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EXHIBIT 10.1
CONSULTING AGREEMENT
THIS AGREEMENT is made and entered into on this 30th day of September,
1996 by and between 7-7, Inc., an Ohio corporation (hereinafter "7-7"), and Xxx
Xxxx, Xx. (hereinafter "Xxxx").
WHEREAS, Xxxx has continuously conducted operations of 7-7 through the
date of this Agreement; and
WHEREAS, Xxxx desires to continue to provide consulting services to
7-7 on a basis where his attendance at 7-7 is not required on a daily basis;
IT IS, THEREFORE, AGREED BY AND BETWEEN THE PARTIES AS FOLLOWS:
1. Consulting Services. For a period of five years following the
date of execution of this Agreement, Xxx Xxxx, Xx. shall provide consultation
to 7-7, to the extent requested by 7-7 president Xxx Xxxx, Xx. All
consultation services shall be coordinated through Xxx Xxxx, Xx. All such
consultation shall be conducted by telephone. In the event that Xxx Xxxx, Xx.
is requested to provide any consulting services other than by telephone, 7-7
shall reimburse Xxx Xxxx, Xx. for all of his costs and expenses associated with
any travel to provide such services. 7-7 warrants that it will not request
consulting services which are overly burdensome to Xxx Xxxx, Xx.
2. Health Insurance. 7-7 shall provide health insurance for Xxx
Xxxx, Xx. for a minimum period of five years. If allowed, the policy of health
insurance existing on the date of closing shall be continued. However, Buyer
may provide identical coverage which contains the same benefits and does not
limit any pre-existing conditions not already excluded in the current policy of
Xxxx and containing the same deductible, co-payment requirements, exclusions,
coverages afforded, and maximum lifetime benefits as are in the current policy.
In the event that the insurance company issuing such health insurance coverage
at closing shall cease for any reason to provide a continuation in coverage for
a period of five years, 7-7 shall use its reasonable efforts to purchase
similar coverage elsewhere provided that such coverage can be obtained at
approximately the same price. In the event that the provisions of this
paragraph conflict with any provision of the Employee Retirement Income
Security Act of 1974 (ERISA) or the Consolidated Omnibus Budget Reconciliation
Act (COBRA), the provisions of this paragraph shall conform to the requirements
of such acts.
3. Compensation. Xxxx shall receive the sum equal to 8.3325
percent of the "pre-tax income," of Exsorbet Industries, Inc. which is solely
attributable to the operation of 7-7, Inc. or its successor and which exceeds
the "base amount" specified below for the time periods indicated. "Pre-tax
income" shall be calculated in accordance with generally accepted accounting
principles, and the following guidelines shall apply in calculating such
"pre-tax income:"
(a) 7-7 or its successor will operate as a subsidiary or separate
division of Exsorbet Industries, Inc.;
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(b) only expenses incurred by 7-7 will be used in determining "pre-tax
income;"
(c) expenses of Exsorbet Administration, Inc. in the operation of
7-7. will not be used in calculating "pre-tax income" unless agreed to
by and between the parties; and
(d) if Exsorbet Industries, Inc. or one of its subsidiaries other
than 7-7 causes additional capital to be placed into the operation of
7-7 for working capital, equipment, or other capital expenditures, an
interest charge equivalent to the prime interest rate may be taken as
a deduction to "pre-tax income," and management of 7-7 will have
reasonable input regarding the revenues and expenses of 7-7; and
(e) any corporate charges from Exsorbet Industries, Inc. to the
"pre-tax income" must be mutually agreed.
The "base amount" and time period for pay-out is as follows:
Time Period Base Amount
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7-1-1996 to 12-31-1996 $0.00
1-1-97 xx 00-00-00 $2,000,000.00
1-1-98 xx 00-00-00 $2,300,000.00
1-1-99 xx 00-00-00 $2,645,000.00
1-1-2000 to 12-31-2000 $3,041,750.00
1-1-2001 to 12-31-2001 $3,498,013.00.
The amount specified herein will be paid no later than April 15 of the year
following the year in which such amounts were earned. The provisions of this
paragraph shall constitute the consideration for this Agreement.
4. Life Insurance on Xxxx. There is an existing life insurance
policy or policies on the life of Xxx Xxxx, Xx. which is owned by 7-7, Inc.
Xxx Xxxx, Xx. shall be allowed to purchase the existing life insurance policy
or policies for the cash surrender value of such policy or policies at closing.
5. Noncompetition and Nondisclosure.
(a) Xxxx acknowledges that he is privy to a substantial amount of
confidential information and numerous trade secrets about the
business, sales policies, and
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manufacturing methods of 7-7. Xxxx understands that the nature of the
business of 7-7 is such that the relationship between 7-7 and its
customers is maintained through close personal contact with the
company employees and consultants. Therefore, Xxxx agrees that during
the period of this Agreement and for a period of two years immediately
following termination of such Agreement, Xxxx will not, directly or
indirectly, for himself or on behalf of others, as an individual on
his own account or as an employee, agent, or employee for any person,
partnership, firm, or corporation:
(1) solicit or provide services to any individual or entity
which had been a customer or client of the Company or of
Exsorbet Industries, Inc., or any of its subsidiaries, within
the one year period immediately prior to Lowe's termination
with the Company; or
(2) solicit or provide services to any individual or entity
which had negotiated with the Company, Exsorbet Industries,
Inc., or any of its subsidiaries for services to be provided
by any such entity within the one year period immediately
prior to Lowe's termination with the Company.
As used in this entire paragraph, the term "solicit or provide
services" shall refer to soliciting work or employment of the same
type as is performed by the Company, Exsorbet Industries, Inc., or any
of its subsidiaries. The provisions of this agreement shall be
limited to North America.
(b) Xxxx agrees that the trade secrets, customer lists, price lists,
operating manuals, policy manuals, confidential corporate documents,
or other specialized information learned while with the Company is
proprietary and the product of the Company. Xxxx agrees that he will
not, after the termination of his employment with the Company, whether
during the initial term of this agreement, at the end of the initial
term, or thereafter, use or divulge such information, directly or
indirectly, without the express written consent of the Company. In
the event that the provisions of this paragraph are construed as being
overly broad, such provisions shall be limited to a two year time
period following the termination of Lowe's employment relationship
with the Company.
(c) Xxxx agrees that during the period of his employment and
for two years thereafter he will not, directly or indirectly, induce
or attempt to induce any employee to terminate employment with the
Company or interfere with or disrupt Company's relationship with other
employees, unless such action is taken as a part of the duties of Xxxx
under this agreement and in consideration of the fiduciary duty owed
by Xxxx to the Company. Xxxx further agrees that for the same time
period, he will not solicit, entice, take away, or employ any person
employed with the Company.
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6. Entire Agreement. This Agreement is the entire agreement between
the parties. The Employee agrees that no other promises or inducements have
been made to him unless contained in writing, attached hereto or incorporated
herein by reference. This Agreement may not be modified unless such
modification is made in writing and signed by all parties.
7. Binding Effect. This Agreement shall be binding upon the parties,
their successors, heirs, administrators, and assigns. In the event of the
death of Xxxx during the term of this Agreement, all sums which would become
due under the provisions of paragraph 3 above, shall be distributed in
accordance with the Last Will and Testament of Xxxx. Should Xxxx fail to
provide for the distribution of such sums in his Last Will and Testament
(either directly or by a residuary clause), such sums shall pass according to
the applicable laws of descent and distribution.
8. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any one or more of the
provisions of this Agreement shall not affect the validity or enforceability of
the other provisions.
9. Governing Law. This agreement and any amendments or addendums
thereto shall be governed by and construed in accordance with the laws of the
State of Arkansas.
10. Headings. Titles of the paragraphs are placed herein for
convenient reference only and shall not to any extent have the effect of
modifying, amending or changing the express terms and provisions of this
Agreement.
11. No Third Party Rights. None of the provisions contained in this
Agreement shall be for the benefit of or enforceable by any third parties.
12. Counterparts. This Agreement may be executed in several
counterparts, all of which together shall constitute one agreement binding on
all parties hereto, notwithstanding that all the parties have not signed the
same counterpart.
13. Applicable Law. This Agreement shall be construed in accordance
with the laws and statutes of the State of Arkansas.
14. Dispute Resolution. In the event of any dispute arising under
this agreement or between the parties whatsoever, resolution of such disputes
shall be submitted to arbitration in accordance with the rules of the American
Arbitration Association. Any such arbitration proceeding shall consist of an
arbitrator chosen by each party. The two arbitrators chosen shall select a
neutral arbitrator. The decision of the arbitration panel shall be
conclusively binding upon both parties unless there has been a clear error in
applicable of law to the facts determined by such arbitration panel.
15. Entire Agreement. This Agreement is the entire agreement between
the parties. The Employee agrees that no other promises or inducements have
been made to him unless contained
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in writing, attached hereto or incorporated herein by reference. This
Agreement shall be binding upon the parties, their successors and assigns.
This Agreement may not be modified unless such modification is made in writing
and signed by all parties.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement on the date first written.
7-7, INC.
By: /s/ Xxxxx Xxxxxxx
Authorized Officer of the Company
EMPLOYEE
/s/ Xxxxxx X. Xxxx Xx.
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