EXHIBIT 10.3
CONSULTING AGREEMENT DATED
DECEMBER 31, 1996 BETWEEN
NEW DIRECTIONS MANUFACTURING, INC. AND XXXX X. XXX
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement") is made this 31st day of December
1996, by and between New Directions Manufacturing, Inc., an Arizona corporation
with offices located at 0000 Xxxx Xxxxxxxx, Xxxxxxx, Xxxxxxx 00000 ("Customer"),
and Xxxx X. Xxx, a natural person ("Customer").
PREMISES
WHEREAS, Customer is in the business of manufacturing, distributing and
marketing contemporary oak wood furniture throughout the United States and
Canada;
WHEREAS, Consultant has the requisite skills and experience to provide
consulting services to a company in a business such as Customer and desires to
enter into a written agreement to set forth said services; and
WHEREAS, Customer desires to secure the services of Consultant pursuant to
the terms and conditions of a consulting agreement and to protect its interest
by obtaining certain covenants from Consultant.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties agree as follows:
1. Term. The term of this Agreement shall commence January 7, 1997 (the
"Effective Date"), and shall continue for an initial term of three (3) years.
This Agreement may be renewed at the end of the term for an additional term upon
the written agreement of the parties. If there is no written agreement for any
additional term(s) then Consultant's employment will continue on a month to
month basis subject to termination pursuant to the terms of this Agreement.
2. Compensation. In consideration of the services rendered to Customer
by Consultant during the term of this Agreement, Customer shall provide
Consultant the following compensation:
(a) Monthly Compensation. Customer shall pay Consultant compensation
at the monthly rate of $5,000.00 (the "Monthly Compensation"). Consultant shall
be responsible for payment of all taxes, including local, state and federal
taxes, fees, and other assessments. The Monthly Compensation shall be payable
to Consultant in accordance with the normal payroll practices of Customer then
in effect.
(b) Expense Reimbursement. In addition to the Monthly Compensation,
Consultant shall be entitled to payment or reimbursement by Customer for
budgeted expenses incurred by Consultant in connection with the performance by
Consultant of his duties under this Agreement in accordance with Customer's
policies and practices for reimbursement of such expenses with respect to
Customer's executive officers (e.g. class of travel, hotel, spousal travel
allowances, etc.), as in effect from time to time, including, without
limitation, reasonable and necessary travel, lodging, entertainment and meals
incurred by Consultant in furtherance of Customer's business and at Customer's
request (including, without limitation, expenses associated with any required
travel
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exceeding 100 miles measured from Customer's current principal place of
business in Phoenix, Arizona.)
3. Duties. During the term of this Agreement, Consultant shall initially
perform those duties normally performed by the Chief Executive Officer as such
are described in the Bylaws of the Customer. However, Consultant shall not have
the authority to bind the Company in any manner without the approval of
management of the Company. Consultant shall determine the location of his
office, the amount of travel deemed necessary to follow-up with various
contacts, and the hours Consultant chooses to work. Consultant shall be fully
responsible for his health insurance and other benefits, and the Company shall
not share in that responsibility.
4. Covenant Not to Compete. Except as may be expressly consented to by
the Board of Directors, Consultant covenants and agrees for the benefit of
Customer and Customer's successors and assigns that during the term of this
Agreement or for a period of five (5) years following the Effective Date,
whichever shall be longer (the "Restrictive Period"), Consultant will not engage
or participate, directly or indirectly, as principal, agent, Consultant,
Customer, Customer or in any other individual or representative capacity
whatever, in the conduct or management of, own (legally or beneficially) or have
the right or option to acquire, any direct or indirect interest in any business
which, in the reasonable judgment of the Board of Directors, engages, directly
or indirectly, in the business of manufacturing, distributing or marketing like
product, or otherwise competes with Customer's business or business prospects.
Additionally, during the Restrictive Period Consultant will not
without the written consent of Customer, directly or indirectly: (i) call on,
solicit, or use any of the customers or suppliers of Customer or its successors
and assigns either for Consultant or for any other person, association or
entity; or (ii) solicit or hire Consultants of Customer or its successors and
assigns either for Consultant or for any other person, association or entity.
Consultant specifically acknowledges and agrees that the foregoing covenants are
reasonable in content and scope and are given for adequate consideration.
Customer shall have the option to reduce the scope and extent of the foregoing
covenants, by written notice to Consultant, either before or after any
adjudication of the legality of said covenants, whereupon said covenants, as so
reduced, shall be binding and enforceable against Customer.
5. Non-Disclosure of Information. In further consideration of retention
of Consultant, Consultant will not, directly or indirectly, during or after the
term of this Agreement, disclose to any person not authorized by Customer to
receive or use such information except, for the sole benefit of Customer, any of
Customer's confidential or proprietary data, information, or techniques, or give
to any person not authorized by Customer to receive it, any information that is
not generally known to anyone other than Customer or that is designated by
Customer as "Limited," "Private," "Confidential," or similarly designated.
6. Termination of Agreement. This Agreement shall terminate upon the
earliest to occur of any of the following events, on the dates and at the times
specified below:
(a) the close of business on the last day of the term of this
Agreement and any extension thereof (the "Expiration Date");
(b) the close of business on the date of Consultant's death ("Death");
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(c) the close of business on the Termination Date specified in the
Notice of Termination which Consultant shall have delivered to Customer to
terminate this Agreement ("Voluntary Termination").
(d) the close of business on the Termination Date specified in the
Notice of Termination which Customer shall have delivered to Consultant to
terminate this Agreement for Cause. "Cause" as used herein shall include
termination based on (i) Consultant's material breach of this Agreement; (ii)
conviction of Consultant for any crime constituting a felony in the jurisdiction
in which committed, any crime involving moral turpitude whether or not a felony,
or any other criminal act against Customer involving dishonesty or willful
misconduct intended to injure Customer (whether or not a felony); (iii)
substance abuse by Consultant; (iv) the failure or refusal of Consultant to
follow one or more lawful and proper directives of the Board of Directors
delivered to Consultant in writing; (v) willful malfeasance or gross misconduct
by Consultant which discredits or damages Customer; or (vi) unauthorized
disclosure of confidences of Customer.
7. Notice of Termination. Any purported termination of this Agreement by
either Customer or Consultant (other than by reason of Death or on the
Expiration Date) shall be communicated by written Notice of Termination to the
other party. As used herein, "Notice of Termination" shall mean a notice which
indicates the specific termination provision in this Agreement relied upon and
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of this Agreement.
8. Termination Date. As used herein, the term "Termination Date" shall
mean (i) the date of Consultant's death; or (ii) the Expiration Date; or (iii)
the date specified in the Notice of Termination.
9. Accrued Compensation. Upon termination of this Agreement, all unpaid
but earned or accrued salary as of the Termination Date, shall be due and
payable to Consultant, Consultant's designee(s), or in the absence of such
designation, Consultant's estate, within thirty (30) days after the Termination
Date.
10. Disability. If the Consultant is unable to perform his services by
reason of illness or incapacity, the compensation payable to him under Section 3
herein shall continue only in accordance with decision unilaterally reached by
the Board of Directors or pursuant to any written policy of the Company.
11. Sale of Business. The provisions of this Agreement shall survive the
sale or transfer of Customer or Customer's business, and Customer's successor-
in-interest or the purchaser of Customer's business, whichever shall be the
case, shall be subject to and bound by the terms of this Agreement. This
provision shall apply in the event of any of the following events:
(a) The sale, by the Customer, of substantially all of its assets to a
single purchaser or group of associated purchasers;
(b) The sale, exchange or other disposition to a single entity or
group of entities under common control in one transaction or series of related
transactions of greater than fifty percent (50%) of the outstanding shares of
the Customer's common stock; or
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(c) The merger or consolidation of the Customer in a transaction in
which the shareholders of the Customer receive less than fifty percent (50%) of
the outstanding voting shares of the new or continuing corporation.
12. Consultant Not Restricted by Other Agreement. The Consultant hereby
expressly represents, warrants, and covenants to the Customer that he is not
bound, in any manner, by any agreement, whether written or oral, which would
restrict him from performing any duties under this Agreement.
13. Survival. The provisions of this Agreement including, specifically,
the Consultant's representation, covenants, and agreements set forth in Sections
5, 6, and 12 shall survive the termi nation of this Agreement.
14. Entire Agreement. This Agreement constitutes the entire understanding
between the parties and there are no covenants, conditions, representation, or
agreements, oral or written, or any nature whatsoever, other than those herein
contained.
15. Amendments. No amendment, alteration, or modification of this
Agreement shall be binding upon the parties hereto unless said amendment,
alteration, or modification is in writing and signed by all parties hereto.
16. Waiver. The waiver of any term, condition, clause, or provision of
this Agreement shall in no way be deemed or considered a waiver of any other
term, condition, clause or provision of this Agreement.
17. Severability. If any term, condition, clause or provision of the
Agreement shall be deemed to be void or invalid then that term, condition,
clause or provision shall be stricken from this Agreement to the extent it is
held to be void or invalid, to be void or invalid and in all other respects this
Agreement shall be valid and in full force and operation.
18. Notices. Any notice or other communication required or permitted
hereunder shall be sent by United States certified mail, postage prepaid,
addressed:
If to Customer: ________________________
Attention: _____________
________________________
________________________
Telephone:
Facsimile:
and, if to Consultant: Xxxx X. Xxx
________________________
________________________
Telephone:
Facsimile:
or to such other person or address designated by the parties to receive notice.
The date of the notice shall be the date of the mailing.
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19. Additional Documents. The parties hereto agree to execute any and all
additional papers and documents reasonably necessary or appropriate to
effectuate the terms of this Agreement.
20. Governing Law. This Agreement shall be subject to and governed by the
laws of the State of Arizona as applied to residents of the State of Arizona
without regard to conflicts of law principles. Any legal action hereunder shall
be properly commenced only in a federal or state court of competent jurisdiction
in Maricopa County, Arizona. The prevailing party in any such action shall be
entitled to recover, in addition to any relief or award ordered by the court, a
reasonable attorney fee and all costs of court.
21. Assignment. This Agreement shall not be assignable by any party to
this Agreement, except upon the written consent of all parties hereto. The
Consultant shall not have the right to pledge, encumber, or dispose of the right
to receive any payments under this Agreement, which payments and right thereto
are expressly declared to be nonassignable and nontransferable and, in the event
of any attempted assignment or transfer, the Customer shall have no further
liability hereunder.
22. Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed an original but both of which together shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal the day and year first above written.
[Customer] [Consultant]
/s/ Xxxxxx X. Xxxxx /s/ Xxxx X. Xxx
--------------------------- ---------------------------
Xxxxxx X. Xxxxx Xxxx X. Xxx
President
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