EXHIBIT 10
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement" or the "Consulting
Agreement") is made and entered into as of the date(s) set forth below to be
effective the 1st day of October, 2001 (the "Agreement Date"), by and between
UNIFAB International, Inc., a corporation organized and existing under the laws
of the State of Louisiana (the "Company"), and Varix, Ltd., a limited
partnership organized and existing under the laws of the State of Texas
("Varix").
Section 1. Effective Date and Term. This Consulting Agreement shall be
effective as of the Agreement Date, and shall remain effective until December
31, 2002 (the "Engagement Term") or until otherwise terminated pursuant to the
terms of this Agreement.
Section 2. Engagement - Services to be Rendered. Varix shall provide
for the benefit of the Company services of the President and Chief Executive
Officer. The Company and Varix agree that Xxxxxx X. Xxxxxxxxx (the "Executive")
shall be designated to provide such services, and that he shall devote a minimum
of 50% of his time, attention, energies and business efforts to the Company. The
Company further agrees that the Executive shall serve as the Chairman of the
Board of Directors.
Section 3. Fees. The Company shall pay or provide to Varix the
following:
(a) Consulting Fee. A consulting fee of $375,000 (the
"Consulting Base Fee") for the Engagement Term, which amount shall be prorated
and paid to Varix in equal semi-monthly installments commencing as of the
Agreement Date.
(b) Performance Bonus. Varix shall be paid an annual
performance bonus in an amount equal to 10% of the Company's EBITDA, with a
minimum amount per calendar year of $50,000. Such performance bonus shall be
paid to Varix not later than 30 days after the end of each calendar year which
is also the close of the Company's fiscal year (the "Bonus Payment Date") and
shall be paid even in the event this Consulting Agreement is terminated prior to
any Bonus Payment Date regardless of the reason for termination. An annual
performance bonus shall be payable for both calendar years 2001 and 2002 in a
minimum amount of $50,000 each year for a total minimum annual performance bonus
under this Consulting Agreement of $100,000.
(c) Restricted Stock. Varix shall be granted 50,000 restricted
shares of the Company's common stock, $0.01 par value per share (the "Common
Stock"); such grant shall be evidenced by a separate written agreement between
Varix and the Company and shall be subject to the terms and conditions set forth
therein.
(d) Stock Options. Varix shall be granted options to acquire
150,000 shares of Common Stock; the per share exercise price shall be the
closing sales price of the Common Stock on the Agreement Date. Such grant shall
be evidenced by a separate written agreement between Varix and the Company and
shall be subject to the terms and conditions set forth therein.
Section 4. Status of the Executive. The Company and Varix acknowledge
the Executive is neither an employee of or independent contractor as to the
Company. Varix is and shall remain solely responsible for all matters related to
the compensation of the Executive, including the payment, withholding and
remittance of all applicable Federal and state income and employment taxes with
respect thereto. The Company and Varix each agree to indemnify and hold harmless
the other from any penalty, tax, liability or other damage arising from the
failure to perform the obligations set forth in this Section 4 with respect to
the services to be rendered to the Company by the Executive.
Section 5. Status as a Statutory Employer. The parties acknowledge that
the services provided by the Executive hereunder (whether the Executive is
deemed to be a direct, borrowed, special or statutory employee of the Company)
are an integral part of and are essential to the business and operations of the
Company, and that the Company shall be presumed to be the statutory, principal
or special employer of the Executive solely for workers' compensation programs.
The parties further agree that notwithstanding any such characterization, Varix
shall remain primarily responsible for the payment of applicable worker's
compensation benefits to the Executive, shall not be entitled to seek
contribution for any such payment from the Company, and shall indemnify and hold
harmless the Company for any and all workers' compensation payments made by the
Company to the Executive.
Section 6. Other Benefits. Neither the Executive nor Varix shall be
entitled to participate in any employee benefit or similar plan, policy or
program maintained by the Company for the benefit of its employees or officers.
The Company shall pay to Varix all expenses of the Executive for travel, lodging
and related expenses incurred for the benefit of the Company including
Executive's travel to and from Houston, Texas where Executive shall be based.
Section 7. Termination. Unless earlier terminated as provided herein,
this Agreement shall terminate and the Company's obligations hereunder shall
cease as of the expiration of the employment term.
(a) Breach. The Company may terminate this Consulting
Agreement for Breach. Upon such termination, the Company's obligations hereunder
shall cease and the Company shall make such payments as may be required under
Section 8 hereof. For this purpose, the term "Breach" shall mean that Varix
fails to perform its material duties and obligations hereunder and is unable to
unable to cure such failure in a manner reasonably satisfactory to the Company
after ten days written notice.
(b) Good Reason. Varix may terminate this Consulting Agreement
for Good Reason. The termination of this Consulting Agreement by Varix for Good
Reason shall be deemed to be a justifiable termination and shall excuse Varix
from the obligation to render services under or relating to this Agreement. As
used herein, the term "Good Reason" shall mean:
(i) any breach of this Agreement by the Company that
continues for a period of ten days after written notice thereof is given by
Varix to the Company;
(ii) the failure by the Company to obtain the
assumption of its obligations under this Agreement by any successor or assign as
contemplated in Section 14 hereunder; or
2
(iii) the assignment by the Board of Directors to
Varix (or its representative) of any duties or responsibilities that are
inconsistent with the status, title and position as President and Chief
Executive Officer of the Company.
(c) Other Termination. Either party may terminate this
Agreement for any reason with 60 days prior written notice to the affected
party.
(d) Notice of Termination. Any purported notice of termination
of this Consulting Agreement or of a Breach or Good Reason in connection
therewith must be communicated in a writing delivered to the other party as
provided in Section 13 hereof (any notice intended to comply with this sentence
is referred to herein as a "Notice of Termination"). Any such Notice of
Termination that purports to terminate this Consulting Agreement for Breach or
for Good Reason shall specify the circumstances supporting such Breach or Good
Reason.
(e) Date of Termination. "Date of Termination" means the date
specified in the Notice of Termination, which shall not be less than ten days
after delivery of such notice with respect to Breach or Good Reason or not less
than 60 days after delivery for any other reason.
Section 8. Obligations Upon Termination. If the Company shall terminate
this Agreement other than for Breach or Varix shall terminate this Agreement for
Good Reason, then the Company shall pay to Varix in a lump sum in cash within 30
days after the Date of Termination the unaccrued Consulting Base Fee payable
through the end of the Engagement Term.
If the Company shall terminate this Agreement for Breach or Varix shall
terminate this Agreement other than for Good Reason, the Company shall pay to
Varix in a lump sum in cash within 30 days after the Date of Termination the
amount of any accrued but unpaid Consulting Base Fee determined as of the
effective Date of Termination.
The Restricted Stock and Stock Options shall not be affected by
termination of this Consulting Agreement for any reason.
Section 9. Waiver. The failure by any party to enforce any of its
rights hereunder shall not be deemed to be a waiver of such rights, unless such
waiver is an express written waiver. Waiver of any one breach shall not be
deemed to be a waiver of any other breach of the same or any other provision
hereof.
Section 10. No Employment Rights. This Consulting Agreement is solely
for the benefit of the Company and Varix and is not intended to constitute or
create a contract of employment as between the Company and the Executive.
Section 11. Governing Law. The validity of this Consulting Agreement,
the construction of its terms and the determination of the rights and duties of
the parties hereto shall be governed by
3
and construed in accordance with federal laws and regulations and the internal
laws of the State of Louisiana applicable to contracts made and to be performed
wholly within such state.
Section 12. Headings. The headings of sections and subsections hereof
are included solely for the convenience of reference and shall not control the
meaning or interpretation of any of the provisions of the Consulting Agreement.
Section 13. Notices. All notices, requests, demands and other
communications provided for by this Consulting Agreement shall be in writing and
shall be deemed to have been duly given when delivered in person or mailed by
United States mail, postage prepaid, addressed as follows:
If to the Company: UNIFAB International, Inc.
0000 Xxxx Xxxx
Xxx Xxxxxx, Xxxxxxxxx 00000
Attn: Vice President
and Chief Financial Officer
If to Varix: Varix, Ltd.
00000 Xxxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xx. X. X. Xxxxxxxxx
Section 14. Assignment. This Consulting Agreement and all obligations
of the Company and Varix hereunder shall be binding on such parties and on any
successor thereto. This Consulting Agreement may not be assigned, in whole or in
part, by the Company or Varix, as the case may be, without the express written
consent of the affected party.
Section 15. Integration and Amendment. This Consulting Agreement and
the Confidentiality and Intellectual Property Agreement by and between the
Company and the Executive dated of even date herewith constitute the entire
understanding between the parties with respect to the subject matter hereof and
supersede any prior agreement or understanding, whether written or oral,
relating to such subject matter.
Section 16. Amendment. No modification or amendment to this Consulting
Agreement shall be effective or binding unless in writing, specifying such
modification or amendment, executed by both parties hereto.
Section 17. Separate Counsel. Varix acknowledges that it has been
advised to engage separate counsel with respect to the terms and conditions of
this Consulting Agreement. Neither the Company nor any officer of employee
thereof has provided any legal or tax advice to Varix with respect to the
subject matter hereof.
Section 18. Counterparts. This Consulting Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original but
all of which together will constitute one and the same instrument.
4
THIS CONSULTING AGREEMENT was executed as of the date set forth below,
to be first effective as of the date set forth in Section 1 hereof.
VARIX, LTD., UNIFAB INTERNATIONAL, INC.
By VERDANT, L.L.C., its General Partner
By: /s/ Xxxxxx X. Xxxxxxxxx By: /s/ Xxxxxx X. Xxx
------------------------------------ -------------------------------
Name: Xxxxxx X. Xxxxxxxxx Name: Xxxxxx X. Xxx
Title: Member Title: Director, Member of the
Compensation Committee
Date: October 26, 2001 Date: October 30, 2001
----------------------------------- ----------------------------
5
