CONSULTING AND NONCOMPETITION AGREEMENT
This agreement is made effective April 26, 2001, between Xxxxxxxx Xxxx
Corporation, an Ohio corporation (the "Company"), whose address is 0000 Xxxxx
Xxxxx Xxxxxx, Xxxxxxxx, Xxxx 00000-0000, fax no. (000) 000-0000, and Xxxxxx X.
Xxxxxxx (the "Consultant"), whose address is xxxxxxx, who hereby agree as
follows:
ss.1. Retention. Upon the terms and subject to the conditions described in
this agreement, the Company hereby retains the Consultant to perform the
services described in ss.3, below, and the Consultant hereby accepts such
retention by the Company.
ss.2. Term. The Consultant's retention by the Company pursuant to this
agreement shall begin on the date set forth above (the "Commencement Date") and
shall end on the first anniversary of the Commencement Date (the "Term"), unless
sooner terminated pursuant to ss.8 of this agreement.
ss.3. Services. During the Term, the Consultant shall perform such
services and be responsible for such activities as may be reasonably assigned to
him from time to time by the board of directors of the Company (the "Board") or
the President of the Company, subject to the business policies and operating
programs, budgets, procedures, and directions established from time to time by
the Board (the "Services"). The Consultant shall be available during regular
business hours to devote not less than 20 hours per week of his professional
time, attention, energy, loyalty, and skill to the performance of the Services;
provided that the Consultant shall have no obligation to devote more than 28
hours per week to the performance of the Services.
ss.4. Independent Contractor. The relationship between the Company and the
Consultant is that of independent contractors. This agreement does not establish
a partnership, joint venture, or agency between the parties, nor does it create
an employer-employee relationship. The Consultant shall have no authority or
power to bind the Company, to create any liability against the Company, or to
incur any obligations on behalf of the Company in any way or for any purpose,
except as expressly authorized in or pursuant to this agreement, and the
Consultant shall not hold himself out as having any such authority.
The Consultant shall not be entitled to any benefits or perquisites made
available to employees of the Company. The Company shall not be obligated to
provide workers' compensation or unemployment compensation for the Consultant or
pay any premiums or fees with respect thereto. The Consultant shall be
responsible for the payment, and shall pay when due, any and all taxes imposed
on the Consultant by any governmental authority or agency in connection with the
fees or other amounts paid by the Company to the Consultant pursuant to this
agreement, including without limitation all federal, state, and local income
taxes, social security taxes, and unemployment taxes, and the Company shall not
be obligated to withhold any of such taxes from the Consultant's compensation
under this agreement or pay any such taxes on the Consultant's behalf.
ss.5. Compensation. As compensation for the Services, the Company shall
pay the Consultant the consulting fees and other benefits described below:
(a) For the one-year period ending on the first anniversary of the
Commencement Date, a consulting fee of $120,000, which shall be payable in
arrears in regular installments (but not less frequently than monthly) in
accordance with the Company's general policies and procedures for payment
of its executive personnel;
(c) Group health and welfare, insurance, and retirement benefits
comparable to those offered generally to the Company's executive personnel
from time to time.
(d) Five weeks paid vacation during each year of this agreement.
(e) Until the expiration of the three-year automobile lease dated
September 26, 1998, for the 1999 Mercedes CLK 430 (the "Mercedes Lease"),
$850.47 per month as an automobile allowance, which allowance shall be
paid directly by the Company to the Lessor under the Mercedes Lease.
In addition, following termination of this agreement for any reason (other
than for Cause or the death of the Employee) and continuing until the Consultant
reaches 63 and one-half years of age, the Company shall continue to make
available to the Consultant participation in such group health, disability, and
all other types of insurance coverage as are offered generally to the Company's
executive personnel from time to time to the extent that coverage is available
under the applicable insurance policy or policies covering the Consultant and
his dependent family members, provided that: (i) the Consultant shall reimburse
the Company on a monthly basis for 50 percent of the portion of the Company's
group health, disability, and other insurance premiums which are attributable to
the Consultant's participation in the Company's group health, disability, and
other insurance coverage as described in this paragraph, and (ii) during any
period of time during which the Company otherwise has an obligation to the
Consultant under this paragraph, the Consultant shall provide such services to
the Company as may be reasonably requested by the Company, but only to the
extent necessary in order for the Consultant to be eligible for coverage under
the terms and conditions of the group health, disability, and other insurance
policies issued to the Company by its group insurer or insurers. The Consultant
acknowledges and agrees that the Company is not and shall not become the
Consultant's health or medical insurer.
The Consultant shall receive no other compensation or benefits from the
Company under this agreement.
ss.6. Reimbursement of Expenses. The Company shall reimburse the
Consultant for his reasonable direct out-of-pocket expenses paid by the
Consultant in connection with the Services and approved in advance by the
Company, including without limitation travel, food, and lodging expenses while
traveling pursuant to the request of the Company, subject to any record keeping,
reporting, or other limitations imposed from time to time by the Company.
ss.7. Confidentiality; Noncompetition. The Consultant shall not, directly
or indirectly, at any time (whether during the term of this agreement or
thereafter), disclose any Confidential Information (as defined below) to any
person, association, or other entity (other than the Affiliated Companies, as
defined below), or use, or permit or assist any person, association, or other
entity (other than the Affiliated Companies) to use, any Confidential
Information, excepting only Confidential Information which (1) is then generally
available to or obtainable by the public and which did not become so available
or obtainable through the breach of any provision of this agreement by the
Consultant, or (2) is obtained by the Consultant on a non-confidential basis
from a source other than an Affiliated Company or any agent or other
representative of an Affiliated Company and such source had the right to
disclose such Confidential Information to the Consultant without violating any
legal, contractual, fiduciary, or other obligation.
Upon termination of his retention by the Company (for any reason), the
Consultant shall immediately deliver to the Company all documents and other
materials containing any Confidential Information which are in his possession or
under his control.
This agreement is confidential and in no event shall the Consultant
disclose any information contained herein without the prior written consent of
the Company, except for disclosures to the
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Consultant's spouse and professional advisors (limited to those who need to
know) (collectively, "Permitted Recipients"). The Consultant shall exercise all
reasonable efforts to maintain, and to cause his Permitted Recipients to
maintain, the confidentiality of this agreement. The provisions of this
paragraph are subject to the Consultant's obligation to comply with applicable
requirements of federal or state laws or any governmental order or regulation.
All Work Product (as defined below) shall be considered and arranged to be
"work made for hire" to the extent permitted by applicable law. The Consultant
hereby transfers, assigns, sells, and conveys to the Company all of the
Consultant's rights, title, and interest in and to the Work Product and shall
execute any other documents reasonably requested by the Company to evidence the
Company's rights in the Work Product and the conveyance to the Company of the
Consultant's rights therein.
During the Restricted Period (as defined below), the Consultant shall not,
directly or indirectly (whether individually or as a shareholder (except as a
shareholder owning 1% or less of the outstanding capital stock of a publicly
traded corporation), partner, member, director, officer, employee, consultant,
creditor, or agent of any person, association, or other entity):
(a) Other than on behalf of an Affiliated Company, enter into,
engage in, or promote or assist (financially or otherwise), directly or
indirectly, any business which provides any Restricted Goods and Services
(as defined below) to any Restricted Customer (as defined below);
(b) Induce or encourage any employee, officer, director, agent,
supplier, or independent contractor of any Affiliated Company to terminate
its relationship with any such Affiliated Company, or otherwise interfere
or attempt to interfere in any way with any Affiliated Company's
relationships with its employees, officers, directors, agents, suppliers,
or independent contractors;
(c) Employ or engage any person who, at any time within the one-year
period immediately preceding such employment or engagement, was an
employee, officer, director, or agent of any Affiliated Company, provided
that the Consultant may employ or engage such a person if such person's
relationship with such Affiliated Company was terminated by such
Affiliated Company; or
(d) Make any statement (oral or written) or take any other action
which would tend to disparage or diminish the reputation of any Affiliated
Company.
For purposes of this agreement: (i) "Confidential Information" shall mean
all trade secrets, proprietary data, and other confidential information of any
Affiliated Company, including without limitation financial information,
information relating to business operations, services, promotional practices,
and relationships with suppliers, employees, independent contractors, or other
parties, and any information which any Affiliated Company is obligated to treat
as confidential pursuant to any course of dealing or any agreement to which it
is a party or otherwise bound; (ii) "Affiliated Companies" shall include the
Company, its parent corporation, and all subsidiaries of the Company, (iii)
"Work Product" shall mean all tangible and intangible work and work products
developed or produced by the Consultant within the scope of his retention
pursuant to this agreement, including without limitation (A) inventions,
creations, discoveries, concepts, formulas, processes, devices, methods,
innovations, designs, mask works, improvements, specifications, drawings,
sketches, models, samples, data, computer programs, reports, documentation, and
other developments, (B) any patents, copyrights, trade secrets, and trademarks
derived therefrom, and (C) any applications for or registrations of any of the
foregoing, (iv) "Restricted Period" shall mean the period beginning on the
Commencement Date and ending on the later of (1) the third anniversary of the
Commencement Date or (2) the second anniversary of the date the
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Consultant is no longer employed or otherwise retained by any Affiliated Company
(provided that, for purposes of determining the Restricted Period, the
Consultant shall not be deemed to be employed or otherwise retained by any
Affiliated Company if his only employment or retention by an Affiliated Company
is exclusively for the purpose of satisfying the next-to-last paragraph of ss.5,
above, or as a result of his service on the board of directors of an Affiliated
Company, and provided further that the Restricted Period shall end immediately
and automatically upon a default (which remains uncured) by the Company or its
parent corporation with respect to their respective payment or stock issuance
obligations under ss.1.1 of the Stock Purchase Agreement between the Consultant,
the Company, and its parent dated the same date as this agreement); (v)
"Restricted Goods and Services" shall mean goods and services of the type
provided by any Affiliated Company at any time or from time to time during the
Consultant's retention by the Company or any Affiliated Company (whether
pursuant to this agreement or otherwise); and (vi) "Restricted Customer" shall
mean, as of any given time, any person, firm, association, corporation, or other
entity which is then a customer of an Affiliated Company, which was a customer
of an Affiliated Company during the two-year period immediately preceding such
time, which is then being actively solicited by or on behalf of an Affiliated
Company to be a customer of such Affiliated Company, or which was being actively
solicited by or on behalf of an Affiliated Company to be a customer of such
Affiliated Company during the one-year period immediately preceding such time.
The Consultant acknowledges that (A) the provisions of this section are
fundamental and essential for the protection of the Company's legitimate
business and proprietary interests, (B) such provisions are reasonable and
appropriate in all respects, and (C) in the event of any violation by the
Consultant of any of such provisions, the Company would suffer irreparable harm
and its remedies at law would be inadequate. In the event of any violation or
attempted violation of such provisions by the Consultant, the Company shall be
entitled to a temporary restraining order, temporary and permanent injunctions,
specific performance, and other equitable relief, without any showing of
irreparable harm or damage or the posting of any bond, in addition to any other
rights or remedies which may then be available to the Company.
ss.8. Termination. The Consultant's retention with the Company shall
terminate automatically upon the death of the Consultant, may be terminated by
the Consultant at any time upon not less than 90 days prior written notice to
the Company, and may be terminated by the Company, without any further
obligation on the part of the Company, immediately upon notice to the Consultant
at any time (a) for Cause (defined below), (b) if the Consultant is under a
Long-Term Disability (as defined below),or (c) without Cause, provided that, if
the Company terminates the Consultant's retention pursuant to this clause (c)
and no other basis for termination exists under this agreement, then the
Company's obligations to the Consultant under ss.5, above, shall survive such
termination; provided that, notwithstanding any other provision of this
agreement to the contrary, the payments and benefits provided under ss.5 shall
be payable or provided, as applicable, only so long as the Consultant is in full
compliance with the provisions of ss.7 of this agreement.
For purposes of this agreement:
(i) "Cause" shall mean any act constituting (A) a felony under the
federal laws of the United States, the laws of any state, or any other
applicable law, (B) fraud, embezzlement, misappropriation of assets,
willful misfeasance, or dishonesty, or (C) other criminal conduct which in
any way materially and adversely affects the reputation, goodwill, or
business position of the Company; and
(ii) "Long-Term Disability" shall mean that, because of physical or
mental incapacity, it is more likely than not that the Consultant will be
unable, within 180 days after such incapacity commenced, to perform the
essential functions of his position with the Company, with
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or without reasonable accommodation. In the event of any disagreement
about whether or when the Consultant is under a Long-Term Disability, the
question shall be determined: (A) by a physician selected by agreement
between the Consultant and the Company if such a physician is selected
within 10 days after either of them requests the other so to agree; or, if
not, (B) by two physicians, the first of whom shall be selected by the
Consultant and the second of whom shall be selected by the Company or, if
the Consultant fails to make a selection within 10 days after being
requested to do so by the Company, the second physician shall be selected
by the first physician; or, if the two physicians fail to agree, (C) by a
third physician selected by the first two physicians. The Consultant shall
submit to all reasonable examinations requested by any such physicians.
ss.9. Return of Records. Upon termination of this agreement, the
Consultant shall deliver to the Company all records, reports, data, memoranda,
notes, models, and equipment of any nature that are in the Consultant's
possession or under the Consultant's control prepared or acquired in the course
of the Consultant's retention by the Company. The Consultant further agrees not
to retain any such information or data, or reproductions of such information or
data, that relate to the business activities of the Company or to parties in a
contract relationship with the Company.
ss.10. Indemnification. The Consultant shall indemnify and hold the
Company harmless from and against any and all liabilities, losses, damages,
claims, costs, and expenses (including legal fees) of any kind whatsoever
arising directly or indirectly out of: (a) any claim, charge, assessment, or
demand by any federal, state, or local governmental authority or agency for (i)
any and all workers' compensation or unemployment compensation premiums or fees
related to the retention of the Consultant by the Company, or (ii) any and all
taxes which the Consultant was obligated to pay but failed to pay and which were
related to the retention of the Consultant by the Company; (b) any claim,
representation, warranty, or other statement by, or any act or omission of, the
Consultant which is not expressly authorized by this agreement; (c) any failure
by the Consultant to perform and observe fully all obligations and conditions to
be performed or observed by the Consultant under this agreement; or (d) any
failure of any representation or warranty made by the Consultant in this
agreement to have been correct in all material respects when made.
ss.11. Capacity. The Consultant represents and warrants to the Company
that he has the capacity and right to enter into this agreement and perform all
of his obligations under this agreement without any restriction.
ss.12. Remedies. All rights and remedies of either Party under this
agreement are cumulative and in addition to all other rights and remedies which
may be available to that Party from time to time, whether under any other
agreement, at law, or in equity.
ss.13. Survival. The termination of the Consultant's retention with the
Company (for any reason) shall not relieve either Party of any of that Party's
obligations under this agreement existing at, arising as a result of, or
relating to acts or omissions occurring prior to, such termination. Without
limiting the generality of the preceding sentence, in no event shall the
termination of such retention modify or affect any obligations of the Consultant
or rights of the Company under ss.7 of this agreement, all of which shall
survive the termination of such retention.
ss.14. Notices. All notices and other communications under this agreement
to any Party shall be in writing and shall be deemed given when delivered
personally, telecopied (which is confirmed) to that Party at the telecopy number
for that Party set forth at the beginning of this agreement, mailed by certified
mail (return receipt requested) to that Party at the address for that Party (or
at such other address for such Party as such Party shall have specified in
notice to the other Party) or delivered to Federal Express, UPS, or any similar
express delivery service for delivery to that Party at that address.
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ss.15. Severability. The intention of the Parties is to comply fully with
all rules, laws, and public policies to the extent possible. If and to the
extent that any court of competent jurisdiction is unable so to construe any
provision of this agreement and holds that provision to be invalid, such
invalidity shall not affect the remaining provisions of this agreement, which
shall remain in full force and effect. With respect to any provision in this
agreement finally determined by such a court to be invalid or unenforceable,
such court shall have jurisdiction to reform this agreement to the extent
necessary to make such provision valid and enforceable, and, as reformed, such
provision shall be binding on the Parties.
ss.16. Non-Waiver. No failure by either Party to insist upon strict
compliance with any term of this agreement, to exercise any option, to enforce
any right, or to seek any remedy upon any default of the other Party shall
affect, or constitute a waiver of, the other Party's right to insist upon such
strict compliance, exercise that option, enforce that right, or seek that remedy
with respect to that default or any prior, contemporaneous, or subsequent
default. No custom or practice of the Parties at variance with any provision of
this agreement shall affect, or constitute a waiver of, either Party's right to
demand strict compliance with all provisions of this agreement.
ss.17. Complete Agreement. This agreement and all documents referred to in
this agreement, all of which are hereby incorporated herein by reference,
contain the entire agreement between the Parties and supersede all other
agreements and understandings between the Parties with respect to the subject
matter of this agreement. No alterations, additions, or other changes to this
agreement shall be made or be binding unless made in writing and signed by both
Parties.
ss.18. Governing Law. This agreement shall be governed by and construed in
accordance with the laws of the State of Ohio without regard to principles of
conflicts of law.
ss.19. Captions. The captions of the various sections of this agreement
are not part of the context of this agreement, are only guides to assist in
locating those sections, and shall be ignored in construing this agreement.
ss.20. Genders and Numbers. Where permitted by the context, each pronoun
used in this agreement includes the same pronoun in other genders and numbers,
and each noun used in this agreement includes the same noun in other numbers.
ss.21. Successors. This agreement shall be personal to the Consultant and
no rights or obligations of the Consultant under this agreement may be assigned
by the Consultant to any third party. Any assignment or attempted assignment by
the Consultant in violation of the preceding sentence shall be null and void.
Subject to the foregoing, this agreement shall be binding upon, inure to the
benefit of, and be enforceable by and against the successors and assigns of each
Party.
XXXXXXXX XXXX CORPORATION
By ____________________________________ _____________________________________
Xxxxx Xxxxxx, President XXXXXX X. XXXXXXX
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