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Exhibit 10.2
CONSULTING AGREEMENT
CONSULTING AGREEMENT, made as of June 6, 1997 ("Agreement"), by and between
Xxxxx Wheels International, Inc., a Delaware corporation (the "Company"), and
Xxxxx Xxxxx-Xxxxxxx ("Consultant").
WITNESSETH:
WHEREAS, the Company is engaged in the business of designing, manufacturing,
selling and distributing (i) automobile and truck wheels and (ii) brake parts
and components (the "Business");
WHEREAS, in connection with and subject to the consummation of the
transactions contemplated by the Purchase Agreement of even date herewith among
the Company, Cromodora, S.p.A., Lemmerz Holding GmbH ("Lemmerz Holding") and
the shareholders of Lemmerz Holding (the "Lemmerz Shareholders"), including,
but not limited to, Consultant (the "Purchase Agreement"), the Company wishes
to engage Consultant upon the terms and subject to the conditions set forth
herein; and
WHEREAS, in connection with and subject to the consummation of the
transactions contemplated by the Purchase Agreement, Consultant wishes to be so
engaged by the Company upon the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Company and Consultant agree as follows:
1. Service to be Provided. The Company hereby agrees to engage Consultant,
and Consultant hereby agrees to serve outside the United States, upon the terms
and subject to the conditions set forth in this Agreement, as a consultant of
the Company. Consultant shall consult with the Company on such subjects and at
such times and locations outside the United States as are from time to time
reasonably requested of Consultant by the senior executive officers or the
Board of Directors of
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the Company, including assisting in the development of the Company's strategy
for its European businesses.
2. Term. The term of Consultant's engagement under this Agreement shall
commence on the Closing Date (as defined in the Purchase Agreement) and, unless
earlier terminated pursuant to Section 7, shall continue in effect for a period
of five years thereafter (such period, as may be earlier terminated, the
"Term"). There shall be no extension of this Agreement other than by written
instrument duly executed and delivered by both parties hereto.
3. Compensation. During the Term, the Company shall pay Consultant
U.S.$200,000 plus value added tax, if any, per annum, payable in equal monthly
installments (subject to proration for any partial month) on the last day of
each month during the Term to an account in the United States designated in
writing by Consultant. Consultant hereby acknowledges and agrees that, except
as set forth in this Section 3 and as set forth in Section __ of the
Termination Agreement (as defined below), neither the Company nor any
subsidiary or affiliate of the Company shall have any responsibility to pay any
amounts in respect of salary, bonus, benefits or other compensation to
Consultant by reason of any position or office held by Consultant from and
after the Closing Date with any such person, including as a director thereof,
whether hereunder, under the Prior Agreement (as defined below) or otherwise.
4. Expenses. The Company shall reimburse Consultant for reasonable and
necessary business expenses of Consultant for travel, meals and similar items
incurred in connection with the performance of Consultant's duties hereunder,
and which are consistent with such guidelines as the Board of Directors of the
Company may from time to time establish. All payments for reimbursement of
such expenses shall be made to Consultant only upon the presentation to the
Company of appropriate vouchers or receipts.
5. Stock Option. The Company hereby grants Consultant, effective from and
after the Closing, an option (the "Option") to purchase 100,000 shares of
Common Stock, par value $.01 per share, of the Company
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(the "Common Shares"), subject to the following terms and conditions:
(a) The Option is not intended to qualify as an incentive stock option
within the meaning of Section 422 of the Internal Revenue Code, as amended.
(b) The exercise price of the Option is $16 per Common Share (the
"Exercise Price"). The Exercise Price shall be paid to the Company in full, at
the time of exercise, in cash.
(c) The Option shall become exercisable at the annual rate of twenty
percent (20%) of the Common Shares underlying the Option on each of the first
through fifth anniversary of the Closing Date during the Term, so long as this
Agreement remains in effect on such anniversary. The Option may be exercised
as to any or all Common Shares as to which the Option has become exercisable by
written notice delivered in person or by mail to the Secretary of the Company,
specifying the number of Common Shares with respect to which the Option is
being exercised. For purposes of the preceding sentence, the date of exercise
shall be deemed to be the date upon which the Secretary of the Company receives
such notification. Unless sooner exercised or terminated, the Option shall be
cancelled and be of no further force and effect after the tenth anniversary of
the date hereof (the "Expiration Date").
(d) The Option is not transferrable by Consultant except by will or the
laws of descent and distribution.
(e) In the event that following the Closing, the Company effects a
dividend or other distribution (whether in the form of cash, capital stock of
the Company or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, spinoff, combination, repurchase
or share exchange, or other similar corporate transaction or event that affects
the Common Shares such that an adjustment is appropriate to prevent dilution or
enlargement of the rights of Consultant with respect to the Option, the Company
shall make equitable changes or adjustments as are consistent with such changes
or adjustments as are made to options granted under the Company's 1996 Stock
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Option Plan to any or all of (i) the number and kind of shares of capital stock
that may be issued or issuable pursuant to the Option and (ii) the Exercise
Price. The parties hereto acknowledge and understand that additional issuances
of capital stock by the Company for cash or property shall not result in an
adjustment under this Section 5(e).
(f) During the term of this Agreement, the Company shall provide to
Consultant.
(i) the use of a representative office in a location determined by
the Company not more than 50 kilometers from Konigswinter (preferably in
or close to Cologne);
(ii) a full-time secretary, provided that the chief financial
officer or other comparable officer of the Company or any of its
subsidiaries shall be entitled to utilize the services of such secretary
when she is not being utilized by Consultant. As long as Xxx. Xxxxx-Xxxxxx
is prepared to serve as secretary to Consultant, the Company shall cause
Xxx. Xxxxx-Xxxxxx to be employed by the Company or one of its subsidiaries
for services to be rendered to Consultant. Xxx. Xxxxx-Xxxxxx shall be
compensated for her services under no less favorable conditions than she is
presently employed by Lemmerz Holding, and she shall receive adjustments to
her compensation in line with adjustments received by comparable employees
of the Company in Germany;
(iii) a Company car Mercedes-Benz 600 SEL V12 or equivalent which
Consultant may use for private purposes. The Company shall bear all costs
resulting from the use of the Company car;
(iv) a full-time driver. As long as Xx. Xxxxxx Xxxx is prepared to
serve as driver to Consultant, the Company shall cause Xx. Xxxxxx Xxxx to
be employed by the Company or one of its subsidiaries for services to be
rendered to Consultant. Xx. Xxxxxx Xxxx shall be compensated for his
services under no less favorable conditions then he is presently employed
by Lemmerz Holding, and he shall receive adjustments to his compensation in
line with adjustments received by comparable employees of the Company in
Germany.
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6. Confidentiality, Non-Competition.
(a) Consultant acknowledges that: (i) the Business is intensely
competitive and that Consultant has, and his engagement by the Company will
require that Consultant continue to have, access to and knowledge of
confidential information of the Company, including, but not limited to, (A) the
identity of the Company's customers, (B) the identity of the representatives of
customers with whom the Company has dealt, (C) the kinds of products and
services provided by the Company to customers and offered to be provided for
potential customers, (D) the manner in which such products and services are
provided or offered, (E) the product and service needs of actual or prospective
customers, (F) pricing information, (G) information concerning the design,
manufacture, sale and distribution of products and services, including, but not
limited to, (1) technical and other engineering know-how, designs and
information and (2) manufacturing methods, practices, procedures, processes and
formulae, (H) customer maintenance listings, (I) computer software applications
and other programs, (J) personnel information and (K) other trade secrets (the
"Confidential Information"); (ii) the direct and indirect disclosure of any
such Confidential Information to existing or potential competitors of the
Company would place the Company at a competitive disadvantage and would do
damage, monetary or otherwise, to the Company's business; and (iii) the
engaging by Consultant in any of the activities prohibited by this Section 6
may constitute improper appropriation and/or use of such information and trade
secrets. Consultant expressly acknowledges the trade secret status of the
Confidential Information and that the Confidential Information constitutes a
protectible business interest of the Company.
(b) For purposes of this Section 6, the Company shall be construed to
include the Company and its parents, subsidiaries and affiliates engaged in the
Business, including, but not limited to, Lemmerz Holding and its subsidiaries.
(c) During the Term of this Agreement and at all times after the
termination of Consultant's engagement upon expiration of the Term or
otherwise, Consultant shall not, directly or indirectly, whether individually,
as a director, stockholder, owner, partner, employee, principal or agent of any
business, or in any other capacity, make known, disclose, furnish, make
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available or utilize any of the Confidential Information, other than in the
proper performance of the duties contemplated herein, or as required by a court
of competent jurisdiction or other administrative or legislative body; provided
that, prior to disclosing any of the Confidential Information to a court or
other administrative or legislative body, Consultant shall promptly notify the
Company so that the Company may seek a protective order or other appropriate
remedy. Consultant agrees to return all Confidential Information, including
all photocopies, extracts and summaries thereof, and any such information
stored electronically on tapes, computer disks or in any other manner to the
Company at any time upon request by the Company and upon the termination of his
engagement for any reason.
(d) Consultant shall not, so long as he is engaged by the Company
hereunder, engage in Competition (as defined below) with the Company. For
purposes of this Agreement, "Competition" by Consultant shall mean Consultant's
engaging in, or otherwise directly or indirectly being employed by or acting as
a consultant or lender to, or being a director, officer, employee, principal,
licensor, trustee, broker, agent, stockholder, member, owner, joint venturer or
partner of, or permitting his name to be used in connection with the activities
of any other business or organization which competes, directly or indirectly,
with the business of the Company as the same shall be constituted as of the
date hereof and, to the extent, but only to the extent that Consultant is not
so engaged at such time consistent with the terms of this Agreement, as the
same shall be expanded or otherwise changed at any time during his engagement
provided that, it shall not be a violation of this Section 6 for the
Consultant, together with the Lemmerz Shareholders, in the aggregate, to (i)
become the registered or beneficial owners of up to five percent (5%) of any
class of the capital stock of a publicly traded competing corporation, or (ii)
acquire up to five percent (5%) of any issue of publicly traded debt securities
of a competing corporation, provided that Consultant may not actively
participate in the business of such corporation until such time as this
covenant expires.
(e) During the Term, Consultant agrees that he will not, directly or
indirectly, for his benefit or for the benefit of any other person, firm or
entity, do any of the following:
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(i) solicit from any customer doing business with the Company business
of the same or of a similar nature to the Business with such customer;
(ii) solicit from any known potential customer of the Business,
business of the same or of a similar nature to that which has been the
subject of a known written or oral bid, offer or proposal by the Company, or
of substantial preparation with a view to making such a bid, proposal or
offer;
(iii) solicit the employment or services of, or hire, any person who
is known to be employed by or is a known consultant to the Company, (other
than investment advisors, accountants or attorneys);
(iv) otherwise interfere with the Business or accounts of the Company
including the making of any statements or comments of a defamatory or
disparaging nature to third parties regarding the Company or its officers,
directors, personnel or products.
(f) Consultant acknowledges that this Agreement is being entered into
in connection with the consummation of the transactions contemplated by the
Purchase Agreement, that the services to be rendered by him to the Company are
of a special and unique character, which gives this Agreement a peculiar value
to the Company, the loss of which may not be reasonably or adequately
compensated for by damages in an action at law, and that a material breach or
threatened breach by him of any of the provisions contained in this Section 6
will cause the Company irreparable injury. Consultant therefore agrees that
the Company shall be entitled, in addition to any other right or remedy, to a
temporary, preliminary and permanent injunction, without the necessity of
proving the inadequacy of monetary damages or the posting of any bond or
security, enjoining or restraining Consultant from any such violation or
threatened violations.
(g) Consultant further acknowledges and agrees that the provisions of
this Section 6 are in addition to the noncompetition provisions granted by the
Lemmerz Shareholders pursuant to the Purchase Agreement and, to the extent that
the provisions set forth herein
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are more restrictive than those set forth in the Purchase Agreement, the
provisions of this Section 6 shall govern.
(i) Consultant further acknowledges and agrees that due to the
uniqueness of his services and confidential nature of the information he
will possess, the covenants set forth herein are reasonable and necessary
for the protection of the business and goodwill of the Company; and it is
the intent of the parties hereto that if in the opinion of any court of
competent jurisdiction any provision set forth in this Section 6 is not
reasonable in any respect, such court shall have the right, power and
authority to modify any and all such provisions as to such court shall
appear not unreasonable and to enforce the remainder of this Section 6 as
so modified.
7. Termination.
(a) Notwithstanding any provision of this Agreement to the
contrary, the engagement of Consultant hereunder after the Closing shall
terminate on the first to occur of the following dates (each of which, to the
extent applicable, the "Date of Termination"):
(i) the date that the Company and Consultant mutually agree to such
termination;
(ii) the date of Consultant's death, adjudicated incompetency or
adjudicated bankruptcy;
(iii) the date on which the Company shall give Consultant notice of
termination for Cause (as defined below);
(iv) the date on which the Consulting Agreement between the
Company and H.K.L., L.L.C., a Florida corporation, of even date herewith,
is terminated pursuant to the provisions of Section 7(a)(iii) thereof; or
(v) the expiration of the Term.
(b) Upon termination of Consultant's engagement after the Closing (other
than pursuant to clause (i) or (v) above), Consultant shall be entitled to the
following:
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(i) upon termination pursuant to clause (a)(ii) above, Consultant
or Consultant's heirs, as the case may be, shall be entitled to (A) receive
any unpaid consulting fees to the Date of Termination and (B) to the extent
exercisable on the Date of Termination pursuant to Section 5(c) hereof,
exercise the Option at any time prior to the Expiration Date; or
(ii) upon termination pursuant to clause (a)(iii) or (iv) above,
Consultant shall be entitled to receive any unpaid consulting fees to the
Date of Termination. The Option, whether or not exercisable, shall
immediately terminate and Consultant shall not be entitled to exercise the
Option on or after the Date of Termination.
(c) For purposes of this Agreement, "Cause" shall mean the occurrence of
any of the following:
(i) the willful failure, neglect or refusal by Consultant to
perform his duties hereunder (including, without limitation, Consultant's
inability to perform such duties as a result of alcohol or drug abuse, chronic
alcoholism or drug addiction);
(ii) any willful, intentional or grossly negligent act by
Consultant having the effect of injuring the interest, business or reputation
of the Company, any of its parents, subsidiaries or affiliates;
(iii) Consultant's commission of any felony or a misdemeanor
involving moral turpitude (including entry of a nolo contendere plea);
(iv) any misappropriation or embezzlement of the property of the
Company and its affiliates and subsidiaries (whether or not a misdemeanor or
felony); and
(v) a material breach of any one or more of the provisions of this
Agreement by Consultant which, to the extent curable, has not been cured
within 30 days after notice thereof is received by the Consultant.
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8. Return of Company Property. Consultant agrees that following the
termination of his engagement for any reason, he shall return all property of
the Company, its subsidiaries, affiliates and any divisions thereof which is
then in or thereafter comes into his possession, including, but not limited to,
documents, contracts, agreements, plans, photographs, books, notes,
electronically stored data and all copies of the foregoing as well as any
automobile or other materials or equipment supplied by the Company to
Consultant; provided that Consultant shall be entitled at such time to purchase
any automobile provided hereunder at its then current market value as reflected
in the then current Xxxxxxxx list.
9. Effectiveness; Survival.
(a) Notwithstanding any provision hereof to the contrary, it is the
intention of the parties hereto that: (i) this Agreement shall become
effective on the Closing Date; and (ii) from and after the termination of the
Purchase Agreement in accordance with its terms at any time prior to the
Closing, the engagement contemplated hereby shall be deemed abandoned and this
Agreement shall forthwith become void.
(b) Upon termination of Consultant's engagement for any reason after the
Closing, this Agreement shall terminate and the Company shall have no further
obligation to Consultant; provided that the provisions set forth in Sections 5
(subject to the termination provisions of Section 7(b)), 6, 7(b), 8 and 10
through 17 hereof shall remain in full force and effect after the termination
of Consultant's engagement, notwithstanding the expiration or termination of
this Agreement.
10. Consultant's Independence and Discretion.
(a) Nothing herein contained shall be construed to constitute the
parties hereto as partners or as joint venturers, or either as agent of the
other, or as employer and employee. By virtue of the relationship described
herein Consultant's relationship to the Company during the term of this
Agreement shall only be that of an independent contractor and Consultant shall
perform all services pursuant to this Agreement as an independent contractor.
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(b) Subject only to such specific limitations as are contained in this
Agreement, the manner, means, details or methods by which Consultant performs
his obligations under this Agreement shall be solely within the discretion of
Consultant. The Company shall not have the authority to, nor shall it,
supervise, direct or control the manner, means, details or methods utilized by
Consultant to perform his obligations under this Agreement and nothing in this
Agreement shall be construed to grant the Company any such authority.
11. Entire Agreement; Termination of Prior Agreement.
(a) This Agreement sets forth the entire agreement between the parties
with respect to its subject matter and merges and supersedes all prior
discussions, agreements and understandings of every kind and nature between any
of them, and neither party shall be bound by any term or condition other than
as expressly set forth or provided for in this Agreement. This Agreement may
not be changed or modified except by an agreement in writing, signed by the
parties hereto.
(b) Without limiting the generality of the foregoing, the Company and
Consultant hereby acknowledge and confirm that: (i) the employment agreement
dated June 9, 1993 between Lemmerz Holding and Consultant (the "Prior
Agreement") has, subject to the occurrence of the Closing, been irrevocably
terminated and, from and after the Closing, the Prior Agreement shall be of no
further force or effect; and (ii) from and after the Closing Date, neither the
Company nor any subsidiary or affiliate of the Company, including, but not
limited to, Lemmerz Holding, shall have any liability or obligation to
Consultant or any person or entity under the Prior Agreement, except as
provided in the termination agreement attached hereto as Exhibit A (the
"Termination Agreement").
12. Waiver. The failure of any party to this Agreement to enforce any of
its terms, provisions or covenants shall not be construed as a waiver of the
same or of the right of such party to enforce the same. Waiver by any party
hereto of any breach or default by any other party of any term or provision of
this Agreement shall not operate as a waiver of any other breach or default.
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13. Severability. In the event that any one or more of the provisions of
this Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remainder of the Agreement shall
not in any way be affected or impaired thereby. Moreover, if any one or more
of the provisions contained in this Agreement shall be held to be excessively
broad as to duration, activity or subject, such provisions shall be construed
by limiting and reducing them so as to be enforceable to the maximum extent
allowed by applicable law.
14. Notices. Any notice given hereunder shall be in writing and shall be
deemed to have been given when delivered by messenger or courier service
(against appropriate receipt), or mailed by registered or certified mail
(return receipt requested), addressed as follows:
If to the Company:
Xxxxx Wheels International, Inc.
Attention: General Counsel
00000 Xxxxx Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
U.S.A.
If to Consultant:
Herrn Xxxxx Xxxxx-Xxxxxxx
Postfach 1125
53621 Konigswinter
Federal Republic of Germany
or at such other address as shall be indicated to either party in writing.
Notice of change of address shall be effective only upon receipt.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Michigan, without regard to conflicts
of law principles.
16. Descriptive Headings. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
17. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an
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original for all purposes but which, together, shall constitute one and the
same instrument.
18. Forum. The forum for the resolution of any claim, action, suit or
proceeding arising out of or related to this Agreement shall be (i) the
Landgericht Bonn for any action brought against Consultant and (ii) the United
States District Court, Eastern District of Michigan, Southern Division, for any
action brought against the Company. Notwithstanding the foregoing,
counterclaims may be asserted by a party in the forum in which the initial
claim, action, suit, proceeding or investigation shall have been filed or
brought.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Consulting
Agreement as of the date first written above.
XXXXX WHEELS INTERNATIONAL, INC.
By: /s/ Xxx Xxxxxx Xxxxxx
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Name:
Title:
CONSULTANT
/s/ Xxxxxxx Xxxxxxxx
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Xxxxx Xxxxx-Xxxxxxx
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