Resolution No. 6909
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RESOLUTION NO. 6909
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A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF VERNON APPROVING AND AUTHORIZING THE
EXECUTION OF A SETTLEMENT AGREEMENT BY AND
BETWEEN THE CITY OF VERNON AND CHEM-TECH
SYSTEMS, INC.
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WHEREAS, CHEM-TECH SYSTEMS, INC. ("CHEM-TECH") operates
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a hazardous waste treatment facility at 3650 East 26th Street in
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the City of Vernon ("CITY"), but uses an address with a Los
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Angeles zip code; and
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WHEREAS, on April 7, 1995 CHEM-TECH filed a petition for
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bankruptcy, Case No. LA95 18924 SB, in the U. S. Bankruptcy Court,
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Central District of California; and
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WHEREAS, prior to that date, CHEM-TECH incurred gross
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receipts business license taxes in the amount of Thirty-seven
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Thousand Three Hundred Fifty-four Dollars and No Cents
($37,354.00) which are due and payable to the City of Vernon as a
priority tax under bankruptcy rules in monthly installments with
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interest over a period of six (6) years; and
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WHEREAS, the City of Vernon has two motions pending on
February 4, 1997, in the bankruptcy court with respect to its
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claim for said taxes and is willing to withdraw said motions if a
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Settlement Agreement is executed; and
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WHEREAS, CHEM-TECH has one motion pending on February 4,
1997, in bankruptcy court in opposition to the City's motion and
is willing to withdraw said motion if a Settlement Agreement is
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executed; and
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WHEREAS, since April 7, 1995, CHEM-TECH has incurred an
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unpaid balance of gross receipts business license taxes in the
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amount of Fifteen Thousand Two Hundred Forty-three Dollars and
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1 Ninety-six Cents ($15,243.96) between April 7 and December 31,
2 1996, which amount is not subject to the bankruptcy proceedings
3 and which will be paid in three equal monthly installments; and
4 WHEREAS, CITY has indicated that it will take action to
5 revoke CHEM-TECH's business license and discontinue all electric
6 and water service to CHEM-TECH unless said postpetition taxes are
7 paid; and
8 WHEREAS, CHEM-TECH has offered to enter into a
9 Settlement Agreement with CITY to repay both prepetition and
10 postpetition taxes as stated; and
11 WHEREAS, the City Administrator has recommended approval
12 of the Settlement Agreement.
13 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
14 THE CITY OF VERNON AS FOLLOWS:
15 SECTION 1: The City Council of the City of Vernon
16 hereby finds and determines that the recitals contained
17 hereinabove are true and correct.
18 SECTION 2: The City Council of the City of Vernon
19 hereby approves the Settlement Agreement, a copy of which has been
20 presented to the City Council concurrently herewith, and the City
21 Council hereby orders said Agreement to be received and filed by
22 the City Clerk.
23 SECTION 3: The City Council of the City of Vernon
24 hereby authorizes the Mayor and the City Clerk to execute said
25 Agreement for, and on behalf of, the City of Vernon.
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SECTION 4: The City Clerk of the City of Vernon shall
2 certify to the passage of this resolution, and thereupon and
3 thereafter the same shall be in full force and effect.
4 APPROVED AND ADOPTED this 21st day of January, 1997.
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ATTEST:.. . / _ //.~ // ..---?7
/Z-- t//'/F~t~~/
BRUCE V. MALKENHORST, City Clerk
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1 STATE OF CALIFORNIA )
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2 COUNTY OF LOS ANGELES )
3 I, BRUCE V. MALKENHORST, City Clerk of the City of
4 Vernon, do hereby certify that the foregoing Resolution, being
5 Resolution No. 6909, was duly adopted by the City Council of the
6 City of Vernon at a regular meeting of the City Council duly held
7 on Tuesday, January 21, 1997, and thereafter was duly signed by
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the Mayo.r of the City of Vernon.
;/2----. ~.."
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BRUCE V. ;;;'LKENHORST, city
Clerk
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Qe.so brOC;,
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EXECUTION COpy
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SETTLEMENT AGREEMENT
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This SETTLEMENT AGREEMENT is made, entered into and
executed in duplicate originals, either copy of which may be
considered and used as the original hereof for all purposes, as of
this ild day of 7/Z??~' 1997,
BY AND BETWEEN THE CITY OF VERNON, a municipal
corporation (hereafter "CITY")
4305 Santa Fe Avenue
Vernon, CA 90058-0805
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AND
CHEM-TECH SYSTEMS, INC., a
California corporation
(hereafter "CHEM-TECH")
3650 East 26th Street
Los Angeles, CA 90023
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RECITALS:
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WHEREAS, CHEM-TECH operates a hazardous waste treatment
facility at 3650 East 26th street in the city of Vernon, but uses
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an address with a Los Angeles zip code; and
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WHEREAS, CHEM-TECH is required to pay to CITY a business
license tax based on one percent (1%) of the CHEM-TECH facility's
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gross annual receipts from processing organic hazardous waste and
a business license tax based on four percent (4%) of the CHEM-TECH
facility's gross annual receipts from processing inorganic
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hazardous waste; and
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WHEREAS, on April 7, 1995, CHEM-TECH filed a petition in
bankruptcy, Case No. LA9S 18924 SB, in the U. S. Bankruptcy Court,
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Central District of California; and
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WHEREAS, prior to and including April 7, 1995, CHEM-TECH
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incurred unpaid, prepetition business license taxes due to City
which amounts are subject to the bankruptcy proceedings (the
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"prepetition Amount"); and
1 WHEREAS, after April 7, 1995, CHEM-TECH incurred unpaid,
2 postpetition business license taxes due to CITY which amounts are
3 not subject to the bankruptcy proceedings (the "postpetition
4 Amount"); and
5 WHEREAS, CITY desires to receive payment of the
6 Prepetition Amount from CHEM-TECH in accordance with 11 USCS
7 Sl129, and CHEM-TECH is willing to pay the Prepetition Amount in
8 payments over a period of six years from the ~ffective date of the
9 Plan; and
10 WHEREAS, CHEM-TECH desires to pay the postpetition Amount
11 over time, and CITY is willing to accept such payment in three (3)
12 monthly installments.
13 NOW, THEREFORE, FOR AND IN CONSIDERATION OF THE MUTUAL
14 PROMISES, COVENANTS AND CONDITIONS HEREIN CONTAINED, IT IS
15 MUTUALLY AGREED BY AND BETWEEN CHEM-TECH AND CITY AS FOLLOWS:
16 SECTION 1: The above Recitals are incorporated herein as
17 though set forth fully herein.
18 SECTION 2: Prepetition Business License Taxes.
19 A. CHEM-TECH has submitted statements for the
20 prepetition gross receipts for processing both organic and
21 inorganic waste during the fourth quarter of 1994 and during the
22 first and second quarters of 1995 which show an obligation for
23 outstanding taxes in the amount of Thirty-seven Thousand Three
24 Hundred Fifty-four Dollars and No Cents ($37,354.00) based upon
25 the following taxes (1% tax and 4% tax combined):
26 4th Quarter 1994: $12,920.00.
27 1st Quarter 1995: $15,356.00.
28 2nd Quarter 1995: $ 9,078.00.
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B. CHEM-TECH shall pay CITY the Prepetition Amount plus
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2 seven percent (7%) simple interest in equal monthly installments
3 over six (6) years beginning on the effective date of the Second
4 Amended Plan of Reorganization (the "Plan"). The payments shall
5 be in the amount of six Hundred Thirty-six Dollars and Eighty-five
6 Cents ($636.85) per month and shall be due on the 1st day of the
7 month.
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SECTION 3:
Postpetition Business License Taxes.
9 A. CHEM-TECH has submitted statements for the postpetition
10 gross receipts for processing both organic and inorganic waste
11 during the third and fourth quarters of 1995 and the first,
12 second, third, and fourth quarters of 1996 resulting in
13 outstanding taxes in the amount of Forty-four Thousand six Hundred
14 Seventy-seven Dollars and No Cents ($44,677.00) based upon the
15 following taxes (1% and 4% tax combined):
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3rd Quarter 1995: $ 1,407.00.
4th Quarter 1995: $ 4,888.00.
1st Quarter 1996: $15,604.00.
2nd Quarter 1996: $11,738.00.
3rd Quarter 1996: $ 3,786.00.
4th Quarter 1996: $ 7,254.00.
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B. CHEM-TECH has previously made payments to CITY toward
23 the postpetition taxes in the amount of $29,433.04. The remaining
24 unpaid Postpetition Amount is Fifteen Thousand Two Hundred Forty-
25 three Dollars and Ninety-six Cents ($15,243.96), which represents
26 the postpetition taxes of $44,677.00 less the $29,433.04
27 previously paid.
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1 C. CHEM-TECH shall pay the postpetition Amount in three
2 (3) equal payments of Five Thousand Eighty-one Dollars and Thirty-
3 two Cents ($5,081.32), which payments CHEM-TECH shall tender to
4 CITY on the fifteenth (15th) day of each of the three (3)
5 consecutive months following the effective date of the Plan.
6 SECTION 4: CHEM-TECH shall make all payments to CITY at
7 the City Hall, 4305 Santa Fe Avenue, Vernon, California 90058, by
8 business check payable to the "City of Vernon". CHEM-TECH shall
9 be entitled to prepay any prepetition or postpetition payment
10 called for under this Agreement without penalty.
11 SECTION 5: CHEM-TECH will keep all payments due and
12 payable on or after the effective date of the Plan current for (1)
13 all business license taxes; (2) electricity services; (3) water
14 services; and (4) any other fees or other charges due CITY. In
15 the event that CHEM-TECH shall fail to make any payment due to
16 CITY during the term of the Agreement, CITY shall give CHEM-TECH
17 written notice of such delinquency. CHEM-TECH shall have five (5)
18 business days from the date of receipt of the written notice of
19 delinquency to make payment to CITY.
20 SECTION 6: In the event that CHEM-TECH fails to make any
21 monthly payment to CITY by 5:00 p.m. on the fifth (5th) day
22 following receipt of the written notice of delinquency, then CHEM-
23 TECH agrees that the entire balance of the Prepetition Amount and
24 Postpetition Amount plus interest shall be due and owing
25 immediately. with respect to the Prepetition Amount, CITY will
26 pursue its legal remedies in compliance with the Federal laws of
27 Bankruptcy Procedure. CITY may file any court action necessary to
28 recover the balance of the Prepetition Amount and postpetition
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1 Amount plus interest and any additional charges which are due. In
2 such event CHEM-TECH shall retain all of its legal rights and
3 defenses which apply to the Prepetition Amount and the
4 Postpetition Amount and which are available to CHEM-TECH at the
5 time this Agreement is executed.
6 SECTION 7: Upon approval of this Agreement by the
7 Bankruptcy Court, (1) CITY agrees to immediately withdraw all
8 pleadings filed by CITY with the Bankruptcy Court on or after
9 October 29, 1996, related to the CHEM-TECH Bankruptcy Case
10 including, but not limited to, a Motion For Reconsideration Of
11 And/Or Relief From Order Confirming Chapter 11 Plan Of
12 Reorganization, and a Motion By city Of Vernon To Amend Claim
13 And/Or Enlarge Time, as well as any accompanying Notice of Motion
14 or supporting documents; (2) CHEM-TECH agrees to immediately
15 withdraw its Motion for Sanctions Based Upon City of Vernon's
16 Motion for Reconsideration of and/or Relief from Order Confirming
17 Chapter 11 Plan of Reorganization (Rule 9024), as well as any
18 accompanying Notice of Motion or supporting documents; and (3)
19 withdrawal of such motions shall be with prejudice unless CHEM-
20 TECH applies for additional relief in bankruptcy, in which case
21 both parties retain all legal remedies, rights, and defenses.
22 SECTION 8: The provisions of this Agreement shall not
23 change the nature of the taxes owed by CHEM-TECH to CITY, nor
24 shall it alter the priority or right to payment of the Prepetition
25 Amount or the postpetition Amount under the bankruptcy code. If
26 this Agreement is breached, CITY retains all legal remedies for
27 collecting taxes and enforcing its business license tax ordinance,
28 and CHEM-TECH retains all of its legal rights and defenses. If
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1 CHEM-TECH applies for additional relief in bankruptcy, such
2 application shall not relieve CHEM-TECH of the obligation and duty
3 to make the payments provided for herein.
4 SECTION 9: If CITY files any court action as a result of
5 failure to make payments, then CHEM-TECH stipulates to the
6 following facts:
7 A. That the amounts set forth in section 2, Paragraph A,
8 above, and section 3, Paragraph A constitute the amount of
9 business license taxes due on CHEM-TECH's gross receipts for the
10 periods shown.
11 B. That all of the statements in this Agreement
12 constitute facts which may be submitted in evidence in any court
13 action and that all such facts are admitted for purposes of proof.
14 SECTION 10: If any such court action is necessary, the
15 prevailing party shall be entitled to receive its costs and
16 attorneys' fees for enforcing the provisions of this Agreement,
17 including the CITY's COllecting any additional amounts not covered
18 by this Agreement which are due and owing for postpetition
19 business license taxes and any other fees and charges.
20 SECTION 11: Notwithstanding any such court action, if
21 CHEM-TECH fails to make any payment due under this Agreement or
22 fails to keep current all payments for electrical and water
23 service, as well as any other payments, fees or charges due to
24 CITY, then CITY is authorized to discontinue such services to the
25 premises upon forty-eight (48) hours written notice to CHEM-TECH.
26 Such 48-hour notice may be delivered to CHEM-TECH or posted on the
27 premises during regular business hours. CHEM-TECH shall be deemed
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1 following circumstances: (a) CITY shall give CHEM-TECH written
2 notice of such delinquency; (b) CHEM-TECH shall have five (5)
3 business days from the date of receipt of the written notice of
4 delinquency to make payment to the CITY, and (c) if CHEM-TECH
5 fails to make payment to CITY by 5:00 p.m. on the fifth (5th) day
6 following receipt of the written notice of delinquency, CHEM-TECH
7 shall be deemed to have failed to make a payment or to keep
8 current.
9 SECTION 12: CHEM-TECH has been operating without a
10 business license since January 1, 1996. Upon completion of the
11 payment of the Postpetition Amount and any current taxes, CHEM-
12 TECH will be issued a renewed business license on the condition
13 subsequent that any failure to make any payment of the Prepetition
14 Amount as set forth in this Agreement will result in the automatic
15 cancellation of such license without hearing by the City Council.
16 CHEM-TECH waives any right to a hearing under Vernon City Code
17 section 15.49 pertaining to such cancellation.
18 SECTION 13: This Agreement constitutes the entire
19 agreement of the parties, and no amendment or modification may be
20 made to this Agreement except in writing and signed by the
21 signatories hereto.
22 SECTION 14: This Agreement shall be governed by and
23 construed in accordance with California law as applied to
24 contracts entered into in California between California residents
25 to be performed in California, and any action hereunder shall be
26 brought in a California court.
27 SECTION 15: This Settlement Agreement is subject to the
28 approval of the united States Bankruptcy Court, Central District
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1 of California, which has jurisdiction over the CHEM-TECH
2 bankruptcy estate and its assets. This Settlement Agreement shall
3 not be effective until approved by the Bankruptcy Court.
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SECTION 16: In the event that any provision of this
5 Agreement shall be held invalid, illegal, or unenforceable, the
6 validity and legality and enforceability of the remaining
7 provisions shall not in any way be effected or impaired thereby.
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SECTION 17: This Settlement Agreement may be executed in
9 counterparts.
10 IN WITNESS WHEREOF, CHEM-TECH and CITY have executed this
11 Agreement as of the date written above.
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THE CITY OF VERNON
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By:
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ATTEST: ~J
By: /~---_.
BRUCE V. MALKENHORST,
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city Clerk
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APPROVED AS TO FORM:
By: \:)~ \S ~^~
DAVID B. BR~ARLEY, City ttorney
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DATE:
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BYo'/z::LVZ:~~~
CONNIE CARRASCO, President
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APPROVED AS TO FORM:
By ~ >:.~ - DATE: ~ ;l. 'I, /(4}
:MICHAE: D. SCHWA~NN, Esq.
Attorney for Chem-Tech Systems, Inc.
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1 .MICHAEL S. KOGAN, State Bar No. 128500 )
MICHAEL D. SCHWARZMANN, State Bar No. 175637
~.~2 ~ ARTER & HADDEN
700 South Flower Street, 30th Floor
b+a ..E3~ Los Angeles, California 90017-4250
~ t=`:~ (213) 629-9300
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~ ~ f5 Attorneys for Debtor
FEB 2 4 1997
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a."~7 UNITED STATES BANKRUPTCY COURT
FEB 2 4 19g
8 CENTRAL DISTRICT OF CALIFORNIA
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"'10 In re ) Case No. LA 95-18924-SB
11 CHEM-'FF~CH SYSTEMS, INC., ) Chapter 11
~ a~ )
12 Debtor. ) [PROPOSED] ORDER ON MOTION
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C~,, ,r c,.;,,~` ~ ) TO APPROVE COMPROMISE OF
13 ~ ) CONTROVERSY WITH THE CITY
~ ) OF VERNON
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) DATE: February 18, 1997
1 ) TIME: 11:00 a.m.
) PLACE : Court room 15 7 5
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18 Chem-Tech .Systems, Inc., the debtor and debtor in
19 possession in the above-captioned bankruptcy case (the "Debtor")
20 motion under Bankruptcy Rule 9019 (a) for an order approving a
21 compromise if its controversies with the City of Vernon.
22 ("Vernon") came: on for hearing at the above date and time. By
23 the motion,. the Debtor seeks to approve a settlement agreement
24 (the "Settlement Agreement") entered into by and between the
25 Debtor .and Vernon. Appearances were as noted on-the record at
26 the hearing. The Court having considered the Motion, all papers
27 and arguments submitted in support of the Motion, and any
28 objections thereto, good cause. appearing therefore,
130326.1E 69358\52783
f.
l IT IS HEREBY ORDERED that:
2 1. Each and every recital, term, condition, and
3 provision contained in the Settlement Agreement shall be and is
4 hereby incorporated herein as though set forth herein in full,
5 and is hereby approved.
6 2. The parties to the Settlement Agreement are
7 authorized to take any and all actions necessary as set forth in
8 the Settlement Agreement.
9 3. The Settlement Agreement is a fair, reasonable and - -
10 equitable amount to settle the controversy concerning the amount-
11 and treatment of Vernon's claims against the estate.
12 4. The Settlement Agreement sets forth. that the
13 following motions be withdrawn, and accordingly these motions are
14 hereby withdrawn and taken off calendar as moot due to the
15 Court's approval of the Settlement Agreement:
16 a. The Debtor's Motion For Sanctions Based Upon _
17 City Of Vernon's Motion For Reconsideration Of And/Or .Relief From
18 Order Confirming Chapter 11 Plan Of Reorganization (Rule 9024);
19 b. Vernon's Motion For Reconsideration Of And/Or
20 Relief From Order Confirming Chapter 11 Plan Of Reorganization
21 (Rule 9024);
22 c. Vernon's Motion By City Of Vernon To-Amend
23 Claim And/Or Enlarge Time (Rule 90.06).
2 5 DATED : ~ Q
.~~t~UE~ F3~L'kiO:C .
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Honorable Samuel L. Bufford
27 United States Bankruptcy Judge
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130326.1E 2 . 6435852783
1 PROOF OF SERVICE
2 I, Denise Givens, declare as follows:
3 I am a citizen of the United States and a resident of
4 -the County of Los Angeles; ~I am over the age of 18 years and am
5 not a party to the within action or proceeding. I am employed by
6 the law firm of Arter & Hadden, located 700 South Flower Street,
7 30th Floor, Los Angeles, California 9001.7. I am readily familiar
8 with Arter & Hadden's business practice for collection and
9 processing of correspondence for mailing with the United States
10 Postal Service and am aware that envelopes placed for collection
11 and mailing within the firm of Arter & Hadden will be deposited
12 with the United States Postal Service on the same day for first-
13 class mailing. in the ordinary course of business.. I served the
14 within [PROPOSED] ORDER ON MOTION TO APPROVE COMPROMISE OF
15 CONTROVERSY WITH THE CITY OF VERNON in said cause, by placing a
16 true and correct copy thereof in an envelope addressed as
17 follows:
18 (SEE ATTACHED LIST)
19 .and by then sealing said envelope and placing it for collection
20 and mailing on Februaryo~~ 19.97 following Arter & Hadden's
21 ordinary business practices.
22 I declare under penalty of perjury that the foregoing
23 is true and correct.
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24 Executed on February~~ 1997 at-Los Angeles,
25 California.
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27 Denise Givens
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130326.1E 64358\52783
1 SERVICE LIST
2 Alvin Mar
U.S. Trustee
3 221 N. Figueroa Street
Suite 800
4 Los Angeles, CA 90012
5 ATTORNEYS FOR CITY OF VERNON
David Brearley, Esq.
6 2440 South Hacienda Boulevard
Suite 223
7 Hacienda Heights, CA 91745
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130326.1E 64358\52783
NOTE TO USERS OF THIS FORM:
Physically attach this form as the last page of the proposed Order or Judgmeht.
Do not file this form as a separate~i~cument:
In re (SHORT TITLE) CHAPTER 11 CASE NUMBER:
HEM-TECH SYSTEMS,. INC.
~ '}=j ~eb~., 95-18924-SB
~f~t~~T
~t ; O;;~dl;~
's i , ul
NOTICE OF ENTRY OF JUDGMENT OR ORDER
AND CERTIFICATE OF MAILING
TO ALL PARTIES IN INTEREST ON THE ATTACHED SERVICE LIST:
1. You are hereby notified, pursuant to Local Bankruptcy Rule 116(1)(a)(iv), that a judgment or order entitled (specify):
.[PROPOSED] ORDER ON MOTION TO APPROVE COMPROMISE OF CONTROVERSY WITH THE
CITY OF VERNON
was entered on (specify date): ~ i~ I.~ b.~~~~`
2. I hereby certify that I mailed a copy of this notice and a true copy of the order or judgment to the persons and entities on the
attached service list on (specify date): -
Dated: _ _ \ , JON D. CERETTO
Clerk of the Bankruptcy Court
By:
Deputy Clerk
~IUnB 1992 This form is optional. It has been approved for use by the United States Bankruptcy Court for the Central District of California ~ ~ O
BK-1 t0
1 SERVICE LIST
2 Alvin Mar
U.S. Trustee
3 221 N. Figueroa Street
Suite 800
4 Los Angeles, CA 90012
5 ATTORNEYS-FOR. CITY OF VERNON
David Brearley, Esq.
6 2440 South Hacienda Boulevard
Suite 223
7 Hacienda Heights, CA 91745
8 ATTORNEYS FOR DEBTOR
Michael D, Schwarzmann, Esq.
9 Arter & Hadden
700 South Flower Street, 30th Floor
10 Los Angeles, CA 90017
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64358\5.2783
130326.1E
OFFICE OF THE CITY CLERK
INTER-OFFICE MEMORANDUM s.f-- ~ I `
DATE: March 10, 1997
TO: Martha Valenzuela, Office Manager - Finance-
Carol Dacey, Customer Service Manager
,FROM: Gloria J. Oros~~ Chief Deputy City-Clerk
SUBJECT: Settlement Agreement - Chem-Tech Systems, Inc.,
Dear Martha & Carol:
The city has entered into a "Settlement Agreement". with Chem-
:Tech, Systems, Inc., effective January 22, 1997.
Based upon the "Settlement Agreement" the City Attorney's office
advises that we may proceed with accepting monies for 1) pre-
petition business license taxes, and 2) post-petition business
license taxes. The "Settlement Agreement" clearly lays out what
Chem-Tech, Systems, Inc., is responsible for; and, the steps, if
necessary, the city is to follow to ensure that monies are paid
as required.
I have .attached hereto a copy of the "Settlement Agreement" for
your information and a copy of instructions from the City
Attorney's office. The letter from the City Attorney's office
provides the amount of monies to be collected, the date due (as
noted by me), explicit instructions if, and when, non-payment
occurs, guidelines for discontinuing utilities; and, lastly,
information pertaining to issuance of a renewed business license.
Ladies, please read all documents thoroughly to familiarize
yourselves with the required actions and if you have any
questions feel free to contact me.
/attachments
:goo
CITY COUNCIL ~ DAVID B. BREARLEY
LEONIS C. MALBURG City Attorney
Mayor FAX: (818) 330-5818
THOMAS A. YBARRA ~ ~ ~ KEVIN WILSON
,~~irector of Community Services & Water
Mayor Pro-Tem
~,1` FAX: 1~) 588-2761
Wm. "BILL" DAVIS
Councilman ~ N J. DeDARIO
o'g or of Light & Power
H. "LARRY" GONZALES c. ~ FAX: (213) 583-1983
Councilman z.-
W. MICHAEL McCORMICK VE 'TELFORD
Fire Chief
Councilman FAX• 213) 581-1385
BRUCE V. MALKENHORST . ' / UI OSENKRANTZ
City Administrator/City Clerk 4305 SANTA FE AVENUE, VERNON, CALIFORNIA ~00~8' ~ , ~ ice Chief
FAX: (213) 581-7924 TELEPHONE (213) 583-8811 111 ~AX: ~13) 581-1178
March 4, 1997 ~
Hand Delivered
Ms. Gloria Orosco
Chief Deputy City Clerk
4305 Santa Fe Avenue
Vernon, CA 90058-0805
Re: Chem-Tech Systems, Inc. Settlement Agreement
Dear Gloria:
Enclosed please find a fully executed Settlement Agreement
with Chem-Tech Systems, Inc. together with an Order on Motion to
Approve Compromise of Controversy with the City of Vernon filed on
February 24, 1997 with respect to the bankruptcy of Chem-Tech. The
payments due under the Settlement Agreement are tied to the
effective date for the Second Amended Plan of Reorganization. A
letter from the attorney for Chem-Tech dated February 27, 1997,
indicates that will occur in two to four weeks j~~~~~~
Pursuant to the Settlement Agreement, Chem-Tech owes the
following:
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1. Prepetition Business License ..Taxes of $37, 354.00 plus 7 % ~ ~~j~
interest payable at the rate of $636.85 per month on the
first day. of each and every month for a period of six
years commencing on the month following the effective
date of the Second Amended Plan of Reorganization
("Plan") pursuant to Section 2 of said Settlement
Agreement.
2. Postpetition Business License Taxes of $15,243.96 payable
in three equal payments of $5,081.32 on the 15th day of
three consecutive months following the effective date of
the Plan pursuant to Section 3 of said Settlement
VVV Agreement .
Ms. Gloria Orosco Page 2 March 4, 1997
In the event Chem-Tech fails to make the required payments as
specified above or to keep current on payments for water and
electric service, the City is required to give Chem-Tech written
notice of the delinquency and Chem-Tech has five business days from
sn the date of receipt of the written notice to cure the delinquency.
Please notify me of any such delinquency. Any notice should be
sent certified return receipt requested. In the event Chem-Tech
C continues to be delinquent after the fifth day, the entire balance
,,y ~ of the amounts owing become due and payable and the City can seek
legal remedies.
In addition, electric and water services may be discontinued,
but the City is required to give 48 hours written notice to Chem-
Tech in the manner specified in Section 11 of said Settlement
Agreement.
Pursuant to Section 12 of said Settlement Agreement, once
,~,~„y..~hem-Tech has paid the postpetition amount of $15,243.96 and any
~'I~v current taxes, the City will issue a renewed business license to
Chem-Tech. Thereafter, if Chem-Tech fails to make the required
payments of the prepetition amount of $37,354.00 plus interest, the
business license can be automatically canceled after the
appropriate notice period.
If you have any questions, please do not hesitate to call. me.
Respectfully,
J. Waved Fitz~m
n~~~~A
torne
Y
DAVID B. BREARLEY, City Attorney
JDF:nc
Enclosures
nc case\glo3-3.97
- _
CITY COUNCIL DAVID B. BREARLEY
LEONIS C. MALBURG City Attorney
Mayor FAX: (818) 330-5818
THOMAS A. YBARRA KEVIN WILSON
Mayor Pro-Tem Director of Community Services & Water
FAX: (213) 588-2761
Wm. "BILL" DAMS
Councilman KENNETH J. DeDARIO
Director of Light & Power
H. "LARRY" GONZALES FAX: (213) 583-1953
Councilman
DAVE TELFORD
W. MICHAEL McCORMICK Fire Chief
Councilman FAX: (213) 581-1385
BRUCE V. MALKENHORST CITY HALL LOUIS RosENKRANTZ
City Administrator/City Clerk 4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058 Police Chief
FAX: (213) 581-7924 TELEPHONE- (213) 583-8811 FAX: (213) 581-1178
March 6, 1997
Ms. Gloria Orosco
Chief Deputy City Clerk
4305 Santa Fe Avenue
Vernon, CA 90058-0805
Re: Chem-Tech Systems, Inc. Settlement Agreement
Dear Gloria:
In response to your question yesterday regarding my letter of
March 4;"1997, and the effective date of commencement of payments
as-set forth therein, i.e., the date by which the payments are due
for purposes of delinquency, the court ordered approval of the
Second Amended Plan of Reorganization on December 13, 1996. The
effective date of the Plan is 90 days thereafter, or March 13,
1997. Therefore, the first payment of $636.85 is due and payable
as to the prepetition amount on or before April 1, 1997 and the
first payment of $5,081.32 is due and payable as to the
postpetition amount on or before April 15, 1997.
Also, enclosed pursuant to your request is a copy of the
February 27, 1997 letter from Mr. Schwarzmann that was referenced
in my letter of March 4, 1997.
I hope this additional information clarifies my letter and if
you have any further questions, please call me.
Very truly yours,
.
. David F~ imons, Attorney
DAVID B. BREARLEY, City Attorney
JDF :'j 1
Enc1'osure
X02/27/97 17:32 $1 213 488 1615 ARTER, HADDEN ~ 002/002
s
ARTER&HADDEN
ATTOxNEYS aT LAVA
fmmd~d 1843
In Califor[Ua: Ocher Offices In:
700 South Flower Street, 30th Floor Cleveland
Onouio Los Angeles, California 900174101 Columbus
San Diego 2131629-9300 ale,~hone Dallas
~ishington„ 17_C.
San Francsco 213/617-9255 facsfmile
Oireat Dial: 1213) 6Z9-9316
February 27, 1997 .
VIA FACSIMILE AND U.S. MAIL
Daloid B: Brearley, Esq.
2440 South Hacienda Boulevard
Suite 223
Hacienda Heights, CA 91745
Chem-Tech Systems Inc.
Dear Mr_ Brearley:
En regards to the effective date of the plan, the effective date of the
plan is earlier of either ninety days after the entry of the order confirming the plan
or within ten days of the new value contribution. The ninety days has nvt yet run
and Ms. Carrasco has -not yet made her capital contribution, so the effective date is
between two to four weeks away.
have contacted Chem-Tech regarding the payment which you
address in your letter. t have been advised that an February 3, 1996, Chem-Tech
sent check No. 44641 in the amount of $6,050.74 to the City's offices.. However,
this -check has not yet been negotiated by the Ciry. Please advise whether you..
have lee.ate~ the check or whether Chem-Tech .should stop payment on the. check
and reissue it. Thank you for your continued. cooperation, and I look forward to
receiving direction firom your office as to the missing payment.
Sincerely,
Mich2el D, Schw~nn
MDS/dg
cc: Connie Carrasco
Michael S: Kogan, Esq.
132138.1E 64358152783
j'
CITY COUNCIL ~ DAVID B. BREARLEY
LEONIS C. MALBURG ~ City Attorney
f . s~ FAX: (818) 330-5818
Mayor
THOMAS A. YBARRA KEVIN WILSON
Mayor: Pro-Tem r Director of Community Services & Water
n ~~r s FAX: (213) 588-2761
Wm. "BILL" DAMS ~ ~ -
Councilman ~ ~ t `~rF,, KENNETH J. DeDARI0
* ~ Director of Light & Power
H. "LARRY" GONZALES ~ ~ c ~ ; ~ FAX: (213) 583-1983
Councilman "
~ ~ ~ DAVE TELFORD
W. MICHAEL McCORMICK ~ ~ ~ Fire Chief
Councilman TTV FAX: (213) 581-1385
BRUCE V. MALKENHORST ~a a a LOUIS ROSENKRANTZ
City AdministratoF/City Clerk 4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058 Police Chief
FAX: (213) 581-7924 TELEPHONE- (213) 583-8811 FAX: (213) 581-1178
January 23, 1997
VIA FEDERAL EXPRESS
Michael D. Schwarzmann, Esq.
After & Hadden
.700 South Flower Street, 30th Floor
Los Angeles, California 90017-4101..
Rec Chem-Tech Systems, Inc. Business License Taxes
Dear Mr. Schwarzmann:
.Enclosed please find two duplicate original Settlement
Agreements which need to be executed by you as to form. After you
have executed both Agreements, please return one executed copy to
me for forwarding to the City of Vernon. The other executed copy
should be forwarded to the President of Chem-Tech Systems for
retention.
Pursuant to my telephone conversation with you today, enclosed
is the signed Stipulation that was faxed to me.
If you have any questions, please give me a call.
Very truly yours,
r
David B. Brearley
City Attorney
DBB:jl
Enclosures
cc: Bruce V. Malkenhorst City Administrator (w/o encls.)
Frank Collins, Controller, Chem-Tech Systems, Inc. (w/o
encls.)
case~ct-schwz.123
INTER-OFFICE MEMORANDUM
DATE: January 22, 1997
TO: David B. Brearley, City Attorney
FROM: Gloria Orosc h'ef Deputy City Clerk
SUBJECT: SETTLEMENT AGREEMENT - CHEM-TECH SYSTEMS
In accordance with your request, attached hereto are two
duplicate originals of the above referenced which have been
signed by, the officials of the City and Chem-Tech.
Will you please return one fully executed agreement to me after
execution by Chem-Tech's attorney.
GJO/hr
T
_ _ _
CITY COUNCIL DAVID B. BREARLEY
LEONIS C. MALBURG City Attorney
FAX: (818) 330-5818
Mayor ' ~ +
KEVIN WILSON
THOMAS A. YBARRA
Mayor Pro-Tem Director of Community Services & Water
FAX: (213) 588-2761
Wm. "BILL" DAMS
` ~ ~ KENNETH J. DeDARIO
Councilman
H. "LARRY" GONZALES 1.~ Director of Light & Power
PAX: (213) 583-1983
Councilman
W. MICHAEL McCORMICK DAVE TELFORD
Fire Chief
Councilman FAX: (213) 581-1385
BRUCE V. MALKENHORST CITY HALL LOUIS ROSENKRANTZ
City Administrator/City Clerk 4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058 Police Chief
FAX: (213) 581-7924- TELEPHONE (213) 583-8811 FAX: (213) 581-1178
January 16, 1997
VIA TELECOPIER AND MAIL
Michael D. Schwarzmann, Esq.
Arter & Hadden
700 South Flower Street, 30th Floor
Los Angeles, California 90017-4101
Telecopier No.: (213) 617-9255
Re: Chem-Tech Systems, Inc. Business License Taxes
Dear Mr. ..Schwarzmann:
The attached Settlement Agreement has-been prepared in final form
and should be executed by Chem-Tech Systems, Inc. prior to the City
Council meeting on January 21, 1997.
With respect to the amount of prepetition and postpetition taxes
which are- due, those figures were prepared by the City Finance
Department. A copy of the accounting is attached hereto for your
information.
The penalty amounts are based on Vernon City Code Section 15.20, a
copy of which was sent to you with my letter of December 27, 1996. Note
that the penalty is part of the license fee., and therefore is included in
the total tax due as shown in the agreement.
If you have any questions, please give me a call.
Very truly yours,
David B. Brearley
City Attorney
DBB:JDF:nc
Enclosures
cc: Bruce V. Malkenhorst, City Administ'~
Frank Collins, Controller, Chem-Tech Systems, Inc.
case~ct-schwz.115
01/16/97 10:51. $213 583.4451 CITY OF VERNON i-~-r CITY ATTY 1~J001
- _
Date: January 16, 1997
To: David B. Brearley, Cify Attorney
From: Sharon Duckworth, Budget Auditor~~
Subject: Chem-Tech Systems
CUP taz Taz Penalty
Pre-petition Amount Amount Total
4th quarter 1994 $12,920.00 $6,460.00 $19,380.00
1st quarter 1995 $15,356.00 $7,578.00 $23,034.00
2nd quarter 1995 $9,078.00 $4,539.00 $13,617.00
Pre-petition fatal $37,354.00 $18,677.00 $56,031.00
,CUP tax during Tax • 1'enaHy
.petition Amount Amount Total
• 3rd quarter 1995 $1,407.00 $703.50 $2,110.50
4th quartet 1995 $4,888.00 $2,444.00 $7,332.00
1st quarter 1996 $15,604.00 $6,353.25 $21,957.25
2nd quarter 1996 $11,738.00 $3,180,31 $14,918.31
3rd Quarter 1996 $3,786.00 $934.50 $4,720.50
4th quarter 1996 $7,254.00 $1,850.94 $9,104.94
Petition Total $44,677.00 $15,466.50 $60,143.50
Pre-petitian Amount $56,031.00
Amount during
Petition $60,143.50
$176,174.50
Less;
payments made to the City •
.05/06186 $10,720.52
08/05/96 $4,292.08
06/24/96 $5,762.95
07/22/96 $1,490.49
0827/96 $2,779A0
09/30/96 $2,032.70
11/01/96 $2,3$5.30
Total payments $29,433.04 29,433.04
Rema~lning balance owed _$86,741.46
Amount owed ~ pre-petitian $56,031.00
Amount owed - during petition $30,710.46
$86.749.48
LL 01/16/37 12:42 $213 583.4451 CITY OF VERNON iii CITY ATTY 0001
Amortization
Key Figures inputs
Annuals Payments $11,463.24 ~PrinCipal Amount $56,03'!.00
Monthly Payments $95527 Annual Interest Rate 7.00%
Interest in First Calendar Year $3,390.13 ~ Period in Years 6
Interest Over Term ~ $12,748.44 Sase Year 1997
Sum of All Payments $68,779.44 Base Manth~ FEB
Payments in First 12 Months
Beginning Cumulative Cumulative Ending
Year Mont Balances Payments Prfncipal Interest Principal Interest Balance
Feb $56,031.00 $955.27 $628.42 $326.85 $628.42 $326.85 $55,403
Mar 55,402.58 855.27 632.09 323.18 1,260.51 650.03 54,770
Apr 54,770.49 95527 635.78 318.49 1,886.29 969.52 54,135
May 54,134.71 955.27 839.48 315.79 2,535.77 1,285.31 53,495
Jun 53,495.23 95527 643.21 312.06 3,178.98 1,597.37 52,852
Ju[ 52,852.02 955.27 646.97 308.30 3,825.95 1,805.67 52,205
qug 52,205.05 955.27 650.74 304.53 4,476.69 2,210.20 51,554
Sep 51,554.31 855.27 654.54 300.73 5,131.23 2,510.93 50,900
Opt 50,899.77 955.27 658.35 286.92 5,789.56 2,807.85 50,241
Nov 50,241.42 955.27 662.20 293.07 6,451.78 3,100.92 49,579
Dec 49,57922 95527 666.06 289.21 7,117.84 3,390.13 48,913
1998 Jan 48,813.16 95527 868.94 285.33 7,787.78 3,675.46 48,243
Yearly Schedule of Balances and Payments
Beginning Cumulative Cumulative Ending
Year Balance Peymer~ts Principal Interest Principal Interest' 6atance
1998 $A8,913.16 $11,463.24 $8,303 3,161 $15,424.36 6,550_$5 $40,611
1989 40,610.64 11,463.24 .8,903 2,561 24,322.88 9,111.57 31,708
2000 31,708.12 11,463.24 9,546 1,917 33,868.96 11,028.73 22,162
2001 22,162.04 11,463.24 10,236 1,227 44,105.13 12,255.80 11,926
2002 11,925.87 11,48324 10,976 _487 55,081.27 12,742.90 950
2003 849.73 955.27 950 6 56,031.00 12,748.44 0
SETTLEMENT AGREEMENT "CLEAN"
This SETTLEMENT AGREEMENT is made, entered into and
executed in duplicate originals, either copy of which may be
considered and used as the original hereof for all purposes, as of
this day of , 1997,
BY AND BETWEEN THE CITY OF VERNON, a municipal
corporation (hereafter "CT_TY")
4305 Santa Fe Avenue
Vernon, CA 90058-0805
AND CHEM-TECH SYSTEMS, INC., a
California corporation
(hereafter "CHEM-TECH")
3650 East 26th Street
Los Angeles, CA 90023
RECITALS:
WHEREAS, CHEM-TECH operates a hazardous waste treatment
facility at 3.6.50 East 26th Street in the City of Vernon, but uses
an address with a Los Angeles zip code; and
WHEREAS, CHEM-TECH is required to pay to CITY a business
license tax based on one percent (1%) of the CHEM-TECH facility's
gross annual receipts from processing organic hazardous waste and
a business license tax based on four percent (4%) of the CHEM-TECH
facility's gross annual receipts from processing inorganic
hazardous waste; and
WHEREAS, on April 7, 1995, CHEM-TECH filed a petition in
bankruptcy, Case No. LA95 18924 SB, in the U. S. Bankruptcy Court,
Central District of California; and
WHEREAS, prior to and including April 7, 1995, CHEM-TECH
incurred unpaid, prepetition business license taxes .due to City
which amounts are subject to the bankruptcy proceedings (the
"prepetition Amount"); and
WHEREAS, after April 7, 1995, CHEM-TECH incurred unpaid,
postpetition business license taxes due to CITY which amounts are
not subject to the bankruptcy proceedings (the "Postpetition
Amount"); and
WHEREAS, CITY desires to receive payment of the
Prepetition Amount from CHEM-TECH in accordance with 11 USCS
§1129, and CHEM-TECH is willing to pay the Prepetition Amount in
payments over a period of six years from the effective date of the
Plan.; and
WHEREAS, CHEM-TECH desires to pay the Postpetition Amount
over time, and CITY is willing to accept such payment in three (3)
monthly installments.
NOW, THEREFORE, FOR AND IN CONSIDERATION OF THE MUTUAL
PROMISES, COVENANTS AND CONDITIONS HEREIN CONTAINED, IT IS
MUTUALLY AGREED BY AND BETWEEN CHEM-TECH AND CITY AS FOLLOWS:
SECTION 1: The above Recitals are incorporated herein as
though set forth fully herein.
SECTION 2: Prepetition Business License Taxes.
A. CHEM-TECH has submitted statements for the
prepetition gross receipts for processing both organic and
inorganic waste during the fourth quarter of 1994 and during the.
first and second quarters of 1995 which show an obligation for
outstanding taxes in the amount of Fifty-six Thousand Thirty-one
Dollars and No Cents ($56,031.00) based upon the following taxes
(1~ tax and 4% tax combined):
4th Quarter 1994: $19,380.00.
1st Quarter 1.995: $23,034.00..
2nd Quarter 1995: $13,617.00.
-2-
B. CHEM-TECH shall pay CITY the Prepetition Amount plus
seven percent (7%) simple interest in equal monthly installments
over six (6) years beginning on the effective date of the Second
Amended Plan of Reorganization (the "Plan"). The payments shall
be in the amount of Nine Hundred Fifty-five Dollars and Twenty-
seven Cents ($955.27) per month and shall be due on the 1st day of
the month.
SECTION 3: Postpetition Business License Taxes.
A. CHEM-TECH has submitted statements for the postpetition
gross receipts for processing both organic and inorganic waste
during the third and fourth quarters of 1995. and the first,
second, third, and fourth quarters of 1996 resulting in
outstanding taxes in the amount of Sixty Thousand One Hundred
Forty-three Dollars and Fifty Cents ($60,143.50) based upon the
following taxes (1% and 4% tax combined):
3rd Quarter 1995: $ 2,110.50.
4th Quarter 1995: $ 7,332.00.
1st Quarter 1996: .$21,957.26.
2nd Quarter 1996: $14,918.31.
3rd Quarter 1996: $ 4,720.50.
4th Quarter 1996: $ 9,104.94.
B. CHEM-TECH has previously made payments to CITY toward
the postpetition taxes in the amount of $29,433.04. The remaining
unpaid Postpetition Amount is Thirty Thousand Seven Hundred Ten
Dollars and Forty-six Cents ($30,710.46), which represents the
postpetition taxes of $60,143.50 less the $29,433.04 previously
paid.
-3-
C. CHEM-TECH shall pay the Postpetition Amount in three
(3) equal payments of-Ten Thousand Two. Hundred Thirty-six Dollars
and Eighty-two Cents ($10,236.82), which payments CHEM-TECH shall
tender to CITY on the fifteenth (15th) day of each of the three
(3) consecutive months following the effective date of the Plan.
SECTION 4: CHEM-TECH shall make all payments to CITY at
the City Hall, 4305 Santa Fe Avenue, Vernon, California 90058, by
business check payable to the "City of Vernon".
SECTION 5: CHEM-TECH will keep all payments due and
payable on or after the effective date of the Plan current for (1)
all business license taxes; (2) electricity services; (3) water
services which are used during the term of the Agreement.; and (4)
any other fees or other charges due CITY. In the event that CHEM-
TECH shall fail to make any payment due to CITY, CITY shall give
CHEM-TECH written notice of such delinquency. CHEM-TECH shall
have five (5) business days from the date of receipt of the
written notice of delinquency to make payment to CITY.
SECTION 6: In the event that CHEM-TECH fails to make any
monthly payment to CITY by 5:00 p.m. on the fifth (5th) day
following receipt of the written notice of delinquency, then CHEM-
TECH agrees that the entire balance of the Prepetition Amount and
Postpetition Amount plus interest shall be due and owing
immediately. With respect to the Prepetition Amount, CITY will
pursue its legal remedies in compliance with the Federal laws of
Bankruptcy Procedure. CITY may file any court action necessary to
recover the balance of the Prepetition Amount and Postpetition
Amount plus interest and any additional charges which are due. In
such event CHEM-TECH shall retain all of its legal rights and
-4-
defenses which apply to the Prepetition Amount and the
Postpetition Amount and which are available to CHEM-TECH at the
time this Agreement is executed.
SECTION 7: Upon approval of this Agreement by the
Bankruptcy Court, (1) CITY agrees to immediately withdraw, with
prejudice, all pleadings filed by CITY with the Bankruptcy Court
on or after October 29, 1996, related to the CHEM-TECH Bankruptcy
Case including, but not limited to, a Motion For Reconsideration
Of And/Or Relief From Order Confirming Chapter 11 Plan Of
Reorganization, and a Motion By City Of Vernon To Amend Claim
And/Or Enlarge Time, as well as any accompanying Notice of Motion
or supporting documents; and (2) CHEM-TECH agrees to immediately
withdraw with prejudice its Motion for Sanctions Based Upon City
of Vernon's Motion for Reconsideration of and/or Relief from Order
Confirming Chapter 11 Plan of Reorganization (Rule 9024), as well
as any accompanying Notice of Motion or supporting documents.
SECTION 8: The provisions of this Agreement shall not
change-the nature of the taxes owed by CHEM-TECH to CITY, nor
shall it alter the priority or right to payment of the Prepetition
Amount or the Postpetition Amount. If this Agreement is breached,
CITY retains all legal remedies for collecting taxes and enforcing
its business license tax ordinance, and CHEM-TECH retains all of
its legal rights and defenses. If CHEM-TECH applies for
additional relief in bankruptcy, both the Prepetition Amount and
the Postpetition Amount shall be treated as gross receipts taxes-
under the bankruptcy code subject to the procedures for filing
priority tax claims.
-5-
SECTION 9: If CITY files any court action as a result of
failure to make payments, then CHEM-TECH stipulates to the
following facts:
A. That the amounts set forth in Section 2, Paragraph A,
above, and Section 3, Paragraph A constitute the amount of
business license taxes due on CHEM-TECH's gross receipts for the
periods shown.
B. That all of the statements in this Agreement
constitute facts which may be submitted in evidence in any court
action and that all such facts are admitted for purposes of proof.
SECTION 10: If any such court action is necessary, the
prevailing party shall be entitled to receive its costs and
attorneys' fees for enforcing the provisions of this Agreement,
including the CITY's collecting any additional amounts not covered
by this Agreement which are due and owing for postpetition
business license taxes and any other fees and charges.
SECTION 11: Notwithstanding any such court action, if
CHEM-TECH fails to make any payment due under this Agreement or
fails to keep current all payments for electrical and water
service, as well as any other payments, fees or charges due to
CITY, then CITY is authorized to discontinue such services to the
premises upon forty-eight (48) hours written notice to CHEM-TECH.
Such 48-hour notice may be delivered to CHEM-TECH or posted on the
premises during regular business hours. CHEM-TECH shall be deemed
to have failed to make a payment or to keep current only under the
following circumstances: (a) CITY shall give .CHEM-TECH written
notice of such delinquency; (b) CHEM-TECH shall have five (5)
business days from the date of receipt of the written notice of
-6-
delinquency to make payment to the CITY, .and (c) if CHEM-TECH
fails to make payment to CITY by 5:00 p.m. on the fifth (5th) day
following receipt of the written notice of delinquency, CHEM-TECH
shall be deemed to have failed to make a payment or to keep
current.-
SECTION 12: CHEM-TECH has been operating without a
business license since January 1, 1996. Upon completion of the
payment of the Postpetiton Amount and any current taxes, CHEM-
TECH will be issued a renewed business license on the condition
subsequent that any failure to make any payment of the Prepetition
Amount as set forth in this Agreement will result in the automatic
cancellation of such license without hearing by the City Council.
CHEM-TECH waives any right to a hearing under Vernon City Code
Section 15.49 pertaining to such cancellation.
SECTION 13: This Agreement constitutes the entire
agreement of the parties, and no amendment or modification may be
made to this Agreement except in writing and signed by the
signatories hereto.
SECTION 14: This Agreement shall be governed by and
construed in accordance with California law as applied to
contracts entered into in California between California residents
to be performed in California, and any action hereunder shall be
brought in a California court..
SECTION 15: This Settlement Agreement is subject to the
. approval of the United States Bankruptcy Court, Central District
of California, which has jurisdiction over the CHEM-TECH
bankruptcy estate and its assets. This Settlement Agreement shall
not be effective until approved by the Bankruptcy Court.
-7-
SECTION 16: In .the event that any provision of this
Agreement shall be held invalid, illegal, or unenforceable, the
validity and legality and enforceability of the remaining
provisions shall not in any way be effected or impaired thereby.
SECTION 17: This Settlement Agreement may be executed in
counterparts.
IN WITNESS WHEREOF, -CHEM-TECH and CITY have executed this
Agreement as of the date written above.
THE CITY OF VERNON
By:
LEONIS C. MALBURG, Mayor
ATTEST:
By:
BRUCE V. MALKENHORST, City Clerk
APPROVED AS TO FORM:
By:
DAVID B. BREARLEY, City Attorney
CHEM-TECH SYSTEMS, INC.
DATE• By:
CONNIE CARRASCO, President
ARTER & HADDEN
By : DAT E
MICHAEL D. SCHWARZMANN, Esq.
Attorney for Chem-Tech Systems, Inc.
-8-
CITY COUNCIL , DAVID B. BREARLEY
City Attorney
LEONIS C. MALBURG FAX: (818) 330-5818
Mayor ~
KEVIN WILSON
THOMAS A. YBARRA _
Mayor Pro-Tem Director of Community Services & Water
~ FAX: (213) 588-2761
Wm. "BILL" DAVI -
Councilman i~' ~ ~ ~ ` KENNETH J. DeDARIO
r Director of Light & Power
H. "LARRY" GONZALES u ° FAX: (213) 583-1.983
Councilman
DAVE TELFORD
W. MICHAEL McCORMICK _ Fire Chief
Councilman TT~+v FAX: (213) 581-1385
BRUCE V. MALKENHORST ~i a a LOUIS ROSENKRANTZ
City Administrator/City Clerk 4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058 Police Chief
FAX: (213) 581-7924 TELEPHONE (213) 583-8811 FAX: (213) 581-1178
December 17, 1996
VIA FACSIMILE& MAIL (213) 26$-96'2
Mr. Frank Collins, Controller
Chem-Tech Systems, Inc.
3650 East 26th Street
Los Angeles, California 90023
Re: Gross Receipts Tax Statements from Chem-Tech Systems, Inc.
Dear Mr. Collins:
In response to your letter of November 25, 1996, in addition to the
quarterly gross receipts statements which must. be filed by Chem-Tech
Systems, Inc., the requirements of Vernon City Code Section 15.36(b) must
be met. This requires the filing at the end of each calendar year of a
written statement showing gross receipts and number of .employees under
penalty of filing a false certificate or return.. This requirement can be
met. in the alternative by including a declaration with each quarterly
statement, as you have done in the past.
Time is of the essence in filing if your- purpose is to forego any
additional hearings in the bankruptcy case. Two motions. have been
prepared which wil l be f filed within ten (10 ) days of the entry of the
Order approving the Chapter 11 Plan of Reorganization. A Proposed Order
was received by this office on December 9, 1996, and I am informed was
signed by Judge Bufford several days ago.
Please do not delay in filing the quarterly statements and in making
an appointment with Mr. Bruce V. Malkenhorst in order to negotiate the
terms of a settlement agreement.
Very truly yours,
David B. Brearley
City Attorney
DBB:JDF:nc
cc: Bruce V. Malkenhorst, City Administrator
Michael S. Kogan, Esq., Arter & Hadden
CITY COUNCIL -DAVID B. BREARLEY
LEONIS C. MALBURG City Attorney
FAX: (818) 330-5818
Mayor
THOMAS A. YBARRA KEVIN WILSON
Mayor Pro-Tem Director of Community Services & Water
s' ~ . FAX: (213) 588-2761
Wm. "BILL" DAVIS ~
Councilman i a KENNETH J. DeDARIO
. u, Director of Light & Power
H. "LARRY" GONZALES s, FAX: (213) 583-19.83
Councilman '
DAVE TELFORD
W. MICHAEL McCORMICK Fire Chief
Councilman TT~+~/ T T FAX: (213) 581-1385
BRUCE V. MALKENHORST ~i a a LOUIS ROSENKRANTZ
City Administrator/City Clerk 4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058 Police Chief
FAX: (213) 581-7924 TELEPHONE (213) 583-8811 FAX: (213) 581-1178
December 27, 1996
VIA TELECOPIER AND MAIL
Michael D. Schwarzmann, Esq.
Arter & Hadden
700 South Flower Street, 30th Floor
Los Angeles, California 90017-4101
Telecopier No.: (213) 617-9255
Re: Chem-Tech Systems, Inc. Business License Taxes
Dear Mr. Schwarzmann:
Your draft of the Settlement Agreement has been reviewed, and
various changes are being recommended. Please-note the attached in
which the changes have been shown by strikeout or highlighting.
With respect to the amount of prepetition and postpetition
taxes which are due, those figures will be changed based on the
calculations being prepared by the City Finance Department. A copy
of the preliminary figures is attached- hereto for your information.
I have not had an opportunity to go through those figures with the
Finance Department, but will do so on Monday. The penalty amounts
for the postpetition period do not take into account the payments
which were received. The City will give credit for those payments
against the -penalties as long as the checks clear the bank.
However, if Chem-Tech intends canceling those checks and including
the total in the postpetition amount payable in three monthly
installments, then all quarterly tax amounts for 1996 will be
subject to the penalty.
A copy of Vernon City Code Section 15.20 is also included for
your information. Note that the penalty becomes part of the
license fee, and therefore will be included in the total tax due as
m
Michael D. Schwarzmann, Esq.
December 27, 1996
Page 2
listed in the agreement.
If you have any questions, please give me a call.
Very truly yours,
po~ ~ . ~ ~
David B. Brearley
City Attorney
DBB:JDF:nc
Enclosures
cc: Bruce V. Malkenhorst, City Administrate
Frank Collins, Controller, Chem-Tech Systems, Inc.
case\ct-2schuz.man
SETTLEMENT AGREEMENT
This SETTLEMENT AGREEMENT is made, entered into and
executed in duplicate originals, either copy of which may be
considered and used as the original hereof for all purposes, as of
this day of , 1997,
BY AND BETWEEN THE CITY OF VERNON, a municipal
corporation (hereafter "CITY")
4305 Santa Fe Avenue
Vernon, CA 90058-0805
p,Np CHEM-TECH SYSTEMS,.INC., a
California corporation
(hereafter "CHEM-TECH")
3650 East 26th Street
Los Angeles, CA 90023
RECITALS:
WHEREAS, CHEM-TECH operates a hazardous waste treatment
facility at 3650 East 26th Street in the City of Vernon, but uses
an address with a Los Angeles zip code; and
WHEREAS, CHEM-TECH is required to pay to CITY a business
license tax based on one percent (1%) of the Chem-Tech facility's
gross annual ~€ap from processing organic hazardous
waste; and business license tax based on four percent (4%) of
Chem-Tech Facility's gross annual ?€from processing
inorganic hazardous waste; and
W~iE~EA:~; .;:.;>:an<:.;: :r:x;~.:<, '~.::<.;:«1.9:.~:.~~..:..;:.>::~~Nt.::: '~~H.:. f:~..7,.~r1::: a;.:.:p~t~.t
.::::::::.::..:.:....A...................~...........::::.::::F:::::::::::::::::::::::::::::::::::::.:::::::::::::::::::::::.~:::::.::....:...........:...;:.~::::::::.~::::::::.
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WHEREAS, prior to and including April 7, 1995, CHEM-TECH
incurred unpaid, prepetition business license taxes due to City
which amounts are subject to the bankruptcy proceedings (the
"Prepetition Amount"); and
WHEREAS, after April 7, 1995, CHEM-TECH
incurred unpaid, postpetition business license taxes-due to CITY
which amounts are rip: subject to the bankruptcy proceedings (the
"Postpetition Amount"); and
WHEREAS, ~1~-eCITY desires to receive payment of the
Pre et i t i on Amount -~~a::::;<"~:~1~:>::>:~;xa:::>:<~~~~d~xr~>;:>w:a::~::<:::>~::~::::>:<
p
>~<ra~-t~i~--Pe~t~et-~ree~ ~Te~Ei~c-T--EG~r and
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~ to pay the Prepetition Amounts~a
CHEM-TECH ~'~>'wa€17'~.?~;'~:a~~
in a ents over ~-~te<<<~ ~'c.~;c~>?<
>~~r:s:>::>~:r~~::>::::~h~::::;:off:~:~t~:v~:>:>c~:at:~:=:c~~>~th~.....1
~I~~~~A:>?<~1!M::>:<'E~H...d~~.~.r~~....~~... ~ ..:~h~...~~~tp~~~::~a~n>.m,csxat
K ~ .
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.
~<~'::~':::'.::~:.::::>::.::>::::..>;:::::>;::.:::::>.';:<::::<>:< .::::::::::.:::::>:::~t~G~: ;t':>~<~1:1;~h::::> :a::.s~'1~;'1`Yt....~.
~:::::::::::::::::::::::::::.::p:::::::.:::.~::::::::::.:..:..:.....................................................................
r»> rt ~t me nos;::
NOW, THEREFORE, FOR AND IN CONSIDERATION OF THE MUTUAL
PROMISES, COVENANTS AND CONDITIONS HEREIN CONTAINED, IT IS
MUTUALLY AGREED BY AND BETWEEN CHEM-TECH AND CITY AS FOLLOWS:
SECTION 1: The above Recitals are incorporated herein as
though set forth-fully herein.
SECTION 2: Prepetition Business License Taxes.
A. CHEM-TECH has calculated the Prepetition Amount of
gross receipts for processing both organic and inorganic waste
during the third and fourth quarters of 1994 and during the first
a~~ quarter of 1995 resulting in an obligation for outstanding
taxes in the amount of $30,557 based upon the following tax
delinquencies (1% tax and 4% tax combined):
3rd Quarter 1994 Actual & 4th Quarter 1994 Estimate: $12,920.
4th Quarter 1994 Actual & 1st Quarter 1995 Estimate: $9,929.
-2-
1st Quarter 1995 Actual & 2nd Quarter 1995 Estimate: $ 7,708.
$-~e-~
t~X~S-~e r~re~$~6~-~~lt'?i~-~e~ez~~-zz=ciiQ~e-~~2e
p•e~e ~€-~e~t~-A~i~Tte-d~e~~b ee~trs e~re~~e~a~e s-;Pe
~ea~e~rt e€-g~e~-s-~eee-~-~s-~e~e~o~e~y--E~F~F~-~„~~u
~i~l-7
,~~~a-e~~a-H}r~~~e~-~`6~e-~3~6=u~~-es ~s~~t~~-cse~t~ieas
9€--takes owed--b ate-awe-~-^~ed-a~e~p~~7 .
CHEM-TECH shall pay CITY the Prepetition Amount plus
seven percent (7%) simple interest in equal monthly installments
over six (6) years beginning on the effective date of the Second
Amended Plan of Reorganization (the "Plan"). The payments shall
be in the amount of $520.96 and shall be due on the 1st day of the
month.
::i::: ~:i::si:::`:;:>:isi::i:<:::i::i::>~:.;::::::i::i::isf::i::::i::i::SYi::i::i:;:;;:;::.:::i:,;;:::;::f:::::::::i::i::i::i:%: ~.:r::: ~::i::;::;::i::i::i:~i~
k3:Gt~::1;~~~T.'4:isi:::;:T::::'~:%':':':'~:':'::::i::::::::::i:::::...~ :.:;i:~i::::..: ~ ::::;:i;:: : ~ : . ~ ; ; . ~:::2Y.:; .
...~!c~~t~e.t.a,t~..can....~3u.~.a.~.~*~~....L~~eri.~~... axes..:.
E.2~S. CHEM-TECH has calculated the Postpetition Amount of
gross receipts for processing both organic and inorganic waste
during the second, third and fourth quarters of 1995 and the
first, second, third, and fourth quarters of 1996 resulting in an
obligation for outstanding taxes in the amount of $54,060 based
upon the following tax delinquencies (1% and 4% tax combined):
2nd Quarter 1995 Actual & 3rd Quarter 1995 Estimate: $ 6,056.
3rd Quarter 1995 Actual & 4th Quarter-1995 Estimate: $11,946.
4th Quarter 1995 Actual & 1st Quarter 1996 Estimate: $10,731.
1st Quarter 1996 Actual & 2nd Quarter 1996 Estimate: $ 7,253.
2nd Quarter 1996 Actual & 3rd Quarter 1996 Estimate: $ 7,167.
3rd Quarter 1996 Actual & 4th Quarter 1996 Estimate: $ 5,575.
4th Quarter 1996 Actual & 1st Quarter 1997 Estimate: $ 5,332.
-3-
The "4th Quarter 1996 Actual & 1st Quarter 1997
Estimate" contains an entry for the "4th Quarter 1996" which is
made up of the October 1996 Actual, the November 1996 Actual, and
the December 1996 estimate. The "1st Quarter Estimate" is the
1997 estimate is based upon historical information.
. CHEM-TECH has previously made payments to CITY toward
the Postpetition Amount, and CITY has accepted $10,720.52. The
remaining unpaid Postpetition Amount is $43.339.48, which
represents the Postpetition Amount of $54,060.00 less the
$10,720.52 previously accepted by CITY.
D. CHEM-TECH shall pay the Postpetition Amount in three
(3) .equal payments of $14,446.50, which payments CHEM-TECH shall
tender to CITY on the fifteenth (15th) day of each. of the three
(3) consecutive months following the effective date of the Plan.
CITY shall return .any and all payments that CITY has received from
CHEM-TECH other than those set forth herein.
SECTION ~ CHEM-TECH shall make all payments to CITY at
the City Hall, 4305 Santa Fe Avenue, Vernon, California 90058, by
business check payable to the "City of Vernon".
SECTION ,4-~: CHEM-TECH will keep all payments due and
payable on or after the effective date of the Plan current for (1)
all business license taxes; (2) electricity services; and (3)
water services which are used during the term of the Agreement, as
well as any other fees or other charges due CITY. In the event
that CHEM-TECH shall fail to make any payment due to CITY, CITY
shall give CHEM-TECH written notice of such delinquency. -CHEM-
TECH shall have five (5) business days from the date of receipt of
the written notice of delinquency to make payment to CITY.
-4-
_ _ _ _
SECTION 6: In the event that CHEM-TECH fails to make any
monthly payment ~~-d-tre,~-s-l~a3~g~o~^~~Ei4-~F}C~-~~~ten~~r~
~TY~e-die-e~-~e~ce-i~-e€~e-~~e~-Bret--i-oe e-~-d-e3~rq{r~~re~-te
~..l~~y-7 e.._. /'~TT[I• TF ~rL'~Tlf_T~~..~ 1.~7.•~e ..l~C to CITY
by 5:00 p.m. on the fifth (5th) day following receipt of the
written notice of delinquency, then CHEM-TECH agrees that the
entire balance
4.~;::>:<the::>:;~?:re :et:aa:a;on:>::Amaunt:::<azd:~~~?os >
lus interest shall be due and owin immediatel ~
P g YF- fix'
,n }
:.~:~xx..:.:::~?r~p~.t~.~~.art;:.;~~~n.,;;>.:. ~i-~~CITY ~~~y pursue its le al
g
remedies in accordance with the Federal laws of Bankruptcy
Procedure:;::; ~e~-tt~ix~~-
-a-i<z~<<~><~n~'::court action
to recover the balance p>f::>:::>th~»::~re :et:~t>~;pn<::::~A~c~nt~»anc~
.........................:::;;y: .::::.p::::::::::::::::::::::::::::::::::::.:~:::::::::::::::::::::::::::::.
....~~tp?~~x'~z.~x~..~mcaun;~:,;;.,p~,~:s,,;;;~.n~er.~~t and any additional charges which
are due. H~rde~Y~e~e e~eu~tst-areses,tt CHEM-TECH shall
retain all of its legal rights and defenses which apply to the
Prepetition Amount and the Postpetition Amount and which are
available to CHEM-TECH at the time this Agreement is executed.
SECTION 7•
Viz`'>?c~~ CITY agrees to immediately withdraw, with
prejudice, all pleadings filed by CITY with the Bankruptcy Court
on or after October 29, 1996, related to the CHEM-TECH Bankruptcy.
Case including, but not limited to, a Motion For Reconsideration
Of And/Or Relief From Order Confirming Chapter 11 Plan Of
Reorganization, and a Motion By City Of Vernon To Amend Claim
And/Or Enlarge Time, as well as any accompany Notice of Motion or
supporting documents.
SECTION 3~3: The provisions of this Agreement shall not
-5-
change the nature of the taxes owed by CHEM-TECH to CITY, nor
shall it alter the priority or right to payment of the Prepetition
Amount or the Postpetition Amount. If this Agreement is breached,
CITY retains all legal remedies for collecting taxes and enforcing
its business license tax ordinance, and CHEM-TECH retains all of
its legal rights and defenses which apply to the Prepetition
Amount and the Postpetition Amount. If CHEM-TECH applies for
additional relief in bankruptcy, such taxes shall be treated as
gross receipts taxes under the bankruptcy code subject to the
procedures for filing priority tax claims-.
SECTION If CITY files any s-court action ~;i
1?><'of>>'fa:a:aura:::>:<to<:>::mak~<:»:<:a::::ent~ then CHEM-TECH sti ulates to
the following facts:
A. That the amounts set forth in Section Paragraph
A above~~?><rii~i>>~~:a:cn:::<:::~<~::i:>::~?:~>7~a. xa: >:h:<:>;;~ constitute the amount of
r
..:::::::::::::::::::::::::::::::::::::::::::::::.:~::::.r:::::::::.::::::::::g.:::::::1~:::::::::::
business license taxes due on ids 1"'SE~?gross receipts for
periods shown.
B. That all of the statements in this Agreement
constitute facts which may be submitted in evidence in any court
action and that all such facts are admitted for purposes of proof.
SECTION ~9~€z: If any such court action is necessary, the
prevailing party shall be entitled to receive its costs and
attorneys' fees for enforcing the provisions of this Agreement,
including the CITY's collecting any additional amounts x~<~k''C1
':;:'"Sr;:i:~i;3:~ ~`~:i::i:::::i::;:::i'i:;i::i:;:;'i:;>::ii: ~t;:::f:;:: ":::;:i:;:;;i:>~.:i:;:;:;:i':::i'i::i:;i:::ir'
>~~h:~s:>;~. x:eme~t::;w~<ch:;<:~;~e::due and owin for ost etition
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business license taxes and any other fees and charges.
SECTION ~-9'~ Notwithstanding any such court action, if
CHEM-TECH fails to make any payment due under this Agreement or
-6-
fails to keep current all payments for electrical and water
service, as well as any other payments, fees or charges due to
CITY, then CITY is authorized to discontinue such services to the
premises upon forty-eight (48) hours written notice to CHEM-TECH.
:~uc~.:::...4..:~.:::hour.::: ~.<.?~:~...c~::: xaa..:::: ~ ...........................................................................:.:....r::..:.::.:... ~...:d::: ~s~:.::::~he
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~~°~:€e~~:€:€<:dur:~n::.<:>:re:::uTar€<:€:€b:~s:~zae~~::»haur~:°: CHEM-TECH shall be deemed
to have failed to make a payment or to keep current only under the
following circumstances: 1~~ CITY shall give CHEM-TECH written
notice of such delinquency; j CHEM-TECH shall have five (5)
business days from the date of receipt of the written notice of
delinquency to .make payment to the CITY, a?~'c~``<~~ if CHEM-TECH
fails to make payment to CITY by 5:00 p.m. on the fifth (5th) day
following receipt of the written notice of delinquency, CHEM-TECH
shall be deemed to have failed to make a payment or to keep
current.
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SECTION 3-1'~ This Agreement constitutes the entire
agreement of the parties, and no amendment or modification may be
made to this Agreement except in writing and signed by the
signatories hereto.
-7-
SECTION ~s4: This Agreement shall be governed by and
construed in accordance with California law as applied to
contracts entered into in California between California residents
to be performed in California, and any action hereunder shall be
brought in a California court.
SECTION 3~~ This Settlement Agreement is subject to
the approval of the United States Bankruptcy Court, Central
District of California, which has jurisdiction over the CHEM-TECH
bankruptcy estate and its assets. This Settlement Agreement shall
not be effective until approved by the Bankruptcy Court.
SECTION ~4 In the event that any provision of this
Agreement shall be held .invalid, illegal, or unenforceable, the
validity and legality and enforceability of the remaining
provisions shall not in any way be effected or impaired thereby.
SECTION 3-§17: This Settlement Agreement may be executed.
in counterparts.
IN WITNESS WHEREOF, CHEM-TECH and CITY have executed this
Agreement as of the date written above.
THE CITY OF VERNON
By:
LEONIS C. MALBURG, Mayor
:::<~><:::::. .'LKENHQR~~`::;::> ::C~~ ''»€~1~~.
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-8-
CHEM-TECH SYSTEMS, INC.
By:
CONNIE CARRASCO, President
ARTER & HADDEN
By:
MICHAEL D. SCHWARZMANN, Esq.
Attorney for Chem-Tech Systems, Inc.
-9-
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CITY COUNCIL DAVID B. BREARLEY
LEONIS C. MALBURG City Attorney
FAX: (818) 330-5818
Mayor
THOMAS A. YBARRA KEVIN WILSON
Mayor Pro-Tem ~ Director of Community Services & Water
~ ~ , PAX: (213) 588-2761
Wrn. "BILL" DAMS y.
Councilman " y ' - KENNETH J. DeDARIO
y Director of Light & Power
H. "LARRY" GONZALES s FAX: (213) 583-1983
Councilman
n - DAVE TELFORD
W. MICHAEL McCORMICK Fire Chief
Councilman ~+v FAX: (213) 581-1385
BRUCE V. MALKENHORST a a LOUIS ROSENKRANTZ
City Administrator/City Clerk 4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058 Police Chief
FAX: (213) 581-7924 TELEPHONE (213) 583-8811 FAX: (213) 581-1178
December 19, 1996
VIA TELECOPLER AND MAIL
Michael D. Schwarzmann, Esq.
Arter & Hadden
.700-South Flower Street, 30th Floor
Los Angeles, California 90017-4101
Telecopier No.: (213) 617-9255
Re: December 16, 1996 Letter to David B. Brearley
Dear Mr. Schwarzmann:
Your letter of December 16, 1996 substantially reflects the
agreement which you reached with Mr. Fitzsimons. The purpose of
this letter is to fine-tune the statement that I "agree not to
appeal the-order confirming the plan." The City does agree not to
appeal the order if an agreement is reached with Chem-Tech Systems,
Inc. and if that agreement is approved by the Court.
In order to preserve the City's remedies in case an agreement
is not reached or in case the court should reject the agreement,
the City will be filing two motions this week. These consist of
(1) Motion for Reconsideration of and/or Relief from Order
Confirming Chapter 11 Plan of Reorganization (Rule 9024) and (2)
Motion by City of Vernon to Amend Claim and/or Enlarge Time (Rule
9006). Notice of Motion and supporting documents will also be
included.
Mr. Frank Collins of Chem-Tech Systems, Inc. has submitted
preliminary figures on the tax returns for both the pre-petition
and post-petition tax delinquencies. With some minor adjustments,
these appear to be satisfactory, and it should be possible to have
an agreement reached prior to the time of the hearing. If that
~A
Michael D. Schwarzmann, Esq.
December 19, 1996
Page 2
agreement is submitted to the Court and approved, then the City of
Vernon will withdraw its motions and will not appeal the- Order
Confirming the Chapter 11 Plan of Reorganization.
If you have any questions, please give me a call.
Very truly yours,
David B. Brearley
City Attorney
DBB:JDF:nc
cc: Bruce V. Malkenhorst, City Administr
Frank Collins, Controller, Chem-Tech Systems, Inc.
case\ct-arter.f&m
rl
1 RESOLUTION NO. 6822
2
3 A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF VERNON REPEALING RESOLUTION NO. 6775 WHICH
4 APPROVED AND AUTHORIZED THE EXECUTION OF A
SETTLEMENT AGREEMENT BY AND BETWEEN THE CITY
5 OF VERNON AND CHEM-TECH SYSTEMS, INC.
6
WHEREAS, CHEM-TECH Systems, Inc. ("CHEM-TECH") operates
~ a hazardous waste treatment facility at 3650 East 26th Street in
8 the City of Vernon ("CITY"); and
9 WHEREAS, CHEM-TECH has incurred an unpaid debt to the
10. CITY for business license fees; and
11 WHEREAS, the City Council by Resolution No. 6775 on
12 April 16, 1996, approved and authorized a Settlement Agreement
13 which would allow CHEM-TECH to repay such debt over a six-month
14 period; and
15 WHEREAS, the terms and conditions of said Settlement
16 Agreement could not be resolved to the satisfaction of both
17 parties and the Agreement was not executed.
18 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
19 THE CITY OF VERNON AS FOLLOWS:
20 SECTION 1: The City Council of the City of Vernon
21 hereby finds and determines that the recitals contained
22 hereinabove are true and correct.
23 SECTION 2: The City Council of the City of Vernon
24 hereby repeals Resolution No. 6775 and withdraws and cancels the
25 proposed Settlement Agreement approved therein.
26
27
2S
1
SECTION 3: The City Clerk of the City of Vernon shall
2
certify to the passage of this resolution, and thereupon and
3 thereafter the same shall be in full force and effect.
4
APPROVED AND ADOPTED this 9th day of July, 1996.
5
6 s/Leonis C. Malbur~
7 LEONIS C. MALBURG, Mayor
8 ATTEST:
9 s/Bruce MalkenhorGt
BRUCE V. MALKENHORST, City Clerk
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1 STATE OF CALIFORNIA )
2 )ss
COUNTY OF LOS ANGELES )
3 I, BRUCE V. MALKENHORST, City Clerk of the City of
4 Vernon, do hereby certify that the foregoing Resolution, being
5 Resolution No. 6822, was duly adopted by the City Council of the
6 City of Vernon at an adjourned regular meeting of the City Council
7 duly held on Tuesday, July 9, 1996, and thereafter was duly signed
8 by the Mayor of the City of Vernon.
9
10 s/Bruce V. Malkenhorst
11 BRUCE V. MALKENHORST, City Clerk
12 (SEAL)
13
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,C
May 18, 1995
TO: Bruce V. Malkenhorst, City Administrator
FROM: Samuel "Kevin" WilsonL'
A ting Director of Community
Services & Water
SUBJECT: CHEM TECH SYSTEMS, INC.
On May 17, 1995 I met with Frank Collins, Chief Financial
Officer and Richard Landi, Vice President of Chem Tech Systems,
Inc. They explained to me that Chem Tech. is in Chapter 11
Bankruptcy, but that they feel the business will recover from its
current financial; problems. However, Chem Tech is requesting
relief from the hazardous waste treatment and storage business
license tax. The tax is based upon volume of the wastes treated
and the last quarterly payment was approximately $18,000.00. I
told them that this fee was set by City ordinance and is non
negotiable. They stated that without some concessions from
various parties that they were not sure if Chem Tech would be
able to stay in business.
In my research it was discovered that their last payment was
in September of 1994. It appears that-they owe. the City payments
on the last three quarters. I suggest that you have Sharon file
documents in Bankruptcy Court for money previously owed to us.
In addition, we may want to threaten them with termination of
their Conditional Use Permit if the payments. are not made.
Please notify me of how you would like to proceed as soon as
possible so that I can inform Chem Tech if further negotiations
will be necessary.
SKW:ps
cc: City Attorney
07/31/96 15:57 FAX 818 3;30 .5818 DAVID B BREARLEY CITY CLERK C~] 002/002
07/31/96 14.:5$ $213 988 2761 vx.iciw~• ~...u,~......
p - -F e _ 7671 Date ~ _ pa$ea? _ - -
From ~ _ -
.IL1ept. Co.
Phone # Phone #
fax # Fex #
• C~sT~~s
~l ~~.lvl 1 ~~-H
a commitment to a .clean environment RECEIVE D
JUL 2 91996
July 25, 1996 (`.01'pmtlnit~~ awrv;n~~
1Vdr: S. IScrviie Wilson
Director of Community Services & Water
City of Vernon
4305 Santa Fe Avenue
Vernon, CA 90058
Dear Mr. Wilson:
Taus fetter is in response to a phone conversation among you, Marty Speare, CTSI's attorney, and myself.
C ter 11 Voluntary PetitJon, and
In CTSI's letter of March 15, 149h, we outlined the reason for filing hap
as a consequence the. 50% decline in revenue that resulted in negative cash flow. Nevertheless, we believe
we can maintain the payment program described below based on present revenues.
1995 is
The post petition obligation due the city for the CUP Tee from April S, 1995 to December 3 i,
. being resolved by tl?e proposed sti~~u1att 30a 996 and continuing on the last day
a each month tl?ereafter
of 54,205,79 each beginning on Augur ,
until. paid, plus interest at the rate of 7% per annum beginring on September 30, 1995 payable together
.with principal.
The CUP fee from the period January 1, 199b to May 30, 1996 has previously been remitted to the city.
The CUP fee for the month of June 1996 will be remiue+I by July 25, 1996, which should be received by
the city by 3uly 26, 1996,
CTSI proposed the continuation oC monthly CUP ~e
20thtdba~f each
sucx~~ng month, cormpute andh
month. C"f SI will close the company s books by
remit payment to the City of Vernon no later than the'~5th day of each month in which the computation is
tx?ade for the preceding month.
We appreciate your understanding during these trying times for CTSI.
Sincerely,
~F'ra'°'n~ of .ins
Controller
FCleg
cc: Marty Speare
Barton, K, Lugman & Getting
n:~ira~.yh,,.°01 3650 )vast :f6th Street Las .Angeles, California 90023
(213) 2.(~8-50511 FAX (213) 2b8-9672 EPA # CAT 080033b81
r_. ~ ~
CITY COUNCIL ~ ~ DAVID B. BREARLEY
LEONIS C. MALBURG ~ City Attorney
Mayor FAX: (818) 330-5818
THOMAS A. YBARRA S. KEVIN WILSON
Mayor Pro-Tem Acting Director of Community Services & Water
FAX: (213) 588-2761
Wnr. "BILL" DAVIS
Councilman KENNETH J. DeDARIO
Director of Light & Power
H. "LARRY" GONZALES FAX: (213) 583-1983
Councilman
DAVE TELFORD
W. MICHAEL McCORMICK Fire Chief
Councilman FAX: (213) 581-1385
BRUCE V. MALKENHORST CITY HALL LOUIS ROSENKRANTZ
City Administrator/City Clerk 4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058 Police Chief
FAX: (213) 581-7924 TELEPHONE (213) 583-8811 FAX: (213) 581-1178
May 6, 1996
VIA FACSIMILE AND HAND DELIVERY
Mr. Bruce V. Malkenhorst
City Administrator/City Clerk
4305 Santa Fe Avenue
Vernon, CA 90058-0805
Re: Settlement Agreement with Chem-Tech Systems, Inc.
Dear Bruce:
The City Council by Resolution No. 6775 adopted on April 16,
1996, approved a Settlement Agreement between Chem-Tech Systems,
Inc. and the City of Vernon. However, the agreement approved by
the City Council has been slightly altered.
Therefore, another resolution has been prepared for adoption
at the meeting of May 7, 1996, that amends Resolution No. 6775 to
approve the modified version of the Settlement Agreement.
If you have any questions concerning this matter, please
call.
Very truly yours,
~ ~ ~
David B. Brearley
City Attorney
DBB : j 1
-Q-
~r
05/02/96 15:12. FAX 818 -330 5818 DAVID B BREARLEY CITY CLERK 0 001/001
~J`+/V:,+/ JO - 1J• J'-1 41 1 I 1"ILI-III-I 4; I I LCIEI~ ~ 914 JJCJ J410 IVU. OU`7 WYJJ
.
r
~o ~
HE E~ ~ ,
a commztme~~t to ~ clean e~,
Msrch 15, 199fi
Mr. Samuel Kcviti Wilson
.Director a[ Community Services & Water ~
City of Vernon
'43QS Santa I+e Avenue
Vernon, California 9005
17ear Mr. Wilson: _ C
I believe it is important fur the City of Vernon to understand why Chem•1'ech Systems, Inc. (C'fSl) G1Cd for
banlQUptcy and also to disclose the negative reveeue nnpact t'esttlti~ng t'rom the filing, and nut plan to return
ta•prafitabillty.
• 'I~he purpose of f-tling bankruptcy were the subs[a~atial environmental claims, both actual and rutttingent that.
exceeded the company's invested Capital. The claim was the result of C15I shipping baz.3rdous waste oil under
proper manifests, in accordance with Federal and State regulations, to an EPA approved disposal site known
as L~kotech.
Subsequent to the acceptance of the waste, tlic EPA charged- that Ekotech mishandled alI their customer's
waste, resulting is that location being designated a $uperfund Cleanup site. The EPA assessed a cleanup cost
against: all thG companit~ that soot waste to Ekotek byinstituting legal action which included CTSI. A proper.
legal defense would be too costly and would deplete CT5I's assets, with no assurance that there would be a
fayarable ruling. C1`5I 5as iastrucled our dtfardey to negotiate a release from the cleanup Iiabiliiy in order
to expedite our emerging-from bamattp#cy.
When the bankruptry fling was made, on April 7, 1995, CP51`s major customers declined to continue business
with a company ie` battWtuptcy, resulting iri a 5il% decline in revenues and cumulation of negative cash flow.
Also, the caatinued recession in Southern t?alifornia manufacturing-base has taken its toll. in aux cpetatians.
Mapagement response was to reduce operation e~cpenses, including pea-svnnel•down-siting, salary reduction
and re-negotiate rakes with vendors. t"T'SI else identified new markets where our unique peratlt would be of
valttC to new customers,. New markets irtclude rail transfer, oil rerycliag. solids waste traapagemettCand metal
recovery. This is a time caasumtiag process that is now bearieg positive results. (.`]5I is also attempting to
reliriartGe its property to raise working capital....
C"i~I ~oknawledged ~ postpetitiaa liability under the CUl' in-the amioupt of $2.g,23~.'77. C`xSI requests a
payment schedule of $4,2Q5.79 per modth, plus intGrGSt over a b month period,. commencing with-your
approval. C'1`Sl will pay 1st Qtr '96 estimate CUP by April 15! 1946..
Wc: appreciate your underst~utding aRd patience during these difficult times and we are con{ident that our
reorggttizsttiaa plan will be successfpl and the company will rc:Wrn la profitability..
Respectfully su$mittod, l'~
ot''"
C
'.~~hranlc Collins
Chief .Financial Ufflcer
tir,.tt 3650 1~ast 26th: Street Las Angeles, C:atifornia 40023..
CITY COUNCIL DAVID B. BREARLEY
LEONIS C. MALBURG City Attorney
FAX: (818)330-5818
Mayor
THOMAS A. YBARRA S. KEVIN WILSON
Mayor Pro-Tem Acting Director of Community Services & Water
FAX: (213) 588-2761
Wm. "BILL" DAVIS
Councilman KENNETH J. DeDARIO
Director of Light & Power
H. "LARRY" GONZALES FAX: (213) 583-1983
Councilman
DAVE TELFORD
W. MICHAEL McCORMICK Fire Chief
Councilman FAX: (213) 581-1385
BRUCE V. MALKENHORST CITY HALL LOUIS RosENKRANTZ
City Administrator/City Clerk 4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058 Police Chief
FAX: (213) 581-7924 TELEPHONE (213) 583-8811 FAX: (213) 581-1178
May 2, 1996
HAND DELIVERED
CHEM-TECH SYSTEMS, INC.,
3650 East 26th Street
Los Angeles, CA 90023
ATT: Mr. Frank Collins, Chief Financial Officer
Dear Mr. Collins:
Your letter to Mr. Kevin Wilson, Director of Community Services, dated
March 15, regarding your "post petition liability under the CUP" has
been accepted in concept by the City Council.
Transmitted herewith for your review is a "draft" settlement agreement
prepared by our City Attorney which we would like to .present to the
City Council for their approval at their meeting to be held May 7. The
agreement has been modified somewhat from your original letter;
however, we feel this would be a more appropriate direction to follow.
If the agreement meets with your approval please notify our city
attorney, David Brearley, by calling (818) 336-3408 and upon
notification of your concurrence he will have the original delivered to
you on Monday for signatures.
If you have any questions concerning the contract please feel free to
call his office as soon as possible.
Very truly yours,
CITY OF VERNON
Gloria J Orosco
Chief De uty City Clerk
/gJ o
cc: Director of Community Svs.
City Attorney
05/02/96 14:40 FAX 818 330 5818 DAVID B BKF.ARLEY' CITI` CLERK f~7j002/005
1 SETTLEMENT AGREEMENT
2
This SETTLEMENT AGREEMENT is made, entered into and
3
executed in duplicate originals, either copy of which may be
4
considered and used as the original hereof for all purposes, as of
5
this day of d, 1996,
6
7 BY AND BETWEEN THE CITY OF VERNON, a municipal
corporation (hereafter "CITY")
8 4305 Santa Fe Avenue
Vernon, CA 90058-0805
9
AND CHEM-TECH SYSTEMS, INC., a
10 California corporation
(hereafter "CHEM-TECH")
11 3650 East 26th Street
Los Angeles, CA 90023
12
13 RECITALS:
14 WHEREAS, CHEM-TECH operates a hazardous waste treatment
15 facility at 3650 East 26th Street in the City of Vernon, but uses
16 an address with a Los Angeles zip code; and
17 WHEREAS, CHEM-TECH is required to pay a business license
18 tax based on four percent (4~) of the facility's gross annual
1g revenue; and
20 WHEREAS, on April 7, 1995 CHEM-TECH filed a petition in
21 bankruptcy, Case No. LA95 18924 SB, in the U. S. Bankruptcy Court,
22 Central District of California; and
23 WHEREAS, from-April 7 to December 31, 1995, CHEM-TECH
24 incurred an unpaid, post-petition debt to the City of Vernon for
25 said business license tax in the amount of Twenty-five Thousand
2g Two Hundred Thirty-four Dollars and Seventy-seven Cents
27 ($25,234.77) plus interest, which debt is not subject to the
2g bankruptcy proceedings; and
G5/0L/96 14:41 FAX 818 330 5818 DAVfll B BItEARLEl" ~ > CITY CLERK C~00;S/005
1 WHEREAS, CITY is authorized to revoke CHEM-TECH's
2 business license and to discontinue electric and water service to
3 CHEM-TECH's property unless the debt is paid.
4 NOW, THEREFORE, FOR AND IN CONSIDERATION OF THE MUTUAL
5 PROMISES, COVENANTS AND CONDITIONS HEREIN CONTAINED, IT IS
6 MUTUALLY AGREED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:
7 1. CHEM-TECH agrees that it has a post-petition
g liability to the City of Vernon from April 7 to December 31, 1995
9 in the amount of Twenty-five Thousand Two Hundred Thirty-four
10 Dollars and Seventy-seven Cents ($25,234.77), plus interest at the
11 rate of seven percent (7~) per annum compounded monthly.
12 2. CHEM-TECH shall, effective May 15, 1996, commence
13 paying .said amount to the CITY over a period of six (6) months in
14 the amount of Four Thousand Two Hundred Five Dollars and Seventy-
15 nine Cents ($4,205.79} per month plus interest.
16 3. CHEM-TECH will keep all payments current for (1) all
17 business license taxes; (2) electricity services; and (3) water
i8 services which are used during the-term of the Agreement, as well
19 as any other fees or other charges due the City of Vernon..
20 4. CHEM-TECH shall make such payments to the City of
21 Vernon at the City Hall, 4305 Santa Fe Avenue, Vernon, California
22 90058 by certified check or money order payable to the City of
23 Vernon.
24 5. In the event that CHEM-TECH fails to make any monthly
25 Payment by the 30th of the month when due, then CHEM-TECH agrees
26 that the entire balance plus interest shall. be due and owing
27 immediately, and- that the CITY may file a court action to recover
28 the balance and any additional charges which are due.
--2 -
05/02/96 14:42 FA1 818 330 5818 DAVID B BRF.ARLEI' > CI`TY' CLERK ~ 0041005
1 6. If the CITY files any such court action, then CHEM-
2 TECH stipulates to the following factso
3 a. Thai the amount of Twenty-five Thousand Two
4 Hundred Thirty--four Dollars and Seventy-seven Cents ($25,234.77)
5 constitutes four percent {4$) of its gross receipts for the period
6 April 7 to December 31, 1995.
• 7 b. That in consideration of the City of Vernon
8 foregoing its right to revoke the business license of and to
9 discontinue services to CHEM-TECH and in consideration of CHEM-
10 TECH~s being allowed to make payments on the delinquent. account,
11 CHEM-TECH has entered into this Agreement in full and complete
12 settlement of the-amount due.
13 c. That all of the statements in this Agreement
14 constitute facts which may be submitted in evidence in any court
15 action and that all such facts are admitted for purposes of proof.
16 7. If any such court action is necessary, CITY shall be
17 entitled to receive its costs and attorneys' fees for enforcing
18 the provisions of this Agreement and for collecting any additional
19 amounts due for business license tax and any other fees and
20 charges.
21 8. Notwithstanding any such court action, if CHEM-TECH
22 fails to make any payment due under this Agreement or fails to
23 keep current all payments for electrical and water service, as
24 well as any other payments, fees or charges due to CITY, then CITY
25 is authorized to discontinue such services to the premises upon
26 forty-eight (48) hours written notice to CHEM-TECH. Such notice
27 may be delivered to CHEM-TECH or posted on the premises during
2g regular business hours.
-3-
b5/02/96 14:43 FAX 818 330 5818 DAVlll B BREARLEY' > CL'i'1' CLERK I~j005!005
-
1 9.. This Agreement constitutes the entire agreement of
2 the parties, and no amendment or modification may be made to this
3 Agreement except in writing and signed by the parties.
4 10. This Agreement shall be governed by and construed in
5 accordance with California iaw, and any action hereunder shall be
6 brought in a California court.
7 11. In the event that any provision of this Agreement
8 shall be held invalid, illegal, or unenforceable, the validity and
9 legality and enforceability of the remaining provisions shall not
10 in any way be effected or impaired thereby.
11 IN WITNESS WHEREOF, CHEM-TECH and the CITY have executed
12 this Agreement as of the date written above.
13
THE CITY OF VERNON
14
By:
15 LEONIS C. MALBURG, Mayor
16 ATTEST:
17 By:
BRUCE V. MALKENHORST, City Clerk
18
APPROVED AS TO FORM:
19
By:
20 ~ DAVID B. BREARLEY, City Attorney
21 "
CHEM-TECH SYSTEMS, INC.
22
BY=
23
Title:
24
25
26
27
28
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;R~''
•
CHEM • TECH
a commitment to a clean 9?~~`~~
June 24, 1996
~'~~%4~
Treasurer
City of Vernon
430 Santa Fe Avenue
Vernon, California 90058
Re: Chem-Tech Systems' April 1996 and May 1.996 CUP Tax Payment
Dear Sir or Madam: ~
Please be advised as fallows:
REVENUE TAX RATE TAX
Organic $73,916.63 1% $739.17
Inorganic $125,594.56 4% $5,023.78
TOTAL $5,762.95
If you have any questions, please contact the undersigned.
Very truly yours,
CHEM-TECH SYSTEMS, INC.
F"ra~d~~. .
Controller
FC/eg
3650 East 26th Street Los Angeles, California 90023
(213) 268-5056 FAX (213) 268-9672 EPA # CAT 080033681
CHEM-TECH-SYSTEMS 3650 EAST 26th STREET LOS ANGELES, CALIFORNIA 90023
438
DATE INVOICE # DESCRIPTION r1MOUNT DISCOUNT NET AMOUNT
0(/24/90 APRLL-Mf1Y CUP TAX PAYMENT 5,7Ci2.95 .00 5.762.95
CHECK: 043895 06/24/96 CITY OI' VERNON CHI: TOTAL: 5,762.95
BANK OF AMERICA 4 3 8 ~
CHEM-'TECH- SYSTEMS SAN FRANCISCO, CA 94102
11-35/1,210
Debtor In Possession Case# 95-18924-SB 0 4 3 8 9 5
3650 East 26th Street
Los Angeles, California 90023
(213) 268-5056
-'FIVE THOUSAND SEVEN HUNDRED SIXTY TWO DOLLARS AND 95 CENTS
DATE AMOUNT
06/24/96 xX~~f:a~5,762.95~~
PAY CITY OF VERNON
TO THE
ORDER 4305 SANTA FE AVENUE
oF: VERNON CA 90058-0805 r.._ ~ , 2,~~~_~
01 10 0 ~Z~~~'Z~lL~~
~ UTHORIZED SIGNATURE
il'0438951i¦ t; ~ 2 1000358: L58 ~7~~I L478 2~i'
CITY COUNCIL ` DAVID B. BREARLEY
LEONIS C. MALBURG City Attorney
FAX: (818) 330-5818
Mayor
THOMAS A. YBARRA S. KEVIN WILSON
Mayor Pro-Tem Acting Director of Community Services & Water
FAX: (213) 588-2761
Wm. "BILL" DAVIS
Councilman KENNETH J. DeDARIO
Director of Light & Power
H. "LARRY" GONZALES FAX: (213) 583-1983
Councilman
DAVE TELFORD
W. MICHAEL McCORMICK Fire Chief
Councilman FAX: (213) 581-1385
BRUCE V. MALKENHORST CITY HALL Loins ROSENKRANTz
City Administrator/City Clerk 4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058 Police Chief
FAX: (213) 581-7924 .TELEPHONE (213) 583-8811 FAX: (213) 581-1178
April 11, 1996
.City Council
City of Vernon
Honorable Members:
At their meeting held March 25, 1996, the Finance Committee
recommended that the proposal from Chem Tech Systems regarding
payment of unpaid Business License Taxes be accepted. The City
Attorney's office has prepared an agreement, and it is hereby
recommended that said agreement with Chem-Tech Systems, Inc. be
approved and executed.
Very truly yo/urs,
d
Bruce V. Malkenhorst
City-Clerk
BVM/hr
council\ltr