Exhibit 10.19
Exhibit A
CONSULTING AGREEMENT
THIS AGREEMENT is made this ____ day of _______, ____between
ELCOM INTERNATIONAL, INC., a Delaware corporation (the "Company"), and XXXXXX X.
XXXXXXX, an individual (the "Consultant").
RECITALS:
A. Pursuant to an Employment Agreement dated as of June 1,
1997 (the "Employment Agreement"), Consultant is the Chairman of the Board and
Chief Executive Officer of the Company.
B. Consultant is a key employee of the Company and has
obtained valuable knowledge and experience pertaining to the Company's
technology, the sale of personal computer products and services (the "Business")
of the Company, specifically including strategic planning, the sales and
marketing functions of such Business, financial and financing matters,
acquisition strategies and implementation, management information systems,
management and operations of the Business and the Company, personnel matters and
reporting and disclosure considerations ("Areas of Expertise").
C. In order to assure that the Company continues to receive
the benefit of Consultant's knowledge and expertise following the termination of
his employment with the Company, the parties hereto desire to enter into this
Agreement pursuant to Section 8 of the Employment Agreement.
NOW, THEREFORE, in consideration of and in reliance upon the
mutual benefits provided hereunder, the Company and the Consultant hereby agree
as follows:
1. Services. For the three (3) year period commencing on the
date that Consultant terminates the Employment Agreement, in accordance with the
terms of the second sentence of Section 8 of the Employment Agreement (the
"Consulting Period"), the Consultant shall serve as a management and financial
consultant to the Company. As such, Consultant shall be on-call for the Company
between the hours of 9:00 a.m. and 5:00 p.m., Boston time, on the first four (4)
Mondays of each month during the Consulting Period for a total of thirty-two
(32) hours per month, to render such advice and assistance regarding operations
of the Business, relationships with and service to major customers, development
of new accounts, strategic planning, financial matters and other matters within
his Areas of Expertise as may reasonably be requested of him by the Company.
Consultant agrees to provide such services in person at any location of the
Company located within fifty (50) miles of downtown Boston, or otherwise shall
make himself available by telephone. Further, the Company and Consultant shall
be entitled to
mutually agree on alternative times and/or places for the provision of such
services to the extent that mutually satisfactory arrangements can be made.
2. Restrictive Covenants.
2.1 Noncompetition. Consultant agrees that
during (the "Noncompetition Period")
period commencing on the date hereof and continuing so long as Consultant
receives payments under this Agreement, Consultant will not, either directly or
indirectly, in any capacity whatsoever, (a) compete with the Company by
soliciting any customer of the Company by whatever method or (b) operate,
control, advise, be employed and/or engaged by, perform any consulting services
for, invest in (other than the purchase of no more than 5 percent of the
publicly traded securities of a company whose securities are traded on a
national stock exchange) or otherwise become associated with, any person,
company or other entity who or which, at any time during the Noncompetition
Period, competes with the Company. As used above, "compete" is defined as the
marketing, distribution or sale of desktop, laptop, notebook or other commonly
called "personal computer" equipment, existing software "shrink-wrapped"
applications (i.e., in existence as of June 1, 1997), services, peripherals, or
accessories in the geographical area in which the Company maintains offices,
sales agents, has customers or otherwise conducts business; provided; however,
that "competes" shall not mean the involvement in any of the following: (i) a
company with less than ten percent (10%) of its revenues for any fiscal year
during the Noncompetition Period from any of the foregoing defined "competitive"
activities, or (ii) a company with a primary purpose of marketing and developing
its own software that otherwise does not exceed the threshold in subclause (i),
if such threshold was thirty percent (30%), or (iii) any entity which has
annualized revenues (at the time Consultant commences, or were to commence, his
relationship with such entity) of less than $3 million. The Consultant further
expressly represents and understands that this Agreement will prohibit the
Consultant from employment during the Noncompetition Period with companies that
compete with the Company, as defined in this Agreement, and as such, will
constrain some of the Consultant's overall possibilities for future employment.
By Consultant's signature to this Agreement, Consultant expressly represents
that his training, education and background are such that his ability to earn a
living shall not be impaired by the restriction in this Agreement.
2.2 Nondisclosure. Consultant agrees at all times to hold as secret and
confidential (unless disclosure is required pursuant to court order, subpoena,
in a governmental proceeding, arbitration, or pursuant to other requirement of
law) any and all knowledge, technical information, business information,
developments, trade secrets and confidences of the Company or its business,
including, without limitation, (a) information or business secrets relating to
the products, customers, business, conduct or operations of the Company or any
of its respective clients, customers, consultants or licensees; and (b) any of
the Company's customer lists, pricing and purchasing information or policies
(collectively, "Confidential Information"), of which he has acquired knowledge
during or after the Consulting Period or his employment with the Company, to the
extent that such matters (i) have not previously been made public or are not
thereafter made public, or (ii) do not otherwise become available to Consultant,
in either case, via a source not bound by any confidentiality obligations to the
Company. The phrase "made public" as used in this Agreement shall apply to
matters within the domain of the general public
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or the Company's industry. Consultant agrees not to use, directly or indirectly,
such knowledge for his own benefit or for the benefit of others and/or disclose
any of such Confidential Information without prior written consent of the
Company. At the end of the Consulting Period, the Consultant agrees to promptly
return to the Company any and all written Confidential Information received from
the Company which relates in any way to any of the foregoing items covered in
this paragraph and to destroy any transcripts or copies the Consultant may have
of such Information unless an alternative method of disposition is approved by
the Company.
2.3 Nonsolicitation/Noninterference. Consultant agrees that during the
period (the "Nonsolicitation Period"), commencing on the date hereof and ending
on the date on which he is last paid by the Company under this Agreement, he
will not at any time, without prior written consent of the Company, directly or
indirectly solicit, induce, or attempt to solicit or induce any employee, former
employee (as herein defined), agent, consultant, or other representative or
associate of the Company for the purpose of providing employment opportunities
or to terminate such individual's relationship with the Company. Consultant
further covenants and agrees that, during the Nonsolicitation Period, he will
not, without the prior written consent of the Company, directly or indirectly,
induce or attempt to induce any actual or prospective customers or suppliers of
the Company to terminate, alter or change its relationship with the Company or
otherwise interfere with any relationship between the Company and any of its
actual or prospective suppliers or customers. A "former employee" shall mean any
person who was employed by the Company at any time during the one (1) year
period prior to the cessation of the Consulting Period.
2.4 Severability; Certain Exclusions. In the event
that Sections 2.1, 2.2 or 2.3 (the "Restrictive Covenants") hereof shall be
found by a court of competent jurisdiction to be invalid or unenforceable as
written as a matter of law, the parties hereto agree that such court(s) may
exercise its discretion in reforming such provision(s) to the end that
Consultant shall be subject to noncompetition, nondisclosure and
nonsolicitation/noninterference covenants that are reasonable under the
circumstances and enforceable by the Company.
Notwithstanding any other provision contained in this
Agreement, none of the Restrictive Covenants contained in Sections 2.1, 2.2 or
2.3 hereof shall be binding on, be applicable to, or shall limit the Consultant
in connection with any relationship that he may have or develop with any entity
that, at the end of the Consulting Period, was a licensee of the Company (and/or
any of its affiliates, including a licensee of the technology of its Elcom
Systems, Inc. subsidiary) or is an affiliate of the Company (hereafter, "Related
Entities"). Further, the covenants contained in Section 2.3 hereof shall not be
binding on or be applicable to the Consultant in connection with any
relationship that he has or may develop with a Related Entity, more than ten
percent (10%) of the equity (represented by the right to vote in the election of
directors or similar governing body) of which was beneficially owned by the
Company or any of its affiliates, at any of the following times: (i) at the time
that a license agreement, if any, was entered into by the Company or any of its
affiliates, (ii) at the end of the Consulting Period, and/or (iii) at such
subsequent time as the activity under Section 2.3 is undertaken.
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2.5 Acknowledgment. Consultant specifically acknowledges that the
covenants set forth herein restricting competition, disclosure and
solicitation/interference are reasonable, appropriate, and necessary as to
duration, scope, and geographic area in view of the nature of the relationship
between Consultant and the Company and the investment by the Company of
significant time and resources in the training, development, and employment of
Consultant. Consultant warrants and represents that in the event that any of the
restrictions set forth in these covenants become operative, he will be able to
engage in other activities for the purpose of earning a livelihood, and shall
not be impaired by these restrictions.
Consultant further acknowledges that the remedy at law for any
breach of these covenants, including monetary damages to which the Company may
be entitled, will be inadequate and that the Company, its successors and/or
assigns, shall be entitled to injunctive relief against any breach without bond.
Such injunctive relief shall not be exclusive, but shall be in addition to any
other rights or remedies which the Company may have for any such breach.
3. Payments. As compensation for his consulting services to
the Company during the Consulting Period and the non-disclosure, non-competition
and non-interference covenants contained herein, the Company shall pay
Consultant One Hundred Twenty-Five Thousand Dollars ($125,000.00) per year,
commencing on the date hereof, and payable in twenty-four (24) equal, bi-monthly
payments on the 1st (first) and 15th (fifteenth) day of each month, for three
years and until payment of an aggregate of Three Hundred Seventy-Five Thousand
Dollars ($375,000.00) hereunder.
3.1 Benefits. Consultant will not, by reason of this
Agreement, participate in any employee benefit or insurance plan or any other
plan or receive any other fringe benefit which is provided by the Company for
its executives or employees, but may receive such benefits to the extent
provided for in the Employment Agreement or otherwise.
3.2 Reimbursement of Expenses. The Company shall
reimburse Consultant for all reasonable expenses incurred by him on behalf of
the Company in the course of performing those services which the Consultant has
been requested to perform by the Company; provided that the Consultant shall
submit to the Company all documentation of such expenses necessary for tax
purposes. Notwithstanding anything to the contrary herein, the Consultant shall
be reimbursed for reasonable expenses for training related to his performance of
his services hereunder; provided, the Consultant first obtains the consent of
the Company for such training.
4. Assignment. Any attempt by Consultant to assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the Company will be void. The Company may assign this Agreement as
part of the sale of its business without the prior written consent of the
Consultant so long as the purchaser expressly agrees to assume and be
responsible for the obligations hereunder.
5. Independent Contractor. It is expressly understood and
agreed that Consultant is an independent contractor and is not in any manner an
agent or employee of the
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Company, nor is Consultant authorized or empowered to conduct business under the
name of, or for the account of, the Company or to incur obligations of any kind,
express or implied, on behalf of the Company, or to make any promise, warranty
or representation on the Company's behalf with respect to any product or service
of the Company.
6. Construction.
6.1 Waiver. Failure of the Company at any time
to enforce any provision of this Agreement or to require performance by
Consultant of any provision hereof shall in no way affect the validity of this
Agreement or any part hereof or the right of the Company thereafter to enforce
its rights hereunder; nor shall it be taken to constitute a condonation or
waiver by the Company of that default or any other or subsequent default or
breach. To the extent permitted by Massachusetts law, each party waives any
provision of law which renders any provision of this Agreement unenforceable or
void in any respect.
6.2 Governing Law. This Agreement shall be
governed by Massachusetts law, without regard to conflict of laws principles
thereof.
6.3 Counterparts. This Agreement may be executed
in multiple counterparts each of which shall be deemed an original but all of
which together shall constitute one and the same document.
6.4 Headings. The headings in this Agreement are
intended solely for convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
6.5 Entire Agreement. This Agreement constitutes
the entire understanding and agreement among the parties hereto concerning the
subject matter hereof. All negotiations among the parties hereto concerning the
subject matter hereof are merged into this Agreement, and there are no
representations, warranties, covenants, understandings, or agreements, oral or
otherwise, in relation thereto among the parties hereto other than those
incorporated herein. No supplement, modification or amendment of this Agreement
shall be binding unless executed in writing by the parties hereto.
[SIGNATURE PAGE FOLLOWS]
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INTENDING TO BE LEGALLY BOUND, the parties or their duly
authorized representatives have signed this Agreement on the date first above
written.
_________________________
Xxxxxx X. Xxxxxxx
(the "Consultant")
ELCOM INTERNATIONAL, INC.
By: _________________________
Title: _________________________
(the "Company")
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