AMENDED OPERATION AGREEMENT
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THIS AMENDED OPERATION AGREEMENT (this "Agreement") is entered into as
of the 22nd day December, 1998, by and between DISTRIBUTION MANAGEMENT SERVICES,
INC., a Florida corporation, whose address is 0000 X.X. 000xx Xxxxxx, Xxxxx 000
Xxxx, Xxxxx Xxxxx, Xxxxxxx 00000 ("DISTRIBUTION") and PEERLESS DADE, INC. d/b/a
DADE RECYCLING AND DISPOSAL, a Florida corporation, whose address is 00000 XX
00xx Xxxxxx, Xxxxx, Xxxxxxx 00000 ("DADE").
RECITALS
A. DISTRIBUTION is the owner of that certain real property and
improvements located at 0000 Xxxxx Xxxxx Xxxxxx, Xxxxx, Xxxxxxx (the
"Property");
B. DISTRIBUTION and Dade Recycling Services, Inc. entered into an
Operation Agreement on August 27, 1998. DADE has purchased the assets of Dade
Recycling Services, Inc., including the aforementioned "Operation Agreement".
All of Dade Recycling Services, Inc.'s rights under the Operating Agreement have
been assigned to DADE. The parties desire to enter into this Amended Operation
Agreement to modify and amend the terms and conditions of the original Operation
Agreement.
C. DISTRIBUTION is finalizing construction of certain improvements
thereon and the installation of certain fixtures at the Property necessary to
operate a recycling center and construction and demolition debris transfer
station thereon (the "Center") pursuant to the terms and conditions of the
various use, environmental and other necessary permits required by the federal,
state, county and city environmental and governmental agencies ("Operation
Permits"), a list of which is attached hereto as Exhibit "A";
D. DISTRIBUTION has all necessary Operating Permits with the exception
of a certificate of use and occupancy from the City of Miami (the "Use Permit");
E. DISTRIBUTION anticipates that the construction of the improvements
will be completed on or about December 22, 1998 and that it will receive a
certificate of use and occupancy from the City of Miami shortly thereafter;
F. DISTRIBUTION does not have the funds required to complete the Use
Permit process and/or complete remaining improvements and requires financial
assistance from DADE;
G. DADE has agreed to provide DISTRIBUTION up to $75,000 for the
purpose of obtaining the Use Permit and/or completing the remaining
improvements;
H. DADE has experience in the operation of a recycling center and
construction and demolition debris landfill and possesses all necessary
machinery, equipment and employees required to operate the same;
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I. DISTRIBUTION desires that DADE operate the Center pursuant to the
terms and conditions specifically forth herein;
X. XXXX desires to operate the Center pursuant to the terms and
conditions specifically set forth herein;
NOW THEREFORE, in consideration of the sum of $10.00 and other good and
valuable consideration, the parties hereto agree as follows:
1. Recitals. The above recitals are true and correct and are
incorporated herein by reference.
2. Use Permit Funding. DADE shall advance up to $75,000 to DISTRIBUTION
to be used exclusively to obtain the Use Permit from the City of Miami and to
complete any additional work required for operation of the Center. DADE shall
pre-approve all work, invoices and payments related to the use of the $75,000.
DADE shall be reimbursed for the money advanced by retaining 50% of
DISTRIBUTION'S share of the Gross Amount Collected as described in Paragraph 7
until the advanced amount is reimbursed in full. Interest will accrue at a rate
of 7% on the unpaid balance until paid in full. In the event that DADE
terminates this Agreement in accordance with the terms hereof and the money
advanced and interest accrued has not been reimbursed in full, then DISTRIBUTION
shall reimburse DADE the unpaid principal and accrued interest within thirty
(30) days of DADE'S termination of the Agreement.
3. Commencement Date. Within ten (10) days of the issuance of the Use
Permit and completion of any remaining work, DADE agrees to commence operation
of the Center (the "Commencement Date"). In the event the Use Permit or any
other Permit required to operate the Center is not received within 90 days of
the execution hereof, DADE may terminate this Agreement by providing
DISTRIBUTION with a written termination notice. In the event of termination,
DISTRIBUTION shall reimburse DADE for all costs expended in the Use Permit
process.
4. Day to Day Operations. DADE shall operate the Center on a day to day
basis using commercially reasonable efforts to maximize the business operations
at the Center. In connection with its duties hereunder, DADE shall provide all
equipment necessary to operate the Center to the extent allowed under the
Permits. DISTRIBUTION shall not have the right to participate in the day to day
operations of the Center, as parties hereto agree that DADE is experienced in
this area and is being hired as such. For example, but without limitation, DADE
shall have the right, without any input or consent of DISTRIBUTION, to establish
prices, set a budget, hire and fire employees, collect accounts receivables,
including filing suit on behalf of the Center when necessary to collect the
same; establish operating hours, contract for services with third parties and
establish bank accounts; and DADE may deem necessary in its sole discretion.
DADE shall not use the Center as a storage facility and all materials shall be
moved in and out of the Center on a daily basis in compliance with the Permits,
as defined in Section 6 below.
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5. Employees. DADE shall be responsible for hiring and firing all
employees necessary to operate the Center. The employees shall be employees of
DADE and not employees of the Center or DISTRIBUTION. Dade shall be responsible
for the payment of local, state and federal taxes required for such employees.
6. Permits. DISTRIBUTION shall be responsible for obtaining and
maintaining all of the Permits for the Center. DADE agrees to operate the Center
in compliance with terms of the Permits as they are currently in effect and all
applicable federal, state and local laws, rules and regulations. DADE agrees to
post any bonds, letters of credit or financial security required under the
Permits for and on behalf of DISTRIBUTION. In the event the Permits are modified
from time to time and any such modification necessitates capital improvements
made to the Center, DISTRIBUTION shall be responsible for completing and paying
all costs related to the same. DADE shall be responsible for equipment related
modifications necessary to comply with the Permits.
7. Distribution of Revenue. As the owner of the Center, DISTRIBUTION
shall receive the following sums generated from the operation of the Center:
(a) For each cubic yard from 0 to 450 cubic yards received
at the Center per operating day, 6% of the Gross Amount Collected therefrom.
(b) For each cubic yard in excess of 450 cubic yards
received at the Center per operating day, 10% of the Gross Amount collected
therefrom.
The term "Gross Amount Collected" shall mean the amount charged and collected
per cubic yard of construction and demolition debris less any applicable local,
state or federal sales taxes due thereon, if any.
DADE shall calculate the Gross Amount Collected on a monthly calendar basis
which shall run from the first of each month until the end of each month and
shall remit all sums due to DISTRIBUTION by the 10th day of the following month.
DISTRIBUTION shall have the right to review the books and records for the
operation of the Center as it may deem necessary from time to time during
regular business hours, to confirm the proper calculation of the Gross Amount
Collected.
8. Operating Expenses. DADE is responsible for paying all expenses
associated with the day to day operations of the Center which shall include but
not be limited to, utility charges such as electricity, water, phone service,
maintenance of the equipment, maintenance of the Property, employee costs and
expenses, advertising, accounting and bookkeeping fees. DISTRIBUTION shall be
responsible for all mortgage payments on the Property, real property taxes, any
permit or license fees, and any capital improvements required to be performed at
the Center. DADE will maintain General Liability and Property Damage insurance
on DISTRIBUTION's buildings and improvements in the amount of one million
dollars ($1,000,000) per occurrence. DISTRIBUTION shall be named as an
additional insured.
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9. Term. The term of this Agreement shall be for a period of five (5)
years, however, DADE shall have the sole right and discretion to terminate this
Agreement after the first six (6) months by providing a written termination
notice to DISTRIBUTION regarding the same. This Agreement shall automatically
renew for four (4) successive terms of one (1) year each, if, prior to the
expiration of any given Term, DADE fails to provide DISTRIBUTION with written
notice of its intent not to renew this Agreement sixty (60) days prior to the
expiration of the then current term. It is further agreed that DADE may, in its
sole and absolute discretion, terminate this Agreement at any time after the
initial one (1) year term, by providing written notice to DISTRIBUTION at least
six (6) months prior to the intended termination date.
10. Option to Purchase. For and in consideration of the terms and
conditions of this Agreement, DADE shall have the exclusive right and option,
during the term of this Agreement, to purchase the Property and Center from
DISTRIBUTION.
(a) In the event DADE exercises its option to purchase the
Property and Center, DISTRIBUTION agrees to sell to DADE and
DADE agrees to purchase the Property and Center for the
purchase price as hereunder set forth:
Year 1 - If the option to purchase is exercised during the
first year of this Agreement, DADE shall pay DISTRIBUTION one
hundred fifteen percent (115%) of DISTRIBUTION'S investment m
the Property and Center as set forth in Exhibit "B" hereto.
Year 2 - if the option to purchase is exercised during the
second year of this Agreement, DADE shall pay DISTRIBUTION
one hundred thirty percent (130%) of DISTRIBUTION'S
investment in the Property and Center as set forth in Exhibit
"B" hereto.
Year 3 - If the option to purchase is exercised during the
third year of this Agreement, DADE shall pay DISTRIBUTION one
hundred forty five percent (145%) of DISTRIBUTION'S
investment in the Property and Center as set forth in Exhibit
"B" hereto.
Year 4 - If the option to purchase is exercised during the
fourth year of this Agreement, DADE shall pay DISTRIBUTION
one hundred sixty percent (160%) of DISTRIBUTION'S investment
in the Property and Center as set forth in Exhibit "B"
hereto.
Year 5 - if the option to purchase is exercised during the
fifth year of this Agreement, DADE shall pay DISTRIBUTION one
hundred seventy five percent (175%) of DISTRIBUTION'S
investment in the Property and Center as in Exhibit "B"
hereto.
The $75,000, or any portion thereof, advanced to DISTRIBUTION to obtain
the Use Permit or complete the additional work and not reimbursed from
DISTRIBUTION'S
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share of the Gross Amount Collected as described in Paragraph 7 shall
be applied toward the purchase price as set forth above.
(b) DADE must communicate to DISTRIBUTION, in writing, its
intention to exercise the Option by executing and delivering
to DISTRIBUTION an executed contract of sale. After delivery
of the executed contract of sale, DISTRIBUTION must execute
that contract of sale within ten (10) days of receipt. The
closing of the transaction shall occur within thirty (30)
days after execution of the contract of sale. DADE may
assign this option and all rights under this option to
purchase on condition that (1) the assignee assumes in
writing all of DADE's obligations under the option, and (2)
DISTRIBUTION gives prior written consent to the assignment.
11. Right of Offset. During the term of this Agreement, DISTRIBUTION
will provide Dade with prompt written notice of any default or non-payment of
its obligations under any promissory note secured by a mortgage, lien or other
security interest ("Mortgage") on the Property, or any lien placed upon the
Property by any federal, state or local taxing or regulatory authority. DADE
shall have the right, but not the obligation, to pay any delinquent Mortgage
payments, ad valorem or other property taxes, and shall be entitled to an offset
or credit against DISTRIBUTION'S share of the Gross Amount Collected, as
described in Paragraph 7, for any payments by DADE. DISTRIBUTION shall advise
any Mortgage holder of the requirements of this provision and request that
notice of any delinquency or default be simultaneously transmitted to DADE. The
parties agree and understand that a notice of DADE'S option to purchase, as set
forth in Paragraph 10, may be recorded in the official records of Dade County,
Florida. DADE agrees to record only the option to purchase.
12. Non-Exclusivity and Covenant Not to Compete. DISTRIBUTION
acknowledges that DADE is in the business of operating similar centers
throughout Florida and by execution hereof acknowledges that this Agreement
shall not be exclusive to DADE and DADE may operate similar centers or
facilities. During the term of this Agreement, DISTRIBUTION further agrees that
it will not, directly or indirectly, own, permit, operate and any other way
participate in the ownership or management of a solid waste or construction and
demolition debris transfer station, recycling center, materials recovery
facility or landfill within Dade County. The term "indirectly", as used above,
includes, but is not limited to, holding any direct or indirect participation in
any solid waste or construction and demolition debris landfill, recycling
facility, transfer station or materials recovery facility as an owner, partner,
limited partner, joint venturer, shareholder or director. The covenant not to
compete shall apply to DISTRIBUTION and any current or future parent, subsidiary
or affiliated company.
13. Public Offering. DISTRIBUTION has caused a 501 statement to be
filed with the United States Securities and Exchange Commission and is
proceeding towards having its common stock registered in the over the counter
market and ultimately on the NASDAQ stock exchange. DADE shall have the option
to merge, consolidate or otherwise become a part of DISTRIBUTION as a public
company upon terms and conditions mutually agreed upon between DADE and
DISTRIBUTION.
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14 Governing Law/Venue. This Agreement shall be governed by and
construed in accordance of the laws of the State of Florida. The forum for any
legal action arising hereunder shall be in Miami-Dade County, Florida.
15. Attorney Fees and Costs. In the even a dispute arises hereunder,
the prevailing party shall have the right to collect its reasonable attorney's
fees and costs incurred in connection with such dispute, whether in pretrial,
trial, on appeal or in bankruptcy, from the non-prevailing party.
16. Force Majeure. In the event an act of God, a strike, governmental
action or other significant work stoppage, beyond the control of DADE, occurs
which prevents DADE from performing its duties hereunder, DADE shall be excused
from performing its duties herein for as long as practically possible after the
occurrence of the same or until the end of the same unless such happening shall
be directly caused by DADE's failure to comply with the Permits.
17. Confidentiality. Neither of the parties hereto shall disclose any
of the provisions of this Agreement to any third party, including but not
limited to, competitors of either DADE or DISTRIBUTION and employees of such
competitors, except as may be required by law or to their respective attorney.
In addition, this Agreement may not be recorded or filed for record in any
public records or with any public body, except as may be required by law or as
provided in Paragraph 11 hereof.
18. Ageement Binding. The terms and conditions of this Agreement shall
be binding upon the successors and assigns of the parties hereto.
19. Survival. Termination of this Agreement shall not affect the rights
or obligations of the parties which arose prior to the termination.
20. Notices. All notices required hereunder shall be delivered to each
of the parties hereto at the address first written above by certified, U.S.
Mail, return receipt requested or by a recognized overnight courier service. A
copy of all notices sent to DADE shall also be sent to G. Xxxxxxx Xxxxxxx, Esq.,
0000 Xxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxxx, Xxxxxxx 00000.
21. No Joint Venture or Partnership. Notwithstanding anything contained
herein to the contrary, neither this Agreement nor the operations required
hereby shall be deemed to create any joint venture, partnership or any other
business enterprises between DADE and DISTRIBUTION.
22. Assignment. Neither DADE nor DISTRIBUTION may assign this Agreement
in whole or in part to any other person or entity
23. Entire Ageement. This Agreement embodies and constitutes the entire
agreement between DADE and DISTRIBUTION in regards to the Property and the
Center, and all prior or
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contemporaneous agreements, understandings, representations and statements,
whether oral or written, are merged into this Agreement.
24. Construction. This Agreement shall not be construed more strictly
against one party or the other, it being recognized that both DADE and
DISTRIBUTION have contributed substantially and materially in preparing this
Agreement.
25. WAIVER OF JURY TRIAL. THE PARTIES HERETO WAIVE ANY RIGHT EITHER OF
THEM MAY HAVE TO A TRIAL BY JURY RELATING TO ANY ACTION THAT MAY ARISE OUT OF A
DISPUTE HEREUNDER. THE PARTIES ACKNOWLEDGE THAT THIS PROVISION HAS BEEN
EXPLAINED TO EACH OF THEM BY THEIR RESPECTIVE ATTORNEYS AND THAT THIS WAIVER OF
JURY TRIAL IS A MATERIAL INDUCEMENT FOR EACH OF THEM TO ENTER INTO THIS
AGREEMENT.
26. Counterparts. This Agreement may be executed in several
counterparts and all so executed shall constitute one Agreement, binding on all
the parties hereto even though all the parties are not signatories to the
original or the same counterpart.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
the day and year first written above.
PEERLESS DADE, INC.,
d/b/a DADE RECYCLING AND
DISPOSAL, a Florida corporation
__________________________________
Print Name:_______________________
By:_________________________________
Print Name:
__________________________________
Title:_______________________________
__________________________________
Print Name: ______________________
DISTRIBUTION MANAGEMENT
SERVICES, INC., a Florida corporation
__________________________________
Print Name: ______________________
By:_________________________________
Print Name:__________________________
___________________________________ Title: ______________________________
Print Name:__________________________
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EXHIBIT "A"
State Operating Permit - SW01190-98
City of Miami - Certificate of Occupancy
City of Miami - Occupational License
County of Dade - Occupational License
Department of
Environmental Protection - GMS I.D. NO. 5013PO7210
GEN. SO13-281088
EXHIBIT "B"
IT HAS BEEN DISCUSSED AND AGREED THAT THE INVESTMENT REFERRED TO IN THE
AMENDED OPERATION AGREEMENT, IN PARAGRAPH 10 THEREOF, IS THE SUM OF ONE MILLION
THREE HUNDRED THOUSAND ($1,300,000) DOLLARS.
THE SUM IS TO BE ADJUSTED AT TIME OF CLOSING BY THE INTEREST PAID IN
CONNECTION WITH THE FINANCING OF THE PROPERTY SINCE JANUARY 1, 1998, AND TAXES
PAID THEREON.
