Administrative Services Agreement
DATE: February 1, 2002
PARTIES: XRG G&A, INC., a Florida corporation ("Service Provider"), XRG, INC., a
Delaware corporation ("Parent"), and KDK TRANSPORT, INC., a Pennsylvania
corporation ("Company").
Whereas:
A. The Service Provider is a wholly-owned subsidiary of Parent which
plans to acquire certain assets utilized by the Company in its transportation
services business (the "Business"), including certain assets useful in the
administration of day-to-day business operations, which acquisition would be
made pursuant to the terms and conditions of an Asset Purchase Agreement by and
between the Company and Parent (the "Acquisition").
B. Subsequent to the consummation of the Acquisition, the Company will
retain certain assets related to the Business, including certain terminals as
set forth in Exhibit D to the said Asset Purchase Agreement (the "Retained
Business").
C. The Company desires to acquire from the Service Provider certain
administrative services in order to permit the Company to administer its
corporate and business affairs with respect to the Business prior to the
consummation of the Acquisition and, subsequent to the Acquisition, with respect
to the Retained Business, in a cost-efficient manner, and the Service Provider
desires to provide those services to the Company.
Now, therefore, in consideration of the covenants and obligations of
the parties set forth herein, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Administrative Services
-----------------------
The Service Provider, through its agents or employees, shall perform
the following services for the Company during the term of this Agreement:
(a) invoicing;
(b) collection, recording and depositing of accounts receivable;
(c) federal and state regulatory compliance;
(d) credit reviews;
(e) processing driver advances, driver payments,
and agent commissions;
(f) telephone answering services; and
1
(g) receiving and sending billing and paperwork.
2. Term and Termination
---------------------
This Agreement will commence as of the date indicated above and will
remain in effect for a period of five (5) years unless terminated earlier by the
Company upon thirty (30) days prior written notice to the Service Provider. The
Company has the option to renew this Agreement for an additional five-year term.
The Service Provider may terminate this Agreement upon written notice to the
Company if the Company fails to pay any undisputed payable service fee or
insurance fee and such failure continues for fifteen (15) days after the Service
Provider provides written notice of such failure to the Company.
3. Service Fees.
------------
As consideration for providing the services set forth in Paragraph 1 of
this Agreement, the Company shall pay the Service Provider a service fee equal
to three percent (3%) of the weekly trucking and brokerage gross xxxxxxxx of the
Company, which service fee shall increase to three and one-half percent (3.5%)
of the weekly trucking and brokerage gross xxxxxxxx of the Company effective as
of the effective date of the closing of the Acquisition to cover compensation
paid to Xxxxxxx Xxxxxxx by the Service Provider for additional services he
provides to the Company. The service fee shall be paid to the Service Provider
on every Friday during the term of this Agreement and will be based on the
Company's trucking and brokerage gross xxxxxxxx for the previous week.
4. General Liability and Cargo Insurance.
-------------------------------------
Effective as of the effective date of the closing of the Acquisition,
the Service Provider shall obtain or maintain general liability, automobile
liability and cargo insurance on behalf of the Company for a fee equal to three
percent (3%) of the monthly non-brokerage gross xxxxxxxx of the Company. The
insurance fee shall be paid to the Service Provider by the tenth (10th) day of
each month during the term of this Agreement and will be based on the Company's
non-brokerage gross xxxxxxxx for the previous month. Such insurance shall be
with a financially responsible insurance company licensed to do business in
Pennsylvania and shall provide for such coverage limits as may be determined by
the Company, which limits shall be consistent with those currently in effect on
the date of this Agreement, unless otherwise agreed by the parties hereto.
Service Provider shall provide Company with certificates of insurance evidencing
such insurance coverage.
5. Confidentiality.
---------------
During the term hereof, or at any time after the termination of this
Agreement, neither party shall, without the prior written authorization of the
other party (or unless in compliance with the terms of this Agreement), disclose
to a third party or use for any competitive purpose any Confidential Information
concerning the business of the other party. The term "Confidential Information"
2
as used herein shall mean non-public information that has been disclosed by one
party to the other party, or is known by a party as a consequence of its
engagement hereunder. Service Provider acknowledges that all Confidential
Information used by Company in connection with the Retained Business shall at
all times remain the property of Company, and that upon termination of this
Agreement Service Provider will surrender the same to Company, including all
copies thereof. Company acknowledges that Confidential Information used by
Service Provider in connection with Service Provider's business shall at all
times remain the property of Service Provider, and that upon termination of this
Agreement Company will surrender the same to Service Provider, including all
copies thereof. This paragraph shall survive the termination of this Agreement.
6. Entire Agreement.
----------------
This Agreement sets forth the entire understanding and agreement among
the parties hereto with reference to the subject matter hereof, and supersedes
any prior understanding or agreements between the parties hereto, either oral or
written.
7. Modification.
------------
This Agreement may not be modified, amended, discharged or terminated
except by a written instrument signed by the parties hereto.
8. Governing Law; Jurisdiction and Venue.
-------------------------------------
This Agreement shall be governed by, and construed in accordance with,
the internal laws, and not the laws of conflicts, of the Commonwealth of
Pennsylvania. With respect to the enforcement of any award under arbitration
proceedings or any claim regarding the Company's failure to pay any undisputed
service or insurance fee, each party hereby submits to the jurisdiction and
venue of the Allegheny County Court of Common Pleas of the Commonwealth of
Pennsylvania or the United States District Court for the Western District of
Pennsylvania.
9. Assignment.
----------
Service Provider may not assign this Agreement without the prior
written consent of Company.
10. Arbitration.
-----------
Any dispute, controversy or claim arising out of or relating to this
Agreement, or a breach hereof, other than the Company's failure to pay any
undisputed service or insurance fees, shall be settled by arbitration in
Pittsburgh, Pennsylvania, before a panel of arbitrators selected in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
("AAA"), and judgment upon the award rendered may be enforced in any court
having jurisdiction thereof. The fees and costs of such arbitration, including
the reasonable fees and costs of attorneys for the parties, shall be apportioned
between the parties by the arbitrators.
3
11. Parent Corporation Guaranty.
---------------------------
Parent hereby irrevocably and unconditionally guarantees to Company the
performance of any and all of Service Provider's duties and obligations
hereunder (the "Obligations") and Parent hereby irrevocably and unconditionally
covenants and agrees that it is liable for the Obligations as a primary obligor.
If it or any part of the Obligations shall not be punctually paid or performed
when due, Parent shall, immediately upon demand by Company, and without
presentment, protest, notice of protest, notice of non-payment or any other
notice whatsoever, pay the amount due on the Obligations or perform the
Obligations of Service Provider. Parent hereby agrees that its obligations under
this Section 11 shall not be released, diminished or otherwise impaired by any
modification of all or any part of the obligations or by the reorganization,
merger or consolidation of Service Provider into or with any other entity, and
that such obligations will be the obligation of any successor or assign of
Parent.
Agreed:
XRG G&A, INC. KDK TRANSPORT, INC.
By: By:
--------------------------------- --------------------------------
Title: Title:
------------------------------ -----------------------------
XRG, Inc.
By:
---------------------------------
Title:
------------------------------
4
