1
EXHIBIT 10.5
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "AGREEMENT") is made as of the 24th day
of April, 1998 by and between Xxxxx Investments, Inc., an Illinois corporation
(the "COMPANY"), and Wellgate International, Ltd., a British Virgin Islands
corporation ("CONSULTANT").
RECITALS
A. Consultant is an international consulting firm that has retained the
services of three (3) former executives of Dominion Bridge Corporation, a
Delaware corporation ("DBC"), and certain subsidiaries and affiliates of DBC
(collectively with DBC, the "DOMINION BRIDGE GROUP"), namely, Xxxxxx X.
Xxxxxxxxx ("MARENGERE"), Xxxxxxx X. Xxxxxxxxx ("XXXXXXXXX") and Xxxx Xxxxx
("XXXXX") (collectively, the "EXECUTIVES").
B. The Company and/or certain of its affiliates (the "XXXXX GROUP") are
shareholders of common stock of DBC.
C. The Company desires to retain Consultant, and Consultant desires to
be so retained, subject to the terms, conditions and covenants hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and
Consultant hereby agree as follows:
ARTICLE I
CONSULTING SERVICES
1.1. Agreement. The Company hereby retains Consultant, and Consultant
hereby accepts such engagement, pursuant to the terms and conditions set forth
herein.
1.2. Term. The term of this Agreement shall be for a three (3) year
period commencing on the date hereof (the "CONSULTING TERM"). Notwithstanding
the provisions of this Section 1.2, this Agreement may be terminated prior to
the expiration of the Consulting Term in accordance with the provisions of
Article II hereof.
1.3. Activities and Duties.
(a) Consultant hereby agrees to make each of the Executives
available, upon the reasonable request of the Company, such request to
be in the form of Exhibit A hereto
2
(with all blanks appropriately completed), to provide transitional
assistance to, and assist with respect to matters involving collection
of claims, and litigation and arbitration matters involving, the
Dominion Bridge Group.
(b) Consultant represents and warrants to the Company that it
is free to enter into this Agreement with the Company, and that it has
secured the commitment of the Executives to provide services on its
behalf hereunder.
(c) Consultant hereby agrees that all consulting services
performed by it during the Consulting Term shall be conducted in the
name of Xxxxx Investments, Inc. Consultant further agrees that it shall
not subcontract any services assigned to it by the Company, or engage
or permit any person or entity other than the Executives to perform any
such services, without the prior written consent of the Company.
1.4. Independent Contractor. Consultant and the Company expressly
acknowledge that no employment, partnership or joint venture relationship is
created by this Agreement, and hereby agree as follows:
(a) Consultant shall act at all times as an independent
contractor hereunder;
(b) Neither Consultant nor anyone employed by or acting for or
on behalf of Consultant, including the Executives, shall ever be or be
construed as an employee of the Company and the Company shall not be
liable for consulting or withholding taxes respecting Consultant or any
employee of Consultant;
(c) Consultant shall determine when, where and how Consultant
shall perform its services hereunder;
(d) Consultant shall take all steps to ensure that Consultant
is treated as an independent contractor of the Company;
(e) Consultant shall provide Consultant's own materials, tools
and equipment in performing the services;
(f) Consultant shall not make any commitment or incur any
charge or expense in the name of the Company without the prior written
approval of the Company;
(g) Except to the extent expressly provided in Article III,
without the prior written consent of the Company, neither Consultant
nor anyone employed by or acting for or on behalf of Consultant,
including the Executives, shall receive or be entitled to any
consideration, compensation or benefits of any kind from the Company,
including without limitation, pension, profit sharing or similar plans
or benefits, or accident, health, medical, life or disability insurance
benefits or coverages; and
-2-
3
(h) To the extent permitted by law, Consultant, for Consultant
and for anyone claiming through Consultant, waives any and all rights
to any consideration, compensation or benefits, except as expressly
provided for herein or in that certain Closing Memorandum of even date
herewith among, inter alia, the parties hereto.
ARTICLE II
TERMINATION/ATTORNEY FEES
2.1. Termination of Consulting Term. Notwithstanding Section 1.2
hereof, the Consulting Term shall terminate upon the occurrence of any of the
following events: (a) upon the mutual written agreement of the Company and
Consultant; or (b) upon a Material Breach (as hereinafter defined) in the
performance or observance of the duties and obligations to be performed on
behalf of Consultant by the Executives pursuant to this Agreement, which
Material Breach shall continue for a period of thirty (30) days after written
notice thereof from the Company to Consultant; or (c) at any time upon
prepayment by the Company of its financial obligations hereunder in accordance
with Section 3.3. For purposes of Section 2.1(b), the term "Material Breach"
shall mean the refusal of both Marengere and Xxxxxxxxx to provide any services
with respect to a matter that (i) is of critical importance to the Dominion
Bridge Group, and (ii) with regard to which Marengere or Xxxxxxxxx have
particular ability or knowledge. In the event Consultant is terminated pursuant
to Section 2.1(b), the Company shall only be obligated to pay Consultant such
compensation as has been earned by it prior to the date of termination.
2.2. Attorneys' Fees. In the event of a breach of any provision of this
Agreement, the breaching party shall pay to the non-breaching party, in addition
to any other damages or remedies which may be available at law or in equity, all
of its attorneys' fees and costs reasonably incurred as a result of such breach.
ARTICLE III
COMPENSATION
3.1. Compensation. In consideration for performance of Consultant's
services hereunder, during the Consulting Term, the Company shall pay Consultant
the sum of $483,333.33 per year (the "CONSULTING FEES"), of which $250,000,
$150,000 and $83,333.333 shall be allocated for the services to be performed on
behalf of Consultant by Marengere, Xxxxxxxxx and Xxxxx, respectively. All
amounts due and owing under this Section 3.1 shall be payable in equal monthly
installments during the Consulting Term, which installments shall be due on or
before the last day of each month, with the first payment calculated on a pro
rated basis and due on April 30, 1998. In the event any installment payment is
not made by the Company within thirty (30) days after the date upon which it is
due, the Company will be in default hereunder. Consultant shall then be entitled
to request that Dominion Bridge Corporation cure
-3-
4
such default. In the event Dominion Bridge Corporation does not cure such
default within thirty (30) days of its receipt of a written request from
Consultant regarding same, Consultant shall be entitled, at its option, to
terminate this Agreement, and in such event, the Company and Dominion Bridge
Corporation shall be jointly and severally liable to pay liquidated damages to
Consultant in an amount equal to the unpaid balance due and owing for services
already performed hereunder plus the net present value of all future amounts due
and payable during the balance of the Term, which net present value shall be
determined as of the date of payment of such sum by applying a discount rate
equal to eleven and one-half percent (11.5%) per annum.
3.2. Death of Marengere and Xxxxxxxxx. Notwithstanding anything to the
contrary contained herein, in the event of the death of both Marengere and
Xxxxxxxxx, so long as upon the date of death of the second of such individuals
to pass away, an uncured Material Breach by Consultant has not continued for a
period of thirty days after written notice thereof from the Company to
Consultant, the Consulting Fees shall continue to be payable to Consultant
during the remainder of the Term.
3.3. Right to Prepay. The Company shall have the right, at any time
during the Consulting Term, to prepay all amounts due and owing under this
Agreement. If the Company elects to prepay the amounts payable hereunder, such
prepayment shall be calculated based on the net present value of such amounts on
the date of prepayment, which shall be determined by applying a discount rate
equal to eleven and one-half percent (11.5%) per annum.
ARTICLE IV
MISCELLANEOUS
4.1. Indemnification.
(a) Consultant hereby agrees to defend, indemnify and hold
harmless the Company and its affiliates, members, managers, officers, agents,
employees, representatives, successors and assigns from and against any and all
claims, demands, causes of action, losses, damages, costs and expenses
(including, without limitation, litigation costs, reasonable attorneys' fees and
any appellate bonds) (collectively, "CLAIMS") arising out of or relating to
Consultant's material breach of any provision contained in this Agreement.
(b) The Company hereby agrees to defend, indemnify and hold
harmless Consultant and its shareholders, officers, directors, successors and
permitted assigns, and the Executives, from and against any and all Claims
arising out of or relating to the Company's material breach of any provision
contained in this Agreement.
4.2. Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be addressed as follows:
-4-
5
If to Consultant:
Wellgate International, Ltd.
x/x Xxxxxxx Xxxxxxx
XXXX Xxxxx, 00xx Xxxxx
0000 Xxxx-Xxxxxxxx Boulevard West
Montreal (Quebec) Canada H3B 3S6
Attn: R. Xxxxx Xxxxxxx
PH: (000) 000-0000
FAX: (000) 000-0000
If to the Company:
Xxxxx Investments, Inc.
000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxx, President
PH: (000) 000-0000
FAX: (000) 000-0000
with a copy to:
Ungaretti & Xxxxxx
Three First Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxxx, Esq.
PH: (000) 000-0000
FAX: (000) 000-0000
or to such other address or addresses as may hereafter be specified by notice
given by any of the above to the others. Notices mailed in accordance with this
Section 4.2 shall be deemed given (i) the third day after they are mailed, (ii)
the next day after they are sent by reputable overnight courier service, (iii)
when sent, if sent by telecopy or e-mail between 9:00 A.M. and 5:00 P.M. central
standard time, or (iv) the next business day thereafter if sent by telecopy or
e-mail after 5:00 P.M. central standard time. Any written notice hereunder may
be provided via e-mail, return receipt requested.
4.3. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their successors and permitted
assigns. In the case of the Company, the successors and permitted assigns
hereunder shall include without limitation any affiliate of the Company as well
as the successors in interest to such affiliate (whether by merger, liquidation
(including successive mergers or liquidations) or otherwise). This Agreement or
any right or interest hereunder is one of personal service and may not be
assigned by Consultant. Nothing in this Agreement, expressed or implied, is
intended or shall be construed to confer upon
-5-
6
any person other than the parties and successors and assigns permitted by this
Section 4.3 any right, remedy or claim under or by reason of this Agreement.
4.4. Entire Agreement; Amendments. This Agreement and the Recitals,
along with the documents described in that certain Closing Memorandum dated of
even date herewith among, inter alia, the parties hereto, contain the entire
understanding of the parties hereto with regard to the subject matter contained
herein, and supersede all prior agreements, understandings or letters of intent
between or among any of the parties hereto. This Agreement shall not be amended,
modified or supplemented except by a written instrument signed by an authorized
representative of each of the parties hereto.
4.5. Interpretation. Article titles and section headings contained
herein are inserted for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement.
4.6. Expenses. Each party hereto will pay all costs and expenses
incident to its negotiation and preparation of this Agreement and to its
performance and compliance with all agreements and conditions contained herein
on its part to be performed or complied with, including the fees, expenses and
disbursements of its counsel and accountants.
4.7. Waivers. Any term or provision of this Agreement may be waived, or
the time for its performance may be extended, by the party or parties entitled
to the benefit thereof. Any such waiver shall be validly and sufficiently
authorized for the purposes of this Agreement if, as to any party, it is
authorized in writing by an authorized representative of such party. The failure
of any party hereto to enforce at any time any provision of this Agreement shall
not be construed to be a waiver of such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to constitute a waiver of any other or subsequent
breach.
4.8. Partial Invalidity. Wherever possible, each provision hereof shall
be interpreted in such manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
provision shall be ineffective to the extent, but only to the extent, of such
invalidity, illegality or unenforceability without invalidating the remainder of
such invalid, illegal or unenforceable provision or provisions or any other
provisions hereof, unless such a construction would be unreasonable.
4.9. Incorporation of Recitals. The recitals set forth on page 1 hereof
are hereby incorporated into and made a part of this Agreement by this
reference.
4.10. Execution in Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be considered an original instrument,
but all of which shall be considered one and the same agreement, and shall
become binding when one or more
-6-
7
counterparts have been signed by each of the parties hereto and delivered to
each of Consultant and the Company.
4.11. Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws (as opposed to the conflicts of law
provisions) of the Province of Quebec.
4.12. Submission to Jurisdiction. The parties hereto hereby irrevocably
submit in any suit, action or proceeding arising out of or related to this
Agreement to the jurisdiction of courts located in the Province of Quebec,
Canada, and waive any and all objections to jurisdiction that they may have
regarding such jurisdiction.
4.13. Preparation of Agreement in English. The parties acknowledge that
they have required that this Consulting Agreement and all related documents be
prepared in English. Les parties reconnaissent avoir exige que la presente
convention et tous les documents connexes soient rediges en anglais.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
THE COMPANY:
XXXXX INVESTMENTS, INC.
an Illinois corporation
By: /s/ XXXX X. XXXXXXXXXX
----------------------------
Xxxx X. Xxxxxxxxxx, as Attorney-in-Fact
for Xxxxxxx Xxxxxxx, President
CONSULTANT:
WELLGATE INTERNATIONAL, LTD.,
a British Virgin Island corporation
By: /s/ XXXXXX X. XXXXXXXXX
----------------------------
Its: Chariman/President
----------------------------
By: /s/ XXXXXXX X. XXXXXXXXX
----------------------------
Its: Secretary
----------------------------
-7-
8
\
In order to induce Wellgate International, Ltd. to enter into this Consulting
Agreement and certain other transactions described in that certain Closing
Memorandum dated of even date herewith among, inter alia, the parties hereto, by
executing this document below, Dominion Bridge Corporation hereby guarantees the
payment by Xxxxx Investments, Inc. of its financial obligations under this
Consulting Agreement.
GUARANTOR:
DOMINION BRIDGE CORPORATION,
a Delaware corporation
By: /s/ XXXXX X. XXXXXXX
----------------------------
Its: Director
----------------------------
-8-
