EXHIBIT (c)(7)
CONSULTING AND NONCOMPETITION AGREEMENT
---------------------------------------
This Consulting and Noncompetition Agreement (this "Agreement") is
entered into as of February 2, 1997 between SCOTSMAN INDUSTRIES, INC., a
Delaware corporation (the "Company"), and XXXXX XXXXXXXX (the "Consultant").
WHEREAS, the Consultant has acquired extensive knowledge of and
experience in the business conducted by the Company.
WHEREAS, the Company desires to obtain the benefit of the Consultant's
knowledge and experience by retaining the Consultant, and the Consultant desires
to accept such position, for the term and upon the other conditions hereinafter
set forth;
WHEREAS, concurrently herewith, the Company, K Acquisition Corp. and
Xxxxx Industrial Corporation are entering into an Agreement and Plan of Merger
dated as of the date hereof (the "Merger Agreement"), pursuant to which K
Acquisition Corp. is acquiring Xxxxx Industrial Corporation and Xxxxx
Industrial Corporation is becoming a wholly-owned subsidiary of the Company;
WHEREAS, the Consultant will cease to be the President and C.E.O. and
a Director of Xxxxx Industrial Corporation effective as of the consummation of
the tender offer contemplated by the Merger Agreement (the "Tender Offer"); and
WHEREAS, the Company has required as a condition to its entering into
the Merger Agreement that the Consultant (i) agree to certain modifications to
his existing employment agreement with Xxxxx Industrial Corporation (the
"Employment Agreement") and (ii) enter into this Agreement.
NOW THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
the Company and the Consultant hereby agree as follows:
1. Consulting Services; Expenses. The Company hereby engages the
Consultant as a consultant, subject to the terms and conditions hereof, for the
period commencing at the consummation of the Tender Offer and ending on the
date which is the sixth anniversary of such consummation (the "Consulting
Period"), subject to earlier termination pursuant to Section 4 hereof; provided,
however, that this Agreement shall terminate and shall be of no further force or
effect if the Merger Agreement shall be terminated and the Tender Offer shall
not be consummated pursuant to the terms thereof. During the Consulting Period,
the Consultant shall make himself available to perform consulting services with
respect to the businesses conducted, or in development, by the Company, upon
reasonable advance notice. Such consulting services shall be related to such
matters as the Chief Executive Officer of the Company may designate from time to
time and as are commensurate with the Consultant's years of experience and level
of skill, and shall include consulting services to the Board of Directors of the
Company (the "Board") with respect to the businesses conducted by the Company.
The Consultant shall accommodate reasonable requests for the Consultant's
consulting services, and shall devote reasonable time and his reasonable best
efforts, skill and attention to the performance of such consulting services,
including travel reasonably required in the performance of such consulting
services. The parties will arrange consulting and travel dates and times so as
not to interrupt any pre-planned business or personal activities, or employment
obligations, of the Consultant. The Company shall reimburse the Consultant for
all necessary travel and
other expenses incurred by the Consultant in providing such consulting services.
Notwithstanding the foregoing, the Consultant shall not be required to be
available more than three (3) days per month nor to travel on more than three
(3) occasions per year.
2. Independent Contractor. The Consultant shall perform the
consulting services described in Section 1 hereof as an independent contractor
without the power to bind or represent the Company for any purpose whatsoever.
The Consultant shall not, by virtue of being a consultant hereunder, be eligible
to receive any benefits for which officers or other employees of the Company are
eligible at any time, such as insurance, participation in the Company's pension
plans or other employee benefits. Consultant acknowledges that Company will not
make provision for federal or state withholding taxes or FICA.
3. Compensation. As compensation for the Consultant's agreement to
make himself reasonably available for consulting as provided in Section 1, and
for his covenants contained in Section 5 of this Agreement, the Company shall
pay to the Consultant on a monthly basis at the end of each month for each of
the seventy-two (72) months during the Consulting Period an amount equal to
$44,600 per month (the "Compensation"). Except in the event of termination of
the Agreement as provided in Section 4, such payments shall not be reduced,
withheld, discontinued, or subjected to setoff, for any reason whatsoever. If
the Company fails to make Compensation payments required by this Agreement, and
such failure continues for ten (10) days after Consultant notifies the Company
in writing of such breach, Consultant's obligations under this Agreement shall
continue, but Company shall be obligated to immediately pay to Consultant, in
one lump sum, all of the remaining unpaid Compensation that would have been
payable through the end of the Consulting Period; discounted, however, to the
then present value, using a discount rate of 7.5 percent. Notwithstanding any
failure by the Company to utilize the consulting services, or any disability of
the Consultant resulting in his inability to perform consulting services
hereunder, the remaining unpaid installments of the Compensation payable
pursuant to this Agreement shall be paid by the Company to the Consultant or to
his legal representative on the dates such payments otherwise would have been
paid hereunder. In the event of the death of the Consultant during the
Consulting Period, the then present value, using a discount rate of 7.5 percent,
of the remaining unpaid Compensation payable through the remainder of the
Consulting Period shall be paid by the Company as a death benefit to the
beneficiary or beneficiaries designated in writing by the Consultant, or if no
beneficiary is so designated, to the executor of the Consultant's estate.
4. Termination of Agreement. (a) The obligation of the Consultant
set forth in Section 1 of this Agreement may be terminated at any time by the
Consultant on thirty (30) days prior written notice to the Company. In the
event of such termination by the Consultant, the obligations of the Company to
pay the Consultant pursuant to Section 3 hereof shall cease, effective on the
date of such termination.
(b) The obligations of the Company set forth in Section 3 of this
Agreement may be terminated at any time by the Company upon written notice to
the Consultant in the event that the Consultant shall willfully be in material
breach of any covenant contained in Section 1 or 5 hereof and the Consultant
shall fail to cure such material breach within 30 days following such notice (in
the event)
-2-
of an alleged breach of Section 5, Consultant may cure any such breach by
ceasing the activities in question).
(c) This Agreement may be terminated by the Consultant upon ten (10)
days prior written notice to the Company in the event that the Company shall
breach any of its obligations under Section 3, 9 or 10 hereof; provided,
however, that the Consultant shall not be entitled to terminate this Agreement
pursuant to this Section 4(c) in the event that the Company shall cure any such
breach within such ten (10) day period. In the event of such termination by the
Consultant, the Company shall pay to the Consultant all remaining payments which
would have become due under this Agreement had it continued in effect until its
expiration date, within five (5) business days of such termination.
5. Noncompetition. During the Consulting Period, except with the prior
written consent of the Board, the Consultant shall not directly or indirectly:
(a) engage in any activities, whether as employer, proprietor,
partner, stockholder (other than the holder of less than 5% of the stock of any
corporation the securities of which are traded on a national or regional
securities exchange or on the NASDAQ (National Market System) or over the
counter), director, officer, employee, consultant or otherwise, in competition
with the businesses conducted, or in development, by the Company at any time
during the Consulting Period, which covenant not to compete shall be on a
worldwide basis and shall include all industries in which the Company competes
at any time during the Consulting Period; or
(b) solicit, in competition with the Company, any person who is a
customer or prospective customer of the businesses conducted, or in development,
by the Company at any time during the Consulting Period.
(6) Confidentiality. The Consultant shall not, at any time during the
Consulting Period or thereafter, make use of or disclose directly or indirectly,
any trade secret or other confidential or secret information of the Company or
Xxxxx Industrial Corporation or other technical, business, proprietary or
financial information of the Company or Xxxxx Industrial Corporation not
available to the public or to the competitors of the Company ("Confidential
Information"), except to the extent that such Confidential Information (a)
becomes a matter of public record or is published in a newspaper, magazine or
other periodical available to the general public, (b) is required to be
disclosed by any law, regulation or order of any court or regulatory commission,
department or agency, or (c) as the Board may so authorize in writing.
7. Nonsolicitation. During the Consulting Period except with the prior
written consent of the Board, the Consultant shall not directly or indirectly
induce or attempt to persuade any employee of the Company to terminate his or
her employment relationship with the Company.
8. Scope of Covenants; Remedies. The following provisions shall
apply to the covenants of the Consultant contained in Sections 5 and 6:
-3-
(a) the covenants contained in Section 5 shall apply on a worldwide basis,
which is the basis on which the Company is actively engaged in conduct of its
businesses and in which customers are being solicited;
(b) without limiting the right of the Company to pursue all other legal
and equitable remedies available for violation by the Consultant of the
covenants contained in Section 5, 6 and 7, it is expressly agreed by the
Consultant and the Company that such other remedies cannot fully compensate the
Company for any such violation and that the Company shall be entitled to
injunctive relief to prevent any such violation or any continuing violation
thereof;
(c) the Company and the Consultant each intends and agrees that the
covenants contained in Sections 5, 6 and 7 are reasonably designed to protect
the legitimate business interests of the Company without unnecessarily or
unreasonably restricting the Consultant's business opportunities during or after
the termination of the consulting Period, but that if in any action before any
court or agency legally empowered to enforce the covenants contained in Sections
5, 6 and 7 any term restriction, covenant or promise contained therein is found
to be unreasonable and accordingly unenforceable, than such term, restriction,
covenant or promise shall be deemed modified to the extent necessary to make it
enforceable by such court or agency; and
(d) the Company shall advise the Consultant in writing of all businesses,
industries and activities the Company believes are covered by the prohibitions
in Section 5, not so identified; provided, that neither the Company's listing of
a business, industry or activity as covered by Section 5 not the Consultant's
failure to specifically object to such listing shall be conclusive as to such
coverage. If Consultant notifies the Company in writing of a specific business,
industry or activity in which the Consultant proposes to engage, the Company
will notify Consultant promptly, in writing, of whether the Company would
consider such business, industry or other activity to violate Section 5, and
Consultant shall not be obliged to refrain from engaging in any such business,
industry or activity if Company fails to do so within 30 days.
9. Expenses. The Company shall promptly pay the Consultant for all costs
and expenses (including, without limitation, court costs and attorney's fees)
incurred by the Consultant as a result of any claim, action or proceeding
(including, without limitation, a claim, action or proceeding by the Consultant
against the Company to collect amounts due to the Consultant or to otherwise
enforce this Agreement) arising out of, or challenging the validity,
advisability or enforceability of, this Agreement or any provision hereof;
provided, however, that no such payment or reimbursement shall be made to the
Consultant if the Consultant is the plaintiff in such claim, action or
proceeding and a final nonappealable judgment is rendered against the Consultant
with respect to all his claims.
10. Indemnification. The Company shall defend, indemnify and hold the
Consultant harmless from and against all damages, cost and expenses (including
attorneys' fees) as a result of claims made by third parties arising out of the
Consultant's performance of services under this agreement; provided, however,
that the Company shall not indemnify and hold the Consultant harmless for
conduct found by a final nonappealable judgment of a court of competent
jurisdiction that the damage, cost or expense results from the Consultant's own
willful misconduct.
-4-
11. Successor. Binding Agreement. This Agreement shall insure to the
benefit of and be enforceable by the Consultant and by his personal or legal
representatives, executors, administrators, heirs, distributees, devises and
legatees and by the Company and its respective successors and assigns.
12. Notices. All notices and other communications required or
permitted under this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered, when delivered by courier or
overnight express service or five days after having been sent by certified or
registered mail, postage prepaid, addressed (a) if to the Consultant, to the
Consultant's address set forth in the records of the Company, or if to the
Company, to Scotsman Industries, Inc., 000 Xxxxxxxxx Xxxxx Xxxxxxx, Xxxxxx
Xxxxx, Xxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxx, with a copy to
Sidley & Austin, Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention:
Xxxxxx X. Xxxx, Esq., or (b) to such other address as either party may have
furnished to the other party in writing in accordance herewith, except that
notices of change of address shall be effective only upon receipt.
13. Governing Law: Validity: Jurisdiction and Venue. The
interpretation, construction and performance of this Agreement shall be governed
by and construed and enforced in accordance with the internal laws of the State
of Michigan without regard to the applicable principles of conflicts of laws.
The parties agree and agree to stipulate that the United States District Court
for the Western District of Michigan (Southern Division) shall be the proper
jurisdiction and venue for litigation of any claim arising out of or relating
to this Agreement. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any of the other
provisions of this Agreement, which other provisions shall remain in full force
and effect.
14. Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original and both of which together shall
constitute one and the same instrument.
15. Miscellaneous. No provision of this Agreement may be modified or
waived unless such modification or waiver is agreed to in writing and executed
by the Consultant and by a duly authorized officer of the Company. No waiver by
a party hereto at any time of any breach by the other party hereto of, or
failure to comply with, any condition or provision of this Agreement to be
performed or complied with by such other party shall be deemed a waiver of any
similar or dissimilar conditions or provisions at the same or at any prior or
subsequent time. This Agreement does not affect any other agreement between the
Consultant and the Company or any of its affiliates. Failure by the Consultant
or the Company to insist upon strict compliance with any provision of this
Agreement or to assert any right which the Consultant or the Company may have
hereunder shall not be deemed to be a waiver of such provision or right or any
other provision of or right under this Agreement.
-5-
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Consultant has executed this
Agreement as of the day and year first above written.
SCOTSMAN INDUSTRIES INC.
/s/ Xxxxxxx Xxxxxxx
By ____________________________________
Chairman and Chief Executive Officer
CONSULTANT:
/s/ Xxxxx Xxxxxxxx
_______________________________________
Xxxxx Xxxxxxxx
-6-
