CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT is made this ____ day of February, 1999, by and
between CANNON FINANCIAL COMPANY, a Kansas corporation, hereinafter referred to
as "Company," and SEQUOIA COMPANY, a Kansas corporation, hereinafter referred to
as "Consultant."
WHEREAS, Company is engaged in the Business of collecting, on behalf of
clients, accounts receivable related to the client's business ("Business"); and
WHEREAS, Consultant will designate during the entire term of this
Agreement a designated employee (hereinafter the "designated employee") of
Consultant to be the sole individual providing services on behalf of Consultant
hereunder; and
WHEREAS, Company desires to obtain the services of Consultant to assist it
in generating a collection business for Company; and
WHEREAS, Consultant desires to be retained by Company in the aforesaid
capacity; and
WHEREAS, Consultant acknowledges that Company would suffer substantial and
irreparable loss and damage in the event Consultant or the designated employee
should disclose confidential information to competitors of Company; and
WHEREAS, Company and Consultant desire to set forth in writing the terms
and conditions of their agreements and understandings.
NOW, THEREFORE, in consideration of the foregoing, of the mutual promises
and undertakings herein contained, the consideration set forth in paragraph 4
hereafter, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto intending
legally to be bound, hereby agree as follows:
1. Consulting. Company hereby agrees to retain Consultant for a
period of five (5) years, commencing upon the date of this Agreement as a
consultant to Company with respect to the Business. In such capacity, Consultant
shall render such advice and consultation in connection with the Business as
Company may require. In particular, Consultant's duties shall consist primarily
of advice from time to time respecting broad aspects of profit-making
opportunities in the general credit collection business. This shall include, but
not be limited to, the determination of various companies in the Business and in
areas involving or similar to credit collection which Company could acquire from
time to time, the location and acquisition of books or groups of non-performing
credit card debt that could be purchased by Company, and the entrance into
agreements with third parties to provide services to those third parties,
assisting them in the collection of their non-performing debt accounts.
Consultant hereby agrees that, at all times during the term of this Agreement,
without the prior written consent of Company, the designated employee will be
the only party who will, on behalf of Consultant, be providing the services
Consultant is required to provide to Company hereunder. In performing these
services,
Company will develop written guidelines that indicate the criteria that must be
present in order for Company to consider these various facets of services to be
provided by Consultant. Consultant agrees to use its best efforts to follow the
guidelines in connection with the Business that it proposes to Company. In
performing these consulting services, Consultant will be an independent
contractor. Company understands that it will have no control over the number of
hours worked by Consultant and where it works in satisfaction of its services
hereunder. Nothing herein will create a partnership or joint venture
relationship between Company and Consultant. Consultant will not be responsible
for day-to-day operations of Company and will perform services, specifically
requested by and reporting to the President of Company or a Vice President
designated by the President at times and places reasonably agreeable to both
parties. Consultant understands that it shall have no authority whatsoever to
bind Company as to any obligation, liability, arrangement, contract or in any
manner or way whatsoever and it agrees that, in all dealings with third parties
on behalf of Company, that it shall communicate such fact to said third parties.
2. Compliance With All Laws. Consultant certifies that it will comply
with all local, state and federal statutes, rules, regulations and laws with
respect to all matters pertaining to this Agreement and the services performed
on behalf of Company hereunder, and shall indemnify and hold Company harmless
from claims, damages, expenses and costs, including reasonable attorneys' fees,
for any violation or claimed violation thereof. Consultant understands that if
it does not so comply with such laws, such actions shall be deemed unauthorized
by Company.
3. Term. The term of this Agreement shall be for a period of five (5)
years beginning on March 1, 1999, and terminating February 28, 2004, unless
earlier terminated.
4. Compensation and Other Benefits.
a. As and for compensation for the services to be rendered for
Company by Consultant under this Agreement, Consultant shall be paid
the monthly sum of Eleven Thousand Five Hundred Dollars($11,500)
during the term of the engagement hereunder beginning March 1, 1999.
b. As additional compensation hereunder, Consultant shall be
entitled to receive a bonus determined as follows:
i In the event that net income for book purposes after
depreciation, interest and taxes for calendar year-end 2000
exceeds Five Hundred Thousand Dollars ($500,000), Consultant
shall be paid a bonus of Four Thousand Dollars ($4,000) per month
in connection with its services rendered during calendar year
2001.
ii In the event that net income for book purposes after
depreciation, interest and taxes for calendar year-end 2001
exceeds Five Hundred Thousand Dollars ($500,000), Consultant
shall be paid a bonus of Four Thousand Dollars ($4,000) per month
in connection with its services rendered during calendar year
2002.
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iii. In the event that net income for book purposes after
depreciation, interest and taxes for calendar year-end 2002
exceeds Five Hundred Thousand Dollars ($500,000), Consultant
shall be paid a bonus of Four Thousand Dollars ($4,000) per month
in connection with its services rendered during calendar year
2003.
c. Consultant understands that, other than as specifically set
forth herein, it shall be obligated to pay for all of its necessary
expenses in connection with performance of its services hereunder.
Company will not be obligated to reimburse Consultant for any expenses
whatsoever it incurs in connection with the conduct of its services
hereunder, other than those expressly allowed by Company policy,
without the prior written agreement of Company in each event. However,
Company does agree that it will provide to Consultant reasonable
office space, monthly office parking for the designated employee only,
phone usage and secretarial assistance in connection with the
provision of its services to Company hereunder.
5. Disclosure of Information.
a. Consultant acknowledges that, in and as a result of its
engagement hereunder, it and its designated employee will be making
use of, acquiring and/or adding to confidential information of a
special and unique nature and value relating to such matters as
Company's secrets, systems, procedures, manuals, confidential reports
and lists of customers of Company and the Business. As a material
inducement to Company to enter into this Agreement, and to pay to
Consultant the compensation referred to in Paragraph 4 hereof,
Consultant covenants and agrees that neither it, nor its designated
employee or any of Consultant's shareholders, officers, directors,
partners, members, employees or agents, shall, at any time during or
following the term of Consultant's engagement hereunder, directly or
indirectly, use, disseminate, divulge, disclose, lecture upon or
publish articles with respect to, for any purpose whatsoever, any of
such confidential information which has been obtained by or disclosed
to them as a result of Consultant's engagement by Company. Such
confidential information includes information not generally known in
the industry in which Company is or may be engaged and information in
any form concerning Company's customers, products, processes, methods,
technology, computer programs, development, inventions, manufacturers,
purchasing, distribution, accounting, marketing, merchandising and
selling. It is understood and agreed, however, that confidential
information will not include any information or documentation in the
public domain and will likewise not include any information or
documentation obtained by Consultant from any third party as long as
such third party was not under a similar confidentiality restriction
or an employee of Company or AFI. In the event of a breach or
threatened breach by Consultant, its designated employee, or
Consultant's shareholders, officers, directors, partners, members,
employees or agents, of any of the provisions of this Paragraph 5,
Company, in addition to and not in limitation of any other rights,
remedies or damages available to Company at law or in equity, shall be
entitled to a permanent injunction in order to prevent or to restrain
any such breach by Consultant, its designated employee or by
Consultant's
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shareholders, directors, officers, partners, agents, representatives,
employees, and/or any and all persons directly or indirectly acting
for or with it or him.
b. Upon termination of its engagement with Company, whether such
termination was at the request of Consultant or of Company, all
documents, records, notebooks and similar repositories of or documents
containing any confidential information as defined in Paragraph 5(a)
above, including copies thereof, then in Consultant's or its
designated employee's possession or the possession of Consultant's
officers, directors, shareholders, partners, members, employees or
agents, or obtained by others from Company, whether prepared by them
or others, will be the sole property of Company and shall be returned
to Company.
c. In the event that Consultant becomes legally compelled to
disclose any of the information defined as confidential in Paragraph
5(a), Consultant or its designated employee will provide Company
prompt notice so that Company may seek a protective order or other
appropriate remedy and/or waive compliance with these provisions of
this Agreement. In the event that such protective order or other
remedy is not obtained, or that Company waives compliance with the
provisions of this Agreement, Consultant and its designated employee
will furnish only that portion of the information which they are
legally required to disclose or with respect to which Company has
waived compliance and will exercise their best efforts (which shall
not require the payment of money) to cooperate with Company's efforts
to obtain a required protective order or other reliable assurance that
confidential treatment will be accorded the information.
6. Restrictive Covenant. By its engagement with Company, Consultant,
as well as its designated employee, will acquire additional and intimate
knowledge about the customers, financial data, price and business negotiations
and business techniques of Company, as they may now exist or as they may be
developed in the future. Consultant acknowledges and agrees that Company, in its
engagement of Consultant, will allow Consultant to perform services for firms,
corporations and other associations and business enterprises which Consultant
may solicit as clients and customers of Company ("customers"), and in so doing,
has and will utilize Company's ideas, techniques and expertise in establishing
an even greater rapport with such customers. In order to avoid the inadvertent
disclosure of Company's confidential matters, and as consideration for
Consultant's engagement hereunder, Consultant hereby covenants and agrees that
during Consultant's engagement hereunder and for two (2) years from and after
the effective date of the termination of Consultant's engagement with Company,
Consultant, its designated employee, and their respective shareholders,
directors, officers, partners, members, employees and agents shall not, directly
or indirectly, either by themselves or through others, or as a partner,
employee, agent, officer, director, member, stockholder or otherwise (1)
solicit, divert, take away or attempt to take away the Business of Company's
present or past customers, or the customers of any affiliated or related
companies of Company, in any business or enterprise competing with Company or
any subsidiary companies of Company, (2) solicit, hire, employ or endeavor to
employ any of Company's employees or employees of any subsidiary companies of
Company, or (3) within a radius of fifty (50) miles from the city limits of any
city in which Company is presently working for or soliciting customers or has
worked for or solicited customers within the two (2) year period prior to
termination of Consultant's engagement with Company, transact any business with,
own any interest directly or indirectly in, or
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be associated with or employed in any capacity by or on behalf of any person,
partnership, firm, corporation or other business association engaged or seeking
to engage in any business or enterprise competing directly or indirectly with
Company or any subsidiary companies of Company. For purposes of this paragraph,
the references to "Consultant" shall include any shareholder, officer, director,
partner, member or agent of Consultant and any individual employed by Consultant
on the date of this Agreement or during the term hereof.
7. Accounting for Profits. Consultant covenants and agrees that if
it, its designated employee, or any other restricted parties shall violate any
of the covenants or restrictions under the foregoing Paragraphs 5 and 6, Company
shall be entitled to an accounting and repayment of all profits, compensation,
commissions, remuneration, or other benefits that Consultant or any other
restricted parties, directly or indirectly, has realized as a result of any such
violation. These remedies shall be in addition to, and not in limitation of, any
injunctive relief or other rights and remedies to which Company is or may be
entitled at law, in equity, or under this Agreement.
8. Reasonableness of Restrictions.
a. Consultant has carefully read and considered the provisions of
Paragraphs 5, 6 and 7 and, having done so, agrees that the
restrictions set forth in these paragraphs, are fair and reasonable,
are reasonably required for the protection of the interests of Company
and its officers, directors, shareholders, and other employees, are
not injurious to the public in general, is no greater than reasonably
necessary to protect the legitimate business interests of Company, and
is not unduly harsh and oppressive on Consultant or the other
restricted parties. In the event that Company is found by the
Arbitrator(s) to have violated this Agreement, Consultant agrees that
Company shall have 30 days after said arbitration decision to cure
said performance or payment default.
b. Consultant represents that its experience, capabilities and
assets are such that this Agreement does not deprive it from earning a
profit in the unrestricted business activities which remain open to
it, nor does it deprive any of the other restricted parties from
earning a livelihood in the unrestricted business activities that
remain open to them or from otherwise adequately and appropriately
supporting themselves.
c. In the event that, notwithstanding the foregoing, any of the
provisions of Paragraphs 5, 6 and 7 shall be held to be invalid or
unenforceable, the remaining provisions thereof shall nevertheless
continue to be valid and enforceable as though the invalid and
unenforceable parts had not been included therein. In the event that
any provision of Paragraphs 5, 6 and 7 shall be declared by a Court of
competent jurisdiction to exceed the maximum restriction such Court
deems reasonable and enforceable, the restriction deemed reasonable
and enforceable by the Court shall become and thereafter be the
maximum restriction.
9. Remedies. Consultant agrees that damages alone will be inadequate
protection for Company in the event of a breach or threatened breach or
violation of any of the provisions of this Agreement and that Company shall, in
addition thereto, be entitled to an injunction restraining such breach or
violation by Consultant, its designated employee and any other
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restricted parties of any provision of this Agreement, and, such injunctive
remedy shall not be in limitation of but in addition to, any other remedies
authorized by law for the breach or threatened breach of this Agreement,
including the recover of monetary damages and a reasonable attorney's fee.
Consultant acknowledges that the agreement of the designated employee to the
restrictions set forth in Paragraphs 5 and 6 herein is a material inducement to
Company's payment of the sums set forth in Paragraph 4 hereof. Consultant,
Company and the other restricted parties expressly waive the posting of any bond
or surety required pursuant to the issuance of an injunction hereunder. However,
in the event that the Court refuses to honor the waiver of bond hereunder,
Consultant, Company and the other restricted parties hereby expressly agree to a
bond to be posted in this matter of One Hundred Dollars ($100). Nothing in this
Agreement shall be construed to prohibit Company from also pursuing any other
remedy, the parties having agreed that all remedies are cumulative. The
obligations of Consultant and the other restricted parties, and the rights of
Company, its successors and assigns under Paragraphs 5, 6, 7, 8 and 9 of this
Agreement, shall survive the termination of this Agreement. Consultant
understands and acknowledges that a breach of Paragraphs 5 and 6 by Consultant's
designated employee, the agents of Consultant's designated employee, or by any
shareholders, directors, officers, employees, agents, partners or members of
Consultant shall constitute a breach of Consultant under this Agreement
entitling Company to all of the same remedies under this Agreement available to
it as if a breach occurred by Consultant itself.
Notwithstanding anything in this Paragraph 9 to the contrary, the parties agree
that any dispute, controversy or claim for actual damages arising out of the
termination of this Agreement under Paragraph 11 herein shall be submitted to
and settled by arbitration in Kansas City, Jackson County, Missouri, pursuant to
private arbitration. No other dispute under this Agreement shall be subject to
arbitration, absent the separate agreement of the parties, and under no
circumstances shall any claim for consequential, punitive or exemplary damages,
or any tort claim, be arbitrable under this Agreement.. The parties agree that
within ten (10) days after a demand for arbitration is sent in writing by any
party to this Agreement, the respective parties shall either jointly agree upon
one (1) arbitrator to arbitrate the disputes raised pursuant to the demand for
arbitration, or each party will independently pick an arbitrator to serve on the
arbitration panel. If the parties elect to pick their own arbitrators to serve
on the panel, the two arbitrators picked by the respective parties shall then
pick a third arbitrator who will complete the arbitration panel. The parties
agree that the actual arbitration between the parties will begin no later than
sixty (60) days from the date that the demand for arbitration is served on the
other party and that the decision of the arbitration panel will be rendered no
later than ninety (90) days from the date that the demand for arbitration is
served on the other party. The parties agree that the Federal Rules of Civil
Procedure, and discovery, will apply to these arbitration proceedings. Any award
rendered shall be in writing and final and conclusive among the parties, and a
judgment thereon may be entered in any court of competent jurisdiction. The
expenses of the arbitration, and the arbitrator fees, shall be borne equally by
the parties to the arbitration, provided that each party shall pay for and bear
the cost of its own experts, evidence and counsel fees. Notwithstanding the
foregoing it is agreed that the arbitrators may, in their discretion, award the
prevailing party reasonable attorney fees as a part of the award if the
arbitrator determines that the losing party acted in bad faith or without
reasonable cause. In the event that Company is found by said Arbitrator(s) to
have violated this Agreement, Consultant agrees that
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Company shall have 30 days after said arbitration decision to cure said
performance or payment default.
10. Delegation of Duties and Assignment of Rights. Consultant and the
other restricted parties may not delegate the performance of any of their
respective obligations or duties hereunder, or assign any rights hereunder
except upon the prior written consent of Company. Company may assign all of its
rights and obligations under this Agreement, provided that Company shall remain
liable for all of its obligations under this Agreement (including, but not
limited to, the obligation to pay compensation to Consultant) despite such
assignment. In the event of an assignment by Company or Consultant, each
reference in this Agreement to Company or Consultant shall include the assignee
from and after the date of such assignment.
11. Termination.
a. The engagement of Consultant under this Agreement shall
terminate upon the occurrence of any of the following events:
i the death of the designated employee;
ii if the designated employee is adjudicated as being
legally incompetent by any court having jurisdiction to determine
such matter;
iii the expiration of ten (10) days following notice by
Company to Consultant of its intent to terminate its engagement
hereunder "with cause" (as defined below), without Consultant
curing said cause. However, the parties hereto agree that in the
event of a termination with cause by Company for which a demand
for arbitration is sent by the terminated party, payments to
Consultant under Paragraph 4(a) only shall continue during the
conduct of the arbitration proceeding and until a decision is
rendered by the arbitrator described in Paragraph 9 herein;
iv subsequent to one (1) year from the date of this
Agreement, the expiration of twenty (20) days following notice by
Company to Consultant of its intent to terminate its engagement
hereunder without cause and upon payment by Company to Consultant
of an additional amount equal to 50% of the payments then
remaining under this Agreement; or
v the mutual agreement of the parties hereto.
b. For purposes of this Agreement, a termination of Consultant's
engagement hereunder shall be considered to be for "cause" if such
termination is by reason of Consultant's or the designated employee's
dishonesty, theft, conviction of a felony or a misdemeanor involving
moral turpitude or dishonesty, malfeasance, willful misconduct,
material breach of this Agreement, abandonment of their respective
responsibilities hereunder, neglect of material duties Consultant
and/or the designated employee are required to perform hereunder,
failure of Consultant and/or the designated employee to maintain the
confidentiality of any client or information in their possession or to
which they have access or knowledge, Company's discovery that any
other party other than the
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designated employee has been providing services on behalf of
Consultant hereunder without the consent of Company, or in the event
that any individual other than the designated employee becomes the
designated employee of Consultant providing services hereunder,
without Company's consent. The parties agree that the definition of
"cause" shall occur if any of these actions have occurred only during
the term hereof, not only by Consultant itself, but by the designated
employee.
c. Upon termination of Consultant's engagement hereunder for any
reason, Company shall be obligated to pay to, or for the benefit of,
Consultant only such compensation or other benefits which have accrued
through the date of such termination. However, in the event that
termination of Consultant's engagement occurs as a result of the
operation of Paragraph 11(a)(i) or 11(a)(ii), Company, as its sole and
remaining payment obligation hereunder, agrees to continue to pay the
sum of Eleven Thousand Five Hundred Dollars ($11,500.00) to Consultant
as a termination payment, for a period of twelve (12) months after the
month of termination.
d. Except as expressly provided herein, the obligation of
Consultant, its designated employee and any other restricted parties,
respectively, and the rights of Company, its successors and assigns,
under this Agreement shall survive the termination of Consultant's
engagement under this Agreement.
12. Waiver of Breach. The waiver by Consultant or Company of a breach
of any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach thereof.
13. Severability. The provisions of this Agreement, including
particularly, but not solely, the provisions of Paragraphs 5, 6 and 7 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 and
enforceability of the other provisions.
14. Applicable Law. This Agreement shall be construed and performed
according to the laws of the State of Missouri, and shall be binding upon the
parties thereto, their successors and assigns. The parties hereto agree that,
except for the claims arbitrable under Paragraph 9 hereof, appropriate
jurisdiction and venue for any and all claims under this Agreement or related in
any way to the Agreement or the subject matter thereof shall be in the Circuit
Courts of Jackson County, Missouri. The parties hereto waive any right they may
have to remove said litigation to any federal court. Consultant hereby agrees,
as part of any relief Company may obtain against Consultant, its designated
employee or any other restricted parties as a result of their breach of this
Consulting Agreement, that Company, in addition to such other relief it shall be
granted by the court, shall be entitled to be reimbursed by Consultant for any
costs it incurs in connection with the enforcement of this Agreement, including,
but not limited to, a reasonable attorneys' fee. The parties hereto agree that
appropriate service of process for any of said actions may be obtained on said
parties by personal service or by delivery of said process to the parties or a
representative of the parties by first class mail, postage prepaid. Consultant
agrees that Company may offset against any amounts owed by Company to Consultant
hereunder, any amounts owed by Consultant, its designated employee, or any
restricted parties, to Company.
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15. Notice. Any notice required to be given shall be sufficient if it
is in writing and sent by certified mail or registered mail, return receipt
requested, first class postage prepaid, to Sequoia Company, Post Office Box
8266, Shawnee Mission, Kansas 66208, in the case of Consultant, its designated
employee, or any other restricted parties, and to 1900 Commerce Tower, 911 Main
Street, Kansas City, Missouri 64105, in the case of Company, which shall be
deemed received three (3) days after such deposit in the United States mail.
16. Entire Agreement. This Agreement, and the documents and
Agreements referred to herein, contains the entire agreement and understanding
by and between Company and Consultant with respect to the engagement herein
referred to, and no representations, promises, agreements or understandings,
written or oral, not herein contained shall be of any force of effect. No change
or modification hereof shall be valid or binding unless the same is in writing
and signed by the party intended to be bound. No waiver or any provision of this
Agreement shall be valid unless the same is in writing and signed by the party
against whom such waiver is sought to be enforced; moreover, no valid waiver of
any provision of this Agreement at any time shall be deemed a waiver of any
other provision of this Agreement at such time or will be deemed a valid waiver
of such provision at any other time.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
IN WITNESS WHEREOF, the parties hereto executed this Agreement as of the
day and year first above written.
CONSULTANT: SEQUOIA COMPANY
By:________________________________________
Name:______________________________________
Title:_____________________________________
COMPANY: CANNON FINANCIAL COMPANY
By:________________________________________
Name:______________________________________
Title:_____________________________________
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