Exhibit 10.2
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement"), dated as of the 24th day of
August, 2007, by and between Welding Metallurgy Inc., a New York corporation
with an address c/o Air Industries Group, Inc., 0000 Xxxxxxx Xxxxxx, Xxx Xxxxx,
Xxx Xxxx, 00000 ("WMI" or the "Company") and Xxxxx Associates LTD, a New York
corporation having an office at 31 & 31A Xxxxx Streeet, West Babylon, New York
("Xxxxx Associates") and Xxxx Xxxxx, an individual having an address at 000
Xxxxxxxxx Xxxxxxxx Xxxxxxxx, Xxx Xxxx (the "Consultant"). WMI, Xxxxx Associates
and the Consultant are hereinafter sometimes individually referred to as a
"Party" and jointly as the "Parties."
RECITALS:
WHEREAS, WMI desires that Xxxxx Associates make the services of the
Consultant available to serve as a consultant and the Consultant desires to
serve WMI in such capacity on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Parties hereto, intending to be legally bound, agree as
follows:
1. Engagement. WMI hereby engages Xxxxx Associates to make the Consultant
available to serve as a consultant and the Consultant agrees to serve in such
capacity. During the Term (as hereinafter defined), Consultant shall report
directly to WMI's President, or to such person(s) as may be directed by WMI's
President, and shall discharge to the best of his abilities all duties and
responsibilities as may be reasonably assigned to him from time to time. During
the Term, the Consultant shall be required to devote no more than twenty (20)
hours of work per week, it being further agreed that when practicable, the
Company shall allow the Consultant to provide his services by telephonic
communication.
2. Term. The initial term of the engagement under this Agreement shall be
for a period of approximately three months commencing on the date hereof and
ending on November 24, 2007 (the "Initial Term"). Upon expiration of the Initial
Term, the engagement under this Agreement shall continue for an additional three
month period unless either Xxxxx Associates or the Company gives written notice
to the other no later than November 1, 2007, of his or its determination to
allow this Agreement to expire as of the end of the Initial Term. The engagement
under this Agreement shall terminate immediately upon the death of the
Consultant or upon the onset of any disability which prevents the Consultant
from rendering services to WMI. The period during which Xxxxx Associates is
engaged by WMI is referred to as the "Term."
3. Compensation. The compensation for the services to be provided to WMI
hereunder during the Term shall be Thirty Thousand Dollars ($30,000.00) per
month, payable to Xxxxx Associates in accordance with WMI's regular payroll
practices, but no less frequently than twice a month and no later than the end
of the month during which services are rendered. If the first or the last month
of the Term begins or ends other than on the first or last day of a calendar
month the amount due Xxxxx Associates for services rendered during such month
shall be pro-rated based upon the number of days in such month during which the
Consultant is engaged by WMI.
In addition to the foregoing, WMI shall promptly reimburse Xxxxx
Associates for all expenses incurred by it in
the performance of its duties hereunder, including, without limitation, those
incurred for business travel, provided that without the prior consent of the
President of WMI Consultant shall not incur more than $2,000 of expenses in any
month and further provided that Xxxxx Associates provides the Company with such
receipts or other evidence of its expenses as are required by the Company's
policies.
4. Nonsolicitation of Customers and Employees. At all times during the
Term and for a period of five (5) years from the date hereof, (a) the Consultant
shall not, directly or indirectly, for himself or on behalf of or in conjunction
with any other person, solicit or attempt to solicit the business or patronage
of any customer of the Company on behalf of a business which provides products
or services competitive with those of WMI, nor shall Consultant interfere with
the business relationship of WMI with any customer of WMI, and (b) the
Consultant shall whether individually, as a director, manager, member,
stockholder, partner, owner, employee, consultant or agent of any business, or
in any other capacity, directly or indirectly, employ, solicit, disturb, entice
away, or in any other manner persuade any employee of WMI or its affiliated
entities (the "Corporation") to discontinue or alter his or her relationship
with the Corporation.
5. Noncompetition. At all times during the Term and for a period of five
(5) years from the date hereof, the Consultant whether individually, as a
director, manager, member, stockholder, partner, owner, employee, consultant or
agent of any business, or in any other capacity, shall not engage, directly or
indirectly through any other person, in any business, enterprise or employment
which competes with the business of the Corporation as conducted on the date
hereof. The Consultant acknowledges and agrees that the business of the
Corporation is of a worldwide nature and that any geographic limitation on the
foregoing covenant would be ineffective to adequately protect the interests of
the Corporation. The Consultant further acknowledges and agrees that the
foregoing covenant is an integral part of his agreement to be engaged hereunder,
is fair and reasonable in light of all of the facts and circumstances of the
relationship between the Consultant, WMI and the Corporation. In the event any
court of competent jurisdiction determines that, notwithstanding the foregoing
acknowledgments, the scope of the restricted activities of the foregoing
covenant is excessive or not enforceable, or that the foregoing covenant is not
enforceable unless it is subject to a geographic limitation, this Agreement
shall be deemed amended to reflect the maximum restrictions on activities and
geographic scope allowable pursuant to such court's determination.
WMI acknowledges that Consultant is a certified welding inspector and that
nothing contained herein shall be deemed to prevent him from acting as a welding
inspector for any entity not engaged in a business competitive with that of the
Company or, in any event for any of Northrop Grumman, Boeing Corp., Lockheed
Xxxxxx, Senior Flexonic and Sandia Laboratories. Further, Consultant shall be
permitted to perform welding inspection services for businesses competitive with
2
the Company so long as Consultant provides no other services to any such entity
and upon request of WMI advises such entity of the restrictions contained
herein. To the extent that there is an inconsistency or ambiguity between this
section and Section 7.1 of that certain Stock Purchase Agreement dated as of
March 9, 2007 by and between Air Industries Group, Inc. ("Air Industries"),
formerly, Xxxxx Industries Incorporated, and Xxxx Xxxxx and Xxxxxxx Xxxxx, the
terms of this Agreement shall govern.
6. Promissory Note. The Parties and the Consultant agree that the
covenants contained in Sections 4 and 5 of this Agreement shall terminate in the
event of a default by Air Industries Group, Inc. under that certain Subordinated
Promissory Note pursuant to which Air Industries has agreed to pay to the
Consultant and Xxxxxxx Xxxxx or their assigns, the principal sum of Two Million
Dollars ($2,000,000.00).
7. Protection of Confidential Information. Consultant acknowledges that he
has been and will be provided with information about, and his engagement by WMI
will, throughout the Term, bring him into close contact with, many confidential
affairs of the Corporation, including proprietary information about the business
of the Corporation for example, but not by way of limitation, costs, finances,
internal financial statements, projections, markets, sales, customers, vendors,
products, key personnel, operational methods, formulas, methods of production,
technical processes and methods, plans for future developments, software, data
bases, computer programs, specifications, documentation, designs, trade secrets,
technology, know-how, research and development, inventions, patents and
copyrights (and any renewals, reissues, extensions, divisions, continuations and
continuations in part thereof and registrations, applications, patents of
addition and inventors certificates) and other information not available to the
public (collectively "Confidential Information"), all of which are highly
confidential and proprietary and all of which were or will be developed or
acquired by the Corporation great effort and expense. Consultant further
acknowledges that the services to be performed by him under this Agreement are
of a special unique, unusual, extraordinary and intellectual character and that
the nature of the relationship of Consultant with the Corporation is such that
Consultant is capable of competing with the Corporation. In recognition of the
foregoing, Consultant agrees that during the Term and thereafter he will:
(a) keep secret all Confidential Information of the Corporation and
not disclose the same to anyone outside of the Corporation except in
furtherance of WMI's affairs or with WMI's prior written consent;
(b) not make use of any of such Confidential Information for his own
purposes or the benefit of anyone other than the Corporation, provided,
however, that the restrictions contained in clauses (a) and (b) shall not
apply at any time to Confidential Information which is then in the public
domain (provided the Consultant was not responsible directly or indirectly
for the fact that such secrets or information have entered the public
domain without WMI's consent), and that these restrictions shall not apply
to Confidential Information that is required to be disclosed by law, by
subpoena or by any government, regulatory or self regulatory body,
provided the Consultant uses reasonable efforts to advise WMI of the
prospective disclosure of Confidential Information and discloses only such
Confidential Information which counsel advises needs to be disclosed; and
3
(c) deliver promptly to WMI on termination of this Agreement, or at
any time WMI may so request, all Confidential Information, including but
not limited to memoranda, notes, records, computer software discs, reports
and other confidential documents (and all copies thereof) relating to the
business and affairs of the Corporation, that he may then possess or have
under his control, except that he may retain personal notes, notebooks,
journals and diaries provided that such materials do not contain
Confidential Information.
8. Property Rights and Inventions. All rights in and to all data,
information, reports, inventions, know-how, improvements, designs, devices,
apparatus, practices, processes, methods or products, whether patentable or not,
which are made, developed, perfected, devised, conceived or first reduced to
practice by Consultant either solely or jointly with others, derived in whole or
in part from Confidential Information (the "Inventions") (i) shall be and remain
the sole and exclusive property of WMI, (ii) shall be considered trade secrets
of WMI subject to the confidential requirement herein, and (iii) shall remain
free of any claim of Consultant or any person deriving any rights or interest
from Consultant.
9. Specific Remedies. It is understood by the Consultant that the
covenants contained in Sections 4, 5, 6 and 7 are essential elements of this
Agreement and that, but for the agreement of the Consultant to comply with such
covenants, WMI would not have agreed to enter into this Agreement. The
Consultant acknowledges that the Corporation may have no adequate remedy at law
if he violates any of the terms of Sections 4, 5, 6 or 7. The Consultant
therefore understands and agrees that the Corporation shall have, without
prejudice as to any other remedies, the right upon application to any court of
proper jurisdiction and without posting of any bond or other security
whatsoever, to a temporary restraining order, preliminary injunction,
injunction, specific performance or other equitable relief, it being
acknowledged and agreed that any such breach will cause irreparable injury to
the Corporation and that money damages will not provide an adequate remedy to
the Corporation.
10. Independent Contractor. This Agreement does not create an
employer/employee relationship between the Consultant and WMI. The Consultant
agrees that he renders all services hereunder as an independent contractor and
not as an employee or agent of WMI. The Consultant also agrees that he shall not
have any rights to receive any employee benefits, such as health and accident
insurance, sick leave or vacation as are in effect generally for employees of
WMI. The Consultant will not enter into any agreements or incur obligations on
behalf of WMI nor commit WMI in any other manner without prior written consent
from a duly authorized officer or representative of WMI.
11. Conflicts of Interests. Xxxxx Associates represents and warrants that
it has the full power and right to enter into this Agreement and that there are
no outstanding agreements, assignments, licenses, encumbrances or rights in
other parties, private or public, which might interfere with, or preclude the
carrying out of, the obligations under this Agreement.
12. Successors; Binding Effect; Third Party Beneficiaries. WMI may assign
this Agreement in whole or in part without the Consultant's consent. No
assignment shall enlarge or expand the scope of the Consultant's services
hereunder without the prior written consent of the Consultant.
4
This Agreement is personal to Xxxxx Associates and the Consultant
and, without the prior written consent of WMI, shall not be assignable by Xxxxx
Associates or the Consultant. Air Industries and its subsidiaries shall each be
deemed third party beneficiaries of this Agreement with the right to enforce the
provisions of Sections 4,5,6 and 7 hereof. Except for the foregoing, this
Agreement shall not create any rights in favor of any party other than the
parties hereto or their respective successors and assigns.
13. Law Governing; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (without giving
effect to the principles of conflicts of law). The Parties agree that the
federal or state courts located in the State of New York shall have exclusive
jurisdiction in connection with any dispute arising out of this Agreement. Any
litigation proceeding under this Agreement shall be confidential in nature to
the fullest extent permitted by applicable law.
14. Severability. If any provision of this Agreement, or any part of any
of them, is hereafter construed or adjudicated to be invalid or unenforceable,
the same shall not affect the remainder of the covenants or rights or remedies
which shall be given full effect without regard to the invalid portions provided
that as so construed each of the parties receives substantially all of the
benefits and remains subject to all of the burdens contemplated hereby. If any
of the covenants set forth herein is held to be invalid or unenforceable because
of the duration of such provision or the area covered thereby, the parties agree
that the court making such determination shall have the power to reduce the
duration and/or area of such provision and in its reduced form said provision
shall then be enforceable.
15. Headings. The headings of this Agreement are for convenience of
reference only and shall not affect in any manner any of the terms and
conditions hereof.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same agreement.
17. Modifications and Waivers. No term, provision or condition of this
Agreement may be modified or discharged unless such modification or discharge is
agreed to in writing and signed by each of the Parties hereto. No waiver by
either Party hereto of any breach by the other party hereto of any term,
provision or condition of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.
18. Entire Agreement. This Agreement constitutes the entire agreement
between the Parties with respect to the subject matter herein and supersedes all
prior agreements, negotiations and discussions between the parties hereto, there
being no extraneous agreements. This Agreement may be amended only in writing
executed by the parties hereto affected by such amendment.
5
19. Notices. Any notice or other written communications required or
permitted to be given or made under this Agreement shall be given or made by
either Party to the other in writing and shall be delivered by personal service
or first class mail, postage prepaid, or overnight courier addressed to a Party
at the address set forth above or at such other address as one Party may give
notice of to the other Party. Notices or written communications shall be deemed
to have been sufficiently given or made: (i) if by personal service, when
performed; (ii) if mailed, three (3) days after being deposited in the mail,
postage prepaid; or (iii) if by overnight courier, one (1) day after delivery to
the overnight courier company.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the
day and year first set forth above.
WELDING METTALURGY INC.
By: /s/ Xxxxx X. Xxxxxxxxxx
---------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: President
XXXXX ASSOCIATES LTD
By: /s/ Xxxx Xxxxx
---------------------------
Name: Xxxx Xxxxx
Title: President
By: /s/ Xxxx Xxxxx
---------------------------
XXXX XXXXX
6
