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<br />88 <br />Page 16 <br /> <br />OUTSTANDING CONTRACTUAL ISSUES <br /> <br />The request for additional information that the Selection Committee has made to the short <br />listed companies can be grouped into two areas. First there are existina issues pertaining to <br />each company's current offer. Second, several new issues have arisen during the course of <br />the Selection Committee's discussions that must be addressed by the short listed firms. The <br />closure of open issues and the companies' responses to new issues may have a bearing on <br />the final decision. The following are additional items that the Evaluation and Selection <br />Committees will consider: <br /> <br />Existing Issues <br /> <br />Exceptions to the Draft Aareement <br />. Hudson Baylor has sought clarification regarding terms and conditions contained in the <br />Draft Agreement, but they have stated that they take no exceptions to the Draft <br />Agreement. <br />. South Bay Recycling, Inc. has taken specific exception to provisions in the Draft <br />Agreement regarding moisture content and material contamination. The company's <br />citation of specific provisions in the Agreement, and recommended changes seem <br />reasonable and are being considered by SBWMA. SBWMA is investigating the <br />method and manner in which issues of moisture content and material contamination <br />have been handled by the South Bay partners under their current and past contractual <br />relationships. <br />References <br />. Hudson Baylor received high marks from their listed references. SBWMA is <br />reconfirming references for the company's proposed Transfer Station sub-contractor, <br />Waste Solutions Group. <br />. South Bay partner, Potential Industries, received excellent recommendations from <br />their listed references. South Bay partner, Community Recycling received generally <br />favorable ratings from their listed references. However, the company received an <br />unsatisfactory rating from the City of Los Angeles related to permit compliance at the <br />company's Sun Valley location. The company has rendered a plausible explanation <br />regarding their permit status and compliance issues. SBWMA is investigating and <br />attempting to verify the company's response. <br />Revenue Guarantee <br />. Hudson Baylor has offered an extraordinary $10.1 M annual commodity revenue <br />guarantee. The company's financial statements do not appear sufficient to unilaterally <br />support their guarantee in the face of poor long-term markets. HBC states that their <br />guarantee is based upon floor price guarantees provided by America Chung Nam, <br />Inc., the largest recycled commodity buyer and exporter in the U.S. SBWMA has <br />received emaH correspondence from America Chung Nam CEO, Peter Wang, to verify <br /> <br />SBWMA; Facility Operations Selection Committee <br /> <br />1/15/2009 <br />