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Exhibit 10.1
CONSULTING AGREEMENT
CONSULTING AGREEMENT, made as of June 6, 1997 ("Agreement"), by and
between Xxxxx Wheels International, Inc., a Delaware corporation (the
"Company"), and H.K.L., L.L.C., a Florida limited liability company
("Consultant").
WITNESSETH:
WHEREAS, the Company is engaged in the business of designing,
manufacturing, selling and distributing (i) automobile and truck wheels and
(ii) brake parts and components (the "Business");
WHEREAS, in connection with and subject to the consummation of the
transactions contemplated by the Purchase Agreement of even date herewith among
the Company, Cromodora, S.p.A., Lemmerz Holding GmbH ("Lemmerz Holding") and
the shareholders of Lemmerz Holding (the "Lemmerz Shareholders") (the "Purchase
Agreement"), the Company wishes to engage Consultant upon the terms and subject
to the conditions set forth herein; and
WHEREAS, in connection with and subject to the consummation of the
transactions contemplated by the Purchase Agreement, Consultant wishes to be so
engaged by the Company upon the terms and subject to the conditions set forth
herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Company and Consultant agree as follows:
1. Service to be Provided. The Company hereby agrees to engage
Consultant, and Consultant hereby agrees to serve solely within the United
States, upon the terms and subject to the conditions set forth in this
Agreement, as a consultant of the Company. Consultant shall consult with the
Company on such subjects and at such times and locations solely within the
United States as are from time to time reasonably requested of Consultant by
the senior executive officers or the Board of
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Directors of the Company, including assisting in the development of the
Company's strategy for its worldwide businesses. All such services shall be
provided on behalf of Consultant only by Xxxxx Xxxxx-Xxxxxxx and such other
employees of Consultant that have been expressly approved in writing by the
Company.
2. Term. The term of Consultant's engagement under this Agreement
shall commence on the Closing Date (as defined in the Purchase Agreement) and,
unless earlier terminated pursuant to Section 7, shall continue in effect for
a period of five years thereafter (such period, as may be earlier terminated,
the "Term"). There shall be no extension of this Agreement other than by
written instrument duly executed and delivered by both parties hereto.
3. Compensation. During the Term, the Company shall pay Consultant
U.S. $300,000 per annum, payable in equal monthly installments (subject to
proration for any partial month) on the last day of each month during the Term
to an account in the United States designated in writing by Consultant.
4. Expenses. The Company shall reimburse Consultant for reasonable and
necessary business expenses of Consultant for travel, meals and similar items
incurred in connection with the performance of Consultant's duties hereunder,
and which are consistent with such guidelines as the Board of Directors of the
Company may from time to time establish. All payments for reimbursement of
such expenses shall be made to Consultant only upon the presentation to the
Company of appropriate vouchers or receipts.
5. Stock Option. The Company hereby grants Consultant, effective
from and after the Closing, an option (the "Option") to purchase 100,000 shares
of Common Stock, par value $.01 per share, of the Company (the "Common Shares"),
subject to the following terms and conditions:
(a) The Option is not intended to qualify as an incentive stock
option within the meaning of Section 422 of the Internal Revenue Code, as
amended.
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(b) The exercise price of the Option is $16 per Common Share (the
"Exercise Price"). The Exercise Price shall be paid to the Company in full, at
the time of exercise, in cash.
(c) The Option shall become exercisable at the annual rate of
twenty percent (20%) of the Common Shares underlying the Option on each of the
first through fifth anniversary of the Closing Date during the Term, so long
as this Agreement remains in effect on such anniversary. The Option may be
exercised as to any or all Common Shares as to which the Option has become
exercisable by written notice delivered in person or by mail to the Secretary
of the Company, specifying the number of Common Shares with respect to which
the Option is being exercised. For purposes of the preceding sentence, the
date of exercise shall be deemed to be the date upon which the Secretary of
the Company receives such notification. Unless sooner exercised or terminated,
the Option shall be cancelled and be of no further force and effect after the
tenth anniversary of the date hereof (the "Expiration Date").
(d) The Option is not transferrable by Consultant other than to
Xxxxx Xxxxx-Xxxxxxx or a successor in the interest of Xxxxx Xxxxx-Xxxxxxx by
will or by the laws of descent and distribution.
(e) In the event that following the Closing, the Company effects a
dividend or other distribution (whether in the form of cash, capital stock of
the Company or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, spinoff, combination, repurchase
or share exchange, or other similar corporate transaction or event that affects
the Common Shares such that an adjustment is appropriate to prevent dilution or
enlargement of the rights of Consultant with respect to the Option, the Company
shall make equitable changes or adjustments as are consistent with such changes
or adjustments as are made to options granted under the Company's 1996 Stock
Option Plan to any or all of (i) the number and kind of shares of capital stock
that may be issued or issuable pursuant to the Option and (ii) the Exercise
Price. The parties hereto acknowledge and understand that additional issuances
of capital stock by the Company for cash or
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property shall not result in an adjustment under this Section 5(e).
6. Confidentiality, Non-Competition.
(a) Consultant acknowledges, on its own behalf and on behalf
of each of its employees, that: (i) the Business is intensely competitive and
that Consultant's engagement by the Company will require that Consultant and
its employees have access to and knowledge of confidential information of the
Company, including, but not limited to, (A) the identity of the Company's
customers, (B) the identity of the representatives of customers with whom the
Company has dealt, (C) the kinds of products and services provided by the
Company to customers and offered to be provided for potential customers, (D)
the manner in which such products and services are provided or offered, (E) the
product and service needs of actual or prospective customers, (F) pricing
information, (G) information concerning the design, manufacture, sale and
distribution of products and services, including, but not limited to, (1)
technical and other engineering know-how, designs and information and (2)
manufacturing methods, practices, procedures, processes and formulae, (H)
customer maintenance listings, (I) computer software applications and other
programs, (J) personnel information and (K) other trade secrets (the
"Confidential Information"); (ii) the direct and indirect disclosure of any
such Confidential Information to existing or potential competitors of the
Company would place the Company at a competitive disadvantage and would do
damage, monetary or otherwise, to the Company's business; and (iii) the
engaging by Consultant or its employees in any of the activities prohibited by
this Section 6 may constitute improper appropriation and/or use of such
information and trade secrets. Consultant, on its own behalf and on behalf of
each of its employees, expressly acknowledges the trade secret status of the
Confidential Information and that the Confidential Information constitutes a
protectible business interest of the Company.
(b) For purposes of this Section 6, the Company shall be
construed to include the Company and its parents, subsidiaries and affiliates
engaged in the Business, including, but not limited to, Lemmerz Holding and
its subsidiaries.
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(c) During the Term of this Agreement and at all times after
the termination of Consultant's engagement upon expiration of the Term or
otherwise, neither Consultant nor any of its employees shall, directly or
indirectly, whether individually, as a director, stockholder, owner, partner,
employee, principal or agent of any business, or in any other capacity, make
known, disclose, furnish, make available or utilize any of the Confidential
Information, other than in the proper performance of the duties contemplated
herein, or as required by a court of competent jurisdiction or other
administrative or legislative body; provided that, prior to disclosing any of
the Confidential Information to a court or other administrative or legislative
body, Consultant or any such employee shall promptly notify the Company so that
the Company may seek a protective order or other appropriate remedy. Consultant
agrees to, and to cause each of its employees to, return all Confidential
Informa- tion, including all photocopies, extracts and summaries thereof, and
any such information stored electronically on tapes, computer disks or in any
other manner to the Company at any time upon request by the Company and upon
the termination of his engagement for any reason.
(d) Neither Consultant nor any of its employees shall, so long as
Consultant is engaged by the Company hereunder, engage in Competition (as
defined below) with the Company. For purposes of this Agreement, "Competition"
by Consultant or its employees shall mean Consultant's engaging in, or
otherwise directly or indirectly being employed by or acting as a consultant or
lender to, or being a director, officer, employee, principal, licensor,
trustee, broker, agent, stockholder, member, owner, joint venturer or partner
of, or permitting his name to be used in connection with the activities of any
other business or organization which competes, directly or indirectly, with the
business of the Company as the same shall be constituted as of the date hereof
and, to the extent, but only to the extent that Consultant or such employee is
not so engaged at such time consistent with the terms of this Agreement, as the
same shall be expanded or otherwise changed at any time during his engagement
provided that, it shall not be a violation of this Section 6 for Xxxxx
Xxxxx-Xxxxxxx, together with the Lemmerz Shareholders, in the aggregate, to (i)
become the registered or beneficial owners of up
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to five percent (5%) of any class of the capital stock of a publicly traded
competing corporation, or (ii) acquire up to five percent (5%) of any issue of
publicly traded debt securities of a competing corporation, provided that Xx.
Xxxxx-Xxxxxxx may not actively participate in the business of such corporation
until such time as this covenant expires.
(e) During the Term, Consultant agrees, on its own behalf and
on behalf of each of its employees, that it will not, directly or indirectly,
for its benefit or for the benefit of any other person, firm or entity, do any
of the following:
(i) solicit from any customer doing business with the
Company business of the same or of a similar nature to the Business
with such customer;
(ii) solicit from any known potential customer of the
Business, business of the same or of a similar nature to that which has
been the subject of a known written or oral bid, offer or proposal by
the Company, or of substantial preparation with a view to making such a
bid, proposal or offer;
(iii) solicit the employment or services of, or hire, any
person who is known to be employed by or is a known consultant to the
Company, (other than investment advisors, accountants or attorneys);
(iv) otherwise interfere with the Business or accounts of
the Company including the making of any statements or comments of a
defamatory or disparaging nature to third parties regarding the Company
or its officers, directors, personnel or products.
(f) Consultant, on its own behalf and on behalf of each of its
employees, acknowledges that this Agreement is being entered into in
connection with the consummation of the transactions contemplated by the
Purchase Agreement, that the services to be rendered by him to the Company are
of a special and unique character, which gives this Agreement a peculiar value
to the Company, the loss of which may not be reasonably or adequately
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compensated for by damages in an action at law, and that a material breach or
threatened breach by him of any of the provisions contained in this Section 6
will cause the Company irreparable injury. Consultant, on its own behalf and
on behalf of each of its employees, therefore agrees that the Company shall be
entitled, in addition to any other right or remedy, to a temporary, preliminary
and permanent injunction, without the necessity of proving the inadequacy of
monetary damages or the posting of any bond or security, enjoining or
restraining Consultant or any of its employees from any such violation or
threatened violations.
(g) Consultant, on its own behalf and on behalf of each of its
employees, further acknowledges that the provisions of this Section 6 are in
addition to the noncompetition provisions granted by the Lemmerz Shareholders
pursuant to the Purchase Agreement and to the extent provisions set forth
herein are more restrictive than those set forth in the Purchase Agreement,
the provisions of this Section 6 shall govern.
(h) Consultant, on its own behalf and on behalf of each of its
employees, further acknowledges and agrees that due to the uniqueness of his
services and confidential nature of the information he will possess, the
covenants set forth herein are reasonable and necessary for the protection of
the business and goodwill of the Company; and it is the intent of the parties
hereto that if in the opinion of any court of competent jurisdiction any
provision set forth in this Section 6 is not reasonable in any respect, such
court shall have the right, power and authority to modify any and all such
provisions as to such court shall appear not unreasonable and to enforce the
remainder of this Section 6 as so modified.
7. Termination.
(a) Notwithstanding any provision of this Agreement to the
contrary, the engagement of Consultant hereunder after the Closing shall
terminate on the first to occur of the following dates (each of which, to the
extent applicable, the "Date of Termination"):
(i) the date that the Company and Consultant mutually
agree to such termination;
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(ii) the date of Xxxxx Xxxxx-Xxxxxxx'x death or adjudicated
incompetency or Xxxxx Xxxxx-Xxxxxxx'x or Consultant's adjudicated
bankruptcy;
(iii) the date on which the Company shall give Consultant
notice of termination for Cause (as defined below);
(iv) the date on which the Consulting Agreement between
the Company and Xxxxx Xxxxx-Xxxxxxx of even date herewith, is terminated
pursuant to the provisions of Section 7(a)(iii) thereof; or
(v) the expiration of the Term.
(b) Upon termination of Consultant's engagement after the
Closing (other than pursuant to clause (i) or (v) above), Consultant shall be
entitled to the following:
(i) upon termination pursuant to clause (a)(ii) above,
Consultant shall be entitled to (A) receive any unpaid consulting fees to
the Date of Termination and (B) to the extent exercisable on the Date of
Termination pursuant to Section 5(c) hereof, exercise the Option at any
time prior to the Expiration Date; or
(ii) upon termination pursuant to clause (a)(iii) or (iv)
above, Consultant shall be entitled to receive any unpaid consulting fees
to the Date of Termination. The Option, whether or not exercisable,
shall immediately terminate and Consultant shall not be entitled to
exercise the Option on or after the Date of Termination.
(c) For purposes of this Agreement, "Cause" shall mean the
occurrence of any of the following:
(i) the willful failure, neglect or refusal by Consultant
or any of its employees to perform its duties hereunder;
(ii) any willful, intentional or grossly negligent act by
Consultant or any of its
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employees having the effect of injuring the interest, business or
reputation of the Company, any of its parents, subsidiaries or affiliates;
(iii) Consultant's or any of its employees rendering
services hereunder commission of any felony or a misdemeanor involving
moral turpitude (including entry of a nolo contendere plea);
(iv) any misappropriation or embezzlement of the property
of the Company and its affiliates and subsidiaries (whether or not a
misdemeanor or felony); and
(v) a material breach of any one or more of the provisions
of this Agreement by Consultant or any of its employees which, to the
extent curable, has not been cured within 30 days after notice thereof is
received by the Consultant.
8. Return of Company Property. Consultant on its own behalf and on
behalf of its employees, agrees that following the termination of its
engagement for any reason, it shall return all property of the Company, its
subsidiaries, affiliates and any divisions thereof which is then in or
thereafter comes into its possession, including, but not limited to,
documents, contracts, agreements, plans, photographs, books, notes,
electronically stored data and all copies of the foregoing as well as any
automobile or other materials or equipment supplied by the Company to
Consultant or any of its employees.
9. Effectiveness; Survival.
(a) Notwithstanding any provision hereof to the contrary, it is
the intention of the parties hereto that: (i) this Agreement shall become
effective on the Closing Date; and (ii) from and after the termination of the
Purchase Agreement in accordance with its terms at any time prior to the
Closing, the engagement contemplated hereby shall be deemed abandoned and this
Agreement shall forthwith become void.
(b) Upon termination of Consultant's engagement for any reason
after the Closing, this Agreement shall terminate and the Company shall have
no further obligation to Consultant; provided that the provisions
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set forth in Sections 5 (subject to the termination provisions of Section
7(b)), 6, 7(b), 8 and 10 through 17 hereof shall remain in full force and
effect after the termination of Consultant's engagement, notwithstanding the
expiration or termination of this Agreement.
10. Consultant's Independence and Discretion.
(a) Nothing herein contained shall be construed to constitute
the parties hereto as partners or as joint venturers, or either as agent of the
other, or as employer and employee. By virtue of the relationship described
herein Consultant's relationship to the Company during the term of this
Agreement shall only be that of an independent contractor and Consultant shall
perform all services pursuant to this Agreement as an independent contractor.
(b) Subject only to such specific limitations as are contained
in this Agreement, the manner, means, details or methods by which Consultant
performs its obligations under this Agreement shall be solely within the
discretion of Consultant. The Company shall not have the authority to, nor
shall it, supervise, direct or control the manner, means, details or methods
utilized by Consultant to perform its obligations under this Agreement and
nothing in this Agreement shall be construed to grant the Company any such
authority.
11. Entire Agreement; Termination of Prior Agreement. This
Agreement sets forth the entire agreement between the parties with respect to
its subject matter and merges and supersedes all prior discussions, agreements
and understandings of every kind and nature between any of them, and neither
party shall be bound by any term or condition other than as expressly set
forth or provided for in this Agreement. This Agreement may not be changed or
modified except by an agreement in writing, signed by the parties hereto.
12. Waiver. The failure of any party to this Agreement to enforce
any of its terms, provisions or covenants shall not be construed as a waiver
of the same or of the right of such party to enforce the same. Waiver by any
party hereto of any breach or default by any other party of any term or
provision of this Agree-
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ment shall not operate as a waiver of any other breach or default.
13. Severability. In the event that any one or more of the
provisions of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remainder of
the Agreement shall not in any way be affected or impaired thereby. Moreover,
if any one or more of the provisions contained in this Agreement shall be held
to be excessively broad as to duration, activity or subject, such provisions
shall be construed by limiting and reducing them so as to be enforceable to
the maximum extent allowed by applicable law.
14. Notices. Any notice given hereunder shall be in writing and
shall be deemed to have been given when delivered by messenger or courier
service (against appropriate receipt), or mailed by registered or certified mail
(return receipt requested), addressed as follows:
If to the Company:
Xxxxx Wheels International, Inc.
Attention: General Counsel
00000 Xxxxx Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
U.S.A.
If to Consultant:
H.K.L., L.L.C.
at such address as is
supplied subsequently
With a copy to:
Herrn Xxxxx Xxxxx-Xxxxxxx
Xxxxxxxx 0000
00000 Xxxxxxxxxxxx
Xxxxxxx Xxxxxxxx of Germany
or at such other address as shall be indicated to either party in writing.
Notice of change of address shall be effective only upon receipt.
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15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Michigan, without regard
to conflicts of law principles.
16. Descriptive Headings. The section headings contained herein
are for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
17. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original for all purposes but which,
together, shall constitute one and the same instrument.
18. Forum. The forum for the resolution of any claim, action,
suit or proceeding arising out of or related to this Agreement shall be (i)
the United States District Court, District of Florida, for any action brought
against Consultant and (ii) the United States District Court, Eastern District
of Michigan, Southern Division, for any action brought against the Company.
Notwithstanding the foregoing, counterclaims may be asserted by a party in the
forum in which the initial claim, action, suit, proceeding or investigation
shall have been filed or brought.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Consulting
Agreement as of the date first written above.
XXXXX WHEELS INTERNATIONAL, INC.
By: /s/ Xxx Xxxxxx Xxxxxx
----------------------------
Name:
Title:
H.K.L., L.L.C.
BY: /s/ Xxxxxxx Xxxxxxxx
----------------------------
Xxxxx Xxxxx-Xxxxxxx
Title:
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