EXHIBIT 10.4
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MANAGEMENT AGREEMENT
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This Agreement ("Management Agreement") is made as of May 12, 1997, by and
between GOLDEN GATE CARTING CO., INC., a New York corporation (the "Company")
and EASTERN WASTE OF NEW YORK, INC., a Delaware corporation (the "Manager").
RECITALS
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Company is engaged in the business of providing solid waste services,
including the collection, hauling, transfer and disposal of solid waste and
recyclable materials from commercial and industrial customers located in the
five boroughs of New York City, New York (the "Business"). Manager is engaged,
among other things, in providing administrative, management, consulting,
financial, marketing and operational support services to the solid waste
industry. Company and Manager have negotiated an Agreement and Plan of
Reorganization dated April 7, 1997 as amended by amendment No. 1 dated May 12,
1997 (the "Acquisition Agreement") pursuant to which Company will sell and
Manager will buy substantially all of Company's solid waste collection accounts
(the "Accounts") and associated equipment (collectively the "Assets"), in the
solid waste collection and disposal business, all as further set forth in the
Acquisition Agreement. The parties have filed with the New York City Trade Waste
Commission for approval to consummate the Acquisition Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:
1. Appointment of Manager; Relationship of Company and the Manager;
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Manager Fee. Manager shall provide administrative, management, consulting,
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financial, marketing and operational support services to the Company, as
hereinafter provided. Manager shall conduct the Business on its own behalf, for
its own benefit, and retain all revenues generated by the Business and pay on
behalf of the Company all expenses and liabilities incurred and accrued by the
Business in the ordinary course of operating the Business (it being understood
that any professional fees relating to the dispute with the Xxxxxx Parties do
not constitute ordinary course operating expenses) on and after the date of this
Agreement, including without limitation a management fee of 10% of the revenues
(the "Management Fee"), which fee shall be deemed an ordinary operating expense.
Notwithstanding anything in this Agreement to the contrary, the revenues
generated by the Business shall be applied as follows: first, the revenues shall
be applied to pay the ordinary course operating expenses (including without
limitation
the Management Fee) and then to pay on behalf of the Company, normal monthly
installments of Company Debt and professional fees, provided however, Manager
shall only pay professional fees relating to the dispute with the Xxxxxx Parties
and all or part of the normal monthly installments of Company Debt or set aside
monies for such installments of Company Debt which is not paid as instructed in
writing by the Company; and second, the balance of the revenues, if any, shall
be retained by Manager. Manager shall have no obligation to make any payments on
Company Debt or to pay professional fees related to the dispute with the Xxxxxx
Parties unless the revenues less operating expenses, including without
limitation the Management Fee, is sufficient to cover any installment of Company
Debt and such professional fees. Manager, at all times, shall be independent of
the Company. The Company shall permit the Business and the Assets to remain in
its name to accommodate the Manager. Nothing contained herein shall be deemed to
make or render the Company a partner, co-venturer or other participant in the
business or operations of the Manager, or in any manner to render Company
liable, as principal, surety, guarantor, agent or otherwise for any of the
debts, obligations or liabilities of Manager. Excluded from this Management
Agreement is any authority with respect to the Excluded Assets (as defined in
the Acquisition Agreement), all control over the responsibility for which shall
remain with the Company (except, with respect to accounts receivables, as set
forth in Section 8).
2. Management Services. Commencing on the date of this Agreement, Manager
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will provide, supply and render such administrative, management, consulting,
financial, marketing and operational support services as are necessary to
provide service to the Accounts and, as more specifically described below,
shall:
(a) Administer, supervise and control all of the finances of the Business,
including payroll, taxes, accounting, bookkeeping, record keeping, managing or
accounts payable, and accounts receivable, banking, financial records and
reporting functions as they pertain to the Accounts, with the power to make such
changes therein, in its sole discretion, and to incorporate such functions into
systems used by Manager.
(b) Select and employ all personnel necessary to service the Accounts.
(c) Supervise and control the purchase of all materials and supplies, and
acquire, lease, dispose of and repair equipment and facilities necessary to
provide safe and adequate service to the Accounts.
(d) Manage, at Manager's sole discretion, all costs and all pricing on a
customer-by-customer basis, estimate all costs on new contracts, bid on and
enter into new contracts, and control all costs for contracts in progress. It is
understood and agreed that such pricing must be within the Company's tariff as
modified from
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time to time by rate band adjustments authorized by the New York City Trade
Waste Commission.
(e) Commence, defend and control all legal actions, arbitrations,
investigations and proceedings that arise due to events occurring in connection
with the Accounts during the term of this Management agreement.
(f) Maintain the Assets in good repair, order and condition, normal and
reasonable wear and tear excepted.
(g) Operate the Assets to service the Accounts, as determined in Manager's
sole discretion.
3. Obligations of the Company. After Closing under the Acquisition
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Agreement, the Company shall not, without the Manager's prior written consent:
(a) Modify, amend, or do anything to affect any of the Accounts;
(b) Create or incur any indebtedness or other liability or obligation in
connection with the Assets or Accounts;
(c) Enter into or terminate any lease, agreement, contract or other
commitment in connection with the Business;
(d) Release or create or incur any mortgage, lien or other encumbrance
with respect to the Assets, Business or Accounts;
(e) Sell, abandon or otherwise dispose of any of the Accounts;
(f) Make any commitment relating to any of the Accounts; or
(g) Cancel or waive any claim or right with respect to the Accounts or
Business.
The Company shall have no obligations other than those set forth in this
Management Agreement.
4. Additional Agreements of Company. The Company agrees that at all times
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during the term of this Agreement the Company shall:
(a) Do nothing, and permit nothing to be done (which is within the control
of the Company), which will or might cause the Company to operate in an improper
or illegal manner.
(b) Not cause a default in any of the terms, conditions and obligations of
any of the contracts and other agreements of the Company.
(c) To the extent permissible by law, maintain its corporate existence in
good standing, maintain in full force its licenses and
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permits in the State of New York and comply fully with all laws respecting its
formation, existence, activities and operations.
(d) Allow Manager and the employees, attorneys, accountants and other
representatives of Manager full and free access to the Company's books and
records, and all of the facilities of the Company so long as they relate to the
Accounts.
(e) Assist Manager to name itself as an additional named insured under all
policies of insurance and give all notices and present all claims under all
policies of insurance in due and timely fashion. All premiums for insurance
shall be paid by the Manager.
5. Payroll Expenses. Manager shall have the power to fix the compensation
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of all persons employed to service the Accounts. It is understood that Manager
will be solely responsible for supplying the personnel required to service the
Accounts and will be responsible for all compensation to be paid.
6. General and Administrative Activities. To the extent that Manager
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shall deem it necessary or desirable, Manager shall have the power and authority
to combine and integrate, at its own office (including those of an affiliate),
the "general and administrative" (as such term is used in accounting practice)
activities of the Business, including, but not limited to, all accounting,
bookkeeping, record-keeping, paying, receiving and other fiscal or financial
activities, with those of Manager.
7. Location. During the term of this Agreement, the Accounts will be
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serviced by Manager from the Business's facility located in 0000 Xxxxxxxxxxxx
Xxxxxx, Xxxxxxxx, X.X. or any other location selected by Manager.
8. Billing and Compensation. a) During the term of this Agreement,
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Manager will xxxx the Accounts in the name of the Company. Manager will collect
all revenues and pay all expenses associated with servicing the Accounts.
Manager will retain any and all profits and incur any and all losses resulting
from servicing the Accounts. If any customer whose account is transferred
hereunder pays Manager for services rendered by the Company prior to the date of
this Agreement, Manager shall promptly pay said amount to the Company and the
Company shall promptly pay to Manager all payments on the customer accounts
which are received by the Company for services rendered by Manager, all in the
manner set forth in the Acquisition Agreement.
b) Promptly after the date of this Agreement, but in any event not
later than three months from the date hereof, Manager shall use its best
efforts to deliver to the Company a monthly accounting of revenues
generated, operating expenses and payments of Company Debt.
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9. Equipment. During the term of this Management Agreement, all equipment
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utilized in servicing the Accounts will bear New York City decals issued to the
Company. Manager will pay the cost of any decals, etc. issued during the term of
this Management with respect to equipment utilized in servicing the Accounts.
Manager may make any modifications to the equipment it deems necessary.
10. Term of Agreement; Termination of Rights.
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(a) The term of this Management Agreement shall commence on the latter of
the date that (i) closing occurs under the Agreement and Plan of Reorganization
dated October 23, 1996, as amended between Manager, Eastern Waste of L.I. Inc.,
Eastern Container Corporation, Eastern Environmental Services, Inc., Curbside
Leasing, Inc., Waste Services, Inc., N.Y. Waste Services, Inc. and L.I. Waste
Services, Inc. and (ii) the date that the management arrangement set forth in
this Management Agreement is approved by the New York City Trade Waste
Commission. This Management Agreement expires upon Closing under the Acquisition
Agreement, or upon the termination of the Acquisition Agreement or at the
election of Manager, on that date specified in a written notice from the Manager
to the Company if the Manager is prevented from performing its obligations
hereunder or realizing any benefits hereunder as a result of any injunction,
restraining order or other court order.
(b) Company may, at its option, upon ten (10) days' written notice
terminate this Management Agreement (if such default is not cured within such
ten (10) day period or such longer period as required to effect a cure if a cure
is commenced within ten days and is diligently prosecuted): (i) if Manager shall
violate any material provision of this Management Agreement or the Acquisition
Agreement; (ii) if Manager shall violate or be in material breach of any
provision, representation, warranty, covenant or undertaking herein; or (iii) if
Manager (a) makes an assignment for the benefit of creditors, (b) is adjudicated
a bankrupt, (c) files or has filed against it any bankruptcy, reorganization,
liquidation or similar petition or any petition seeking the appointment of a
receiver, conservator or other representative, or (d) proposes a composition
arrangement with creditors, provided however that any failure by the Manager to
perform its obligations hereunder as a result of the bankruptcy of the Company,
or any injunction, restraining order or other court order obtained by the Xxxxxx
Parties in connection with the dispute as to the Xxxxxx Debt (as such terms are
defined in the Acquisition Agreement) shall not constitute a default under this
Agreement. The Company may also terminate this Agreement if the Company and the
Manager cannot agree upon the accounting by Manager to the Company of revenues
and expenses.
(c) The Manager may terminate this Agreement at any time for any reason
whatsoever after three months from the date of this Agreement. The date on which
this Agreement is terminated pursuant
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to Section 10(a) or (b) above or this Section 10(c) is hereinafter referred to
as the "Expiration Date".
11. Indemnification.
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(a) Manager shall indemnify, defend and hold harmless Company and its
affiliates, their respective shareholders, officers, directors, employees, and
agents, against and in respect of any and all losses, claims, damages, causes of
action, actions, obligations, liabilities, deficiencies, suits, proceedings,
actual out-of-pocket obligations and expenses (including cost of investigation,
interest, penalties and reasonable attorneys' fees) (collectively, "Losses")
arising out of or due to the operation of the Business by Manager, its
affiliates, agents, servants and/or employees after Closing under the provisions
of the Management Agreement except for losses attributable to any actions taken
by the Xxxxxx Parties (as defined in the Acquisition Agreement) or their
counsel. The obligations set forth in this Section 11(a) shall survive for a
period of one (1) year following the Expiration Date.
(b) Company shall indemnify, defend and hold harmless Manager and its
affiliates, their respective shareholders, officers, directors, employees, and
agents, against and in respect of any and all Losses arising out of or due to
the operation of the Business by Company, its affiliates, agents, servants
and/or employees prior to the commencement of the term of this Management
Agreement, including without limitation any Losses arising in connection with
the dispute between the Xxxxxx Parties and the Company as to the indebtedness
owed by the Company to the Xxxxxx Parties. The obligations set forth in this
Section 11(b) shall survive for a period of one (1) year following the
Expiration Date. The obligations set forth in this Agreement are in addition to,
and not in lieu of the Xxxxxx Indemnity (as defined in the Acquisition
Agreement).
(c) If a party entitled to indemnification (the "Indemnitee") receives
notice of any claim or the commencement of any action or proceeding with respect
to which a party is obligated to provide indemnification (the "Indemnifying
Party") pursuant to subsections (a) and (b) of this Section, the Indemnitee
shall promptly give the Indemnifying Party notice thereof (Indemnification
Notice"). Such Indemnification Notice shall be a condition precedent to any
liability of the Indemnifying Party under the provisions for indemnification
contained in this Management Agreement. Except as provided below, the
Indemnifying Party may compromise, settle or defend, at such Indemnifying
Party's own expense and by such Indemnifying Party's own counsel, any such
matter involving the asserted liability of the Indemnitee. In any event, the
Indemnitee, the Indemnifying Party and the Indemnifying Party's counsel shall
cooperate in the compromise of, or defense against, any such asserted liability.
If the Indemnifying Party provides the Indemnitee a defense to a third party
claim at the Indemnifying
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Party's cost with a qualified attorney, Indemnitee may participate and/or
monitor the defense with an attorney of the Indemnitee's selection (at the
Indemnitee's own expense). Provided that the Indemnifying Party pays for the
full cost of the settlement of any claim, the Indemnifying Party may settle any
claim without the consent of the Indemnitee. If the Indemnifying Party chooses
to defend any claim, the Indemnitee shall make available to the Indemnifying
Party any books, records or other documents within its control that are
necessary or appropriate for such defense.
(d) If a party is entitled to indemnification under this Management
Agreement and the Acquisition Agreement, the party seeking indemnification must
elect to proceed under either this Section 11 or under Article VIII of the
Acquisition Agreement, and may not seek indemnity under both this Management
Agreement and the Acquisition Agreement.
12. Trade Waste Approval. The parties acknowledge that this Management
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Agreement as well as the Acquisition Agreement are subject to approval by the
New York City Trade Waste Commission and they will cooperate in seeking such
approval.
13. Additional Provisions.
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(a) This Management Agreement sets forth the entire understanding and
agreement among he parties hereto with reference to the subject matter hereof
and may not be modified, amended, discharged or terminated except by a written
instrument signed by the parties hereto.
(b) This Management Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to agreements
made, delivered and to be performed within such State.
(c) This Management Agreement may not be assigned by Company or Manager,
except that Manager may in its sole discretion assign this Management Agreement
to a properly licensed affiliate performing similar types of services. Upon any
assignment Manager shall remain primarily liable and also be jointly and
severally liable to Company for performance of Manager's duties herein.
(d) All of the terms and provisions of this Management Agreement shall be
binding upon, inure to the benefit of, and be enforceable by each of the parties
hereto and their respective successors and assigns. Except for affiliates of
the Company and Manager and their respective shareholders, officers, directors,
employees and agents, no person other than the parties hereto shall be a third
party beneficiary of this Management Agreement or have any rights hereunder.
(e) No failure on the part of any party hereto to exercise, and no delay
in exercising, any right, power or remedy hereunder
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shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other rights, power or remedy.
(f) No publicity release or announcement concerning this Management
Agreement or the transactions contemplated hereby shall be issued without
advance approval of the form and substance thereof by Company.
(g) Any notice or other communication required or which may be given
hereunder shall be in writing and either delivered personally to the addressee,
telecopied to the addressee or mailed, certified or registered mail, or sent by
a nationally recognized express courier service, postage or sending charges
prepaid, and shall be deemed given when so delivered personally, telecopied, if
by certified or registered mail, four days after the date of mailing, or if by
express courier service, two days after the date of sending, as follows:
(i) If to the Company, to:
Xxxxxxxx Xxxxxx, Xx.
0 Xxxxx Xxxxx
Xxxxxx Xxx, XX 00000
with a copy to:
Xxxxxx, Xxxxxx & Xxxxxx
EAB Plaza
Uniondale, N.Y. 11556-0111
Attn: Xxxxx X. Xxxxxxx, Esq.
(ii) If to Manager, to:
Eastern Environmental Services, Inc.
0000 Xxxxxxxx Xxxxx
Xx. Xxxxxx, XX 00000
With a copy to:
Xxxxxx X. Xxxxxx, Esq.
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxx xx Xxxxxxx, XX 00000
and to such other address of addresses as the Company or Manager, as the case
may be, may designate to the other by notice as set forth above.
(h) Any legal action, suit or proceeding arising out of or relating to
this Management Agreement or the transactions contemplated hereby may be
instituted in any state or Federal court
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located in New York City, State of New York, and each party waives any objection
which such party may not or hereafter have to the laying of the venue of any
such action, suit or proceeding, an d irrevocably submits to the jurisdiction of
any such court in any such action, suit or proceeding. Any and all service of
process and any other notice in any such action, suit or proceeding shall be
effective against any party if given by registered or certified mail, return
receipt requested, or by any other means of mail which requires a signed
receipt, postage prepaid, mailed to such party as herein provided. Nothing
herein contained shall be deemed to affect the right to any party to service of
process in any other manner permitted by law.
(i) If any provision of this Management Agreement shall be determined by a
court of competent jurisdiction to be invalid or unenforceable, such
determination shall not affect the remaining provisions of this Management
Agreement, all of which shall remain in full force and effect.
(j) This Management Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
(k) The headings in this Management Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Management Agreement.
(l) Manager shall name Company as an additional insured on liability
policies and shall provide Company evidence of same within five (5) days of
execution of this Management Agreement.
IN WITNESS WHEREOF, the parties have executed this Management Agreement as
of the date first above written.
EASTERN WASTE OF NEW YORK, INC.
By: /s/ Xxxxxx Xxxxxx
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Xxxxxx X. Xxxxxx
Executive Vice President
GOLDEN GATE CARTING, INC.
By: /s/ Xxxxxxxx Xxxxxx
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Xxxxxxxx Xxxxxx, Xx.
President
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