Exhibit (10)(gg)
AA Letter Agreement dated 2/1/01
re Company Process Improvements
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February 1, 2001
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Chief Financial Officer Suite 3800
Safety-Kleen Corp. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Tel ▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇
Dear ▇▇. ▇▇▇▇▇▇▇▇▇:
This letter confirms ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP's ("AA") arrangement to render loan
staff services in connection with various process improvement initiatives in the
finance and accounting organization of Safety-Kleen Corporation's
("Safety-Kleen" or "the Company"). This letter confirms our understanding of
your needs, an overview of the work to be performed, and estimated fees related
to the arrangement.
Our Understanding of Your Needs
Safety-Kleen has historically experienced inefficiencies in its Finance,
Accounting, and Administrative Functions. Current finance and accounting-related
processes in the back office will need to be reengineered. Inefficiencies have
been further compounded by the difficulty in integrating recent acquisitions.
To address improvement opportunities discussed above and the effectiveness,
efficiency and staffing issues of various departments of finance and accounting
organizations of the Company, Safety-Kleen has entered into discussions with AA
regarding the potential to employ a small team to review, evaluate options and
recommend solutions for these respective functions.
Project Scope
Under the direction of the CFO, our effort will encompass reviewing processes
and supporting systems for Safety-Kleen's various Finance, Accounting, and
Administrative Functions, developing recommendations and assisting Safety-Kleen
staff as needed with implementation of the recommendations. For each specific
function within finance and accounting for which we are asked to review and
evaluate processes, we will prepare a rider to this arrangement letter that
outlines the detailed scope for that respective effort. Each such rider shall be
in the form of Exhibit 1 hereto. AA shall have no obligation to begin performing
any services described in a rider until such rider has been signed by both
parties.
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February 1, 2001
Page 2 of 5
Staffing, Fees and Expenses
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, and ▇▇▇▇▇ ▇▇▇▇▇ will be the partners on this
engagement. ▇▇▇▇ ▇▇▇▇▇▇ will provide project oversight and expertise in required
areas. Other resources, including accountants and subject matter experts, will
be utilized as needed.
Our fees will be based upon standard per diem rates plus reasonable
out-of-pocket expenses. Our standard per diem rate for this engagement is as
follows:
o Partner(s) and Senior Manager(s) - $250 per hour,
o Manager(s) and Staff - $200 per hour.
All fees will be billed on a bi-monthly basis as the work is completed.
Client Responsibilities
In connection with AA's provision of its services, Client will perform the
following tasks and assume the following responsibilities ("Client
Responsibilities").
o Provide guidance as to specific tasks that Client wishes AA personnel to
perform.
o Provide best efforts for Client personnel to cooperate with AA personnel in
the gathering of necessary information that AA personnel believes necessary
in the circumstances to discharge their responsibilities.
o Accept responsibility for all final decisions to be made with respect to
the matters listed above and work performed by AA.
You will provide reasonable workspace for AA personnel at its worksites, as well
as occasional secretarial support services. In addition, you will insure that
all information provided to us is accurate and complete in all material
respects, contains no material omissions and is updated on a prompt and
continuous basis. You will also be responsible for obtaining all third-party
consents and security clearances required to enable AA to access and use any
third-party information, materials or products necessary to our performance.
Client understands that AA's performance is dependent on Client's timely and
effective satisfaction of its own activities and responsibilities in connection
with this engagement, as well as timely decisions and approvals by Client. AA
shall be entitled to rely on all information provided by and decisions and
approvals of Client (and its counsel) in connection with our work. AA will not
be responsible if any information provided by Client is not complete, accurate
or current.
Client management is responsible for establishing and maintaining an effective
internal control system, recordkeeping, management, decision-making and other
management functions. An effective internal control system reduces the
likelihood that errors or irregularities will occur and remain undetected;
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February 1, 2001
Page 3 of 5
however, it does not eliminate that possibility. Our work does not guarantee
that errors or irregularities will not occur and may not detect errors or
irregularities should they occur.
Client's management shall be fully and solely responsible for applying
independent business judgment with respect to the services and work product
provided by us, to make implementation decisions, if any, and to determine
further courses of action with respect to any matters addressed in any advice,
recommendations, services, reports or other work product or deliverables to
Client. Client hereby acknowledges that AA personnel are in no way acting as a
member of Client's management and Client has sole responsibility for the impact
of any recommendations AA personnel may make.
▇▇▇▇ ▇▇▇▇▇▇ will serve as the AA representative with respect to administering
the Services. Other manager and staff resources will be provided as both parties
agree appropriate. Collectively, the AA resources providing services under this
agreement are known as the Personnel. We will make every effort to provide
continuity of resources together with the appropriate skills.
Client shall also be responsible for the payment of any taxes and duties based
upon the facilities, assets and Services, any Additional Services and/or
products provided by AA, exclusive of any taxes based upon AA's income. ▇▇▇▇▇▇▇▇
will be submitted on a monthly basis. In the event of any dispute with regard to
a portion of an invoice, the undisputed portion shall be paid as provided
herein. Client shall reimburse AA for all out-of-pocket expenses incurred by AA
or any Personnel in connection with providing the Services in accordance with
AA's standard expense policies.
In addition, Client shall reimburse AA for all out-of-pocket expenses incurred
by AA or any Personnel in connection with providing the Services in accordance
with AA's standard expense policies. These out-of-pocket expenses with regard to
lodging will be limited to $125 a day and $42 per day per diem. In connection
with the engagement an administrative charge of 3% of total AA Personnel charges
(exclusive of out-of-pocket expenses) will be added.
Amounts are due within twenty days of the date of invoice. Fees and expenses for
any additional projects or unplanned work will be agreed to and billed
separately.
The Personnel will provide Services commencing on December 15, 2000, and will
provide the Services until approximately June 15, 2001 or until such point the
parties mutually agree. While AA shall attempt to comply with Client's request
for specific individuals, AA shall be responsible for assigning and re-assigning
its personnel, as appropriate, to perform the services described herein.
AA's work product is prepared solely for the internal use of Client's
management, employees and board of directors. Any other distribution or
disclosure must be approved in advance by AA in writing. We will own our work
papers and access by any third party to such work papers will be subject to the
requirements of AA's standard policies regarding granting access to its work
papers. Client shall receive no right or interest to any pre-existing
proprietary products owned by AA or any third party and used by AA, or by
Client's employees under the supervision of AA, to perform under this agreement,
including but not limited to AA's proprietary tools and methodologies, except to
the extent otherwise agreed by the parties in a separate written agreement.
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February 1, 2001
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If Client intends to publish or otherwise reproduce any of AA's work product or
portion thereof, or to make reference to AA in any document that will go to a
third party, Client agrees to (i) provide AA with a draft of the document to
review, and (ii) obtain AA's written approval for inclusion of AA's name or work
product in such document before the document is printed and distributed. Client
consents to AA's use of Client's name and a factual description of the services
to be performed by AA under this agreement in AA's advertising and promotional
materials.
Because of the importance of Client's representations to AA with respect to AA's
ability to perform its services, Client agrees to release AA and its personnel
from any liability and costs relating to the services hereunder which liability
and costs are attributable to any misrepresentation made by Client personnel
With respect to any services, work product or other deliverables hereunder, or
this engagement generally, AA's liability shall in no event exceed the fees it
receives hereunder for the portion of the work giving rise to liability nor
include any special, consequential, incidental or exemplary damages or loss (nor
any lost profits, savings or business opportunity), and client will upon the
receipt of written notice indemnify AA, its affiliates and their partners,
principals and personnel against all costs, fees, expense, damages and
liabilities (including defense costs) associated with any third-party claim
arising from or relating to: any such services, work product or deliverables
that client uses or discloses to others; or this engagement generally. The
foregoing terms are intended to apply to the extent not contrary to applicable
law, regardless of the grounds or nature of any claim asserted (including
contract, statute, any form of negligence, tort, strict liability or otherwise)
and whether or not AA was advised of the possibility of the damage or loss
asserted. Such terms shall also continue to apply after any termination of this
agreement and during any dispute between the parties.
This agreement has been entered into solely between Client and AA, and no
third-party beneficiaries are created hereby. This agreement represents the
entire agreement between you and us and supersedes all other communications
between the parties concerning the services described herein.
AA warrants that the services provided hereunder shall be performed with
reasonable care in a diligent and competent manner. AA's sole obligation shall
be to correct any nonconformance with this warranty, provided that Client gives
AA written notice within thirty (30) days after the services are performed. AA
does not warrant and is not responsible for any third party products or
services. Client's sole and exclusive rights and remedies with respect to any
third party products or services, are against the third party vendor and not
against AA. THIS PRECEDING IS AA'S ONLY WARRANTY CONCERNING THE SERVICES
PROVIDED HEREUNDER AND IS MADE EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES AND
REPRESENTATIONS, EXPRESS OR IMPLIED, INLCUDING ANY IMPLIED WARRANTIES OR
MERCHANTABILITY, NON-INFRINGEMENT, OR FITNESS FOR A PARTICULAR PURPOSE, OR
OTHERWISE.
Client shall not solicit, hire or offer employment to any Personnel during the
term of this agreement and for a period of one (1) year following the
termination of this agreement. This restriction shall apply equally to Client,
its subsidiaries, parent company and any other of its affiliates. Any breach of
this
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February 1, 2001
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provision shall require Client to pay AA an amount equal to one year's
salary of each individual with respect to which a breach occurred.
Either party may terminate this agreement for any reason upon thirty (30) days
prior written notice to the other party. In the event of such termination,
Client shall pay AA for all services rendered and expenses incurred by AA prior
to the date of termination.
We are pleased to have this opportunity to be of service to you.
Very truly yours,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
CDH
j:\audit\admin\▇▇▇▇▇▇▇▇▇▇\bpo\safety kleen\jal\02-01-01 Loan Staff Arr Ltr.doc
Enclosures
Accepted and Agreed:
Safety-Kleen Corporation
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Date May 22, 2001
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Chief Financial Officer
Copy to:
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇
