Exhibit 99(e)
CONSULTING AGREEMENT
CONSULTING AGREEMENT ("Agreement") made as of the 27th day of February,
1998, between Bacou USA Safety, Inc., a Delaware corporation, (the "Company")
and Xxxxxx X. Xxxxxx, an individual residing at 0000 Xxxxxxxxx Xxxx, Xxxxxx,
Xxxxxxxxxx 00000 ("Consultant"). As used in this Agreement, capitalized terms
not otherwise defined shall have the same meaning herein as provided in the
Asset Purchase Agreement (defined below).
W I T N E S S E T H:
WHEREAS, the Company is a wholly-owned subsidiary of Bacou USA, Inc.
("Bacou"); and
WHEREAS, pursuant to an Asset Purchase Agreement dated as of December 31,
1997 ("Asset Purchase Agreement") with Xxxxxx X. Xxxxxx & Associates, Inc., a
California corporation ("Seller"), Company has purchased substantially all of
the assets and business of the Seller (the "Acquisition"); and
WHEREAS, Consultant is the founder, Chairman and principal stockholder of
the Seller; and
WHEREAS, the Seller was in the business of developing, manufacturing and
selling hearing protection devices ("Business") and the Company, by virtue of
the Acquisition, is now engaged in the Business; and
WHEREAS, Consultant is experienced and knowledgeable in the process of the
development, manufacture and marketing of hearing protection devices (the
"Consulting Field"); and
WHEREAS, Consultant desires to consult with the Company and it is a
condition to the Closing of the Acquisition that Consultant enter into this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. ENGAGEMENT. Upon the terms and conditions contained in this Agreement,
the Company hereby retains Consultant, and Consultant hereby accepts the
engagement, and agrees to perform Consulting Services (as defined below) for the
Company in the Consulting Field.
2. CONSULTING SERVICES; DIRECTOR NOMINATION. (a) During the term of this
Agreement, as defined in section 5 below (the "Term"), at the request of the
Company, Consultant shall give to the Company the benefit of Consultant's skill
and advice in the Consulting Field as the Consultant may offer to the Company or
as the Company may from time to time reasonably request which services may be
rendered over the telephone and the Consultant shall annually attend and assist
the Company in its marketing efforts for the duration of each of the National
Safety Congress, the National Hygiene Congress and one major international trade
show designated by the Company (the "Consulting Services").
(b) Each year during the Term of this Agreement, the Directors of Bacou
then serving on the nominating committee shall nominate the Consultant to serve
as a member of Bacou's Board of Directors.
(c) For so long as Consultant is providing Consulting Services under this
Agreement he may utilize his existing offices at Seller's San Diego facility.
3. CONSULTING FEES; BACOU OPTIONS. (a) Consultant's fees for all Consulting
Services rendered under this Agreement during the Term shall be paid at the
annual rate of $200,000, payable in equal monthly installments of $16,667 in
arrears.
(b) In addition, Company shall make contingent payments to Consultant in
accordance with the following provisions:
(i) Within sixty (60) days following the end of each
calendar quarter, Company shall pay to Consultant in cash an
amount equal to four percent (4%) of the Net Sales (as
defined below) of any New Product (as defined below) with
respect to such calendar quarter (a "Royalty Payment"),
provided that no Royalty Payments shall become due hereunder
for any New Product until the cumulative Net Sales of such
New Product shall exceed $3,000,000, whereupon all accrued
and unpaid Royalty Payments from the date of first sale for
such New Product shall become due and payable. Royalty
Payments with respect to each New Product shall continue
until the expiration of the US patent relating to such New
Product;
(ii) As used in this Agreement, the following terms
shall have the meanings set forth below:
(A) "Net Sales" shall mean the gross invoice
amount received from customers for any New Product sold
by the Company and its affiliates throughout the world,
less cash and quantity discounts and allowances, taxes,
freight charges and returns as calculated by the
Company's accounting personnel.
(B) "New Product" shall mean each and every new
product relating to the Business developed and marketed
by the Company,
(x) which is patented by the Company or for
which a patent application is submitted in good
faith, or
(y) for which a patent could be obtained but
which the Company determined not to file in order
to protect its trade secret,
and is either principally derived from ideas conveyed by Consultant to the
Company during the Term of the development of which was initiated principally by
Consultant during the Term; PROVIDED, HOWEVER, that the product "Multi-Max Dual
Earplug (patent pending)", shall be deemed a New Product for purposes of this
Section 3.
(iii) As soon as may be practicable after the last day
of each calendar quarter, but not later than sixty (60) days
following the end of such calendar quarter, Company will
deliver to Consultant a statement setting forth in
reasonable detail its calculation of the Net Sales of the
New Products for such calendar quarter, and the amount of
any Royalty Payment to be paid to Consultant. If within
thirty (30) days after the delivery of such statement
Consultant has not given written notice to Company disputing
such statement and indicating the basis of such dispute,
that statement shall be deemed correct for all purposes. In
the event Consultant gives Company such notice of dispute
within such thirty (30) day period, Consultant and Company
shall use their best efforts to settle the dispute within
thirty (30) days after the giving of such notice.
(iv) Consultant shall have the right on a quarterly
basis and at his expense to have his accounting
representative audit the cost calculation of Royalty
Payments. If the result of such audit reveals more than a
five percent (5%) underpayment of Royalty Payments from any
quarterly period, the Company shall reimburse the Consultant
for the cost of such audit as well as pay consultant any
deficiency which is owed.
(c) Effective upon the Closing Date, immediately following the due
execution of this Agreement, Bacou shall grant to Consultant the option to
purchase an aggregate of 50,000 shares of the common stock, $.001 par value, of
Bacou at a price of $17.00 per share. The option shall commence on the date of
this Agreement and shall continue for 10 years from the date of this Agreement,
unless earlier terminated by Consultant. Consultant shall execute and agrees to
be bound by the terms set forth in Bacou's standard form of Stock Option
Agreement, a copy of which is attached hereto.
4. EXPENSES. The Company shall arrange and pay for all reasonable travel
and other expenses (including first-class airfare for national and international
travel) incurred by Consultant at the Company's request in connection with his
attendance at the trade shows (described in Section 2) at the Company's request
upon presentation of expense statements, vouchers, and other supporting
documentation in such form and containing such information as the Company may
from time to time request.
5. TERM. The term of Consultant's engagement to perform Consulting Services
(the "Term") shall commence on the date of this Agreement, and shall continue
for a period of five years, unless extended by mutual agreement by the parties
hereto. Royalty Payments payable pursuant to Section 3(b) shall not terminate as
a result of the expiration of the term of this Agreement.
6. INDEPENDENT CONTRACTOR. In the performance of the Consulting Services,
Consultant shall be deemed to be, and shall be, an independent contractor, and
not a joint venturer, partner, employee or agent with or of the Company. Without
limiting the generality of the foregoing, neither the Company nor Consultant
shall have the power to bind the other, contractually or otherwise; Consultant
shall be entitled only to the compensation and reimbursement set forth in
sections 3 and 4 of this Agreement and not to any other so-called "fringe
benefits" and Consultant shall be solely responsible for any and all state and
federal taxes, withholding, FICA, FUTA, worker's compensation, or other payments
due in respect of the compensation paid to Consultant by the Company.
7. ASSIGNMENT. This Agreement shall bind and inure to the benefit of only
Consultant, the Company and the Company's successors and assigns, and the
Consultant's legal representatives, estate or intestate distributees. The
Company may assign its rights and obligations under this Agreement, in the
Company's sole discretion, by giving Consultant written notice of such
assignment. Consultant may not assign any of Consultant's rights or delegate any
of Consultant's obligations under this Agreement without the express prior
written consent of the Company.
8. CONFIDENTIAL INFORMATION.
(a) Consultant shall, both prior to and after termination of this
Agreement, maintain in confidence and not use the Proprietary Information
relating to the Business, as defined below. Maintaining the Proprietary
Information in confidence shall include refraining from disclosing Proprietary
Information to any third party, and refraining from using the Proprietary
Information for the account of Consultant or of any other person or business
entity. Consultant agrees not to make any copies of the Proprietary Information
and promptly upon request, whether during or after the Term, to return to the
Company any and all documentary, machine-readable or other tangible elements or
evidence of the Proprietary Information and any copies of the same that may be
in Consultant's possession or under Consultant's control.
(b) "Proprietary Information" includes any writing, drawing, logo, computer
program, computer database, manual, trade name, trademark, service xxxx or other
material registered or otherwise protected or protectable under state, federal,
or foreign patent, trademark, copyright, or similar laws; any trade or business
secrets of the Company or its affiliates and any technical or business materials
that are treated by the Company or its affiliates as confidential or
proprietary, including, but not limited to, information concerning: customer
lists, salaries and fees paid by the Company or its affiliates, general business
operations, research and development, ideas, discoveries, inventions and
improvements, manufacturing processes, costs, profits, sales, marketing
strategies, distribution procedures and agreements, methods of doing business,
servicing clients, customer relations, and of costing and making charge for
services and products, business forms developed by or for the Company or its
affiliates, form and content of bids, proposals and contracts, the Company's
internal reporting methods, technical and Company data, documentation and
drawings, all whether in writing, oral or machine-readable form, software
programs and databases, however embodied, diagnostic techniques, and information
obtained by or given to the Company or its affiliates about or belonging to its
customers, potential customers or others.
9. RIGHTS TO INVENTIONS.
(a) Consultant agrees to disclose to the Company all works, ideas and
inventions relating to the Business, whether or not subject to patent or
copyright protection, made, conceived or actually or constructively reduced to
practice by Consultant during the Term or prior thereto, whether solely or
jointly with others, or which refer to or are suggested by or grow out of
Consultant's performance of the Consulting Services or from any information
obtained by Consultant in discussions and meetings with employees of the Company
or any of its affiliates.
(b) Consultant further hereby assigns and agrees to assign said works,
ideas and inventions to the Company relating to the Business and shall, at the
Company's expense, assist the Company in every possible way to protect such
ideas and inventions, including but not limited to signing patent and/or
copyright applications, oaths and assignments in favor of the Company relating
to such works, ideas and inventions both in the United States and in any and all
foreign countries.
(c) Consultant agrees that all contractual rights, works, ideas,
inventions, documents and data developed in connection with performance of the
Consulting Services in the Consulting Field shall become and remain the
exclusive property of the Company and the Company shall have the right to use
them for any purpose without any additional compensation to Consultant.
10. NON-COMPETITION. (a) During the Term of this Agreement, and thereafter
as long as the Company is making Royalty Payments under Section 3(b) at the rate
of $300,000 per quarter, the Consultant agrees that he will not anywhere in the
world engage, either directly or indirectly, individually or as an owner,
partner, joint venturer, employee, officer, director, stockholder, consultant,
independent contractor or lender of or to any corporation, holding company or
other business entity which is in or competes with the Business. Notwithstanding
the foregoing, the Consultant may own five (5%) percent of the securities of any
business in competition with the Business which securities are regularly traded
on a public exchange, provided that any such ownership shall not result in the
Consultant becoming a record or beneficial owner at any time of more than five
(5%) percent of equity securities of said business entity.
(b) The Consultant shall not during the Term of this Agreement employ and
for five years thereafter, retain or arrange to have any other person or entity
employ or retain any person who was employed by Company or any of its affiliated
companies having an annual compensation of at least U.S. $50,000 per annum
during the Term of this Agreement unless approved by the Company in writing,
which approval will not be unreasonably withheld.
(c) If any provision of this Section is held to be unenforceable because of
the scope, duration or area of its applicability or otherwise, the legal entity
making that determination will have the power to modify the scope, duration or
area, or all of them, and the provision will then apply in its modified form.
11. TERMINATION. (a) This Agreement shall terminate upon expiration of the
Term, except (i) that the Company shall continue to be obligated to make Royalty
Payments thereafter if required under Section 3(b) and Consultant shall remain
subject thereafter to the provisions of Section 10 for so long as the Company is
making Royalty Payments under Section 3(b) at the rate of at least $300,000 per
quarter. In addition, following such termination the Consultant shall be
obligated to comply with any nondisclosure obligations applicable to Consultant
under law or under this Agreement, including without limitation those in
sections 8 and 9 above, and to return all of the Company's property, including,
without limitation, any proprietary or confidential information of the Company
or of third parties obtained by Consultant from the Company and property
described in section 9 above.
(b) Consultant may terminate this Agreement following thirty (30) days
written notice of a material default in the performance of the Company's
obligations under this Agreement, provided that such default has not been cured
during such thirty (30) day period, in which event the Company shall remain
liable to make Royalty Payments pursuant to Section 3(b).
12. NO CONFLICTS. Consultant represents and warrants to the Company that
performance of Consultant's obligations under this Agreement does not and will
not violate any written or oral contract, agreement, or court order by which
Consultant is bound and Consultant covenants not to create such a violation
during the Term of this Agreement including, without limitation, such violation
created by using any information belonging to any third party, that would be
characterized as Proprietary Information if such information belonged to the
Company.
13. SEVERABILITY. Should any provision of this Agreement be held by a court
of competent jurisdiction to be unenforceable, or enforceable only if modified,
such holding shall not affect the validity of the remainder of this Agreement,
which shall continue to be binding upon the parties hereto. The parties further
agree that any such court is expressly authorized to modify any such
unenforceable provision of this Agreement in lieu of severing the unenforceable
provisions from this Agreement in its entirety, whether by rewriting the
offending provision, adding additional language to this Agreement or making such
other modifications as the court deems warranted to carry out the agreement of
the parties. The parties expressly agree that this Agreement as so modified by
the court shall be binding upon and enforceable against each of them.
14. ARBITRATION. Notwithstanding the fact that the parties shall be
entitled to equitable relief in order to enforce certain provisions hereunder
(e.g., temporary restraining orders or injunctive relief), any dispute,
controversy or claim arising out of or relating to this Agreement, or the breach
hereof, shall be settled by arbitration in accordance with the "Commercial
Arbitration Rules" of the American Arbitration Association in effect on the date
of this Agreement, except as varied below. The site of any such arbitration
shall be Los Angeles, California and any award shall be deemed to be a Los
Angeles, California award. There shall be a single arbitrator who shall be
admitted to practice law in California, with no less than ten (10) years
experience in the handling of commercial or corporate matters or disputes. The
arbitrator shall render a written decision stating his reasons therefor, and
shall render an award within six (6) months of the request for arbitration, and
such award shall be final and binding upon both parties. Judgment upon the award
rendered by the arbitrator may be entered in any court of competent jurisdiction
in any state of the United States or country or application may be made to such
court for a judicial acceptance of the award and an enforcement, as the law of
such jurisdiction may require or allow. The substantive law to be applied to any
case determined pursuant to this Section 13 is that of the State of California.
The expense of arbitration shall be borne by the respective parties except to
the extent that the arbitrators shall determine that the entire expense shall be
borne by a single party.
15. GENERAL PROVISIONS.
(a) Waiver of any provision of this agreement, in whole or in part, in any
one instance shall not constitute a waiver of any other provision in the same
instance, nor any waiver of the same provision in another instance, but each
provision shall continue in full force and effect with respect to any other
then-existing or subsequent breach.
(b) Any notice required or permitted under this agreement shall be given in
writing by delivery in hand or by postage prepaid, registered or certified mail,
return receipt requested to the parties at their respective addresses specified
in the Asset Purchase Agreement, or at such other address for a party as that
party may specify by notice. Notice shall be effective upon receipt.
(c) This agreement: (i) may be executed in any number of counterparts, each
of which, when executed by both parties to this agreement shall be deemed to be
an original, and all of which counterparts together shall constitute one and the
same instrument; (ii) shall be governed by and construed under the laws of the
State of California applicable to contracts made, accepted, and performed wholly
within California, without application of principles of conflicts of laws; (iii)
constitutes the entire agreement of the parties with respect to its subject
matter, superseding all prior oral and written communications, proposals,
negotiations, representations, understandings, courses of dealing, agreements,
contracts, and the like between the parties in such respect; (iv) may be
amended, modified, or terminated, and any right under this agreement may be
waived in whole or in part, only by a writing signed by both parties; (v)
contains headings only for convenience, which headings do not form part, and
shall not be used in construction, of this agreement; (vi) shall bind and inure
to the benefit of the parties and their respective legal representatives,
successors and permitted assigns; and (vii) is not intended to inure to the
benefit of any third-party beneficiaries.
(d) The obligations imposed by this agreement are unique. Breach of any of
such obligations would injure the parties to this agreement; such injury is
likely to be difficult to measure; and monetary damages, even if ascertainable,
are likely to be inadequate compensation for such injury. Therefore, the parties
to this agreement acknowledge and agree that protection of the respective
interests in this agreement would require equitable relief, including specific
performance and injunctive relief, in addition to any other remedy or remedies
that the parties may have at law or under this agreement, including, without
limitation, entitlement to reimbursement by the breaching party or parties of
the legal fees and expenses of the injured party or parties prevailing in any
such suit.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
BACOU USA SAFETY, INC.
By: /s/ Xxxxxx Xxxxxx
---------------------------------
Name: Xxxxxx Xxxxxx
Title: Chairman, President and
Chief Executive Officer
By: /s/ Xxxxxx X. Xxxx, Xx.
---------------------------------
Name: Xxxxxx X. Xxxx, Xx.
Title: Vice Chairman, Secretary and Treasurer
/s/ Xxxxxx X. Xxxxxx
-------------------------------------
Xxxxxx X. Xxxxxx
Acknowledged and Agreed solely with respect to
Section 2(b) and 3(c):
BACOU USA, INC.
By: /s/ Xxxxxx Xxxxxx
----------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice Chairman, President and
Chief Executive Officer
By: /s/ Xxxxxx X. Xxxx, Xx.
----------------------------------
Name: Xxxxxx X. Xxxx, Xx.
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
