1
EXHIBIT 10.2
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is made and entered into this
24th day of July, 2001, by and between The Xxxxxxxx Group, Inc., hereafter
referred to as "Xxxxxxxx" or "the Company", and Xxxxx Xxxxxx, hereafter referred
to as "Consultant."
WHEREAS, Consultant has significant experience in a variety of areas
relevant to the Company's business, and is very familiar with the Company and
its customers; and
WHEREAS, Consultant is retiring from employment with the Company
effective August 13, 2001 pursuant to a retirement agreement between Consultant
and the Company executed contemporaneously with this Agreement (the "Retirement
Agreement"); and
WHEREAS, Xxxxxxxx wishes to engage Consultant to provide services to
Xxxxxxxx following his retirement in his areas of experience and expertise; and
WHEREAS, Consultant is willing to provide services to Xxxxxxxx in
accordance herewith;
NOW, THEREFORE, IN CONSIDERATION of the mutual promises set forth below,
Xxxxxxxx and Consultant agree as follows:
1. Term. Xxxxxxxx agrees to engage Consultant to provide services to
Xxxxxxxx, and Consultant agrees to provide services to Xxxxxxxx, in accordance
with the terms and provisions of this Agreement, for the period commencing
August 14, 2001 and continuing until August 13, 2011 ("the Term"), unless
earlier terminated as provided below.
2. Description of Consulting Services. Consultant will consult with and
advise Xxxxxxxx in connection with such matters and issues as may be
specifically requested of him from time to time by the President of Xxxxxxxx;
provided, however, that the Company will not request assistance that would
present a conflict of interest with Consultant's other activities. Consultant
shall promptly notify the Company if any assistance requested of him may
constitute a conflict of interest. Consultant agrees to exert his best efforts
to perform all such services as may be requested by the Company; provided,
however, that Consultant shall not be required to provide more than 40 hours of
services in any calendar month. Consultant is free to perform consulting
services or be employed by other businesses or persons provided that such
consulting or employment does not constitute a conflict of interest with the
work actually performed by Consultant under this Agreement on behalf of the
Company, and does not place Consultant in a position where he would be required
to use or disclose Confidential Information of the Company (as defined in
Section 7 below).
3. Compensation. Consultant will be compensated by Xxxxxxxx at an annual
retainer of Two Hundred Thousand Dollars ($200,000.00) per year, payable
annually, on or before the 30th day of January of each year beginning in
January, 2002.
2
4. Independent Contractor. Consultant is an independent contractor. This
Agreement shall not create the relationship of employer and employee, a
partnership, or a joint venture. Consultant shall determine his own schedule,
and the Company shall not control or direct the details and means by which
Consultant performs his work. Consultant shall have no authority to bind the
Company in any contractual manner without the prior authorization and consent of
the Company. Although it is contemplated by the parties that because of his
unique experience and qualifications, any consulting services rendered pursuant
to this Agreement will be performed by Consultant personally, Consultant shall
determine the number of his assistants, partners or employees, if any.
Consultant shall be solely liable for the wages, fringe benefits, work schedules
and work conditions of any such assistants, partners or employees.
5. Taxes. Consultant shall be responsible for and pay all costs of
conducting his business, including but not limited to, the expense and
responsibility for any applicable insurance or city, county, state or federal
licenses, permits, taxes or assessments of any kind. Consultant shall be
responsible for payment of his self-employment taxes including, but not limited
to, income taxes, Social Security taxes, and worker's compensation premiums.
Consultant shall indemnify the Company and hold it harmless from paying such
business costs or taxes.
6. Termination of Agreement. This Agreement shall automatically terminate
at the end of the Term, unless extended in writing signed by both parties. This
Agreement may be terminated by either party in the event of a material breach of
this Agreement or the Retirement Agreement by the other party which is not cured
within 45 calendar days after written notice of such breach is delivered to the
party allegedly in breach, provided, however, that this Agreement may not be
terminated if such breach is not curable within such period and the breaching
party has commenced and is diligently pursuing a cure. This Agreement may be
terminated by Consultant upon thirty (30) calendar days notice to the Company.
In the event that Consultant terminates this Agreement prior to the end of its
Term, Consultant shall be entitled to compensation only for the period of time
during which he was available to provide consulting services prior to such
termination, and shall be entitled to no additional compensation under this
Agreement.
7. Confidentiality. Consultant agrees that during the Term of this
Consulting Agreement and thereafter, he shall keep secret and retain in
strictest confidence, and shall not, without the prior written consent of the
Company, furnish, make available or disclose to any third party (except in
furtherance of the Company's business activities and for the benefit of
Xxxxxxxx) or use for the benefit of himself or any third party, any Confidential
Information. As used in this Agreement, "Confidential Information" shall mean
any information relating to the business or affairs of the Company, its
subsidiaries and affiliates, or their customers and clients, including but not
limited to information relating to financial statements, customer identities,
potential customers, employees, business strategies and information, analyses,
profit margins, or other proprietary information used by the Company in
connection with its business; provided, however, that Confidential Information
shall not include any information which is in the public domain or becomes known
in the industry through no wrongful act on the part of Consultant. Consultant
acknowledges that the Confidential Information is vital, sensitive, confidential
and proprietary to the Company. Nothing in this Agreement shall be construed to
preclude Consultant or his counsel from complying with a lawful court order or
other legal process
2
3
requiring disclosure, written, oral or otherwise, of any Confidential
Information; provided, however, that Xx. Xxxxxx shall immediately notify the
Company in writing of any court order or other legal process which may require
disclosure of any Confidential Information, and shall fully cooperate with the
Company, consistent with his legal obligations, in the event the Company should
decide to intervene in such proceeding or process to attempt to prohibit or
limit any disclosure of the Company's Confidential Information.
a. Effect of Termination. If the Company or Consultant
should terminate this Agreement for any reason, then, notwithstanding such
termination, the confidentiality provisions contained in this Section 7 shall
remain in full force and effect.
b. Remedies Upon Disclosure. The parties agree that any
disclosure or unauthorized use of Confidential Information will cause
irreparable harm and loss, and that money damages might not be a sufficient
remedy for any breach of this Agreement. In the event of a breach or threatened
breach of this Agreement by Consultant, the Company shall be entitled to
injunctive relief or specific performance prohibiting Consultant from
disclosing, in whole or in part, the Confidential Information, or from rendering
services to any individual, business or entity to whom such information has been
disclosed or threatened to be disclosed. In addition, Xxxxxxxx shall be entitled
to all other legal remedies available, including the recovery of damages, based
upon such breach or threatened breach.
8. Waiver of Breach. The waiver by the Company of any breach by the
Consultant of any provision of this Agreement shall not operate or be construed
as a waiver of any subsequent breach by the Consultant.
9. Dispute Resolution. Consultant and the Company shall resolve any
claim, controversy or dispute arising out of or in connection with this
Agreement, or relating to or arising out of any other relationship or incident
between Consultant and the Company, or alleging the violation of either a
statutory or common law duty, or both, by compulsory arbitration.
Notwithstanding the provisions of this Section, the Company may seek and obtain
appropriate restraining orders and temporary or permanent injunctions in a court
proceeding without engaging in arbitration with respect to any alleged violation
of the covenants contained in Section 7. The rules and procedures for
arbitration pursuant to this Agreement are attached to this Agreement.
10. Indemnification. The parties agree to indemnify, defend and hold each
other harmless from any claims, demands, causes of action, liabilities or
expenses, including reasonable attorneys' fees and costs, arising out of any act
or omission of the other party, its employees, agents, representatives or
affiliates. The Company shall defend and fully indemnify Consultant in
connection with any matter (including litigation, investigation or governmental
proceeding) that relates to matters with which Consultant was involved during
the term of this Agreement (the "Xxxxxxxx Matters") to the extent:
(1) Consultant acted in good faith;
(2) Consultant was acting in his official capacity on
behalf of the Company;
(3) Consultant reasonably believed his conduct was in the
Company's best interests;
3
4
(4) Acts or omissions of Consultant are not finally
adjudged to be intentional misconduct or a knowing violation of law; and
(5) It is not finally adjudged that Consultant personally
received a benefit in money, property, or services to which Consultant was not
legally entitled.
The Company shall pay for or reimburse the reasonable expenses incurred
by Consultant in defending himself in advance of final disposition of the
Xxxxxxxx Matters; provided, however that Consultant agrees to repay the advance
if it is ultimately determined that he did not meet the standard of conduct.
11. Assignment. Neither party shall have the right to assign this
Agreement without the express written consent of the other party. In the event
of Consultant's death, the Company shall continue to perform its covenants under
this Agreement for the benefit of Consultant's estate and heirs, including
without limitation paying the amounts due under Section 3 notwithstanding
Consultant's death. In the event of (i) the sale in one or more related
transactions of all or substantially all of The Xxxxxxxx Group, Inc.'s assets,
(ii) the sale of assets of an affiliate of the Company in one or more related
transactions constituting in excess of 50% of the asset value of The Xxxxxxxx
Group, Inc., (iii) any merger or consolidation of The Xxxxxxxx Group, Inc., or a
major affiliate thereof, following which Xxxxx and Xxxxxx Xxxxxxxx holds
directly or indirectly less than a majority of the voting equity securities of
Xxxxxxxx or such Affiliate, or (iv) any sale or purchase of securities or other
transaction, the result of which is that Xxxxx and Xxxxxx Xxxxxxxx holds
directly or indirectly less than a majority of the voting equity securities of
The Xxxxxxxx Group, Inc., its major Affiliates or any surviving entity, then the
Company shall take one of the following actions, at its option: (a) require a
successor that has sufficient financial and operational capability to adequately
and faithfully satisfy the obligations called for under this Agreement for the
remaining term of this Agreement to expressly assume in writing the Company's
obligations hereunder; (b) demonstrate to Consultant's reasonable satisfaction
that Xxxxxxxx continues to have sufficient financial and operational capability
to adequately and faithfully satisfy the obligations called for under this
Agreement for the remaining term of this Agreement; (c) implement other
financial arrangements that will reasonably ensure the satisfaction of the
obligations called for under this Agreement for the remaining term of this
Agreement; or (d) immediately pay to Consultant without discount the remaining
financial obligations of the Company under this Agreement.
12. Notice. Any demand, request, or notice which either party hereto
desires, or is required to make or deliver to the other shall be in writing and
shall be deemed delivered when personally delivered, delivered by overnight
express carrier as reflected in a signed delivery receipt, or three days after
being deposited in the United States mail, in registered or certified form,
return receipt requested, addressed as follows:
To the Company: The Xxxxxxxx Group, Inc.
Attn: Xx. Xxxxx Xxxxxxxx
Suite 4000, 0000 0xx Xxx.
Xxxxxxx, XX 00000
4
5
To Consultant; Xx. Xxxxx Xxxxxx
0000 000xx Xxx. XX
Xxxxxxxxx, XX
13. Entire Agreement. Although this Consulting Agreement is entered into
pursuant to and contemporaneously with a Retirement Agreement between Consultant
and the Company, this document contains the entire agreement of the parties
concerning the details of this consulting arrangement, and all promises,
representations, understandings, arrangements and prior agreements concerning
the details of the consulting arrangement are merged herein and superseded
hereby. The provisions of this Agreement may not be amended, modified, repealed,
waived, extended or discharged except by an agreement in writing signed by the
party against whom enforcement of any amendment, modification, repeal, waiver,
extension or discharge is sought.
14. Severability. If any provision of this Agreement is invalid or
unenforceable in any jurisdiction, the other provisions herein shall be remain
in full force and effect in such jurisdiction and shall be liberally construed
in order to effectuate the purpose and intent of this Agreement, and the
invalidity or unenforceability of any provision of this Agreement in any
jurisdiction shall not affect the validity or enforceability of any such
provision in any other jurisdiction.
15. Authorization. The Company has the corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder and
the undersigned officer of the Company is authorized to execute this Agreement
on the Company's behalf.
IN WITNESS WHEREOF, the parties have executed this Consulting Agreement
on or about the date set forth above.
THE XXXXXXXX GROUP, INC. XXXXX XXXXXX
By /s/ Xxxxx Xxxxxxxx /s/ Xxxxx Xxxxxx
-------------------------------- ----------------------------------------
Its President Date 7/24/01
------------------------------- ------------------------------------
Date: 7/24/01
-----------------------------
5
6
ARBITRATION RULES AND PROCEDURES
The rules and procedures of the American Arbitration Association in
effect when any arbitration occurs shall govern the procedures of any
arbitration between the Company and Consultant ("Parties"). Any arbitration
shall take place in Seattle, Washington.
A single neutral arbitrator shall conduct the arbitration hearing and
decide the issues submitted to arbitration. If within 21 calendar days of the
receipt by either Party of a written demand for arbitration from the other Party
the Parties cannot agree on a single neutral arbitrator, either Party may
request a panel of seven arbitrators experienced in commercial disputes from the
American Arbitration Association's Seattle, Washington office. The Parties shall
alternatively strike names from the panel until one arbitrator remains, who
shall then act as the single neutral arbitrator.
The Parties grant the following authority and jurisdiction to the single
neutral arbitrator. The arbitrator shall determine the lawfulness under federal,
state, and local law, whether statutory or common law, or both, of acts or
omissions, or both, that produced the complaint, controversy, or dispute subject
to arbitration. In addition, the arbitrator shall decide the appropriateness of
the Parties' acts or omissions that comprise the complaint, controversy, or
dispute submitted to arbitration, given the rights and duties under this
Agreement. Further, the arbitrator may interpret and determine the rights of the
Parties under the Agreement and any other agreement to which they are both
parties.
The single neutral arbitrator may fashion either equitable or legal
relief, or both, as limited by this provision. The arbitrator may award full
reimbursement to the prevailing Party for such out-of-pocket expenses or losses
together with any other damages to which the prevailing Party is entitled,
including, without limitation, reasonable attorneys' fees, costs and expenses of
arbitration and back pay that the evidence supports. However, the arbitrator
shall lack any authority to grant exemplary or punitive damages. Finally, the
arbitrator may assess interest on any award at the legal rate of interest due on
judgments in Washington State.
The arbitrator's decision shall bind the Parties as a final decision
enforceable in a court of competent jurisdiction.
The prevailing Party may confirm the arbitrator's award in a court of
competent jurisdiction. If either Party refuses to satisfy an arbitration award,
then the other Party shall have the right to receive reimbursement for all of
its costs incurred to confirm that award, including a reasonable attorneys' fee.
6
