EXHIBIT 10.5
CONSULTING AGREEMENT
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This Consulting Agreement (this "Agreement") is entered into as of July 16,
1995 among Xxxxx Paper Company, a Pennsylvania corporation ("Xxxxx"), Xxxxxxxx-
Xxxxx Corporation, a Delaware corporation ("Xxxxxxxx-Xxxxx"), and Xxxxxx X.
Xxxxxx (the "Consultant").
WHEREAS, the Consultant has acquired extensive knowledge of and experience
in the business conducted by Xxxxx;
WHEREAS, Xxxxx desires to obtain the benefit of the Consultant's knowledge
and experience by retaining the Consultant, and the Consultant desires to accept
such position, for the term and upon the other conditions hereinafter set forth;
WHEREAS, concurrently herewith, Xxxxxxxx-Xxxxx, Rifle Merger Co. and Xxxxx
are entering into an Agreement and Plan of Merger dated as of the date hereof
(the "Merger Agreement"), pursuant to which Rifle Merger Co. is merging with and
into Xxxxx and Xxxxx is becoming a wholly-owned subsidiary of Xxxxxxxx-Xxxxx;
WHEREAS, the Consultant will cease to be a director and officer of Xxxxx
and of all of its subsidiaries, effective as of the Effective Time of the Merger
(as such terms are defined in the Merger Agreement); and
WHEREAS, concurrently herewith, Xxxxx, Xxxxxxxx-Xxxxx and the Consultant
are entering into a Noncompetition Agreement dated as of the date hereof (the
"Noncompetition Agreement").
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
Xxxxx, Xxxxxxxx-Xxxxx and the Consultant hereby agree as follows:
1. Term of Agreement. Xxxxx hereby engages the Consultant as a
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consultant, subject to the terms and conditions hereof, for the period
commencing at the Effective Time of the Merger and ending on the date which is
the fifth one-year anniversary of the Effective Time of the Merger (the
"Consulting Period"), subject to earlier termination pursuant to Section 6
hereof; provided, however, that this Agreement shall terminate and shall be of
no further force or effect if the Merger Agreement shall be terminated and the
Merger shall not become effective pursuant to the terms thereof.
2. Consulting Services; Expenses. During the Consulting Period, the
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Consultant shall make himself available to
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perform consulting services with respect to the businesses conducted by Xxxxx.
Such consulting services shall be related to such matters as the Chief Executive
Officer of Xxxxxxxx-Xxxxx may designate from time to time, including consulting
services to Xxxxxxxx-Xxxxx'x Board of Directors with respect to the businesses
conducted by Xxxxx. The Consultant shall accommodate to reasonable requests for
the Consultant's consulting services, and shall devote reasonable time and his
reasonable best efforts, skill and attention to the performance of such
consulting services, including travel reasonably required in the performance of
such consulting services. Xxxxx shall reimburse the Consultant for all
necessary travel and other expenses incurred by the Consultant in providing such
consulting services. Xxxxx shall also pay the Consultant, on the Effective Time
of the Merger and on each anniversary date of the Effective Time of the Merger
during the term hereof, the sum of twenty thousand dollars ($20,000), for office
expenses.
3. Independent Contractor. The Consultant shall perform the consulting
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services described in Section 2 hereof as an independent contractor without the
power to bind or represent Xxxxx for any purpose whatsoever. The Consultant
shall not, by virtue of being a consultant hereunder, be eligible to receive any
benefits for which officers or other employees of Xxxxx are eligible at any
time, such as insurance, participation in Company pension plans or other
employee benefits. The Consultant hereby acknowledges his separate
responsibility for all federal and state withholding taxes, Federal Insurance
Contribution Act taxes and workers' compensation and unemployment compensation
taxes, if applicable, and agrees to indemnify and hold Xxxxx and Xxxxxxxx-Xxxxx
harmless from any claim or liability therefor.
4. Compensation. As compensation for the consulting services to be
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performed by the Consultant hereunder, Xxxxx and Xxxxxxxx-Xxxxx shall deliver or
cause to be delivered to the Consultant at the Effective Time of the Merger and
on each of the first four one-year anniversary dates thereof five thousand
(5,000) shares of Common Stock, $1.25 par value, of Xxxxxxxx-Xxxxx (the
"Stock"). Notwithstanding any disability of the Consultant resulting in his
inability to perform consulting services hereunder, the remaining undelivered
Stock payable pursuant to this Agreement shall be delivered by Xxxxx and
Xxxxxxxx-Xxxxx to the Consultant or to his legal representative designated in
writing by the Consultant on the dates such Stock would otherwise have been
delivered hereunder. In the event of the death of the Consultant during the
Consulting Period, the remaining undelivered Stock payable pursuant to this
Agreement shall be delivered by Xxxxx and Xxxxxxxx-Xxxxx within 90 days
following the date of such death as a death benefit to the beneficiary or
beneficiaries designated in writing by the Consultant or, if no beneficiary or
beneficiaries have been so designated, to the Consultant's estate. In the event
of any stock split, stock dividend, recapitalization, reorganization,
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merger, consolidation, combination, exchange of shares or other similar change
in capitalization, the number of shares of Stock thereafter payable pursuant to
this Agreement shall be appropriately adjusted. If any such adjustment would
result in a fractional security being payable pursuant to this Agreement, such
fractional security shall be paid in cash.
5. Registration of Stock. Xxxxxxxx-Xxxxx shall file a registration
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statement with the Securities and Exchange Commission under the Securities Act
of 1933 (the "Securities Act") with respect to the Stock to be delivered
pursuant to this Agreement and shall use its best efforts to cause such
registration statement filed to be declared effective prior to, and remain
effective upon, the delivery of the Stock to the Consultant; provided, however,
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that Xxxxxxxx-Xxxxx may, in its sole discretion, satisfy its obligation pursuant
to this Section 5 by including such Stock within any other coincident
registration statement filed by Xxxxxxxx-Xxxxx under the Securities Act and
which remains effective at the time of delivery of the stock to the Consultant.
All expenses of any registration of the Stock pursuant to this Section 5 shall
be paid by Xxxxx or Xxxxxxxx-Xxxxx.
6. Termination. (a) This Agreement may be terminated at any time by the
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Consultant on thirty (30) days prior written notice to Xxxxx and Xxxxxxxx-Xxxxx.
In the event of such termination by the Consultant, the obligation of Xxxxx and
Xxxxxxxx-Xxxxx to deliver Stock to the Consultant pursuant to Section 4 hereof
shall cease, effective on the date of such termination.
(b) This Agreement may be terminated at any time by Xxxxx or Xxxxxxxx-
Xxxxx upon written notice to the Consultant in the event that the Consultant
shall breach any covenant contained in Section 2 hereof or in Section 2, 5(a) or
6 of the Noncompetition Agreement. In the event of such termination by Xxxxx or
Xxxxxxxx-Xxxxx, the obligation of Xxxxx and Xxxxxxxx-Xxxxx to deliver Stock to
the Consultant pursuant to Section 4 hereof shall cease, effective on the date
of such termination.
(c) At any time after the first one-year anniversary of the Effective Time
of the Merger, Xxxxx or Xxxxxxxx-Xxxxx may terminate this Agreement upon written
notice to the Consultant and upon delivery by Xxxxx and Xxxxxxxx-Xxxxx of all
undelivered Stock and a lump sum payment by Xxxxx representing $20,000 for each
full year of the remaining portion of the Consulting Period and accrued expenses
if any.
(d) This Agreement may be terminated by the Consultant upon ten (10) days'
prior written notice to Xxxxx and Xxxxxxxx-Xxxxx in the event that Xxxxx or
Xxxxxxxx-Xxxxx shall breach any of its obligations under Section 2, 4, 5, 7 or 8
hereof or Section 3, 5(b) or 7 of the Noncompetition Agreement; provided,
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however, that the Consultant shall not be entitled to terminate this Agreement
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pursuant to this Section 6(d) in the event that Xxxxx and Xxxxxxxx-Xxxxx shall
cure any such breach within such ten (10) day period. In the event of such
termination by the Consultant, Xxxxx and Xxxxxxxx-Xxxxx shall deliver all
undelivered Stock payable during the term of this Agreement, and Xxxxx shall pay
all accrued expenses and $20,000 for each full year of the remaining portion of
the Consulting Period, to the Consultant within five (5) business days of such
termination.
7. Expenses. Xxxxx shall promptly pay or reimburse the Consultant for
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all costs and expenses (including, without limitation, court costs and
attorney's fees) incurred by the Consultant as a result of any claim, action or
proceeding (including, without limitation, a claim, action or proceeding by
Consultant against Xxxxx or Xxxxxxxx-Xxxxx to collect amounts due to Consultant
or to otherwise enforce this Agreement) arising out of, or challenging the
validity, advisability or enforceability of, this Agreement or any provision
hereof; provided, however, that no such payment or reimbursement shall be made
to Consultant if Consultant is the plaintiff in such claim, action or proceeding
and a final nonappealable judgment is rendered against Consultant with respect
to all his claims.
8. Indemnification. Xxxxx and Xxxxxxxx-Xxxxx shall defend, indemnify and
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hold Consultant harmless from and against all damages, costs and expenses
(including attorneys' fees) as a result of claims made by third parties arising
out of Consultant's performance of services under this agreement; provided,
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however, that Xxxxx and Xxxxxxxx-Xxxxx shall not indemnify and hold Consultant
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harmless for Consultant's own gross negligence or willful misconduct.
9. Successors; Binding Agreement. This Agreement shall inure to the
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benefit of and be enforceable by the Consultant and by his personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees and by Xxxxx and Xxxxxxxx-Xxxxx and their respective successors and
assigns.
10 . Notices. All notices and other communications required or permitted
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under this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered, when delivered by courier or overnight express
service or five days after having been sent by certified or registered mail,
postage prepaid, addressed (a) if to the Consultant, to the Consultant's address
set forth in the records of the Company, or if to Xxxxx or Xxxxxxxx-Xxxxx, to
Xxxxx X. Xxxxxxx, Chairman of the Board and Chief Executive Officer, 000 Xxxxxx
Xxxxx, Xxxxxx, Xxxxx 00000, with a copy to O. Xxxxxx Xxxxxxxx, Senior Vice
President - Law and Government Affairs, 000 Xxxxxx Xxxxx, Xxxxxx, Xxxxx 00000,
or (b) to such other address as any party may have furnished to the other
parties in writing in accordance herewith,
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except that notices of change of address shall be effective only upon receipt.
11. Guaranty. Xxxxxxxx-Xxxxx hereby guarantees the payment of all amounts
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payable by Xxxxx pursuant to this Agreement.
12. Governing Law; Validity. The interpretation, construction and
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performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware without regard to the
applicable principles of conflicts of laws. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any of the other provisions of this Agreement, which other
provisions shall remain in full force and effect.
13. Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
14. Miscellaneous. No provision of this Agreement may be modified or
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waived unless such modification or waiver is agreed to in writing and executed
by the Consultant and by a duly authorized officer of Xxxxx and of Xxxxxxxx-
Xxxxx. No waiver by any party hereto at any time of any breach by another party
hereto of, or failure to comply with, any condition or provision of this
Agreement to be performed or complied with by such other party shall be deemed a
waiver of any similar or dissimilar conditions or provisions at the same or at
any prior or subsequent time. Failure by the Consultant, Xxxxx or Xxxxxxxx-
Xxxxx to insist upon strict compliance with any provision of this Agreement or
to assert any right which the Consultant, Xxxxx or Xxxxxxxx-Xxxxx may have
hereunder shall not be deemed to be a waiver of such provision or right or any
other provision of or right under this Agreement.
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IN WITNESS WHEREOF, each of Xxxxx and Xxxxxxxx-Xxxxx has caused this
Agreement to be executed by its duly authorized officer and the Consultant has
executed this Agreement as of the day and year first above written.
Xxxxx Paper Company
By
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Xxxxxxxx-Xxxxx Corporation
By
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CONSULTANT:
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Xxxxxx X. Xxxxxx
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