EXHIBIT 10.7
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") is made and entered into
as of the 6th day of April, 2004, (the "Effective Date") between WHITEWING
ENVIRONMENTAL CORP., a Delaware corporation, whose principal place of business
is 000 Xxxxx Xxxxxx, Xxxxxxxxxx, XX 00000 (the "Company") and XXXXXXX XXXXXX, an
individual whose address is 00000 Xxxx Xxxxx Xxxxx, Xx. 000, Xxxxx, XX 00000
(the "Consulting").
RECITALS
A. The Company is a Delaware corporation and is principally engaged in
the business of manufacturing and distribution of industrial absorbents (the
"Business").
B. The Company agrees to engage the Consultant and the Consultant
accepts the engagement with the Company ("Engagement"), subject to the terms and
conditions contained in this Consulting Agreement.
NOW, THEREFORE, the parties hereby covenant that the foregoing recitals
are true and correct, and are herein incorporated by reference. In consideration
of the mutual agreements herein made, the Company and the Consultant agree as
follows:
1. ENGAGEMENT AND DUTIES.
The Consultant shall serve as the business counselor to the Chairman of
the Board of the Company ("Chairman") and shall have such authority and such
duties as the Chairman shall delegate from time to time, as well as other duties
as may be assigned to the Consultant from time to time by the Company's Board of
Directors (the "Board"). Consultant's Engagement includes the Company and its
subsidiaries. Consultant shall discharge his duties from offices that Company
shall maintain in the state of New York or New Jersey.
2. TERM OF ENGAGEMENT.
This Agreement shall commence on the Effective Date and shall be for an
Engagement Period for three (3) consecutive years from the Effective Date
("Engagement Period"). The Engagement Period shall thereafter automatically
extend for two (2) one-year successive terms at the option of Consultant and
thereafter shall automatically extend for one year successive terms unless at
least three (3) months prior to the expiration of the Engagement Period (as the
same may have been extended), either party delivers to the other written notice
of election not to renew.
3. CONSIDERATION AND BENEFITS.
3.1 Base Fee.
The Company shall pay the Consultant an initial base fee, exclusive of
any bonuses, of $156,000 per annum ("Base Fee"). The Base Fee shall be increased
to $186,000 effective January 1, 2005 and $206,000 effective January 1, 2006. In
addition, the Base Fee shall be reviewed and increased upon the completion of
any Acquisition (whether by asset purchase or purchase of a majority of stock
interest) of any entity during the Engagement Period, or other mutually agreed
milestones. The amount of such increase shall be promptly determined by the
Board of Directors and made retroactive to the closing date of the Acquisition.
The Base Fee shall be payable at such intervals as salaries are paid by the
Company to its executive employees.
3.2 Minimum Salary - Accrual
The Consultant shall be limited to drawing down $6,000.00 per month of
his Base Fee until such time as the company reaches break-even in cash flow.
Base Fee due above $6,000.00 per month shall accrue to the Consultant and shall
be payable when the Company reaches break-even in cash flow, at which time the
Consultant shall draw down his full Base Fee. The accrual period shall be
limited to one year. Thereafter, if the company is not at break-even in cash
flow, the Base Fee due above $6,000.00 per month shall be waived by the
Consultant.
3.3 Performance Based Bonus.
The Consultant shall receive an annual bonus ("Bonus") pursuant to a
bonus system established for its Senior Management (as hereinafter defined)
whereby, on December 31, 2004, and on each anniversary thereof (each, a "Bonus
Year"), the Company shall set aside an amount equal to ten (10%) percent of its
earnings before interest, taxes, depreciation and amortization (the "Bonus
Pool"). Bonuses payable from the Bonus Pool shall be paid not later than 30 days
following the end of a Bonus Year. For the Bonus Year ending December 31, 2004,
the Company's Senior Management shall consist of Consultant and the Company's
Vice President/COO, who shall each share equally in the Bonus Pool. Commencing
with the Bonus Year ending December 31, 2004, and thereafter, the Senior Manager
may, in its discretion, add to the persons constituting Senior Management and
reallocate the Bonus Pool among such Senior Management, as redefined. In the
absence of any contrary action taken by the Board of Directors during a Bonus
Year, the computation and distribution of Bonuses to Senior Management shall be
that of the prior Bonus Year. Additionally, the Board reserves the right to
award Bonuses to the Consultant in excess of that prescribed above, in
recognition of his individual contributions, as and when it deems appropriate.
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3.4 Benefit Plans.
During the Engagement Period, Consultant shall be entitled to
participate in all plans adopted for the general benefit of the Company's
executive employees, such as pension plans, medical plans, investment plans and
group or other insurance plans and benefits (including disability and life
insurance plans) to the extent that the Consultant is and remains eligible to
participate therein and subject to the eligibility provisions of such plans in
effect from time to time. At the request of Consultant, Company shall reimburse
Consultant for the cost of Consultant's medical insurance.
3.5 Expenses.
The Consultant shall be reimbursed for his reasonable out-of-pocket
expenses incurred in the performance of his duties upon submission of
appropriate evidence thereof in conformity with normal Company policy.
3.6 Stock Options/Stock Grant.
The Consultant shall be granted an option ("Option") to purchase a
number of shares equal to twelve (12%) of the issued and outstanding shares of
the common stock of the Company on a fully diluted basis ("Option Shares") at
the exercise price of $.01 per Option Share. The amount of shares included in
such options shall be calculated upon vesting, which shall be 1/2 upon execution
hereof and 1/2 on the first anniversary hereof. The Options shall contain
anti-dilution provisions relating to adjustments in the event that the Company,
among other things, declares stock dividends, effects forward or reverse stock
splits, or other financings. The Option shall expire seven (7) years from the
date of this Agreement. The Option shall be immediately exercisable and shall
remain exercisable during the Engagement Period and for a period of four (4)
years following termination of the Agreement. Payment of the Exercise Price of
the Option Shares being purchased may be made by a cashless exercise procedure
whereby the Option Shares issued upon exercise of the Option will be sold with
the Grantee receiving the difference between the Exercise Price and the sale
price, in cash, and the Company receiving the Exercise Price for the Option
Shares, in cash. The Option may be exercised in whole or in part. All Options
shall vest immediately upon Change in Control as defined below.
3.7 Registration of Stock Underlying Options.
(a) Piggyback Registration Rights. The Consultant shall have piggy back
registration rights, as to shares of the common stock underlying twenty-five
(25%) of the Options, subject to certain restrictions. If at any time Company
prepares and files one or more registration statements under the Securities Act
with respect to a public offering of its Company's equity securities, or of any
of the Company's securities held by its security holders (other than a
registration statement on Forms S-4, S 8, or similar form) the Company will
include in the registration statement information as is required, to permit a
resale of the shares of the common stock underlying twenty five percent 25% of
the Options. However, if, in the written opinion of the Company's managing
underwriter, if any, for such offering, the shares underlying the Warrant, when
added to the securities being registered by the Company or its selling security
holders, would exceed the maximum amount of securities that could be marketed
without otherwise materially and adversely affecting the entire offering, then
the Company may exclude shares required to be registered so that the total
number of securities to be registered is within the maximum number of shares
that, in the opinion of the managing underwriter, may be marketed without
otherwise materially and adversely affecting the entire offering.
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b) Mandatory Registration. Within one (1) year of the Effective Date of
this Agreement, the Company shall file a Registration Statement at its sole
expense, to register shares of the common stock underlying seventy-five (75%) of
the Options. The Company will use its reasonable best efforts through its
officers, directors, auditors and counsel in all matters necessary or advisable
to file and cause to become effective such Registration Statement within one (1)
year of the Effective Date.
c) The Company will bear all fees and expenses other than the fees and
expenses of shareholder's counsel incurred in the preparation and filing of one
or more registration statements and related state registrations, and the
furnishing of copies of the preliminary and final prospectuses. In connection
with filing of a registration statement, the Consultant may be required to
furnish certain information to the Company and must agree to indemnify the
Company, its officers, directors and controlling persons against any liabilities
or damages, including liabilities arising under the Securities Act, with respect
to any information the Investor provided in writing. The Company will agree to
indemnify the Consultant against any liabilities or damages, including
liabilities under the Securities Act with respect to certain claims under the
prospectus.
4. VACATION.
For each year during the Engagement Period, the Consultant shall be
entitled to four weeks paid vacation to be taken at such times, and in such
increments, as Consultant shall determine in his sole discretion provided
however, that the Consultant shall evidence reasonable judgment with regard to
appropriate vacation scheduling. Unused vacation shall accrue to the following
year.
5. AUTOMOBILE/CELL PHONE/INTERNET/MEMBERSHIPS/MOVING
EXPENSES/MISCELLANEOUS.
5.1 Automobile Allowance. The Consultant shall be entitled to an
automobile allowance or the use of a Company-owned or Company-leased automobile
according to policies of the Company in place from time to time for its senior
Consultant officers. In the absence of such policies, the automobile allowance
shall be $5,000 at the onset, followed by payments of $900.00 per month.
5.2 Cell Phone/Internet Allowance. The Company shall be responsible for
reimbursing the Consultant for his reasonable cell phone usage, and will
reimburse him for his monthly service contract. In addition, the Company shall
provide the Consultant with Blackberry (or similar) service, including the
initial equipment cost (approximately $600) and monthly subscription fee. The
Company shall also provide and maintain Internet access in one or more locations
for the full term of Consultant's Engagement.
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5.3 Membership, Dues and Charitable Contributions. The Company shall
provide to the Consultant, a membership in the New York Athletic Club or such
social, charitable or religious organization or club, in the Consultant's sole
discretion, which membership shall be either in the name of the Consultant; or
(ii) an equivalent dollar amount of charitable donations or contributions shall
be made, which amounts and which charities shall be determined in the sole
discretion of the Consultant; provided that such Membership, Dues and Charitable
Contributions shall not exceed Five Thousand Dollars ($5,000) per year.
5.4 Moving Expenses. This Agreement is entered into on the basis that
the principal place of business of the Company, and the location from which
Consultant is to be based for the performance of his services hereunder, is
Connecticut. The Company shall reimburse Consultant for all moving and
relocation expenses paid or incurred up to up to Ten Thousand Dollars ($10,000)
in connection with Consultant's relocation from Florida to New York or New
Jersey.
In the event that the Company shall change the location of Company's
principal office, or otherwise require Consultant to be based and/or to operate
from another location which is more than fifty (50) miles further from
Consultant's then-current residence to the Company's current headquarters office
in Connecticut Company shall reimburse Consultant for all moving and relocation
expenses paid or incurred in connection with Consultant's relocation to a new
residence closer to Company's new principal office.
6. TERMINATION.
6.1 Death.
In the event of the death of the Consultant during the Engagement
Period, the Company shall also be obligated to pay to the Consultant's estate or
heirs, as the case may be, such amount of Bonus based upon (i) the formula set
forth in Section 3.2 of this Agreement.
6.2 Disability.
(a) "Disability," for the purposes of this Agreement, shall be deemed
to have occurred in the event (i) the Consultant is unable by reason of sickness
or accident to perform the Consultant's duties under this Agreement for an
aggregate of 180 days in any twelve-month period or (ii) the Consultant has a
guardian of the person or estate appointed by a court of competent jurisdiction.
Termination due to Disability shall be deemed to have occurred upon the first
day of the month following the determination of Disability as defined in the
preceding sentence.
(b) In the event of the Consultant's Disability, the Consultant shall
be entitled to compensation in accordance with the Company's disability
compensation practice for senior Consultants, including any separate arrangement
or policy covering the Consultant, but in all events the Consultant shall
continue to receive the Consultant's salary for a period, at the annual rate in
effect immediately prior to the commencement of Disability, of not less than 180
days from the date on which the Disability has been deemed to occur as provided
below. Any amounts provided for in this Section 6 shall not be offset by other
long-term disability benefits provided to the Consultant by the Company.
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(c) Anything in this Agreement to the contrary notwithstanding, if,
following a termination of Engagement due to Disability as provided in the
preceding paragraph, the Consultant becomes reemployed, whether as an Consultant
or a consultant to the Company, any salary, annual incentive payments or other
benefits earned by the Consultant from such reemployment shall offset any salary
continuation due to the Consultant hereunder commencing with the date of
re-employment.
6.3 Termination for Cause.
(a) "Cause" shall mean and include those actions or events specified
below in subsections (i) through (iv) to the extent the same occur, or the
events constituting the same take place, subsequent to the date of execution of
this Agreement: (i) Committing or participating in an injurious act of fraud,
gross neglect or embezzlement against the Company; (ii) committing or
participating in any other injurious act or omission wantonly, willfully,
recklessly or in a manner which was grossly negligent against the Company,
monetarily or otherwise; (iii) engaging in a criminal enterprise involving moral
turpitude; or (iv) conviction of an act or acts constituting a felony under the
laws of the United States or any state thereof. No actions, events or
circumstances occurring or taking place at any time prior to the date of this
Agreement shall in any event constitute or provide any basis for any termination
of this Agreement for Cause;
(b) Nothing herein shall prevent the Company from terminating
Engagement for Cause. The Consultant shall continue to receive salary for the
period ending thirty (30) days after the date of such termination plus any
accrued Bonus and accrued and unused Vacation time through such date of
termination. Any rights and benefits the Consultant may have in respect of any
other compensation shall be determined in accordance with the terms of such
other compensation arrangements or such plans or programs.
(c) Notwithstanding anything else contained in this Agreement, this
Agreement will not be deemed to have been terminated for Cause unless and until
there shall have been delivered to the Consultant a notice of termination
stating that the Consultant committed one of the types of conduct set forth in
this Section 6 contained in this Agreement and specifying the particulars
thereof and the Consultant shall be given a thirty (30) day period to cure such
conduct, if possible.
6.4 Termination for Other Than Cause.
If the Consultant's Engagement is terminated other than by reason of
(i) Death, (ii) Disability, (iii) for Cause, (iv) the Consultant's voluntary
termination of Engagement, (v) constructive termination as set forth in Section
6.6, or (vi) change of control as set forth in Section 6.7, then (a) the Company
shall be obligated to pay the Consultant any unpaid Base Fee through the date of
termination, and Bonus and accrued and unused Vacation time, pro-rated to the
date of termination, (b) the Company shall pay the Consultant severance pay
equal to the Base Fee (less any applicable withholding taxes) payable hereunder,
at times and intervals set forth in Sections 3.1 , for the remainder of the term
of this Agreement (the "Severance Term"), and (c) notwithstanding anything
contained in the Option Agreement or the Company's option plans to the contrary,
all options previously awarded to the Consultant shall immediately vest. The
Company's obligation to make payments hereunder to the Consultant shall
immediately cease upon the Consultant's subsequent death or Disability or in the
event the Consultant shall fail to honor the Consultant's obligations under
Section 7.
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6.5 Voluntary Termination.
In the event the Consultant terminates the Consultant's Engagement on
the Consultant's own volition (except as provided in Section 6.6 and/or Section
6.7) prior to the expiration of the Term of this Agreement, including any
renewals thereof, such termination shall constitute a voluntary termination and
in the Consultant shall be entitled to the Compensation and Benefits upon
termination as provided in Section 6.8.
6.6 Constructive Termination of Engagement.
If the Consultant so elects, a termination by the Company other than
for Cause shall be deemed to have occurred upon the occurrence of one or more of
the following events without the express written consent of the Consultant. Upon
such termination, the company shall be obligated to pay the Consultant as if the
Agreement was Terminated for Other Reason as defined in paragraph 6.4 above:
(i) the assignment to the Consultant of duties inconsistent with the
Agreement or a change in his title or authority; or
(ii) any change in reporting responsibility so that the Consultant
reports to any person other than the Board of Directors; or
(iii) the requirement of the Consultant to relocate to a location
outside the state of Connecticut; or
(iv) any reduction in the Consultant's salary or any change in the
method of calculating Consultant's Bonus Compensation hereunder; or
(v) a material breach of the Agreement by the Company; or
(vi) a material reduction of the Consultant's benefits under any
employee benefit plan, program or arrangement (for Consultant individually or as
part of a group) of the Company as then in effect or as in effect on the
effective date of the Agreement, which reduction shall not be effectuated for
similarly situated employees of the Company; or
(vii) failure by a successor company to assume the obligations
under the Agreement.
Anything in this Agreement to the contrary notwithstanding, the
Consultant shall give written notice to the Board of Directors of the Company
that the Consultant believes an event has occurred which would result in a
Constructive Termination of the Consultant's Engagement under this Section 6.6
which written notice shall specify the particular act or acts, on the basis of
which the Consultant intends to so terminate the Consultant's Engagement, and
the Company shall then be given the opportunity, within fifteen (15) days of its
receipt of such notice to cure said event, provided, however, there shall be no
time period permitted to cure a second or subsequent occurrence under this
Section 6.6 (whether such second occurrence be of the same or a different event
specified in subsections (i) through (vii) above).
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6.7 Termination Following a Change of Control.
(i) In the event that a "Change in Control" of the Company shall occur
at any time during the Term hereof, the Consultant shall have the right to
terminate the Consultant's Engagement under this Agreement upon thirty (30) days
written notice given at any time within one year after the occurrence of such
event, and such termination of the Consultant's Engagement with the Company
pursuant to this Section 6.7(i), and, in any such event, such termination shall
be deemed to be a Termination by the Company other than for Cause and the
Consultant shall be entitled to such Compensation and Benefits upon termination
as set forth in Subsection 6.8 of this Agreement.
(ii) For purposes of this Agreement, a "Change in Control" of the
Company shall mean:
(a) any "person or group of persons", other than the
Consultant, (as such term is used in Section 13(d) and 14(d) of the Exchange
Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
thirty percent (30%) or more of the combined voting power of the Company's
outstanding securities then having the right to vote at elections of directors;
or
(b) the individuals who at the commencement date of the
Agreement constitute the Board of Directors cease for any reason to constitute a
majority thereof unless the election, or nomination for election, of each new
director was approved by a vote of at least two thirds of the directors then in
office who were directors at the commencement of the Agreement; or
(c) the business of the Company for which the Consultant's
services are principally performed is disposed of by the Company pursuant to a
partial or complete liquidation of the Company, a sale of assets (including
stock of a subsidiary of the Company) or otherwise; or
(d) the disposition of (or including) the properties or
business of the Company, substantially in its entirety, by merger,
consolidation, sale of assets or otherwise or a [30%] change in the beneficial
ownership of the Company's securities in a single transaction or series of
related transactions.
Anything herein to the contrary notwithstanding, this Section 6.7(ii)
will not apply where the Consultant gives the Consultant's explicit written
waiver stating that for the purposes of this Section 6.7(ii) a Change in Control
shall not be deemed to have occurred. The Consultant's participation in any
negotiations or other matters in relation to a Change in Control shall in no way
constitute such a waiver which can only be given by an explicit written waiver
as provided in the preceding sentence.
(iii) In the event that, within twelve (12) months of any Change in
Control of the Company or any "Attempted Change in Control," as hereinafter
defined of the Company, the Company terminates the Engagement of the Consultant
under this Agreement, other than for Cause as defined in Section 6.4 or the
Consultant's Engagement is constructively terminated as defined in Section 6.6
then, in any such event, such termination shall be deemed to be a Termination by
the Company other than for Cause and the Consultant shall be entitled to such
Compensation and Benefits as set forth in Subsection 6.8 of this Agreement.
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An "Attempted Change in Control" shall be deemed to have occurred if
any substantial attempt, accompanied by significant work efforts and
expenditures of money, is made to accomplish a Change in Control, as described
in subparagraphs (a), (b), (c), (d) or (e) above whether or not such attempt is
made with the approval of a majority of the then current members of the Board of
Directors.
6.8 Compensation and Benefits Upon Termination of Consultant
Engagement.
In the event of any termination of Consultant's Engagement other than
for Cause under Section 6.3, on the effective date of any such termination, the
Consultant shall be entitled to receive the following:
(1) All life, disability, health insurance and other benefits pursuant
to Section 3, to which he was entitled to continue to receive thirty (30) days
prior to the Effective Date of such termination, shall continue to be made for a
period of six (6) months following the date of termination as set forth in this
Section; provided that in the Consultant's sole discretion, the Consultant may
receive the cash equivalent of all or any part of such life, disability and/or
health insurance benefits from the Company in lieu of receiving such benefits;
plus
(2) An amount equal to six (6) times the Consultant's monthly Base Fee,
based upon the greater of the Consultant's Base Fee (i) immediately prior to the
effective date of termination or (ii) as of ninety (90) days prior to the
effective date of termination; provided that all Base Compensation shall be
payable to the Consultant bi-weekly; provided that in the event that the
Consultant is entitled to receive the Base Compensation as a result of a Change
in Control, at the Consultant's option, the Consultant may receive a lump sum
equal to the balance of the Base Compensation including the two (2) one-year
successive terms due to the Consultant pursuant to Section 3.1 reduced to
present value, as set forth in Section 280G of the Internal Revenue Code; plus
(3) All unpaid Base Fee through the date of termination, Bonus and
accrued and unused Vacation time, pro-rated to the date of termination.
The provisions of this Section 6.8 notwithstanding, the Compensation
and Benefits to be received by the Consultant pursuant to this Section 6.8 shall
not exceed the amount set forth in Section 162(m) of the Internal Revenue Code,
or its successor provision.
7. RESTRICTIONS.
7.1 Confidentiality.
The Consultant recognizes that the Consultant's position with the
Company is one of trust and confidence. The Consultant acknowledges that, during
the course of the Consultant's Engagement with the Company, the Consultant will
necessarily become acquainted with confidential information relating to the
suppliers of the Company, and trade secrets, such as processes, methods of
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operation and other information which the Company regards as confidential and in
the nature of trade secrets (collectively "Confidential Information"); provided,
however, Confidential Information shall not include information which (i) is
already in the possession of the Consultant prior to the date of this Agreement;
(ii) is or becomes generally available to the public other than as a result of
disclosure by the Consultant; (iii) becomes available to the Consultant on a
non-confidential basis from a source other than the Company, or (iv) which is
generally known within the industry or otherwise obtainable through other
sources. The Consultant acknowledges and agrees that the Confidential
Information is valuable to the Company and that the Company could suffer damage
if any of the Confidential Information were improperly disclosed.
The Consultant covenants and agrees that the Consultant will not, at
any time during or for a period of twelve (12) months after the termination of
the Consultant's relationship with the Company, reveal, divulge, or make known
to any person, firm or corporation, any Confidential Information made known to
the Consultant or of which the Consultant has become aware, regardless of
whether developed, prepared, devised or otherwise created in whole or in part by
the efforts of the Consultant, except and to the extent that such disclosure is
necessary to carry out the Consultant's duties for the Company. The Consultant
further covenants and agrees that the Consultant shall retain all Confidential
Information in trust for the sole benefit of the Company, and will not divulge
or deliver or show any Confidential Information to any unauthorized person
including, without limitation, any other employer of the Consultant, and the
Consultant will not make use thereof in an independent business related to the
business of the Company.
The Consultant agrees that, upon termination of the Consultant's
Engagement for any reason whatsoever, or for no reason, and at any time, the
Consultant shall return to the Company all papers, documents and other property
of the Company which relate to Confidential Information, and the Consultant will
not retain copies of any such papers, documents or other property for any
purpose whatsoever.
7.2 Non-Competition.
The Consultant agrees that during the Engagement Period, and for a
period of twelve (12) months thereafter (or, if Consultant's Engagement is
terminated pursuant to Section 6.4 hereof, during the Severance Term), and
whether or not the Consultant shall be entitled to the payment of any
post-termination severance benefits described in Section 6.4 hereof, the
Consultant shall not, except as permitted under Section 7.3 hereof, (i) engage,
directly or indirectly, in the State of New Jersey, alone or as a shareholder,
partner, officer, director, employee or consultant of any other business
organization, in the business of the recycling of oil filters, oil and/or
antifreeze (collectively, the `Business"), (ii) divert to any organization in
the Business any customer of the Company or any of its subsidiaries or business
units, or (iii) hire, solicit or encourage any officer, employee or consultant
of the Company or any of its subsidiaries to leave its employ for employment by
or with any organization in the Business. Nothing provided in this Section 7.2
shall prevent the Consultant from purchasing or otherwise beneficially owning,
without restriction on amount, any securities issued by the Company. If at any
time the provisions of this Section 7.2 shall be determined to be invalid or
unenforceable, by reason of unreasonableness as to area, duration or scope of
activity, this Section 7.2 shall be considered divisible and shall become and be
immediately amended to only such area, duration and scope of activity as shall
be determined to be reasonable and enforceable by the court or other body having
jurisdiction over the matter; and the Consultant agrees that this Section 7.2 as
so amended shall be valid and binding as though any invalid or unenforceable
provision had not been included herein.
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7.3 Exclusivity.
During the Engagement Period, the Consultant shall devote substantially
his full time to the business of the Company, shall faithfully serve the
Company, shall in all respects conform to and comply with the lawful and
reasonable directions and instructions given to him by the Board in accordance
with the terms of this Agreement, shall use his best efforts to promote and
serve the interest of the Company and shall not engage in any other business
activity, whether or not such activity shall be engaged in for pecuniary profit,
except that the Consultant may (i) participate in the activities of professional
trade organizations related to the business of the Company and its subsidiaries,
(ii) engage in personal investing activities of unrelated businesses and (iii)
with the written consent of the Board, which shall not be withheld unreasonably,
own up to five (5%) percent of the outstanding capital stock or profits interest
of any competing Business, provided that the activities set forth in these
clauses (i), (ii) and (iii), either singly or in the aggregate, does not
interfere in any material respect with the services to be provided by the
Consultant hereunder.
7.4 Due Performance By Company.
All terms and provisions of this Section 7 are subject to the Company's
due performance of all obligations on its part to be performed.
8. ENFORCEMENT.
The Consultant acknowledges that the Company will suffer substantial
and irreparable damages not readily ascertainable or compensable in terms of
money in the event of the breach of any of the Consultant's obligations under
Section 7. The Consultant agrees that the Company, in addition to any other
remedies (including damages) provided by law, shall have the right and remedy to
have such provisions specifically enforced by any court having equity
jurisdiction upon due notice to the Consultant. The rights and remedies set
forth in this Section 8 shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or equity. Should it
become necessary for any party to institute legal action to enforce the terms
and conditions of this Agreement, the successful party will be awarded
reasonable attorneys' fees at all trial and appellate levels, expenses and
costs.
9. INDEMNITY.
9.1 The Consultant shall be covered by the Articles of
Incorporation and/or the Bylaws of the Company with respect to matters occurring
on or prior to the date of termination of the Consultant's Engagement with the
Company, subject to all the provisions of Delaware and Federal law and the
Articles of Incorporation and Bylaws of the Company then in effect. Such
reasonable expenses, including attorneys' fees, that may be covered by the
Articles of Incorporation and/or Bylaws of the Company shall be paid by the
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Company on a current basis in accordance with such provision, the Company's
Articles of Incorporation and Delaware law. To the extent that any such payments
by the Company pursuant to the Company's Articles of Incorporation and/or Bylaws
may be subject to repayment by the Consultant pursuant to the provisions of the
Company's Articles of Incorporation or Bylaws, or pursuant to Delaware or
Federal law, such repayment shall be due and payable by the Consultant to the
Company within twelve (12) months after the termination of all proceedings, if
any, which relate to such repayment and to the Company's affairs for the period
prior to the date of termination of the Consultant's Engagement with the Company
and as to which Consultant has been covered by such applicable provisions.
9.2 The Company hereby agrees to indemnify Consultant and hold
Consultant harmless from and against all claims and damages (including
reasonable attorney's fees) arising out of or relating to any personal
guarantees given by Consultant to secure obligations of the Company. Company's
obligations under this section shall survive the termination of this Agreement
and the termination of Consultant's Engagement with the Company. The Company
further agrees that, if Consultant is terminated without cause during the term
of this Agreement, Company will exercise best efforts to relieve Consultant from
his guaranteed obligations and, failing such efforts, to attempt to refinance
the indemnified obligation if it is commercially reasonable to do so.
10. Withholding.
Anything to the contrary notwithstanding, all payments required to be
made by the Company hereunder to the Consultant or the Consultant's estate or
beneficiaries shall be subject to the withholding of such amounts, if any,
relating to tax and other payroll deductions as the Company may reasonably
determine it should withhold pursuant to any applicable law or regulation. In
lieu of withholding such amounts, the Company may accept other arrangements
pursuant to which it is satisfied that such tax and other payroll obligations
will be satisfied in a manner complying with applicable law or regulation.
11. Certain Tax Matters. The Company shall indemnify and hold the
Consultant harmless from and against (i) the imposition of excise tax (the
"Excise Tax") under Section 4999 of the Internal Revenue Code of 1986, as
amended (or any successor provision thereto, the "Code"), on any payment made
under this Agreement (including any payment made under this paragraph) and any
interest, penalties and additions to tax imposed in connection therewith, and
(ii) any federal, state or local income tax imposed on any payment made pursuant
to this paragraph. The Consultant shall not take the position on any tax return
or other filing that any payment made under this Agreement is subject to the
Excise Tax, unless, in the opinion of independent tax counsel reasonably
acceptable to the Company, there is no reasonable basis for taking the position
that any such payment is not subject to the Excise Tax under U.S. tax law then
in effect. If the Internal Revenue Service makes a claim that any payment or
portion thereof is subject to the Excise Tax, at the Company's election, and the
Company's direction and expense, the Consultant shall contest such claim;
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provided, however, that the Company shall advance to the Consultant the costs
and expenses of such contest, as incurred. For the purpose of determining the
amount of any payment under clause (ii) of the first sentence of this paragraph,
the Consultant shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation applicable to individuals in the
calendar year in which such indemnity payment is to be made and state and local
income taxes at the highest marginal rates of taxation applicable to individuals
as are in effect in the jurisdiction in which the Consultant is resident, net of
the reduction in federal income taxes that is obtained from deduction of such
state and local taxes.
11. MISCELLANEOUS PROVISIONS.
11.1 Entire Agreement; Prior Agreement Terminated.
This Agreement set forth the entire agreement and understanding between
the parties with respect to the subject matter hereof and supersedes all prior
agreements, arrangements, and understandings between the parties with respect to
the subject matter hereof. Notwithstanding the foregoing, if the transaction set
forth in paragraph 2 is not consummated, than this agreement shall not take
effect and all prior agreements, arrangements and understandings between the
parties remain in full force and effect.
11.2 Modification.
This Agreement may not be amended, modified, superseded, canceled,
renewed or extended, and the terms or covenants hereof may not be waived, except
by a written instrument executed by both of the parties or in the case of a
waiver, by the party waiving compliance.
11.3 Successors.
(a) Company's Successors. This Agreement shall be binding upon any
successor (whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company's business and/or assets ("Change of Ownership"). The Company shall
require any successor, by agreement in form and substance reasonably
satisfactory to the Consultant, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. For all purposes
under this Agreement, the term "Company" shall include any successor to the
Company's business and/or assets which becomes bound by this Agreement.
(b) Consultant's Successors. This Agreement and all rights of
Consultant hereunder shall inure to the benefit of, and be enforceable by,
Consultant's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
11.4 Waiver.
The failure of either party at any time or times to require performance
of any provision hereof in no manner shall affect the right at a later time to
enforce the same. No waiver by either party of a breach of any term or covenant
contained in this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be or construed as a further or continuing waiver
of any such breach or a waiver of any other term or covenant contained in this
Agreement.
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11.5 Notices.
All notices, demands, consents or other communications hereunder shall
be in writing and shall be given (and shall be deemed to have been duly given)
upon the earlier of receipt or one business day after being sent by reputable
overnight courier to the parties at the addresses set forth above or to such
other address either party shall hereafter specify by notice to the other party.
Irrespective of the foregoing, notice of change of address shall be effective
only upon receipt.
11.6 Governing Law.
This Agreement shall become valid when executed and accepted by
Company. The parties agree that it shall be deemed made and entered into in the
State of New York and shall be governed and construed under and in accordance
with the laws of the State of New York. Anything in this Agreement to the
contrary notwithstanding, the Consultant shall conduct the Consultant's business
in a lawful manner and faithfully comply with applicable laws or regulations of
the state, city or other political subdivision in which the Consultant is
located.
11.7 Disputes.
In the case of any dispute between the Company and the Consultant which
has not been resolved through negotiation between the parties, such dispute
shall be settled and determined through arbitration in accordance with the Rules
of Commercial Arbitration of the American Arbitration Association ("AAA"). Any
arbitration pursuant to this Agreement shall be held in Broward County, Florida,
and shall be conducted by a single arbitrator. The arbitration shall be
conducted by a single arbitrator to be selected by 2 (or 3) independent
arbitrators, one each to be selected by each party to the dispute. The written
decision of the arbitrator so selected shall be binding, final and conclusive on
the parties. The fees and expenses of the arbitration will be shared equally by
the disputing parties. The prevailing party in any arbitration (subject to the
discretion of the arbitrator) shall recover its expenses and costs including
reasonable attorney's fees from the other party. The parties knowingly and
voluntarily agree to enter into this arbitration clause and waive any rights
that might otherwise exist to request a jury trial or other court proceeding.
11.8 Assignability.
This Agreement and the Consultant's rights and obligations hereunder,
may not be assigned by the Consultant. Subject to Consultant's documentary
approval rights as provided in Section 9.3, the Company may assign its rights,
together with its obligations hereunder, only to a successor by merger or by the
purchase of all or substantially all of the assets and business of the Company
and such rights and obligations shall inure to, and be binding upon, any such
successor.
11.9 Binding Effect.
This Agreement shall be binding upon and shall inure to the benefit of
the parties and their respective legal representatives, heirs, permitted
successors and permitted assigns.
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11.10 Headings and Word Meanings.
Headings and titles in this Agreement are for convenience of reference
only and shall not control the construction or interpretation of any provision
hereof. The words "herein," "hereof," "hereunder," and words of similar import,
when used anywhere in this Agreement, refer to this Agreement as a whole and not
merely to a subdivision in which such words appear, unless the context otherwise
requires. The singular shall include the plural unless the context otherwise
requires.
11.12 Severability.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction.
11.13 Survival.
Any termination of this Agreement shall not affect the ongoing
provisions of this Agreement which shall survive such termination in accordance
with their terms.
11.14 Further Assurances.
All parties hereto shall execute and deliver such other instruments and
do such other acts as may be necessary to carry out the intent and purposes of
this Agreement.
[SIGNATURE PAGE TO FOLLOW]
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THE CONSULTANT ACKNOWLEDGES THAT HE HAS READ ALL OF THE TERMS OF THIS
AGREEMENT, UNDERSTANDS THE AGREEMENT, AND AGREES TO ABIDE BY ITS TERMS AND
CONDITIONS.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
The Company:
Witness: WHITEWING ENVIRONMENTAL CORP.
/S/ XXXXXX XXXXX By: /S/ XXXXXX XXXXXX
Witness: The Consultant
/S/ XXXXXX X. XXXXXXX /S/ XXXXXXX XXXXXX
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