Consulting Agreement
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THIS AGREEMENT is made and entered into as of _____________, 1997, among
Xxxxxxx Xxxxx ("Consultant"), Peerless Chain Company, a Minnesota corporation
("Subsidiary") and Peerless Industrial Group, Inc., a Minnesota corporation (the
"Company").
RECITALS:
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A. Consultant has been employed as Chief Executive Officer of the Company
prior to the Company's merger (the "Merger") with R-B Acquisition Corporation
(the "Purchaser").
B. Pursuant to an Agreement and Plan of Merger dated as of April __, 1997
(the "Merger Agreement"), R-B Acquisition Corporation (the "Purchaser") has
acquired a majority of the outstanding shares of the Company, and has been
merged with and into the Company with the Company being the surviving
corporation;
C. The Company is the sole shareholder of Subsidiary.
D. In connection with the transactions contemplated by the Merger
Agreement, Consultant's employment with the Company has terminated.
E. Consultant has valuable knowledge relating to the business of the
Company and Subsidiary and the industries in which they are engaged.
F. The Company and Subsidiary desire to retain Consultant's services as a
consultant for a period after his termination of employment and Consultant
desires to provide such services.
NOW, THEREFORE, the parties agree as follows:
1. Consulting Term. Subject to the terms and conditions of this
Agreement, the Company and Subsidiary hereby retain the services of Consultant
as a consultant for the period beginning at the Effective Time of the Merger and
ending on the second anniversary thereof (the "Consulting Term") and Consultant
hereby agrees to render consulting services to the Company and Subsidiary during
the Consulting Term in accordance with this Agreement.
2. Consulting Services. Consultant agrees that, during the Consulting
Term, he shall provide such consulting services relating to the business and
operations of Company, Subsidiary, their employees and/or the chain and cordage
industry as may be reasonably requested from time to time by the Company, on
reasonable notice to Consultant (collectively "Consulting Services"); provided,
however, that, in no event shall Consultant be required to devote more than 40
hours during any month to the
performance of Consulting Services hereunder. Subject to the foregoing
provisions of this Section 2 and the provisions of Section 6, nothing in this
Agreement shall preclude Consultant from performing services for persons or
entities other than the Company and Subsidiary during the Consulting Term or
thereafter. Consultant shall perform the Consulting Services only as requested
by the Company, and shall make no contact with Subsidiary or its employees
except as authorized by the Company.
3. Payments. In consideration of the Consulting Services to be performed
by him during Consulting Term, the Company and Subsidiary, jointly and
severally, shall pay or provide to Consultant (a) within seven days after the
execution of this Agreement, the sum of $120,000, and thereafter, (b) the sum of
$25,000 per quarter for the first four quarters of this Agreement, payable
quarterly in arrears, and (c) $22,500 per quarter for the second four quarters
of this Agreement, payable quarterly in arrears. The Company and Subsidiary,
jointly and severally, shall also reimburse Consultant for all expenses incurred
by Consultant with the prior approval of the Company in connection with the
performance of the Consulting Services.
4. Assistance with Claims. Without limiting the generality of
Consultant's obligation to provide the Consulting Services described in Section
2, Consultant further agrees that during the Consulting Term, at the request of
the Company, he will assist the Company and any of its affiliates (including
Subsidiary) in the defense of any third-party claims that have been or may be
made against the Company or any of its affiliates (including Subsidiary), and
will assist the Company and any of its affiliates (including Subsidiary) in the
prosecution of any claims that may be made by the Company or any of its
affiliates (including Subsidiary). Consultant agrees, unless precluded by law,
to promptly inform the Company if he is asked to participate (or otherwise
become involved) in any lawsuits involving such claims that may be filed against
the Company or any of its affiliates (including Subsidiary). Consultant also
agrees, unless precluded by law, to promptly inform the Company if he is asked
to assist in any investigation of the Company or any of its affiliates
(including Subsidiary), or their actions, that may relate to services performed
by Consultant for the Company or any of its affiliates (including Subsidiary),
regardless of whether a lawsuit has then been filed against the Company or any
of its affiliates with respect to such investigation. The Company and
Subsidiary, jointly and severally, agree to reimburse Consultant for all of his
reasonable out-of-pocket expenses associated with such assistance, including
travel expenses.
5. Confidential Information. Except as may be required by the lawful
order of a court or agency of competent jurisdiction, or except to the extent
that Consultant has express authorization from
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the Company, Consultant agrees that he will keep secret and confidential
indefinitely, will not disclose, either directly or indirectly, to any other
person, firm, or business entity, and will not use in any way, any non-public
information concerning the Company, Subsidiary and their affiliates which was
acquired by or disclosed to him during the course of his employment with the
Company or Subsidiary or his performance of Consulting Services, including,
without limitation, the Company's, Subsidiary's and their affiliates' customers,
products, equipment, processes, costs, operations and methods, whether past,
current, or planned, as well as knowledge and data relating to processes,
business plans (including, without limitation, prospective acquisitions),
marketing and sales information originated, owned, controlled or possessed by
the Company, Subsidiary or their affiliates. Nothing in the foregoing
provisions of this Section 5 shall be construed so as to prevent Consultant from
using, in connection with his employment for himself, for an employer (or other
recipient of his services), or otherwise, knowledge which was acquired by him
during the course of his employment or other engagement by the Company or
Subsidiary and which is generally known to persons of his experience in other
companies in the same industry.
6. Non-competition. Consultant agrees that during the Consulting Term, he
will not directly or indirectly assist, perform services for or have any equity
interest in, any competitor of the Company, Subsidiary or their affiliates,
whether as an employee, officer, director, agent, security holder, creditor,
consultant or otherwise.
7. Amendment. This Agreement may be amended or canceled only by mutual
agreement of the parties in writing. No person, other than the parties hereto,
shall have any rights under or interest in this Agreement or the subject matter
hereof.
8. Death of Consultant; Change in Control. If Consultant shall die during
the Consulting Term, the Company and Subsidiary, jointly and severally, shall
pay to Consultant's estate the quarterly payment for the quarter in which such
death occurs and upon such payment this Agreement shall terminate. If a Change
of Control (as defined below) shall occur, the obligations of Consultant to
provide the Consulting Services shall cease, and all amounts that would have
been payable to Consultant over the remainder of the Consulting Term shall
become immediately due and payable. As used herein, a "Change of Control" shall
mean any one or more of the following: (a) the Company shall be a party to any
merger or consolidation in which the Company (or an entity which is, immediately
following the Effective Time, an affiliate of the Company) is not the surviving
entity, or (b) any person or entity (other than an entity which is, immediately
following the Effective Time, an affiliate of the Company), shall acquire,
directly or indirectly, beneficial ownership of common stock of the Company or
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Subsidiary having the power to elect a majority of the board of directors of the
Company or Subsidiary, or (c) the Company or Subsidiary shall sell all or
substantially all of its assets in any transaction or series of related
transactions.
9. Remedies. Consultant acknowledges that the Company and Subsidiary
would be irreparably injured by his violation of this Agreement, and he agrees
that the Company and Subsidiary , in addition to any other remedies available to
them for such breach or threatened breach, shall be entitled to a preliminary
injunction, temporary restraining order, or other equivalent relief, restraining
Consultant from any actual or threatened breach of this Agreement.
10. Withholding. To the extent required by applicable law, all amounts
otherwise payable under the Agreement shall be subject to withholding and other
employment taxes.
11. Waiver of Breach. The waiver by Consultant or the Company and
Subsidiary of a breach of any provision of this Agreement shall not operate as
or be deemed a waiver by the non-breaching party of any subsequent breach.
Continuation of payments hereunder by the Company and Subsidiary following a
breach by Consultant of any provision of this Agreement shall not preclude the
Company and Subsidiary from thereafter exercising any right that it may
otherwise independently have to terminate said payments based upon the same
violation.
12. Severability. The invalidity or unenforceability of any provision of
this Agreement will not affect the validity or enforceability of any other
provision of this Agreement, and this Agreement will be construed as if such
invalid or unenforceable provision were omitted (but only to the extent that
such provision cannot be appropriately reformed or modified).
13. Notices. All notices hereunder shall be in writing and shall be
deemed sufficiently given if personally delivered, sent by registered or
certified mail, postage prepaid, sent by overnight courier or facsimile, at such
addresses as the parties may from time to time provide to each other.
14. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Minnesota, without regard to the conflict of law
provisions of any state.
15. Counterparts. This Agreement may be executed in more than one
counterpart, but all of which together will constitute one and the same
agreement.
16. Other Agreements. Except as otherwise specifically provided in this
Agreement, this instrument constitutes the entire
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agreement between Consultant and Subsidiary or the Company relating to the
subject matter hereof and supersedes all prior agreements and understandings
between the parties relating to the subject matter hereof, whether written or
oral. Consultant represents and warrants to the Company and Subsidiary that all
employment agreements that may have been made by and between Consultant and the
Company, Subsidiary or their predecessors or affiliates (collectively, the
"Prior Agreements") have been terminated and that Consultant is not entitled to
any further payment or benefit thereunder.
19. Release of Other Claims. Except for a claim based upon a breach of
this Agreement, Consultant, on behalf of himself and his heirs, representatives,
agents, and insurers (hereinafter the "Releasors") releases and forever
discharges the Company and Subsidiary, their current and former officers,
directors, trustees, members, representatives, agents, employees, and insurers,
and their affiliates, and their respective officers, directors, representatives,
agents, employees, and insurers (hereinafter collectively and individually the
"Releasees") from any and all rights, claims, demands, debts, dues, sums of
money, accounts, attorneys' fees, complaints, judgments, executions, actions and
causes of action of any nature whatsoever, cognizable at law or equity, known or
unknown (sometimes referred to herein as "Claims") which Consultant (or the
other Releasors may have) now has or claims, or might hereafter have or claim,
against the Releasees based upon or arising out of any matter or thing
whatsoever, through the date of this Agreement; provided, that the foregoing
shall not limit the right of Consultant to the same indemnifications that are
provided under the Merger Agreement to other former officers of the Company.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first set forth above.
PEERLESS INDUSTRIAL GROUP, INC.
By __________________________
Its__________________________
PEERLESS CHAIN COMPANY
By ___________________________
Its___________________________
XXXXXXX XXXXX
_____________________________
Xxxxxxx Xxxxx
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