MANAGEMENT CONTRACT
MANAGEMENT CONTRACT AGREEMENT entered into this 31st day of December,
1997, between JOTAN, INC., a corporation organized and existing under the
laws of the State of Florida and having principal offices at 0000 Xxxx
Xxxxx Xx., Xxxxxxxxxxxx, Xxxxxxx 00000 (the "Company"), and ALLOMET
PARTNERS, LTD., a Delaware Corporation having principal offices at 0000
Xxxxxxx-Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxx 00000 (the "Consultant").
PREAMBLE
WHEREAS, the Consultant is engaged in the business of providing business
evaluation, management assistance, and financial consultation services,
and has developed considerable expertise in those areas; and
WHEREAS, the Company has requested that the Consultant provide management
and financial services to the Company, and the Consultant has agreed to do
so on the terms and conditions set forth herein.
W I T N E S S E T H:
Now, therefore, in consideration of the mutual provisions and agreements
contained herein, the Company and the Consultant agree as follows:
1. Appointment of Consultant; Relationship.
(a) The Company hereby retains Consultant for the purpose of performing
the services described in this Agreement and Consultant hereby agrees to
perform such services on the terms and conditions set forth herein.
(b) Nothing in this Agreement shall be deemed or construed as
establishing a partnership or joint venture between the Company and the
Consultant.
2. Responsibility and Authority of Consultant to Operate the Business of
the Company.
(a) The Consultant through its employees, representatives, and agents
designated from time to time, shall assume, subject to the limitations
described herein, responsibility for the operational management of the
Company effective the date hereof. The responsibility and authority of
the Consultant shall include (but is not limited to) the authority to
purchase equipment, supplies and materials used in the operation of the
Company's business; direct the Company's manufacturing, warehousing and
inventory activities; direct and manage employees in such manner as the
Consultant may deem necessary, enter into and pay obligations in the
ordinary course of the Company's business; control deposits, disbursements
and transfers of funds to and from the Company's bank accounts; maintain
the Company's books and records; supervise all marketing and sales
functions; enter into agreements with suppliers, vendors, distributors
and other persons in connection with the Company's business; manage all
other operational activities of the Company and subject to the prior
approval of the Board of Directors, engage and disengage employees and
determine employee compensation.
(b) In the course of carrying out the operation and management of the
Company pursuant to this Agreement, the Consultant anticipates that it
will consult with and seek advice from the officers and directors of and
professional advisors to the Company. Notwithstanding the foregoing, the
Consultant retains the right under this Agreement to make such routine and
day to day decisions and to take such courses of action without the
consent of any other person except as may be otherwise provided herein.
(c) The Consultant shall be entitled to rely in good faith on any
information obtained from the Company's officers, directors, employees,
and professional advisors, and on the books and records of the Company as
of the date hereof, for all purposes relating to the performance of the
Consultant's duties and obligations under the Agreement.
3. Limitations on Authority and Obligations of Consultant.
Notwithstanding anything in this Agreement to the contrary, it is
specifically understood, and the authority of the Consultant hereunder is
specifically limited as follows:
(a) In the event the Board of Directors of the Company elects to file a
petition under Chapter 11 of the United States Bankruptcy Code and the
Company thereby becomes a debtor-in-possession under the supervision of
the Bankruptcy Court, certain actions of the Consultant may require
approval of the Bankruptcy Court prior to their implementation;
(b) Subject to the terms of Company's senior loan agreement, the
Consultant shall not commit the Company to any liabilities or capital
equipment or fixed asset purchases outside the ordinary course of business
in an amount in excess of $5,000 in any instance;
(c) The shareholders and directors of the Company retain their statutory
rights and privileges and accordingly retain the right to maintain
operational and management control of the Company;
(d) The Consultant shall have no authority or responsibility for
management of operations in the following areas: compliance with any
environmental, natural resource or land use laws, regulations, ordinances
or other requirements; and handling, generating, storage, treatment,
transportation, disposal or arranging for disposal of any waste material
or hazardous substance. Consultant shall not enter into any arrangement
where it will become an owner or operator of a facility as defined under
the Federal Comprehensive Environmental Response Compensation and
Liability Act ("CERCLA") or similar laws. Without limiting the generality
of the foregoing, Consultant shall have no authority or responsibility for
any matter pertaining in any way to discharges to ground or surface water,
emissions to air or handling, generation, storage, treatment,
transportation or disposal or arranging for disposal of solid or hazardous
waste. Authority and responsibility for matters described in this
paragraph shall remain vested in the Company; and
(e) The Consultant shall not have any obligation to assume, pay,
guarantee, act as surety for or on behalf of the Company or otherwise be
responsible for any debt liability or obligation of the Company, or to
make any loans or advances to the Company, and any debts, liabilities or
obligations incurred during the term of this Agreement shall be solely for
the account of the Company; provided same are incurred in connection with
this Agreement and on behalf of the Company. The Consultant shall have no
liability or obligation whatsoever with respect to any federal, state or
local tax payable by the Company.
4. Representations by the Company. The Company warrants and represents
to the Consultant as follows:
(a) All applicable employee withholding taxes have been deposited on a
timely basis to the appropriate taxing entities and that other
withholdings for which the Company acts as a trustee have been remitted as
required;
(b) To the best of Company's knowledge, except as set forth on Exhibit
"A" hereto, the Company is and has been in compliance with all applicable
federal, state and local environmental natural resource and land use laws,
regulations, ordinances and other requirements (collectively,
"Environmental Laws"), including without limitation requirements relating
to past or present discharges to land, surface water or ground water, past
or present emissions to air; and past or present handling, generation,
storage, transportation, treatment, disposal or arrangement for disposal
of solid or hazardous waste; and
(c) To the best of Company's knowledge, except as set forth on Exhibit
"A" hereto, no environmental, health or safety hazards exist on the
Company property; and
(d) To the best of Company's knowledge, no liens or superliens have been
asserted against the property of the Company by any governmental authority
and the Company is aware of no such liens or superliens which may be
asserted.
5. Term.
(a) The initial term of this Agreement shall commence as of the date
hereof and terminate as of March 1, 1998. Thereafter, the term of this
Agreement shall continue on a month-to-month basis if extended by the
Board of Directors of Company.
(b) This Agreement may be terminated earlier than the scheduled
expiration date upon the occurrence of any of the following events:
(i) by order of the Bankruptcy Court;
(ii) the sale of the Company or substantially all of its assets;
(iii) by the Consultant upon the breach by the Company of any material
representation, warranty, covenant or other obligation of the Company
under this Agreement, or
(iv) by the Company upon breach by the Consultant of any material
covenant or obligation of the Consultant under this Agreement.
6. Compensation.
(a) The Company acknowledges that the Consultant generally receives
compensation for outside consulting services based upon the number of
hours of services provided. However, the Consultant and the Company have
agreed that the compensation under this Agreement shall be a fixed weekly
fee during the term of this Agreement; due to the length of the term of
the Agreement, the extent of control being given to the Consultant, and
the desire of the parties to lessen the Impact upon cash flow of the
Company.
(b) The weekly fee to be paid by the Company to the Consultant under this
Agreement shall be $14,000. In addition, the Consultant shall be
reimbursed by the Company for any reasonable expenses, including, but not
limited to, travel and lodging expenses of the Consultant's officers,
directors, employees and representatives, and the costs and upon prior
approval of the Company, all reasonable fees of any sub-contractors,
consultants and professional advisors retained by the Consultant in
connection with rendering its services hereunder.
7. Exculpation.
(a) The Company shall hold harmless, defend and indemnify Consultant and
its officers, employees, representatives and agents, individually and in
their respective capacities, from and against any and all claims, demands,
damages, expenses or liabilities which may be asserted against them
relating in any way to this Agreement or to any services performed
pursuant to this Agreement, except as same relate to or arise from the
Consultant's gross negligence, willful misconduct, or bad faith,
including, without limitation, those relating in any way to:
(i) compliance with any Environmental Laws pertaining to discharges
to ground or surface water;
(ii) environmental contamination of any type on the Company's
property or elsewhere including contamination subject to CERCLA or similar
Environmental Laws; and
(iii) environmental, health or safety hazards or unsafe conditions on
the Company's property.
(b) The Company shall as soon as practical after execution of this
Agreement and provided the cost of doing so is reasonable, add to its
Officers and Directors/Errors & Omissions Liability Insurance policy, if
such policy is in force, and its General Liability Policy, the name of
Allomet Partners, Ltd. as an additional insured and will provide to
Consultant a copy of the terms and conditions of such policy(ies).
(c) Except as specifically set forth in this Agreement, Consultant shall
have no liability to the Company or its creditors, shareholders or any
other party in interest except for Consultant's gross negligence, willful
misconduct and bad faith.
(d) The Consultant shall hold harmless, defend and indemnify the Company
and its officers, employees, representatives and agents, individually and
in their respective capacities, from and against any and all claims,
demands, damages, expenses or liabilities which may be assessed against
them relating in any way to this Agreement or to any services performed
pursuant to this Agreement, except as same relate to or arise from the
Company's gross negligence, willful misconduct, or bad faith, including,
without limitation, those relating in any way to this Agreement or to any
services performed pursuant to this Agreement. The above indemnifications
shall survive execution and performance of this Agreement.
8. Power of Attorney. Subject to the terms and conditions set forth in
this Agreement, the Company hereby makes, constitutes and appoints
Consultant its true and lawful attorney-in-fact for the Company and in the
Company's name, place and stead, and on the Company's behalf, to execute
and endorse all documents, agreements, contracts or certificates to which
the Company may be a party, all instruments of debt, checks, drafts,
notes, or any other similar negotiable or non-negotiable instruments
relating to the Company's business, and to collect and deposit for the
account of the Company, all revenues, cash, checks, loan proceeds, funds
or any other payments relating to the Company's business, and to disburse
such funds from the Company's bank accounts. It is acknowledged and
understood that the power of attorney granted hereby may be utilized by
the Consultant at its discretion, and shall in no way obligate the
Consultant to exercise the specific powers granted in this Section 8.
9. Miscellaneous.
(a) The Company represents to the Consultant that there are no other
agreements to which the Company is a party which are in conflict with this
Agreement or which would prohibit the Company from entering into and
carrying out the terms of this Agreement.
(b) This Agreement is for the benefit of the parties hereto and is not
assignable.
(c) This Agreement constitutes the entire agreement between the parties
pertaining to the subject mater contained herein and supersedes all other
prior and contemporaneous agreements and understandings of the parties.
(d) No modification or amendment to this Agreement shall be binding
unless executed by both parties and, if required, approved by the
Bankruptcy Court.
(e) No waiver of any of the provisions of this Agreement shall constitute
a waiver of any other provisions nor shall any waiver constitute a
continuing waiver.
(f) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
(g) This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which shall constitute one
and the same instrument.
(h) All notices, elections, rights and other communications hereunder
must be in writing and shall be deemed duly given as of receipt or refusal
of receipt when delivered personally or mailed, return receipt requested,
postpaid, by post office certified, registered or express mail, FedEx or
other internationally recognized courier, to each of the appropriate
parties at their addresses set forth above (or at such other address for a
party as shall be specified by such party by notice given pursuant
hereto).
(i) Each of the parties agrees to execute and deliver such further
instruments, certificates and documents as may be reasonably requested by
any other party to carry out the terms and provisions of this Agreement.
(j) The headings in this Agreement are intended solely for convenience of
reference and shall be given no effect in the construction or
interpretation of this Agreement.
(k) Any term or provision of this Agreement which is invalid or
enforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of
this Agreement or affecting the validity or enforceability of any of the
terms or provisions of this Agreement in any other jurisdiction.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the date and year first above mentioned.
ALLOMET PARTNERS, LTD.
By: /s/ Xxxx Xxxxxx
Its: President
JOTAN, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
Its: Chairman
