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88 Page 17 their support of the HBC guarantee. In addition to the email correspondence, HBC will need to provide SBWMA a fully executed copy of a long-term purchase agreement containing the requisite floor prices. . South Bay has offered an annual revenue guarantee of $7.25M. During negotiation, South Bay proposed to amend their guarantee by inserting an "off-set" mechanism as a means of recapturing revenues from years during which the actual sales revenues fall short of the guaranteed amount. SBWMA rejected the proposed amendment. While South Bay officer, Dan Domonoske, has acknowledged the rejection in an emailed correspondence, SBWMA will need official written confirmation from the company. . Commodity Price Manipulation . Hudson Baylor has secured price support from the world's largest recycled commodity buyer. South Bay Recycling partners have direct ow~ership of newsprint and tissue mills. While these features offer tremendous potential benefit to SBWMA, they also present the opportunity for price manipulation. Each proposer has been asked to propose a "fail-safe" mechanism whereby SBWMA can be assured that it always receives the highest prices that are offered in the local market area. Cost Chanaes from oriainallv submitted proposals . During negotiation, HBC contemplated several options to their originally proposed operation. With their tinal proposal, however, though some costs were reallocated, the total additional operating costs amounted to less than $10,000 per year. . At the commencement of negotiations, South Bay was low-bidder by approximately $3.6M annually. During negotiation, South Bay increased their proposed operating costs by approximately $1.75M annually, thereby narrowing the operating cost difference between HBC and SBR to approximately $1.8 M per year. A portion of SBR's increased costs are attributable to the addition staff that were added at the suggestion of the SBWMA. However, the listed staffing changes do not appear to account for the total additional operating cost represented in the company's current proposal. SBWMA has requested that SBR fully account for the added operating costs. Union Issues . Hudson Baylor has executed a Memorandum of Understanding as prepared by Teamsters Local 350. . South Bay acknowledges the current Collective Bargaining Agreement and the expectation that the current contractor, Allied Waste Industries, will enter into a new Agreement with the Teamsters in 2009. South Bay commits to honoring the Collective Bargaining Ag~eement that is in place upon commencement of the new operating contract, but is reluctant to make contractual commitments prior to the award of the contract. . Both companies have been asked to provide updates regarding interaction with the Teamsters. SBWMA: Facility Operations Selection Committee 1/15/2009