1
EXHIBIT 10.1
CONSULTING AND MANAGEMENT SERVICES AGREEMENT
AGREEMENT entered into as of the 17th day of June, 1999, by and between
TBM Holding, Inc., a Florida corporation with its principal office located at
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Holdings"), and TBM Consulting
Group, Inc., a North Carolina corporation ("Consulting") with its principal
office located at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H:
WHEREAS, Consulting is engaged in the business of providing consulting
and management services with respect to the operation of manufacturing
businesses by combining on-site and central office capabilities, which
include administrative, contracting, negotiations, personnel oversight,
financial and budget services and educational resources directed at promoting
quality and efficient management and operations to manufacturing businesses;
and
WHEREAS, Holdings currently is a publicly traded corporation that is
focusing on developing manufacturing companies utilizing the Toyota
Production System and Kaizen Growth Strategy (the "Company") and in
connection therewith, requires consulting and management services of the type
provided by Consulting; and
WHEREAS, Holdings desires to engage the services of Consulting to
provide consulting and management services for the Company; and
WHEREAS, Consulting desires to and is fully committed to provide such
services, on the terms and conditions as hereinafter set forth.
NOW THEREFORE, in consideration of the mutual promises contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is mutually agreed as
follows:
1. APPOINTMENT. Holdings hereby engages the services of Consulting
to consult with and provide certain management services to the Company
subject to the terms and conditions set forth herein, and Consulting accepts
such engagement and agrees to provide services in accordance with the terms
of this Agreement.
2. OBLIGATIONS OF CONSULTING. Consulting covenants and agrees that
it will provide certain consulting and management to the Company which shall
include the following:
2
(a) Management and Consulting Services.
(i) Consulting agrees to provide regular and customary
Kaizen consulting to Holdings on a priority basis (meaning that if Consulting
is at full capacity Holdings' needs will be given preference). The amount of
consulting will be appropriate for the size of Holdings' operating business.
Consulting will utilize its proven client launch model for implementing the
Toyota Production System and converting to a high-performance culture of
employee involvement.
(ii) Consulting agrees to make available the services of
Mr. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ to act as President and Chief Operating Officer of the
Company as provided under the Employment Agreement entered as of the date
hereof between Holdings and ▇▇. ▇▇▇▇▇▇▇▇. Consulting shall have no liability
in the event of ▇▇. ▇▇▇▇▇▇▇▇'▇ breach of such Employment Agreement.
(iii) Consulting agrees to provide the services of Mr.
▇▇▇▇▇ ▇▇▇▇▇▇ to act as Chairman and Chief Executive Officer of Holdings.
Holdings and Consulting acknowledge that ▇▇. ▇▇▇▇▇▇ will remain an employee
of Consulting, but will provide such time and services to Holdings to be
actively involved and provide leadership in his capacity as Chairman and
Chief Executive Officer. Neither Consulting nor ▇▇. ▇▇▇▇▇▇ shall be
separately compensated for providing such services unless otherwise agreed to
by the Company and the Compensation Committee of its Board of Directors.
(iv) Consulting further agrees to provide the services of
Mr. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ to Holdings to work on the Company's acquisition
strategy. Prior to the time that Holdings consummates its first acquisition of
an operating company, Consulting will cause Mr. Sample to be available not less
than fifty (50%) percent of his business time to Holdings and Consulting will
cause Mr. Sample to provide such services as reasonably requested by Holdings'
Chief Operating Officer or its Board of Directors. During this period,
Holdings will pay compensation to Consulting in respect to Mr. Sample's
services at the rate of $70,000 per annum plus fifty (50%) percent of Mr.
Sample's benefits and bonus compensation. Following Holdings first acquisition
of an operating company, Consulting will make available Mr. Sample to spend his
full and exclusive business time to Holdings to act in such a capacity as will
be determined by the Chief Operating Officer or Board of Directors of Holdings.
At that time, Mr. Sample will enter into an employment agreement with Holdings,
become a full time employee of Holdings and will be compensated appropriately
for the position assumed. If for any reason Mr. Sample is unable to provide
his full business time to Holdings or if Holdings requests that another
individual assume a key role with the Company, Consulting agrees to provide the
services of another proven and qualified individual to act in such capacity.
(b) Staff. Subject to the requirements of applicable federal
and state law, Consulting shall, on the terms and conditions specified in
this Agreement, employ or engage and
- 2 -
3
make available to the Company, on a non-exclusive basis, consulting personnel
on a temporary basis (hereinafter referred to collectively as "Staff") as may
be reasonably necessary to fill operating positions within the Company in an
efficient manner (e.g., plant manager, vice president of operations). The
hiring, firing, disciplining, and determination of compensation and benefits
of such Staff in connection with services provided to or on behalf of the
Company shall be within the sole discretion of Consulting; provided, however,
that Consulting shall, at Holdings' written request, remove from the Company
any Staff member who does not perform to the reasonable satisfaction of
Holdings.
(c) Investment Commitment.
(i) The Board of Directors of Consulting, TBM Capital II,
LLC and certain chief executive officers or presidents of Consulting's
clients have committed to provide no less than $2,000,000 of capital to
Holdings pursuant to and on the same terms and conditions of other
third-party investors investing in the Holdings' private placement which is
scheduled to close on or about May 26, 1999. Consulting and its Board of
Directors have fully considered this commitment and have authorized
Consulting's investment and participation in Holdings.
(ii) In the future, Consulting will use Holdings as its
exclusive investment vehicle for principal investments for Consulting and its
employees. Consulting hereby agrees that for a five (5) year period
commencing as of the date of this Agreement, it will not sponsor, form or
assist in the formation of a similar investment or operating entity to
Holdings. Notwithstanding the foregoing, Holdings acknowledges that
Consulting continues to have some follow-on activities with respect to the
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Company.
3. TERM. This Agreement shall commence upon the date hereof and
shall continue in effect for an initial period of five (5) years, unless
terminated pursuant to Section 9 hereof. Thereafter, this Agreement shall be
renewed automatically on the same terms and conditions for successive twelve
(12) month periods, unless either party notifies the other of its intent not
to extend by giving at least ninety (90) days' written notice prior to
expiration of the initial or any extended term of this Agreement.
4. COMPENSATION TO CONSULTING.
(a) In exchange for the services described in Section 2(a)(i),
during the Term of this Agreement, Holdings shall pay a monthly fee to
Consulting in an amount equal to the regular Consulting published pricing as set
forth on Schedule 1 attached hereto which Schedule may be modified from time to
time to reflect Consulting's then pricing.
(b) In exchange for the services, if any, provided in Section
2(b), Holdings will pay to Consulting its share of Consulting's actual staff
cost (including salary, bonus and
- 3 -
4
benefits) for the staff used by Holdings based upon the term of temporary
employment by Holdings.
(c) The parties agree that at the end of the initial term of
this Agreement, they will review the scope of services being provided by
Consulting which may result in adjustments to meet the service requirements
of Holdings; the fees payable to Consulting shall be increased or decreased
depending on whether the scope of services provided by Consulting is
increased or decreased.
5. CONFIDENTIAL INFORMATION. Consulting shall maintain the full and
complete confidentiality of all of Holdings' records, financial information
and confidential and proprietary information except to the extent that
disclosure is required by law or is already in the public domain. Such
information, including documents, negotiations, terms and materials related
to this Agreement, shall not be made available by Consulting to outside
organizations, institutions or individuals; provided, however, Consulting may
disclose to third parties the fact that Consulting has entered into this
Agreement.
6. COMPLIANCE WITH SECURITY REGULATIONS. Consulting agrees that it
will conduct its activities and operations in compliance with all applicable
local, state and federal laws including, without limitation, all securities
laws, and consistent with the goals and values of Holdings' business as
communicated in writing. Consulting's employees and representatives shall be
required to comply with and observe such rules. Holdings agrees to provide
Consulting with copies of all such rules as well as reasonable advance notice
of changes to the same.
7. PERSONNEL RELATIONSHIPS.
(a) Other than as specifically provided herein, persons
employed or contracted for by Consulting shall in no event be considered as
the employees, agents or servants of Holdings, and Consulting shall have the
full responsibility for wages, vacation pay, sick leave, retirement benefits,
social security, worker compensation, disability insurance, employment
insurance, severance pay or employee records of any kind for each of its
personnel.
(b) Persons employed or retained by Consulting may be dismissed
by Consulting as Consulting deems appropriate, in its sole and absolute
discretion. Upon written request from Holdings setting forth the basis for
such request, any Consulting employee or contractor who, in Holdings'
reasonable opinion, is incompatible with the goals of Holdings and/or
Holdings' staff will be removed by Consulting promptly following such request.
8. HOLDINGS - CONSULTING RELATIONSHIP. Consulting and Holdings are
not and shall not be considered employer or employee of one another, nor as
joint ventures or partners with one another and nothing herein shall be
construed to authorize either party to act as agent for the other. Each of
the parties agrees to disclose in their respective dealings that they are
separate
- 4 -
5
entities. There shall be no liability on the part of either party to any
person for any debts, liabilities or obligations incurred by or on behalf of
the other party and the businesses conducted by such other party. It is
understood that there are no agreements, commitments, representations or
warranties between the parties, except those expressly set forth herein.
9. TERMINATION. This Agreement may be terminated prior to the
expiration of the initial term or any extended term, only as follows, and
such termination shall not affect any rights or obligations arising prior to
the effective date of termination:
(a) Default. In the event of a non-monetary, material breach
of this Agreement, the non-breaching party must first give at least thirty
(30) days' prior written notice to the breaching party detailing the nature
of such breach. Thereafter, provided that the breaching party shall not have
cured such breach within such thirty (30) day period, or with respect to any
breach that is not curable within such thirty (30) day period, shall have not
commenced diligently to cure such breach within such thirty (30) day period
and thereafter shall have not prosecuted to completion the cure of such
breach with the exercise of due diligence, the non-breaching party may, after
the expiration of such thirty (30) day period, terminate this Agreement upon
not less than five (5) days' prior written notice provided, however, that to
be effective the notice of termination must be given within thirty (30) days
of the expiration of the cure period set forth in this Section 9(a). This
remedy shall be in addition to any other remedy available at law or in equity.
(b) Non-Payment. In the event of Holdings' failure to pay any
monies when due, Consulting may terminate this Agreement by giving at least
twenty (20) days' prior written notice of termination.
(c) Bankruptcy. Either party may terminate this Agreement
immediately or upon such notice as it may select following the bankruptcy of
the other party. For the purpose of this Section, "bankruptcy" shall mean:
(i) the filing of a voluntary or involuntary petition for
bankruptcy or similar relief from creditors,
(ii) insolvency,
(iii) the appointment of a trustee or receiver, or
(iv) any similar occurrence reasonably indicating an
imminent inability to perform substantially all of such party's duties under
this Agreement.
(d) Notwithstanding the foregoing, Holdings may terminate this
Agreement in the event of a sale of all or substantially all of the assets of
the Company or a sale of a majority
- 5 -
6
of the voting stock of Holdings in a single transaction or a series of
coordinated transactions, but only if there are no longer any representatives
of Consulting on the Board of Directors of Holdings or if Consulting or its
representatives are no longer managing the business operations of Holdings.
10. FORCE MAJEURE. Notwithstanding anything contained in this
Agreement to the contrary, if any obligation to be performed by any party
hereto (but specifically excluding payment obligations under this Agreement)
is rendered impossible to perform due to any cause beyond such party's
control, including, without limitation, an act of God, civil disturbance,
riot, fire or casualty, or governmental order or rule, such party, for so
long as such condition exists, shall be excused from such performance,
provided it promptly provides the other party with written notice of its
inability to perform, stating the reason for such inability and provided that
such party takes all appropriate and reasonable steps, as soon as reasonably
practicable upon termination of such condition, to perform, and provided that
if after thirty (30) days from the termination of such condition, if the
party has still not resumed performance, the other party may, at its option,
terminate this Agreement by giving thirty (30) days' prior written notice to
the other to that effect.
11. BINDING EFFECT. Consulting shall not assign this Agreement
without the prior written consent of Holdings which shall not be unreasonably
withheld or delayed. This Agreement shall be binding upon the parties
hereto, its shareholders and upon all successors or assignees in interest.
12. NOTICES. All notices to be given or otherwise made under this
Agreement shall be deemed to be sufficient only if contained in a written
instrument, delivered in person or by registered, certified, or Express Mail
or by next business day commercial delivery service, postage and other
delivery charges prepaid, addressed to such party at the address set forth
below, or at such other addresses as may hereafter be designated in writing
by like notice from one party to this Agreement to the other party. All such
notices shall be deemed given and effective upon delivery or tender for
delivery during regular business hours at the address set forth below (if
delivered in person), one (1) business day after being deposited with such
commercial delivery service or the U.S. Mail (if sent by commercial delivery
service or Express Mail) or five (5) calendar days after being deposited in
the U.S. Mail (if not sent by Express Mail).
In the case of Consulting:
TBM Consulting Group, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chairman
- 6 -
7
In the case of Holdings:
TBM Holdings, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Operating Officer
With a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ P.C.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
13. AFFILIATES. As used in this Agreement, the term "Affiliate"
means (i) any person or entity, directly or indirectly, owning or controlling
50% or more of the voting stock (or other equitable interests) of or having
the ability to elect or appoint 50% or more of the directors (or other
persons with comparable powers) of Consulting or Holdings, as the case may
be, (ii) any person or entity of which Consulting or Holdings, as the case
may be, directly or indirectly owns or controls 50% or more of the voting
stock (or other equitable interests) or ability to elect or appoint 50% or
more of the directors (or other persons with comparable powers) or (iii) any
person or entity that is, directly or indirectly, owned or controlled by a
person or entity directly or indirectly, owning or controlling 50% or more of
the voting stock (or other equitable interests) or ability to elect or
appoint 50% or more of the directors (or other persons with comparable
powers) of Consulting or Holdings, as the case may be. No Affiliate of
either party shall have any liability under this Agreement. For purposes of
this Agreement, Consulting and Holdings are not deemed to be Affiliates.
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute one and the same instrument.
15. ENTIRE AGREEMENT. This Agreement (including all Schedules
attached hereto, which Schedules are hereby made a part hereof) contains the
entire agreement of the parties and there are no other agreements,
commitments, representations or warranties between the parties, except as
expressly set forth herein. This Agreement may not be canceled or modified
except in a writing signed by both parties. All continuing covenants,
duties and obligations herein contained shall survive the expiration or
termination of this Agreement.
16. AUTHORITY. Each party warrants and represents to the other, upon
which warranty and representation the other has relied in the execution of
this Agreement, that the execution of this Agreement and the transactions
contemplated hereby, are within each party's authority, have
- 7 -
8
been duly authorized by Holdings' Board of Directors and Consulting's Board
of Directors and any other necessary corporate or partnership action, as the
case may be, that the persons executing this Agreement on behalf of such
party have been duly authorized to do so by all appropriate actions, that
this Agreement constitutes a valid and enforceable obligation of each party
in accordance with its terms and that the execution, delivery and performance
of the obligations of such party under this Agreement will not (i) contravene
any provision of its charter, By-Laws, or other similar agreement as the case
may be, (ii) cause or result in a breach of any of the terms, covenants,
provisions or conditions of, or constitute a default under, any note, bond,
debenture, indenture, agreement, contract, license, permit or other
obligation or understanding (whether written or otherwise) to which such
party is now a party or (iii) knowingly violate any existing order, writ,
injunction or decree of any court, administrative agency or other
governmental body or any other federal, state, county, municipal or other
governmental law, ordinance, rule or regulation applicable to such party.
17. GOVERNING LAW. This Agreement shall be deemed to have been made
and entered into in Connecticut and shall be interpreted in accordance with
the laws of the State of Connecticut without regard to conflict of laws
principles. This Agreement may be enforced in the state and federal courts
located in the State of Connecticut. Each of the parties to this Agreement
submits to the jurisdiction of said courts and agrees that process may be
served upon it by registered or certified mail addressed as provided in the
manner set forth for notices under this Agreement.
18. ARBITRATION. Except for an action for injunctive relief, any
disputes or controversies arising under this Agreement shall be settled by
arbitration in Connecticut in accordance with the rules of the American
Arbitration Association relating to the arbitration of the resolution of
commercial disputes. The determination and findings of such arbitrators
shall be final and binding on all parties and may be enforced, if necessary,
in the courts of the State of Connecticut. The compensation and expenses of
the arbitrators and any administrative fees or costs associated with the
arbitration proceedings shall be borne by the party or parties who have been
found to have breached this Agreement or caused the damages incurred by the
prevailing party.
- 8 -
9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as
of the date and year first hereinabove written.
TBM CONSULTING GROUP, INC.
By: /s/▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President and Chief Executive Officer
TBM HOLDINGS, INC.
By: /s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President and Chief Operating Officer
- 9 -