foregoing ratio and that the Fund has two revolving credit facilities to support its Canadian and U.S. segment operations which require financial covenant tests to be prepared separately. Management of the Fund is confident that the Fund's long-term debt facilities, available capacities, including its accordion features, and access to other sources of long-term debt financing are sufficient to meet the Fund's near-term planned growth and development activities. A portion of the Fund's term loan, its two revolving credit facilities, and its IRBs are subject to interest rate fluctuations with bank prime, the 30 day rate on bankers' acceptances or LIBOR. The Fund has hedged U.S. $262,000 of variable rate interest on its U.S. long-term debt facility. The balance of drawings on the U.S. long-term debt facility, U.S. $266,500, together with amounts drawn on the Fund's Canadian revolving credit facility totaling $72,000, and amounts drawn on the IRBs, are subject to interest rate risk. A 1.0% rise or fall in the variable interest rate results in a U.S. $2,665, $720, and U.S. $1,040, change in annualized interest expense incurred on the Fund's U.S. long-term debt facility, Canadian revolving credit facility, and IRBs, respectively. The Fund is obligated under the terms of its debentures, term loan, revolving credit facilities, and IRBs (collectively the "facilities") to repay the full principal amount of each at their respective maturities. A failure to comply with the terms of any facility could result in an event of default which, if not cured or waived, could accelerate repayment of the relevant indebtedness. If repayment of the facilities were to be accelerated, there can be no assurance that the assets of the Fund would be sufficient to repay these facilities in full. 41 The terms of the facilities contain restrictive covenants that limit the discretion of the Fund's management with respect to certain business matters. These covenants place restrictions on, among other things, the ability of the Fund to incur additional indebtedness, to create liens or other encumbrances, to pay distributions on trust units and dividends on PPSs above certain levels or make certain other payments, investments, loans and guarantees, and to sell or otherwise dispose of assets and merge or consolidate with another entity, in addition, the debentures and revolving credit facilities contain a number of financial covenants that require the Fund to meet certain financial ratios and financial condition tests. A failure to comply with the terms of the facilities could result in an event of default which, if not cured or waived, could result in accelerated repayment. If the repayment of the facilities were to be accelerated, there can be no assurance that the assets of the Fund would be sufficient to repay these facilities in full. The Fund's U.S. revolving credit facility restricts total annualized capital and landfill expenditures, less expenditures for new municipal contracts, to 1.1 times annual capital and landfill asset amortization. If opportunities arise that require growth capital expenditures that are in excess of the restrictive covenant, the Fund would seek a waiver of this covenant. Failure to receive the waiver could accelerate the repayment of the relevant indebtedness or result in the postponement of growth capital expenditures. If the repayment of the facility were to be accelerated, there can be no assurance that the assets of the Fund would be sufficient to repay this facility in full. Management of the Fund actively reviews its financing alternatives. Cash flows Cash flows generated from (utilized in): Operating activities investing activities Financing activities Year ended December 31 2006 $Change $ 185,698 $ 31,717 $ (166,677) $ (356,311) $ (23,953) $ 332,462 Operating activities Solid organic and acquisition growth is the primary reason for the increase in cash generated from operating activities for the year ended December 31. Cash generated from organic and acquisition growth was partially offset by higher borrowing and financing costs, approximately $8,700 and $7,100, respectively. Higher borrowing and financing costs were incurred principally to support organic and acquisition growth. Changes in non-cash working capital is the primary reason for the bulk of the remaining change, details of which are outlined in the Financial Condition - Working capitalposition (defidt) section of this MD&A. Investing activities Acquisitions completed in 2007 compared to those completed in 2006 are the primary reasons for the increase in cash utilized in investing activities, approximately $332,700. Representing approximately $306,300 of the total current year acquisitions, Winters Bros. is the primary reason for the year over year increase. Capital asset purchases also rose, approximately $21,800, due in large part to maintaining capital assets for a larger business base coupled with higher aggregate growth expenditures. Financing activities Net proceeds from long-term debt facilities, and net proceeds from the Fund's trust unit offering, approximateJy $339,700 are the primary reasons for the increase. Net proceeds were used primarily to fund acquisitions and, to a lesser extent, growth expenditures. The balance of the change is due principally to higher distributions and dividends paid to unitholders and participating preferred shareholders. 42 Seasonality Revenues are generally higher in spring, summer and autumn months due to higher collected and disposed of waste volumes. Higher collection and disposal revenues are partially offset by higher operating expenses to service and dispose of additional waste volumes. Risks and Uncertainties The Fund is subject to various risks and uncertainties which are summarized below. Additional details are contained in the Fund's 2007 Annual Information Form filed on SEDAR, which can be found at www. sedar, com. · renewal or maintenance of landfill operating permits · modifications to landfill operating permits · continued focus on growth through acquisition · continued management of business growth · loss of contracts through competitive bidding or early termination · reliance on third party disposal customers · geographic concentration of operations · customer concentration · weather and seasonality · union labour agreements · fuel surcharge cost pass through · reliance on key management executives · localized decision making · surety bonds, letters of credit and insurance · leverage, restrictive covenants, and capital requirements · uninsured and underinsured losses · legislation and governmental regulation · environmental regulation and litigation · environmental contamination · competition · governmental initiatives to reduce landfill disposal by encouraging alternatives · control of 4264126 Canada Limited · foreign exchange exposure · accounting estimates · internal control over financial reporting and disclosure control procedures · distributions are not guaranteed · nature of trust units · income tax matters in Canada, including the taxation of income trusts, and the United States · distribution of securities on redemption or termination of the Fund · unitholder liability · investment eligibility and foreign property · restrictions on certain unitholders and liquidity of trust units · future exchanges of the non-controlling interests investment 43 Outlook (all amounts are in thousands of Canadian dollars, unless otherwise stated) Overview Management is committed to employing its improvement and market-focused strategies with the goal of continuously delivering value to its unitholders. Management's objective is continuous improvement, which equates to continuous revenue growth coupled with effective cost management. New market entry, existing market densification and landfill development will be a continued focus of the Fund as it looks for ways to expand its operations, increase customer density in strategic markets, and increase internalization. The Fund's strengths remain founded in the following: consistent historical organic growth, growth through strategic acquisition, strong competitive position, a solid customer base with long-term contracts, disciplined operating process, predictable maintenance expenditure requirements, and stable generation of free cash flow available for distribution~B~. Management of the Fund remains committed to actively managing these strengths in the future. Structure It is management's belief that the Fund requires both capital market breadth and certainty. Without these fundamentals, efficient access to, and cost of, capital diminish the attractiveness of acquisitions, which management contends is a key element to the Fund's past and future success and value driver. Accordingly, the Trustees continue to work actively with management to review the Fund's corporate structure with a committed goal of enhancing total return for its investors. Strategic acquisitions The Fund is active in its review and pursuit of new market or strategic "tuck-in" acquisitions. Maintenance expenditures For fiscal 2008, maintenance expenditures, representing the replacement of capital and landfill assets to sustain current business operations, are expected to approximate $22,000 to $24,000 and U.S. $37,000 to U.S. $39,000 for the Canadian and U.S. operations, respectively. Maintenance expenditures are expected to be concentrated in the first three quarters, which may result in the declaration and payment of distributions and dividends in these quarters that are in excess of free cash flow available for distributionIB~. Growth expenditures Growth expenditures represent capital and landfill asset additions required to meet the demands of acquired or organic growth or expenditures that specifically benefit a future period or periods. For 2008, management expects to incur growth expenditures for the construction of landfill airspace capacity that will benefit a future period or periods and to grow the Fund's collection operations. Liquidity Management of the Fund remains active in its review of interest rate alternatives and foreign currency exchange rates. Operations The Fund has received significant volumes of waste at its landfills, which may not continue at a similar rate. The Fund is active in various permit expansion efforts at certain landfills as permitted life is consumed. The Fund is actively reviewing alternatives to replace its Calgary landfill site and effective April 2006 is deferring costs incurred to develop an alternative site. TEe Fund is also active in its efforts to expand the Lachenaie landfill. Development spending in respect of both initiatives is included in deferred costs on the consolidated balance sheet. The Fund continuously bids residential and other government contracts which may require significant growth expenditures. The Fund will continue to pass through fuel surcharges, and environmental costs, including government imposed disposal charges, to its customers with a view to eliminating operating cost variability in its operating results and free cash flow available for distribution~B~. Readers are reminded that increasing fuel costs, environmental costs, and government imposed disposal charges result in higher revenues and, all else equal, reduce the Fund's gross operating margin (defined as revenues less operating expenses divided by revenues). Other Taxation of income trusts On October 31, 2006, the Minister of Finance (Canada) announced proposed changes to the income tax treatment of distributions and allocations to and from the Fund. On June 12, 2007, the proposed legislation, with certain modifications, passed third reading and received royal assent on June 22, 2007. The proposals, which are effective for the 2011 taxation year, subject to certain conditions, make certain income earned by the Fund taxable in a manner similar to income earned by a corporation. Financing strategic growth One of management's principal objectives is to grow organically and through strategic acquisition. Growth is dependent on the Fund's ability to access debt and equity in the capital markets. Any restrictions will affect the Fund's growth objective. Distributions Distributions are dependent on free cash flow available for distribution~B~ and other factors, including but not limited to the Fund's ability to access debt and equity in the capital markets. The rate of distribution declared per trust unit, and by extension PPS dividends, is reviewed by the Trustees from time to time. Normal course issuer bid On November 6, 2006, the Fund received approval to commence a normal course issuer bid for up to 2% of the trust units outstanding in any 30 day period and not more than 10% of trust units outstanding in any 365 day period, where total trust units outstanding is equal to 53,617. The normal course issuer bid has terminated and no trust units were repurchased. Withholding taxes on foreign source income Withholding taxes on foreign source income are recorded as current income tax expense on the consolidated statement of operations and comprehensive (loss) income. An increase in dividends paid, or the erosion of IESl's ability to return capital, will result in increasing withholding taxes. Optimization of tax losses and tax efficiency of structure Management of the Fund periodically reviews its organizational structure to promote tax efficiency and optimize the use of tax losses within the structure. The Fund expects to incur additional reorganization costs in this regard. 45 Critical Accounting Estimates Landfill closure and post-closure costs Costs associated with capping, closing and monitoring the landfill after it ceases to accept waste are recognized at fair value over the landfill's operating life which is the period over which the landfill accepts waste. The Fund develops estimates for closure and post-closure costs with input from its engineers, and landfill and accounting personnel. Estimates are reviewed at least once annually and consider the various regulations that govern each facility. Revenues derived from the Fund's landfill gas to energy facilities do not reduce the Fund's closure and post- closure cost estimates for periods during or post waste acceptance. The Fund's landfill closure and post-closure cost estimates approximate fair value, as quoted market prices are generally not available. Accordingly, the Fund develops its fair value estimates using present value techniques that considers and incorporates assumptions marketplace participants would use in the determination of these estimates, including inflation, markups, inherent uncertainties due to the timing of work performed, information obtained from third parties, quoted and actual prices paid for similar work and engineering estimates. Inflation assumptions are based on management's understanding of current and future economic conditions and the expected timing of expenditures. An inflation factor of 3.0% and 2.5% has been used in the derivation of fair value estimates for the Fund's Canadian and U.S. landfills, respectively. Fair value estimates are then discounted back to their present value using the credit adjusted risk flee rate, which is the rate of interest that is essentially free of default risk, plus an adjustment for the Fund's credit standing. The credit adjusted risk free rate is based on management's understanding of current and future economic conditions and the expected timing of expenditures. Accordingly, the Fund has discounted landfill closure and post-closure costs using a credit adjusted risk free rate of 5.6% and 7.2% for its Canadian and U.S. landfills, respectively. Due to the inherent uncertainty in making these estimates, actual results could differ. Future changes in the Fund's credit standing do not change previously recorded closure and post-closure costs, but impact subsequent fair value calculations. Reliable estimates of market risk premiums are not available as there is no existing market for selling the responsibility of landfill closure and post-closure activities. Accordingly, the Fund has excluded any estimate of market risk premiums in the determination of fair value for landfill closure and post-closure costs. Upward revisions to estimated closure and post-closure costs are discounted using the current credit adjusted risk free rate. Downward revisions to estimated closure and post-closure costs are discounted using the credit adjusted risk free rate when the estimated closure and post-closure costs were originally recorded or a weighted average credit adjusted risk free rate if the period of original recognition cannot be identified. The Fund records the estimated fair value of landfill closure and post-closure costs as airspace is consumed. The total obligation will be fully accrued at the time these facilities cease to accept waste and are closed. Maintenance activities including: environmental monitoring, mowing and fertilizing, leachate management, well monitoring, buffer maintenance, landfill gas to energy collection and flaring systems, and other activities, are charged to operating expenses during the operating life of the landfill. These same costs are estimated and included in the Fund's landfill closure and post-closure accruals for all activities that occur post the landfill's operating life. Maintenance activities are generally required for a period of 30 years post waste acceptance. Accretion, representing an increase in the carrying amount of landfill closure and post-closure cost accruals due to the passage of time, is recognized as an operating expense in the consolidated statement of operations and comprehensive (loss) income and continues post waste acceptance. The assumptions included in the determination of closure and post-closure cost obligations are significant and numerous. Accordingly, it is not practical to disclose the sensitivity of each estimate in isolation or in aggregate or to provide a probable range of possible outcomes which may differ from recorded or disclosed amounts. Changes in estimated costs, the estimated closure and post-closure spending sequence, discount rates, and capacities may have a significant impact on future closure and post-closure cost obligations, the related landfill assets, and the results of operations. Changes to assumptions while a landfill is accepting waste is accounted for prospectively and reflected as a revision in estimated cash flows in the year of the change. The impact of the change in subsequent periods is recognized over the landfills estimated remaining useful life. Changes in assumptions that affect landfills which are no longer accepting waste are charged to operations when known. The following tables outline key assumptions used to determine the fair value of landfill closure and post-closure costs, the expected timing of landfill closure and post-closure expenditures, and reconcile beginning and ending landfill closure and post-closure costs: Fair value of legally restricted assets Undiscounted closure and post-closure costs Credit adjusted risk flee rate - Canadian segment landfills Credit adjusted risk flee rate - U.S. segment landfills Expected timing ofundiscountedlandfillclosure and pos~closure expenditures 2008 2009 2010 2011 2012 Therea~er ;$~373,364 Landfill closure and post-closure costs, beginning of year Provision for landfill closure and post-closure costs, during the year Accretion expense, during the year Landfill closure and post-closure expenditures, during the year Revisions to estimated cash flows, during the year Foreign currency translation adjustment, during the year 66,405 8,180 2,932 (13,016) 177 (143) Landfill closure and post-closure costs, end of year :'$ 58,843 $ 64,535 Readers are reminded that the Fund reports its financial results in Canadian dollars. Consequently, changes in the foreign currency exchange rate between Canada and the U.S. impacts the translated value of the Fund's U.S. landfill assets and landfill closure and post-closure cost obligations and operating results. U.S. denominated amounts are settled in U.S. dollars from U.S. cash flows. Other Other estimates include, but are not limited to, the following: estimates of the Fund's allowance for doubtful accounts receivable; realization of future income tax assets; future earnings, income tax and other estimates used in the determination of the fair value of goodwill for the Fund's annual test of impairment; deferred cost recoverability assumptions; the useful life of capital and intangible assets; estimates and assumptions used in the determination of the fair value of contingent acquisition payments; accrued accident claims reserves; projected landfill construction and development costs and estimated permitted airspace capacity consumed in the determination of landfill asset amortization; estimated landfill remediation costs; various economic estimates used in the development of fair value estimates; and future income tax assets and liabilities. New Accounting Policies Adopted On January 1, 2007, the Fund adopted revisions to the CICA accounting standard for Accounting Changes (section 1506). The revised standard sets forth expanded disclosures for changes in accounting policies, accounting estimates, and accounting errors. The standard requires that accounting changes be applied retrospectively unless otherwise permitted or where it is deemed impractical. The standard also requires that the Fund disclose new primary sources of GAAP that have been issued, but are not adopted because they are not currently effective. On January 1, 2007, the Fund adopted the following CICA accounting standards: Financial Instruments - Recognition and Measurement (section 3855), Financial Instruments - Disclosure and Presentation (section 3861), Hedges (section 3865), Comprehensive Income (section 1530), Investments (section 3051), and Equity (section 3251). The Fund adopted these standards retrospectively without restatement, with the exception of the presentation of accumulated gains and losses on the translation of self sustaining foreign operations. 47 Financial instruments This section outlines standards for recognizing and measuring balance sheet financial instruments and for reporting the resulting gains and losses. The standard requires that all financial assets and liabilities, including derivatives and derivatives that are part of a hedging relationship, be measured at fair value, with the exception of the following: loans and receivables; held-to-maturity investments; investments in available for sale equity instruments that do not have a quoted market price in an active market; and financial liabilities measured at amortized cost. The standard also requires that all non-financial derivatives, subject to certain exceptions, be measured at fair value. Gains or losses on financial instruments measured at fair value are recognized in the determination of net income in the periods in which they arise, with the exception of the following: gains and losses on financial assets classified as available for sale and certain financial instruments that are part of a designated hedging relationship. The effect of adopting these sections is detailed in the Fund's consolidated financial statements. On adoption of CICA 3855, the Fund concluded that the redemption option on its debentures was an embedded derivative. Accordingly, the Fund recorded the difference between the carrying amount of its debentures and the redemption options values. In addition, subsequent fair value changes to the redemption options were recorded in the Fund's consolidated statement of operations and comprehensive (loss) income. Management has determined that its interpretation of CICA 3855, as it relates to embedded derivatives, was inconsistent with interpretations of other reporting issuers and other ancillary interpretations and practices. The Fund has since concluded that the fair value of the redemption option on its debentures is Snil. The Fund's 2007 quarterly results, after reflecting this adjustment, are as follows: Consolidated Balance Sheets Future income tax (liabilities) assets Other liabilities Non-controlling interest Unitholders' equity Consolidated Statements of Operations and Comprehensive (Loss) Income Net loss (gain) on financial instruments Income before income taxes and non-controlling interest Income tax (recovery) expense - future income before non-controlling interest Non-controlling interest Net income Comprehensive income (loss) Net income per trust unit, basic and diluted Consolidated Statements of Cash Flows Net income Future income taxes Net loss (gain) on financial instruments Non-controlling interest Consolidated Statements of Unitholders' Equity, Deficit and Accumulated Other Comprehensive Loss Accumulated net income, beginning of period or year Net income, during the period Transition adjustment Accumulated net income, end of period Unitholder$' equity Hedges This section outlines when and how hedge accounting may be applied. Applying hedge accounting is at the option of the issuer. Management of the Fund has not adopted hedge accounting and accordingly adopting this section did not have any effect on the Fund's consolidated financial statements. Comprehensive income This section outlines reporting and disclosure standards for comprehensive income and its components. The new standard does not address issues of recognition and measurement. Comprehensive income represents all changes to unitholders' equity, other than those arising from investments by and distributions to unitholders. The effect of adopting this section is detailed in the Fund's consolidated financial statements. investments This section establishes accounting standards for investments subject to significant influence and for measuring and disclosing certain other non-financial investments. Adopting this section had no impact on the consolidated financial statements of the Fund. Equity This section establishes standards for the presentation of equity and changes in equity during the reporting period. Adopting this section resulted in changes to the Fund's presentation of unitholders' equity, details of which are included in the Fund's consolidated financial statements. New Accounting Policies Requiring Adoption Financial instruments CICA accounting standards, Financial Instruments - Disclosures (section 3862), Financial Instruments - Presentation (section 3863), and Capital Disclosures (section 1535) require additional disclosures with respect to the significance and risks, and management, of financial instruments and capital disclosures as they relate to the Fund's objectives, policies and process for managing capital. The standards are applicable to annual and interim financial statements for fiscal years beginning on or after October 1, 2007. The Fund is currently evaluating the impact of adopting these new standards and does not expect their adoption to have a material impact on the Fund's consolidated financial statements. Goodwill and intangible assets CICA accounting standard, Goodwill and Intangibles (section 3064), replaces Goodwill and Other Intangibles (section 3062) and Research and Development Costs (section 3450). The prima~ changes to CICA 3064 establish standards for the recognition, measurement, presentation and disclosure of internally generated goodwill and intangible assets. This section applies to annual and interim financial statements relating to fiscal years beginning on or after October 1, 2008, with early adoption encouraged. Adopting this section is not expected to have any impact on the Fund's consolidated financial statements. Financial Information Controls and Procedures The Vice Chairman and Chief Executive Officer and the Chief Financial Officer of the Fund, together with various levels of management, have evaluated the Fund's disclosure controls and procedures at December 31, 2007 and are collectively satisfied that the Fund's disclosure controls and procedures were adequate and effective to ensure significant information relating to the Fund is disclosed in accordance with regulatory requirements. For the year ended 2007, there have been no changes to the Fund's internal control over financial reporting that had, or is reasonably likely to have, a material affect on its internal controls over financial reporting. Definitions of EBITDA and free cash flow available for distribution ~^~ All references to "EBITDA" in Management's Discussion and Analysis are to "income before the following" on the consolidated statement of operations and comprehensive (loss) income. "Income before the following" excludes some or all of the following: "amortization, interest on long-term debt, financing costs, net gain or loss on sale of capital and landfill assets, net gain or loss on financial instruments, net foreign exchange gain or loss, write-off of deferred financing costs, other expenses, income taxes, and non-controlling interest". EBITDA is a term used by the Fund that does not have a standardized meaning prescribed by Canadian generally accepted accounting principles ("GAAP") and is therefore unlikely to be comparable to similar measures used by other issuers. EBITDA is a measure of the Fund's operating profitability, and by definition, excludes certain items as detai~ed above. These items are viewed by management as either non-cash (in the case of amortization, certain financing costs, write-off of deferred financing costs, net gain or loss on financial instruments, net foreign exchange gain or loss, and future income taxes) or non-operating (in the case of interest on long-term debt, net gain or loss on sale of capital and landfill assets, certain financing 49 costs, other expenses, current income taxes, and non-controlling interest). EBITDA is a useful financial and operating metric for management, the Fund's Trustees, and its lenders, as it represents a starting point in the determination of free cash flow available for distribution~8~. The underlying reasons for exclusion of each item are as follows; Amortization - as a non-cash item amortization has no impact on the determination of free cash flow available for distributionIBI. Interest on long-term debt - interest on long-term debt is a function of the Fund's debt/equity mix and interest rates; as such, it reflects the treasury/financing activities of the Fund and represents a different class of expense than those included in EBITOA. Finoncing costs - financing costs are a function of the Fund's treasury/financing activities and represents a different class of expense than those included in EBITDA. Net gain or loss on sale of capital and landfill assets - the gain or loss on sale of capital and landfill assets has no impact on the determination of free cash flow available for distributionlB), because proceeds from the sale were either reinvested in other capital or landfill assets or used to repay the Fund's revolving credit facility. Net gain or loss on financial instruments - as non-cash items, gains or losses on financial instruments have no impact on the determination of free cash flow available for distribution(8). Net foreign exchange gain or loss - as non-cash items, foreign exchange gains or losses have no impact on the determination of free cash flow available for distributionIBI. Write-off of deferred financing costs - as a non-cash item, write-off of deferred financing costs has no impact on the determination of free cash flow available for distribution(BI. Other expenses - other expenses represent amounts paid to management of the Fund on account of certain acquisitions and are not considered an expense indicative of continuing operations. Accordingly, other expenses represent a different class of expense than those included in EBITDA. Income taxes - income taxes are a function of tax laws and rates and are affected by matters which are separate from the daily operations of the Fund. Non-controlling interest- non-controlling interest represents a direct non-controlling equity interest in IESI through PPS holdings. Accordingly, non-controlling interest represents a different class of expense than those included in EBITDA. EBITDA should not be construed as a measu re of income or of cash flows. The reconciling items between EBITDA and net income (loss) are detailed in the consolidated statement of operations and comprehensive (loss) income beginning with "income before the following" and ending with "net income (loss)". (~1 The Fund has adopted a measurement called "flee cash flow available for distribution" to supplement net income (loss) as a measure of operating performance. Free cash flow available for distribution is a term which does not have a standardized meaning prescribed by GAAP and is therefore unlikely to be comparable to similar measures used by other issuers. The objective of presenting this non-GAAP measure is to calculate the amount which is available for distribution to unitholders and non- controlling interest. PPS holdings are presented as non-controlling interest in the consolidated financial statements; however, management of the Fund has elected to include the shareholdings of the non-controlling interest in the calculation of free cash flow available for distribution as PPSs are entitled to dividends that are economically equivalent to the distributions received by u n[tholders and PPSs are exchangeable on a one-to-one basis for trust units of the Fund. Details of the calculation are included in the "Other Performance Measures - Free cash flow available for distribution~'' section of this MD&A. Free cash flow available for distribution is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to cash flow as a measure of liquidity. All references to "flee cash flow available for distribution" in this MD&A have the meaning set out in this note. ~c) Excess free cash flow available for distribution represents the result of free cash flow available for distribution~B~ less distributions and dividends declared. 5O Management's Responsibility for Financial Statements The consolidated financial statements of BFI Canada Income Fund and all the information in this annual report are the responsibility of management and have been approved by the Trustees. The consolidated financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles. The consolidated financial statements include some amounts that are based on estimates and judgments. Management has determined such amounts on a reasonable basis to ensure that the consolidated financial statements are presented fairly, in all material respects. Financial information presented elsewhere in this annual report has been prepared on a basis consistent with that in the consolidated financial statements. BFI Canada Income Fund maintains systems of internal accounting and administrative controls. These systems are designed to provide reasonable assurance that the financial information is relevant, reliable and accurate and that the Fund's assets are properly accounted for and adequately safeguarded. The Trustees are responsible for ensuring that management fulfills its responsibilities for financial reporting and are ultimately responsible for reviewing and approving the consolidated financial statements. The Trustees carry out this responsibility principally through their Audit Committee. The Audit Committee is appointed by the Trustees and is comprised entirely of non-management Trustees. The Audit Committee meets periodically with management and the external auditors to discuss auditing, internal controls, accounting policy, and financial reporting matters. The Audit Committee reviews the consolidated financial statements with both management and the external auditors and reports its findings to the Trustees before such statements are approved by the Trustees. The consolidated financial statements have been audited by Deloitte & Touche LLP, the external auditors, in accordance with Canadian generally accepted auditing standards. Keith Carrigan Vice Chairman and Chief Executive Officer Thomas Cowee Chief Financial Officer Auditors' Report To the Unitholders of BFI Canada Income Fund Deloitte &Touche LLP 5140 Yonge Street Suite 1700 Toronto ON M2N 6L7 Canada Tel: 416-601 ~150 Fax: 416-601-6151 www.de~oitte.ca 51 We have audited the consolidated balance sheets of BFI Canada Income Fund as at December 31,2007 and 2006 and the consolidated statements of operations and comprehensive (loss) income, of cash flows and of unitholders' equity, deficit and accumulated other comprehensive loss for the years then ended. These financial statements are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these consolidated financial statements present fairly, in ali material respects, the financial position of the Fund as at December 31, 2007 and 2006 and the results of its operations and its cash flows for the years then ended in accordance with Canadian generally accepted accounting principles. Chartered Accountants Licensed Public Accountants February 29, 2008 52 BFI CANADA INCOME FUND Consolidated Balance Sheets December 31, 2007 and December 31,2006 (in thousands of dollars) December31, 2006 ASSETS CURRENT Cash and cash equivalents Accounts receivable Due from non-controlling interest (Note 12) Otherreceivables Prepaid expenses 9,275 102,3S0 6,638 1,737 11,66S OTHER RECEIVABLES FUNDED LANDFILL POST-CLOSURE COSTS (Note 10) INTANGIBLES (Note S) GOODWILL DEFERRED COSTS DEFERRED FINANCING COSTS CAPITAL ASSETS (Note 6) LANDFILL ASSETS (Note 7) OTHER ASSETS (Notes 8 & 19) 131,665 1,517 4,142 77,204 481,334 ~051 7,015 322,372 730,290 7,070 S 1,766,660 LIABILITIES CURRENT Accounts payable $ 64,284 Accrued charges 57,318 Distribution and dividends payable . 9,907 Income taxes payable 1,280 Deferred revenues 10,212 Current portion of long-term debt (Note 9) SO Landfill closure and post-closure costs (Note 10) 5,824 148,875 LONG-TERM DEBT (Note 9) 543,454 LANDFILL CLOSURE AND POST-CLOSU RE COSTS (Note 10) 5B,711 OTHER LIABILITIES (Notes 8 & 19) 383 FUTURE INCOME TAX LIABILITIES (Note 11) 31,922 ; 1~090,652~'~ 783,345 NON-CONTROLLING INTEREST (Note 12) 282,026 UNITHOLDERS' EQUITY (Note 13) 701,289 S 1,766,660 Joseph H. Wright Non-Executive Chairman James J. Forese Audit Committee Chair 53 BFI CANADA INCOME FUND Consolidated Statements of Operations and Comprehensive (Loss) Income For the years ended December 31,2007 and 2006 (in thousands of dollars, except net income per trust unit amounts) REVENUES 2006 $ 771,819 EXPENSES OPERATING SELLING, GENERAL AND ADMINISTRATION 436,311 99,591 INCOME BEFORE THE FOLLOWING AMORTIZATION INTEREST ON LONG-TERM DEBT FINANCING COSTS (Note 15) NET GAIN ON SALE OF CAPITAL ASSETS N ET LOSS ON FINANCIAL INSTRUMENTS (Note 19) NET FOREIGN EXCHANGE LOSS (GAIN) (Note 16) OTHER EXPENSES 235,917 148,128 34,307 79 (443) 3,363 (2,578) 210 INCOME BEFORE INCOME TAXES AND NON-CONTROLLING INTEREST 52,851 INCOME TAX EXPENSE (RECOVERY) (Note 11) Current 5,610 Future 7,307 '- ~; ~¢~4;697~ 12,917 INCOME BEFORE NON-CONTROLLING INTEREST NON-CONTROLLING INTEREST (Note 12) 320; NET INCOME ~3i ~87 32,743 OTHER COMPREHENSIVE (LOSS) INCOME Foreign currency, translation ad)ustment COMPREHENSIVE (LOSS) INCOME Net income per trust unit, basic and diluted Weighted average number of trust units outstanding (thousands), basic (Note 13) $ (64,172) Weighted average number of trust units outstanding (thousands), diluted (Note 13) 39,934 7,191 (421) $ 32,322 $ 0.61 53,506 65,391 54 BFI CANADA INCOME FUND Consolidated Statements of Cash Flows For the years ended December 31,2007 and 2006 (in thousands of dollars) NET iNFLOW (OUTFLOW) OF CASH RELATED TO THE FOLLOWING ACTIVITIES OPERATING Net income Items not affecting cash Write-off of deferred costs Accretion of landfill closure and post-closure costs Amortization of intangibles Amortization of deferred financing costs Amortization of capital assets Amortization of landfill assets Write-off of deferred financing costs Net gain on sale of capital assets Net loss on financial instruments Net unrealized foreign exchange loss Future income taxes Non-controlling interest Landfill closure and post-closure expenditures ~0o~ 2006 $ 32,743 847 2,932 19,851 1,380 56,874 70,023 79 (443) 3,363 96 L307 7,191 (13,016) Changes in non-cash working capital items Cash generated from operating activities INVESTING Acquisitions (Note 4 & 17) Investment in other receivables Proceeds from other receivables Funded landfill post-closure costs Purchase of capital assets Purchase of landfill assets Proceeds from the sale of capital assets investment in deferred costs 189,227 (3,529) 185,698 (33,578) (2,095) 1,633 (2,525) (7&33~ (55,051) 1,183 (1,910) Cash utilized in investing activities FINANCING Payment of deferred financing costs Proceeds from long-term debt Repayment of long-term debt Trust units issued, net of issue costs ~ ~' (522;988) (166,677) (1,890) 215,406 (123,774) (46) Distributions and dividends paid to unitholders and participating preferred shareholders Cash generated from (utilized in) financing activities Effect of foreign exchange changes on foreign cash and cash equivalents NET CASH INFLOW (OUTFLOW) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH ANO CASH EQUIVALENTS, END OF YEAR SUPPLEMENTAL CASH FLOW INFORMATION: Cash and cash equivalents are comprised of: Cash Cash equivalents Cash paid during the year for: Income taxes Interest (113,649) (23,953) (4,867) 14,142 ~$~%13,3S9~ S 9,275 9,269 6 S 9,275 $ 4,014 $ 32,619 BFI CANADA INCOME FUND Consoliclated Statements of Unitholclers' Equity, Deficit and Accumulated Other Comprehensive Loss For the yea rs ended December 31,2007 and 2006 {in thousands of dollars) 55 2006 CONTRIBUTED EQUITY Trust units, beginning of year Trust u nits issued, net of issue costs and related tax effect, du ring the year (Note 13) Trust units issued on exchange of participating preferred shares ("PPSs"), during the year Trust units, end of year S 891,070 (46) 17,197 908,221 Class A units, beginning of year Class A units issued, during the year Class A units, end of }/ear Treasury units, beginning of year Trust units acquired by the U.S. LTIP, during the year Deferred compensation obligation, during the },ear Treasury units, end of year (1,281) 1,281 TOTAL CONTRIBUTED EQUITY ~1;006;751~ 908,221 DEFICIT Accumulated net income, beginning of year Accumulated distributions, beginning of ~/ear Deficit, beginning of year Net income, during the year Transition adjustment, during the year (Note 3) Distributions declared, during the year 54,204 (167,270) (113,066) 32,743 (93,721) Accumulated net income, end of year Accumulated distributions, end of year DEFICIT, END OF YEAR ACCUMULATED OTHER COMPREHENSIVE LOSS Accumulated other comprehensive loss, beginning of year Foreign currency translation adiustment, durinc~ the year ACCUMULATED OTHER COMPREHENSIVE LOSS, END OF YEAR DEFICIT AND ACCUMULATED OTHER COMPREHENSIVE LOSS, END OF YEAR UNITHOLDERS' EQUITY ;~,'115t064;' 86,947 ~(363t879} (260,991) ~,: :(248r815) (174,044) i~(32,888) (32,467) ~(128~747i (32,888) (206,932) $ 701,289 56 BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31, 2007 and December 3 I, 2006 (in thousands, except per trust unit amounts, unless otherwise stated) 1. Organization BFI Canada Income Fund (the "Fund") is an open ended, limited purpose trust established under the laws of the province of Ontario and governed by a Second Amended and Restated Declaration of Trust dated January 21, 2005, as supplemented from time to time. The Fund, through its operating subsidiaries, provides vertically integrated non-hazardous solid waste ("waste") services to commercial, industrial, municipal and residential customers in Canada and the south and northeast United States ("U.S."). The Fund makes cash distributions to unitholders based on ail amounts received by the Fund, and IESI Corporation ("IESI"), an indirect subsidiary of the Fund, pays equivalent dividends to participating preferred shareholders ("non-controlling interest"), as determined by the Trustees. The declaration of trust provides that monthly cash distributions are to be paid on or about the fifteenth day of the succeeding month. 2. Summary of Significant Accounting Policies These consolidated financial statements have been prepared in conformity with Canadian generally accepted accounting principles ("GAAP"), are stated in Canadian dollars, and reflect the following significant accounting policies. Basis of presentation The consolidated financial statements include the accounts of the Fund and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated on consolidation. Use of estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions include the following: estimates of the Fund's allowance for doubtful accounts receivable; realization of future income tax assets; future earnings, income tax and other estimates used in the determination of the fair value of goodwill for the Fund's annual test of impairment; deferred costs recoverability assumptions; the useful life of capital and intangible assets; estimates and assumptions used in the determination of the fair value of contingent acquisition payments; accrued accident claims reserves; projected landfill construction and development costs and estimated permitted airspace capacity consumed in the determination of landfill asset amortization; estimated landfill remediation costs; estimated closure and post~closure costs; various economic estimates used in the development of fair value estimates; and future income tax assets and liabilities. Effective February 10, 2004, BFI Usine de Triage Lachenaie Ltd ("Lachenaie"), an indirect subsidiary of the Fund, received approval to expand its landfill by an additional 6.5 million cubic metres which, depending on the annual volume of waste entering the site, is the equivalent of approximately 5 years of operation. The Fund has commenced the process to obtain expansion approvals for this permit, which if not successful would result in a material adjustment, at December 31, 2007, to the following assets: goodwill $19,859 (December 31, 2006 - $19,859) and landfill assets $85,136 (December 31, 2006 - $86,239). Management remains confident that approval for the Lachenaie expansion will be obtained prior to the expiry of the current operating permit. Accordingly no provision for impairment has been recorded. The Fund makes various estimates [n the determination of estimated permitted airspace capacity. These estimates, if not realized, could result in material adjustments to landfill assets, goodwill, and landfill closure and post-closure costs. BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31, 2007 and December 31, 2006 (in thousands, except per trust unit amounts, unless otherwise stated) 57 Cash and cash equivalents Cash and cash equivalents include cash and short-term, highly liquid money market investments that have an original term to maturity of three months or less. Other receivables Other receivables include direct finance lease and long-term finance receivables. Assets leased under terms that transfer substantially all of the benefits and risks and rewards of ownership to customers are accounted for as direct finance lease receivables. Direct finance lease receivables are carried at cost and discounted at the underlying rate implicit in the receivable. Long-term finance receivables are carried at cost plus unearned finance revenues. The fair value of other receivables is estimated using a discounted cash flow analysis applying interest rates that management considers consistent with the credit quality of the borrower. Other receivables are periodically reviewed for impairment and any resulting write-down to the net recoverable amount is recorded in the period in which the impairment occurs. Intangibles Intangible assets include customer collection contracts, customer lists, non-competition agreements, transfer station permits, and trade-names, and all are deemed to have finite lives. Finite life intangibles are amortized on a straight-line basis as follows: Customer collection contracts Customer lists Non-competition agreements Transfer station permits Trade-names Estimated contract term net of attrition 2-12years 2-5 years 10-25 years 2-13 years Goodwill Goodwill is not amortized and is tested at least annually for impairment or more frequently if an event or circumstance occurs that more likely than not reduces the fair value of a reporting unit below its carrying amount. Any resulting write-down, representing the difference between fair value and the carrying amount, is recorded in the period in which the impairment occurs. The annual impairment test was completed on April 30, 2007 and did not result in the recognition of an impairment loss. Deferred costs Deferred costs relate to the development of landfills, including landfill permitting costs, capital projects, acquisition and transaction related costs for acquisitions which have not yet been consummated and other costs which are deferred to a future period. Management periodically reviews the carrying values of deferred costs for impairment and any resulting write-down to the net recoverable amount is recorded in the period in which the impairment occurs. 58 BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31, 2007 and December 31, 2006 (in thousands, except per trust unit amounts, unless otherwise stated) Capital assets Capital assets are recorded at cost and are amortized over their estimated useful lives on a straight-line basis as follows: Buildings and improvements Vehicles and equipment Containers and compactors Furniture, fixtures and computer equipment 10-40 years 3-10 years 5-10 years 3-10 years Landfill assets Landfill assets represent the cost of landfill airspace, including original acquisition cost, incurred landfill construction and development costs, including gas collection systems installed during the operating life of the site, and capitalized landfill closure and post-closure costs. The cost of landfill assets, together with projected landfill construction and development costs, is amortized on a per unit basis as landfill airspace is consumed. Management annually updates landfill capacity estimates, based on survey information provided by independent engineers, and projected landfill construction and development costs. The impact on annual amortization expense of changes in estimated capacity and construction costs is accounted for prospectively. Total available disposal capacity for the purpose of amortizing landfill assets represents the sum of estimated permitted airspace capacity (having received the final permit from the governing authorities) plus future permitted airspace capacity, which represents an estimate of airspace capacity that management believes is probable of being permitted based on the following criteria: Personnel are actively working to obtain the permit or permit modifications necessary for expansion of an existing landfill, and progress is being made on the project; It is probable that the required approvals will be received within the normal application and processing time periods for approvals in the jurisdiction in which the landfill is located; · The Fund has a legal right to use or obtain land associated with the expansion plan; · There are no significant known political, technical, legal or business restrictions or issues that could impair the success of the expansion effort; · Management is committed to pursuing the expansion; and · Additional airspace capacity and related costs have been estimated based on the conceptual design of the proposed expansion. The Fund and its predecessors have been successful in receiving approvals for expansions pursued; however, there can be no assurance that the Fund will be successful in obtaining approvals for landfill expansions in the future. Landfill closure and post-closure costs Costs associated with capping, closing and monitoring the landfill after it ceases to accept waste are recognized at fair value over the landfill's operating life which is the period over which the landfill accepts waste. BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31,2007 and December 31,2006 (in thousands, except per trust unit amounts, unless otherwise stated) The Fund develops estimates for closure and post-closure costs with input from its engineers, and landfill and accounting personnel. Estimates are reviewed at least once annually and consider the various regulations that govern each facility. Revenues derived from the Fund's landfill gas to energy facilities do not reduce the Fund's closure and post-closure cost estimates for periods during or post waste acceptance. The Fund's landfill closure and post-closure cost estimates approximate fair value, as quoted market prices are generally not available. Accordingly, the Fund develops its fair value estimates using present value techniques that considers and incorporates assumptions marketplace participants would use in the determination of these estimates, including inflation, markups, inherent uncertainties due to the timing of work performed, information obtained from third parties, quoted and actual prices paid for similar work and engineering estimates. Inflation assumptions are based on management's understanding of current and future economic conditions and the expected timing of expenditures. An inflation factor of 3.0% and 2.5% has been used in the derivation of fair value estimates for the Fund's Canadian and U.S. landfills, respectively. Fair value estimates are then discounted back to their present value using the credit adjusted risk free rate, which is the rate of interest that is essentially free of default risk, plus an adjustment for the Fund's credit standing. The credit adjusted risk free rate is based on management's understanding of current and future economic conditions and the expected timing of expenditures. Accordingly, the Fund has discounted landfill closure and post-closure costs using a credit adjusted risk free rate of 5.6% and 7.2% for its Canadian and U.S. landfills, respectively. Due to the inherent uncertainty in making these estimates, actual results could differ. Future changes in the Fund's credit standing do not change previously recorded closure and post-closure costs, but impact subsequent fair value calculations. Reliable estimates of market risk premiums are not available as there is no existing market for selling the responsibility of landfill closure and post-closure activities. Accordingly, the Fund has excluded any estimate of market risk premiums in the determination of fair value for landfill closure and post-closure costs. Upward revisions to estimated closure and post-closure costs are discounted using the current credit adjusted risk free rate. Downward revisions to estimated closure and post-closure costs are discounted using the credit adjusted risk free rate when the estimated closure and post-closure costs were originally recorded or a weighted average credit adjusted risk free rate if the period of original recognition cannot be identified. The Fund records the estimated fair value of landfill closure and post-closure costs as airspace is consumed. The total obligation will be fully accrued at the time these facilities cease to accept waste and are closed. Maintenance activities including: environmental monitoring, mowing and fertilizing, leachate management, well monitoring, buffer maintenance, landfill gas to energy collection and flaring systems, and other activities, are charged to operating expenses during the operating life of the landfill. These same costs are estimated and included in the Fund's landfill closure and post-closure accruals for all activities that occur post the landfill's operating life. Maintenance activities are generally required for a period of 30 years post waste acceptance. Accretion, representing an increase in the carrying amount of landfill closure and post-closure cost accruals due to the passage of time, is recognized as an operating expense in the consolidated statement of operations and comprehensive (loss) income and continues post waste acceptance. 6O BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31,2007 and December 31, 2006 (in thousands, except per trust unit amounts, unless otherwise stated) Income taxes Future income taxes are calculated using the liability method of accounting for income taxes. Future income tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities, and are measured using the substantively enacted tax rates and laws that will be in effect when the differences are expected to reverse. The effect of a change in tax rates on future income tax assets and liabilities is recorded to operations in the period in which the change occurs. Unutilized tax loss carryforwards that are not more likely than not to be realized are reduced by a valuation allowance in the determination of future income tax assets. Revenues Revenues consist primarily of waste collection fees from commercial, industrial, municipal and residential customers, and transfer and landfill disposal fees charged to third parties. For waste collection and disposal activities, revenue is recognized when service is provided, persuasive evidence of an arrangement exists, and the price is determinable. Deferred revenue relates to long-term collection contracts, under which advanced billing occurs or cash is received prior to the services being performed. Acquisitions The Fund accounts for acquisitions using the purchase method of accounting and allocates the purchase price to the fair value of assets and liabilities acquired. Acquired assets are amortized over the remaining useful life of the underlying asset. The allocation of the purchase price may require adjustment when information is absent and fair value allocations are presented on an estimated or preliminary basis. Subsequent adjustments to estimated or preliminary amounts are recorded to the purchase price allocation. Certain of the Fund's purchase and sale agreements contain contingent consideration provisions. Contingent consideration which can be reasonably estimated at the date of acquisition and the outcome of which can be determined beyond reasonable doubt, is recognized at fair value in the purchase price allocation. Consideration which is contingent on maintaining or achieving specified revenue or earning levels, satisfying representations and warranties, achieving specified tonnage thresholds, in the case of acquired landfills, or receiving approval from regulatory authorities for landfill expansion, is recognized as an adjustment to the purchase price allocation when the contingency is resolved and the additional consideration is issued or becomes issuable. Additional consideration paid in respect of compensation for services, use of property, or profit sharing is recognized as an expense in the consolidated statement of operations and comprehensive (loss) income. Royalties Certain of the Fund's purchase and sale agreements contain provisions to make royalty payments. Royalty payments are recorded to operating expenses on the consolidated statement of operations and comprehensive (loss) income as amounts are paid or become payable. Impairment of long-lived assets An impairment loss is recognized when events or circumstances indicate that the carrying amount of the long- lived asset is not recoverable and exceeds its fair value. Any resulting impairment loss is recorded in the period in which the impairment occurs. BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31, 2007 and December 31, 2006 (in thousands, except per trust unit amounts, unless otherwise stated) 61 Non-controlling interest Non-controlling interest represents a direct non-controlling equity interest in the Fund through IESl's PPS holdings. The non-controlling interest is entitled to dividends that are economically equivalent to distributions of the Fund. PPSs are recorded at their exchange amount, which is measured at the weighted average trading price of the Fund's trust units at the date of issuance. The weighted average trading price represents the average price of the Fund's trust units for a reasonable period before and after the terms of the IESI acquisition were announced and agreed to. Exchanges of PPSs into trust units of the Fund are recorded at the carrying value of the PPSs at issuance net of net income (loss) and dividends attributable to PPSs to the date of exchange. Trust unit based compensation Trust unit based compensation is recognized as compensation expense and is measured at the fair value of trust units issued on the date of grant. Trust unit options issued with trust unit appreciation rights give the holder the right to surrender to the Fund all or a portion of a trust unit option in exchange for cash equal to the excess of the fair market value, defined as the five day volume weighted average trading price of a trust unit, over the trust unit option exercise price. Trust unit appreciation rights, and changes thereto, are recorded as selling, general and administration expenses when the quoted market price of the trust units exceeds the trust unit option exercise price with an offset to other liabilities. If the holder of the trust unit option elects to purchase trust units, the accrued liability is credited to contributed surplus. Financial instruments Derivatives, including derivatives that are embedded in financial or non-financial contracts that are not closely related to the host contract, subject to certain exceptions, are measured at fair value, even when they are part of a hedging relationship. Non-derivative financial assets and liabilities are measured at fair value, with the exception of the following: loans and receivables; held-to-maturity investments; investments in equity instruments, classified as available for sale, that do not have a quoted market price in an active market; and financial liabilities measured at amortized cost. Gains or losses on financial instruments measured at fair value are recognized in the consolidated statement of operations and comprehensive (loss) income in the periods in which they arise, with the exception of the following: gains and losses on financial assets classified as available for sale and certain financial instruments that are part of a designated hedging relationship. Classifications of financial instruments are as follows: Held for trading - is a financial asset or liability that meets any of the following conditions: it is acquired or incurred principally for the purpose of sale or repurchase in the near term, part of a portfolio of identified financial instruments that are managed together, and is a derivative not designated for hedge accounting or it is designated by the Fund upon initial recognition as held for trading. Held for trading financial instruments are measured at fair value. Upon initial recognition, the Fund has designated the following financial assets as held for trading: cash and cash equivalents and funded landfill post-closure costs. Reclassification of financial instruments while held or issued is prohibited. Gains or losses on funded landfill post-closure costs are recorded in the consolidated statement of operations and comprehensive (loss) income as a gain or loss on financial instruments with an offset to funded landfill post-closure costs on the Fund's consolidated balance sheet. Loans and receivables- are non-derivative financial assets resulting from the delivery of cash or other assets by a lender to a borrower in return for a promise to repay on a specified date or dates, or on demand, typically with interest. Loans and receivables exclude debt securities and loans and receivables designated as held for trading or available for sale upon initial recognition. Loans and receivables are measured at amortized cost. The Fund has classified accounts receivable and other receivables as loans and receivables. 62 BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31, 2007 and December 31, 2006 (in thousands, except per trust unit amounts, unless otherwise stated) Held-to-maturityinvestments - are non-derivative financial assets with fixed or determinable payments and fixed maturity that the Fund has a positive intention and ability to hold to maturity. Exclusions include those financial assets that upon initial recognition are designated as held for trading, designated as available for sale, and those financial assets that meet the definition of loans and receivables. Held-to-maturity investments are measured at amortized cost, subsequent to initial recognition. The Fund has no financial assets designated as held-to- maturity. Available for sale - are non-derivative financial assets that are designated as available for sale, or that are not classified as loans and receivables, held-to-maturity investments, or held for trading. Available for sale financial assets are measured at fair value. The Fund has no financial assets designated as available for sale. Other financial liabilities - includes all financial liabilities which are not classified as held for trading. Other financial liabilities are measured at amortized cost, subsequent to initial recognition. The Fund has classified accounts payable, accrued charges, current portion of and long-term debt, and other liabilities (contingent acquisition payables), as other financial liabilities. Derivatives are financial instruments or other contracts that embody all of the following characteristics: · its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, a credit rating or credit index, or other variable (sometimes called the "underlying"), provided that, in the case of a non-financial variable, the variable is not specific to a party to the contract; · it requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors; and · it is settled at a future date. The Fund has three types of derivative financial instruments, classified as held for trading, which include the following: interest rate swaps, foreign currency exchange agreements, and old corrugated cardboard ("OCC") hedges. Gains or losses on these derivative instruments are recorded in the consolidated statement of operations and comprehensive (loss) income, as a component of net income, as a gain or loss on financial instruments with an offset to other assets or other liabilities on the Fund's consolidated balance sheet. Embedded derivatives are components of a hybrid (combined) instrument that also includes a non-derivative host contract. The result is that some of the cash flows of the combined instrument vary in a way similar to a stand-alone derivative. An embedded derivative causes some or all of the cash flows that would otherwise be required by the contract to be modified according to a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, a credit rating or credit index, or other variable, provided that, in the case of a non-financial variable, the variable is not specific to a party to the contract. An embedded derivative is separated from its host contract when all of the following conditions are met: · the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract; · the separated instrument would meet the definition of a derivative; and · the hybrid (combined) instrument is not measured at fair value with changes in fair value recognized in net income. BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years end ed Oece tuber 31, 2007 and December 31,2006 (in thousands, except per trust unit amounts, unless otherwise stated) 63 The Fund has a redemption option on its senior secured series A and B debentures, an embedded derivative, which is not closely related to the debt host contract and is classified as held for trading. The fair value of the embedded derivative is Snil. Any gains or losses on this embedded derivative will be recorded in the consolidated statement of operations and comprehensive (loss) income as a gain or loss on financial instruments with an offset to other assets or other liabilities on the Fund's consolidated balance sheet. The Fund has only recognized embedded derivatives existing in contracts that were acquired or substantially modified on or subsequent to January 1,2003. Transaction costs incurred for the acquisition or issue of all financial assets or liabilities are recorded in the consolidated statement of operations and comprehensive (loss) income when incurred. Foreign currency translation Self-sustaining foreign operations are translated using the current rate method. Under this method, assets and liabilities are translated to Canadian dollars from their functional currency using the exchange rate in effect at the consolidated balance sheet date. Revenues and expenses are translated to Canadian dollars at the monthly average exchange rates. The resulting translation adjustments are included in other comprehensive (loss) income and are only included in the determination of net income when a reduction in the investment in these foreign operations is realized. Gains or losses on foreign currency balances or transactions that are designated as hedges of a net investment in self-sustaining foreign operations are offset against exchange losses or gains included in other comprehensive (loss) income. Disposal of long-lived assets and discontinued operations Long-lived assets, to be disposed of other than by sale, such as abandonment or exchange for similar productive long-lived assets, are classified as held and used until the disposal transaction occurs. Long-lived assets held for sale are carried at the lower of their carrying amount or fair value Ness cost to sell. Employee future benefits The costs of retirement benefits, other than pensions and certain post-employment benefits, are recognized over the period in which the employee renders services in return for those benefits. Other post-employment benefits are recognized when the event giving rise to the obligation occurs. The Fund maintains both defined contribution and defined benefit pension plans and accrues its obligations under employee benefit plans and the related costs, net of plan assets. The Fund has adopted the following policies: The cost of pensions earned by employees is actuadally determined using the projected unit credit cost method prorated on service and management's best estimate of expected plan investment performance for funded plans, salary escalation, and retirement ages of employees. For the purpose of calculating the expected return on plan assets, those assets are valued at fair value. The excess of net actuarial gain (loss) over 10% of the greater of the benefit obligation and the fair value of plan assets is amortized over the remaining average service period of active employees. The average remaining service period of the active employees covered by the defined benefit pension plan is 7.8 years. · The initial transition asset is amortized over a period of 11.9 years. Variable interest entities Variable interest entities ("VIE's") are consolidated when the Fund is deemed to be the primary beneficiary of the VIE. The primary beneficiary is the party that is either exposed to a majority of the expected losses from the VlE's activities or is entitled to receive a majority of the VIE's residual returns or both. The Fund has determined that it is not the primary beneficiary of any VIE. 64 BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31, 2007 and December 31, 2006 (in thousands, except per trust unit amounts, un[ess otherwise stated) Long-term incentive plan ("LTiP") - U.S. Trust units of the Fund acquired for the benefit of its U.S. LTIP participants are held in a rabbi trust. A rabbi trust, as a grantor trust, requires that the assets held in the trust be available to satisfy the claims of general creditors in the event of bankruptcy. Trust units of the Fund acquired by the trust are recorded to unitholders' equity. The deferred compensation obligation is classified as a trust unitholders' equity instrument and subsequent changes in the fair value of the trust units are not recognized in either treasury stock or deferred compensation obligations. As U.S. LTIP participants draw trust units of the Fund from the rabbi trust, both the deferred compensation obligation and trust units acquired by the U.S. LTIP reduce by a similar amount. New Accounting Policies Requiring Adoption Financial instruments Canadian Institute of Chartered Accountants ("CICA") accounting standards, Financial Instruments - Disclosures (section 3862), Financial Instruments - Presentation (section 3863), and Capital Disclosures (section 1535) require additional disclosures with respect to the significance and risks, and management, of financial instruments and capital disclosures as they relate to the Fund's objectives, policies and process for managing capital. The standards are applicable to annual and interim financial statements for fiscal years beginning on or after October 1, 2007. The Fund is currently evaluating the impact of adopting these new standards and does not expect their adoption to have a material impact on the Fund's consolidated financial statements. Goodwill and intangible assets CICA accounting standard, Goodwill and Intangibles (section 3064), replaces Goodwill and Other Intangibles (section 3062) and Research and Development Costs (section 3450). The primary changes to CICA 3064 establish standards for the recognition, measurement, presentation and disclosure of internally generated goodwill and intangible assets. This section applies to annual and interim financial statements relating to fiscal years beginning on or after October 1, 2008, with early adoption encouraged. Adopting this section is not expected to have any impact on the Fund's consolidated financial statements. 3. Change in Accounting Policy On January 1, 2007, the Fund adopted revisions to the CICA accounting standard for Accounting Changes (section 1506). The revised standard sets forth expanded disclosures for changes in accounting policies, accounting estimates, and accounting errors. The standard requires that accounting changes be applied retrospectively unless otherwise permitted or where it is deemed impractical. The standard also requires that the Fund disclose new primary sources of GAAP that have been issued, but are not yet effective, and have not been adopted. On January 1, 2007, the Fund adopted the following CICA accounting standards: Financial Instruments - Recognition and Measurement (section 3855), Financial Instruments - Disclosure and Presentation (section 3861), Hedges (section 3865), Comprehensive Income (section 1530), Investments (section 3051), and Equity (section 3251). The Fund adopted these standards retrospectively without restatement, with the exception of the presentation of accumulated gains and losses on the translation of self-sustaining foreign operations. The transitional provisions for CICA section 3855 do not require the recognition, de-recognition and measurement of policies for periods prior to the Fund's effective date of adopting these standards to be reversed or restated. At the date of adoption, the Fund is required to recognize and re-measure, as required, all financial assets and liabilities, based on their classifications. All adjustments to previously recorded carrying amounts, with the exception of financial assets classified as available for sale, are recognized as an adjustment to accumulated net income. BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31,2007 and December 31,2006 (in thousands, except per trust unit amounts, unless otherwise stated) 65 The Fund selected January 1, 2003 as the transition date for its embedded derivatives. Accordingly, only embedded derivatives included in contracts which were issued, acquired or substantively modified on or subsequent to January 1, 2003 have been recognized as a financial asset or liability. The effect of adopting these sections is as follows: Consolidated Balance Sheet Funded landfill post-closure costs Deferred financing costs Future income tax liabilities Non-controlling interest Unitholders' equity 4. Acquisitions Effective August 31, 2007, the Fund acquired all of the issued and outstanding common shares of Winters Bros. Waste Systems, Inc. ("Winters Bros."), an integrated waste services provider based in New York. Total cash consideration, including acquisition and related costs and net of acquired cash and cash equivalents, amounted to $306,253. The preliminary purchase price is allocated as follows: Current assets (excluding cash and cash equivalents of $1,521 ) Intangibles Goodwill Capital assets Deferred costs Current liabilities Other liabilities Future income tax liabilities Consideration Cash (net of acquired cash and cash equivalents) Acquisition and related costs The allocation of the purchase price is subject to final fair value and working capital adjustments. Final fair value or working capital adjustments that increase or decrease the fair value of certain assets or liabilities will be recorded to the purchase price allocation. Results for the Winters Bros. acquisition have been included in the Fund's consolidated statement of operations and comprehensive (loss) income, and U.S. northeast segment, since the date of acquisition. Goodwill is not deductible for tax purposes. For the year ended December 31, 2007, and excluding the Winters Bros. acquisition, the Fund acquired all of the outstanding common shares and solid waste collection assets of one waste management company in each of Canada and the U.S., and acquired the solid waste collection assets, including various current assets, and assumed various liabilities of five waste management companies in Canada and ten in the U.S. Aggregate consideration, including consideration in respect of liabilities assumed amounted to $60,557 and is allocated to 66 BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31, 2007 and December 31, 2006 {in thousands, except per trust unit amounts, unless otherwise stated) the U.S. northeast, U.S. south and Canadian segments as follows: $1,482, $42,030, and $17,045, respectively. The allocation of purchase prices is as follows: intangibles $18,682, goodwill $23,752, capital assets $24,256, future income tax liabilities ($6,537), and net current assets $404. Aggregate cash consideration amounting to $56,123 excludes holdbacks and cash payments due to sellers for achieving various business performance targets. The allocation of certain purchase prices are absent final fair value adjustments and adjustments for the payment of contingent consideration for achieving various business performance targets. Final fair value and contingent consideration adjustments that increase or decrease the fair value of certain assets or liabilities will be recorded against the respective purchase price allocation. Goodwill amounting to $9,264 is not deductible for tax purposes. For the year ended December 31, 2006, the Fund acquired all of the outstanding common shares of two waste management companies, one in each of the U.S. and Canada, and acquired the solid waste collection assets, various current assets, and assumed various liabilities of seven waste management companies in the U.S. and three in Canada. Aggregate consideration, including consideration in respect of liabilities assumed amounted to $38,077 and is allocated to the U.S. northeast, U.S. south and Canadian segments as follows: $2,541, $28,055, and $7,481, respectively. The allocation of the purchase prices resulted in the Fund recognizing total intangibles, goodwill, capital assets and other net liabilities of $12,392, $15,734, $12,557 and ($2,606), respectively. Aggregate cash consideration amounted to $33,578 at that time. Goodwill amounting to $7,810 is not deductible for tax purposes. The results of these acquisitions have been included in the consolidated financial statements from their respective closing dates. 5. Intangibles Customer collection contracts Customer lists Non-competition agreements Transfer station permits Trade-names $?~£ ~41~,197 96,5~"$~:~;144,6867~$~408,434 December 31, 2006 Accumulated Cost Amortization Net Book Value Additions Customer collection contracts $ 110,353 $ 62,780 $ 47,573 $ 855 Customer lists 28,066 7,207 20,859 10,341 Non competition agreements 3,990 1,796 2,194 1,196 Transfer station permits 6,272 1,146 5,126 Trade-names 2,300 848 1,452 $ 150,981 $ 73,777 $ 77,204 $ 12,392 BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31,2007 and December 31, 2006 (in thousands, except per trust unit amounts, unless otherwise stated) 67 6. Capital Assets Land and improvements Containers and compactors ~1~726; ~' December 31, 2006 Accumulated Cost Amortization Net Book Value Land and improvements $ 34,934 $ $ 34,934 Buildings and improvements 64,200 10,754 53,446 Vehicles and equipment 248,021 90,310 157,71 I Containers and compactors 113,151 41,199 71,952 Furniture, fixtures and computer equipment 12,071 7,742 4,329 $ 472,377 $ 150,005 $ 322,372 7. Landfill Assets Landflllassets December 31,2006 Accumulated Cost Amortization Net BookValue Landfill assets $ 906,508 $ 176,218 $ 730,290 Effective February 10, 2004, Lachenaie received approval to expand its landfill by an additional 6.5 million cubic metres which, depending on the annual volume of waste entering the site, is the equivalent of approximately 5 years of operation. Future approval to continue operating the Lachenaie landfill is expected to increase its capacity, and accordingly its operating life, by an additional 27.2 million cubic metres. Management expects to receive the necessary permits prior to the expiry of the current permit. Consequently, Lachenaie landfill costs are amortized over total estimated airspace of approximately 33.2 million cubic metres. The net book value of the Lachenaie landfill at December 31, 2007 is $85,136 {December 31,2006 - $86,239). Effective August 28, 2007, the Fund received all required approvals to expand the Seneca Meadows landfill. Accordingly, Seneca Meadows landfill costs are amortized over total estimated airspace, which is the equivalent of approximately 18 years of operation. The net book value of the Seneca Meadows landfill at December 31, 2007 is $224,689 (December 31, 2006 - $264,094). 68 BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31, 2007 and December 31, 2006 (in thousands, except per trust unit amounts, unless otherwise stated) 8. Other Assets and Other Liabilities Fair value of OCC hedges December 31 2006 3,216 3,812 $ 7,070 Other liabilities Fair value of interest rate swaps $ Fair value of OCC hedges Contingent acquisition payables 383 383 9. Long-term Debt December 31 ~ ~ 2007~ 2006 Term loan $ 227,234 Senior secured debentures, series A 47,000 Senior secured debentures, series B ~ 58,000 58,000 Revolving credit facilities 132,563 Other 78,707 543,504 Less current portion of long-term debt 50 $ //~801~g73~ S 543,454 Term loan and U.S. revolving credit facility Effective August 31, 2007, the Fund entered into a third amendment to its Amended and Restated Revolving Credit and Term Loan Agreement. The amendment makes available an additional U.S. $320,000 bringing the total available capacity under the U.S. revolving credit facility to U.S. $575,000. As a condition of lending, IESI is required to enter into and maintain not less than 40% of total funded debt, as defined therein, on a fixed rate basis within 30 days from the third amendment date (Note 19). The revolving credit facility is available to finance working capital requirements, qualifying capital expenditures, acquisitions, and for general corporate purposes. At December 31, 2007, U.S. $333,500 (2006 - U.S. $76,000} is drawn on the revolving credit facility and U.S. $195,000 (2006 - U.S. $195,000) is drawn on the term loan. The term loan and revolving credit facility bear interest at various interest rates plus an applicable margin, interest is payable quarterly in arrears, and unutilized portions of the revolving credit facility are subject to a commitment fee. The term loan and revolving credit facility mature on January 21, 2012 and January 21, 2010, respectively. The term loan and revolving credit facility are secured by a first priority perfected security interest over all assets of 1ESI and its subsidiaries and includes all of the equity interests of IESI's direct and indirect subsidiaries and all of IESl's common shares. BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31,2007 and December 31,2006 (in thousands, except per trust unit amounts, unless otherwise stated) 69 Senior secured debentures, series A and B ("debentures") On June 25, 2004, BFI Canada Holdings Inc. ("Holdings"), a subsidiary of the Fund, issued $47,000 senior secured, series A debentures, bearing interest at 6.123% and $58,000 senior secured, series B debentures, bearing interest at 7.015%. Interest on each series of debenture is payable quarterly in arrears, commencing on September 26, 2004. The series A and B debentures are payable in full on June 26, 2009 and June 26, 2014, respectively. The debentures are redeemable in whole or in part from time to time at a price equal to the greater of par and the net present value of all scheduled payments of interest and principal using a discount rate equivalent to the sum of the Government of Canada Yield plus a margin on either series of debenture. The debentures are secured by a charge over all the personal and real property of Holdings and Ridge Landfill Trust, a wholly-owned subsidiary of the Fund, and their subsidiaries, the shares and intercompany indebtedness held by 4264126 Canada Limited, a subsidiary of the Fund, and the Fund, respectively. The debentures rank equally with the Fund's Canadian revolving credit facility. Canadian revolving credit facility Effective March 21, 2007, the Fund entered into a Second Amending Agreement to its Fourth Amended and Restated Credit Agreement. The second amendment increases the total committed Canadian segment credit to $150,000 from $80,000 and the total available credit from this facility, subject to lender consent, to $200,000 from $120,000. The maturity date was extended to May 30, 2011 from June 30, 2010, and the maturity date remains subject to one year extensions. The revolving credit facility is available to finance working capital requirements, qualifying capital expenditures, and acquisitions. At December 31, 2007, $72,000 (2006 - $44,000) is drawn on the revolving credit facility. The revolving credit facility bears interest at various interest rates plus an applicable margin, is payable monthly in arrears and unutilized portions of the facility are subject to a commitment fee. The facility is secured by a first priority perfected security interest over all personal and real property of Holdings and its subsidiaries, the shares and intercompany indebtedness held by 4264126 Canada Limited, and the Fund, respectively. The facility ranks equally with the senior secured, series A and B debentures. Other In October 2005, IESI entered into a 30 year agreement which permits it access to variable rate demand solid waste disposal revenue bonds ("iRBs"). The IRBs are made available, to a maximum of U.S. $45,000, to fund a portion of Seneca Meadows landfill construction and equipment expenditures. The IRBs bear interest at LIBOR less an applicable discount, and interest is payable monthly in arrears, commencing on November 1, 2005. The IRBs mature on October 1, 2035 and are secured by a letter of credit in the amount of the drawn facility. At December 31,2007, U.S. $45,000 (2006 - U.S. $45,000) of IRBs have been drawn under this facility. In November 2006, IESI entered into a 22 year agreement for additional IRBs. The IR8s are made available, to a maximum of U.S. $35,000, and are available to fund a portion of landfill construction, equipment, vehicle, and container expenditures in the Fund's Pennsylvania operations. The IRBs bear interest at LIBOR less an applicable discount, and interest is payable monthly in arrears, commencing on December 1, 2006. The IRBs mature on November 1, 2028 and are secured by a letter of credit in the amount of the drawn facility. At December 31, 2007 U.S. $35,000 (2006 - U.S. $22,500) has been drawn under this facility and U.S. Snil (2006 - U.S. $685) of cash, included in cash and cash equivalents at December 31, 2007, is restricted for the purpose of funding future landfill construction and equipment expenditures in the U.S. northeast. 7O BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31, 2007 and December 31,2006 (in thousands, except per trust unit amounts, unless otherwise stated) In March 2007, the Fund entered into a new 15 year agreement for IRBs in the state of Texas. The IRBs are made available, to a maximum of U.S. $24,000 and are available to fund a portion of landfill construction activities, and equipment, vehicle, and container expenditures in the Fund's Texas operations. The IRBs bear interest at LIBOR less an applicable discount, and interest is payable monthly in arrears, commencing on May 1, 2007. The IRBs mature on April 1, 2022 and are secured by a letter of credit in the amount of the drawn facility. At December 31, 2007 U.S. $24,000 (2006 - U.S. Snil) has been drawn under this facility and U.S. S1,619 (2006 - U.S. Snil) of cash, included in cash and cash equivalents at December 31, 2007, is restricted for the purpose of funding future landfill construction and equipment expenditures in the state of Texas. Entreprise Sanitaire F.A. Lte~ ("F.A?), an indirect subsidiary of the Fund, had a bank loan due March 12, 2007 which bore interest at 7.0%. A city in the province of Quebec was providing security on the bank loan. The purpose of this loan was for F.A. to acquire containers which were furnished to the city. This loan was repaid directly by the city to the lender in monthly amounts of principal and interest. Included in the current portion of other receivables for the year ended December 31, 2006 is a note due from this city having the same terms and conditions as the underlying bank loan. Interest on long-term debt amounted to $42,964 (2006 - $34,307). Principal repayments required in each of the next five years ending December 31 and thereafter are as follows: 2008 2009 2010 2012 Thereafter BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31, 2007 and December 31, 2006 (in thousands, except per trust unit amounts, unless otherwise stated) 71 10. Landfill Closure and Post-Closure Costs The following tables outline key assumptions used to determine the fair value of landfill closure and post-closure costs, the expected timing of landfill closure and post-closure expenditures, and reconcile beginning and ending landfill closure and post-closure costs: Fair value of legally restricted assets Undiscounted closure and post-closure costs Credit adjusted risk free rate - Canadian segment landfills Credit adjusted risk free rate - U.S. segment landfills Expected timing ofundiscountedlandfillclosure and post-closure expenditures 2008 2009 2010 2011 2012 Therea~er Landfill closure and post-closure costs, beginning of year Provision for landfill closure and post-closure costs, during the year Accretion expense, during the year Landfill closure and post-closure expenditures, during the year Revisions to estimated cash flows, during the year Foreign currency translation adjustment, durinc/the year Landfill closure and post-closure costs, end of year 66,405 8,180 2,932 (13,016) 177 {143) 64,535 Effective February 10, 2004, the Fund received approval to expand the Lachenaie landfill's airspace capacity. As a condition of this approval, the Fund is required to deposit monies into a social utility trust for the purpose of settling post-closure costs. The funding amount is established by the Quebec Government based on each cubic metre of waste accepted at the Lachenaie landfill and payment is due quarterly. At December 31, 2007, funded landfill post-closure costs, representing the fair value of legally restricted assets, total 55,976 (December 31, 2006 - $4,142). At December 31, 2007, $5,586 (December 31, 2006 - $3,794) was deposited into the social utility trust with the balance, 5390 (December 31,2006 - $348) remaining unfunded and included in accounts payable. At December 31, 2007, the Fund has an accrued environmental liability of $10,712 (December 31, 2006 - $13,002). The accrued environmental liability is included in landfill closure and post-closure costs and relates principally to an inactive landfill which the Fund acquired on the acquisition of IESI. These estimated costs have a total undiscounted value amounting to $8,459 (December 31,2006 - $11,553). 72 BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31,2007 and December 31,2006 (in thousands, except per trust unit amounts, unless otherwise stated) 1 1. Income Taxes The Fund is taxed as a "mutual fund trust" for income tax purposes. Pursuant to the Second Amended and Restated Declaration of Trust, the Fund distributes all taxable income it earns to its unitholders and deducts these distributions for income tax purposes. Canadian and U.S. based corporate subsidiaries are subject to tax on their taxable income at a rate of approximately 34% and 38% (2006 - 34% and 38%), respectively. On October 31, 2006, the Minister of Finance (Canada) announced proposed changes to the income tax treatment of distributions and allocations to and from the Fund. On June 12, 2007, the proposed legislation, with certain modifications, passed third reading and received royal assent on June 22, 2007. The proposals, which are effective for the 2011 taxation year, subject to certain conditions, make certain income earned by the Fund taxable in a manner similar to income earned by a corporation. The following table reconciles the difference between income taxes that would result solely by applying statutory rates to the Fund's pre-tax income and income tax expense (recovery) recorded in the consolidated statement of operations and comprehensive (loss) income. December 31 2006 income before income taxes and non-controlling interest income tax expense at the combined basic rate Tax on income attributable to trust unitholders and non-controlling interest Large corporations and state tax Withholding tax on foreign dividends and interest Tax on other non-deductible expenses Revision to unutilized tax loss carryforwards and tax base of capital assets Other $ 52,851 17,689 (12,660) 3,413 2,348 4,466 773 (3,112) Income tax expense at the combined basic rate ~$~,697 $ 12,917 December 31 Unutilized tax loss carryforwards, net of valuation allowances Tax value of deferred costs in excess of carrying value Deferred financing costs and offering expenses Accounting provisions not currently deductible for tax Accounting losses not currently deductible for tax Other 5,613 26,275 897 72,908 Future income tax liabilities CarTing value of capital assets in excess of tax value 25,503 Carrying value of intangibles and landfill assets in excess of tax value 76,391 Carrying value of deferred costs in excess of tax value 2,251 Other 685 ~:~ 128,699 104,830 Net future income tax liabilities $ ~ :$7~668; $ 31,922 BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31, 2007 and December 31, 2006 {in thousands, except per trust unit amounts, unless otherwise stated) 73 Net future income tax liabilities, totaling $57,668 (2006 - $31,922), is comprised of net future income tax liabilities in Canada amounting to $2,129 (2006 - $1,343) and net future income tax liabilities in the U.S. amounting to $55,539 (2006 - $30,579). Subsidiaries of the Fund have unutilized tax losses amounting to $98,$32 (2006 - $116,818) which expire 2009 to 2027. The realization of the resulting future income tax assets, net of a $3,085 valuation allowance on certain U.S. unutilized tax loss carryforwards, totaling $40,646 (2006 - $40,123) is dependent on the generation of future taxable income during the years in which those temporary differences become deductible. Based on management's estimate of projected future taxable income and tax planning strategies, management expects to realize these future income tax assets in advance of expiry. On the Fund's acquisition of IESI, [ESI issued a U.S. $160,000 note payable ("U.S. note"). Effective August 28, 2007, the U.S. note was cancelled. For the purposes of determining taxable income, IESI has taken the position that the note and its related interest was commercially reasonable and has deducted the interest paid on its note on this basis. Management has taken steps to ensure that the U.S. note was commercially reasonable, however, there can be no assurance that U.S. taxation authorities will not seek to challenge the treatment of the U.S. note as debt or the amount of interest expense deducted, which could increase IESI's taxable income and accordingly its U.S. federal income tax liability. If the U.S. taxation authorities were successful in their challenge, IESI's after tax income available for distribution would be reduced which would affect the Fund's ability to make distributions and dividend payments to its unitholders and non-controlling interest. 12. Non-controlling Interest On the closing of the IESI acquisition, IESI issued 22,266 PPSs which represent a direct non-controlling interest in the Fund. PPSs are exchangeable into trust units of the Fund, subject to various conditions, on a one-to-one basis. The non-controlling interest is entitled to dividends that are economically equivalent to distributions of the Fund. The PPSs were initially recorded at their exchange amount, which is measured at the weighted average trading price of trust units of the Fund. The weighted average trading price represents the average price of the Fund's trust units for a reasonable period before and after the terms of the IESI acquisition were announced and agreed to. Exchanges of PPSs are recorded at the carrying value of the PPSs at issuance net of net income and dividends attributable to PPSs to the date of exchange. For the year ended December 31, 2007, 386 (2006 - 695) PPSs were exchanged for trust units of the Fund. Non-controlling interest, beginning of year PPSs exchanged for trust units, during the year PPSs cancelled, during the year Net income a~ributab[e to PPSs, during the year Dividends attributable to PPSs, during the year Transition adjustment (Note 3) Non-controlling interest, end of year December 31 PPSs 2006 12,469 S 312,614 (695) (17,197) 7,191 (20,582) 11,774 $ 282,026 74 BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31, 2007 and December 31, 2006 (in thousands, except per trust unit amounts, unless otherwise stated) On the acquisition of IESI, a portion of PPSs issued to various IESI selling shareholders were held in escrow to settle various representations and warranties. The settlement of these representations and warranties in February 2007 resulted in the cancellation of 250 PPSs totaling $6,638 which were recorded at the exchange amount. 13. Unitholders' Equity Trust units An unlimited number of trust units may be issued. Each trust unit is transferable, voting and represents an equal and undivided beneficial interest in any distributions from the Fund whether of income, net realized capital gains or other amounts, and in any net assets of the Fund in the event of termination or wind-up. Effective April 5, 2007, the Fund closed its offering of 3,565 trust units, including the exercised over-allotment option, for gross proceeds of $93,047. Trust unit issue costs and the related tax effect amounted to $5,447 and $1,852, respectively. At December 31, 2007, 108 (December 31, 2006 - 45) trust units were held by the U.S. LTIP plan rabbi trust. Class A unit Pursuant to the Second Amended and Restated Declaration of Trust one Class A unit was issued to IESI. The Class A unit provides its holder the right to vote with trust units of the Fund on all matters on the basis of one vote for each trust unit receivable on exercise of the exchange rights for each PPS. The Class A unit will generally vote together with trust units of the Fund at all unitholder meetings or in respect of any written resolutions of unitholders. The holder of the Class A unit has the right to designate up to two Trustees of the Fund. The entitlement to designate Trustees is dependent on the ownership interest of the nomcontrolling interest and the right to designate two Trustees is conditional on the non-controlling interest holding an ownership interest in the Fund, on a fully diluted basis, in excess of 20%. If the ownership interest of the non-controlling interest falls below 20%, but is greater than 10%, the Class A unitholder has the right to designate one Trustee of the Fund. If the ownership interest of the non-controlling interest falls below 10%, the Class A unitholder has no right to designate any Trustees of the Fund. At December 31, 2007, the indirect ownership interest held by the non-controlling interest is approximately 16.2% (2006 - 18.0%). The Second Amended and Restated Declaration of Trust provides that for so long as any PPSs remain outstanding, the Trustees shall not declare payable or pay or make any distribution of distributable cash flow, as defined therein, or other distribution of cash or property on a trust unit of the Fund unless IESI declares a payment or dividend to holders of the PPSs in an amount equal to the per trust unit distribution payable to unitholders of the Fund. The Class A unit is redeemable at the option of the holder at any time or at the option of the Fund at any time after the date that no PPSs are outstanding and the Class A unit rights against the Fund have ceased. The redemption price of the Class A unit will be for a nominal amount. Normal course issuer bid On November 6, 2006, the Fund received approval to commence a normal course issuer bid for up to 2% of the trust units outstanding in any 30 day period and not more than 10% of trust units outstanding in any 365 day period, where total trust units outstanding is equal to 53,617. The normal course issuer bid has terminated and no trust units were repurchased. BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31, 2007 and December 31, 2006 (in thousands, except per trust unit amounts, unless otherwise stated) 75 Details of issued trust, and Class A units for the year ended December 31, 2007 are as follows: December 31 Trust units issued and outstanding, beginning of year Trust units issued, during the year Trust units issued on exchange of PPSs, during tbe year Trust units issued and outstanding, end of year Class A units issued and outstanding, beginning of year Class A units issued, during the year Class A units issued and outstanding, end of year i~g~2007 2006 52,922 695 57,568 ~ 53,617 Accumulated other comprehensive loss, representing accumulated foreign currency translation adjustments, is comprised principally of accumulated exchange losses on goodwill and capital and landfill assets, partially offset by accumulated exchange gains on long-term debt, landfill closure and post-closure costs, and future income tax liabilities. The basic weighted average trust units outstanding for the year ended December 31, 2007 totaled 56,564 (2006 - 53,506). The calculation of net income per trust unit, basic, is net of the non-controlling interest's share of net income, and amounts to $0.56 (2006 - $0.61). The diluted weighted average trust units outstanding include the exchange of all PPSs, 11,239 (2006 - 11,885), into trust units of the Fund and totals 67,803 (2006 - 65,391). The calculation of net income per diluted trust unit amounts to $0.56 (2006 - $0.61). 14. Trust Unit Based Compensation Trust unit options, subject to unitholder approval, are granted to certain directors, officers or management employees at the discretion of the Board of Trustees of the Fund, or its designate. Trust unit options, in the absence of any other determination, are exercisable equally on the first, second, third and fourth anniversary and expire on the 10t~ anniversary of the grant date. The Fund has reserved 1,750 trust units for issuance under the trust unit option plan. The exercise date of trust unit options may be accelerated, at the discretion of the Board of Trustees of the Fund, or its designate. Trust unit options are not transferable or assignable. On February 14, 2006, the Board of Trustees issued 1,000 trust unit options, ali of which have trust unit appreciation rights, to certain executive management of the Fund. Trust unit options issued on February 14, 2006 are exercisable equally on January 1, 2007, January 1, 2008 and January 1, 2009 and have an exercise price of $29.15. The market value of the trust units on the grant date was $28.35. On termination of employment or death, the trust unit options will be immediately exercisable. Outstanding, beginning of year Granted, during the year Exercised, during the year Forfeited, during the year Expired, during the year December31 2006 Number of Weighted trust average unit options exercise pri¢~ $ 1,000 $ 29.15 $ $ $ 76 BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31,2007 and December 31,2006 (in thousands, except per trust unit amounts, unless otherwise stated) Compensation expense recorded in selling, general and administration expenses amounted to Snil (2006 - Snil) for the year ended December 31, 2007. The weighted average remaining contractual life of the trust unit options is 8.0 years and at December 31, 2007, 333 trust unit options are exercisable. 15. Financing Costs With the adoption of CICA section 3855, financing costs are recorded in the consolidated statement of operations and comprehensive (loss) income when incurred. Accordingly, amendments to the Fund's Amended and Restated Revolving Credit and Term Loan Agreement in the U.S. and Fourth Amended and Restated Credit Agreement in Canada resulted in financing costs totaling $7,042 and $150, respectively, for the year ended December 31, 2007 (2006 - Snil). 16. Net Foreign Exchange Loss (Gain) As a condition of the Fund entering into a third amendment to its Amended and Restated Revolving Credit and Term Loan Agreement in the U.S., the Fund's U.S. note due from IESI was cancelled, effective August 31, 2007. Prior to cancellation, the U.S. note was eliminated on the consolidation and was not included in the net investment of IESI, a self sustaining foreign operation. Accordingly, the U.S. note was translated as if it was a third-party foreign currency trade balance. The resulting foreign exchange loss on the cancellation and translation of this note for the year ended December 31, 2007 amounted to $17,390 (2006 - $96). The balance of the foreign exchange loss (gain) is due principally to changes in the foreign exchange rate from the date interest is due on notes receivable to the date interest is received from IESI and realized gains on the settlement of derivative financial instruments. 17. Commitments and Contingencies (i) The Fund leases buildings and equipment under various operating leases. Future lease payments for the next five years ending December 31 and thereafter are as follows: 2008 2009 2010 2011 2012 Therea~er (ii) (iv) The Fund is the successor to a license agreement to use the trade name "BFI" and the related logo, subject to certain restrictions. The agreement was amended on February 22, 2002, whereby a one-time payment of $2,000 was made on April 25, 2002 in full satisfaction of all royalty obligations under the license agreement payable through June 1, 2015 (effectively the initial 15-year term). The Fund has two additional 10 year extension options at a cost of $600 and $1,500, respectively, per annum. Effective February 10, 2004, the Fund received approval to expand the capacity of the Lachenaie landfill by an additional 6.5 million cubic metres which, depending on the annual volume of waste entering the site, is the equivalent of approximately 5 years of operation (see Note 7). As a result, the Fund is required to pay a royalty of $1.50 per tonne for each tonne of waste accepted in the expansion area to a maximum of $1,500 per annum. This royalty agreement has a life of 4 years and a maximum cumulative payment of $6,000. To December 31, 2007, the Fund has either accrued or paid royalties amounting to $5,500. The Fund enters into various commitments in the normal course of business. At December 31, 2007, the Fund has issued letters of credit amounting to $189,484 (2006 - $171,878) and performance bonds totaling $172,504 (2006 - $141,696). BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31, 2007 and December 31, 2006 (in thousands, except per trust unit amounts, unless otherwise stated) 77 (V) On the acquisition of IESI, the Fund assumed various obligations which require payment of additional amounts for achieving certain negotiated events or business performance targets, including landfill expansion approval or target disposal volumes. Upon approval of the Seneca Meadow's landfill expansion, the Fund is obligated to pay the original seller approximately U.S. $18,000. At December 31, 2007, the Fund has received all necessary permits and exhausted the normal course appeals process. Accordingly, the Fund has recognized its obligation and recorded such amounts to accrued charges and goodwill at December 31, 2007. In addition, the Fund is also obligated to pay certain other sellers various amounts for achieving certain negotiated disposal volumes to a maximum of approximately U.S. $14,800. Amounts are accrued monthly, and paid from time to time in accordance with underlying agreements, until certain threshold negotiated disposal volume targets are achieved, and the maximum obligation is satisfied. Monthly accrued amounts, which are paid up to the date the disposal volume threshold targets are met, reduce the threshold payment by a similar amount. The Fund will record an adjustment to the purchase price allocation when the contingency is resolved and consideration is issued or becomes issuable. For the year ended December 31, 2007, the Fund paid cash consideration or has accrued consideration payable to the original sellers in respect of meeting negotiated disposal volume targets at landfills in the U.S. south amounting to $3,868 (2006 - $2,668). Landfill permits acquired on the acquisition of IESI were recorded at their fair values. Accordingly, all contingent amounts paid, and all future contingent payments, in respect of the receipt of landfill expansion approval or fulfilling disposal volume targets, are recorded to goodwill. (vi) The Fund has a disposal contract that requires it to meet specific disposal volume targets. The volume requirements are measured based on an annual average. In the event the Fund does not meet the required volume targets, the Fund is required to make additional payments on the disposal volume shortfall. At December 31,2007, the Fund expects to meet its disposal volume target and accordingly is not accruing for a shortfall. (vii) The Fund has an accrued environmental liability of $10,712 recorded in landfill closure and post-closure costs on the consolidated balance sheet, related principally to an inactive landfill (hereinafter referred to as %antalo"), which the Fund assumed as part of the IESI acquisition. The Tantalo environmental liability consists of remediation and 30 years of post-closure monitoring totalling approximately $8,400. The initial remediation work commenced in 2004, and the post-closure monitoring commenced in 2007. Tantalo is a 26 acre landfill that stopped accepting waste in 1976 and has been identified by the State of New York as an "Inactive Hazardous Waste Disposal Site". During its period of operation, Tantalo received both municipal and industrial waste, some of which has been found to exhibit "hazardous" characteristics as defined by the U.S. Resource Conservation and Recovery Act. Past activities at Tantalo have resulted in the release of hazardous wastes into the groundwater. A remediation program has been developed for Tantalo in conjunction with the New York State Department of Environmental Conservation. The remediation program includes: installation of groundwater barriers, protective liner caps, leachate and gas collection systems, and storm-water drainage controls, as well as methods to accelerate the decontamination process, in addition, IESl purchased a "Cleanup Cost Cap Insurance Policy," with a ten-year policy period, which provides U.S. $25,000 of coverage in excess of the remediation portion of the liability. The total estimated future undiscounted remediation costs amounting to $8,732 are included in the Fund's landfill closure and post- closure costs at December 31,2007. The cost of remediation requires a number of assumptions and estimates which are inherently difficult to estimate, and the outcome may differ materially from current estimates. However, management believes that its experience, together with its use of independent engineers and consultants provides a reasonable basis for estimating its liability. As additional information becomes available, estimates are adjusted as applicable. It is possible that technological, regulatory or enforcement developments, the results of environmental studies, or other factors could necessitate the recording of additional liabilities which could be material. The estimated environmental remediation liabilities have not been reduced for possible recoveries from other potentially responsible third parties. 78 BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31,2007 and December 31,2006 (in thousands, except per trust unit amounts, unless otherwise stated) (viii)The Fund is subject to certain lawsuits and other claims arising in the ordinary course of business. The outcome of these matters is subject to future resolution. Management's evaluation and analysis of such matters indicates that the resolution thereof will not have a material effect on the Fund's consolidated financial statements. 18. Employee Future Benefits The net pension expense for the defined contribution and defined benefit pension plans for the year ended December 31, 2007 amounted to $1,796 (2006 ~ $1,611 ). Defined contribution pension plan The Fund's defined contribution pension plan is non-contributory and requires all eligible employees to join the plan following one year of service. Defined benefit pension plan The Fund has 10 active members in its defined benefit pension plan. Plan assets and the accrued benefit obligation were measured at December 31, 2007. Contributions to the defined benefit pension plan by members of the plan are neither required nor permitted and the Fund makes contributions to the plan based on the advice of the plan's actuary. Subject to applicable provincial legislation, benefits vest after two years of continuous employment. If a member terminates employment for reasons other than death or retirement, the member will receive a pension commencing on their normal retirement date, equal to the pension earned at the date of termination. BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31, 2007 and December 31, 2006 (in thousands, except per trust unit amounts, unless otherwise stated) 79 An actuarial valuation for funding purposes is performed every three years. The most recent actuarial valuation was completed on December 31, 2006. Information on the Fund's defined benefit pension plan is as follows: De~ember 31 ~:~ ¥~ 2007 2006 Plan Assets Fair value of plan assets, beginning of year Expected return on plan assets Employer contributions Actuarial (loss} ~ain Fair value of plan assets, end of year 539 42 43 30 654 Accrued Benefit Obligation Accrued benefit obligation, beginning of year Current service cost Interest cost Actuarial (gain) loss Actuarial revision to openin~ accrued benefit obligations Accrued benefit obligation, end of year $ 641 37 28 763 Net Benefit Plan Expense Current service cost Expected return on plan assets Interest cost Amortization of transition asset Net actuarial losses 57 37 (3) Net benefit plan expense $ 7, $ 59 (Accrued} Prepaid Pension Benefit Expense Funded status ~ plan deficit Unamortized transitional asset Unamortized actuarial losses (109) 03) 126 (Accrued) prepaid pension benefit expense, end of year (31) $ 4 The significant actuarial assumptions are as follows: December 31 2007! 2006 Discount rate Expected long-term rate of return on plan assets Rate of compensation increase Average remaining service period of active employees, in years S,0% 7.5% 4.0% 12.3 8O BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31, 2007 and December 31, 2006 (in thousands, except per trust unit amounts, unless otherwise stated) 19. Financial Instruments Risk management objectives The Fund's financial risk management objective is to mitigate risk exposures to a level consistent with its risk tolerance. Derivative financial instruments are evaluated against the exposures they are expected to mitigate and the selection of a derivative financial instrument may not increase the net exposure of the Fund to risk. Derivative financial instruments may expose the Fund to other types of risk, which may include, but is not limited to, credit risk. The exposure to other types of risk is evaluated against the selected derivative financial instrument and is subject to a cost versus benefit review and analysis. The Fund's use of derivative financial instruments for speculative or trading purposes is prohibited and the value of the derivative financial instrument cannot exceed the risk exposu re of the underlying asset, liability or cash flow it expects to mitigate. The Fund has identified interest rate, foreign currency exchange rate and commodity price fluctuations as areas of risk exposure which are not influenced by the Fund's normal course operations. Accordingly, the Fund uses the following derivative financial instruments to mitigate its identified risks: interest rate swaps, used to fix a portion of the floating component of the Fund's U.S. term loan and revolving credit facility, single rate foreign currency hedge agreements, used to mitigate the effect of changes in the U.S./Canadian foreign currency exchange rate, and commodity price hedges for OCC. Exposure risks As a condition of borrowing, the Fund is required to enter into and maintain interest rate swaps, on a fixed rate basis, for not less than 40% of total funded debt on its U.S. long-term debt facility. The U.S. term loan and revolving credit facility are secured by a first priority perfected security interest over all assets of IESI and its subsidiaries and includes all of the equity interests of IESl's direct and indirect subsidiaries and all of IESI's common shares. The Fund has entered into interest rate swaps with various financial institutions, details of which are as follows: Interest rate swaps at December 31, 2007 Amount (stated in thousands of U.5. dollars) Maturity Rate ~ $:~62;ooo January 21, 2009 3,57% January 21, 2009 3.47% January 21, 2009 3.60% March 30, 2009 4.98% October 4, 2010 4,72% October 2, 2011 4.73% October 3, 2011 4.70% October 2, 2012 4.80% All interest rate swaps are subject to a bank margin ranging from 1.75% to 3.50%. PPS dividends and a portion of the Fund's Canadian dollar distributions to unitholders are supported by U.S. denominated amounts. The Fund has three single rate hedge agreements with various financial institutions through February 2008 to purchase 4,500 Canadian dollars monthly at an average foreign currency exchange rate of approximately $1.222. The Fund is party to an OCC hedge agreement through January 2008 to swap approximately 1.4 short tons monthly at a fixed price of eighty-two U.S. dollars per short ton. BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31,2007 and December 31, 2006 (in thousands, except per trust unit amounts, unless otherwise stated) 81 Pursuant to the terms of the Fund's Third Amended and Restated Trust Indenture for its debentures, the Fund, at its option, may redeem at any time prior to maturity all or any portion of its debentures, subject to certain restrictions. The redemption price is the greater of the debentures' value calculated using the current Government of Canada yield, plus an applicable spread, as defined therein, and the then current principal amount outstanding, plus accrued interest outstanding in either instance. The fair value of the redemption option, an embedded derivative, is SniL The debentures mature on June 26, 2009 and 2014. The Fund has not designated any of its derivatives in a hedge accounting relationship. Accordingly, changes in the fair value of these derivatives, non-cash items, are recorded in the consolidated statement of operations and comprehensive (loss) income as a net loss or gain on financial instruments. The fair value of derivatives is recorded in other assets and other liabilities on the consolidated balance sheet. interest rate price and cash flow risk The Fund has various financial instruments which are exposed to interest rate price and cash flow risk, as follows: The Fund's debentures and a portion of the Fund's U.S. term loan bear interest at fixed rates of interest and are subject to interest rate price risk. Although fluctuations in the variable interest rate have no effect on the Fund's current interest expense on long-term debt, the Fund is exposed to interest rate price risk on renegotiation of its fixed interest rate instruments. The Fund is also subject to interest rate price risk on other receivables. A portion of the Fund's term loan, its two revolving credit facilities, and its IRBs are subject to interest rate cash flow risk. An increase or decrease in the underlying variable interest rate results in a corresponding increase or decrease to interest expense on long-term debt. The Fund is also subject to interest rate cash flow risk on funded landfill post-closure costs. Funded landfill post-closure costs are invested in interest rate sensitive short- term investments. An increase or decrease in the return on invested amounts results in either a decrease or increase in the Fund's funding obligation. Credit risk The Fund is subject to credit risk on various financial instruments. The Fund's maximum exposure to credit risk on its interest rate swaps, foreign currency exchange agreements and hedge agreements for OCC is equal to the fair value of the respective financial instruments included in other assets or other liabilities on the Fund's consolidated balance sheet (Note 8). The Fund is subject to credit risk from its exposure to a single customer in the U.S. which accounts for approximately 6.0% of the Fund's accounts receivable at December 31, 2007 (December 31, 2006 - 13.8%). The Fund is also subject to credit risk from exposure to its syndicated lenders who are party to the Fund's long-term debt facilities. The Fund does not consider these exposures to be significant. Estimated fair value The carrying value of accounts receivable, due from non-controlling interest, accounts payable, and accrued charges approximates fair value due to the relatively short-term maturities of these instruments. Cash and cash equivalents, funded landfill post-closure costs and derivative and embedded derivative financial instruments are recorded on the consolidated balance sheet at fair value. 82 BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31,2007 and December 31,2006 (in thousands, except per trust unit amounts, unless otherwise stated) At December 31, 2007, the estimated fair value of the direct finance lease receivables applying an interest rate consistent with the credit quality of the instrument is $1,321 (2006 - $2,671), compared to the carrying amount of $1,218 (2006 - $2,469). At December 31, 2007, the estimated fair value of long-term finance receivables applying an interest rate consistent with the credit quality of the instrument is Snil (2006 - $714), compared to the carrying amount of Snil (2006 - $735). At December 31, 2007, the debentures estimated fair value is approximately $120,000 (2006 - $119,000) compared to the carrying amount of $105,000 (2006 - $105,000). At December 31,2007, the estimated fair value of long-term debt bearing interest at variable rates approximates its carrying amount. Fair value methods and assumptions Financial assets and liabilities recorded at fair value and included in other assets and other liabilities on the Fund's consolidated balance sheet are as follows: cash and cash equivalents, funded landfill post-closure costs, interest rate swaps, foreign currency exchange agreements, and OCC hedges. Statements of cash and cash equivalents are supplied by the Fund's financial institutions and reflect current cash balances and quoted market prices, respectively. Deposits made to the social utility trust, and recorded as funded landfill post-closure costs on the consolidated balance sheet, are invested by the social utility trust trustee. Statements of invested amounts are supplied to the Fund by the social utility trust trustee and are prepared from quoted market prices for the underlying investments. The fair value of interest rate swaps, foreign currency exchange agreements and OCC hedges are prepared by third parties applying valuation techniques and using market inputs. The total change in the fair value of financial assets and liabilities, recorded in the Fund's consolidated statement of operations and comprehensive (loss) income as net loss on financial instruments for the year ended December 31, 2007, amounts to $9,384 (2006 - $3,363), in aggregate. The total change is comprised of the following fair value changes: funded landfill post-closure costs ($176) (2006 - Snil), interest rate swaps $8,290 (2006 - Snil), foreign currency exchange agreements $1,149 (2006 - $2,946), and OCC hedges $121 (2006 - $417). The fair value of financial assets and liabilities disclosed in the notes to the consolidated financial statements include direct finance leases, long-term finance lease receivables and debentures and are valued applying a discount rate adjustment approach. BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31, 2007 and December 31, 2006 (in thousands, except per trust unit amounts, unless otherwise stated) 83 20. Segmented Reporting The Fund carries on business through three separate geographic segments: Canada, U.S. south and U.S. northeast. The business segments are vertically integrated and principally include landfills and landfill gas to energy facilities, collection and disposal of waste and recyclable products, transfer station operations, and material recovery facilities. The geographic location of each business segment limits the volume and amount of transactions between each segment. The accounting policies applied by the business segments are the same as those described in the summary of significant accounting policies (Note 2). U.S. corporate selling, general and administration expenses are allocated to the U.S. south and U.S. northeast segments based on various factors, including income before the following~n. The Fund evaluates segment performance based on gross revenues, less operating and selling, general and administration expenses. December 31 Gross Revenues Canada $ 288,640 U.S. South 267,121 U.S. NoKcheast 216,058 771,819 Income before the following Canada $ 101,989 U.S. South 53,288 U.S. Northeast 80,640 ~ ~7~5~e5~ S 235,917 Amortization Canada $ 56,215 U.S. South 45,193 U.S. Northeast 46,720 ~,$~161 006! $ 148,128 ~ ~ cafiada ~ .~; ~%~ U.S; Nbrt he,SCOt, Total Capitalassets Goodwill TotalAssets December 31,2006 Canada U.S. South U.S. Northeast Total Capital assets $ 124,418 S 145,409 $ 52,545 $ 322,372 Goodwill $ 53,760 $ 171,307 $ 256,267 $ 481,334 Total Assets $ 493,459 $ 515,768 $ 757,433 $ 1,766,660 84 BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31, 2007 and December 31, 2006 (in thousands, except per trust unit amounts, unless otherwise stated) 21.Guarantees In the normal course of business, the Fund enters into agreements that meet the definition of a guarantee. The Fund's primary guarantees are as follows: The Fund has provided indemnities under lease agreements for the use of various operating facilities. Under the terms of these agreements the Fund agrees to indemnify the counterparties for various items including, but not limited to, all liabilities, loss, suits, damage and existence of hazardous substances arising during, on or after the term of the agreement. Changes in environmental laws or in the interpretation thereof may require the Fund to compensate the counterparties. The maximum amount of any potential future payment cannot be reasonably estimated. Indemnity has been provided to all Trustees and directors and or officers of the Fund and its subsidiaries for various items including, but not limited to, all costs to settle suits or actions due to association with the Fund and its subsidiaries, subject to certain restrictions. The Fund has purchased directors' and officers' liability insurance to mitigate the cost of any potential future suits or actions. The term of the indemnification is not explicitly defined, but is limited to the period over which the indemnified party serves as a Trustee, director or officer of the Fund or its subsidiaries. The maximum amount of any potential future payment cannot be reasonably estimated. The Fund has received indemnities for the receipt of hazardous, toxic or radioactive wastes or substances and the Fund has issued indemnities for the disposal thereof at third party landfills. Applicable federal, provincial, state or local laws and regulations define hazardous, toxic or radioactive wastes or substances. Changes in environmental laws or in the interpretation thereof may require the Fund to compensate or be compensated by the counterparties. The term of the indemnity is not explicitly defined and the maximum amount of any potential future reimbursement or payment cannot be reasonably estimated. As part of a Host Community Agreement ("HCA") between the Fund and the Town of Seneca Falls, New York in which the Seneca Meadows Landfill is located, the Fund has agreed to guarantee the market value of certain homeowners' properties within a certain distance of the landfill based on a Property Value Protection Program ("PVPP") incorporated into the HCA. Under the PVPP, the Fund would be responsible for the difference between the sale value and the hypothetical market value of the homeowners' properties assuming a previously approved expansion of the landfill had not been approved, if any. The Fund does not believe it is possible to determine the contingent obligation associated with the PVPP guarantees, but does not believe it would have a material effect on the Fund's financial position or results of operations. As of December 31, 2007, the Fund has not been required to compensate any homeowner under the PVPP. In the normal course of business, the Fund has entered into agreements that include indemnities in favour of third parties, such as purchase and sale agreements, confidentiality agreements, engagement letters with advisors and consultants, outsourcing agreements, leasing contracts, underwriting and agency agreements, information technology agreements and service agreements. These indemnification agreements may require the Fund to compensate counterparties for losses incurred by the counterparties as a result of breaches in representation and regulations or as a result of litigation claims or statutory sanctions that may be suffered by the counterparty as a consequence of the transaction. The terms of these indemnities are not explicitly defined and the maximum amount of any potential reimbursement cannot be reasonably estimated. BFI CANADA INCOME FUND Notes to the Consolidated Financial Statements For the years ended December 31, 2007 and December 31, 2006 (in thousands, except per trust unit amounts, unless otherwise stated) 85 The nature of these indemnification agreements prevents the Fund from making a reasonable estimate of the maximum exposure due to the difficulties in assessing the amount of liability which stems from the unpredictability of future events and the unlimited coverage offered to counterparties. Historically, the Fund and its predecessor have not made any significant payments under such or similar indemnification agreements and therefore no amount has been accrued in the consolidated balance sheet with respect to these agreements. The Fund has been indemnified for various environmental and real property and other matters, including taxes and various other items that existed on or prior to June 30, 2000. The term and potential reimbursement varies with the matter indemnified. 22. Long-term Incentive Plan Effective January 1, 2003, Holdings entered into a trust (the 'q'rust") agreement to establish a long-term incentive plan on behalf of certain Canadian employees, officers and directors of Holdings and its subsidiaries. The purpose of the Trust is to receive monies from Holdings and its subsidiaries on behalf of certain Canadian employees, officers and directors to purchase units of the Fund in the open market and to hold those units acquired for the benefit of its participants. Units will remain registered in the name of Holdings, the Trustee, or its nominee(s), until the units are redeemed, sold or distributed to the participant for whom they are held. Distributions received by the Trust are to be distributed to the participants in proportion to their pro-rata entitlement. The Fund's maximum exposure to loss is limited to its obligation to fund the administration of the Trust and its indemnity to Holdings', officers, directors, employees, agents or unitholders for various items including, but not limited to, all costs to settle suits or actions due to association with the Trust, subject to certain restrictions. The risk of fluctuations in the price of the Fund's trust units is borne by its participants. In February 2006, the Fund amended and restated its long-term incentive plan and established a long-term incentive plan on behalf of certain U.S. employees, officers and directors of IESI and its subsidiaries. With the exception of changes to the vesting period, the terms of the long-term incentive plan remain principally unchanged. Trust units acquired by the Trust in respect of fiscal year ending December 31, 2004 for the benefit of its participants have vested. Trust units acquired by the Trust in respect of fiscal year ending December 31, 2005, and thereafter, will vest as follows: one third on the day such trust units are allocated to the participant, one third on December 31 of the year such trust units are allocated to the participant, and the balance on December 31 of the subsequent year. Trust units that are forfeited by participants to the long-term incentive plan are allocated to the remaining participants in accordance with their proportional entitlement to all of the trust units held by the Trust and the Trust will abstain from voting on all matters related to the Fund. The purpose and terms of the U.S. long-term incentive plan are consistent with those outlined for the Fund's amended and restated Canadian plan. Contributions to the long-term incentive plan are calculated at a rate of 2.25% of free cash flow available for distribution as presented in management's discussion and analysis. included in selling, general and administration expenses are $3,809 (2006 - $3,195) of accrued amounts payable to the Trust on behalf of certain Canadian and U.S. employees, officers and directors at December 31, 2007. 23. Comparative Financial Statements Certain prior year amounts have been reclassified to conform to the current year's presentation. 86 TRUSTEES Joseph H. Wright Non-Executive Chairman Keith A. Carrigan Vice Chairman Daniel M. DidQnson Trustee Charles F. "Mickey' Flood Trustee James J. Forese ~ Trustee Douglas Knight Daniel R. Milliard ~,~ Trustee T. lain Ronald Director Emeritus EXECUTIVE MANAGEMENT Keith A. Carrigan Vice Chairman and Chief Executive Officer Charles f. "Mickey~ Flood President Joseph D. Quarto Executive Vice President and Canadian Chief Operating Officer Thomas J. Cowee Vice President and Chief Financial Officer SENIOR MANAGEMENT Thomas L. Drown Senior vice President and Chief OperaNng Officer, U.S. Gordon D. Peckham Senior Vice President and Chief Development Officer Izzffi Abrams Vice President, Business Development and Government Relations, Canada Edward L. Apuzzi Vice President and Regional Manager, Northeast Region William Chyfetz Vice President, General Counsel and Secretary Thomas S. Fowler SeniorVice President, General Counsel, U.S. Howard M. Goldby Vice President, Engineering and Compliance Bryan Grieshach Vice President, Environmental Management Group John C. Gustafion, Jr. Vice President and Regional Manager, Texas Region William R M. Herman Vice President, Finance and Corporate Controller Martin Idch Vice President, Ontario and Manitoba, Canada Stephen Y. Moody Vice President and Corporate Controller, Ronald L. Neese Vice President, Information Systems Yves Normandio Vice President, Quebec Joseph Rajotte Vice President, British Columbia Scott Richards Vice President, Internal Audit Harold Richardson Vice President, Alberta Phillip L Smith Vice President and Regional Manager, South Central Region CORPORATE INFORMATION Head Office BFI Canada Income Fund 135 Queens Hate Drive, Suite 300 Toronto, Ontario MgW 6V1 Phone: 4'ffi.741 .B221 Fax: 416.741.4565 Website: www. bficanada.oom Investor Relations For further information about BFI Canada Income Fund or to be placed on the mailing list for guarter[y reports and news releases, please contact: Chaya Cooperberg Director, Investor Relations & Corporate Communications Phone: 416.401.7729 Email: investorrelaDons@bflcanada.com Auditors Deloitte & Touche LLP, Toronto, Ontario Legal Counsel Torys LL~, Toronto, Ontado Stock Exchange Listing Toronto Stock Exchange Trading Symboh BFC.UN Transfer Agent and Registrar Computershare Trust Corn pany of Canada 100 University Avenue Toronto, Ontario MSJ 2Y1 Annual and Special Meeting of Unitholders Tuesday, May 13, 2008 at 2:00 pm (EST) The Toronto Board of Trade 1 First Canadian Place Toronto, ON, MSX 1C1 By using recycled paper in this Annual Report instead of virgin fibres paper, we have reduced our ecological footprint by 567 kg of solid waste, 53,652 litres of water and 1,245 kg of air emissions. I,~o Mixed Sources ( FSC.,,.,.-,...~,~-. File Edit Funddon~ Help ~-Pak INQUIRY BIDDER'S SOLICITATION MATERIALS HAULING SERVICES AGREEMENT DOCUMENTS TOWN OF SOUTHOLD STATE OF NEW YORK TOWN OF SOUTHOLD Prepared by: Solid Waste Management District P:O. Box 962 Cutchogue, NY 11935 March 2009 LEGALNOTICE NOTICE TO BIDDERS NOTICE IS HEREBY GIVEN, in accordance with the provisions of Section 103 of the General Municipal Law, that sealed bids are sought and requested for Materials Hauling Services by the Town of Southold for one year. Specifications and bid proposal form may be obtained at the Office of the Town Clerk, Town of Southold, Town Hall, PO Box 1179, 53095 Main Road, Southold, New York 11971. The sealed bid, together with a Non-collusive Bid Certificate and bank raft or certified check in the amount of $100.00, will be received by the Town Clerk, at the Southold Town Hall, PO Box 1179, 53095 Main Road, Southold, New York, until 10:00 A.M., Thursday, March 26, 2009 at which time they will be opened and read aloud in public. The Town Board of the Town of Southold reserves the right to reject any and all bids and waive any and all informalities in any bid should it be deemed in the best interest of the Town of Southold to do so. All bids must be signed ~and sealed in envelopes plainly marked "Bid on Materials Hauling Services", and submitted to the Office of the Town Clerk. The bid price shall not include any tax, federal, state, or local, from which the Town of Southold is exempt. Dated: February 24, 2009 ELIZABETH A. NEVILLE SOUTHOLD TOWN CLERK PLEASE PUBLISH ON MARCH 12, 2009 AND FORWARD ONE (1) AFFIDAVIT OF PUBLICATION TO ELIZABETH NEVILLE, TOWN CLERK, TOWN HALL, PO BOX 1179, SOUTHOLD, NY 11971. Copies to the following: The Suffolk Times Town Attorney Brown's Letters Town Clerk's Bulletin Board Town Board Members Dodge Reports Burrelle's Information Services Solid Waste Coordinator Bunchuck Town of Southold Bid - Materials Hauling Services March 2009 NOTICE TO BIDDERS MATERIALS TRUCKING SERVICES The Town of Southold will receive sealed bids for materials trucking services for the items identified herein (i.e., construction and demolition debris (C&D) and recycled newspaper (ONP) until the time and at the location shown below, such bids to then be opened and publicly read aloud. The trucking services sought by the Town will involve moving C&D and ONP collected at the Town's waste and recycling Transfer Station on Cox Lane in Cutchogue, NY to .one or more specified destinations. THIS SOLICITATION SEEKS TRUCKING SERVICE(S) ONLY. NO DISPOSAL OR RECYCLING SERVICES ARE SOUGHT. PLACE: Office Of the Town Clerk Southold Town Hall 53095 Main Road PO Box 1179 Southold, New York 11971 (631) 765-1800 DATE: March 26, 2009 TIME: 10:00 a.m. (LATE BIDS WILL NOT BE OPENED) Town of Southold Bid - Materials Hauling Services March 2009 TOWN OF SOUTHOLD MATERIALS TRUCKING SERVICES GENERAL SERVICES SOUGHT The Town seeks prices for each of the following trucking tasks, in accordance with this Bid Solicitation: ~ '~ TASK 1: A bid price PER TRIP, to provide equipment and labor for hauling construction & demolition debris (C&D) from the Town of Southold Transfer Station at 6155 Cox Lane, Cutchogue, NY to the Town of Brookhaven C&D Landf'fll at 350 Horseblock Road, Brookhaven, NY. (IMPORTANT: SEE SECTION B, PARAGRAPH 3.1 REGARDING POTENTIAL AMOUNTS OF C&D TO BE HAULED) TASK 2: A bid price PER TRIP to provide equipment and labor for hauling recycled newspaper (ONP) from the Town of Southold Transfer Station at 6155 COx Lane, Cutchogue, NY to the Town of Islip Materials Recycling Facility located at Lincoln Ave., Holbrook, NY. THE TOWN IS CURRENTLY UNDER AN INTER-MUNICIPAL AGREEMENT (IMA) TO DELIVER THE MATERIALS COVERED BY TASK 1 AND TASK 2 TO THE BROOKHAVEN AND ISLIP DESTINATIONS SPECIFIED. THESE DESTINATIONS ARE NOT EXPECTED TO CHANGE DURING THE TERM OF ANY CONTRACT 'ENTERED INTO PURSUANT TO THIS BID. BY SUBMITTING A BID FOR THESE TASKS, THE BIDDER IS COMMITTING TO. DELIVER SAID MATERIALS TO THESE LOCATIONS. BASIC AWARD CRITERIA The winning bid submitted in response to this sOlicitation will be based on the lowest price submitted for the two TASKS combined. The Town expects a single contractor to perform both Tasks. TERM The term of this Agreement shall be ONE (1) year from commencing from the date of award, expected to be on or about April 8, 2009. The Town and the winning bidder shall have a mutual option of renewing the Agreement for an additional one year term by agreeing together in writing to do so not less than thirty (30) days Prior to the expiration of the initial term, at the price(s) agreed to herein. CERTAIN OTHER CONDITIONS Bids must be made in writing on the forms furnished and shall be accompanied by a Bid Guaranty in the Form of.certified check, money order, bank draft or standard form letter of credit made payable to Town of Southold, orbid bond, in the sum of five thousand dollars ($5,000.00) wherein the named obligee shall be the Town of Southold (APPENDIX C). Town of Southold Bid - Materials Hauling Services March 2009 The successful Bidder shall be required to furnish a performance Bond, and insurance in accordance with the instructions in the Bid Solicitation (APPENDIX D). The bid price shall not include any tax, Federal, state, or local, from which the Town of Southold is exempt. A Bidder may not withdraw his bid within forty-five (45) days after the opening of the bids, but may withdraw his Bid at any time prior to the scheduled time for the opening of bids. The Town reserves the right to reject any or all bids and to waive informalities, should this action be in the best interest Of the Town of Southold. Bid Solicitation containing submission requirements, instructions, technical specifications, and bidding forms may be examined free of charge and at the following location on weekdays from 8:00 A.M. to 4:00 P.M.: Office Of the Town Clerk Southold Town Hall PO Box I 179 53095 Main Road Southold, New York 11971 Upon payment of non-refundable fifty dollars ($50.00) Bid Solicitation may be picked up at: Office of the Town Clerk Southold Town Hall PO Box 1179 53095 Main Road Southold, New York 11971 Bidders should direct any questions concerning this solicitation to Mr. James Bunchuck, the Southold Town Solid Waste Coordinator at the Southold Town Transfer Station office, 6155 Cox Lane, Cutchogue, NY 11935 (631) 734-7685. Bidders may visit the Transfer Station during normal business hours of 7:00 am - 5:00 pm, 7 days a week (except holidays). Appointments are not necessary, but may be scheduled by calling Mr. Bunchuck. Elizabeth A. Neville Town Clerk 4 Town of Southold Bid - Materials Hauling Services March 2009 TABLE OF CONTENTS GLOSSARY OF TERMS SECTION A- SUBMISSION REQUIREMENTS 1.0 Project Purpose 2.0 Schedule 3.0 Examination Of Agreement Documents 4.0 Information to be Submitted 4.1 Contractual Bid 4.2 Supplemental Information 5.0 Bid Format 6.0 Submission of Bid 7.0 Bid Guaranty 8.0 Execution Of Agreement 9.0 Consideration Of Bids 10.0 Selection Of Contractor 11.0 Acceptance of Bid 12.0 Assignment 13.0 Insurance and Bonds 13.1 Insurance 13.2 Bonds 14.0 Indemnity (Hold Harmless) 15.0 Payments 16.0 Default 17.0 Term of Agreement 18.0 Rights and Options SECTION B - BID SPECIFICATION 1.0 Requirements 2.0 Program Goals and Objectives 3.0 Potential Regulatory and Operational Changes 4.0 Character and Amounts of Materials 4.1 Quantities - C&D 4.2 Quantities - ONP 4.3 Non-Compliance Waste 5.0 Schedule of Cutchogue Transfer Station 6.0 Program Activities 6.1 Contractor Responsibilities 6.2 Town Responsibilities 6.3 Routing Mode 6.4 Town of Southold Accident and Damage Policy 7.0 NYSDEC Part 360 Permit to Operate 8.0 Compensation 9.0 Safety and Health Regulations 10.0 Contacts 7 9 9 9 9 10 10 10 10 10 11 II 11 12 12 12 12 12 13 13 13 13 13 14 20 16 16 16 16 17 17 17 17 18 18 18 18 19 19 19 19 20 5 Town of Southold Bid - Materials Hauling Services March 2009 11.0 Supporting Data 20 SECTION C - CONTRACTOR BID FORM 1.0 Deneral Bid Statement ~ 2.0 Unit Price Bid Schedule 21 22 25 SECTION D - APPENDICES Appendix A - Surety Verification Appendix B - Subcontractors Appendix C - Form of Bid Bond Appendix D - Performance Bond 26 27 28 31 Town of Southold Bid - Materials Hauling Services March 2009 GLOSSARY OF TERMS ADMINISTRATOR - Shall mean the Coordinator of construction and demolition debris (or his agent) Of the Town of Southold, New York. AGREEMENT - Shall mean a Form operating agreement set forth by the Town and resulting from this Bid Solicitation between the Town of Southold and the successful Bidder to be executed in 2009 . AGREEMENT DOCUMENTS - Shall include the notice to bidders, instructions, bid solicitation, bid Forms, information schedules, proposal, payment bond, bid bond, Agreement, performance bond, certificates of insurance, glossary of terms any general conditions or special conditions, and any addenda. The Agreement Documents will Form a paxt of the Agreement. AGREEMENT YEAR ~ Shall mean the period of the first 365 days from the date a contract(s)/award(s) pursuant to this solicitation is signed by the parties. BIDDER - Shall mean any party or parties submitting in proper form a bid to perform the work as specified in the Agreement Documents. The successful Bidder selected by the Town to perform the specified work will thereafter be known as the Contractor. BID PRICE - Shall mean the unit cost to determine the ranking of bidders. BID SOLICITATION - Shall mean this document, specifications, and any bid addenda issued. COMMENCEMENT DATE - Shall mean the date a contract(s)/award(s) pursuant to this solicitation is signed by the parties. CONSTRUCTION MATERIALS AND/OR DEMOLITION DEBRIS (C&D) - Shall mean solid waste resulting from the construction, renovation, equipping, remodeling, repair and demolition of structures and roads. Such waste includes, but is not limited to, bricks, concrete and other masonry materials, soil, rock, wood, wall coverings, plaster, drywall, non-asbestos insulation and roofing shingles. CONTRACT DOCUMENTS - Shall have the same meaning as Agreement Documents. CONTRACTOR - Shall mean the party contracting to perform the work, or the heirs, executors, administrators, agents, or successors thereof. COUNTY - Shall mean Suffolk County, State Of New York. DAILY - Sunday to Saturday, inclusive. DESTINATION SITES - Permitted disposal site(s) designated by the Town for C&D and permitted recycling facilities designated by the Town. EPA - Environmental Protection Agency (Federal). GLOSSARY - 1 Town of Southold Bid - Mater/als Hauling Services March 2009 Glossary of Terms (cont'd) HAUL SERVICES UNIT PRICE - Shall mean the Contractor's compensation in dollars for each ton of C&D debris or recyclables actually hauled from the Town Of Southold Transfer Station to the Town Designated Disposal/Recycling Site. HAZARDOUS WASTE - Shall mean (1) any "hazardous waste" as defined under the Resource Conservation and Recovery Act, 42 US.C. Section 6901 et seq., or "hazardous substance" as defined under the comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., or "hazardous wagte" as defined under New York Environmental Conservation Law Section 27-0901 et seq., as each such law may be amended from time to time, and the regulations promulgated there under, and any analogous or succeeding Federal, state or local law, rule or regulation and regulations promulgated there under and (2) any other mater/al which any governmental agency or unit having appropriate jurisdiction shall determine from time to time cannot be processed at the facility because it is harmful, toxic or dangerous. NOTICE OF AWARD - Shall mean written notice from the Town of Southold to the successful Bidder that the Town of Southold intends to award an Agreement to the successful Bidder, subject to compliance with all their terms and conditions of the Agreement Documents. NYSDEC - New York State Department Of Environmental Conservation. ONP - Old Recycled Newsprint brought to the Southold MSW Transfer Station by residents and curbside collection carters, including newspaper, glossy inserts, magazines, paperback books, office paper, and construction paper. ONP is NOT intended to include paper used for cleaning or hygiene purposes such as paper towels, napkins, or tissues. OSHA - Federal Williams-Steiger Occupations Safety & Health Act of 1970, plus subsequent revisions. PERMIT - Shall mean any and all permits, licenses, approvals, certificates of public convenience and necessity, Franchises or authorizations which must be issued by any Governmental Body having jurisdiction thereof to legally enable the Contractor to transport and/or dispose Of construction and demolition debris. PERMITTEE - Shall mean any person issued a valid permit to haul construction and demolition debris or to construct, establish, maintain or operate a construction and demolition debris Disposal Site. RCRA - Resource Conservation Recovery Act (Federal). SOLID WASTE - Shall mean all putrescible and non-putrescible materials or substances, including but not limited to garbage, refuse, rubbish, ashes, agricultural wastes, and offal. (Solid Waste does not include C&D waste, recyclables, hazardous, or infectious waste). SUBCONTRACTOR - Shall mean an individual, firm or corporation having a direct contract with the Contractor for services, equipment, materials and/or labor. GLOSSARY-2 8 Town of Southold Bid - Materials Hauling Services March 2009 SECTION A SUBMISSION REQUIREMENTS BIDDERS INFORMATION, iNSTRUCTIONS AND AWARD BASIS 1.0 PROJECT PURPOSE The Town of Southold seeks bids for the hauling of construction and demolition debris (C&D) and recycled newspaper (ONP) from the Town of Southold Transfer Station to specified permitte/t Destination Site(s) owned and operated by the Towns of Brookhaven and Islip, respectively. 2.0 SCHEDULE The schedule below is an estimate of the time period leading up to the commencement of the Agreement. Its intent is to provide each Bidder with an idea of when certain events may occur. The dates given are guidelines and should not be construed as firm dates or deadlines due to the multiple parties involved in the decision making process. EVENT Bid Opening Town Board Approval Agreement Executed Operations Commencement DATE 10:00 am, March 26, 2009 April 7, 2009 On or Before Mayl, 2009 Day Agreement is Executed 3.0 EXAMINATION OF AGREEMENT DOCUMENTS, FAMILIARITY WITH THE WORK It is the responsibility of each Bidder before submitting a Bid to (a) examine the Bid Documents thoroughly; (b) become familiar with conditions at the Town of Southold Transfer Station and Destination Sites that may affect cost, progress, performance or furnishing of the work; (c) become familiar with and consider all federal, state and local laws, regulations ordinances, permits, approvals and orders that may effect the cost, progress, performance or furnishing of the work; (d) study any Bid and/or Agreement Documents carefully; and (e) notify the Town Clerk of all conflicts, errors or discrepancies in the Agreement Documents. The submission of a Bid becomes a representation that Bidder has complied with every requirement of this Bid Solicitation, that the Bid is based upon performing and furnishing the work required by the Agreement Documents, and that the Agreement Documents are sufficient in scope and detail to indicate and convey understanding of all terms and conditions for performing and furnishing the work. Town of Southold Bid - Materials Hauling Services March 2009 5.0 6.0 4.0 INFORMATION TO BE SUBMITTED WITH PROPOSAL 4.1 Contractual Bid For the purpose of assisting the Town in determining the responsible Bidders for t~is Bid Solicitation, the Bidder is required to submit the following minimum information with his bid: ii. iii. Cont/actor Bid Form Bid Security or Bid Bond (SEE APPENDIX C) Supplemental Information as described in 4.2 4.2 Supplemental Information In addition to the aforementioned forms, the Bidder is required to submit the following supplemental information with his bid: A statement that the Bidder has or will acquire all manpower, materials and supplies, mobile equipment, etc., necessary to provide the Town with all services sought under the Agreement. ii. A copy of any current Permit(s) to transport C&D and/or municipal recyclables as required. ii~ Identification of the Surety company supplying the Performance Bond specified herein. (SEE APPENDIX A). iv. A list of any Subcontractors the Bidder intends to use to complete any portion of the work. The Bidder is advised that any Agreement awarded will be contingent upon the use of the subcontractor(s) so identified. In the event that the Bidder desires to change the number or identity of such subcontractor(s), the proposed change must be submitted to the Town for approval. (SEE APPENDIX B). BID FORMAT Form Preparation Bid prices shall be submitted in the form described in this Bid Solicitation (SEE PAGE 25). Bid prices shall be properly filled in, using both words and numerals where indicated. BIDS SHALL NOT BE QUALIFIED, MODIFIED, LIMITED OR RESTRICTED IN ANY WAY. In the event a specification is not applicable, it shalI be so indicated. Incomplete bids may not be considered, depending on the nature of the missing information. SUBMISSION OF BID Each Bidder shall submit a complete set of his Bid which shall be enclosed in a sealed envelope plainly marked on the outside with the title of the work and the name and address of the Bidder. No Bid will be considered unless filed on or before the time and at the place designated in the Notice to Bidders. Bids received after the time set for the opening will be returned to Bidders unopened. 10 Town of Southold Bid - Materials Hauling Services March 2009 When sent by mail, preferably registered, the sealed Bid, marked as aboVe, should be enclosed in an additional envelope similarly marked and addressed to: Elizabeth Neville Southold Town Clerk Town Hall PO Box 1179 53095 Main Road Southold, New York 11971 7.0 BID GUARANTY The guaranty of $5,000 may be certified check, bank draft, money order, standard form irrevocable letter of credit, or a bid bond in the form attached (APPENDIX C). The bid bond shall be secured from a surety company authorized to do business in the State of New York as a surety. No Bid will be considered unless it is accompanied by the required guaranty, certified check, money Order or bank draft must be made payable to the order of the Town of Southold. The bid bond shall name the Town as the obligee. Cash deposits will not be accepted. The bid guaranty shall ensure the execution of the Agreement and the furnishing of the surety bond or other required bonds by the successful Bidder, all as required by the Agreement Documents. All guaranties will be returned within ten (10) days after the execution of the Agreement and required bonds, insurance and other Agreement Documents are received from the successful Bidder. 8.0 EXECUTION OF AGREEMENT, FURNISHING OF BONDS The successful Bidder, or its legally authorized representative, shall appear in person within ten (10) days of the Notice of Award by the Town at the place and time designated by the Town to execute the Agreement and other Agreement Documents for Materials Hauling Services, if so required by the Town. The successful Bidder shall, at its own cost and expense, procure, execute and deliver to the Town the following documents within ten (10) daYs of formal Notice of Award by the Town. Performance Bond - A Performance Bond shall be in an amount of fifty thousand dollars (50;000). This bond (as shown by example in Appendix D), shall be maintained at the Contractor's own expense for the term of the Agreement. Failure to do so shall constitute a breach of the Agreement created by the Town's acceptance of the bid. In such event, the Town may determine that such Bidder has abandoned the Agreement and the Town shall be entitled to take action for any and all damages it may suffer as the result of such breach. 9.0 CONSIDERATION OF BIDS The Town of Southold reserves the right to reject any/or all bids for haul and disposal services if such action is deemed to be in the best interests of the Town. To be considered responsive to this Bid Solicitation, each Bidder shall 11 10.0 Town of Southold Bid - Materials Hauling Services March 2009 A) provide equipment, labor, maintenance and management services to haul C&D and recyclables from the Town of Southold Transfer Station designated Destination Site(s) as set forth in Section B - Bid Specifications. B) Provide evidence of all current valid state and Federal permits, licenses, local ordinances, etc., required by law to receive construction and ~iebris at the designated~Disposal Site(s). C) Provide evidence of physical and financial caPability to perform services described in the bid specifications. SELECTION OF CONTRACTOR Bids will be evaluated only if accompanied by the approved form of bid guaranty. Only bids solicited from finns or combinations thereof, who have sufficient management, operating, and maintenance experience to fulfill the Town's goads and comply with the applicable local, state, Federal laws, ordinances, and regulations will be accepted. The Town will review the bids and make a selection recommendation based on the evaluation criteria included in this Bid Solicitation or take such other action as it deems in its best interest. Any agreement awarded hereunder will be to the responsible Bidder whose Evaluation Unit Bid Price is the lowest. The Town of Southold reserves the right, in its sole discretion, to reject all bids submitted in response to this Bid Solicitation. 11.0 ACCEPTANCE OF BID The acceptance of a Bid will be a Notice of Award signed by a duly authorized representative of the Town, and no other act of the Town shall constitute the acceptance of a Bid. The acceptance of a Bid shall bind the successful Bidder to perform the work deScribed in the Bid Documents and to execute any other Agreement Documents that may be reqUired by the Town. 12.0 ASSIGNMENT 13;0 13.1 The successful Bidder to whom any Agreement shall be let, granted, or awarded shall not assign, transfer, convey, sublet, or otherwise dispose of the Agreement or of his right, title, or interest therein or his power to execute such Agreement, to any person or corporation without the prior written consent of the Town. INSURANCE AND BONDS Insurance For the period the Agreement is in effect, Contractor must maintain insurance acceptable to the Town in the kinds and amounts set forth below. All such insurance coverage shall be provided by companies licensed to do business in New York State. The Town of Southold and its agent shall be named as an additional insured and coverage shall not be changed or cancelled until thirty (30) days written notice has been given to the Town. Within ten (10) days of the Notice of Award, Contractor shall furnish to the Town evidence that it maintains the following types and amounts of insurance: 12 Town of Southold Bid - Materials Hauling Services March 2009 Worker's Compensation Insurance - A Policy covering the operations of the Contractor in accordance with the provisions of Chapter 41 of the Laws of 1914 as emended, known as the Worker's Compensation Law, covering all operations Of the Contractor, whether performed by him or by his subcontractors. The Agreement shall be void and of no effect unless the person or corporation making or executing seme shall secure compensation coverage for the benefit of, and keep insured during the life of s~aid Agreement such employees in compliance with provisions of the Worker's Compensation Law. General Liability (Comprehensive Form) Insurance - Contractor's liability insurance issued to and coveting legal liability of the Contractor with respect to all work performed by him under the Agreement. 13.2 Bonds In the event the Contractor secures a Performance Bond from any of its subcontractors, said bond shall also name the Town of Southold as a dual obligee. 14.0 INDEMNITY (HOLD HARMLESS) 16.0 Contractor shall agree to defend, indemnify and save harmless the Town against any and all liability, loss, demage, detriment, suit, claim, demand, cost, charge, attorney's fees and expenses of whatever kind or nature which the Town may directly or indirectly incur, suffer or be required to pay by reason of or in consequence of the carrying out of or the performance of the terms of such Agreement, or the failure to carry out any of the revisions, duties, services or requirements of such Agreement, whether such losses and demages are suffered or sustained by the Town directly or its employees, licensees, agents, engineers, citizens or by other persons or corporations, including any of the Contractor's employees and agents who may seek to hold the Town liable therefor. This obligation shall be ongoing, survive the term of the Agreement and include, but not be limited to, claims concerning non-sudden environmental impairments. 15.0 PAYMENTS Contractor shall receive monthly payments for services performed during the prior calendar month upon submission of an invoice (with a Town voucher) that shall contain an itemized list of trips from the Town of Southold Transfer Station including the tonnage of all materials hauled and the manifest number for each load removed. Such payments shall be made within sixty (60) days of the Town% approval of Contractor's invoice. Contractor's monthly invoice shall include a daily summary of tonnage received by Contractor at the Transfer Station. The Town shall be entitled to deduct from any payment owing to Contractor any sums expended by the Town to cure any default or other non-compliance by Contractor. DEFAULT In the event the Contractor fails to perform its obligations under the Agreement, the Town may terminate such Agreement, and the Town may procure the services from other sources and hold the Contractor responsible for any excess costs incurred and deduct from payments owing to the Contractor and/or draw upon the Performance Bond as full or partial reimbursement for such excess costs. The Town reserves the fight to terminate the Agreement for just cause. 13 17.0 Town of Southold Bid - Material~ Hauling Services March 2009 TERM OFAGREEMENT The term of this Agreement(s) shall be one (1) year commencing on the date of execution of the Agreement. The Town and. the contractor(s), shall have the mutual option of renewing the Agreement for 9ne (1) additional one (1) year term through written notice not less than thirty (30) days prior to th% expiration of the tenn. 18.0 RIGHTS AND OPTIONS The Town of Southold, New York, reserves and holds at the following rights and options upon issuing this Bid Solicitation: To award an Agreement to the candidate whose bid is judged to be the lowest responsible bid pursuant to Section 103 of the General Municipal Law of the S.tate of New York. 2. To reject any and/or all bids. 3. To issue subsequent bid solicitations. To issue additional and subsequent solicitations for Statements of qualifications, and conduct investigations or interviews with respect to the qualifications of each Bidder. To designate another public body, private or public agency, group, or authority tO act in its behalf for evaluation and Agreement negotiations. To designate another public body, private or public agency, group, or authority to act in its behalf for contraCt administration of this project at any time during the Agreement period. 14 Town of Southold Bid - Materials Hauling Services March 2009 SECTION B BID SPECIFICATIONS (TECHNICAL/MANAGEMENT) 15 Town of Southold Bid - Materials Hauling Services March 2009 SECTION B BID SPECIFICATIONS TECHNICAI_AVIANAGEMENT 1.0 REQUIREMENTS This request for bids is issued for the Town of Southold, State of New York, Town Hall, 53095 Main Road, PO Box 1179, Southold, New York, 11971 (TelephOne (631) 765-1800) The effort, shall be known as the Town of SOuthold Materials Trucking Services. The Town of Southold seeks to engage a qualified Contractor to haul Construction and Demolition Debris (C&D) and recycled newspaper (ONP) received at its MSW Transfer Station in Cutchogue, NY to Tom-designated Destination Sites. The Town will need to dispose of approximately 3,500 tons* of C&D and 1,300 tons of recyclables during each year of the agreement. Specifically, the contractor(si must provide equipment, labor, maintenance, management and policies to operate a transportation system for hauling C&D and ONP as described herein. The contractor must perform all work in accordance with applicable federal, state, and local regulatory requirements. 2.0 PROGRAM GOALS AND OBJECTIVES The goal of this project is the continued safe and reliable hauling and disposal of the C&D debris and ONP from the Town Of Southold Transfer Station at minimum cost to the citizenry. 3.0 POTENTIAL REGULATORY AND OPERATIONAL CHANGES During the termof the Agreement, there may be a regulatory and operational changes which may Affect the quantities of materials received at the Town of Southold Transfer Station for transport by the contractor. Depending upon the bids received in response to this solicitation, quantities of C&D in particular may increase substantially. This Agreement will not provide any guarantees with respect to the volume of waste to be hauled and/or disposed of by Contractor. The Town reserves the fight to designate another public body, private or public agency, group or authority to act in its behalf for administration of the Agreement at any time during the term of Agreement. 4.0 CHARACTER AND AMOUNTS OF MATERIALS The wastes which are to be hauled and disposed of under terms of this bid solicitation are to include typical C&D wastes and old recycled newsprint (ONP) from a suburban community, as described in the Glossary of Terms. * See Section 4.1 on page 17 regarding potential quantities of C&D. 16 Town of Southold Bid - Materials Hauling Service~ March 2009 4A Quantities - C&D It is believed that only about 25% of the C&D waste generated within the Town passes through the Transfer Station, as a result of relatively high tip fees that discourage use by larger commercial carters. In 2008, this amounted approximately 2,700 tons, although in recent years between 4,000 and 5,000 tons per year was more typical. The Transfer Station is now able to handle significantly more of the Town's C&D waste and depending upon bids received in response to this solicitation, the Town may consider lowering its tip fee to attract more of the C&D waste stream. Should this occur, it is expected that up to about 10,000 tons per year of C&D may need to be removed under any contract signed pursuant to this bid. CURRENT PRACTICE: The Town currently utilizes a 100-cubic yard walking floor trailer for'C&D removal. In 2008 the average weight of un-processed C&D in each trailer load was 18 tons (net). The Town is capable of further reducing the volume of C&D prior to loading. 4.2 Quantities - ONP Projected tonnages of ONP subject to hauling under this bid are expected to be more stable, in the 1,200 - 1,500 tons per year range. Changes to the Town's Recycling programs ma3( affect the quantity and characteristics of the waste received at the Town of Southold Transfer Station. CURRENT PRACTICE: The Town currently utilizes 100-cubic yard walking floor trailers for ONP removal. In 2008 the average weight of ONP in each trailer load was 21 tons (net). 4.3 Non-Compliance Waste If the Contractor discovers any non-compliance waste (hazardous, regulated medical or special wastes), the Contractor shall notify the Town and dispose of the noncompliance waste in accordance with local, state and Federal regulations. Compensation for such waste disposal services shall be provided for by the Town. 5.0 SCHEDULE OF CUTCHOGUE TRANSFER STATION The Town of Southold Transfer Station is open 7 days a week, except holidays, from 7:00 A.M. to 5:00 P.M. The Transfer Station's business office hours are 8:00 A.M. - 4:00 P.M. Monday through Friday. The Transfer Station is closed on the following holidays: New Year's Day Lincoln's Birthday Easter Sunday Independence Day Columbus Day Veterans Day Thanksgiving Christmas Martin Luther King Day Presidents Day Memorial Day Labor Day Election Day 1/2 day before Thanksgiving 1/2 day before Christmas 1/2 day before New Year's Day 17 Town of Southold Bid - Materials Hauling Services March 2009 6.0 PROGRAM ACTIVITIES 6.1 Contractor Responsibilities The Contractor will be expected to be available to remove materials from the Transfer Station during the following hours: Monday through Sunday 7:00 A.M. to 4:00 P.M., although Sunday removals are generally not expected to be needed unless specifically requested by the Town. The Contractor will be expected to provide enough containers so that C&D delivered to the Town Transfer Station can be loaded within 72 hours of its delivery, and ONP is removed upon accumulation at the Transfer Station of not more than 100 cubic yards. The staging of an adequate number of containers for this purpose will be coordinated with Transfer Station Staff as needed. The contractor shall deliver empty transfer containers to the Transfer Station for loading by Town personnel, who will then stage loaded trailers at a mutually convenient location at the Transfer Station for removal. Containers shall have covers available, although empty containers delivered to the Transfer Station shall be let~ open. THE TOWN WILL CONSIDER ALL TRANSPORT OPTIONS, WITH A PREFERENCE HOWEVER TOWARD THOSE THAT PROPOSE CONTAINERS OF A SIZE LARGE ENOUGH TO HOLD THE STANDARD MAXIMUM WEIGHT ALLOWED BY NEW YORK STATE DOT (80,000 LBS), SUCH AS 100 CUBIC YARD CAPACITY LONG-HAUL TRANSFER TRAILERS. 6.2 Town Responsibilities Town staffwill load materials into contractor containers using a front end wheel loader. After loading, the Town will bring transfer containers to the Town's truck scales for weighing to prevent overloading and to document haul and disposal tonnages. Town personnel will then cover (tarp) the loads prior to leaving the site. The Town will at all times exercise due caution with regard to loading and/o[ moving the Contractor's equiPment, and agrees to notify the Contractor promptly of any damage or unusual occurrence with regard to the equipment while it is under the care and control of the Town. 6.3 Routing Mode Contractor will have the right to select the route(s) for travel from the Town of Southold Transfer Station to the Destination Site(s). Contractor warrants and guarantees that; in selecting and utilizing such route(s), Contractor will insure that it is not violating any applicable motor vehicle height (overpass clearance), motor vehicle weight restrictions, local ordinances or Interstate Commerce Commission regulations. Contractor will indemnify and hold the Town harmless from any claims, fines and other damages assessed upon or incurred by the Town as a result of any violations of applicable restrictions or regulations relating to the routes traveled by the Contractor. 18 Town of Southold Bid - Materials Hauling SerVices March 2009 6.4 TOWN OF SOUTHOLD ACCIDENT AND DAMAGE POLICY The Contractor and The Town shall be required to prepare an Accident Report for any accidents and/or damage that occur while performing respective duties under the term of the Agreement. Both parties agree to notify the other immediately of any major occurrences such as bodily injury or structural damage to the Town's Transfer Station or the Town'~ or Contractor's equipment. An Accident Report will be submitted to the appropriate within twenty-four (24) hours containing the date, time, location, and complete description of all incidents. If occurring at the Town's facility, the offending parts or representative/s thereof shall also be recorded and required to sign any accident/damage report prior to departing the Town of Southold Transfer Station. T0 NYSDEC PART 360 PERMIT TO OPERATE The Town Of Southold operates the Transfer Station under a New York State Department of Environmental Conservation (NYSDEC) Part 360 Permit to Operate. A copy of NYSDEC Permit is available for viewing at the Transfer .Station business office upon request. 8.0 COMPENSATION The Town will compensate the Contractor for materials hauled on a per-trip basis. -The Contractor's manifest summary may be used for billing purposes, but will be compared against the Town's scale receipts before the Town makes payment. In the event of any dispute over differences in net trip counts between the Town and Contractor's records, the Town may make payment upon the trip count it deems to be most correct, until the dispute is reconciled. Any claims for differences must be filed in writing within sixty (60) days of occurrence or the Town's calculation shall be deemed final and binding between the parties. 9.0 SAFETY AND HEALTH REGULATIONS The Contractor shall comply with all current Federal Department of Labor, Safety and Health Regulations under the Occupational Safety and Health Act, 1972 (PL91-596) and Section 107, Agreement Work Hours and Safety Standards Act (PL91-54). The Contractor shall comply with all local, state and Federal regulations, laws and statutes which .apply to the work and to safety in particular. The Contractor shall comply with New York State Department of Labor current requirements. The Contractor shall be solely and completely responsible for operational safety during performance of the Agreement. The obligation exists twenty-four (24) hours a day, each and. every day throughout the term of the Agreement. The Town of Southold shall not have any responsibility for means, methods, sequences of techniques selected by the Contractor for safety precautions and programs, or for any failure to comply with laws, rules, regulations, ordinances, codes or orders applicable t6 the Contractor furnishing and performing the services under the terms of the Agreement 10.0 CONTACTS 19 Town of Southold Bid - Materials Hauling Services March 2009 The. Contractor shall provide the Town with a list of key persormel/staffthat will be servicing the account for the contractor, including job title, names and telephone numbers. 11.0 SUPPORTING DATA In the event the Town requires any information in support of its' operations or to meet federal, state, or local reporting requirements, the Contractor agrees to furnish all licenses, permits and inspection reports regarding equipment and'disposal sites which may be required by Town, County, State or Federal law within 48 hours of being requested by the Town. In the event the Contractor requires any information in support of its' operations or to meet federal, state, or local reporting requirements, the Town will provide such information as it applies to Southold Town operations. 20 Town of Southold Bid - Materials Hauling Services March 2009 SECTION C CONTRACTOR BID FORM 21 Town of Southold Bid - Materials Hauling Services March 2009 SECTION C TOWN OF SOUTHOLD CONSTRUCTION MATERIAL AND/OR DEMOLITION DEBRIS SERVICES CONTRACTOR BID FORM 1.0 GENERAL BID STATEMENT TO: TOWN OF SOUTHOLD STATE OF NEW YORK PO BOX 1179 53095 MAIN ROAD SOUTHOLD, NEw YORK 11971 Gentlemen: The undersigned Bidder has carefully examined the forms and'content of the Bid Solicitation, including notice to bidders, bid bond, sample operating agreement, performance bond, certificates of insurance, general conditions, bid specifi?ations, and addenda, has familiarized itself with the sites of work, and hereby proposes to furnish all necessary services, permits, labor, materials, equipment, vehicles, and tools required to perform and complete the work in strict accordance with all of the bid documents written by or on behalf of the Town of Southold for this project. The undersigned Bidder agrees to abide by all conditions stated, intended, implied both particularly and generally by the terms of this Bid Solicitation, the Agreement to be provided by the Town, and the unit price Bid herein stated. 1. The Undersigned Bidder also agrees as follows: FIRST: If this bid is accepted, to execute the Agreement and furnish to the Town a satisfactory performance bond, and notification of insurance within ten (10) calendar days. SECONDt To begin Materials hauling services operations on the commencement date of any Agreement awarded hereunder. THIRD: To pay the Town any and all damages it may incur as a result of the Contractor's failure to perform all acts necessary to the execution of the Agreement as provided in the Bid Solicitation. FOURTH: During the performance of this Agreement,. the Contractor hereby agrees as follows: The Contractor shall not discriminate against any employee or applicant for employment because of age, race, creed, color, sex, sexual orientation, marital status, national origin, or physical disability. 22 ToTM of Southold Bid - Materials Hauling Services March 2009 The Contractor shall comply with the provisions of Sections 290 through 301 of the Executive Law, shall furnish all information and reports deemed i~ecessary by the State Commission for Human Rights under these nondiscrimination clauses and such sections of the Executive Law, and shall permit access to his books, records, and accounts by the State Commission for Human Rights, the Attorney General, and the Industrial Commissioner for purposes of investigation to ascertain compliance with these on discrimination clauses and such sections of the Executive Law and Civil Rights Law, This Agreement may be forthwith cancelled, terminated, or suspended, in whole or in part, by the Town upon the basis ora finding made by the State Commission for Human Rights that the Contractor has not complied with these nondiscrimination clauses. No laborer, workman or mechanic in the employ of the Contractor or subcontractor shall be permitted or required to work more than eight hours in any one calendar day, or more than five days in any one week except as otherwise provided in Labor Code Section 220. The Contractor shall include the provisions of clauses (a) through (e) in every subcontract or purchase order in such a manner that such provisions will be binding upon each subcontractor or vendor as to operations to be performed within the State of New York. FIFTH: By submission of this bid~ the Bidder and each person signing on behalf of any Bidder certifies, and in case of a joint bid each party thereto certifies as to its own organization, under penalty of perjury that to the best of his knowledge and belief: The prices in this bid have been arrived at independently without collusion, consultation, communication, or agreement for the purpose of restricting competition. b. Unless Otherwise required by law, the prices which have been quoted in this bid have not been knowingly diSclOsed by the Bidder and will not knowingly be disclosed by the Bidder prior to opening. No attempt has been made nor will be made by the Bidder to induce any other person, partnership, or corporation to submit or not to submit a bid for the purpose of restricting competition. The undersigned also declares that it has or they have carefully examined the Bid ' Solicitation requirements and sample operating agreement and that it has or they have personally inspected the actual location of work, together with the local sources of supply, has or have satisfied itself or themselves as to all the quantifies and conditions, and waives all rights to claim any misunderstanding, omissions or errors regarding the same which such inspection and observation would have disclosed. 23 Town of Southold Bid - Materials Hauling Services March 2009 o The undersigned submits herewith a bid guaranty within the form provided by the applicable bid documents in the amount of $5,000.00 (Appendix A) for any option or combination thereof. In the event this proposal is accepted, and the undersigned fails, within ten (10) calendar days after date of receipt of Notice Of Award from the Town to execute and deliver an Agreement in the form provided by the Town or fails to execute and deliver evidence of prope~ insurance coverage and performance bond in the mounts required and in the prescribed form within ten (10) days after Notice of Award, the bid guaranty shall be forfeited and be retained by the Town toward the satisfaction of liquidated damages,and not as a penalty. Otherwise, the total amount of bid guaranty liquidated will be returned to the Bidder. The Bidder has completed the Contract Bid Form and Unit Price Schedules in both words and numerals in accordance with these bid requirements. 24 LEGAL NOTICE NOTICE TO BIDDERS NOTICE IS HEREBY GIVEN, in accordance with the provisions of Section 103 of the General Municipal Law, that sealed bids are sought and requested for Materials Hauling Services by the Town of Southold for one year. Specifications and bid proposal form may be obtained at the Office of the Town Clerk, Town of Southold, Town Hall, PO Box 1179, 53095 Main Road, Southold, New York 11971. The sealed bid, together with a Non-collusive Bid Certificate and bank raft or certified check in the amount of $100.00, will be received by the Town Clerk, at the Southold Town Hall, PO Box 1179, 53095 Main Road, Southold, New York, until 10:00 A.M., Thursday, March 26, 2009 at which time they will be opened and read aloud in public. The Town Board of the Town of Southold reserves the right to reject any and all bids and waive any and all informalities in any bid should it be deemed in the best interest of the Town of Southold to do so. All bids must be signed and sealed in envelopes plainly marked "Bid on Materials Hauling Services", and submitted to the Office of the Town Clerk. The bid price shall not include any tax, federal, state, or local, from which the Town of Southold is exempt. Dated: February 24, 2009 ELIZABETH A. NEVILLE SOUTHOLD TOWN CLERK PLEASE PUBLISH ON MARCH 12, 2009 AND FORWARD ONE (1) AFFIDAVIT OF PUBLICATION TO ELIZABETH NEVILLE, TOWN CLERK, TOWN HALL, PO BOX 1179, SOUTHOLD, NY 11971. Copies to the following: The Suffolk Times Town Attorney Brown's Letters Town Clerk's Bulletin Board Town Board Members Dodge Reports Burrelle's Information Services Solid Waste Coordinator Bunchuck STATE OF NEW YORK ) SS: COUNTY OF SUFFOLK) ELIZABETH A. NEVILLE, Town Clerk of the Town of Southold, New York being duly swom, says that on the Id day of ~~ ,2009, she affixed a notice of which the annexed printed notice is a true copy, in a proper and substantial manner, in a most public place in the Town of Southold, Suffolk County, New York, to wit: Town Clerk's Bulletin Board, 53095 Main Road, Southold, New York. Bid on Materials Tracking - 3/26/09 10:00 a.m. l~zabeth A. Neville Southold Town Clerk Swom before me tl~is __~ay of ~~_~008. '" lqo~y Public LYNDA M. BONN NOTARY PUBLIC, State of New York No. 01 ~306020932 Qualified in Suffolk County Term Expires Ma~ch 8.20 ~! BIDDER'S SOLICITATION MATERIALS HAULING SERVICES AGREEMENT DOCUMENTS TOWN OF SOUTHOLD STATE OF NEW YORK TOWN OF SOUTHOLD Prepared by: Solid Waste Management District P.O. Box 962 Cutchogue, NY 11935 March 2009 Town of Southold Bid - Materials Haul!ng Services March 2009 NOTICE TO BIDDERS MATERIALS TRUCKING SERVICES The Town of Southold will receive sealed bids for materials trucking services for the items identified herein (i.e., construction and demolition debris (C&D) and recycled newspaper (ONP) until the time and at the location shown below, such bids to then be opened and publicly read aloud. The trucking services sought by the Town will involve moving C&D and ONP collected at the Town's waste and recycling Transfer Station on Cox Lane in Cutchogue, NY to one or more specified destinations. TItIS SOLICITATION SEEKS TRUCKING SERVICE(S) ONLY. NO DISPOSAL OR RECYCLING SERVICES ARE SOUGHT. PLACE: Office Of the Town Clerk Southold Town Hall 53095 Main Road PO Box 1179 Southold, New York 11971 (631) 765-1800 DATE: March 26, 2009 TIME: 10:00 a.m. (LATE BIDS WILL NOT BE OPENED) Town of Southold Bid Materials Hauling Services March 2009 TOWN OF SOUTItOLD MATERIALS TRUCKING SERVICES GENERAL SERVICES SOUGHT The Town seeks prices for each of the following trucking tasks, in accordance with this Bid Solicitation: ~ TASK 1: A bid price PER TRIP, to provide equipment and labor for hauling construction & demolition debris (C&D) from the Town of Southold Transfer Station at 6155 Cox Lane, Cutchogue, NY to the Town of Brookhaven C&D Landfill at 350 Horseblock Road, Brookhaven, NY. (IMPORTANT: SEE SECTION B, PARAGRAPH 3.1 REGARDING POTENTIAL AMOUNTS OF C&D TO BE HAULED) TASK 2: A bid price PER TRIP to provide equipment and labor for hauling recycled newspaper (ONP) from the Town of Southold Transfer Station at 6155 Cox Lane, Cutchogue, NY to the Town of Islip Materials Recycling Facility located at Lincoln Ave., Holbrook, NY. THE TOWN IS CURRENTLY UNDER AN INTER-MUNICIPAL AGREEMENT (IMA) TO DELIVER THE MATERIALS COVERED BY TASK 1 AND TASK 2 TO THE BROOKHAVEN AND ISLIP DESTINATIONS SPECIFIED. THESE DESTINATIONS ARE NOT EXPECTED TO CHANGE DURING THE TERM OF ANY CONTRACT 'ENTERED INTO PURSUANT TO THIS BID. BY SUBMITTING A BID FOR THESE TASKS, THE BIDDER IS COMMITTING TO DELIVER SAID MATERIALS TO THESE LOCATIONS. BASIC AWARD CRITERIA The winning bid submitted in response to this solicitation will be based on the lowest price submitted for the two TASKS combined. The Town expects a single contractor to perform both Tasks. TERM The term of this Agreement shall be ONE (1) year from commencing from the date of award, expected to be on or about April 8, 2009. The Town and the winning bidder shall have a mutual option of renewing the Agreement for an additional one year term by agreeing together in writing to do so not less than thirty (30) days prior to the expiration of the initial term, at the price(s) agreed to herein. CERTAIN OTHER CONDITIONS Bids must be made in writing on the forms furnished and shall be accompanied by a Bid Guaranty in the Form of ~ertified check, money order, bank dra~ or standard form letter of credit made payable to Town of Southold, or bid bond, in the sum of five thousand dollars ($5,000.00) wherein the named obligee shall be the Town of Southold (APPENDIX C). 3 Town of Southold Bid - Materials Hauling Services March 2009 The successful Bidder shall be required to furnish a performance Bond, and insurance in accordance with the instructions in the Bid Solicitation (APPENDIX D). The bid price shall not include any tax, Federal, state, or local, from which the Town of Southold is exempt. A Bidder may not withdraw his bid within forty-five (45) days after the opening of the bids, but may withdraw his Bid at any time prior to the scheduled time for the opening of bids. The Town reserves the right to reject any or all bids and to waive informalities, should this action be in the best interest of the Town of Southold. Bid Solicitation containing submission requirements, instructions, technical specifications, and bidding forms may be examined free of charge and at the following location on weekdays from 8:00 A.M. to 4:00 P.M.: Office Of the Town Clerk Southold Town Hall PO Box 1179 53095 Main Road Southold, New York 11971 Upon payment of non-refundable fifty dollars ($50.00) Bid Solicitation may be picked up at: Office of the Town Clerk Southold Town Hall PO Box 1179 53095 Main Road Southold, New York 11971 Bidders should direct any questions concerning this solicitation to Mr. James Bunchuck, the Southold Town Solid Waste Coordinator at the Southold Town Transfer Station office, 6155 Cox Lane, Cutchogue, NY 11935 (631) 734-7685. Bidders may visit the Transfer Station during normal business hours of 7:00 am - 5:00 pm, 7 days a week (except holidays). Appointments are not necessary, but may be scheduled by calling Mr. Bunchuck. Elizabeth A. Neville Town Clerk 4 Town of Southold Bid Materials Hauling Services March 2009 TABLE OFCONTENTS GLOSSARY OF TERMS SECTION 1.0 2.0 3.0 4.0 A- SUBMISSION REQUIREMENTS Project Purpose Schedule Examination Of Agreement Documents Information to be Submitted 4.1 Contractual Bid 4.2 Supplemental Information 5.0 Bid Format 6.0 Submission of Bid 7.0 Bid Guaranty 8.0 Execution Of Agreement 9.0 Consideration Of Bids 10.0 Selection Of Contractor 11.0 Acceptance of Bid 12.0 Assignment 13.0 Insurance and Bonds 13.1 Insurance 13.2 Bonds 14.0 Indemnity (Hold Harmless) 15.0 Payments 16.0 Default 17.0 Term of Agreement 18.0 Rights and Options SECTION B - BID SPECIFICATION 1.0 Requirements 2.0 Program Goals and Objectives 3.0 Potential Regulatory and Operational Changes 4.0 Character and Amounts of Materials 4.1 Quantities - C&D 4.2 Quantities - ONP 4.3 Non-Compliance Waste 5.0 Schedule of Cutchogue Transfer Station 6.0 Program Activities 6.1 Contractor Responsibilities 6.2 Town Responsibilities 6.3 Routing Mode 6.4 Town of Southold Accident and Damage Policy 7.0 NYSDEC Part 360 Permit to Operate 8.0 Compensation 9.0 Safety and Health Regulations 10.0 Contacts 7 9 9 9 9 10 10 10 10 10 11 11 11 12 12 12 12 12 13 13 13 13 13 14 20 16 16 16 16 17 17 17 17 18 18 !8 18 19 19 19 19 20 Town of Southold Bid - Materials Hauling Services March 2009 11.0 Supporting Data 2O SECTION C - CONTRACTOR BID FORM 1.0 General Bid Statement ¢ 2.0 Unit Price Bid Schedule 21 22 25 SECTION D - APPENDICES Appendix A - Surety Verification Appendix B - Subcontractors Appendix C - Form of Bid Bond Appendix D - Performance Bond 26 27 28 31 6 Town of Southold Bid Materials Hauling Services March 2009 GLOSSARY OF TERMS ADMINISTRATOR - Shall mean the Coordinator of construction and demolition debris (or his agent) Of the Town of Southold, New York. AGREEMENT - Shall mean a Form operating agreement set forth by the Town and resulting from this Bid Solicitation between the Town of Southold and the successful Bidder to be executed in 2009 . AGREEMENT DOCUMENTS - Shall include the notice to bidders, instructions, bid solicitation, bid Forms, information schedules, proposal, payment bond, bid bond, Agreement, performance bond, certificates of insurance, glossary of terms any general conditions or special conditions, and any addenda. The Agreement Documents will Form a part of the Agreement. AGREEMENT YEAR - Shall mean the period of the first 365 days from the date a contract(s)/award(s) pursuant to this solicitation is signed by the parties. BIDDER - Shall mean any party or parties submitting in proper form a bid to perform the work as specified in the Agreement Documents. The successful Bidder selected by the Town to perform the specified work will thereafter be known as the Contractor. BID PRICE - Shall mean the unit cost to determine the ranking of bidders. BID SOLICITATION - Shall mean this document, specifications, and any bid addenda issued. COMMENCEMENT DATE - Shall mean the date a contract(s)/award(s) pursuant to this solicitation is signed by the parties. CONSTRUCTION MATERIALS AND/OR DEMOLITION DEBRIS (C&D) - Shall mean solid waste resulting from the construction, renovation, equipping, remodeling, repair and demolition of structures and roads. Such waste includes, but is not limited to, bricks, concrete and other masonry materials, soil, rock, wood, wall coverings, plaster, drywall, non-asbestos insulation and roofing shingles. CONTRACT DOCUMENTS - Shall have the same meaning as Agreement Documents. CONTRACTOR - Shall mean the party contracting to perform the work, or the heirs, executors, administrators, agents, or successors thereof. COUNTY - Shall mean Suffolk County, State Of New York. DAILY - Sunday to Saturday, inclusive. DESTINATION SITES - Permitted disposal site(s) designated by the Town for C&D and permitted recycling facilities designated by the Town. EPA - Environmental Protection Agency (Federal). GLOSSARY- 1 7 Town of Southold Bid - Materials Hauling Services March 2009 Glossary of Terms (cont'd) HAUL SERVICES UNIT PRICE - Shall mean the Contractor's compensation in dollars for each ton of C&D debris or recyclables actually hauled from the Town Of Southold Transfer Station to the Town Designated Disposal/Recycling Site. HAZARDOUS WASTE - Shall mean (1) any "hazardous waste" as defined under the Resource Conservation and Recovery Act, 42 US.C. Section 6901 et seq., or "hazardous substance" as defined under the comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., or "hazardous waste" as defined under New York Environmental Conservation Law Section 27-0901 et seq., as each such law may be amended from time to time, and the regulations promulgated there under, and any analogous or succeeding Federal, state or local law, rule or regulation and regulations promulgated there under and (2) any other material which any governmental agency or unit having appropriate jurisdiction shall determine from time to time cannot be processed at the facility because it is harmful, toxic or dangerous. NOTICE OF AWARD - Shall mean written notice from the Town of Southold to the successful Bidder that the Town of Southold intends to award an Agreement to the successful Bidder, subject to compliance with all their terms and conditions of the Agreement Documents. NYSDEC - New York State Department Of Environmental Conservation. ONP - Old Recycled Newsprint brought to the Southold MSW Transfer Station by residents and curbside collection carters, including newspaper, glossy inserts, magazines, paperback books, office paper, and construction paper. ONP is NOT intended to include paper used for cleaning or hygiene purposes such as paper towels, napkins, or tissues. OSHA - Federal Williams-Steiger Occupations Safety & Health Act of 1970, plus subsequent revisions. PERMIT - Shall mean any and all permits, licenses, approvals, certificates of public convenience and necessity, Franchises or authorizations which must be issued by any Governmental Body having jurisdiction thereof to legally enable the Contractor to transport and/or dispose Of construction and demolition debris. PERMITTEE - Shall mean any person issued a valid permit to haul construction and demolition debris or to construct, establish, maintain or operate a construction and demolition debris Disposal Site. RCRA - Resource Conservation Recovery Act (Federal). SOLID WASTE - Shall mean all putrescible and non-putrescible materials or substances, including but not limited to garbage, refuse, rubbish, ashes, agricultural wastes, and offal. (Solid Waste does not include C&D waste, recyclables, hazardous, or infectious waste). SUBCONTRACTOR - Shall mean an individual, firm or corporation having a direct contract with the Contractor for services, equipment, materials and/or labor. GLOSSARY-2 Town of Southold Bid Materials Hauling Services March 2009 SECTION A SUBMISSION REQUIREMENTS BIDDERS INFORMATION, INSTRUCTIONS AND AWARD BASIS 1.0 PROJECT PURPOSE The Town of Southold seeks bids for the hauling of construction and demolition debris (C&D) and recycled newspaper (ONP) from the Town of Southold Transfer Station to specified permitted Destination Site(s) owned and operated by the Towns of Brookhaven and Islip, respectively. 2.0 SCHEDULE The schedule below is an estimate of the time period leading up to the commencement of the Agreement. Its intent is to provide each Bidder with an idea of when certain events may occur. The dates given are guidelines and should not be construed as firm dates or deadlines due to the multiple parties involved in the decision making process. EVENT Bid Opening Town Board Approval Agreement Executed Operations Commencement DATE 10:00 am, March 26, 2009 April 7, 2009 On or Before Mayl, 2009 Day Agreement is Executed 3.0 EXAMINATION OF AGREEMENT DOCUMENTS, FAMILIARITY WITH THE WORK It is the responsibility of each Bidder before submitting a Bid to (a) examine the Bid Documents thoroughly; (b) become familiar with conditions at the Town of Southold Transfer Station and Destination Sites that may affect cost, progress, performance or furnishing of the work; (c) become familiar with and consider all federal, state and local laws, regulations ordinances, permits, approvals and orders that may effect the cost, progress, performance or fumishing of the work; (d) study any Bid and/or Agreement Documents carefully; and (e) notify the Town Clerk of all conflicts, errors or discrepancies in the Agreement Documents. The submission of a Bid becomes a representation that Bidder has complied with every requirement of this Bid Solicitation, that the Bid is based upon performing and furnishing the work required by the Agreement Documents, and that the Agreement Documents are sufficient in scope and detail to indicate and convey understanding of all terms and conditions for performing and furnishing the work. 9 Town of Southold Bid - Materials Hauling Services March 2009 4.0 INFORMATION TO BE SUBMITTED WITH PROPOSAL 4.1 Contractual Bid For the purpose of assisting the Town in determining the responsible Bidders for this Bid Solicitation, the Bidder is required to submit the following minimum information with his bid: ii. iii. 4.2 Contractor Bid Form Bid Security or Bid Bond (SEE APPENDIX C) Supplemental Information as described in 4.2 Supplemental Information In addition to the aforementioned forms, the Bidder is required to submit the following supplemental information with his bid: A statement that the Bidder has or will acquire all manpower, materials and supplies, mobile equipment, etc., necessary to provide the Town with all services sought under the Agreement. ii. A copy of any current Permit(s) to transport C&D and/or municipal recyclables as required. iii. Identification of the Surety company supplying the Performance Bond specified herein. (SEE APPENDIX A). iv. 5.0 BID FORMAT A list of any Subcontractors the Bidder intends to use to complete any portion of the work. The Bidder is advised that any Agreement awarded will be contingent upon the use of the subcontractor(s) so identified. In the event that the Bidder desires to change the number or identity of such subcontractor(s), the proposed change must be submitted to the Town for approval. (SEE APPENDIX B). 6.0 Form Preparation Bid prices shall be submitted in the form described in this Bid Solicitation (SEE PAGE 25). Bid prices shall be properly filled in, using both words and numerals where indicated. BIDS SHALL NOT BE QUALIFIED, MODIFIED, LIMITED OR RESTRICTED 1N ANY WAY. In the event a specification is not applicable, it shall be so indicated. Incomplete bids may not be considered, depending on the nature of the missing information. SUBMISSION OF BID Each Bidder shall submit a complete set of his Bid which shall be enclosed in a sealed envelope plainly marked on the outside with the title of the work and the name and address of the Bidder. No Bid will be considered unless filed on or before the time and at the place designated in the Notice to Bidders. Bids received after the time set for the opening will be returned to Bidders unopened. 10 Town of Southold Bid Materials Hauling Services March 2009 When sent by mail, preferably registered, the sealed Bid, marked as above, should be enclosed in an additional envelope similarly marked and addressed to: Elizabeth Neville Southold Town Clerk Town Hall PO Box 1179 53095 Main Road Southold, New York 11971 7.0 BID GUARANTY The guaranty of $5,000 may be certified check, bank draft, money order, standard form irrevocable letter of credit, or a bid bond in the form attached (APPENDIX C). The bid bond shall be secured from a surety company authorized to do business in the State of New York as a surety. No Bid will be considered unless it is accompanied by the required guaranty, certified check, money order or bank draft must be made payable to the order of the Town of Southold. The bid bond shall name the Town as the obligee. Cash deposits will not be accepted. The bid guaranty shall ensure the execution of the Agreement and the furnishing of the surety bond or other required bonds by the successful Bidder, all as required by the Agreement Documents. All guaranties will be returned within ten (10) days after the execution of the Agreement and required bonds, insurance and other Agreement Documents are received from the successful Bidder. 8.0 EXECUTION OF AGREEMENT, FURNISHING OF BONDS The successful Bidder, or its legally authorized representative, shall appear in person within ten (10) days of the Notice of Award by the Town at the place and time designated by the Town to execute the Agreement and other Agreement Documents for Materials Hauling Services, if so required by the Town. The successful Bidder shall, at its own cost and expense, procure, execute and deliver to the Town the following documents within ten (10) days of formal Notice of Award by the Town. Performance Bond - A Performance Bond shall be in an amount of fifty thousand dollars (50,000). This bond (as shown by example in Appendix D), shall be maintained at the Contractor's own expense for the term of the Agreement. Failure to do so shall constitute a breach of the Agreement created by the Town's acceptance of the bid. In such event, the Town may determine that such Bidder has abandoned the Agreement and the Town shall be entitled to take action for any and all damages it may suffer as the result of such breach. 9.0 CONSIDERATION OF BIDS The Town of Southold reserves the right to reject any/or all bids for haul and disposal services if such action is deemed to be in the best interests of the Town. To be considered responsive to this Bid Solicitation, each Bidder shall 11 ^) Town of Southold Bid - Materials Hauling Services March 2009 provide equipment, labor, maintenance and management services to haul C&D and recyclables from the Town of Southold Transfer Station designated Destination Site(s) as set forth in Section B ~ Bid Specifications. B) Provide evidence of all current valid state and Federal permits, licenses, local ordinances, etc., required by law to receive construction and debris at the designated~Disposal Site(s). C) Provide evidence of physical and financial capability to perform services described in the bid specifications. 10.0 SELECTION OF CONTRACTOR Bids will be evaluated only if accompanied by the approved form of bid guaranty. Only bids solicited from firms or combinations thereof, who have sufficient management, operating, and maintenance experience to fulfill the Town's goads and comply with the applicable local, state, Federal laws, ordinances, and regulations will be accepted. The Town will review the bids and make a selection recommendation based on the evaluation criteria included in this Bid Solicitation or take such other action as it deems in its best interest. Any agreement awarded hereunder will be to the responsible Bidder whose Evaluation Unit Bid Price is the lowest. The Town of Southold reserves the right, in its sole discretion, to reject all bids submitted in response to this Bid Solicitation. 11.0 ACCEPTANCE OF BID The acceptance of a Bid will be a Notice of Award signed by a duly authorized representative of the Town, and no other act of the Town shall constitute the acceptance of a Bid. The acceptance ora Bid shall bind the successful Bidder to perform the work described in the Bid Documents and to execute any other Agreement Documents that may be required by the Town. 12.0 ASSIGNMENT The successful Bidder to whom any Agreement shall be let, granted, or awarded shall not assign, transfer, convey, sublet, or otherwise dispose of the Agreement or of his right, title, or interest therein or his power to execute such Agreement, to any person or corporation without the prior written consent of the Town. 13:0 INSURANCE AND BONDS 13.1 Insurance For the period the Agreement is in effect, Contractor must maintain insurance acceptable to the Town in the kinds and amounts set forth below. All such insurance coverage shall be provided by companies licensed to do business in New York State. The Town of Southold and its agent shall be named as an additional insured and coverage shall not be changed or cancelled until thirty (30) days written notice has been given to the Town. Within ten (10) days of the Notice of Award, Contractor shall furnish to the Town evidence that it maintains the following types and amounts of insurance: 12 Town of Southold Bid - Materials Hauling Services March 2009 Worker's Compensation Insurance - A Policy covering the operations of the Contractor in accordance with the provisions of Chapter 41 of the Laws of 1914 as amended, known as the Worker's Compensation Law, coveting all operations Of the Contractor, whether performed by him or by his subcontractors. The Agreement shall be void and of no effect unless the person or 9orporation making or executing same shall secure compensation coverage for the benefit of, and keep insured during the life of said Agreement such 6'mployees in compliance with provisions of the Worker's Compensation Law. General Liability (Comprehensive Form) Insurance - Contractor's liability insurance issued to and coveting legal liability of the Contractor with respect to all work performed by him under the Agreement. 13.2 Bonds In the event the Contractor secures a Performance Bond from any of its subcontractors, said bond shall also name the Town of Southold as a dual obligee. 14.0 INDEMNITY (HOLD HARMLESS) 16.0 Contractor shall agree to defend, indemnify and save harmless the Town against any and all liability, loss, damage, detriment, suit, claim, demand, cost, charge, attorney's fees and expenses of whatever kind or nature which the Town may directly or indirectly incur, suffer or be required to pay by reason of or in consequence of the carrying out of or the performance of the terms of such Agreement, or the failure to carry out any of the revisions, duties, services or requirements of such Agreement, whether such losses and damages are suffered or sustained by the Town directly or its employees, licensees, agents, engineers, citizens or by other persons or corporations, including any of the Contractor's employees and agents who may seek to hold the Town liable therefor. This obligation shall be ongoing, survive the term of the Agreement and include, but not be limited to, claims concerning non-sudden environmental impairments. 15.0 PAYMENTS Contractor shall receive monthly payments for services performed during the prior calendar month upon submission of an invoice (with a Town voucher) that shall contain an itemized list of trips from the Town of Southold Transfer Station including the tonnage of all materials hauled and the manifest number for each load removed. Such payments shall be made within sixty (60) days of the Town's approval of Contractor's invoice. Contractor's monthly invoice shall include a daily summary of tonnage received by Contractor at the Transfer Station. The Town shall be entitled to deduct from any payment owing to Contractor any sums expended by the Town to cure any default or other non-compliance by Contractor. DEFAULT In the event the Contractor fails to perform its obligations under the Agreement, the Town may terminate such Agreement, and the Town may procure the services from other sources and hold the Contractor responsible for any excess costs incurred and deduct from payments owing to the Contractor and/or draw upon the Performance Bond as full or partial reimbursement for such excess costs. The Town reserves the right to terminate the Agreement for just cause. 13 Town of Southold Bid Materials Hauling Services March 2009 17.0 TERM OFAGREEMENT The term of this Agrecnnent(s) shall be one (1) year commencing on the date of execution of the Agreement. The Town and the contractor(s), shall have the mutual option of renewing the Agreement for one (1) additional one (1) year term through written notice not less than thirty (30) days prior to the expiration of the term. 18.0 RIGHTS AND OPTIONS The Town of Southold, New York, reserves and holds at the following rights and options upon issuing this Bid Solicitation: To award an Agreement to the candidate whose bid is judged to be the lowest responsible bid pursuant to Section 103 of the General Municipal Law of the State of New York. 2. To reject any and/or all bids. 3. To issue subsequent bid solicitations. To issue additional and subsequent solicitations for statements of qualifications, and conduct investigations or interviews with respect to the qualifications of each Bidder. To designate another public body, private or public agency, group, or authority to act in its behalf for evaluation and Agrecnnent negotiations. To designate another public body, private or public agency, group, or authority to act in its behalf for contract administration of this project at any time during the Agreement period. 14 Town of Southold Bid Materials Hauling Services March 2009 SECTION B BID SPECIFICATIONS TECHNICAL/MANAGEMENT) 15 Town of Southold Bid - Materials Hauling Services March 2009 SECTION B BID SPECIFICATIONS TECHNICAL/MANAGEMENT 1.0 REQUIREMENTS This request for bids is issued for the Town of Southold, State of New York, Town Hall, 53095 Main Road, PO Box 1179, Southold, New York, 11971 (Telephone (631) 765-1800) The effort, shall be known as the Town of Southold Materials Trucking Services. The Town of Southold seeks to engage a qualified Contractor to haul Construction and Demolition Debris (C&D) and recycled newspaper (ONP) received at its MSW Transfer Station in Cutchogue, NY to Town-designated Destination Sites. The Town will need to dispose of approximately 3,500 tons* of C&D and 1,300 tons ofrecyclables during each year of the agreement. Specifically, the contractor(s) must provide equipment, labor, maintenance, management and policies to operate a transportation system for hauling C&D and ONP as described herein. The contractor must perform all work in accordance with applicable federal, state, and local regulatory requirements. 2.0 PROGRAM GOALS AND OBJECTIVES The goal of this project is the continued safe and reliable hauling and disposal of the C&D debris and ONP from the Town Of Southold Transfer Station at minimum cost to the citizenry. 3.0 POTENTIAL REGULATORY AND OPERATIONAL CHANGES During the term of the Agreement, there may be a regulatory and operational changes which may Affect the quantities of materials received at the Town of Southold Transfer Station for transport by the contractor. Depending upon the bids received in response to this solicitation, quantities of C&D in particular may increase substantially. This Agreement will not provide any guarantees with respect to the volume of waste to be hauled and/or disposed of by Contractor. The Town reserves the right to designate another public body, private or public agency, group or authority to act in its behalf for administration of the Agreement at any time during the term of Agreement. 4.0 CHARACTER AND AMOUNTS OF MATERIALS The wastes which are to be hauled and disposed of under terms of this bid solicitation are to include typical C&D wastes and old recycled newsprint (ONP) from a suburban community, as described in the Glossary of Terms. * See Section 4.1 on page 17 regarding potential quantities of C&D. 16 Town of Southold Bid Materials Hauling Service~ March 2009 4.1 Quantifies - C&D It is believed that only about 25% of the C&D waste generated within the Town passes through the Transfer Station, as a result of relatively high tip fees that discourage use by larger commercial carters. In 2008, this amounted approximately 2,700 tons, although in recent years between 4,000 and 5,000 tons per year was more typical. The Transfer Station is now able to handle significantly more of the Town's C&D waste and depending upon bids received in response to this solicitation, the Town may consider lowering its tip fee to attract more of the C&D waste stream. Should this occur, it is expected that up to about 10,000 tons per year of C&D may need to be removed under any contract signed pursuant to this bid. CURRENT PRACTICE: The Town currently utilizes a 100-cubic yard walking floor trailer for C&D removal. In 2008 the average weight of un-processed C&D in each trailer load was 18 tons (net). The Town is capable of further reducing the volume of C&D prior to loading. 4.2 Quantities - ONP Projected tonnages of ONP subject to hauling under this bid are expected to be more stable, in the 1,200 - 1,500 tons per year range. Changes to the Town's Recycling programs may affect the quantity and characteristics of the waste received at the Town of Southold Transfer Station. CURRENT PRACTICE: The Town currently utilizes 100-cubic yard walking floor trailers for ONP removal. In 2008 the average weight of ONP in each trailer load was 21 tons (net). 4.3 Non-Compliance Waste If the Contractor discovers any non-compliance waste (hazardous, regulated medical or special wastes), the Contractor shall notify the Town and dispose of the noncompliance waste in accordance with local, state and Federal regulations. Compensation for such waste disposal services shall be provided for by the Town. 5.0 SCHEDULE OF CUTCHOGUE TRANSFER STATION The Town of Southold Transfer Station is open 7 days a week, except holidays, from 7:00 A.M. to 5:00 P.M. The Transfer Station's business office hours are 8:00 A.M. - 4:00 P.M. Monday through Friday. The Transfer Station is closed on the following holidays: New Year's Day Lincoln's Birthday Easter Sunday Independence Day Columbus Day Veterans Day Thanksgiving Christmas Martin Luther King Day Presidents Day Memorial Day Labor Day Election Day 1/2 day before Thanksgiving 1/2 day before Christmas 1/2 day before New Year's Day 17 Town of Southold Bid Materials Hauling Services March 2009 6.0 PROGRAM ACTIVITIES 6.1 Contractor Responsibilities The Contractor will be expected to be available to remove materials from the Transfer Station during the following hours: Monday through Sunday 7:00 A.M. to 4:00 P.M., although Sunday removals are generally not expected to be needed unless specifically requested by the Town. The Contractor will be expected to provide enough containers so that C&D delivered to the Town Transfer Station can be loaded within 72 hours of its delivery, and ONP is removed upon accumulation at the Transfer Station of not more than 100 cubic yards. The staging of an adequate number of containers for this purpose will be coordinated with Transfer Station Staff as needed. The contractor shall deliver empty transfer containers to the Transfer Station for loading by Town personnel, who will then stage loaded trailers at a mutually convenient location at the Transfer Station for removal. Containers shall have covers available, although empty containers delivered to the Transfer Station shall be left open. THE TOWN WILL CONSIDER ALL TRANSPORT OPTIONS, WITH A PREFERENCE HOWEVER TOWARD THOSE THAT PROPOSE CONTAINERS OF A SIZE LARGE ENOUGH TO HOLD THE STANDARD MAXIMUM WEIGHT ALLOWED BY NEW YORK STATE DOT (80,000 LBS), SUCH AS 100 CUBIC YARD CAPACITY LONG-HAUL TRANSFER TRAILERS. 6.2 Town Responsibilities Town staffwill load materials into contractor containers using a front end wheel loader. After loading, the Town will bring transfer containers to the Town's track scales for weighing to prevent overloading and to document haul and disposal tonnages. Town personnel will then cover (tarp) the loads prior to leaving the site. The Town will at all times exercise due caution with regard to loading and/or moving the Contractor's equipment, and agrees to notify the Contractor promptly of any damage or unusual occurrence with regard to the equipment while it is under the care and control of the Town. 6.3 Routing Mode Contractor will have the right to select the route(s) for travel from the Town of Southold Transfer Station to the Destination Site(s). Contractor warrants and guarantees that, in selecting and utilizing such route(s), Contractor will insure that it is not violating any applicable motor vehicle height (overpass clearance), motor vehicle weight restrictions, local ordinances or Interstate Commerce Commission regulations. Contractor will indemnify and hold the Town harmless from any claims, fines and other damages assessed upon or incurred by the Town as a result of any violations of applicable restrictions or regulations relating to the routes traveled by the Contractor. 18 Town of Southold Bid Materials Hauling Services March 2009 6.4 TOWN OF SOUTHOLD ACCIDENT AND DAMAGE POLICY The Contractor and The Town shall be required to prepare an Accident Report for any accidents and/or damage that occur while performing respective duties under the term of the Agreement. Both parties agree to notify the other immediately of any major occurrences such as bodily injury or structural damage to the Town's Transfer Station or the Town's or Contractor's equipment. An Accident Report will be submitted to the appropriate within twenty-four (24) hours containing the date, time, location, and complete description of all incidents. If occurring at the Town's facility, the offending parts or representative/s thereof shall also be recorded and required to sign any accident/damage report prior to departing the Town of Southold Transfer Station. 7.0 NYSDEC PART 360 PERMIT TO OPERATE The Town Of Southold operates the Transfer Station under a New York State Department of Environmental Conservation (NYSDEC) Part 360 Permit to Operate. A copy of NYSDEC Permit is available for viewing at the Transfer Station business office upon request. 8.0 COMPENSATION The Town will compensate the Contractor for materials hauled on a per-trip basis. -The Contractor's manifest summary may be used for billing purposes, but will be compared against the Town's scale receipts before the Town makes payment. In the event of any dispute over differences in net trip counts between the Town and Contractor's records, the Town may make payment upon the trip count it deems to be most correct, until the dispute is reconciled. Any claims for differences must be filed in writing within sixty (60) days of occurrence or the Town's calculation shall be deemed final and binding between the parties. 9.0 SAFETY AND HEALTH REGULATIONS The Contractor shall comply with all current Federal Department of Labor, Safety and Health Regulations under the Occupational Safety and Health Act, 1972 (PL91-596) and Section 107, Agreement Work Hours and Safety Standards Act (PL91-54). The Contractor shall comply with all local, state and Federal regulations, laws and statutes which apply to the work and to safety in particular. The Contractor shall comply with New York State Department of Labor current requirements. The COntractor shall be solely and completely responsible for operational safety during performance of the Agreement. The obligation exists twenty-four (24) hours a day, each and every day throughout the term of the Agreement. The Town of Southold shall not have any responsibility for means, methods, sequences of techniques selected by the Contractor for safety precautions and programs, or for any failure to comply with laws, rules, regulations, ordinances, codes or orders applicable to the Contractor furnishing and performing the services under the terms of the Agreement 10.0 CONTACTS 19 Town of Southold Bid - Materials Hauling Services March 2009 The Contractor shall provide the Town with a list of key personnel/staff that will be servicing the account for the contractor, including job title, names and telephone numbers. 11.0 SUPPORTING DATA In the event the Town requires any information in support of its' operations or to meet federal, state, or local reporting requirements, the Contractor agrees to furnish all licenses, permits and inspection reports regarding equipment and disposal sites which may be required by Town, County, State or Federal law within 48 hours of being requested by the Town. In the event the Contractor requires any information in support of its' operations or to meet federal, state, or local reporting requirements, the Town will provide such information as it applies to Southold Town operations. 20 Town of Southold Bid - Materials Hauling Services March 2009 SECTION C CONTRACTOR BID FORM 21 Town of Southold Bid - Materials Hauling Services March 2009 SECTION C TOWN OF SOUTHOLD CONSTRUCTION MATERIAL AND/OR DEMOLITION DEBRIS SERVICES CONTRACTOR BID FORM 1.0 GENERAL BID STATEMENT TO: TOWN OF SOUTHOLD STATE OF NEW YORK PO BOX 1179 53095 MAIN ROAD SOUTHOLD, NEW YORK 11971 Gentlemen: The undersigned Bidder has carefully examined the forms and content of the Bid Solicitation, including notice to bidders, bid bond, sample operating agreement, performance bond, certificates of insurance, general conditions, bid specifications, and addenda, has familiarized itself with the sites of work, and hereby proposes to furnish all necessary services, permits, labor, materials, equipment, vehicles, and tools required to perform and complete the work in strict accordance with all of the bid documents written by or on behalf of the Town of Southold for this project. The undersigned Bidder agrees to abide by all conditions stated, intended, implied both particularly and generally by the terms of this Bid Solicitation, the Agreement to be provided by the Town, and the unit price Bid herein stated. 1. The Undersigned Bidder also agrees as follows: FIRST: If this bid is accepted, to execute the Agreement and furnish to the Town a satisfactory performance bond, and notification of insurance within ten (10) calendar days. SECOND:' To begin Materials hauling services operations on the commencement date of any Agreement awarded hereunder. THIRD: To pay the Town any and all damages it may incur as a result of the Contractor's failure to perform all acts necessary to the execution of the Agreement as provided in the Bid Solicitation. FOURTH: During the performance of this Agreement, the Contractor hereby agrees as follows: The Contractor shall not discriminate against any employee or applicant for employment because of age, race, creed, color, sex, sexual orientation, marital status, national origin, or physical disability. 22 Town of Southold Bid - Materials Hauling Services March 2009 The Contractor shall comply with the provisions of Sections 290 through 301 of the Executive Law, shall furnish all information and reports deemed necessary by the State Commission for Human Rights under these nondiscrimination clauses and such sections of the Executive Law, and shall permit access to his books, records, and accounts by the State Commission for Human Rights, the Attorney General, and the Industrial Commissioner for purposes of investigation to ascertain compliance with these on discrimination clauses and such sections of the Executive Law and Civil Rights Law, This Agreement may be forthwith cancelled, terminated, or suspended, in whole or in part, by the Town upon the basis of a finding made by the State Commission for Human Rights that the Contractor has not complied with these nondiscrimination clauses. No laborer, workman or mechanic in the employ of the Contractor or subcontractor shall be permitted or required to work more than eight hours in any one calendar day, or more than five days in any one week except as otherwise provided in Labor Code Section 220. The Contractor shall include the provisions of clauses (a) through (e) in every subcontract or purchase order in such a manner that such provisions will be binding upon each subcontractor or vendor as to operations to be performed within the State of New York. FIFTH: By submission of this bid, the Bidder and each person signing on behalf of any Bidder certifies, and in case of a joint bid each party thereto certifies as to its own organization, under penalty of perjury that to the best of his knowledge and beliefi The prices in this bid have been arrived at independently without collusion, consultation, communication, or agreement for the purpose of restricting competition. Unless otherwise required by law, the prices which have been quoted in this bid have not been knowingly disclosed by the Bidder and will not knowingly be disclosed by the Bidder prior to opening. No attempt has been made nor will be made by the Bidder to induce any other person, partnership, or corporation to submit or not to submit a bid for the purpose of restricting competition. The undersigned also declares that it has or they have carefully examined the Bid Solicitation requirements and sample operating agreement and that it has or they have personally inspected the actual location of work, together with the local sources of sUpply, has or have satisfied itself or themselves as to all the quantities and conditions, and waives all rights to claim any misunderstanding, omissions or errors regarding the same which such inspection and observation would have disclosed. 23 Town of Southold Bid - Materials Hauling Services March 2009 The undersigned submits herewith a bid guaranty within the form provided by the applicable bid documents in the amount of $5,000.00 (Appendix A) for any option or combination thereof. In the event this proposal is accepted, and the undersigned fails, within ten (10) calendar days after date of receipt of Notice Of Award from the Town to execute and deliver an Agreement in the form provided by the Town or fails to execute and deliver evidence of proper insurance coverage and performance bond in the mounts required and in the prescribed form within ten (10) days after Notice of Award, the bid guaranty shall be forfeited and be retained by the Town toward the satisfaction of liquidated damages and not as a penalty. Otherwise, the total amount of bid guaranty liquidated will be returned to the Bidder. The Bidder has completed the Contract Bid Form and Unit Price Schedules in both words and numerals in accordance with these bid requirements. 24 PRICE BID SCHEDULE, MATERIALS HAULING SERVICES, SOUTHOLD TOWN, NEW YORK TASK 1 TASK2 C&D HAULED TO BROOKHAVEN LF Container Type (i.e., trailer, roll-off, etc.): Container Size (in cu. Yds): Estimated # Trips (@ 18 tons per 100 yds) (assume 3500 tons per year) Price per trip (in words): Price per trip (in numerals): ITASK 1 ESTIMATED TOTAL COST (Price per trip X # of Trips): NEWSPAPER TO ISLIP RRA Container Type (i.e., trailer, r011-off, etc.): Container Size (in cu. Yds): Estimated # Trips (~ 21 tons per 100 yds) (assume 1,300 tons per year) Price per trip (in words): Price per trip (in numerals): ITASK 2 ESTIMATED TOTAL COST (Price per trip X # of Trips): PAGE 25 Town of Southold Bid Materials Hauling Services SIGNATURE PAGE The undersigned hereby submits the foregoing prices to furnish Materials Hauling Services as described in thiS solicitation: Bidder: Firm-Corporation Address By: Print: Signature - Authorized Representative Date Title 26 · Town o f Southold Bid - Materials Hauling Services APPENDIX A - SURETY VERIFICATION This is identification that will be the Surety Company for the Bidder, on this project and that the named Surety Company herein provides written certification that the named Surety Company will provide the Performance Bond, specified in the Contract Documents, in the event the Bidder enters into an Agreement with the Town. The Surety Company that such Company is licensed to do business in the State of New York. (Seal) By: (L.S.) Principal Surety Company Surety Verification Appendix A 27 Town of Southold Bid - Materials Hauling Services APPENDIX B - SUBCONTRACTORS The Bidder hereby states that it proposes, if awarded an Agreement to use following haul subcontractors on this project. Subcontractor/ Contract Trade Individual Address Phone # Specialties Name of Bidder: By:_ (Authorized Signature) Date: NOTE: If blank not applicable, fill in with N/A 28 Town of Southold Bid - Materials Hauling Services APPENDIX C - FORM OF BID BOND KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned, as Principal, and as Surety, are hereby held and firmly bound unto The Town of Southold as Owner in the sum of Five Thousand Dollars ($ 5~000.00) for the payment of which, will end truly be made, we hereby jointly and severally bind ourselves, our heirs, executors, administrators, successors and assigns. Signed this day of ~ 20 The condition of the above obligation is such that whereas the Principal has submitted to the Town of Southold a certain Bid, attached hereto and hereby made a part hereof to enter into contract in writing, for the hauling of construction debris material and/or recycled newspaper; NOW, THEREFORE, (a) If said Bid shall be rejected or in the alternate, (b) If said Bid shall be accepted, and the Principal shall execute and deliver an Agreement in the form of the Sample Operating Agreement attached hereto (properly completed in accordance with said Bid) and shall furnish certificates of insurance and a bond for this faithful performance of said Agreement, and for the payment of all persons performing labor or furnishing materials in connection therewith, and shall in all other respects perform the Agreement created by the acceptance of said Bid, then this obligation shall be void, otherwise the same shall remain in force and effect; it being expressly understood end agreed that the liability of the Surety for any and all claims hereunder shall, in no event, exceed the penal amount of this obligation as herein stated. Form of Bid Bond Appendix C Page 1 of 3 29 Town of Southold Bid - Materials Hauling Services The Surety, for value received, hereby stipulates and agrees that the obligations of said Surety and its bond shall be in no way impaired or affected by any extension of the time within which the Owner may accept such Bid; and said Surety does hereby waive notice of any such extension, IN WITNESS WHEREOF, the Principal and the Surety have hereunto set their hands and seals, and such of Them as are corporations have caused their corporate seals to be hereto affixed and these presents to be signed by their proper officers, the day and year first set forth above. (L.S.) Principal Surety By: Address of Surety: SEAL (ACKNOWLEDGEMENT BY CONTRACTOR, IF A CORPORATION) STATE OF: ) COUNTY )SSN : On this day of ,20 , before me personally came _, to me known, who being duly sworn, did depose and say that he resides in ; that he is the of the corporation described in and which executed the foregoing instrument; that he knows the seal of the corporation; that the seal affixed to the instrument is such corporate seal; that it was so affixed by the order of the Board of Directors of the corporation; and that he signed his name thereto by like order. Notary Public Form of Bid Bond Appendix C Page 2 of 3 30 Town of Southold Bid - Materials Hauling Services (ACKNOWLEDGEMENT BY.coNTRACTOR. IF A PARTNERSHIP) STATE OF: ) COUNTY OF: ) SSN: On this day of ., 20 , before me personally came ., to ms known, and known to me to be a member of the firm of and known to me to be an individual described in, and who executed the foregoing instrument in the Firm name of ~ and he duly acknowledged to me that he executed the same for and in the behalf of said firm for the uses and purposes mentioned therein. Notary Public (ACKNOWLEDGEMENT BY INDIVIDUAL CONTRACTOR) STATE OF: COUNTY OF: Onthis day of ) SSN: ,20 , before me personally came ., to me known and known to be the person described in and who executed the foregoing instrument and duly Acknowledged that he executed the same. Notary Public Form of Bid Bond Appendix C Page 3 of 3 31 Town of Southold Bid Materials Hauling Services APPENDIX D - PERFORMANCE BOND Bond No. KNOW ALL MEN BY THESE PRESENTS, that (hereinafter called the "principal") and (hereinafter called the "Surety") are held and firmly bound to the Town of Southold (hereinafter called the "Owner") in the full and just sum of dollars (Fifty Thousand ($ 50~000) ) good and lawful money of the United States of America, for the payment of which sum of money, well and truly to be made and done, the Principal binds himself, his heirs, executors, administrators and assigns and the Surety binds itself, its successors and assigns, jointly and severally, firmly by these presents. WHEREAS, the Principal has entered into a certain written Agreement bearing date on the __ day of ., 20 ., with the Owner for the Town of Southold construction debris and recycled newspaper Haul Services, a copy of which Agreement is annexed to and hereby made part of this bond as though herein set forth in full. NOW, THEREFORE, the conditions of this obligation are such that if the Principal, his or its representatives or assigns, shall well and faithfully comply with and perform all the terms, covenants and conditions of said Agreement or his (their, its) part to be kept and performed and all modifications, amendments, additions and alterations thereto that may hereafter be made, according to the true intent and meaning of said Agreement, and shall fully indemnify and save harmless the Owner from all cost and damage which it may suffer by reason of failure so to do, and shall fully reimburse and repay the Owner for all outlaw and expense which the Owner may incur in making good any such default, and shall protect the said Owner against, and pay any and all amounts, damages, costs and Judgments which may or shall be recovered against said Owner or its officers or agents or which the said Owner may be called upon to pay to any person or corporation by reason of any damages arising or growing out of the doing of said work, or the repair of maintenance thereof, or the manner of doing the same, or the neglect of the said Principal, or his (their, its) agents or servants or the improper performance of the said work by the said Principal, or his (their, its) agents or servants, or the infringement of any patent or patent rights by reason of the use of any materials furnished or work done as aforesaid or otherwise, then this obligation shall be null and void, otherwise to remain in full force and effect; Performance Bond Appendix D Page 1 of 2 32 Town of Southold Bid - Materials Hauling Services PROVIDED, HOWEVER, the Surety, for value received hereby stipulates and agrees, if requested to do so by the Owner, fully perform and complete the work mentioned and described in said Agreement, pursuant to the terms, conditions, and covenants thereof, if for any cause the Principal falls or neglects to so fully perform and complete such work and the Surety further agrees to commence such work of completion within ten (10) calendar days after written notice thereof from the Owner and to complete such work within ten (10) calendar daYs from the expiration of the time allowed the Principal in the Agreement the completion thereof; and further PROVIDED, HOWEVER, the Surety, for value received, for itself and its successors and assigns, hereby stipulates and agrees that the obligation of said Surety and its bond shall be in no way impaired or affected by an extension of time, modification, work to be performed thereunder, or by any payment thereunder before the time required herein, or by any waiver of any provisions thereof, or by any assignment, subletting or other transfer of any work to be performed or any monies due or to become due thereunder; and said Surety does hereby waive notice of any and all of such extensions, modifications, omissions, additions, changes, payments, waivers, assignments, subcontracts and transfers, and hereby expressly stipulates and agrees that any and all things done and omitted to be done by and in relation to assignees, subcontractors, and other transferees shall have the same effect as to said Surety as though done or omitted to be done be or in relation to said Principal. IN WITNESS WHEREOF, the Principal has hereunto set his (their, its) hand and seal and the Surety has caused this instrument to be signed by its , and its corporate seal to be hereunto affixed this day of 20 (If Corporation add Seal and Attestation) By; Attest: Principal Surety (If Corporation add Seal and Attestation) By: Attest: Address of Surety Performance Bond Appendix D Page 2 of 2 33 NON-COLLUSIVE BID CERTIFICATE The undersigned bidder certifies that this bid has been arrived at by the bidder independently and has been submitted without collusion with any other vendor of materials, supplies or equipment of the type described in the invitation for bids, and the contents of this bid have not been communicated by the bidder, nor, to its best knowledge and belief, by any of its employees or agents, to any person not an employee or agent of the bidder or its surety on any bond furnished herewith prior to the official opening of the bid. Signed: Print name Corporate Title (if any) Company Name Mailing Address Phone Number BID ON Materials Trucking 3/26/09 Page 1 of 1 Rudder, Lynda From: Candice Schott [cschott@timesreview.com] Sent: Friday, March 06.2009 12:55 PM To: Rudder, Lynda Subject: RE: for publication 3/12/09 Hi Lynda, I have received your two legal ads and they are set to run next week. Thanks and have a great weekend! Candice Schott From: Rudder, Lynda [mailto:lynda.rudder@town.southold.ny.us] Sent: Friday, March 06, 2009 11:31 AH To: legals@timesreview.com Subject: for publication 3/12/09 For publication on 3/12/09 please acknowledge receipt of this email Lyndo AA Rudder Lynda M Rudder Deputy Southold Town Clerk Principal Account Clerk 53095 Main Road PO Box 1179 Southold, NY 11971 (631)765'1800 ext 265 3/6/2009 Southold Town Board - Letter Board Meeting of February 24, 2009 RESOLUTION 2009-165 ADOPTED Item # 4.10 DOC ID: 4778 THIS IS TO CERTIFY THAT THE FOLLOWING RESOLUTION NO. 2009-165 WAS ADOPTED AT THE REGULAR MEETING OF THE SOUTHOLD TOWN BOARD ON FEBRUARY 24, 2009: RESOLVED that the Town Board of the Town of Southold hereby authorizes and directs the Town Clerk to advertise for bids for the trucking of construction and demolition debris (C&D) and rec¥clables from the Cutchogue Transfer Station according to specifications to be provided by thc Solid Waste Coordinator. Elizabeth A. Neville Southold Town Clerk RESULT: ADOPTED [UNANIMOUS] MOVER: Albert KruDski .Ir., Councilman SECONDER: William Ruland, Councilman AYES: Ruland, Orlando, Krupski Jr., Wickham, Evans, Russell Generated February 27, 2009 Page 37