EXHIBIT 10.1
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CONSULTING AGREEMENT
This CONSULTING AGREEMENT (this "Agreement") is made as of September 16, 2004,
by and between WESTERN POWER & EQUIPMENT CORP., an Oregon corporation (the
"Company"), and H. Xxxxxxx Xxxx, an individual residing at Xxxxx 0 Xxx 0000,
Xxxxxxxxx, XX 8332 (the "Consultant").
RECITALS
A. The Company is an Oregon corporation engaged in the construction and
industrial equipment industry.
B. Effective September 15, 2004, the Company has acquired the business and
assets of Arizona Pacific Materials, LLC (the "Business").
C. The Company desires to retain Consultant as a consultant, and
Consultant wishes to serve as a consultant to the Company, upon the
terms and subject to the conditions set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS.
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1.
"AGREEMENT" shall have the meaning set forth in the preamble.
"BOARD OF DIRECTORS" shall mean the board of directors, or similar
governing body, of the Company.
"STOCK COMPENSATION" shall have the meaning set forth in Section 3.2.
"COMPANY" shall have the meaning set forth in the first paragraph of
this Agreement.
"CONSULTANT" shall have the meaning set forth in the first paragraph of
this Agreement.
"CONSULTING PAYMENT" shall have the meaning set forth in Section
3.1(a).
"DISABILITY" shall have the meaning set forth in Section 4.2.
"EFFECTIVE DATE" shall mean the date first above written.
"FOR CAUSE" shall have the meaning set forth in Section 4.3.
"GOOD REASON" shall have the meaning set forth in Section 4.3.
"PERSON" shall mean any individual, corporation (including any
non-profit corporation), general or limited partnership, limited
liability company, joint venture, estate, trust, association,
organization or governmental body.
"TERM" shall have the meaning set forth in Section 2.2.
2. CONSULTING TERMS AND DUTIES.
2.1 Consulting Services. The Company hereby retains Consultant, and
Consultant hereby agrees to provide consulting services to the Company,
upon the terms and subject to the conditions set forth in this
Agreement.
2.2 Term. The term of this Agreement shall begin on the Effective Date
and shall, unless earlier terminated in accordance with the provisions
of Section 4, end on the third anniversary of the Effective Date (the
"Term").
2.3 Duties. Consultant shall assist the Company in acquiring and
managing other aggregate/minerals/raw materials companies, raising
capital and securing financing for same, and shall report to, and
perform such duties as are requested by, the Chief Executive Officer of
the Company.
3. COMPENSATION.
3.1 Basic Compensation.
(a) Consulting Payment. Consultant shall be paid an
annual consulting payment of $150,000 (the "Consulting Payment").
The Consulting Payment shall be payable in equal periodic
installments, but no less frequently than monthly.
(b) Expenses. The Company shall pay on behalf of
Consultant (or reimburse Consultant for) reasonable expenses
incurred by Consultant at the request of, or on behalf of, the
Company in the performance of Consultant's duties pursuant to this
Agreement, and in accordance with the Company's policies.
Consultant shall file expense reports with respect to such expenses
in accordance with the Company's policies. Consultant shall submit
written requests for such reimbursement together with supporting
documents in reasonable detail.
3.2 Convertible Preferred Stock Compensation. Within 30 days of the
date of this Agreement, WPEC shall deliver to the Consultant an
aggregate of 1,000,000 shares of Series A Convertible Preferred Stock
of WPEC (the "Preferred Stock"). WPEC shall issue the Preferred Stock
in Consultant's name or any designee(s) of Consultant, as Consultant
may request. Such Preferred Stock shall have the rights, privileges,
conversion terms and conditions, and designations set forth in that
Certificate of Designation attached hereto as Exhibit A.
4. TERMINATION.
4.1 Events of Termination. The Term, Consultant's Consulting Payment,
and Convertible Preferred Stock Compensation and any and all other
rights of Consultant under this Agreement or otherwise as a consultant
to the Company shall terminate (except as otherwise provided in this
Section 4):
(a) upon the death of Consultant;
(b) upon the Disability of Consultant (as defined in
Section 4.2), immediately upon notice from either party to the
other;
(c) immediately upon notice from the Company to
Consultant that the Company is terminating Consultant's consulting
services For Cause (as defined in Section 4.3), or at such later
time as such notice may specify; or
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(d) immediately upon notice from Consultant to Company
that Consultant is terminating Consultant's contract with company
due to a Change in Control or Ownership of Company (as defined in
Section 4.3), or at such later time as such notice may specify.
4.2 Definition of "Disability". For purposes of Sections 4.1 and 4.4,
Consultant shall be deemed to have a "Disability" if, for physical or
mental reasons, Consultant is unable to perform Consultant's duties
under this Agreement for 90 consecutive days, or 120 days during any
twelve month period, as determined in accordance with this Section 4.2.
The Disability of Consultant shall be determined by the Board of
Directors in consultation with a medical doctor selected by it.
Consultant shall submit to a reasonable number of examinations by the
medical doctor making the determination of Disability under this
Section 4.2, and Consultant hereby authorizes the disclosure and
release to the Company of such determination and all supporting medical
records. If Consultant is not legally competent, Consultant's legal
guardian or duly authorized attorney-in-fact shall act in Consultant's
stead under this Section 4.2 for the purposes of submitting Consultant
to the examinations, and providing the authorization of disclosure,
required under this Section 4.2.
4.3 Definitions of "For Cause"; "Good Reason"; "Change of Control of
Ownership".
(a) For purposes of this Agreement, the phrase "For
Cause" means: (i) Consultant's willful and repeated failure to
substantially perform his duties hereunder or to adhere to any
written Company policy if Consultant has been given 20 days' prior
written notice of such failure and does not cure such failure by
the end of such 20-day period; (ii) the appropriation (or attempted
appropriation) of a material business opportunity of the Company,
including attempting to secure or securing any personal profit in
connection with any transaction entered into on behalf of the
Company; (iii) Consultant's breach of any of the covenants
contained in Section 5 or 6; (iv) the misappropriation (or
attempted misappropriation) of any of the Company's funds or
property; (v) Consultant's willful engagement in gross misconduct
injurious to the Company, or (vi) the conviction of, or the
entering of a guilty plea or plea of no contest with respect to, a
felony.
(b) For purposes of this Agreement, the phrase "Good
Reason" shall mean (i) the failure of the Company to perform or
observe any of the material terms or provisions of this Agreement,
and the continued failure of the Company to cure such default
within twenty (20) days after written notice of such default given
to the Company by Consultant, (ii) the assignment of duties
inconsistent with Consultant's position, duties, responsibilities
and status with the Company without Consultant's consent, and the
failure of the Company to rescind such assignment within twenty
(20) days after written notice of Consultant's objection to such,
which notice shall with respect to the assignment of duties
describe specifically the nature of such inconsistency or (iii) the
decrease by the Board of Directors of Consultant's Consulting
Payment by more than ten percent (10%).
(c) For purposes of this Agreement, the phrase "Change
of Control or Ownership" shall mean a change in control or
ownership of more than 25% of the outstanding stock of Company or
Company's parent corporation.
4.4 Termination Pay. Effective upon the termination of Consultant under
this Agreement, the Company shall be obligated to pay Consultant (or,
in the event of his death, his designated beneficiary) only such
compensation as is provided in this Section 4.4, and in lieu of all
other amounts and in settlement and complete release of all claims
Consultant may have against the Company relating to his provision of
consulting services to the Company.
(a) Termination by the Company other than For Cause or
by Consultant with Good Reason. If the Company terminates this
Agreement (other than For Cause or by reason of Consultant's
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Disability or death) or Consultant terminates this Agreement with
Good Reason, the Company shall pay Consultant the Consulting
Payment through the end of the Term, at the times such payments
would otherwise have been made.
(b) Termination by the Company For Cause or Due to
Disability or death of Consultant or by Consultant without Good
Reason. If the Company terminates this Agreement For Cause, or Due
to Disability or death of Consultant, or if Consultant terminates
his consulting services without Good Reason, Consultant shall be
entitled to receive his Consulting Payment only through the date
such termination is effective, and shall not be entitled to any
Bonus Compensation for the fiscal year during which such
termination occurs or any subsequent fiscal year.
5. NON-DISCLOSURE COVENANT.
5.1 During the Term and thereafter, Consultant shall keep secret and
retain in strictest confidence all confidential matters of the Company
including the Company's know-how, trade secrets, client and supplier
lists, details of client, supplier, subcontractor, and consultant
contracts, pricing policies, operational methods, marketing plans and
strategies, product development plans, acquisition or bidding
techniques and plans, technical processes, inventions and research
project, business acquisition plans, personnel acquisition plans, and
other similar information unless (i) such information is generally
available to the public without restriction; (ii) Consultant is
requested by the Board of Directors or a committee thereof to disclose
such confidential information; (iii) such information is being provided
to a customer, vendor, or consultant of the Company in the ordinary
course of business; or (iv) Consultant is compelled to disclose such
confidential information by order, inquiry, or request by a court of
law, governmental agency, or other source of authority and prompt
notice of such order is given to the Company which may challenge such
order.
5.2 All lists, records, and other non-personal documents or papers
(including all copies thereof), including such items stored in computer
memories, on microfiche, or any other media made or compiled by or on
behalf of Consultant or made available to Consultant relating to the
Company are and shall be the property of the Company and shall be
delivered to the Company upon termination of this agreement. All
inventions, including any procedures, formulas, methods, processes,
uses, apparatuses, patters, designs, drawings, devises, or
configurations of any kind, and all improvements to them which are
developed, discovered, made, or produced, trade secrets or information
used by any or all of the Company shall be the exclusive property of
the Company and shall be delivered to the Company upon termination of
this Agreement.
6. NON-COMPETITION AND NON-INTERFERENCE.
6.1 Until the latest to occur of (i) termination of Consultant; (ii)
three years following the date of termination of this Agreement and;
(iii) such period as Consultant shall continue to receive the
Consulting Payment under this agreement - Consultant shall not,
directly or indirectly, whether individually or as an employee,
stockholder, partner, joint venturer, agent or other representative of
any other person, firm, corporation, or other business entity engage in
any business which is competitive with the business of the Company. As
used herein, the term "business which is competitive with the
businesses of the Company" shall only mean any person, firm,
corporation, or other business entity doing business in the territories
serviced by the Company under its dealership agreements with its
suppliers if 10% or more of the net revenues of such business are
derived from the sale, rental, parts, servicing, or other distribution
of small, medium, or heavy construction or industrial equipment of the
nature then being sold by the Company including, without limitation,
any such equipment manufactured by Case Corporation or any other
corporation manufacturing equipment in competition with the equipment
then manufactured by Case Corporation. In addition, the term "business
which is competitive with the businesses of the Company" shall mean any
person or business entity doing business in the territories serviced by
the Company if 10%
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or more of the net revenues of such business are derived from the sale
of aggregate/minerals/raw materials of the nature then being sold by
the Company. 6.2 If Consultant is terminated for any reason other than
with Good Reason, Consultant shall not, directly or indirectly, solicit
any employee or consultant of the Company, or encourage any such
employee or consultant to leave employment with the Company.
7. GENERAL PROVISIONS.
7.1 Binding Effect; Delegation of Duties Prohibited. This Agreement
shall inure to the benefit of, and shall be binding upon, the parties
hereto and their respective successors, assigns, heirs and legal
representatives. The duties and covenants of Consultant under this
Agreement, being personal, may not be delegated. This Agreement shall
become effective on the Effective Date provided it has been executed by
both parties.
7.2 Notices. All notices, consents, waivers and other communications
under this Agreement shall be made in writing and shall be deemed to
have been duly given when (a) delivered by hand (with written
confirmation of receipt), (b) sent by facsimile (with written
confirmation of receipt) or (c) when received by the addressee, if sent
by a nationally recognized overnight delivery service (receipt
requested), in each case to the appropriate addresses and facsimile
numbers set forth below (or to such other addresses and facsimile
numbers as a party may designate by notice to the other parties):
If to the Company:
Western Power & Equipment Corp.
0000-X X.X. 000xx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Board of Directors
Telecopy: (000) 000-0000
If to Consultant:
To the address set forth in the Preamble.
7.3 Entire Agreement; Amendments. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements and understandings, oral or
written, between the parties hereto with respect to the subject matter
hereof. This Agreement may not be amended orally, but only by an
agreement in writing signed by the parties hereto.
7.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington without regard to
conflicts of laws principles.
7.5 Jurisdiction. Any action or proceeding seeking to enforce any
provision of, or based on any right arising out of, this Agreement may
be brought against either of the parties in the courts of the State of
Washington, County of Xxxxx or, if it has or can acquire jurisdiction,
in the United States District Court for the Western district of
Washington, and each of the parties hereto hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts)
in any such action or proceeding, and waives any objection to venue
laid therein.
7.6 Section Headings, Construction. The headings of Sections in this
Agreement are provided for convenience only and shall not affect its
construction or interpretation. All references to "Section" or
"Sections" refer to the corresponding Section or Sections of this
Agreement unless otherwise specified. All words used in this Agreement
shall be construed to be of such gender or number as the circumstances
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require. Unless otherwise expressly provided, the word "including" does
not limit the preceding words or terms.
7.7 Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement shall remain in full force and effect. Any
provision of this Agreement held invalid or unenforceable only in part
or degree shall remain in full force and effect to the extent not held
invalid or unenforceable.
7.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original copy of
this Agreement and all of which, when taken together, shall be deemed
to constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first above written.
WESTERN POWER & EQUIPMENT CORP.
By:_______________________________ _____________________________
Name: H. Xxxxxxx Xxxx
Title:
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