EXHIBIT 10.75
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is made and entered into as
of the 14th day of March, 2003, by and between CLUNET X. XXXXX, an individual
resident of the State of Michigan ("Consultant"), and VERSO TECHNOLOGIES, INC.,
a Minnesota corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Company wishes to engage Consultant to provide to the
Company certain consulting services, as more particularly described herein, and
Consultant desires to render such consulting services to the Company, on the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and of the promises
and agreements hereinafter set forth, the parties hereto, intending to be
legally bound, do hereby agree as follows:
SECTION 1. DUTIES. Consultant hereby agrees, during the Term (as
hereinafter defined), to provide up to twenty (20) hours of consulting services
per calendar month to the Company on such matters pertaining to the Company's
business as may, from time to time, be reasonably requested of Consultant by the
Company; provided, however, that such services shall be limited to
executive-level services comparable in scope to those previously performed by
Consultant for or on behalf of the Company. In this regard, Consultant shall be
available throughout the Term at reasonable times, and upon reasonable notice,
to meet, in person or via telephone, with the Company, for the purposes of
providing such consulting services; provided, however, that (i) the foregoing
shall not be deemed to restrict Consultant from engaging in any part or
full-time employment with, or providing consulting services to, someone other
than the Company; and (ii) if Consultant is required to meet any place other
than his residence, then he shall be entitled to be reimbursed for his
reasonable travel expenses in accordance with Section 4.3 below, and in no event
shall Consultant be required to travel more than two (2) days per calendar
month. At the Company's request, Consultant may, but shall not be obligated to,
consult for more than twenty (20) hours per calendar month, in which event
Consultant shall receive no additional compensation for such additional
consulting services, but such additional consulting time shall be credited to
(and shall thereupon satisfy the portion of) the 20-hour requirement on an
hour-for-hour basis for the next succeeding calendar month or months (as
necessary to give full credit for such additional consulting time).
SECTION 2. TERM. The term of this Agreement shall commence on the date
hereof and continue until September 14, 2005 (the "Term").
SECTION 3. TERMINATION. This Agreement may be
terminated prior to the expiration of the Term upon the occurrence of any of the
following events:
(a) the mutual written agreement of the parties
hereto to terminate this Agreement; or
(b) the Company's termination of Consultant
hereunder, upon written notice to
Consultant, for "good cause," which shall
exist (i) if Consultant fails to cure any
material breach of Consultant's duties or
obligations under this Agreement within
thirty (30) days after written notice of the
same from the Company; (ii) if Consultant is
convicted of (from which no appeal may be
taken), or pleads guilty to, any act of
fraud, misappropriation or embezzlement; or
(iii) if, in the good faith determination of
the Board of Directors of the Company,
Consultant has engaged in conduct or
activities materially and demonstrably
damaging to the business of the Company (it
being understood that neither conduct nor
activities pursuant to Consultant's exercise
of his good faith business judgment nor
unintentional physical damage to property by
Consultant shall be grounds for such a
determination by the Board of Directors of
the Company); provided, however, that this
Agreement shall not be terminated pursuant
to this Section 3(b)(iii) unless and until
there shall have been delivered to
Consultant a copy of the resolution duly
adopted by the affirmative vote of not less
than a majority of the entire membership of
the Company's Board of Directors at a
meeting called and held for such purpose
(after reasonable notice is provided to
Consultant and Consultant is given an
opportunity, together with counsel, to be
heard before such Board of Directors),
finding that, in the good faith
determination of such Board of Directors,
Consultant has engaged in such conduct or
activities, and specifying such conduct or
activities in reasonable detail.
SECTION 4. COMPENSATION AND RELATED MATTERS.
4.1 COMPENSATION. In consideration for
the consulting services hereunder, the Company shall deliver to Consultant a
number of shares of the Company's common stock ("Common Stock") on the dates and
in the amounts determined as follows (collectively, the "Shares"):
A. On January 21, 2004: a number of Shares
equal to $64,145 divided by the Average
Price (as hereafter defined);
B. On January 21, 2005: a number of Shares
equal to $64,145 divided by the Average
Price; and
C. On January 21, 2006: a number of Shares
equal to $32,073 divided by the Average
Price.
-2-
"Average Price" for each of the dates specified above shall mean the arithmetic
average of the daily closing price per share of Common Stock as reported on The
Nasdaq Stock Market ("Nasdaq") for each of the twenty (20) trading days prior to
(and not including) the date specified. Notwithstanding the foregoing, in the
Company's sole discretion, the Company may pay any portion of the consideration
set above in cash (rather than in the form of shares of Common Stock) in an
amount equal to the number of shares times the Average Price, times 85% (e.g.,
if 50% of the first payment under this Agreement is to be paid in the form of
cash and 50% is to be paid in the form of shares of Common Stock, then the cash
portion of such total payment would be equal to 0.85 multiplied by 0.50
multiplied by $64,145 (or expressed mathematically, cash portion = .85 x (.50 x
$64,145)).
4.2 NO BENEFITS. Consultant shall not be entitled to
participate in, or receive any benefits under, any welfare benefit plan or
program (including, without limitation, medical, dental, disability, group life
and business travel insurance plans and programs), any retirement savings plan
or program (including, without limitation, 401(k) and pension plans) or any
other fringe benefit program of the Company currently in effect or as the
Company may, from time to time, hereafter adopt and implement for the benefit of
the Company's employees. The foregoing shall not affect the continuing effect of
existing options previously granted by the Company to Consultant.
4.3 OUT-OF-POCKET EXPENSES. Consultant shall be entitled
to receive reimbursement for all reasonable expenses incurred in connection with
the fulfillment of Consultant's duties hereunder upon presentation of
appropriate vouchers therefor, provided that Consultant has complied with all
policies and procedures relating to the reimbursement of such expenses as shall,
from time to time, be reasonably established by the Company and consistently
applied.
SECTION 5. MISCELLANEOUS.
5.1 BINDING EFFECT. This Agreement shall inure to the
benefit of and shall be binding upon Consultant, Consultant's executor,
administrator, heirs, personal representatives and assigns, and the Company and
its successors and assigns; provided, however, that the obligations and duties
of Consultant may not be assigned or delegated.
5.2 GOVERNING LAW. This Agreement shall be deemed to be
made in, and in all respects shall be interpreted, construed and governed by and
in accordance with, the laws of the State of Michigan, without giving effect to
any conflicts of laws principles.
5.3 INVALID PROVISIONS. The parties herein hereby agree
that the agreements, provisions and covenants contained in this Agreement are
severable and divisible, that none of such agreements, provisions or covenants
depends upon any other provision, agreement or covenant for its enforceability,
and that each such agreement, provision and covenant constitutes an enforceable
obligation between the Company and Consultant. Consequently, the parties hereto
agree that neither the invalidity nor the unenforceability of any agreement,
provision or covenant of this Agreement shall affect the other agreements,
provisions
-3-
or covenants hereof, and this Agreement shall remain in full force and effect
and be construed in all respects as if such invalid or unenforceable agreement,
provision or covenant were omitted.
5.4 HEADINGS. The section and paragraph headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
5.5 NOTICES. All communications provided for hereunder
shall be in writing and shall be deemed to be given when delivered in person or
deposited in the United States mail, first class, registered mail, return
receipt requested, with proper postage prepaid, and
If to Consultant, addressed to:
Clunet X. Xxxxx
00000 X. Xxxxxxxx Xxx
Xxxxxxxxxx, Xxxxxxx 00000
If to the Company, addressed to:
Verso Technologies, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn.: Xxxxxx X. Xxxxxxx
or at such other place or places or to such other person or persons as shall be
designated in writing by the parties hereto in the manner provided above for
notices.
5.6 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
5.7 WAIVER OF BREACH. No act, event or circumstance shall
be a breach of this Agreement by Consultant (or a reason for termination under
Section 3(b)(iii) hereof) unless the Company shall have given Consultant written
notice of such act, event or circumstance specifying in reasonable detail the
breach occasioned thereby (a "Breach Event") and Consult fails to cure or
discontinue such Breach Event within thirty (30) days of the date of such
notice; provided, however, that the Company shall not be obligated to give any
such notice to Consultant with respect to, and Consultant shall have no right to
cure or discontinue, any Breach Event that is the same or substantially the same
as any Breach Event as to which the Company has previously given notice to
Consultant. The waiver by the Company of a breach of any provision, agreement or
covenant of this Agreement by Consultant shall not operate or be construed as a
waiver of any prior or subsequent breach of the same or any other provision,
agreement or covenant by Consultant.
-4-
5.8 AMENDMENT. This Agreement may not be amended,
modified or supplemented except by written agreement of the parties hereto.
5.9 ARBITRATION. Any controversy or claim arising out of
or relating to this Agreement, or the breach thereof, shall be settled by
arbitration in Southfield, Michigan in accordance with the commercial
arbitration rules of the American Arbitration Association then in effect. If the
arbitrator in that certain arbitration proceeding before the American
Arbitration Proceeding (Case No. 54-199-002862) to which Consultant and the
Company, among others, are parties (the "Proceeding") is available and willing
to serve as arbitrator with respect to any such controversy or claim, then he
shall be the arbitrator for any such controversy or claim. If the arbitrator in
the Proceeding is unavailable or unwilling to so serve, then a single arbitrator
shall be selected in accordance with the commercial arbitration rules of the
American Arbitration Association. The decision of the arbitrator shall be final
and binding as to any matter submitted to him under this Agreement, and judgment
on any award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. If the dispute involves the failure of the Company to
issue to Consultant the Shares, then, provided that Consultant prevails in the
arbitration proceeding, (i) the Company shall pay all arbitration fees and all
of Consultant's reasonable costs and attorneys fees associated with the
arbitration of such dispute, and (ii) the measure of damages shall be the
highest closing price of the Shares as reported on Nasdaq during the period
commencing on the date that Shares were scheduled to be issued to Consultant
pursuant to Section 4.1 hereof and the date of the arbitration hearing relating
to such dispute, unless the Company issues to Consultant on or prior to the one
(1) year anniversary of the respective date set forth in Section 4.1 hereof the
number of Shares required to be so issued in accordance with such section and
such Shares have been the registered under the Securities Act of 1933, as
amended, in which event the agreement regarding the measure of damages set forth
in the foregoing clause (ii) shall not apply.
5.10 ENTIRE AGREEMENT. This Agreement constitutes the full
and entire understanding and agreement between the parties with regard to the
subject matter hereof.
5.11 NON-DISCLOSURE OF CONFIDENTIAL INFORMATION AND TRADE
SECRETS.
(A) CONFIDENTIAL INFORMATION; TRADE SECRETS. As
used in this Agreement, the term "Confidential Information" shall mean valuable,
non-public, competitively sensitive data and information relating to the
Company's business or the business of any entity affiliated with the Company,
other than (i) Trade Secrets (as defined below); (ii) information contained in
any publicly available press release, a regulatory filing or other public
communication which is otherwise in the public domain on the date of this
Agreement; (iii) information that hereafter enters the public domain through no
action on the part of Consultant; (iv) information that is known by Consultant
or becomes available to him from a source other than the Company or any of its
affiliates, provided that such information was not obtained as a result of a
breach of any confidentiality obligation by the source of such information; (v)
information that was already in the possession of Consultant prior to the date
hereof and which was not acquired from the Company or any of its affiliates; or
(vi) information obtained from discovery in a legal proceeding, but only to the
extent such information is used in such a proceeding. "Confidential Information"
shall include, among other things, information
-5-
specifically designated as a Trade Secret that is, notwithstanding the
designation, determined by a court of competent jurisdiction not to be a "trade
secret" under applicable law. As used in this Agreement, the term "Trade
Secrets" shall mean information or data of or about the Company or any entity
affiliated with the Company, including, without limitation, technical or
non-technical data, formulas, patterns, compilations, programs, devices,
methods, techniques, drawings, processes, financial data, financial plans,
product plans or lists of actual or potential customers or suppliers, that (i)
derive economic value, actual or potential, from not being generally known to,
and not being readily ascertainable by proper means by, other persons who can
obtain economic value from their disclosure or use; and (ii) are subject of
efforts that are reasonable under the circumstances to maintain their secrecy.
To the extent that the foregoing definition is inconsistent with a definition of
"trade secret" under applicable law, the foregoing definition shall be deemed
amended to the extent necessary to render it consistent with applicable law.
(B) NON-DISCLOSURE. Consultant will be exposed
to Trade Secrets and Confidential Information as a result of the relationship
with the Company as provided in this Agreement. Consultant acknowledges and
agrees that any unauthorized disclosure or use of any of the Trade Secrets or
Confidential Information of the Company would be wrongful and would likely
result in immediate and irreparable injury to the Company. In consideration of
the terms of this Agreement, except as appropriate in connection with the
performance of Consultant's duties and obligations under this Agreement,
Consultant shall not, without the express prior written consent of an executive
officer of the Company, redistribute, market, publish, disclose or divulge to
any other person or entity, or use or modify for use, directly or indirectly, in
any way for any person or entity (i) any Confidential Information during the
Term of this Agreement and for a period of two (2) years after the date of the
termination of this Agreement; and (ii) any Trade Secrets at any time (during or
after the Term of this Agreement) during which such information or data shall
continue to constitute a "trade secret" under applicable law. Consultant agrees
to cooperate with any reasonable confidentiality requirements of the Company.
Consultant shall immediately notify the Company of any disclosure or use of any
Trade Secrets or Confidential Information by Consultant in violation of the
terms hereof of which Consultant becomes aware.
[Signature page follows.]
-6-
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first written above.
/s/ Clunet X. Xxxxx
--------------------------------------
CLUNET X. XXXXX
VERSO TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Its:Executive Vice President and
----------------------------------
Chief Financial Officer
-----------------------------------
-7-
