EXHIBIT 10.18
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is entered into as of May 2,
2002 (the "Effective Date"), by and between XXXX XXXXX ASSOCIATES, INC., a
Delaware corporation (the "Company"), and XXXX XXXXX (the "Consultant"), an
individual resident of the state of the state of Pennsylvania.
W I T N E S S E T H :
WHEREAS, Pursuant to that certain Asset Purchase Agreement dated as of the
date hereof, among Pocono Knits, Inc. ("Seller"), the Company and the
Shareholders of Seller (the "Purchase Agreement"), the Company has purchased
from Seller all assets and properties of the Seller owned or used in connection
with its business, subject to certain Excluded Assets (as defined in the
Purchase Agreement) (the "Business").
WHEREAS, In connection with the sale of the Business, the Consultant
has agreed to provide various services to the Company;
NOW, THEREFORE, for and in consideration of the mutual covenants and
promises contained herein, and for other good and valuable consideration, the
receipt, adequacy, and sufficiency of which are hereby acknowledged and
accepted, the parties hereby agree as follows:
1. Definitions. For purposes of this Agreement, the following capitalized
terms shall have the definition set forth below:
(a) "Affiliate" shall mean any corporation, limited partnership,
limited liability company or other entity engaged in the same business as
the Company or a related business, which is controlled by or under common
control with the Company.
(b) "Business of the Company" shall mean the manufacture of clothing
items for the military, police forces, fire departments and private
security agencies.
(c) "Cause" shall mean:
(i) material act of fraud, dishonesty, misappropriation or
similar act of bad faith on the part of Consultant;
(ii) a willful failure by Consultant to comply with laws or
regulations relating to the Business of the Company or relating to the
services he provides to the Company;
(iii)material or continuing failure by Consultant to perform
satisfactorily his duties for the Company (other than as a result of
illness, vacation or Disability), but only after the Company shall
have given Consultant written notice specifying with particularity
such failure, and Consultant shall not have corrected such lack of
performance within thirty (30) days after such notice;
(iv) a material breach of Section 7 of this Agreement;
(v) as a result of Consultant's negligence or willful
misconduct, Consultant shall commit any act that causes, or shall
knowingly fail to take reasonable and appropriate action to prevent,
any material injury to the financial condition or business reputation
of the Company; or
(vi) indictment for a felony.
(d) "Confidential Information" shall mean any data or information,
other than Trade Secrets, that is material to the Company and is not
generally known by the public. To the extent consistent with the foregoing,
Confidential Information includes, but is not limited to, lists of the
Company's current or potential customers, lists of and other information
about the Company's executives and employees, financial information that
has not been released to the public by the Company, marketing techniques,
price lists, pricing policies, and the Company's business methods,
contracts and contractual relations with the Company's customers and
suppliers and future business plans.
(e) "Disability" shall mean an incapacity due to physical or mental
illness or injury that is permanent in nature and prevents Consultant from
performing the duties hereunder. Any such disability shall be deemed to be
permanent in nature if such disability is expected to last for a period of
twelve (12) consecutive months.
(f) "Restricted Territory" shall mean the state of Pennsylvania or
any state in which the Company now conducts business.
(g) "Trade Secret" shall mean information of the Company, without
regard to form, which is not commonly known by or available to the public
and which derives economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by,
other persons who can obtain economic value from its disclosure or use, and
is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy. Trade Secrets also include any information described
in this Section 1(g) which the Company obtains from another party which the
Company treats as proprietary or designates as trade secrets, whether or
not owned or developed by the Company.
2. Engagement. The Company hereby engages the Consultant, and the
Consultant agrees to provide services to the Company relating to the Business
and make available to the Company all of his expertise, advice and
recommendations relating to the Business of the Company, as requested by the
Company from time to time (the "Consulting Services"). The term of this
Agreement shall be five (5) years commencing on the Effective Date, unless
sooner terminated pursuant to Section 6 hereof. This Agreement shall be
automatically renewed for successive one (1) year renewal terms unless either
the Company or Consultant delivers to the other a notice of nonextension at
least sixty (60) days prior to the scheduled expiration date of this Agreement.
3. Duties. During the term of this Agreement, the Consultant agrees to
devote such portion of his business time as reasonably requested by the Company
to provide the services hereunder. The Consultant shall use his best efforts to
provide the Consulting Services to the Company. The Consultant shall provide the
Consulting Services from his Pennsylvania location, but may be required to
travel occasionally as requested by the Company.
4. Compensation.
(a) During the term hereof, the Company will pay Consultant $119,700
per year (the "Base Amount"), payable bi-monthly, with the first payment
due on __________, 2002.
(b) During the term hereof, the Company will pay the Consultant an
automobile allowance of $625 per month, payable monthly, with the first
payment due on _____________, 2002.
(c) Company agrees to reimburse Consultant for any income or other
taxes payable by Consultant as a result of any payments made by Consultant
to ________ Bank on the Company's behalf.
(d) Upon submission of itemized expense statements in the manner
specified by the Company, Consultant shall be entitled to reimbursement for
reasonable business and travel expenses duly incurred by Consultant in the
performance of his duties under this Agreement.
5. Independent Contractor. Consultant at all times with respect to this
Agreement shall be an independent contractor. As such, Consultant will not be
eligible for any benefits provided by the Company to its employees and
Consultant will be responsible for payment of all taxes arising out of his
activities in accordance with this Agreement, including without limitation
federal and state income taxes, social security taxes, unemployment insurance
taxes, and any other taxes or business license fees as required. Consultant
shall not incur any liabilities or obligations of any kind in the name of or on
behalf of the Company other than those specifically made or approved as part of
this Agreement. Consultant is not and shall not be an agent, officer or employee
of the Company and shall not represent to third parties that he or she is an
agent, officer or employee of the Company in the provision of services under
this Agreement.
6. Termination.
(a) Termination for Cause. The Company shall have the right to
terminate this Agreement for Cause. If the Company terminates this
Agreement for Cause, the Company shall have no further obligations
hereunder accruing from and after the date of such termination of
Consultant by the Company.
(b) Death or Disability. This Agreement shall terminate upon
Consultant's death or Disability. A "Disability" with respect to Consultant
shall be deemed to occur by the Board of Directors of the Company in their
reasonable discretion. In the event that Consultant or his representative
shall disagree with the determination of the Board of Directors that a
Disability has occurred, Consultant or his representative shall be entitled
to appoint a medical doctor and the Company shall be entitled to appoint a
medical doctor and the two (2) doctors shall in turn appoint a third
medical doctor who shall examine Consultant to determine the question of
Disability. The parties hereby agree that the determination of the medical
doctor appointed by the medical doctor of Consultant and the medical doctor
of the Company shall be binding upon all parties to this Agreement.
(c) Termination without Cause. The Chairman of the Company's Board of
Directors shall have the right to relieve Consultant of his duties
hereunder for any reason and at any time. Such termination not for cause
shall be effective on the date specified by the Board of Directors.
Termination of this Agreement due to Consultant's death or Disability will
be deemed to be termination by the Company without cause.
(d) Termination Payments. In the event of the termination of
Consultant's employment with the Company, Consultant will be paid an amount
determined as follows:
(i) In the event of termination of this Agreement by reason of
Consultant's death or Disability, Consultant or in the case of
Consultant's death, Consultant's surviving spouse or other beneficiary
designated by Consultant during his lifetime, or Consultant's estate,
as appropriate, will be entitled to payment of his Base Amount through
the date of the termination of this Agreement and for a period of
three (3) months thereafter.
(ii) In the event of termination of this Agreement by reason of
the Company terminating Consultant for Cause or in the event that
Consultant voluntarily terminates this Agreement other than as
provided in Section 6(c), he will be paid his Base Amount through the
date of the termination.
(iii)In the event that Consultant violates Section 7 of this
Agreement, or a court of competent jurisdiction or arbitrator declares
any provision in Section 7 unenforceable, the Company's obligation to
pay Consultant pursuant to this Section 6 shall terminate.
(iv) In the event of termination of this Agreement by reason of
the Company terminating this Agreement without cause and as damages
therefor, Consultant will be entitled to payment of his Base Amount
through the remaining term of this Agreement.
(v) The termination payments due hereunder shall be in lieu of
any and all other amounts for which Company may be liable under any
laws, rules or regulations. As a condition to receipt of the
termination payments provided for hereunder, Consultant or his
personal representative shall execute a general release of all claims
in favor of the Company.
(e) Confidentiality of Cause Notice. In the event of Consultant's
termination for Cause, the Company will provide Consultant with prompt
written notice stating with reasonable specificity the basis for the
Company's action. Consultant agrees that in the event he receives written
notice of termination with Cause, Consultant shall treat the contents of
said notice as privileged and Consultant shall have no action against the
Company or any of its officers, agents or employees due to the contents of
said notice unless the contents are intentionally false and malicious.
7. Covenants.
(a) Confidential Relationship and Protection of Trade Secrets and
Confidential Information. Prior to the time of the sale of the Busines and
during the term of this Agreement, Consultant has had access to and will
have access to the Company's most sensitive and most valuable trade
secrets, proprietary information, and confidential information concerning
the Company and its affiliates and their customers and business affairs
which constitute valuable business assets of the Company, the use,
application or disclosure of any of which will cause substantial and
possible irreparable damage to the business and asset value of the Company.
Accordingly, Consultant accepts and agrees to be bound by the following
provisions:
(i) At any time, upon the request of the Company and in any
event upon the termination of this Agreement, Consultant will deliver
to the Company all memoranda, notes, records, drawings, manuals, files
or other documents, and all copies of each, concerning or constituting
Confidential Information or Trade Secrets and any other property or
files belonging to the Company or any of its affiliates that are in
the possession of Consultant, whether made or compiled by Consultant
or furnished to or acquired by Consultant from the Company.
(ii) In order to protect the Company's Trade Secrets and
Confidential Information, Consultant agrees that:
(A) At any time during the term of this Agreement and
indefinitely thereafter, Consultant will not, except as expressly
authorized or directed by the Company, use, copy or disclose, or
permit any unauthorized person access to, any Trade Secrets
belonging to the Company or any third party; and
(B) During the term of this Agreement and for a period of
two (2) years after termination of such this Agreement,
Consultant will not use, copy, or disclose, or permit any
unauthorized person access to, any Confidential Information
belonging to the Company or any third party.
(b) Ownership of Property. Consultant agrees and acknowledges that
all works of authorship and inventions, including, but not limited to,
products, goods, know-how, Trade Secrets and Confidential Information, and
any revisions thereof, in any form and in whatever stage of creation or
development, arising out of or resulting from, or in connection with, the
services provided by Consultant to the Company under this Agreement
(collectively, the "Property") are works made for hire and shall be the
sole and exclusive property of the Company. Consultant agrees to execute,
when and if the need arises in the future, such documents as the Company
may reasonably request for the purpose of effectuating the rights of the
Company herein.
(c) Covenant not to Compete. Consultant agrees that during the term
of this Agreement and for two (2) years thereafter, Consultant will not
directly or indirectly own, manage, operate, control, be employed by,
participate in or be connected in any manner with the ownership,
management, operation or control of any business or enterprise located in
the Restricted Territory that competes with the Business of the Company.
(d) Non-Solicitation of Customers. Consultant covenants and agrees
that during the term of this Agreement, and for a period of two (2) years
thereafter, he will not on behalf of any person, firm, corporation or
entity solicit business from customers of the Company that Consultant had
contact with, solicited, or performed services for during the term that
Consultant provided services to the Company, including actively-sought
prospective customers that Consultant had contact with or solicited during
the two (2) year period prior to the termination of this Agreement, for the
purpose of providing or selling products or services that are competitive
with those provided by the Company in connection with the Business of the
Company.
(e) Non-Solicitation of Employees. Consultant agrees that during the
term of this Agreement and for two (2) years thereafter, Consultant will
not solicit or in any manner attempt to induce employees to leave the
Company's employment.
(f) Injunctive Relief. Consultant acknowledges and agrees that the
remedy at law for any breach of the provisions of this Section 7 will be
inadequate and that in the event of such breach the Company will suffer
irreparable damage; accordingly, the Company shall be entitled to obtain ex
parte, preliminary, interlocutory, temporary, or permanent injunctive
relief, specific performance and other equitable remedies in any court of
competent jurisdiction to prevent Consultant from violating such provision
or provisions or to prevent the continuance of any violation thereof,
together with an award or judgment for any and all damages, losses,
liabilities, expenses and costs incurred by the Company as a result of such
breach or threatened breach including, but not limited to, attorneys' fees
incurred by the Company, its successors or assigns in connection with, or
as a result of, the enforcement of this Agreement. Consultant expressly
waives any requirement based on any statute, rule or procedure, or other
source, that the Company post a bond as a condition of obtaining any of the
above-described remedies.
(g) Non-Renewal. Notwithstanding the foregoing, subparagraphs (c),
(d) and (e) shall not apply to Consultant if the Company shall elect to not
extend this Agreement upon expiration of its Term.
8. Miscellaneous.
(a) Severability. Each of the covenants and agreements of Consultant
set forth in Section 7 shall be deemed separate and severable, each from
the other, and should any such separate and severable covenant or
agreement, or any part thereof, be declared invalid or unenforceable by a
court of competent jurisdiction from which no appeal is timely taken, such
declaration of invalidity or enforceability shall not in any way affect or
limit the validity or enforceability of any other covenant or agreement, or
part thereof, not also declared invalid or unenforceable, each of which
shall remain binding on Consultant in accordance with its respective terms.
Further, if any such covenant or agreement is so declared to be invalid or
unenforceable, Consultant shall, as soon as possible, execute a
supplemental agreement with the Company granting to the Company, to the
extent legally permissible, the protection intended to be afforded to the
Company by the covenant or agreement so declared invalid or unenforceable.
Failure to insist upon strict compliance with any provision of this
Agreement shall not be deemed a waiver of such provision or any other
provision of this Agreement.
(b) Waiver of Breach. Failure or delay of either party to insist upon
compliance with any provision hereof shall not operate as, and is not to be
construed as, a waiver or amendment of such provision. Any express waiver
of any provision of this Agreement shall not operate and is not to be
construed as a waiver of any subsequent breach, whether occurring under
similar or dissimilar circumstances.
(c) Notice. All notices and other communications required or
permitted to be given by this Agreement shall be in writing and shall be
given and shall be deemed received upon (i) personal delivery, (ii) three
(3) days after being mailed by first class mail (postage prepaid and return
receipt requested) or (iii) the next business day after being sent by an
overnight delivery service in time for and specifying overnight delivery to
the following addresses:
if to the Company, to: Xxxx Xxxxx Associates, Inc.
[ADDRESS]
Attention: Mr. Xxxxx Xxxxx
or if to Consultant, to: Xxxx Xxxxx
[ADDRESS]
or at such other address as either party hereto shall notify the other of
in writing.
(d) Entire Agreement. This Agreement contains the entire agreement
and understanding by and between Consultant and the Company with respect to
the subject matter contained herein, and no representations, promises,
agreements or understandings, written or oral, relating to the subject
matter contained herein not contained or referenced herein or therein shall
be of any force or effect.
(e) Amendment. This Agreement may be amended at any time by mutual
consent of the parties hereto, with any such amendment to be invalid unless
in writing and signed by the Company and Consultant.
(f) Benefit. This Agreement, together with any amendments hereto,
shall be binding upon and shall inure to the benefit of the parties hereto
and their respective successors, assigns, heirs and personal
representatives, except that the rights and benefits of either of the
parties under this Agreement may not be assigned without the prior written
consent of the other party.
(g) Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Pennsylvania (without regard to
any conflicts of laws provisions of the laws of such state).
(h) Acknowledgement. By signing this Agreement, Consultant
acknowledges that the Company has advised Consultant of his right to
consult with an attorney prior to executing this Agreement; that he has the
right to retain counsel of his own choosing concerning any waiver of rights
or claims; that he has read and fully understands the terms of this
Agreement and/or has had the right to have it reviewed and approved by
counsel of choice, with adequate opportunity and time for such review; and
that he is fully aware of its contents and of its legal effect.
Accordingly, this Agreement shall not be construed against any party on the
grounds that the party drafted this Agreement. Instead, this Agreement
shall be interpreted as though drafted equally by all parties.
(i) Ventures. If Consultant, during the term of this Agreement, is
engaged in or associated with the planning or implementing of any project,
program or venture involving Company and any third party or parties, all
rights in the project, program or venture shall belong to Company, and
Consultant shall not be entitled to any interest therein or to any
commission, finder's fee or other compensation in connection therewith
other than the compensation to be paid to Consultant as provided in this
Agreement.
(j) Covenant of Good Faith. Consultant agrees that the subject of
this Agreement involves sensitive matters which go to the very heart of the
corporate existence and well-being of Company and that it may be difficult
for Company to protect adequately its interest through agreement or
otherwise. Consultant agrees to exercise the highest degree of good faith
in his dealings with Company and to refrain from any actions which might
reasonably be deemed to be contrary to its interests.
(k) Subpoenas. If Consultant is served with any subpoena or other
compulsory judicial or administrative process calling for production of
Confidential Information and/or Trade Secrets or if Consultant is otherwise
required by law or regulation to disclose Confidential Information and/or
Trade Secrets, Consultant will immediately, and prior to production or
disclosure, notify Company and provide it with such information as may be
necessary in order that Company may take such action as it deems necessary
to protect its interest.
(l) Post Termination Assistance. Consultant agrees that after the
termination of this Agreement he will provide, upon reasonable notice, such
information and assistance to the Company as may reasonably be requested by
the Company in connection with any litigation in which the Company or any
of its Affiliates is or may become a party; provided, however, that the
Company agrees to reimburse Consultant for any related expenses, including
travel expenses.
(m) Survival of Provisions. Notwithstanding any other provision of
this Agreement, the parties' respective rights and obligations under
Sections 1, 6, 7, and 8 shall survive any termination or expiration of this
Agreement for any reason whatsoever.
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IN WITNESS WHEREOF, the parties have affixed their seals and executed and
delivered this Agreement as of the date first above written.
COMPANY
XXXX XXXXX, INC.
Attest: By /s/ Xxxxx X. Xxxxx
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Name Xxxxx X. Xxxxx
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Title President
----------------------------
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Secretary
CONSULTANT
------------------------------ /s/ Xxxx Xxxxx
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Witness Xxxx Xxxxx
