EXHIBIT 10.9
December 1, 1996
Xx. Xxxxxxxx Xxxxxxxxx
Ziegelhuette 32
D-61476 Kronberg
GERMANY
RE: CONSULTING AGREEMENT BETWEEN XXXXX, INC. AND XXXXXXXX XXXXXXXXX
Dear Wolfgang:
This letter, once it is signed by both parties, shall act as the Consulting
Agreement ("Agreement") between Xxxxx, Inc. ("Knoll") and Xxxxxxxx Xxxxxxxxx
("Consultant"). Please sign both originals of this letter and return one
original to me.
ENGAGEMENT - Consultant will perform a variety of consulting services to Knoll
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and its European affiliates, as directed by the Chairman or the Vice Chairman of
Knoll during the term of this Agreement, including but not limited to the
following services:
a. Developing and implementing a plan to maximize the financial
performance and revenue growth of Knoll Europe in accordance with the
financial objectives agreed upon with Knoll;
b. Advising the management of Knoll and of Knoll Europe, as appropriate;
and
c. Continuing to implement and monitor performance under the Knoll Ethics
Program.
Major financial, structural, legal issues as well as all contracts and personnel
matters and "extraordinary business matters" (as hereinafter defined) shall be
pre-approved by the Chairman or Vice Chairman of Knoll.
Consultant shall keep Knoll Europe's affairs completely separate from any other
business(es) for which Consultant does work or in which Consultant has any
direct or indirect ownership, financial or other interest.
Consultant will spend whatever amount of his personal time is necessary or
appropriate to complete Consultant's services and duties hereunder. Consultant
will spend his full time performing consulting services for Knoll.
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COMPENSATION - Consultant shall receive a monthly fee of 52,249 Deutsche Marks
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("Monthly Fee") and shall be reimbursed on a monthly basis for his reasonable
out-of-pocket travel and business expenses. Consultant shall submit monthly
invoices with supporting documentation as reasonably required by Knoll. Payment
terms are net thirty (30) days.
For Fiscal 1997, in addition to the Monthly Fee, Consultant shall receive a
contingent incentive in U.S. Dollars equal to 6% of the positive operating
profit of Knoll Europe on Xxxxx'x U.S. Dollar internal financial statements for
Knoll Europe for the fiscal year commencing on December 1, 1996 and ending on
November 30, 1997 ("Fiscal 1997"), provided that such operating profit is at
least $2 Million ("OP Incentive"). If operating profit for Knoll Europe is less
than $2 Million for Fiscal 1997, the OP Incentive shall be zero.
Notwithstanding anything to the contrary, the OP Incentive shall not exceed the
sum of $240,000.
For example:
(a) If operating profit for Knoll Europe for Fiscal 1997 is $1.9 Million,
the OP Incentive shall be zero.
(b) If operating profit for Knoll Europe for Fiscal 1997 is $2.9 Million,
the OP Incentive shall be $174,000.
(c) If operating profit for Knoll Europe for Fiscal 1997 is $3.9 Million,
the OP Incentive shall be $234,000.
For Fiscal 1997, in addition to the Monthly Fee and the OP Incentive, Consultant
shall receive a contingent incentive in U.S. Dollars equal to 4% of the
incremental "Orders" (as defined by this Agreement and Xxxxx'x internal
accounting policies, practices and procedures) volume in excess of $55 Million
for Fiscal 1997 for Knoll Europe on Xxxxx'x U.S. Dollar financial statements,
provided that Knoll Europe's operating profit for Fiscal 1997 is at least $2
Million ("Orders Incentive"). If Knoll Europe's operating profit for Fiscal
1997 is less than $2 Million, the Orders Incentive shall be zero. There is no
maximum payout or limit on the amount of the Orders Incentive.
For example:
(a) If operating profit for Knoll Europe for Fiscal 1997 is $1.9 Million
and Orders for Fiscal 1997 are $60 Million, the Orders Incentive shall
be zero.
(b) If operating profit for Knoll Europe for Fiscal 1997 is equal to or
greater than $2.0 Million and Orders for Fiscal 1997 are $60 Million,
the Orders Incentive shall be $200,000 ($60 Million less $55 Million =
$5 Million x 4% = $200,000).
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December 1, 1996
(c) If the facts are the same as section (b) above except that Orders for
Fiscal 1997 are $65 Million, the Orders Incentive shall be $400,000
($65 Million less $55 Million = $10 Million x 4% = $400,000).
All determinations of valid Orders and all operating profit calculations for
purposes of determining the Orders Incentive and OP Incentive shall be made
using Xxxxx'x internal accounting policies, practices and procedures as
interpreted and determined by Xxxxx'x Vice President and Controller in his sole
discretion and after Knoll Europe's financial statements are converted to U.S.
Dollars using Xxxxx'x internal currency conversion policies. The calculation of
Knoll Europe's operating profit on Xxxxx'x internal financial statements shall
include charges for Consultant's Monthly Fees, OP Incentive, Orders Incentive,
travel and business expenses and incentive accruals for all other Knoll Europe
incentives. Unusual income (such as gains on sales of fixed assets), unusual
expenditures (such as restructuring costs), changes in depreciation and goodwill
(other than changes in depreciation and goodwill in the ordinary course of
business) shall be disregarded in determining operating profit as determined by
the Chairman of Knoll.
Knoll Europe is the group of Knoll entities included in Xxxxx'x internal
financial statements as of the date hereof. Payment of the Orders Incentive and
OP Incentive, if appropriate hereunder, would be paid to Consultant on or before
February 28, 1998. The payments of the OP Incentive and the Orders Incentive
shall be made in German Deutsche Marks using the exchange rate from the U.S.
Dollar calculations contemplated hereby at the exchange rates that are reported
in the Wall Street Journal on the date of the payments.
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For the fiscal years after Fiscal 1997, the parties will discuss and attempt in
good faith to design incentives for Consultant that are consistent with Xxxxx'x
financial objectives for said fiscal years; provided, however, that Knoll
reserves the right to ultimately determine said incentives in its sole
discretion.
TERM; TERMINATION - The term of this Agreement shall begin on December 1, 1996
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and end on November 30, 1997, subject to termination as hereinafter set forth.
This Agreement shall automatically renew for an additional one (1)-year period
for "Fiscal 1998" (December 1, 1997 to November 30, 1998) and "Fiscal 1999"
(December 1, 1998 to November 30, 1999) unless either party elects not to renew
and informs the other party prior to October 1, 1997 (for Fiscal 1998) or
October 1, 1998 (for Fiscal 1999). If a party elects not to renew this
Agreement or if Knoll terminates the Agreement for "Good Cause," Knoll shall be
released for any and all future liability to Consultant under this Agreement,
including any liability for a "Termination Payment" (as hereinafter defined),
fees, compensation or any incentives.
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In addition, notwithstanding any other provision hereof, Knoll shall have the
unilateral right to terminate Consultant with or without any cause and without
any further liability for fees, compensation or incentives whatsoever upon three
(3) month's notice and upon payment to Consultant of the "Termination Payment".
Payment of the Termination Payment, if appropriate hereunder, would be made
within thirty (30) days of the effective date of termination.
For purposes of this Agreement, the term "Termination Payment" means 313,494
Deutsche Marks ("Base Termination Payment") plus the "Additional Termination
Payment" (as hereinafter defined). In addition, for notices of termination of
Consultant sent by Knoll during Fiscal 1997, the "Additional Termination
Payment" shall be defined as the sum of the OP Incentive and the Orders
Incentive determined in accordance hereunder multiplied by a fraction having as
its numerator the number of months actually worked by Consultant after December
1, 1996 but before the earlier of notice of termination is given to Consultant
and November 30, 1997, and having as its denominator the number twelve (12).
For Fiscal 1998 and Fiscal 1999, assuming this Agreement is in force and has not
earlier been terminated, not renewed or expired, if incentives have been
successfully determined for said fiscal years, then the parties will discuss and
attempt in good faith to design an Additional Termination Payment that is
consistent with the above approach and is consistent with Xxxxx'x financial
objectives for said fiscal years; provided, however, that Knoll reserves the
right to ultimately determine said Additional Termination Payments in its sole
discretion.
As a condition precedent to receiving the Termination Payment, Consultant shall
execute a complete release of Knoll and its affiliates in a form satisfactory to
Knoll.
For purposes of this Agreement, "Good Cause" means:
a. Termination or breach of this Agreement by Consultant;
b. Conviction of Consultant or any employee of Consultant of a felony (or
similar international law); or
c. Consultant's willful misconduct or fraud.
The expiration or termination by this Agreement shall not affect Xxxxx'x rights
to enforce the "Miscellaneous" provisions hereof.
MISCELLANEOUS - Consultant is an independent contractor and not an agent or
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employee of Knoll. Consultant is not integrated into the operation of Knoll
Europe and is free to decide how, were and when to work on the assignments
necessary for it to perform under
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December 1, 1996
this Agreement. Except as permitted herein, Consultant shall not enter into any
contracts on behalf of Knoll or its affiliates.
Consultant shall keep all information and trade secrets regarding Knoll or its
affiliates strictly confidential, including the terms of this Agreement. Any
and all intellectual property rights and other drawings, designs,
specifications, data maskworks, copyrightable works, inventions, discoveries,
computer programs, photos and documents developed by Consultant, his employees,
agents and subcontractors during this Agreement or for a period of one (1) year
thereafter shall belong to Knoll.
Consultant shall not take any action which directly or indirectly competes with
or conflicts with the business of Knoll in Europe during the term of this
Agreement.
Knoll acknowledges that on July 1, 1996, the Board of Directors of Xxxxx
International S.p.A. (Italy) appointed Consultant as Chairman of the Board of
Xxxxx International S.p.A. (Italy) and granted certain powers to Consultant to
manage that company.
Knoll is aware that certain managerial powers relating to extraordinary business
matters of Xxxxx International S.p.A. (Italy) may conflict with the provisions
set forth in this Agreement. Therefore, Consultant will have full authority for
any ordinary business matters while Knoll will require that any extraordinary
business matters are referred to the Chairman or Vice Chairman of Knoll for
Xxxxx'x prior approval, as required hereunder. For purposes of this Agreement,
"extraordinary business matters" shall include the following with respect to
Knoll or any Knoll subsidiary or affiliate: acquisitions, divestitures, joint
ventures, partnerships, or other unusual business combinations; purchasing,
selling or leasing real estate; major product development initiatives; licensing
agreements or other purchase or sale of intellectual property; covenants not to
compete; hiring, firing and promoting senior management; consulting agreements
or other material agreements outside the ordinary course of business.
Knoll will also keep Consultant indemnified against any losses and damages which
Consultant may suffer in connection with the performance of Consultant's duties
as Chairman of the Board of Xxxxx International S.p.A. (Italy) under the law and
under the Xxxxx International S.p.A. (Italy) Board of Directors' resolution of
July 1, 1996, except in the event that Xxxxxxxx Xxxxxxxxx has performed his
duties with gross negligence or fraud or in a manner inconsistent with the terms
hereof.
All services performed by Consultant, including, but not limited to, the
services rendered in the capacity of Chairman of the Board of Xxxxx
International S.p.A. (Italy) shall not entitle Consultant to any compensation or
benefits in addition to the compensation provided in the Agreement.
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All taxes applicable to any amounts paid by Knoll to Consultant shall be
Consultant's liability and Knoll shall not withhold any such amounts for taxes.
Consultant shall comply with all applicable laws (including U.S. laws) in the
performance of his duties hereunder.
This Agreement sets forth the entire understanding of the parties with regard to
the subject matter herein and merges and supersedes any other oral or written
agreements, discussions, understandings and/or terms.
This Agreement shall be construed in accordance with and governed by the laws of
the State of New York, United States of America applicable to agreements made
and to be performed wholly within such jurisdiction. The parties agree that any
legal action, suit or proceeding arising out of or relating to this Agreement
shall be instituted in a Federal or State court sitting in the State of New York
which shall be the exclusive jurisdiction and venue of said legal proceedings
and each party hereto waives any objection which such party may now or hereafter
have to the laying of venue of any such actions, suit or proceeding, and
irrevocably submits to the jurisdiction of any such court in any such action,
suit or proceeding. Any and all service of process and any other notice in any
such action, suit or proceeding shall be effective against such party when
transmitted in writing to the address of each contained herein. Nothing
contained herein shall be deemed to affect the right of any party hereto to
serve process in any manner permitted by law.
Consultant shall not assign this Agreement. Any attempted assignment shall be
null, void and of no legal effect.
This Agreement shall not become effective until and unless the Agreement and
Exhibit "A" are signed by the Consultant and the Agreement signed by Knoll.
XXXXX , INC.
BY:_________________________________
XXXXXX X. XXXXXXX, CHAIRMAN
AGREED:
BY:________________________________
XXXXXXXX XXXXXXXXX
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EXHIBIT "A"
CONSULTANT CERTIFICATION
The undersigned hereby certifies that Xxxxxxxx Xxxxxxxxx has not made and
will not make any gift or payment of money or anything of value, directly or
indirectly, to any official or employee of any government, or any department or
agency thereof (including government-owned companies) or to any political party
or candidate for political office for the corrupt purpose of inducing such
official, employee, party or candidate to misuse his position or to influence
any act or decision of a government, department or agency thereof in order to
obtain, retain or direct business to or for Xxxxx, Inc. and/or any subsidiary or
affiliate thereof.
WITNESS:
____________________________ ____________________________
Xxxxxxxx Xxxxxxxxx
Date:_______________________
