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EXHIBIT 5
CONSULTING AGREEMENT
THIS AGREEMENT made and entered into this 7th day of February, 1996 by
and between XXXXXX MANUFACTURING AND TECHNOLOGY, INC., a Delaware corporation
with an office at 0000 Xxxxx 00xx Xxxxxx, Xxxxxxx, Xxxxxxx 00000 (hereinafter
called the "Company"), and XxXXXXXX CONSULTANTS INC., a Delaware corporation
with an office at 000 Xxxxx Xxxxx, Xxxxxxxx, Xxx Xxxxxx 00000 (hereinafter
called "Consultant").
RECITALS
A. The Company is the owner of XXXX X. XXXXXXXX ASSOCIATES, INC.
("JJMA") a corporation engaged in the business of naval architecture and marine
engineering with a significant amount of U.S. Navy business, and is seeking to
control the costs and enhance the revenues of such business and of certain other
enterprises owned by the Company which do a significant amount of business with
various agencies and bureaus within the U.S. Department of Defense, and the
Company is desirous of finding opportunities to expand its business operations
into other defense-oriented activities.
B. Consultant and personnel associated with Consultant possess a high
degree of entrepreneurial and financial experience which the Company wishes to
have available to it for its business improvement and expansion.
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C. In consideration of the mutual benefits and agreements set out
herein, the Company and Consultant have made the agreement set forth herein.
1. Engagement. The Company hereby engages the services of
Consultant to provide the services hereinafter specified (the "Services") for
the compensation and on the terms and conditions set forth in this Agreement.
Consultant accepts such engagement and agrees to provide such Services for said
compensation and on such terms and conditions.
2. Effective Date and Term. This Agreement shall be effective
as of the first day of February, 1996 and shall continue in force and effect for
five (5) years until January 31, 2001 unless sooner terminated under the
provisions hereof.
3. Services of Consultant.
(a) Consultant, acting as an independent contractor and
consultant, shall on request of the Company or JJMA provide the following
services to the Company or JJMA by means of members of the Consultant's staff
designated by the Consultant for the particular task: assist the Company in
seeking and finding business opportunities for the Company to exploit including
analyzing the investment required and the potential return of each such business
opportunity; as and when requested by the Company assist the Company from time
to time in making presentations to potential clients of JJMA and other
enterprises owned by the Company which do business with agencies of the U.S.
Government, and provide such other consulting services as the
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Company and the Consultant may mutually agree are within the general scope of
the foregoing listed specific service description.
(b) During the term of this Agreement, and for so long as he is
willing and able to do so, the Company and the Consultant agree that Xx. Xxxx X.
XxXxxxxx shall serve as Chairman of JJMA with such duties as may be delegated to
him from time to time by the Board of Directors of JJMA, and shall be otherwise
available at reasonable times by telephone for consultation with officers and
employees of the Company and/or its subsidiaries.
4. Compensation and Expense Reimbursement.
(a) As a consulting fee, the Company shall pay, or shall cause
one or more of its subsidiaries to pay, to Consultant a fee of $400,000 per year
for each year of the term of this Agreement, payable in equal installments on
the fifteenth (15th) day and last day of each month during the term of this
Agreement.
(b) Consultant shall also be reimbursed for reasonable
out-of-pocket expenses incurred in carrying out its duties pursuant to this
Agreement. All such reimbursements will be made within 30 days of receipt by the
Company of Consultant's itemization of such expenses.
5. Secretarial Services. The Company shall supply to Consultant the
exclusive services of two secretaries employed by JJMA and carried on its
payroll, but seconded to Consultant. All costs related to such secretaries
incurred by JJMA or the
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Company, including but not limited to salary, benefits, extraordinary medical
claims and severance pay, shall be reimbursed to the Company by Consultant.
6. Early Termination. This Agreement may be terminated by
either party prior to January 31, 2001 by written notice given to the other in
the event any of the following should occur: (a) a material default by either
party in performing its material obligations under this Agreement, such default
continuing for a period of thirty (30) days following notice of default by the
non-defaulting party to the defaulting party, and the non-defaulting party then
giving a notice of election to terminate; (b) the other party shall become
unable or fail to pay its debts generally as they become due, or admit in
writing its inability to pay its debts, or make a general assignment for the
benefit of creditors; (c) any proceeding shall be instituted by or against the
other party seeking (i) to adjudicate it a bankrupt or insolvent, or (ii)
reorganization, arrangement, adjustment or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or (iii) appointment of a receiver, trustee, or other similar official
for it or for any substantial part of its property, and such proceeding shall
not have been dismissed within forty-five (45) days after the date such
proceeding was commenced; or (iv) the other party shall take any action to
authorize or consent to any action described in clause (c) above.
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7. Covenant Not to Compete; Confidentiality. During the term of
this Agreement and for a period of three (3) years after the termination of this
Agreement, neither Consultant nor XxXxxxxx shall engage in any activity that
competes with any line of business engaged in by JJMA, including, but not
limited to the business of commercial ship and detail design, naval ship and
combat systems and marine technical and management services (collectively,
"Line of Business"), whether acting as an officer, director, employee,
consultant, shareholder, owner, partner, fiduciary or in any other individual or
representative capacity whatsoever, and shall not otherwise use to its or his
own advantage, or to the advantage of any other person, corporation, or other
entity, or disclose to any other person, corporation, or other entity, any
non-public information as to the clients, customers, prospects, properties,
prices, sales practices, manner of operation, plans, trade secrets, patents,
processes, relationships with clients and customers or any other non-public
information concerning the Company or JJMA and/or their respective businesses or
solicit or induce (or seek to induce) any employee of JJMA to leave such
employment. Notwithstanding the foregoing, Consultant and Xx. Xxxx X. XxXxxxxx
may invest its or his assets in such form or manner as deemed appropriate;
provided, however, that such investments shall not require any substantial
services on the part of Consultant or Xx. XxXxxxxx in the operation of the
affairs of the company or entity in which such investments are made if such
company or entity competes with
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a Line of Business. The parties acknowledge the foregoing covenants are
reasonable in scope and necessary for the Company to receive the full benefit of
the consulting services to be provides hereunder. The Company shall have the
option in its sole discretion to reduce the scope and extent of the foregoing
covenants, by written notice to Consultant, either before or after adjudication
of the legality or enforceability of said covenants, whereupon said covenants
shall be valid and enforceable against Consultant and XxXxxxxx.
If a court should conclude that the foregoing covenants are
unenforceable according to their terms either because of their duration, the
geographic area covered thereby or the scope of the subject matter covered, the
parties hereby agree that the court shall reduce such duration, geographic area
or scope so that the resulting duration, geographic area and scope shall be the
maximum that such court shall conclude is enforceable, which reduction shall be
performed as follows: in the case of duration, the duration hereof shall be
reduced by one month at a time until it shall be the maximum enforceable
duration; in the case of geographic area, such area shall be reduced by
eliminating individual states one at a time therefrom until such area shall be
of maximum enforceable geographical coverage, commencing with the state in which
the least volume of JJMA revenues is generated during a fiscal year immediately
preceding such determination and eliminating additional states one at a time in
inverse order of the volume of JJMA revenues generated by
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business activity of JJMA in each such state during such fiscal year; in the
case of the scope of subject matter, the parties agree that the scope of such
covenants shall be reduced to the minimum extent necessary in order for such
covenants to be enforced. The parties acknowledge that damages may not be an
adequate remedy for breaches of the foregoing covenants. In addition to such
other remedies as may be available under applicable law, the parties acknowledge
that the remedies of specific performance and/or injunctive relief shall be
available and proper in the event of Consultant's or Xxxxxxxx'x actual or
imminent refusal or failure to perform its or his obligations hereunder.
8. Relationship of Parties. This instrument does not create and shall
not be construed as creating joint venture, partnership, or association between
the Company and Consultant. Consultant is and shall be during the entire term of
this Agreement an independent contractor.
9. Not Personal Services. In addition to other provisions herein
contained, this Agreement shall not be terminated in the event of the death or
disability of Xx. Xxxx X. XxXxxxxx.
10. No Assignments. This Agreement is personal to each of the parties
hereto, and neither party may assign or delegate any of its rights or
obligations hereunder without first obtaining the written consent of the other;
provided, however, that the Company may in connection with a merger,
consolidation, sale or other disposition of all or substantially all of its
assets
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assign its respective rights and delegate its obligations hereunder, but in such
case shall remain obligated as surety for the performance of the assignee.
11. Binding Effect. This Agreement shall bind and benefit Consultant
and the Company and their respective successors and assigns.
12. Notice. Any notice required or permitted to be given under
this Agreement shall be sufficient if in writing and if sent by registered mail
to the attention of the President at the office of Consultant, in the case of
the Consultant; or to the attention of its Chairman of the Board at its
principal office in the case of the Company.
13. Integration Clause; Oral Modification. This Agreement
represents the entire agreement of the parties with respect to the subject
matter hereof, and all agreements entered into prior hereto are revoked and
superseded by this Agreement, and no representations, warranties, inducements or
oral agreements halve been made by any of the parties except as expressly set
forth herein, or in other contemporaneous written agreements. This Agreement may
not be changed, modified or rescinded except in writing, signed by all parties
hereto, and any attempt at oral modification of this Agreement shall be void and
of no effect.
14. Governing Law. This Agreement shall be deemed to be made under, and
shall be construed in accordance with and shall be governed by, the laws of the
State of Arizona, and suit to enforce any provision of this Agreement or to
obtain any remedy
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with respect hereto may be brought in Superior Court, Maricopa County, Arizona,
and for this purpose each party hereby expressly and irrevocably consents to the
jurisdiction of said court.
15. Attorneys' Fees. In the event suit is brought (or
arbitration instituted) or an attorney is retained by any party to this
Agreement to enforce the terms of this Agreement or to collect any moneys due
hereunder, or to collect money damages for breach hereof, the prevailing party
shall be entitled to recover, in addition to any other remedy, reimbursement for
reasonable attorneys' fees, court costs, costs of investigation and other
related expenses incurred in connection therewith.
16. Waiver. Failure of any party to exercise any right or option
arising out of a breach of this Agreement shall not be deemed a waiver of any
right or option with respect to any subsequent or different breach, or the
continuance of any existing breach.
17. Counterparts. This Agreement may be executed in any number of
counterparts, all such counterparts shall be deemed to constitute one and the
same instrument, and each of said counterparts shall be deemed an original
hereof.
18. Captions. Captions and section headings used herein are for
convenience only and are not a part of this Agreement and shall not be deemed to
limit or alter any provisions hereof and shall not be deemed relevant in
construing this Agreement.
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IN WITNESS WHEREOF, the parties have signed this Agreement as of the
day, month and year first written above.
XXXXXX MANUFACTURING AND
TECHNOLOGY, INC., a Delaware
corporation
By Xxxx X. Xxxxxxxxx
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Its: Vice President and Secretary
XxXXXXXX CONSULTANTS INC.
By
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IN WITNESS WHEREOF, the parties have signed this Agreement
as of the day, month and year first written above.
XXXXXX MANUFACTURING AND
TECHNOLOGY, INC., a Delaware
corporation
By
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Its:
XxXXXXXX CONSULTANTS INC.
By Xxxx X. XxXxxxxx
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President
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