Exhibit 10.3
EXECUTION COPY
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT, dated effective as of April 29, 1998 (the
"Effective Date"), is by and between Grove Worldwide LLC, a Delaware limited
liability company (the "Company"), and Xxxxxx Group, Inc., a Texas corporation
(the "Consultant").
For and in consideration of the mutual covenants and agreements set
forth herein and other good and valuable consideration, the adequacy and receipt
of which are hereby acknowledged and agreed, the parties hereby agree as
follows:
1. Engagement. The Company hereby agrees to engage the Consultant,
and the Consultant hereby agrees to serve the Company, in each case upon the
terms and subject to the conditions set forth herein.
2. Term. The term of this Agreement (the "Term") shall be the period
commencing on the Effective Date and ending on September 30, 2002 (the
"Performance Term"), subject to the earlier exercise of the termination rights
of the Company or the Consultant set forth in Section 8 below.
3. Advisory Services. During the Term, the Consultant shall provide
personnel and resources as necessary to design and implement Company-wide
business processes consistent with those practices generally considered to be
"best practices" and designed to result in improvements in the Company's
revenue, cash flow, and return on invested capital (the "Services") in
accordance with the Consulting Plan and Budget attached hereto as Exhibit "A"
(the "Plan"). It is a material term of this Agreement that, at all times during
the Term, the personnel assigned by the Consultant to perform the Services shall
be acceptable to the Chief Executive Officer of the Company. The Consultant
shall perform its duties hereunder in good faith.
4. Compensation.
4.1 Payment of Fee. As compensation for the performance of the
Services and reimbursement for estimated expenses during the Term, the
Consultant shall receive a monthly fee as specified in the Plan (each such fee,
a "Monthly Fees and Expenses") during each such one-month period in connection
with the performance of such Services, subject to Adjustment (as defined
herein). In no event shall the sum of the aggregate of Monthly Fees and Expenses
paid to the Consultant exceed $14,438,000.00, subject to Adjustment ("Total
Fee"). At the beginning of each month during the Term of this Agreement, the
Consultant shall provide the Company with a written statement (the "Consultant
Xxxx") including the applicable Monthly Fees and Expenses for the month in which
the Consultant Xxxx is rendered. The Company shall pay the Monthly Fees and
Expenses in advance (for
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the month in which the Consultant Xxxx is dated) on or before 30 days after
receipt of the Consultant Xxxx. The actual out-of-pocket expenses of the
Consultant will be calculated at the end of the Term of this Agreement and 50%
of the excess, if any, of (a) $3,822,000.00 over (b) such actual expenses of the
Consultant to such date shall be reimbursed by Consultant to the Company
promptly following the determination thereof.
"Adjustment" as used herein refers to an increase or decrease in a
Monthly Fee or the Total Fee as a result of the Company modifying the scope of
the Services performed hereunder measured on a man-month basis; provided,
however, that the actual number of man-months worked as a result of a
modification in the scope of Services requested by the Company shall not differ
from the budgeted number of man-months for the entire Term by more than 15%.
4.2 Record of Expenses. The Consultant shall maintain, during
the Term of this Agreement and continuing for a period the longer of (a) one
year after the termination of this Agreement or (b) until the final resolution
of any dispute between the Company and the Consultant which is outstanding on
such anniversary date, its internal books and records pertaining to its
expenses, in sufficient detail and condition so as to permit reasonable
convenient periodic audits of such books and records by the Company or the
Company's authorized representative, at times and places mutually agreed upon by
the Company and the Consultant, so that the Company may verify the amount of any
and all expenses included in the Consultant Bills.
5. Intellectual Property.
(a) As used herein the following definitions shall apply:
"Deliverables" shall mean software (source code, object code,
associated documentation and related data files, tools and utilities), plans,
methods, prototypes, circuitry, diagrams, drawings, designs, specifications,
proposals, technical descriptions, schematics, and other technical information
relating to the subject matter of the Services that the Consultant provides to
the Company pursuant to this Agreement.
"Intellectual Property Rights" or "IP Rights" shall mean all patent,
copyright, trade secret and other proprietary rights in Deliverables.
(b) The Consultant shall assign to the Company all IP rights
created or acquired by the Consultant during the Term of this Agreement which
(i) are specifically adapted for mobile hydraulic crane or aerial work platform
products manufacturing, or (ii) incorporate Confidential Information of the
Company. The foregoing shall not preclude the Consultant from using general
information and techniques developed during the Agreement on behalf of other
clients of the
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Consultant. The Consultant retains sole ownership of all IP Rights in existence
at the beginning of the term of this Agreement, and all IP Rights created or
acquired by the Consultant during the term of this Agreement other than those
which are to be owned by the Company as provided above. The owning party shall
have the exclusive right to file and prosecute patent and copyright applications
relating to the applicable IP Rights.
(c) The Consultant hereby grants to the Company, and those of
its subsidiaries, parents and affiliates which are engaged in the business of
mobile hydraulic crane and aerial work platform products manufacturing, a
perpetual, paid-up, non-exclusive license, without right of sublicense, under
the Consultant-owned IP Rights to use Deliverables provided by the Consultant
pursuant to this Agreement for the Company's, any such subsidiaries', parents'
and affiliates' internal business purposes only. The license granted herein
shall be non-transferable without the Consultant's prior written consent,
provided that no such consent shall be required for transfers to a successor of
the Company or to a purchaser of all or substantially all the assets of the
business in which the IP Rights will be used, provided such transferee is not a
competitor of the Consultant.
(d) The Consultant shall, at its expense, defend or settle any
claim, action, or allegation brought against the Company that the Deliverables
infringe any patent, copyright, trade secret, or other proprietary right of any
third party or that the Company's use of the Deliverables violates any
non-competition or similar agreement or otherwise violates the rights of any
third party and pay any judgments awarded or settlements entered into, provided
that the Company must give written notice of any such claim, action, or
allegation of infringement (collectively, "Infringement Claim") to the
Consultant within 30 days after the Company first receives notice thereof. The
Company will promptly grant to the Consultant, and the Consultant will have, the
exclusive right to defend any Infringement Claim and make settlements thereof at
its own discretion, and the Company may not settle or compromise any
Infringement Claim, except with prior written consent of the Consultant. The
Company shall give such assistance and information as the Consultant may
reasonably require to settle or oppose any Infringement Claim. If any such
infringement occurs or may occur, the Consultant shall, at its sole option and
expense (a) procure for the Company the right to continue use of the
Deliverables or infringing part thereof, (b) modify or amend the Deliverables or
infringing part thereof, or (c) replace the Deliverables with other Deliverables
having substantially the same or better capabilities. This paragraph sets forth
the entire liability of the Consultant to the Company with respect to
infringement of any patent, copyright, trade secret or other proprietary rights.
6. Confidentiality.
6.1 Confidential Information. The Consultant and the Company
acknowledge that they may acquire certain information and materials that
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are the confidential and proprietary information of the other (the "Confidential
Information"). The Consultant and the Company agree not to disclose or use the
Confidential Information except in the performance of this Agreement or with the
prior, express, written consent of the other. The Consultant and the Company
agree to take all actions reasonably necessary and satisfactory to the other to
protect the confidentiality of the Confidential Information (including, without
limitation, as either receiving party may deem appropriate, entering into
written agreements with each of its employees, representatives, agents and
subcontractors who perform services hereunder sufficient to carry out each
party's obligations under this Agreement).
6.2 Non-Confidential Information. The following shall not be
considered Confidential Information:
(a) Information previously known to the disclosee that
is, or subsequently becomes, rightfully and without breach of any obligation to
or agreement with the other party hereto, in the disclosee's possession without
any obligation restricting use or disclosure.
(b) Information in the public domain, through no act or
omission of the party to this Agreement required to keep such information
confidential.
(c) Information received from a third party with a legal
or contractual right to disclose such information.
(d) Information independently developed by the disclosee
without reference to the Confidential Information.
6.3 Publicity. The Consultant shall not use and shall keep its
employees from using the name of the Company and its sponsors and their
respective affiliates with any third party, without the prior express written
consent of the Company.
6.4 Other Agreements. The Consultant and the Company expressly
agree that this Agreement is intended to replace and supersede all, if any,
prior agreements between the Consultant and the Company concerning
confidentiality and non-disclosure.
6.5 Release of Obligations. Each party will be relieved of its
respective confidentiality obligations hereunder if, and only to the extent,
that any Confidential Information is disclosed pursuant to the lawful
requirement or request of a governmental agency, or disclosure is required by
operation of law, solely with respect to such Confidential Information required
to be so disclosed; provided that such party has given notice to the other party
and with sufficient time to enable the
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other party to seek a protective order limiting disclosure and use of the
Confidential Information so disclosed.
7. Restrictive Covenants of Consultant.
7.1 Non-Competition. For a period commencing on the Effective
Date and ending on the fifth anniversary of the earlier of (i) a Change in
Control (as defined herein) or (ii) the date of termination of this Agreement
pursuant to Section 8.1 or Section 8.2 (the "Restricted Period"), the Consultant
covenants and agrees that, without the prior written consent of the Company,
neither the Consultant nor its principals shall, in the Territory (as defined
below), working alone or in conjunction with one or more other persons or
entities, for compensation or not, directly or indirectly, either for itself or
himself or as a member of a partnership or other association or as a
stockholder, investor, lender, agent, associate, employee or consultant of any
person, partnership, corporation or other association (other than through
ownership for investment purposes of not more than 5% of the outstanding shares
of a corporation's capital stock which is listed on a national securities
exchange or quoted on any automated quotation system), engage in the business of
manufacturing, distribution and/or selling any of the products produced and/or
distributed by the Company at any time during the Restricted Period. As used
herein, the term "Territory" means any county in any state of the United States.
The parties intend that the covenants contained in this Section 7.1 shall be
deemed to be a series of separate covenants, one for each county in each state
of the United States and, except for geographic coverage, each such separate
covenant shall be identical in terms to the covenant contained in this Section
7.1.
7.2 No Solicitation. During the Restricted Period, the
Consultant covenants and agrees that neither it nor its principals shall,
directly or indirectly through any affiliate, employee, agent or representative,
interfere with, or take any action that would have the effect of interfering
with, the contractual and other relationships between the Company or any of its
affiliates and any of its or their employees. During the Restricted Period, the
Company covenants and agrees that neither it nor its principals shall, directly
or indirectly through any affiliate, employee, agent or representative,
interfere with, or take any action that would have the effect of interfering
with, the contractual and other relationships between the Consultant or any of
its affiliates and any of its or their employees.
7.3 Tolling. If the Consultant violates any covenant contained
in this Section, then the Restricted Period shall be tolled for the period
commencing on the commencement of such violation and ending upon the earlier of
(a) such time as such violation shall be cured by the Consultant to the
reasonable satisfaction of the Company or (b) final adjudication (including
appeals) of any action filed for injunctive relief or damages arising out of
such violation.
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7.4 Reformation. If, in any judicial proceeding, the court
shall refuse to enforce any covenant contained in this Section hereof as written
because the duration thereof is too long, it is expressly understood and agreed
between the parties hereto that for purposes of such proceeding the duration of
such covenant shall be deemed reduced to the extent necessary to permit
enforcement of such covenant. If, in any judicial proceeding, the court shall
refuse to enforce any covenant contained in this Section hereof as written
because such covenant is more extensive (whether as to geographic area, scope of
business or otherwise) than necessary to protect the business and goodwill of
the Company or any of its affiliates, it is expressly understood and agreed
between the parties hereto that for purposes of such proceeding, the geographic
area, scope of business or other aspect shall be deemed reduced to the extent
necessary to permit enforcement of such covenant.
8. Termination.
8.1 Termination by the Company. The Company may terminate this
Agreement immediately (i) upon the occurrence of a Change in Control (as defined
in Section 8.2(ii)), (ii) following the failure to perform any term, covenant or
agreement of this Agreement by the Consultant (other than the Performance
Failure) or the failure to perform any term, covenant or agreement of the LLC
Agreement (as defined below) by Xxxxxxx Xxxxxx or GGEP-Grove, L.P., and such
failure shall continue unremedied for a period of 30 days following notice by
the non- breaching party to the Consultant, GGEP-Grove, L.P. or Xxxxxxx Xxxxxx,
as the case may be, stating the nature of such breach, or (iii) following 90
days written notice to the Consultant of its decision to terminate this
Agreement for Performance Failure, unless the Company meets or exceeds the
Annual EBITDA Baseline performance targets set forth in Exhibit "C" to the
Amended and Restated Limited Liability Company Agreement of Grove Investors LLC
(the "LLC Agreement") on a trailing last twelve month basis during the 90 day
notice period.
As used herein, "Performance Failure" means the failure of the
Company for any reason to achieve the Annual EBITDA Baseline performance targets
as set forth in Exhibit C to the LLC Agreement, except in fiscal year 1999. In
fiscal year 1999, "Cause" means the failure of the Company to achieve an Annual
EBITDA of greater than (i) the product of (x) fiscal year 1999 Annual Revenue
and (y) 0.195%, minus (ii) 78,400,000.00.
8.2 Termination by the Consultant. The Consultant may
terminate this Agreement:
(i) in the event that the Company fails to remit payment
to the Consultant within 30 days following receipt of any Consultant Xxxx,
provided that the Consultant gives the Company written notice of such failure to
pay and the Company fails to cure such nonpayment within 30 days after receipt
of such notice, or
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(ii) upon the occurrence of a Change in Control (as
defined below) of the Company, provided that such termination will not be
effective until at least 90 days following the date that the Change of Control
of the Company occurs. As used herein, "Change in Control" means that more than
50% of the voting interests in the Company, or more than 50% of the assets
thereof, are sold, transferred, directly or indirectly, to an entity or person
other than Grove Investors LLC and their direct and indirect members, general
and limited partners as of the date hereof or to a person that is not controlled
by, controlling or under common control with (being greater than 50% voting
control) one or more of the foregoing.
8.3 Post-Termination Obligations.
(a) Upon the effective date of termination of this
Agreement (whether upon expiration of the Term or otherwise), (i) the Company
shall pay the Monthly Fees and Expenses in accordance with Section 4 hereof,
through the effective date of termination; and (ii) the Consultant shall deliver
to the Company all records in the possession of the Consultant relating to the
business and affairs of the Company, together with all items of property owned
by the Company and in the Consultant's possession. The actual out-of pocket
expenses of Consultant will be calculated at the effective date of the
termination of this Agreement and the excess of (a) the Monthly Expenses funded
through such date (as set forth in the Plan) over (b) such actual expense of
Consultant to such date shall be reimbursed by Consultant to the Company
promptly following the determination thereof.
(b) In addition, following the termination of this
Agreement upon the expiration of the Term pursuant to Section 1, the Consultant,
for four years after such termination. will make available to the Company at the
Company's request consultant services not to exceed eight days or $25,000 in
Consultant fees annually in order to assist the Company in its efforts to
maintain the performance goals achieved under the Plan and to continue improving
the Company's performance. If additional services are needed or additional
projects are identified, the Consultant shall provide such additional services
as are requested by the Company at a cost per consultant month to be agreed to
by the parties but in any event not to exceed $40,000.
(c) Termination of this Agreement shall not release the
Consultant or the Company from liability for failure to perform any of the
duties or obligations of either of them under this Agreement that have already
accrued, and the payment of any amounts in connection with the termination shall
not constitute a release of the Consultant or the Company, as the case may be,
from any such accrued liabilities.
(d) After the effective date of termination and except
as set forth in this Section 8.3 and except for the obligations set forth in
Sections 5, 6
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and 7, neither party shall have any further obligation to the other party hereto
under this Agreement.
9. Representations and Warranties.
9.1 Consultant Representations. The Consultant is a
corporation existing and in good standing under the laws of the State of Texas.
This Agreement has been duly authorized, executed and delivered by the
Consultant and constitutes the legal, valid and binding obligation of the
Consultant, enforceable against the Consultant in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors' rights
generally and to general equitable principles. The Consultant has all necessary
corporate power and authority to perform its obligations hereunder.
9.2 Company Representations. The Company is a limited
liability company existing and in good standing under the laws of the State of
Delaware. This Agreement has been duly authorized, executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights generally and to
general equitable principles. The Company has all necessary limited liability
company power and authority to perform its obligations hereunder.
9.3 LIMITATION OF LIABILITY. EXCEPT FOR THE EXPRESS WARRANTIES
SPECIFIED IN SECTIONS 9.1 AND 9.2, NEITHER THE CONSULTANT NOR THE COMPANY MAKES
ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
CONSULTANT WILL NOT BE RESPONSIBLE FOR ANY MODIFICATION OF THE DELIVERABLES MADE
BY COMPANY OR ITS CONSULTANTS. IN NO EVENT SHALL CONSULTANT BE LIABLE FOR ANY
SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES RESULTING FROM USE OF A DELIVERABLE.
10. Indemnification. Each party agrees to indemnify and hold the
other harmless against any losses, claims, damages or liabilities incurred by
the other party based upon acts performed or omitted to be performed by such
party as the result of its willful misconduct, negligence, intentional breach of
this Agreement or fraud, unless such act or omission also constitutes willful
misconduct, negligence, intentional breach or fraud on the part of the
indemnitee.
11. Amendments. This Agreement may be amended only by a written
instrument duly executed by both parties hereto.
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12. Entire Agreement. This Agreement embodies the entire Agreement
between the parties hereto concerning the subject matters mentioned herein and
supersedes all previous discussions, correspondence, understandings and
agreements, whether written or oral, with respect to such matters.
13. Notices. All notices and other communications necessary or
contemplated under this Agreement shall be in writing and shall be deemed to
have been duly delivered three business days after mailing by certified mail,
when delivered by hand, or one day after sending by overnight delivery service,
to the respective addresses of the parties set forth on the signature page
hereto.
14. Assignment. Neither party may assign this Agreement, or any
interest in it, by operation of law or otherwise, without the prior written
consent of the other party, which consent will not be unreasonably withheld;
provided, however, that either party may assign its rights and obligations under
this Agreement to its successor without the consent of the other party in the
event that it shall effect a reorganization, consolidate with, or merge into,
any other entity or transfer all or substantially all of its properties or
assets to any other entity if the shareholders of the assigning party
immediately prior to such reorganization, consolidation, merger or transfer
constitute a majority of the shareholders of such new entity. This Agreement
shall inure to the benefit of and be binding upon the Company and the Consultant
and their respective successors and permitted assigns.
15. Severability. If any portion or provision of this Agreement
shall to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
16. Waiver. No waiver of any provision of this Agreement shall be
effective unless made in writing and signed by a duly authorized representative
of each party. The failure of either party to require the performance of any
term or obligation of this Agreement, or the waiver by either party of any
breach of this Agreement, shall not prevent any subsequent enforcement of such
term or obligation or be deemed a waiver of any subsequent breach.
17. Headings. The headings and captions in this Agreement are for
convenience only and in no way define or describe the scope or content of any
provision of this Agreement.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which together
constitute one and the same instrument.
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19. Governing Law. This Agreement shall be construed and enforced
under and be governed in all respects by the substantive laws of the State of
Texas, without regard to the conflict of laws principles thereof.
20. Dispute Resolution. In the event of any dispute between the
Company and the Consultant, the Consultant and the Company agree that prior to
submitting any such dispute to the Mediators (as defined herein) in accordance
with this Section they shall attempt to resolve disputes in an informal and
timely manner. In the event, however, that a dispute cannot be resolved
informally, the Consultant and the Company hereby designate the individuals in
the positions named below as "Mediators," who shall have the responsibility for
settling formal disputes. The Mediators agree to use reasonable best efforts to
confer with one another within one week after the formal dispute has been
submitted. If the Mediators are not able to resolve the dispute within two weeks
after its submission, then the dispute will be submitted to the Management
Committee of the Company which shall resolve the dispute fully and finally.
Neither party may have recourse to the judicial system to resolve any such
dispute.
Consultant's Mediator: Xxxxx Xxxxxxx, Senior Vice
President, Results Delivery
Company's Mediator: Xxxxxxxxx X. Xxxxxxx, Chief
Executive Officer
21. Status. The Consultant shall be deemed to be an independent
contractor. The Consultant shall not have the authority to act for or represent
the Company in any way and shall not otherwise be deemed to be an agent of the
Company. Similarly, the Company shall not have the authority to act for or
represent the Consultant in any way and neither shall be deemed to be an agent
of the Consultant. Nothing contained herein shall create or constitute the
Company and the Consultant as members of any partnership, joint venture,
association, syndicate, unincorporated business, or other separate entity, nor
shall be deemed to confer on
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any of them any express, implied, or apparent authority to incur any obligation
or liability on behalf of such other entity.
IN WITNESS WHEREOF, each party hereto has caused this Agreement to
be duly executed by its duly authorized representative effective as of the
Effective Date.
ADDRESS: GROVE WORLDWIDE LLC
0000 Xxxxxxxx Xxxxx Xxxx
X.X. Xxx 00
Xxxxx Xxxxx, XX 00000 By: /s/ Xxxxxxxxx X. Xxxxxxx
Attention: Xxxxxxxxx Xxxxxxx ------------------------
Title: President
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ADDRESS: XXXXXX GROUP, INC.
One Galleria Tower
00000 Xxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000 By: /s/ Xxxxx Xxxxxx
Attention: Xxxxx Xxxxxx ------------------------
Les Park Title:
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