EXHIBIT 99.10
CONSULTING AGREEMENT
THIS CONSULTING 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 XXXX X. XXXXXX ("Consultant").
WITNESSETH:
WHEREAS, the Company desires to engage Consultant and Consultant
desires to accept such engagement by the Company upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. ENGAGEMENT. Subject to the other terms and conditions of this
Agreement, the Company hereby agrees to engage Consultant to provide various
consulting services to the Company relating to the business of the Company as
set forth herein, and Consultant hereby agrees to be so engaged 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,
Consultant's engagement with the Company shall thereafter be subject to
termination by either party at any time and regardless of cause.
2. RESPONSIBILITIES OF ENGAGEMENT. During the term of Consultant's
engagement, Consultant shall diligently and faithfully serve the Company in such
capacity as may be requested by the President or the Board of Directors of the
Company and perform such other duties, assignments and responsibilities as the
Company may request from time to time.
3. COMPENSATION; STOCK OPTIONS; REIMBURSEMENT FOR EXPENSES.
(a) During the term of Consultant's engagement pursuant to this
Agreement, the Company shall pay to Consultant as basic compensation for his
services hereunder a consulting fee of Fifty-Two Thousand Dollars ($52,000.00)
per year, payable in fifty-two (52) weekly installments.
(b) Consultant 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 Consultant, at no
cost to Consultant, options to purchase the corresponding number of
shares of Common Stock of the Company (the "1999 Options") at an
exercise price of $.0438 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
$3,000,000 312,000
$4,500,000 312,000
$6,000,000 312,000
$7,500,000 312,000
$9,000,000 312,000
If and when the Company grants the 1999 Options to the Consultant, 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 Consultant (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
Consultant, at no cost to Consultant, 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
Consultant (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
Consultant, at no cost to Consultant, 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 Consultant.
(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 or consultants of publicly-held
companies. Notwithstanding the foregoing, such options shall be
exercisable for a 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 Consultant has received hereunder will immediately vest upon
a Change in Control of the Company. "Change of Control" as used herein
means the 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 assignees.
(c) In consideration of Consultant's execution of this Agreement,
the Company hereby sells to Consultant a warrant to purchase 937,000 shares of
Common Stock of the Company at the Exercise Price. Consultant may exercise this
warrant, in part or in full, at
2
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. The payment for such warrant shall be in cash.
(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) Consultant shall be entitled to be reimbursed for all reasonable
and necessary out-of-pocket expenses incurred by Consultant 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 Consultant for all such expenses following presentation by
Consultant, from time to time, of an itemized accounting and appropriate
substantiation of such expenditures.
4. NO EMPLOYMENT INTENDED. The parties agree as follows:
(a) Consultant shall render services as an independent contractor
and not as an employee of the Company.
(b) Consultant shall have no authority in his capacity as consultant
to act or to purport to act for the Company, to represent himself to any third
party as being an employee or agent of the Company for any purpose whatsoever,
to bind the Company in any way, or to commit the Company to any liability or
obligation whatsoever, except as provided for herein or otherwise granted in
writing from time to time by the Company concerning specific matters.
(c) The Company shall not provide any vacation pay, sick leave,
retirement benefits, worker's compensation insurance, health, accident or
liability insurance, or any other employee benefits to Consultant. In addition,
the Company shall not pay on behalf of Consultant any contribution to
unemployment insurance or withholding taxes, nor provide or allow for the
participation by Consultant in any other compensation, contributions or benefits
that might be expected in an employer-employee relationship. Consultant shall
report and pay any and all of his required contributions for taxes, unemployment
insurance and other benefits.
(d) In the event that any state department of revenue, Internal
Revenue Service or any other taxing authority at any time questions the
independent contractor status of Consultant, each party agrees that he or it
will notify the other party and will involve the other party, to the extent
possible, in any and all discussions and negotiations that may be held with the
representatives of such taxing authority.
(e) Consultant shall exercise his independent professional judgment
in performing his services to the Company. The Company shall neither have nor
exercise any control or direction over the methods by which Consultant exercises
his professional judgment.
3
5. COVENANT NOT TO COMPETE. Consultant 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 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, Consultant hereby agrees that during the term hereof and
for a period of one (1) year from the date after termination of Consultant's
engagement by the Company and this Agreement's termination, Consultant shall
not, except as provided for herein in Section 2, directly or indirectly, to the
furthest extent permitted by law:
(a) except for serving as President of the Plastics Division of
Durobag Manufacturing Company, 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 engagement 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 5.
(e) If any provision or part of this Section 5 is held to be
unenforceable because of the duration of such provision or the area covered
thereby, Consultant 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.
6. EQUITABLE REMEDIES. Consultant acknowledges and agrees to the
fairness, applicability, scope and nature of the covenants set forth in Sections
5, 8 and 9 hereof, and
4
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. Consultant 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, shall not be deemed a waiver of such
violation or limitation upon the Company's rights as set forth in this Section.
7. CONSULTANT ALTERNATIVE SERVICES. Consultant represents and warrants
to the Company that, in the event of enforcement of the provisions of Sections
5, 6, 7, 8 and 9 hereof, Consultant's experience, capabilities and prospects are
such that Consultant can obtain employment that will not cause Consultant 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 Consultant from
earning a livelihood.
8. TRADE SECRETS AND CONFIDENTIAL INFORMATION.
(a) Consultant hereby covenants and agrees that he will not, except
as may be required in connection with his engagement with the Company, directly
or indirectly, use or disclose to any other person or entity, whether during or
subsequent to the term of his engagement by the Company, irrespective of the
time, manner or cause of the termination of his engagement, 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 Consultant shall prepare, use, construct or observe, shall be and remain
the sole property of the Company, and upon termination of this Agreement or his
engagement hereunder or otherwise with the Company for any reason, Consultant
shall return to the possession of the Company any items of that nature and any
copies thereof which he may have in his possession.
9. 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 Consultant while he is engaged 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 Consultant in connection therewith.
5
(b) Consultant 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 engagement by the Company, either solely or jointly
with others. Upon request of the Company, Consultant will execute and deliver,
at the expense 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.
10. TERMINATION. Upon termination of Consultant's engagement by the
Company, by Consultant or upon the death or disability of Consultant, the rights
of Consultant shall be as follows:
(a) DEATH OR DISABILITY OF CONSULTANT; TERMINATION BY CONSULTANT. If
Consultant dies while engaged by the Company, if Consultant's engagement is
terminated by the Company due to Consultant's disability (as defined in
Subparagraph (d) hereinbelow), or if Consultant elects to terminate his
engagement hereunder, this Agreement shall immediately terminate without any
further obligation on the part of the Company to Consultant, including, without
limitation, no obligation to pay Consultant any fees or other benefits, except
that the Company shall pay to Consultant or his Beneficiary (as hereinafter
defined in Subparagraph (e)) only such fee pursuant to Section 3 hereof as may
be accrued and unpaid on the date of such death, disability or termination of
engagement.
(b) TERMINATION BY THE COMPANY FOR CAUSE. If Consultant's engagement
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 Consultant any fee or other
benefits, except that the Company shall pay to Consultant only such fee pursuant
to Section 3 hereof as may be accrued and unpaid on the date of such termination
of engagement. For purposes of the foregoing, "cause" shall mean any of the
following (i) willful failure or neglect of Consultant 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 Consultant, (iii) self-dealing by Consultant 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) Consultant'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 Consultant in the conduct of his engagement hereunder, or
(vi) any material breach of this Agreement by Consultant.
(c) TERMINATION BY THE COMPANY FOR OTHER REASONS. The Company shall
have the right at any time to terminate Consultant's engagement hereunder for
any reason by giving him written notice (which shall fix the date as of which
his engagement is to terminate) of its intention to do so. If Consultant's
engagement hereunder is terminated by the Company other than for cause or by
reason of Consultant's death or disability, the Company shall be obligated to
pay Consultant only his fee pursuant to Section 3 hereof until the first to
occur of the following: (i) the end of the stated term of this Agreement; (ii)
Consultant's engaging in any engagement, business, or other activity, directly
or indirectly, which does or would constitute a violation of the provisions of
Section 5 hereof (whether or not the provisions of said Section 5 may have
6
ceased to be operative and/or effective for any reason); (iii) Consultant's
death or disability; or (iv) any discovery of embezzlement or improper use of
corporate funds by Consultant, 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.
(d) DEFINITION OF DISABILITY. For purposes of the foregoing, the
term "disability" shall mean Consultant'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)
Consultant 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 Consultant or refuses to accept the benefits hereunder,
then the term "Beneficiary" shall mean the estate of Consultant.
(f) CONTINUING OBLIGATIONS OF CONSULTANT. Notwithstanding anything
to the contrary contained herein, termination of this Agreement or Consultant's
engagement, whether for cause, by reason of disability, by Consultant or
otherwise, shall not be deemed in any way to affect Consultant's obligations
under Section 5 through and including Section 10 of this Agreement, with respect
to which he shall remain bound.
11. 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.
12. 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.
13. 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.
14. 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 Consultant, but shall be binding upon and inure to the benefit of
the successors and assigns of the Company.
7
15. 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:
______________________; and (ii) if to Consultant, addressed to: Xxxx X. Xxxxxx,
__________________________________________; 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.
16. CHOICE OF FORUM AND VENUE. CONSULTANT 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. CONSULTANT AND THE COMPANY HEREBY
CONSENT AND SUBMIT TO THE JURISDICTION OF ANY SUCH STATE OR FEDERAL COURT
LOCATED WITHIN SUCH COUNTY. CONSULTANT 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.
17. 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]
8
IN WITNESS WHEREOF, the parties hereto have executed this Consulting
Agreement as of the day and year first written above.
CONSULTANT BPI PACKAGING TECHNOLOGIES, INC.
------------------------ By:
XXXX X. XXXXXX ------------------------------
Title:
---------------------------
