EXHIBIT 99.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of the 27th day of
January, 1999, by and between BPI Packaging Technologies, Inc., a Delaware
corporation (the "Company"), and Xxxxx X. Xxxxxxxxxx ("Employee").
WITNESSETH:
WHEREAS, the Company desires to employ Employee and Employee desires to
accept such employment by the Company upon the terms and conditions hereinafter
set forth.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. EMPLOYMENT. Subject to the other terms and conditions of this
Agreement, the Company hereby agrees to employ Employee as the Chief Financial
Officer of the Company as set forth herein, and Employee hereby agrees to be so
employed in such position by the Company, for a three (3) year term beginning on
January 27, 1999 and ending January 27, 2002; provided, however, upon expiration
of the stated term of this Agreement, Employee's employment with the Company
shall revert to the status of employment at will and shall thereafter be subject
to termination by either party at any time and regardless of cause.
2. RESPONSIBILITIES OF EMPLOYMENT. During the term of Employee's
employment, Employee: (a) shall diligently and faithfully serve the Company in
such capacity as may be determined from time to time by the President of the
Company and perform such other duties, assignments and responsibilities as the
Company may impose upon Employee from time to time, consistent with his role as
an executive officer of the Company, and he shall devote his best efforts and
entire business time, services and attention to the advancement of the Company's
interests; and (b) shall not, without the prior written consent of the President
of the Company, engage in any other employment or business, directly or
indirectly, in any capacity (whether as a sole proprietor, partner, member,
manager, director, officer, employee, consultant or otherwise), whether for
compensation or otherwise and whether or not such business is in competition or
conflict with the business of the Company provided, however ownership of not
more than one percent (1 %) of the securities of any publicly-held corporation
or five percent (5 %) of any private corporation shall not constitute a
violation of this Section 2.
3. COMPENSATION; STOCK OPTIONS; BENEFITS; REIMBURSEMENT FOR EXPENSES.
(a) During the term of Employee's employment pursuant to this
Agreement, the Company shall pay to Employee as basic compensation for his
services hereunder the sum of One Hundred and Twenty-Five Thousand Dollars
($125,000.00) per year, payable in accordance with the normal payroll practices
of the Company commencing on a date to be mutually agreed upon by the Company
and the Employee.
(b) Employee shall receive options to purchase Common Stock of the
Company during the term of this Agreement if the Company equals or exceeds
certain financial performance goals as set forth below:
(1) If, in fiscal year 1999, the Company's net earnings for
the fiscal year plus amounts deducted in the computation thereof for: (a)
interest expense, (b) Federal, state and local income taxes, (c)
depreciation, (d) amortization of intangibles, as
computed by the Company's accountants in accordance with generally
accepted accounting principals, consistently applied, and (e) any expenses
or other charges associated with the investment, loans, and equipment
leases made by DGJ, L.L.C. to the Company and all other extraordinary
charges ("EBITDA"), equals or exceeds one of the EBITDA performance goals
below (the "Performance Goals"), the Company shall grant to Employee, at
no cost to Employee, options to purchase the corresponding number of
shares of Common Stock of the Company (the "1999 Options") at an exercise
price of $.04 per share (the "Exercise Price"), subject to adjustment in
the event of a stock split, stock dividend or similar event, as determined
by the Board of Directors of the Company:
EBITDA
Performance Goals Number of Shares
----------------- ----------------
$3,000,000 573,000
$4,500,000 573,000
$6,000,000 573,000
$7,500,000 573,000
$9,000,000 573,000
If and when the Company grants the 1999 Options to the Employee, the 1999
Options shall vest in increments of one-third (1/3), with one one-third
(1/3) portion vesting on the date the 1999 Options are granted to Employee
(the "1999 Grant Date") and one one-third (1/3) portion vesting on each of
the first and second anniversaries of the 1999 Grant Date.
(2) If, in Fiscal Year 2000, the Company's EBITDA equals or
exceeds one of the Performance Goals, the Company shall grant to
Employee, at no cost to Employee, options to purchase, at the
Exercise Price, an amount of shares equal to, but not less than
zero,: (a) the number of shares of Common Stock of the Company that
corresponds to the equaled or highest exceeded Performance Goal, (b)
less the number of shares represented by the 1999 Options (the "2000
Options"). If and when the Company grants the 2000 Options to the
Employee (the "2000 Grant Date"), the 2000 Options will vest
one-half (1/2) on the 2000 Grant Date and one-half (1/2) on the
first anniversary of the 2000 Grant Date.
(3) If, in Fiscal Year 2001, the Company's EBITDA equals or
exceeds one of the Performance Goals, the Company shall grant to
Employee, at no cost to Employee, options to purchase, at the
Exercise Price, an amount of shares equal to, but not less than
zero,: (a) the number of shares of Common Stock of the Company that
corresponds to the equaled or highest exceeded Performance Goal, (b)
less the number of shares represented by the 1999 Options and the
2000 Options (the "2001 Options"). The 2001 Options shall vest 100%
on the date they are granted to Employee.
(4) The terms of the 1999 Options, the 2000 Options and the
2001 Options, if any, and the terms and conditions thereof shall be
established by the Board of Directors of the Company at the time of
the grant of such option upon such terms and conditions as are
customary for stock options held by employees of publicly-held
companies. Notwithstanding the foregoing, such options shall be
exercisable for a
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minimum period of five (5) years from the date of vesting, shall not be
subject to repurchase by the Company, and shall be freely transferable
once vested.
(5) To the extent not previously vested, any and all options
which the Employee has received hereunder will immediately vest upon
a Change in Control of the Company. "Change of Control" as used
herein means sale of 50% or more of the Common Stock of the Company,
but not including the exercise of any warrant held by DGJ, L.L.C.
and its designees or assigns.
(c) In consideration of Employee's execution of this Agreement, the
Company hereby grants to Employee a warrant to purchase 1,719,000 shares of
Common Stock of the Company at the Exercise Price. Employee may exercise this
warrant, in part or in full, at any time after thirty (30) days after the
Stockholders' meeting contemplated in Section 2.5 of the Securities Purchase
Agreement, of even date herewith, between the Company and DGJ, L.L.C. and before
the warrant's expiration date of January 27, 2009 by payment to the Company of
the Exercise Price multiplied by the number of shares purchased. Such payment
for such warrant may be made in cash or by means of a full recourse promissory
note due and payable on or before January 27, 2004 with interest payable upon
prepayment or maturity, whether by reason of demands acceleration or otherwise
at the prime rate of interest charged by LaSalle National Bank. Such note shall
be secured by all shares purchased by Employee under this Section 3(c) and such
other collateral as provided by the Employee having a value at least equal to
the purchase price of such stock purchased under this Section 3(c).
(d) Shares issuable under Section 3(b) of this Agreement shall be
registered on Form S-8 on or before July 31, 1999. The warrant shares issuable
under Section 3(c) of this Agreement shall be registered at the same time as the
warrant dated the date hereof from the Company to DGJ, L.L.C.
(e) During the term of Employee's employment hereunder, the Company
shall provide Employee with such benefits, if any, as are generally made
available by the Company to all of its other employees or to all other
executive employees; provided, however, the Employee shall be entitled
each calendar year to four (4) weeks of vacation, at such time or times
as is reasonably agreed upon by the parties hereto, during which time the
Employee shall receive his normal compensation as provided for in Section
3(a) hereof.
(f) Employee shall be entitled to be reimbursed for all reasonable
and necessary out-of-pocket expenses incurred by Employee in the conduct of the
performance of his services for the Company in accordance with policies relating
thereto established by the President from time to time. The Company will
reimburse Employee for all such expenses following presentation by Employee,
from time to times of an itemized accounting and appropriate substantiation of
such expenditures.
4. COVENANT NOT TO COMPETE. Employee acknowledges and agrees that he has
obtained and will continue to obtain knowledge and familiarity with the
operations of the Company, the conduct of the business of the Company, its
operating, manufacturing, distribution, marketing and sales procedures and
methods, the identity and requirements of its past, present and potential
customers and other proprietary information and trade secrets not generally
known to other persons or entities who can obtain economic value from its
disclosure
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or use which includes, without limitation, records, data, documents, plans,
policies, customer lists, price lists, names and addresses of suppliers or
representatives, or other matters of any kind or description relating to any of
the foregoing, irrespective of the medium on which contained, which must be
safeguarded and which are reasonable under the circumstances to protect. To
protect the Company, Employee hereby agrees that during the term hereof and for
a period of one (1) year from the date after termination of Employee's
employment by the Company and this Agreement's termination, Employee shall not,
directly or indirectly, to the furthest extent permitted by law:
(a) own, manage, operate, control or participate in, or be
associated in any manner whatsoever, directly, indirectly or otherwise, with, or
be connected as an officer, employee, partner, director, member, manager,
consultant or otherwise with, or have any financial interest in, or aid or
assist any person or entity in the conduct of, or otherwise engage in, any
business (whether it be a sole proprietorship, partnership, limited liability
company, corporation or other entity) engaged in any business carried on by the
Company anywhere within the United States of America; or
(b) approach, solicit or otherwise encourage any employee of the
Company to terminate his or her employment with the Company, or to enter into
employment with any other person or entity; or
(c) approach, induce or persuade any customer of the Company,
whether a past, present or potential customer of the Company, to terminate its
or not pursue a (as applicable) relationship with the Company or to enter into
any relationship with any other person or entity engaged in the business of the
Company or in a business or businesses described in clause (a) above; or
(d) in any manner slander, libel or through any other means take
any action which is intended, or could reasonably be expected, to be detrimental
to Company, its products, personnel, prospects or operations; provided, however,
ownership of not more than one percent (1%) of the securities of any publicly-
held corporation shall not constitute a violation of this Section 4.
(e) If any provision or part of this Section 4 is held to be
unenforceable because of the duration of such provision or the area covered
thereby, Employee and the Company agree to modify such provision or, that the
court making such determination shall have the power to modify such provision,
to reduce the duration or area of such provision, or both, or to delete specific
words or phrases ("blue-penciling"), and in its reduced or blue-penciled form,
such provision shall then be enforceable and shall be enforced.
5. EQUITABLE REMEDIES. Employee acknowledges and agrees to the fairness,
applicability, scope and nature of the covenants set forth in Sections 4, 7 and
8 hereof, and further agrees that the time period and scope specified therein
are the fair, appropriate and minimum and reasonable time and scope necessary to
protect the Company in the conduct of its business. Employee further agrees that
damages are not an adequate remedy in the event of a violation of such
covenants, and hereby agrees that, in case of violation, the Company and its
successors and assigns shall be entitled to injunctive relief, without the
posting of a bond, in addition to such other relief and remedies as may
otherwise be available in law or equity. The Company's forbearance or failure to
take action with regard to any violation of this Agreement,
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shall not be deemed a waiver of such violation or limitation upon the Company's
rights as set forth in this Section.
6. EMPLOYEE ALTERNATIVE SERVICES. Employee represents and warrants to the
Company that, in the event of enforcement of the provisions of Sections 4, 5, 6,
7 and 8 hereof, Employee's experience, capabilities and prospects are such that
Employee can obtain employment that will not cause Employee to be in violation
of such Sections hereof, and that the enforcement of such covenants hereunder by
the Company by way of injunction will not prevent Employee from earning a
livelihood.
7. TRADE SECRETS AND CONFIDENTIAL INFORMATION.
(a) Employee hereby covenants and agrees that he will not, except as
may be required in connection with his employment with the Company, directly or
indirectly, use or disclose to any other person or entity, whether during or
subsequent to the term of his employment by the Company, irrespective of the
time, manner or cause of the termination of his employment, any information of a
proprietary nature belonging to the Company, or which could be reasonably
expected to have an adverse effect on the Company, its business, property or
financial condition, including, without limitation, records, data, documents,
processes, specifications, methods of operation, inventions, manufacturing
techniques and know-how, formulae, experimental or developmental work, plans,
policies, customer lists, price lists, the names and addresses of suppliers or
representatives, investigations or other matters of any kind or description
relating to the products, services, suppliers, customers, sales or businesses of
the Company.
(b) All records, files, drawings, data, computer programs,
documents, equipment, writings and the like relating to the Company's business
which Employee shall prepare, use, construct or observe, shall be and remain the
sole property of the Company, and upon termination of this Agreement or his
employment hereunder or otherwise with the Company for any reason, Employee
shall return to the possession of the Company any items of that nature and any
copies thereof which he may have in his possession.
8. INVENTIONS.
(a) Any invention, improvement, discovery, process, formula or
method relating to or useful in connection with the business now or hereafter
carried on or contemplated by the Company, which is developed or discovered or
which comes to the attention of Employee while he is employed by the Company,
will be forthwith fully disclosed by him to the President of the Company. Any
such invention, improvement, discovery, process, formula or method will be the
sole and absolute property of the Company, and the Company will be the sole and
absolute owner of all patent and other rights in respect thereof, without the
necessity of any payment by the Company to Employee in connection therewith.
(b) Employee agrees to assign and transfer to the Company, without
payment of any money or other consideration, all of his right, title and
interest in and to any invention, improvement, discovery, process, formula or
method, relating to or useful in connection with the business now or hereafter
carried on or contemplated by the Company, which he may conceive, develop or
make during the term of his employment by the Company, either solely or jointly
with others. Upon request of the Company, Employee will execute and deliver, at
the expense
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of the Company, all such documents and will do all such other acts as may in the
Company's opinion be necessary or desirable to secure to the Company, its
successors and assigns, or its nominee, all right, title and interest in and to
any such invention, improvement, discovery, process, formula or method.
9. TERMINATION. Upon termination of Employee's employment by the Company,
by Employee or upon the death or disability of Employee, the rights of Employee
shall be as follows:
(a) Death or Disability of Employee; Termination by Employee. If
Employee dies while employed by the Company, if Employee's employment is
terminated by the Company due to Employee's disability (as defined in
Subparagraph (d) hereinbelow), or if Employee elects to terminate his employment
hereunder, this Agreement shall immediately terminate without any further
obligation on the part of the Company to Employee, including, without
limitation, no obligation to pay Employee any salary or other benefits, except
that the Company shall pay to Employee or his Beneficiary (as hereinafter
defined in Subparagraph (e)) only such salary pursuant to Section 3 hereof as
may be accrued and unpaid on the date of such death, disability or termination
of employment.
(b) Termination by the Company for Cause. If Employee's employment
is terminated at any time by the Company for cause, this Agreement shall
immediately terminate without any further obligation on the part of the Company,
including, without limitation, no obligation to pay Employee any salary or other
benefits, except that the Company shall pay to Employee only such salary
pursuant to Section 3 hereof as may be accrued and unpaid on the date of such
termination of employment. For purposes of the foregoing, "cause" shall mean any
of the following (i) willful failure or neglect of Employee to perform his
duties as set forth herein after written notice thereof by the Company; (ii) the
commission of fraud, theft, deceit, a felony, embezzlement, or improper use of
corporate funds by Employee, (iii) self-dealing by Employee detrimental to the
Company or any attempt to obtain any personal profit from any transaction in
which the Company has an interest, (iv) habitual intoxication or drug addiction,
(v) Employee's repeated failure after written notice thereof by the Company to
perform or comply with rules, regulations or requirements reasonably established
by the Company for Employee in the conduct of his employment hereunder, or (vi)
any material breach of this Agreement by Employee.
(c) Termination by the Company for Other Reasons. The Company shall
have the right at any time to terminate Employee's employment hereunder for any
reason by giving him written notice (which shall fix the date as of which his
employment is to terminate) of its intention to do so. If Employee's employment
hereunder is terminated by the Company other than for cause or by reason of
Employee's death or disability, the Company shall be obligated to pay Employee
only his salary pursuant to Section 3 hereof until the first to occur of the
following: (i) the end of the stated term of this Agreement; (ii) Employee's
engaging in any employment, business, or other activity, directly or indirectly,
which does or would constitute a violation of the provisions of Section 4 hereof
(whether or not the provisions of said Section 4 may have ceased to be operative
and/or effective for any reason); (iii) Employee's death or disability; or (iv)
any discovery of embezzlement or improper use of corporate funds by Employee,
self-dealing detrimental to the Company or any attempt to obtain personal profit
from any transaction in which the Company has an interest, or any breach of the
terms of this Agreement.
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(d) Definition of Disability. For purposes of the foregoing, the
term "disability" shall mean Employee's inability due to illness or other
physical or mental disability to substantially perform his duties as prescribed
herein for a period of ninety (90) days within any consecutive twelve (12) month
period.
(e) Definition of Beneficiary. For purposes of the foregoing, the
term "Beneficiary" shall mean any person (including any trust or trustee)
Employee may have designated in a writing acceptable to and filed with the
Company. In the absence of the appointment of such a beneficiary or if such
beneficiary predeceases Employee or refuses to accept the benefits hereunder,
then the term "Beneficiary" shall mean the estate of Employee.
(f) Continuing Obligations of Employee. Notwithstanding anything to
the contrary contained herein, termination of this Agreement or Employee's
employment, whether for cause, by reason of disability, by Employee or
otherwise, shall not be deemed in any way to affect Employee's obligations under
Section 4 through and including Section 9 of this Agreement, with respect to
which he shall remain bound.
10. GOVERNING LAW. This Agreement shall be construed, governed and
enforced in accordance with the internal laws of the State of Illinois, without
regard to conflicts of law principles.
11. MUTUAL CONTRIBUTION. The parties to this Agreement have mutually
contributed to its drafting. Consequently, no term or provision of this
Agreement shall be construed against any party on the ground that such party
drafted the provision or caused the provision to be drafted, or that any party
suffered any inequity or inequality in bargaining power causing such party to
accept any term or provision contained herein.
12. MODIFICATION; ETC.. This Agreement is the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof
and supersedes any and all prior and contemporaneous negotiations,
understandings and agreements with regard to the subject matter hereof, whether
oral or written. No representation, inducement, agreement, promise or
understanding altering, modifying, taking from or adding to the terms and
conditions hereof shall have any force or effect unless the same is in writing
and validly executed by the parties hereto. The titles of the Sections have been
inserted as a matter of convenience of reference only and shall not be construed
to control or affect the meaning or construction of this Agreement.
13. SEVERABILITY; ASSIGNMENT. If any portion of this Agreement is found to
be in violation of or conflict with any applicable law, the parties agree that
said portion shall be modified only to the extent necessary to enable it to
comply with such law, and the remainder of this Agreement shall remain in full
force and effect. This Agreement requires the personal services of and is not
assignable by Employee, but shall be binding upon and inure to the benefit of
the successors and assigns of the Company.
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14. NOTICES. All notices or other communications in connection with this
Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed first class, postage prepaid and addressed as follows: (i)
if to the Company, addressed to: BPI Packaging Technologies, Inc. 000 Xxxxxxxx
Xxxxxx, Xxxxx Xxxxxxx, Xxxxxxxxxxxxx 00000; Attention: Xxxx X. Xxxx; and (ii) if
to Employee, addressed to: Xxxxx X. Xxxxxxxxxx, 000 Xxxxxxxx Xxxxxx, Xxxxxxxx,
XX 00000; or such other address or addressed to the attention of such other
person or persons as either of the parties may notify the other in accordance
with the provisions of this Section.
15. CHOICE OF FORUM AND VENUE. EMPLOYEE AND THE COMPANY, IN ORDER TO
INDUCE EACH OTHER TO ENTER INTO THIS AGREEMENT, HEREBY AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED
TO OR FROM THIS AGREEMENT SHALL BE LITIGATED, IN COURTS HAVING SITUS WITHIN THE
U.S.A., STATE OF ILLINOIS, COUNTY OF XXXX. EMPLOYEE AND THE COMPANY HEREBY
CONSENT AND SUBMIT TO THE JURISDICTION OF ANY SUCH STATE OR FEDERAL COURT
LOCATED WITHIN SUCH COUNTY. EMPLOYEE AND THE COMPANY HEREBY WAIVE ANY RIGHT EACH
OF THEM MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT BY OR
AGAINST EITHER OF THEM IN ACCORDANCE WITH THIS SECTION.
16. OPPORTUNITY FOR INDIVIDUAL COUNSEL. All parties hereto hereby
acknowledge and agree that they have each had an opportunity to read this
Agreement in its entirety and to obtain separate counsel before such party's
execution of this Agreement, and that this Agreement is made voluntarily and
without duress of any kind.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the day and year first written above.
Employee BPI Packaging Technologies, Inc.
/s/ Xxxxx X. Xxxxxxxxxx By: /s/ C. Xxxx Xxxxxxxxx
----------------------- ---------------------
Xxxxx X. Xxxxxxxxxx Title: Chairman and Chief Executive Officer
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