1
Exhibit 10(4)
SECOND
AMENDED AND RESTATED
MANAGEMENT SERVICES AGREEMENT
CPS
This Agreement has been executed on May 15, 1998, by and between CPS CAPITAL
LTD., an Ohio limited liability company, whose principal offices are located at
of 0000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxx 00000 ("CPS"), and SENTEX
SENSING TECHNOLOGY, INC., an New Jersey corporation, whose principal offices are
located at 000 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000 ("Sentex").
PRELIMINARY STATEMENTS:
A. CPS possesses a diverse executive management background in
manufacturing, distribution and service industries.
B. CPS also has direct management experience in Finance,
Marketing, Sales, Business Systems, Strategic Planning, and
Human Resources and is willing to provide services to Sentex
based on this background.
C. CPS has made these services available to Sentex.
D. Sentex desires to have these services provided by CPS.
E. CPS has provided these services to Sentex during fiscal 1997
and is due the sum of $196,900 for which it has not yet been
paid.
F. The parties have agreed that effective December 1, 1998 CPS
would reduce its fee to $250,000 per year and that Sentex
would pay CPS the unpaid balance of $196,900 or a portion
thereof in common shares, without par value, of Sentex
("Common Shares") to the extent permitted under the New Jersey
Shareholder Protection Act ("Act").
G. The parties have agreed to amend and restate their prior
agreement to account for the changes in Preliminary Statement
E and F.
2
Therefore, in consideration of the mutual covenants set forth herein, the
parties hereto agree as follows:
1. MANAGEMENT SERVICES. Subject to the terms and conditions of this
Agreement, Sentex hereby retains CPS, as an independent contractor, to
provide executive management services to Sentex and its subsidiaries
(collectively the "Sentex Companies"). The nature and extent of the
services to be provided may vary from time to time as agreed by the
parties (the "Services"), but shall include:
(a) those services normally provided by the executive
officers of a corporation of similar size and
diversity including, without limitation, those
services normally provided by the Chief Executive
Officer, the Chief Operating Officer and Corporate
Secretary;
(b) management and oversight of the accounting and
financial functions of the Sentex Companies;
(c) management of advertising and promotions for all
business segments;
(d) strategic planning;
(e) stockholders relations;
(f) supervision of day to day business operations;
(g) perform those items set forth in the Interim Letter
Agreement during the pendency of the Merger
Agreement; and
(h) upon the consummation of the Merger, continue to
perform the items set forth in the Interim Letter
Agreement.
The Services will be performed by Xxxxxx X. Xxxxxxx acting in
his capacity as Chairman, President and Treasurer of Sentex
and Xxxxx X. Few acting in his capacity as Vice President,
Secretary and Chief Operating Officer of Sentex (collectively,
the "Executive Officers") and other CPS employees as, from
time to time, may be required to provide the Services to be
rendered hereunder. The parties may add, remove or substitute
personnel from time to time as they may agree; provided,
however, that at all times the Executive Officers shall be
elected by the Board of Directors of Sentex and shall hold
office until their successors are qualified and chosen.
Notwithstanding any of the foregoing to the contrary, the
nature and extent of Services to be performed by CPS, through
the Executive Officers and other CPS employees, shall in all
respects be determined by the Board of Directors of Sentex.
2. PERFORMANCE OF SERVICES. Notwithstanding that the nature and extent
of the services will be determined in all respects by the Board of
Directors of Sentex, the manner in which the Services are to be
performed and the specific hours to be worked by CPS personnel shall be
determined in all respects by CPS.
3. COMPENSATION.
(a) Effective December 1, 1997, Sentex will pay a fee to CPS
(the "Compensation") at the annual rate of $250,000. The
Compensation shall be payable monthly, in advance,
-2-
3
and due no later than the tenth day of each month.
Notwithstanding the foregoing sentence, in the event Sentex
shall be unable to pay the fee in accordance with the terms in
the prior sentence, Sentex shall pay the fee to CPS as soon as
the financial condition of Sentex will permit such fee to be
paid and in all events Sentex shall record such a fee as a
liability of Sentex. The Compensation includes an allocation
of CPS's overhead costs, including, without limitation, rent,
utilities, office, clerical, personnel and administrative
expenses. The Compensation is subject to change based upon
changes in Sentex's business activity; provided, however, any
such change will become effective only upon thirty days notice
to Sentex and require the written approval of a majority of
the members of the Board of Directors of Sentex who are
neither an officer nor controlling member of CPS. Upon
Termination of this Agreement (as defined in Section 5 hereof)
the Compensation shall cease; provided, however, CPS shall be
entitled to Compensation for periods or partial periods that
occurred prior to Termination and for which CPS has not yet
been paid.
(b) In exchange for $196,900 of the fiscal 1997 fee that has
not been paid, Sentex hereby issues to CPS 5,025,745 Common
Shares; provided, however, that in the event is shall have
been determined that the number of Common Shares issued to CPS
exceeds that number of Common Shares that are permitted to be
issued to CPS under Act, then CPS shall return such excess
Common Shares to the Company.
4. EXPENSE REIMBURSEMENT. CPS shall be entitled to reimbursement from
Sentex for all reasonable "out-of-pocket" expenses incurred in the
performance of the Services hereunder in accordance with and subject to
Sentex's regular policies in effect regarding reimbursement of expenses
and the documentation required in connection therewith.
5. TERM/TERMINATION. The term of this Agreement shall be for a period
of one year, to commence on the date hereof, and shall renew,
automatically, for successive terms of the same duration. This
Agreement may be terminated, with or without cause, by either party
upon thirty days written notice of termination to the other party
("Termination").
6. INDEPENDENT CONTRACTOR. It is understood by the parties to this
Agreement that CPS is an independent contractor to Sentex and nothing
in this Agreement shall be construed to create an employer/employee
relationship between any of the Sentex Companies and any of the
personnel of CPS. The Compensation provided for hereunder includes all
benefits due or owed to the Executive Officers by CPS, including,
without limitation, vacation pay, health, life or disability insurance,
xxxxxxx'x compensation (collective, "Additional Benefits") and the
Sentex Companies shall incur no responsibility or liability for any
such Additional Benefits.
7. ASSIGNMENT. CPS's obligations under this Agreement may not be
assigned or transferred to any other person, firm, or corporation
without the prior written consent of Sentex.
8. CONFIDENTIALITY. CPS acknowledges and agrees that the Sentex
Companies maintain confidential and proprietary information and trade
secrets, including, without limitation, discoveries, ideas, inventions,
drawings, blueprints, manuals, customer and supplier lists and other
material of a technical, business or fiscal nature (collectively
"Confidential Information"). CPS agrees not to disclose any
Confidential Information to third parties unless authorized to do so by
Sentex in writing, except, however, that CPS may disclose or use such
Confidential Information in the performance of the Services hereunder.
The foregoing restriction shall not apply to any information that is in
the public domain or becomes available to CPS, after the Termination of
the Agreement, from sources other than Sentex. CPS acknowledges and
agrees
-3-
4
that disclosures of Confidential Information would cause irreparable
damage to Sentex and, in the event of breach of this provision, Sentex
would be entitled to any and all remedies at law and equity including
temporary and permanent injunctive relief.
9. COVENANT NOT TO COMPETE. Except as otherwise mutually agreed to by
the parties, during the Term of this Agreement and for one year
thereafter, CPS shall not engage, directly nor indirectly, in any
business that is competitive with the business that is being conducted
by the Sentex Companies or solicit or attempt to solicit any business
from any person, firm or entity that was or is a customer or is a
prospective customer of the Sentex Companies. For the purposes of this
paragraph, "prospective customer" shall mean a potential customer which
one of the Sentex Companies has solicited or with whom one of the
Sentex Companies has had active discussions concerning potential
business at any time during the Term of this Agreement. CPS
acknowledges, and agrees that, in the event of the breach of this
paragraph, Sentex would be entitled to any and all remedies at law and
equity including temporary and permanent injunctive relief.
10. INDEMNIFICATION. CPS hereby agrees to indemnify and hold harmless
Sentex, its successors and assigns, from and against any and all
claims, investigations, losses, damages, liabilities, actions and
causes of action including, without limitation, reasonable attorney
fees and costs of investigation, arising out of any actual violation of
the Act resulting from the payment by Sentex to CPS of management fees
that constitutes, in whole or in part, a prohibited "business
combination" (as defined in the Act).
11. RETURN OF RECORDS. Upon termination of this Agreement, CPS shall
deliver all records, notes, data, memorandums, models, and equipment of
any nature that are in CPS's possession or under CPS's control and that
are the property or relate to the business of any of the Sentex
Companies.
12. NOTICES. All notices required or permitted under this Agreement
shall be in writing and shall be deemed delivered when delivered in
person or deposited in the United States mail, postage prepaid,
addressed as follows:
CONSULTANT COMPANY
CPS Capital Ltd. Sentex Sensing Technology, Inc.
Xxxxxx X. Xxxxxxx Xxxxxx Xxxxxxx
President President
0000 Xxxx Xxxxx Xxxxxx 0000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000 Xxxxx 0000
Xxxxxxxxx, Xxxx 00000 Xxxxxxxxx, Xxxx 00000
Such address may be changed from time to time by either party by
providing written notice to the other in the manner set forth above.
13. ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties and there are no other promises or conditions in any other
agreement whether oral or written. This Agreement supersedes any prior
written or oral agreements between the parties.
14. AMENDMENT. This Agreement may be modified or amended if the
amendment is made in writing and is signed by both parties.
-4-
5
15. SEVERABILITY. If any provision of this Agreement shall be held to
be invalid or unenforceable for any reason, the remaining provisions
shall continue to be valid and enforceable. If a court finds that any
provision of this agreement is invalid or unenforceable, but that by
limiting such provision it would become valid and enforceable, then
such provision shall be deemed to be written, constructed, and enforced
as so limited.
16. WAIVER OF CONTRACTUAL RIGHT. The failure of either party to enforce
any provision of this Agreement shall not be construed as a waiver or
limitation of that party's right to subsequently enforce and compel
strict compliance with every provision of this Agreement.
17. APPLICABLE LAW. This Agreement shall be governed by the laws of the
State of New Jersey without regard to principles of conflict of laws.
CPS CAPITAL LTD. SENTEX SENSING TECHNOLOGY, INC.
By: /s/Xxxxxx X. Xxxxxxx By: /s/Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx, President Xxxxxx X. Xxxxxxx, President
-5-
