Exhibit 10.5 Annex I
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") is entered into as of this ___
day of ________, 1998 by and among WINDSOR ART, INC., a Missouri corporation
with an address of c/o Interiors, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (the "Company"), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, residing at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Consultant"), and INTERIORS, INC., a Delaware
corporation with an address of ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇-▇▇▇▇ ("Interiors").
R E C I T A L S
WHEREAS, Interiors and Bentley International, Inc., a Missouri corporation
("Bentley"), have entered into that certain Stock Purchase Agreement dated as of
July 7, 1998 (the "Stock Purchase Agreement") pursuant to which Interiors has
purchased all of the issued and outstanding capital stock of the Company from
Bentley.
WHEREAS, it is a condition precedent to the consummation of the
transactions contemplated by the Stock Purchase Agreement, that Consultant enter
into a consulting agreement with the Company;
WHEREAS, the Company desires to secure the services of Consultant, and
Consultant desires to furnish his services to the Company, on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Defined Terms. Terms used in this Agreement in capitalized form which
are not defined in this Agreement shall have the same definitions as used in the
Stock Purchase Agreement.
2. Consulting Services.
Commencing on the date of this Agreement and continuing (unless terminated
earlier pursuant to Section 7 hereof) until four (4) years from the date of this
Agreement, Consultant shall make himself available at reasonable times and upon
reasonable notice, as requested by the Company or Interiors, to consult with the
Board of Directors and management of each of the Company and Interiors regarding
input and advice on overall strategy for the Company and Interiors and provide
advice and assistance with respect to the business affairs of Interiors and its
subsidiaries.
The Company and Interiors acknowledge and agree that Consultant may be
engaged in other business activities which will limit the frequency and duration
of Consultant's services hereunder. More specifically, the Company and Interiors
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acknowledge that Consultant may establish his primary business headquarters,
from time to time, any where in the world and that Consultant's current primary
business location is in St. Louis County, Missouri. In addition, Company and
Interiors agree that Consultant shall not be required during any month to be out
of town for more than six (6) nights, and that Consultant shall not be required
to expend more than ten (10) hours per week, for forty-eight (48) weeks, during
any calendar year to comply in full with his obligations under this Agreement.
3. Compensation. In consideration of the services to be rendered by
Consultant hereunder, the Company agrees to compensate Consultant as follows:
Cash Compensation. During the term hereof, the Company will pay to
Consultant the following amounts: (i) during the first three years of the term
of this Agreement an aggregate annual fee equal to Two Hundred Thousand Dollars
($200,000.00) in bi-monthly payments equal to $8,333.33, and (ii)during the
last year of the term of this Agreement an aggregate annual fee of Fifty
Thousand Dollars ($50,000) in bi-monthly payments equal to $2,083.33.
Benefits and Expense Allowances. During the term hereof, the Company shall
provide the following benefits and expense allowances to Consultant:
(a) The Company shall provide Consultant and Consultant's family with
coverage under a health insurance policy with benefits equivalent to or better
than those provided by Consultant's current health insurance policy for
Consultant and Consultant's family.
(b) Consultant shall be entitled to a maximum reimbursement of $2,400 per
year for expenses associated with the maintenance of an office in St. Louis,
Missouri, or such other location as Consultant shall designate. All
reimbursements hereunder shall be made within twenty-one (21) days following the
Company's receipt of an expense statement, including, where appropriate, all
original statements of charges and proof of payment.
(c) Commencing August 1, 1998, and the first day of each month thereafter
during the term of this Agreement, Company shall pay to Consultant a Los Angeles
housing allowance in the amount of $2,000 per month so long as that certain
condominium situated in the State of California, which Consultant makes use of,
continues to be owned by the ▇▇▇▇▇ ▇. ▇▇▇▇ Children's Trust. Consultant shall
identify in writing to the Company within three (3) days after the execution of
this Agreement the address of such condominium and shall inform the Company
forthwith in the event such condominium is sold by such trust.
(d) Commencing August 1, 1998, and the first day of each month thereafter
during the term of this Agreement, Company shall pay to Consultant (i) a Los
Angeles automobile allowance in the amount of $450 per month so long as
Consultant and/or a member of Consultant's family maintains an automobile in the
State of California, which Consultant makes use of, and (ii) a St. Louis
automobile allowance in the amount of $150 per month for the automobile
Consultant makes use of at his primary business headquarters. Consultant shall
identify in writing to the Company
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within three (3) days after the execution of this Agreement the initial
automobiles in each location, and any changes to such initial designation shall
be made in writing to the Company. In addition, within ten (10) days following
the Company's receipt of an expense statement from Consultant regarding any
expense associated with the automobile located in the State of California,
including, without limitation, gas, oil, maintenance, insurance and taxes,
accompanied, where appropriate, with all original statements for such expenses
and proof of payment, Company shall reimburse Consultant for all such expenses.
Warrants. On the date hereof, Consultant shall be granted a warrant (the
"Warrant") to purchase an aggregate of Fifty Thousand (50,000) shares of Class A
Common Stock of Interiors, at the average closing market price of such shares
for the five (5) trading days after the effective date of this Agreement. In
addition, Consultant shall have the right to grant to employees of the Company
an aggregate of Forty Thousand (40,000) warrants to purchase shares of Class A
Common Stock of Interiors on terms and conditions substantially identical to the
terms and conditions of the Warrant. Such grant(s) shall be made within 30 days
of the date hereof.
The foregoing consulting fee, benefits, expense allowances and warrants shall be
Consultant's sole compensation for all services rendered by Consultant
hereunder.
4. Expenses. The Company shall reimburse Consultant for expenses incurred
by him during the term of this Agreement (including travel-related expenses) in
the performance of his duties as a consultant for the Company; provided,
however, that the Company shall not be obligated to reimburse Consultant for any
expenses which have not been approved in advance by the Company.
5. Use of Automobile and Condominium. Consultant hereby agrees that (i) the
automobile designated by Consultant for use in the State of California pursuant
to Section 3.2(d) hereof and (ii) the condominium designated by Consultant
pursuant to Section 3.2(c) hereof shall, during the term hereof, be made
available for use by ▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇ and such other senior executives
of the Company and Interiors as Consultant shall approve of in advance when not
in use by Consultant. Consultant shall have no obligation to maintain the
condominium or the automobile referred to in this Section 5, and at such time as
either or both are sold, the rights granted pursuant to this Section 5 shall
lapse with respect to such one or both of them that has or have been sold. In
any event the Company and Interiors agree to indemnify, reimburse and hold
Consultant and the owner or owners of such automobile and condominium harmless
from any and all damages and/or liability to the extent such damages and/or
liability arise from the use of such automobile or condominium by ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇, and such other senior executives of the Company and Interiors to
the extent such damages and/or liability are not covered by any policy of
insurance maintained by the Company, Interiors, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, any such
senior executive, or Consultant.
6. Guaranty of Obligations. Interiors hereby irrevocably and
unconditionally guarantees to Consultant full and indefeasible payment of the
obligations of the Company to Consultant under this Agreement (the "Guaranteed
Obligations"). In the event that the Company fails to timely make any payment of
any Guaranteed Obligations, Interiors shall promptly cause such payment to be
made.
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7. Termination.
7.1 Termination for Cause. Consultant understands and agrees that this
Agreement may be terminated by the Company for "cause" upon written notice to
Consultant in the manner set forth in Section 10.3 below. "Cause" shall mean
willful misconduct on the part of Consultant, which shall include only (i) fraud
with respect to the Company or Interiors occurring after the date of this
Agreement and (ii) conviction of a felony or theft. In the event of any
termination pursuant to this Section 7.1, the obligations of Consultant under
Section 8 hereof shall expressly survive such termination unless there is a
Default under either of the Promissory Notes, in which case the provisions of
Section 8 hereof shall lapse and be of no further force or effect upon the
occurrence of such Default.
7.2 Death. In the event of the death of Consultant during the Term, the
Company shall pay, or cause to be paid, to any one or more beneficiaries
designated by Consultant pursuant to notice to the Company or, failing such
designation, to Consultant's estate, the fees provided for herein through the
date on which Consultant's death occurs plus an amount equal to the lesser of
the amount that would have been payable to Consultant for the twelve (12) months
following Consultant's death if the remaining term of this Agreement is in
excess of twelve (12) months or the aggregate amount that would have been
payable to Consultant for the remainder of the term of this Agreement pursuant
to Section 3.1 of this Agreement.
7.3 Disability. In the event that Consultant shall become, by reason of
physical or mental disability, incapable of performing his duties and services
in accordance with the provisions of this Agreement, and such incapacity(ies)
shall continue for a period of sixty (60) days, the Company shall have the right
to terminate this Agreement by giving him written notice of such termination
and, thereafter, this Agreement shall immediately terminate. In the event of
such termination, the Company shall continue to pay, or cause to be paid, to
Consultant the fees provided for herein through the date such termination occurs
plus an amount equal to the lesser of the amount that would have been payable to
Consultant for the twelve (12) months following Consultant's termination if the
remaining term of this Agreement is in excess of twelve (12) months or the
aggregate amount that would have been payable to Consultant for the remainder of
the term of this Agreement pursuant to Section 3.1 of this Agreement.
7.3 Termination by Consultant.This Agreement may be terminated immediately
by Consultant upon written notice to the Company in the manner set forth in
Section 10.3 below. In the event of such termination, the Company shall have no
further obligation to compensate Consultant under this Agreement and Consultant
shall have no further obligations to the Company or Interiors hereunder.
7.4 Termination Upon Buyout. On or prior to December 31, 1998, the Company
shall have the right, but not the obligation, to terminate this Agreement by
paying to Consultant on or before such date the sum of Five Hundred Twenty-Five
Thousand Dollars ($525,000) plus all amounts then due but unpaid; provided,
however, that the Company may not exercise its rights pursuant to this Section
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7.5 Unless Interiors has repurchased the Buyer Shares pursuant Section 8.13
of the Stock Purchase Agreement. In the event of such payment and termination,
the Company shall have no further obligation to compensate Consultant under this
Agreement, including, without limitation, continuance of the benefits provided
for in Section 3 hereof and Consultant shall have no further obligations to the
Company or Interiors hereunder.
7.6 Certain Liability of Interiors. In the event of a Default under either
of the Promissory Notes, Interiors shall forthwith assume and become primarily
liable for all obligations of the Company hereunder, including without
limitation, all compensation and benefits provided for in Section 3 hereof until
Interiors has signed all documents and taken all actions reasonably required to
allow Bentley to reacquire all of the outstanding stock of Windsor free and
clear of all liens and encumbrances.
7.7 No Additional Compensation. Except as expressly provided in this
Section 7, Consultant acknowledges and agrees that he will not be entitled to
any additional compensation as a result of the termination of this Agreement or
his services hereunder.
7.8 Effect of Termination. Upon termination or expiration of this
Agreement, Consultant shall immediately surrender to the Company all lists,
books, records, materials and documents, together with all copies thereof, and
all other property in his possession or under his control, relating to or used
in connection with the past or present business of the Company, or any affiliate
or subsidiary of the Company. Consultant acknowledges and agrees that all such
lists, books, records, materials and documents, including without limitation
compilations or collections of suppliers', contractors', employees' and
customers' names and addresses, are the sole and exclusive property of the
Company.
8. Nondisclosure; Ownership and Protection of Proprietary Rights.
8.1 Nondisclosure. Consultant understands and agrees that, in the course of
his relationship with the Company, he may acquire confidential information and
trade secrets concerning the Company's operations, future plans, methods of
doing business, projected and historical sales, marketing, costs, production,
growth and distribution, and that it would be extremely damaging to the Company
if such information were disclosed to a competitor or made available to any
other person or corporation. In view of the nature of the consulting
relationship with the Company contemplated herein, Consultant agrees that,
during the term of this Agreement and thereafter, any and all confidential
information, including, without limitation, any customer lists, customer
information or addresses, trade secrets, prices being charged, information
relating to governmental relations, discoveries, practices, processes, methods
or products, whether patentable or not, concerning the business of the Company
or any confidential information concerning or relating to any former or existing
suppliers, contractors, employees or customers of the Company or any corporation
or business entity that is controlling, controlled by, under common control with
or otherwise affiliated with the Company (collectively, the "Customers"), with
respect to the past, present or future business of the Company, or any affiliate
or subsidiary of the Company or any secret, proprietary or confidential
information concerning or relating to the past, present or future business of
the Company, or any affiliate or subsidiary of the Company
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(collectively, "Confidential Information") that Consultant has acquired or may
acquire from any such corporation or business entity or the Company, shall be
maintained by him in confidence and shall not be disclosed or divulged to any
third party without the prior written consent of the Board of Directors of the
Company. Consultant further agrees that he will not utilize such Confidential
Information on his own behalf or on behalf of others at any time during the term
of this Agreement or thereafter. Consultant agrees that he will not divert or
attempt to divert any of the customers or do any act to impair, prejudice or
destroy the goodwill of the Company with the Customers. The Consultant and the
Company acknowledge that they have entered into and agreed to be bound by a
Noncompetition, Nondisclosure, Nonsolicitation and Intellectual Property
Agreement, dated of even date herewith.
8.2 Ownership of Intellectual Property. Consultant acknowledges and agrees
that all intellectual property (including without limitation all ideas,
concepts, inventions, plans, developments, software, data, configurations,
materials (whether written or machine-readable), designs, drawings,
illustrations and photographs, which may be protectable, in whole or in part,
under any patent, copyright, trademark, trade secret or other intellectual
property law), developed, created, conceived, made or reduced to practice during
the term of this Agreement which (a) relate to the current, future or potential
business of the Company, (b) result from the duties or work performed by
Consultant hereunder, or (c) are developed during working time or using the
Company's equipment, supplies, facilities, resources, materials or information,
shall be the sole and exclusive property of the Company and Consultant shall and
hereby does assign all right, title and interest in and to such intellectual
property to the Company.
8.3 Nonsolicitation. Because Consultant's solicitation of the Customers of
the Company, or any affiliate of the Company, under certain circumstances would
necessarily involve the use or disclosure of Confidential Information,
Consultant shall not, either directly or indirectly, at any time during the term
of this Agreement and for a period of three (3) years from the date of
termination or expiration of this Agreement (a) call on, solicit or take away,
or attempt to call on, solicit or take away, any past or present Customers of
the Company, or any affiliate of the Company, (b) employ, hire or solicit the
employment of any person employed by the Company, or any affiliate of the
Company, (c) do any act to impair, prejudice or destroy the goodwill of the
Company, or any affiliate of the Company, or to prejudice or impair the
relationship or dealing between the Company, or any affiliate of the Company,
and the Customers or (d) assist any other person, firm or corporation in any
such acts; provided that Consultant's post-termination obligations under this
Section 8.3 shall not apply if this Agreement is terminated by Consultant as a
result of an uncured, material breach of this Agreement by the Company or
bankruptcy of the Company; and further provided, however, that ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
(i) shall be permitted to serve as a director of Bentley, (ii) may be solicited
by Bentley or Consultant to become a full-time employee of Bentley after January
1, 1999 and (iii) may be hired as a full-time employee of Bentley only upon
ninety (90) days' written notice to Company.
8.4 Noncompetition. Consultant shall not, at any time during the term of
this Agreement, be or become (a) interested or engaged in any manner, directly
or indirectly, in any county and/or city in the United States of America or any
county or political subdivision in any state or country in the world, either
alone or with
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any person, firm or corporation now existing or hereafter created, in any
business, trade or other enterprise substantially similar to or which is or may
be directly or indirectly competitive with the past, present or future business
of the Company or Interiors (as such business relates to the manufacture and
sale of decorative accessories) (the "Business") or (b) directly or indirectly,
a stockholder, bondholder or officer, director or employee of, or in any manner
associated with, or aid or abet or give information or financial assistance to
any business which is or may be competitive with the Business; provided that
nothing contained in this Section 8.4 shall prevent Consultant from acquiring or
holding, as a passive investment, not more than five percent (5%) of the
outstanding capital shares of any publicly held corporation engaged in such
business. Consultant represents and warrants that as of the date hereof,
Consultant does not own more than five percent (5%) of the outstanding capital
shares of any publicly held corporation engaged in a business which is or may be
competitive with the Business other than Bentley International, Inc., which upon
the sale of Company to Interiors on the date hereof shall cease to be engaged in
a business which is or may be competitive with the Business.
8.5 Survival. Subject to the following provisions, the provisions of this
Section 8 shall survive the termination of this Agreement, irrespective of the
reason therefor; provided, however, that in the event of a Default under either
of the Promissory Notes, the above provisions of this Section 8 shall lapse and
be of no further force or effect.
8.6 Relief. Consultant acknowledges that (a) the services to be rendered by
him are of a special, unique and extraordinary character and it would be very
difficult or impossible to replace such services, (b) the provisions of Section
8 are reasonable and necessary to protect the legitimate interests of the
Company, (c) the restrictions contained in Section 8 will not prevent Consultant
from earning or seeking a livelihood, (d) the restrictions contained in Section
8 shall apply in all areas where such application is permitted by law and (e)
any violation of this Agreement by Consultant would result in irreparable harm
to the Company. Accordingly, Consultant consents and agrees that, if he violates
any of the provisions of this Agreement, the Company shall be entitled to, in
addition to other remedies available to it, an injunction to be issued by any
court of competent jurisdiction restraining him from committing or continuing
any violation of this Agreement, without the need to post any bond or for any
other undertaking, including without limitation proving the inadequacy of money
damages.
8.7 In the event that the whole or any part of the provisions of Section 8
hereof shall be determined to be invalid by reason of the extent, duration,
scope or other provision set forth therein, the extent, duration, scope or other
provision of that section shall be reduced so as to cure such invalidity and in
its reduced form the provisions of Section 8 shall be enforceable in the manner
contemplated hereby. Subject to the provisions of Section 8.5, the provisions of
this Section 9 shall survive the termination of this Agreement, irrespective of
the reason therefor.
9. Miscellaneous.
9.1 Waiver of Breach. Neither party's failure to enforce any provision or
provisions of this Agreement shall be deemed or in any way construed as a waiver
of any such provision or provisions, nor prevent that party thereafter from
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enforcing each and every provision of this Agreement. The rights granted the
parties herein are cumulative and shall not constitute a waiver of any party's
right to assert all other legal remedies available to it under the
circumstances.
9.2 Successors; Assigns. The Company shall be entitled to assign its rights
and obligations hereunder. Consultant shall not assign any of his rights or
obligations under this Agreement without the prior written consent of the Board
of Directors of the Company. Subject to the foregoing, the provisions of this
Agreement shall be binding upon and inure to the benefit of the heirs, legal
representatives, executors, successors and assigns of Consultant and the
Company.
9.3 Notices. All notices and other communications which are required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to be sufficiently given (a) if delivered personally, upon delivery and
(b) if delivered by registered or certified mail (return receipt requested),
postage prepaid, upon the earlier of actual delivery or upon three (3) days
after being mailed, in each case to Consultant or the Company at the address set
forth at the beginning of this Agreement. Either party may, by notice given
hereunder, designate any further or different address to which subsequent
notices or other communications shall be sent.
9.4 Severability. If any term or provision of this Agreement is held to be
void or unenforceable by any court of competent jurisdiction, only that
objectionable term or provision shall be deleted herefrom while the remainder of
the term, provision and agreement shall be enforceable.
9.5 Governing Law. Each party hereto irrevocably submits to the
jurisdiction of the courts of the State of Missouri and the United States
District Court for the Eastern District of Missouri for the purpose of any suit,
action, proceeding or judgment relating to or arising out of this Agreement and
the transactions contemplated hereby and to the laying of venue in any such
court. Each party hereto irrevocably waives any claim that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum. This Agreement shall be governed by and construed in accordance with the
internal, substantive laws of the State of Missouri.
9.6 Attorneys' Fees. In the event any litigation or other proceeding
("Proceeding') is initiated by any party against any other party to enforce,
interpret or otherwise obtain judicial or quasi-judicial relief in connection
with this Agreement, the prevailing party or parties in such proceeding shall be
entitled to recover from the unsuccessful party or parties all costs, expenses
and reasonable attorneys' fees relating to or arising out of such Proceeding
(whether or not the Proceeding results in a judgment), including any
post-judgment or post-award Proceeding, including, without limitation, one to
enforce any judgment or award resulting from any such Proceeding. Any such
judgment or award shall contain a specific provision for the recovery of all
such subsequently incurred costs, expenses and reasonable attorneys fees.
9.7 Counterparts. This Agreement may be executed simultaneously in two (2)
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one (1) and the same instrument. Furthermore,
facsimiles of signatures may be taken as the actual signatures, and each party
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agrees to furnish the other with documents bearing the original signatures
within ten (10) days of the facsimile transmission.
9.8 Complete Agreement; Amendments. This Agreement contains the entire
understanding between the parties hereto with respect to the subject matter
hereof and supersedes any prior agreements and understandings relating thereto.
This Agreement may not be waived, changed, modified, extended or discharged
orally, but only by a written instrument signed by the party against whom
enforcement of any waiver, change, modification, extension or discharge is
sought.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the day and year first above written.
The "Company'
WINDSOR ART, INC.
By:_________________________________
An Authorized Officer
"Consultant"
___________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
"Interiors"
INTERIORS, INC.
By:_________________________________
An Authorized Officer
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