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88 Page 127 APPENDIX A Materials which can be diverted SBR will have an opportunity, but not an obligation, to recover CnD materials, compostable materials, and other which can be diverted from the landfill for beneficial use. SBWMA will be responsible to pay SBR the prevailing freight and processing charges for those materials, provided the quality and composition of tIle diverted materials are consistent with prevailing standards for materials being diverted from the TS selfhaul. GENERAL COMMENT REGARDING CURRENT MARKET VALUE OF TARGETED RECYCLABLE MATERIALS PROJECTED TO BE DELIVERED TO THE SHOREWAY SITE DURING FIRST YEAR OF CONTRACT SBWMA is guaranteed all annual revenue for the sale of targeted recyclable material up to a certain level beyond which it is shared 75% for SBWMA and 25% for the Facility Operator. The RFP cost worksheets specify that the revenue is based 86,293 tons comprised of 83,707 tons from the Material Recovery Facility (MRF) and 2,586 annual tons from Buyback (BB). SBWMA provided historical tonnage breakdowns for MRF and BB which result in composition distributions that facilitate revenue calculations. The process is simply to apply current market prices and California Redemption Value (CRV) payments to determine market value, and then project annual revenue. In February 2009 the prevailing scrap prices and CRY revenues result in projected annual revenues that exceed $10.2 million dollars. The projected revenue is split nearly 50/50 between the contribution from scrap (determined by market forces) and CR V (determined by State regulations). South Bay Recycling, LLC (SBR) believes that current scrap value pricing is below long term trend lines, and that as the US and global economy slowly rebound from the current recession that scrap pricing will rise. SBR submitted a responsive bid which included an "off take" agreement that provides floor price protection for half of the Old Newspaper and half the Old Corrugated Containers, which represent approximately 38% of the 83,707 tons of targeted recyclable material. February 2009 is used as an example to determine current market value of recyclable materials. Scrap prices and CRY values for February 2009 are applied to all projected annual tonnage with the result being annual revenue of$10,272,002.41 or $119.05 per weighted average ton. However, when the market value for Old Newspaper ($66.77) and Old Corrugated Containers ($71.77) is adjusted to the SBR Floor Price for Newspaper ($70.00) and Old Corrugated Containers ($80.00), then the increased price paid to SBWMA for Newspaper ($3.23) and Old Corrugated Containers ($8.23) is applied to half the projected monthly tons of Newspaper (1,380 tons) and Old Corrugated Containers (1,132 tons). This results in an increased monthly payment in to SBWMA of $13,774.76 or $165,297.09 per year at prevailing price levels. the end