Families Against Cancer & Toxics

MEMORANDUM OF UNDERSTANDING

BY AND BETWEEN GLOBAL ENERGY RESOURCES, LLC AND COUNTY OF COCHISE, STATE OF ARIZONA
________________, 2005

This Memorandum shall serve to outline our understanding of our discussions to date regarding the basic terms of a proposed agreement between Global Energy Resources, LLC (“GER”) and Cochise County, State of Arizona (the “County”), regarding a Plant described below (referred to herein as the “Plant’) which the parties intend to be operated on County owned land.

1.            Proposed Lease. The County will lease to GER real property on or near a landfill operated by the County at a site determined by mutual agreement of the parties, at a fair market value to the County; provided, however, that GER shall receive credit against rent for the reduced cost of waste disposal, which will fully offset the rent. The term of the lease will be twenty (20) years, with options for GER to extend the term for up to two (2) additional consecutive ten (10) year periods, with terms and conditions for the renewal to be the same as the original term, or the first extended term, as the case may be. It is understood that in return for commitment by the County for such term, that GER will commit to operating the Plant for the same period.

Other terms and conditions of the lease shall be agreed upon in the definitive lease agreement, but the overall approach of the lease shall be that (i) the County shall have no expense or liability arising out of GER’s operation including but not limited to any environmental clean up, operational noise and lighting. GER shall be completely responsible for Plant removal and clean up at any such time as the Plant becomes inoperable for a period of time not to exceed 180 days for any reason whatsoever, except in instances of damage or destruction to the plant so long as GER is diligently proceeding with repair, or in other instances where GER is prevented from rendering the Plant operable due to force majeur beyond control of GER,.and (ii) GER shall protect the County in the form of insurance and suitable indemnification as against claims of any third parties against the County or any of its agencies arising out of the Plant’s operations. GER will commit in the lease that all of its operations will comply with all federal, state and local regulatory agencies laws and regulations governing these type of operations, and in particular all environmental laws and regulations governing emissions, soil and water protections.

2.      Confidentiality of Information. GER intends to construct and operate upon the leased land the Plant utilizing using certain proprietary technology for the plasma-arc and pyrolysis processing of carbon-based waste products (“Technology”). In connection with obtaining the necessary local, state and other governmental permits for development, construction and/or operation of the Plant, GER may be required to disclose certain information which it deems to be proprietary or confidential, or both, concerning its methodology, systems, business or financial information, etc. In the definitive agreement, County will enter into appropriate and mutually acceptable confidentiality agreements with GER protecting GER as against disclosure of such information to third parties, unless it is required by law to disclose same or is necessary in order for the County to evaluate the proposal.

3.      County to Supply Waste Product. County understands that GER intends to design a Plant to accommodate the projected future carbon based waste products generated by County, including waste tires. County will commit to supply no less than 80,000 tons of waste products during each year of the Plant’s operations and at least 50,000 waste tires, all to be delivered to the Plant by County free of charge to GER. (Said waste includes carbon based waste, glass, aluminum and other waste). GER shall have no obligation to process waste which significantly exceeds the projected tonnage of waste products or quantities of tires.
 It is intended by GER that it have a materials recovery Plant at the Plant to separate out vitreous glass, slag by-products and other recyclables. There will be no charge to the County for such processing. The recyclables shall be disposed of through a contract with a third party for the account of GER.

GER will accept any delivery by the County of what is commonly known as “white goods”, e.g. refrigerators, stoves, etc. Provided, however, in determining whether County has met its yearly obligation to deliver a minimum tonnage of waste product, any white goods which are delivered will not count toward such tonnage requirements.

4.   GER Sales of Produced Energy. GER will have the right to sell all electrical power generated at the Plant to local utility companies and shall have the right to sell all other by products manufactured at the Plant for its own account, provided that the sale of said products comply with all laws, including those regarding health and safety.

5.            Entitlements. The County will provide assistance to GER in connection with securing the permits and other governmental authorizations necessary to construct and operate the Plant, and the parties will cooperate with one another in connection with the regulators and concerned citizen, environmental and other groups who may be involved in the permitting process. It is understood that the County’s “assistance” does not include supporting factual claims made by GER as to the efficacy of the Plant, including emissions.

6.  Post Signing Procedures. Upon mutual execution of this Memorandum, the County will provide GER with an estimate of the minimum quantity and make up of the waste product it expects to deliver annually to the Plant. This estimate is not binding upon County, but County will use its best efforts in its estimation so that the final commitment in the definitive agreement shall not differ by more than plus or minus 10%. GER will examine the County’s estimate in order to make its own determination of said estimate.

Upon receiving the County’s estimate, GER will proceed with engineering and other studies to determine a schematic plan for the Plant’s design and equipment. GER will also begin the process of estimating its cost of construction and further intends to pursue discussions with various sources of financing for the Plant and its operations. GER will provide the County with the engineering studies and estimates in order to enable the County to evaluate the engineering efficacy of the Plant. The studies and estimates will also include the water use required to operate the Plant.

The County will need to retain an outside expert to assist it with the evaluation. GER will pay the County the funds to retain the expert. This evaluation will occur prior to signing a definitive agreement. This Memorandum of Understanding does not obligate GER to provide such funds, it being understood that the amount of such funds cannot be determined at this time and will be subject to negotiations, which will include approval by GER of the amount of funds, scope and timing of work; it is, however, understood that the County will not proceed to negotiate or execute a definitive agreement if GER does not do so.

7.      Execution of Definitive Agreements. The parties will negotiate definitive agreements to implement the transactions contemplated hereunder upon such terms and conditions as each party shall determine to be advisable in its sole and absolute discretion. Either party may abandon such negotiations and terminate this letter as determined in its sole and absolute discretion at any time prior to the execution of such definitive agreements.
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Except with respect to Paragraph 2 hereof, which is binding on the County with respect to any and all confidential, proprietary, business or financial information of GER disclosed to the County and which shall survive termination hereof, this Memorandum is not binding on either party, and neither party shall have any rights against or obligations to the other party under or arising from this Memorandum or the transactions contemplated hereby unless and until definitive agreements contemplated by Paragraph 7 hereof are entered into by the parties.

By their mutual execution below, the parties acknowledge that this Memorandum correctly sets forth the understanding of their discussions to date regarding the basic terms of a proposed agreement between them.


Global Energy Resources, LLC

By: _______________________________

Title: _____________________________

County of Cochise, State of Arizona

By: __________________________________

Title: ________________________________


Attest:


_____________________________
Nadine Parkhurst, Clerk of the Board


Approved as to form:

Deputy County Attorney