CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement") is entered into this 29th day
of January, 1999, by and among PEN CABLING TECHNOLOGIES, LLC, an Ohio limited
liability company (the "Company"), CTG, INC., an Ohio corporation (ACTG@) and
PEN INTERCONNECT, INC., a Utah corporation ("Consultant").
RECITALS
The Company and Consultant entered into an Asset Purchase Agreement,
dated January 29, 1999 ("Purchase Agreement"), whereby Consultant agreed to
sell, and the Company agreed to purchase, all of the Acquired Assets (as that
term is defined in the Purchase Agreement).
The Company is a wholly-owned subsidiary of CTG.
The Company desires to engage Consultant to render consultative and
advisory services to the Company in respect of its business of designing and
manufacturing internal and external custom cable and harness interconnections
(the "Business").
Consultant desires to accept such engagement upon the terms and
conditions hereinafter set forth.
In consideration of the Recitals set forth above and the mutual
covenants set forth below, the parties hereby agree as follows:
1. Consultancy. The Company agrees to retain Consultant as a
consultant, and Consultant agrees to provide consulting services to the Company,
for a period of sixty (60) months after the Closing Date (as defined in the
Purchase Agreement). Consultant will provide the Company with the services of
members of its management to act as consultants on matters pertaining to the
Business. Consultant shall have the status of independent contractor. The manner
and method of performing such obligations will be under the control and
discretion of Consultant, the Company's sole interest being in the result of
such services. Consultant agrees and understands that during the course of the
consultancy, it shall not have the authority or power to enter into a contract
or agreement on the Company's behalf.
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2. Consulting Payments. In consideration for the consulting services
provided by Consultant, the Company agrees to pay Consultant consulting fees in
an amount equal to two and one half percent (2.5%) of Net Receipts from the
operation of the Business during the consultancy. "Net Receipts" are defined as
the Invoice amount excluding freight, handling fees and related fees of (a)
product manufactured in the Pen Technology, Salt Lake City facility for existing
or new accounts, (b) product manufactured any where other than the Salt Lake
City facility for existing accounts set forth on Exhibit 1.2 of the Purchase
Agreement if such products are invoiced by the Company, and (c) sales made to
existing accounts where the product is currently sourced from a third party.
Consulting payments will be made quarterly beginning one hundred twenty (120)
days after the Closing Date, and the final payment will be made one hundred
twenty (120) days following the end of the sixtieth month after the Closing
Date. In no event shall the aggregate amount of consulting payments under this
Agreement be less than $150,000 or exceed $600,000. Notwithstanding the above,
in the event that Consultant has not discharged (a) all of the liabilities set
forth in Column A of Exhibit 7.13(n) within three business of days of the
Closing Date and (b) 80% of the liabilities set forth in Column B of Exhibit
7.13(n) within sixty days of the Closing Date, the aggregate amount of
consulting payments under this Agreement shall not exceed $450,000. In the event
that Consultant has discharged all of the liabilities set forth in Column A of
Exhibit 7.13(n) within three business of days of the Closing Date and (b) 80% of
the liabilities set forth in Column B of Exhibit 7.13(n) within sixty days of
the Closing Date (including all amounts owed to CTG International), but has not
discharged the remaining 20% of the liabilities set forth in Column B of Exhibit
7.13(n) within sixty days of the Closing Date, the aggregate amount of
consulting payments under this Agreement shall not exceed $500,000.
3. Offset Rights. In addition to all other remedies available to the
Company for a breach of this Agreement, the Company shall have the right to
offset the following against consulting payments to Consultant:
(a) the amount of any Closing Adjustment (as defined in the
Purchase Agreement) payable by Consultant to the Company in accordance with
Section 5.2 of the Purchase Agreement to the extent that Consultant has not paid
the Company such amount;
(b) the amount of any Receivables (as defined in the Purchase
Agreement) that have not been collected within ninety (90) days after the
Closing Date;
(c) the amount of any credits that must be issued by the
Company to customers of the Business after the Closing Date which relate to the
period prior to Closing (including those that the Company determines must be
issued in order preserve goodwill with such customers);
(d) the amount of any payments that must be made by the
Company to vendors of the Business excluding vendors included in Assumed
Liabilities (as defined in the Purchase Agreement) provided Consultant was
current in all payment and other obligations to such vendors as of the Closing
Date) after the Closing Date which relate to the period prior to Closing
(including those that the Company determines must be issued in order to preserve
goodwill with such vendors); and
(e) the cost of any material repair or replacement of
equipment included in the Acquired Assets in the event of a breach by consultant
of Section 7.10 of the Purchase Agreement unless such repair or replacement is
necessitated by the use of such Acquired Assets by the Company after the
Closing.
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4. Termination. This Agreement shall be terminated upon the happening
of either of the following events:
(a) by reason of expiration of the term of this
Agreement; or
(b) by either party, in the event of an overt or
intentional breach by the other party of this
Agreement or any other contractual relationship
between the Company and Consultant.
5. The Company's Files. All records contained in the Company's files
shall be the property of the Company and Consultant shall not remove such
records upon termination of this Agreement.
6. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed given and received (a) on the
date of delivery when delivered by hand or when transmitted by confirmed
simultaneous telecopy, (b) on the following business day when sent by receipted
overnight courier, or (c) three (3) business days after deposit in the United
States Mail when mailed by registered or certified mail, return receipt
requested, first class postage prepaid, as follows:
(a) If to the Company to:
Pen Cabling Technologies, LLC
Attn: Xxxxx Xxxxx
0000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
FAX: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxx, Esq.
Coolidge, Wall, Womsley & Lombard
00 X. Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxx 00000
FAX: (000) 000-0000
(b) If to Consultant to:
Pen Interconnect, Inc.
Attn: Xxxxxxx X. Xxxxx
0000 Xxxxx Xxxxxxx
Xxxxxx, XX 00000
FAX: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxx, Esq.
Law Offices of Xxxxx Xxxxxx
Suite 2400
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
FAX: (000) 000-0000
Any party may change the address to which notices are to be sent to it by giving
written notice of such change of address to the other parties in the manner
above provided for giving notice.
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7. Headings. The section headings in this Agreement are inserted solely
as a matter of convenience for reference, and shall not in any way affect the
meaning or interpretation of any of the provisions of the Agreement.
8. Assignment; Binding Effect. This Agreement may not be assigned by
any of the parties hereto without the prior written consent of the other parties
hereto, provided that the Company may assign its rights under this Agreement to
an affiliated entity without the prior consent of Consultant, provided that such
assignee also agrees to become a party to this Agreement with joint liability
for the obligations of the Company hereunder. This Agreement shall be binding
upon the parties hereto and their respective permitted successors, assigns and
transferees. Consultant agrees not to sell substantially all of its assets or
engage in a similar transaction with another entity after the Closing Date
unless the acquiring entity agrees to be bound by the terms of this Agreement
applicable to Consultant.
9. Headings; Exhibits and Schedules. The Section, Subsection and other
headings in this Agreement are inserted solely as a matter of convenience and
for reference, and are not a part of this Agreement. The Exhibits and Schedules
attached hereto are a material part of this Agreement and are incorporated
herein by this reference.
10. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one counterpart has been signed by each party and
delivered to the other party hereto.
11. Integration of Agreement. Except as otherwise provided herein, this
Agreement supersedes all prior agreements, oral and written, between the parties
hereto with respect to the subject matter hereunder. Neither this Agreement, nor
any provision hereof, may be changed, waived, discharged, supplemented or
terminated orally, but only by an agreement in writing signed by the party
against which the enforcement of such change, waiver, discharge or termination
is sought.
12. Time of Essence. Time is of the essence in this Agreement.
13. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Ohio.
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14. Partial Illegality or Unenforceability. Wherever possible, each
provision hereof shall be interpreted in such manner as to be effective under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be illegal or unenforceable in any respect,
such illegality or unenforceability shall not affect any other provisions of
this Agreement, and this Agreement shall be construed as if such illegal or
unenforceable provision or provisions had never been contained herein unless the
deletion of such provision or provisions would result in such a material change
as to cause completion of the transactions contemplated hereby to be
unreasonable.
15. Arbitration.
(a) Any controversy, dispute or claim arising out of or
relating to this Agreement shall be submitted to arbitration in accordance with
the commercial rules of the American Arbitration Association, by which each
party will be bound.
(b) If the parties have not agreed during their negotiations
on a single arbitrator to whom the controversy, dispute or claim will be
submitted, either party may select an arbitrator and send written notice to the
other party of the selection. The party receiving such notice will have ten (10)
days from the date such party receives such notice of such selection to select a
second arbitrator and send notice of such to the party who selected the first
arbitrator. Failure to select the second arbitrator and to send timely notice,
as provided above, empowers the arbitrator first selected to resolve the
controversy. If both arbitrators have been duly named, they will as soon as is
reasonably practicable (but within thirty (30) days from the date the latter of
the two arbitrators is named) name a third arbitrator, and the controversy shall
be resolved by majority vote of the three arbitrators. The provisions of the
Federal Rules of Civil Procedure and the Federal Rules of Evidence shall be
applicable to any such arbitration.
(c) Any arbitration proceedings will be conducted in Dayton,
Ohio unless the parties otherwise agree.
(d) The parties agree to be bound by the decision of the
arbitrator and the decision thereof to be entered into any appropriate court or
other jurisdiction. Unless otherwise provided in this Agreement, the prevailing
party in the arbitration shall be promptly reimbursed for its reasonable costs
and fees (including attorneys' fees) incurred in connection with the arbitration
and shall not be responsible for the costs of arbitration.
16. CTG Guaranty. CTG agrees to guaranty the performance by the Company
of its obligation to make consulting payments to Consultant under Section 2 of
this Agreement, provided, however that the amount guaranteed by CTG shall not
exceed $150,000 in the aggregate.
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The parties have caused this Agreement to be executed effective as of
the 29th day of January, 1999.
COMPANY:
PEN CABLING TECHNOLOGIES, LLC
BY: CTG, INC., Sole Member
By: /s/Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
Chairman and Chief Executive Officer
CTG:
CTG, INC.,
an Ohio corporation
By /s/Xxxxxxx X. Xxxxx
Its Chairman and Chief Exexcutive Officer
CONSULTANT:
PEN INTERCONNECT, INC.,
a Utah corporation
By /s/Xxxxxxx X. Xxxxx
Its President and Chief Operating Officer
