Exhibit 10.41
CONSULTING AGREEMENT
Consulting Agreement, dated as of April 1, 1999, between CVC, Inc.,
(the "Company") a Delaware corporation, and Xxxxxx X. Xxxxxxxx, Xx., an
individual ("Consultant").
WHEREAS, the Company, CVC Acquisition Corporation, a Virginia
corporation and a wholly owned subsidiary of the Company ("Sub") and
Commonwealth Scientific Corporation, a Virginia corporation ("CSC"), are
entering into an Agreement and Plan of Merger (the "Merger Agreement"), dated as
of the date hereof, providing for the merger of Sub with and into CSC (the
"Merger");
WHEREAS, the Consultant is the Chief Executive Officer and principal
shareholder of CSC; and
WHEREAS, effective as of the closing of the Merger, the Company desires
to enter into a consulting relationship with Consultant upon the terms and
conditions set forth in this Agreement, and Consultant wishes to accept such
consulting relationship upon the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of and in reliance upon the foregoing
and the covenants, obligations and agreements contained herein, the Company and
Consultant hereby agree as follows:
1. CONSULTING PERIOD.
(a) Subject to early termination as provided in Section 4 of this
Agreement, the term of this Agreement will be the three year period beginning on
the date of the closing of the Merger (the "Commencement Date") and ending on
the third anniversary of such date (unless the term is extended as described in
paragraph (b) below (the "Consulting Period").
(b) In the event that there has not been a Liquidation Event (as
defined in paragraph (c) below) prior the third anniversary of the Commencement
Date, the term of this Agreement shall be extended for a period ending upon the
occurrence of a Liquidation Event, but in no event for a period exceeding two
years.
(c) For purposes hereof, a "Liquidation Event" shall mean the
occurrence of an event in which Consultant would have the ability to, and choose
to, exchange shares of common stock of the Company held by Consultant for
readily marketable securities or cash, having a value of $4.0 million.
2. CONSULTING SERVICES. During the Consulting Period, Consultant agrees to
provide technology, product, design and other advice as required by the Company
(the "Consulting Services"). During the Consulting Period, Consultant shall be
available to
perform the Consulting Services as reasonably requested by the Company;
PROVIDED, HOWEVER, that (i) during the first year of the Consulting Period,
Consultant is not required to perform services for more than an aggregate of 100
hours per calendar month, (ii) during the second year of the Consulting Period,
Consultant is not required to perform services for more than an aggregate of 75
hours per calendar month, and (iii) during the third year of the Consulting
Period, Consultant is not required to perform services for more than an
aggregate of 50 hours per calendar month. In no event shall Consultant be
required to regularly report or work at locations designated by the Company that
are outside of Northern Virginia or the Greater Washington, D.C. metropolitan
area, without the Consultant's express consent.
3. COMPENSATION.
(a) CONSULTING FEES. The Company shall pay Consultant a base fee at the
rate of (i) $200,000 for the first year of the Consulting Period, (ii) $175,000
for the second year of the Consulting Period (iii) $150,000 for the third year
of the Consulting Period, and (iv) $150,000 per year for any subsequent years
due to the extension of the Consulting Period pursuant to Section 1(b) hereof
(the "Consulting Fee"), payable on a by-weekly basis irrespective of the number
of hours served.
(b) MEDICAL COVERAGE. During the Consulting Period, Consultant and his
dependents will be covered under the medical benefit plans generally in effect
from time to time for senior executives of the Company and their dependents,
including dental and prescription drug coverage, if any, provided that the
Company will bear 100% of the costs of any such coverage.
(c) LIFE INSURANCE. During the Consulting Period, the Company shall
provide the Consultant with life insurance coverage equal to $50,000, provided
that the Company will bear 100% of the costs of any such coverage.
(d) BUSINESS EXPENSES. All reasonable and necessary business expenses
incurred by the Consultant in the performance of his services hereunder shall be
promptly reimbursed by the Company in accordance with the Company's standard
expense reimbursement policies applicable to contractors.
(e) LOAN PAYMENT. The Company shall continue to pay the monthly loan
payments that were paid by Commonwealth Scientific Corporation immediately prior
to the Merger for use of an automobile (the "Pre-Merger Automobile") by the
Consultant until such loan payment is paid in full. Upon the payment in full of
such loan, Company shall provide Consultant with a leased vehicle of a make and
model similar to the Pre-Merger Automobile (the "Leased Automobile") for any
remaining portion of the Consulting Period. In addition, during the Consulting
Period, the Company shall pay the full cost of appropriate and customary
automobile insurance for the use by the Consultant of the Pre-Merger Automobile
and the Leased Automobile in accordance with the foregoing.
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(f) DUTIES AS A DIRECTOR. The Consultant's duties as a director of the
Company are independent of his obligations under this Agreement, and any
directors' fees paid to the Consultant shall be excluded from the calculation of
the Consultant's fees under this Agreement. For the period in which the
Consultant is a director of the Company, the Company shall provide directors and
officers liability insurance coverage to the Consultant on the same terms and
only to the extent provided to other directors and officers of the Company.
4. TERMINATION.
4.1 MANNER OF TERMINATION. This Agreement may be terminated prior to
the expiration of the Consulting Period, as follows:
(a) BY THE COMPANY FOR CAUSE. At the option of and by written
notice from the Company, if the Company finds "Cause" for termination. For
purposes of this Agreement, the term "Cause" shall mean (i) any material breach
by Consultant of his obligations under the Stockholder Non-Competition Agreement
dated as of the date hereof between the Consultant and the Company (the
"Stockholder Non-Competition Agreement"); (ii) final conviction by Consultant of
a felony or any offense involving misappropriation of money; or (iii) the
Consultant's willful failure or refusal to perform the Consulting Services
contemplated hereby (which shall be deemed to include, without limitation,
disobeying reasonable directives of the Chief Executive Officer of the Company).
(b) BY CONSULTANT. By the Consultant at any time for any
reason.
(c) DEATH. Upon the death of the Consultant.
4.2 CONSEQUENCES OF TERMINATION. In the event that this Agreement is
terminated prior to the expiration of the Consulting Period by the Company other
than for Cause, the Company will continue to pay the Consultant the Consulting
Fee in the manner set forth in Section 3(a) for the remaining term of the
Consulting Period. In the event that this Agreement is terminated prior to the
expiration of the Consulting Period by the Consultant, or is terminated by the
Company for Cause, all rights and obligations of the parties hereunder will
expire, except that any Consulting Fees and expenses that are owed to the
Consultant for services rendered prior to the date of termination shall be paid
to the Consultant or, if appropriate, his estate.
5. MISCELLANEOUS.
5.1 STATUS. Consultant acknowledges and agrees that his status at all
times shall be that of an independent contractor, and that he may not, at any
time, act as a representative for or on behalf of the Company for any purpose or
transaction, and may not bind or otherwise obligate the Company in any manner
whatsoever without obtaining the prior written approval of the Company therefor.
Except as provided herein,
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Consultant hereby waives any rights as an employee or deemed employee of the
Company or any of its affiliates. The parties hereby acknowledge and agree that
all Consulting Fees paid during the Consulting Period shall represent fees for
his Consulting Services as an independent contractor, and shall therefor be paid
without any deductions or withholdings taken therefrom for taxes or any other
purpose. The Consultant further acknowledges that the Company makes no
warranties as to any tax consequences regarding payment of such Consulting Fees,
and specifically agrees that the determination of any tax liability or other
consequences of the payment set forth above is his sole and complete
responsibility and that he will pay all federal, state and local taxes, if any,
assessed on such payments, but will not be responsible for any taxes or
penalties imposed by any taxing authority against the Company for its failure to
properly report the Consultant's earnings under this Agreement.
5.2 WAIVER. Failure of the Company at any time to enforce any provision
of this Agreement or to require performance by Consultant of any provisions
hereof shall in no way affect the validity of this Agreement or any part hereof
or the right of the Company thereafter to enforce its rights hereunder; nor
shall it be taken to constitute a condonation or waiver by the Company of that
default or any other or subsequent default or breach.
5.3 NOTICES. All notices or other communications hereunder shall not be
binding on either party hereto unless in writing, and delivered to the other
party thereto at the following address:
If to the Company: 000 Xxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx X. XxXxxxxxx
If to Consultant: 000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxxxx, Xx.
Notices shall be deemed duly delivered upon hand delivery thereof at
the above addresses, one day after deposit with a nationally recognized
overnight delivery company, or three days after deposit thereof in the United
States mails, postage prepaid, certified or registered mail. Either party may
change its address for notice by delivery of written notice thereof in the
manner provided.
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5.4 ASSIGNMENT. Except as set forth herein, no rights of any kind under
this Agreement shall, without the prior consent of the Company, be transferable
to or assignable by Consultant or any other person, or, except as provided by
applicable law, be subject to alienation, encumbrance, garnishment, attachment,
execution or levy of any kind, voluntary or involuntary. This Agreement shall be
binding upon and shall inure to the benefit of the Company and its successors
and assigns.
5.5 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the substantive laws of the Commonwealth of Virginia, without
regard to the conflicts of law principles thereof.
5.6 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same document.
5.7 HEADINGS. The headings in this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
5.8 ENTIRE AGREEMENT. THE PARTIES HERETO ACKNOWLEDGE THAT THEY HAVE
READ THIS AGREEMENT, UNDERSTAND IT, AND AGREE TO BE BOUND BY ITS TERMS. This
Agreement and the Shareholder Non-Competition Agreement entered into among the
parties as of the date hereof constitute the entire understanding and agreement
between the parties hereto concerning the subject matter hereof. All
negotiations by the parties hereto concerning the subject matter hereof are
merged into these Agreements, and there are no representations, warranties,
covenants, understandings or agreements, oral or otherwise, in relation thereto
by the parties hereto other than those incorporated herein. No supplement
modification or amendment of this Agreement shall be binding unless executed in
writing by the parties hereto.
INTENDING TO BE LEGALLY BOUND, the parties or their duly authorized
representatives have signed this Agreement as of the date first above written.
CVC, INC.
By:
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Its:
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CONSULTANT
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Xxxxxx X. Xxxxxxxx, Xx.
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