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Exhibit 10.11
CONSULTING AGREEMENT
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This Agreement is made effective the 1st day of February, 1997 by and
between BENCHMARK ASSOCIATES, INC., 0000 Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxx 00000 (the "Consultant"), and OFFICE CENTRE CORPORATION, (the
"Company"), with its principal place of business in care of The King Group
located at 00 Xxxx 00xx Xxxxxx Xxx Xxxx, XX 00000.
R E C I T A L S
WHEREAS, the Consultant represents to the Company that it has broad
experience in providing technical and economic advice concerning business
development; rendering advice to the Company to achieve the Company's goals
through various business combinations including, but not limited to, capital
formation, mergers/acquisitions, joint ventures, licensing, and corporate
partnerships; and
WHEREAS, the Company desires to obtain such services from Consultant
and the Company agrees to provide compensation for such services to Consultant
pursuant to the terms contained herein below.
NOW THEREFORE, the parties do hereinafter agree as follows:
1. DUTIES OF CONSULTANT. The Company hereby retains the Consultant to
perform those duties delineated below and Consultant agrees to perform the
following activities on behalf of the Company:
(a) Suggest revisions to and make recommendations to the
Company's business plan;
(b) Participate in the Company's Acquisition Program, the
mission of which is to secure appropriate acquisitions by aiding in the
following activities: (i) locate, (ii) negotiate terms; (iii) complete letter of
intent; (iv) perform due diligence; (v) complete definitive agreement; (vi)
develop transition plan; and (vii) assist in closing.
These specific objectives may be altered, modified or revised based on
the Company's needs or new developments and as may be directed by the Company.
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2. COMPENSATION OF CONSULTANT.
(a) In consideration of the services to be provided by
Consultant herein, the Company will compensate and pay Consultant on a monthly
basis at the rate of Five Thousand Dollars ($5,000) per month, plus expenses
during the term of this Agreement. The Company shall pay Consultant the monthly
fee of $5,000 on the first day of each calendar month commencing February 1,
1997.
(b) In addition, Consultant shall receive and the Company
shall pay fees ("Consultant's Fee") based upon the following terms:
(i) Upon the closing of an Initial Public Offering
("IPO") of the Company's stock, the Consultant's Fee shall be due and payable
at the closing of the IPO as follows:
(A) Consultant shall receive the sum of
$425,000 in the form of cash plus $162,500 in the form of the Company's
unregistered shares of stock calculated at a price per share which is 50% of the
IPO price of the stock.
(B) (This subparagraph intentionally left
blank)
(ii) Upon the closing of a merger transaction in
which the Company is merged into another entity prior to the occurrence of an
IPO, then the Consultant's Fee shall be due and payable at the closing of the
merger transaction as follows:
(A) In the event the surviving entity is a
privately held entity or a natural person, Consultant shall receive a
Consultant's fee in the amount of $700,000 payable in the form of cash and due
immediately upon the closing of the merger transaction; or
(B) In the event the surviving entity is a
publicly held company with registered, freely tradeable shares of stock,
Consultant shall receive a Consultant's Fee in the form of cash in the amount of
$250,000 plus $250,000 in the form of the surviving company's registered shares
of stock with no restrictions calculated at a price per share which is 50% of
the value of the surviving company's stock on the date of closing the merger
transaction. However, at the Company's sole option, the Company may elect to pay
Consultant the Consultant's Fee due under this subparagraph (B) in the form of
cash in the amount of $700,000.
(iii) If none of the transactions described in
Section 2(b)(i)(A) or 2(b)(ii) above occur prior to the first anniversary of the
earlier of (a) the normal expiration term of this Agreement or (b) the early
termination of this Agreement for any reason and except as otherwise provided in
this Agreement, the Consultant's Fee shall be the greater of (1) $125,000 if one
Acquisition Transaction as defined below (other than an acquisition involving
UDI Corp., UDI II Corp. or King Office Supplies, Inc.) finally closed during the
term of this Agreement or within the twelve month period following the
termination of this Agreement; (2) $250,000 if two or more Acquisition
Transactions (other than an acquisition involving UDI Corp., UDI II Corp. or
King Office Supplies, Inc.) are finally closed during the term of this
Agreement or within the twelve
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month period following the termination of this Agreement or (3) the product of
$750,000 multiplied by a fraction, the numerator of which shall be equal to the
combined product and service sales volumes (calculated as described in Section
2(c))of all Acquisition Transactions actually closed during the term of this
Agreement and within the twelve month period following the termination of this
Agreement (excluding the UDI Corp., UDI II Corp. and King Office Supply, Inc.
transactions), and the denominator of which shall be $150 million. The
Consultant's Fee payable under this Section 2(b)(iii) shall be due and payable
within thirty days following the twelve month period immediately following the
termination of this Agreement.
(c) If an event described in Sections 2(b)(i) or 2(b)(ii)
occurs during the term of this Agreement, and the combined product and service
sales volumes of completed Acquisition Transactions (excluding UDI Corp., UDI II
Corp. and King Office Supply, Inc.) made prior to the occurrence of any event
described in Sections 2(b)(i) or 2(b)(ii) and during the term of this Agreement
exceed $150 million in gross annual revenues, Consultant shall receive an
additional fee equal to 1% of the value of all Acquisition Transactions finally
closed during the term of this Agreement prior to the occurrence of an event
described in Section 2(b)(i) or 2 (b)(ii) which resulted in such product and
service sales volumes exceeding the $150 million threshold. If a target in an
Acquisition Transaction (the "Straddler") has such product and service sales
volumes in an amount which, when added together with all such product and
service sales volumes of targets in previously consummated Acquisition
Transactions (excluding UDI Corp., UDI II Corp. and King Office Supply, Inc.),
exceed $150 million, the additional 1% fee with respect to the Straddler shall
be equal to the product of (i) 1% of the value of the Acquisition Transaction
involving the Straddler multiplied by (ii) a fraction, the numerator of which
equals the difference between (A) the combined product and service sales volumes
of completed Acquisition Transactions at that date (including the Straddler) and
(B) $150 million, and the denominator of which is such product and service sales
volumes of the Straddler. The value of such Acquisition Transactions shall be
equal to the purchase price of all such Acquisition Transactions paid by the
Company in whatever form the purchase price is payable including cash, debt
assumed, notes, stock, and all deferred payments. In the event any portion of
the purchase price of any such Acquisition Transaction is paid or is payable in
property of a kind other than cash, assumed debt, notes, stock or deferred
payments, the parties shall negotiate in good faith to determine the
Consultant's Fee payable to Consultant with respect to such other property, with
the valuation to be determined based on the valuation that the parties to the
Acquisition Transaction in question ascribed to such property in reaching their
agreement effecting such Acquisition Transaction. In the event the parties
cannot reach an agreement as a result of such good faith negotiations, the issue
of the Consultant's Fee payable with respect to such other property shall be
submitted to arbitration under paragraph 7 of this Agreement. For purposes of
this Agreement, an Acquisition Transaction shall be a transaction in which the
Company purchases the assets or the stock of another person or entity and for
which Consultant actively participates in the negotiation. However, the
Company's acquisition of UDI Corp., UDI II Corp. and King Office Supply, Inc.
shall not be included within the definition of Acquisition Transactions for
purposes of this Agreement, and therefore no fee shall be paid for such
acquisitions. In addition, any compensation paid to the principals of the
acquisition targets for services actually to be performed by those principals
shall not be included in such calculation of Consultant's Fee. The determination
whether gross annual revenues in fact exceeds $150 million shall be based on,
for each Acquisition Transaction, the most recent 12-month figures set forth in
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the audited financial statements used at the closing of such Acquisition
Transaction. All fees and compensation due Consultant under Paragraph 2(c) of
this Agreement shall be due and payable within 15 days after the earlier of (1)
the date on which the IPO closes, (2) the date on which the transaction
described in paragraph 2(b)(ii)(A) closes, or (3) the date on which the
transaction described in paragraph 2(b)(ii)(B) closes.
(d) In the event of a disagreement related to any of the
Consultant's Fees payable under this Agreement, Company and Consultant agree to
be guided by GAAP (Generally Accepted Accounting Principles) with such dispute
to be submitted to arbitration pursuant to section 7 hereto.
(e) The Consultant's Fee described in Sections 2(b)(i)(A),
2(b)(ii) and 2(c) shall be in addition to, and exclusive of the monthly fees
payable by the Company to Consultant described in subparagraph 2(a) of this
Agreement.
(f) The Company shall reimburse Consultant the Consultant's
reasonable and customary business expenses incurred by Consultant in connection
with its performance of the services described in this Agreement. The Company
shall deliver the actual reimbursement funds to Consultant within 10 days
following Consultant's delivery to Company of a written expense report
containing reasonable detail of the expenses for which Consultant seeks
reimbursement together with receipts evidencing such expenses.
3. INTENTIONALLY DELETED.
4. PAYMENT OF CONSIDERATION AFTER TERMINATION.
(a) The parties agree that the initial acquisition candidates
(each being a "Target") will be the companies as set forth on Annex A hereto.
Upon mutual agreement of the Company and Consultant, Annex A may be amended from
time to time to add or subtract Targets. If this Agreement expires or otherwise
is terminated pursuant to Section 8 for any reason other than by the Company for
just cause as described in paragraph 8(b) and if any relevant IPO or merger
transaction as described in Sections 2(b)(i)(A) and 2(b)(ii) closes within one
year of the expiration or other such early termination of this Agreement,
Consultant shall be entitled to receive the full Consultant's Fee described in
said Sections 2(b)(i)(A) and 2(b)(ii) less the amounts, if any, actually
received by Consultant pursuant to Section 2(b)(iii). If, after the expiration
or other such termination of this Agreement, any of the Acquisition Transactions
are finally closed within the twelve month period following such expiration or
other such early termination of this Agreement, with any Target with whom
Consultant was participating as a part of the Acquisition Team prior to the
expiration or other such early termination of this Agreement, Consultant shall
be entitled to receive the Consultant's Fee (if applicable) described in Section
2(b)(iii) with respect to such Acquisition Transaction.
(b) In the event the Company terminates this Agreement for
just cause as described in Section 8(b) of this Agreement, and except as
otherwise provided in this Section 4(b) Consultant only shall be entitled to
receive a Consultant's Fee if the Company closes an IPO or merger transaction as
described in Sections 2(b)(i)(A) and 2(b)(ii) within the twelve month
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period immediately following the effective date of termination. The Consultant's
Fee payable in that event shall be equal to the Consultant's Fee described in
either Section 2(b)(i)(A) or Section 2(b)(ii), as appropriate, times a fraction
the denominator of which shall be the total combined product and service sales
volume of completed Acquisition Transactions at the time of the closing of the
IPO or merger transaction and the numerator of which shall be the total combined
product and service sales volume of Acquisition Transactions under either
contract or letter of intent (but not yet closed) which actually close prior to
or at the closing the of the IPO or merger transaction. In the event the Company
terminates this Agreement for just cause as described in Section 8(b) of this
Agreement and the Company does not close an IPO or merger transaction as
described in Sections 2(b)(i)(A) and 2(b)(ii) within the twelve-month period
immediately following the effective date of termination, Consultant shall be
entitled only to receipt of a Consultant's Fee in an amount described in Section
2(b)(iii).
5. OBLIGATIONS OF COMPANY. The Company will make available to
Consultant copies of all correspondence exchanged between Company, and any
Target as well as any entity described in paragraph 2(b) and Company will, in
general, keep Consultant apprised in a timely fashion of the nature of any such
proposed transactions.
6. RESTRICTIVE COVENANTS. The following restrictive covenants shall be
in full force and effect during the term of this Agreement and for a period of
one (1) year after this Agreement has been terminated:
(a) Consultant will take all action necessary to insure that
all information provided by the Company to Consultant shall be kept in strictest
confidence by Consultant; and
(b) During the term of this restrictive covenant, Consultant
agrees not to, directly or indirectly, solicit any of the Company's Targets or
any other parties whose names have been identified by the Acquisition Team as
potential Targets for any other entity other than on behalf of the Company.
7. MANDATORY ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof. In the
event either party utilizes an attorney in order to enforce the terms of this
Agreement and such party prevails, then the losing party shall reimburse the
prevailing party for the costs of said action including, but not limited to,
reasonable attorneys fees.
8. TERM. (a) Unless otherwise terminated in accordance with the
provisions contained in subparagraphs (b) or (c) of this paragraph 8, the term
of this Agreement shall be twelve months commencing on the date of this
Agreement.
(b) The Company may terminate this Agreement for just cause
which shall include the following:
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(i) Repeated failure by the Consultant, following
not less than 30 days' prior written warning, to perform duties and obligations
pursuant to this Agreement in a correct, timely and expeditious manner;
(ii) Conviction or pleas of guilty or NOLO CONTENDRE
to any crime which constitutes a felony under the laws of any state or the laws
of the United States by any of the Consultant's principals;
(iii) Engaging in activities by Consultant which
constitutes a material breach of the
provisions contained in paragraph 6 of this Agreement.
In the event the Company elects to terminate this Agreement for just
cause pursuant to this subparagraph 8(b), Consultant shall not be entitled to
any of the monthly fees described in paragraph 2(a) accruing after the effective
date of termination nor any of the Consultant Fees which otherwise would be due
and owing for the consummation of Acquisition Transactions following the
effective date of the termination of this Agreement except as provided in
Section 4(b).
In the event the Company terminates this Agreement for any reason other
than for just cause, Company shall remain obligated to pay and shall pay
Consultant an amount equal to 50% of the monthly fee described in paragraph 2(a)
of this Agreement for the remaining term of this Agreement as well as the
Consultants Fees and the additional fees described in Section 4(a) of this
Agreement.
(c) Consultant may terminate this Agreement for just cause which
shall include the following:
(i) The Company fails to pay any of the fees due and payable
to Consultant under this Agreement and such failure continues for a period of
thirty days following Consultant's delivery of written notice of such failure to
Company;
(ii) The Company breaches any other provision of this
Agreement and fails to cure such breach within thirty days following
Consultant's delivery of written notice of such breach to the Company;
(iii) The Company fails to pursue with reasonable diligence
any of the prospective Acquisition Transactions with the Targets and the Company
continues its failure to do so during the thirty days following Consultant's
delivery of written notice thereof to Company;
(iv) The Company becomes insolvent during the term of this
Agreement.
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In the event Consultant elects to terminate this Agreement for proven,
just cause pursuant to this subparagraph 8(c), Consultant shall be entitled to
receive and the Company shall remain obligated to pay and shall pay Consultant
the amounts to which Consultant otherwise would be entitled to receive under
subparagraphs 2(a), 2(b), 2(c) and 4(a) of this Agreement.
9. AUTHORITY TO ACT. Each party hereby represents and warrants that the
individual who executes this Agreement on behalf of such party has been granted
the requisite authority to do so by such party.
10. INDEMNIFICATION. Each party will indemnity and hold the other party
and its agents, officers, directors and employees harmless from any and all
claims arising from its activities under this Agreement except in the event that
actions or inactions of such party are deemed to involve negligence or willful
misconduct. Such indemnification shall include, but not be limited to, the
non-breaching party's attorneys fees.
11. NOTICE. Any notice required hereunder shall be complete upon
certified mailing of the notice to the party at the address appearing herein, or
at the address which shall from time to time be provided to the other party. The
parties shall notify the other of any alteration or change in address
hereinafter occurring.
12. COUNTERPARTS. This Agreement may be executed in multiple
counterparts. Each executed counterpart shall be considered an original, and
taken together, shall constitute one and the same document. Any signature,
notice or other communication with respect to the subject matter hereof may be
given by telex, telecopy or other facsimile transmission and relied upon to the
same extent as if it were an original.
13. SEVERABILITY. If any provision, paragraph or subparagraph of this
Agreement is adjudged by any court to be void or unenforceable in whole or in
part, this adjudication shall not affect the validity of the remainder of the
Agreement, including any other provision, paragraph or subparagraph. Each
provision, paragraph or subparagraph of this Agreement is separable from every
other provision, paragraph and subparagraph and constitutes a separate and
distinct covenant.
14. GOVERNING LAW. This Agreement shall be subject to and governed by
the laws of the State of New York.
15. AMENDMENT. This Agreement may only be amended in writing, duly
endorsed by the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement,
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effective the date first written above.
CONSULTANT:
BENMARK ASSOCIATES, INC.
By: /s/ Xxxxxxx X. Case
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Xxxxxxx X. Case
Its duly authorized President
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OFFICE CENTRE CORPORATION
By: /s/ X.X. Xxxxxx, Xx.
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Xxxxxx X. Xxxxxx, Xx.
Its duly authorized CEO
For value received, the sufficiency of which hereby is acknowledged by
UDI Corp. and by UDI II Corp, UDI Corp. and UDI II Corp. join this Agreement
solely for the purpose of guaranteeing Office Centre Corporation performance of
its obligations under this Agreement. The guarantee of UDI Corp. and of UDI II
Corp. is one of performance and not merely of collection.
UDI CORP. UDI II CORP.
By: /s/ Xxxxxx Xxxxxxxxxxx By: /s/ Xxxxxx Xxxxxxxxxxx
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Xxxxxx Xxxxxxxxxxx Xxxxxx Xxxxxxxxxxx
Its duly authorized Pres. Its duly authorized Pres.
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