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EXHIBIT (c)(5)
CONSULTING AND NON-COMPETITION AGREEMENT
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The parties agree as follows:
RECITALS
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Consultant is currently employed by Duplex in the position of President.
Consultant and Duplex previously entered into the Severance Agreement which,
among other things, provided for certain compensation and severance benefits to
be paid to Consultant following a "change in control" of Duplex.
Reynolds and Duplex have entered into the Merger Agreement pursuant to which
Reynolds will commence the Offer to purchase all of the Shares.
It is the intention of Consultant and Reynolds that, on the Effective Date,
this Consulting Agreement shall become effective and supersede the Severance
Agreement and any other oral or written agreement, policy, plan, commitment or
other arrangement between Consultant and Duplex relating to employment or
severance.
Capitalized terms used in this Agreement have the meanings set forth in
Schedule 1.
1. RESIGNATION, WAIVER AND TERMINATION. Effective as of the Effective Date:
(a) Consultant resigns from any and all positions held with Duplex; (b)
Consultant releases Duplex from any and all claims, and waives any and all
rights, arising out of Consultant's employment and the termination of
Consultant's employment with Duplex; and (c) Consultant agrees to terminate and
render null and void the Severance Agreement. Nothing in this Agreement shall
affect the vesting of any stock options held by Consultant.
2. ENGAGEMENT. Reynolds hereby retains Consultant for the Term to render
consulting and advisory services to Reynolds with respect to Duplex as Reynolds
may reasonably request from time to time.
3. CONDITION PRECEDENT. This Agreement is conditioned upon the occurrence of
the Effective Date and shall become effective simultaneously with the closing
contemplated by the definition of "Effective Date".
4. DUTIES. During the Term, Consultant shall provide information, advice and
consultation with respect to Duplex and its business and such other services as
reasonably requested by Reynolds and upon reasonable advance notice by
Reynolds. Consultant shall provide such services at such locations as
Reynolds may reasonably request (Consultant acknowledges that Consultant will
not be provided any office space by Reynolds or Duplex).
5. COMPENSATION. As full and complete compensation for all services rendered
under this Agreement, Consultant shall receive the consideration described in
this Section 5.
5.1 Unused Vacation. Consultant shall be paid an amount equal to
Consultant's accrued but unused vacation as of the Effective Date (payable in a
lump sum on the Effective Date simultaneous with the closing contemplated by
the definition of that term).
5.2 Fixed Consideration. Consultant shall be paid the sum of $637,000
payable as described in this Section 5.2. The First Installment shall be paid
on the Effective Date simultaneous with the closing contemplated by the
definition of that term. Subject to the provisions of Section 10.2, the Second
Installment shall be payable on the two (2)-month anniversary of the Effective
Date.
5.3 Life Insurance. Consultant currently enjoys group term life insurance
provided by the Company in the amount of $750,000. Consultant shall procure
replacement term insurance in the same or a lesser amount and the Company shall
reimburse Consultant for the premiums actually paid by Consultant for such
replacement insurance for the one (1) year period ending on the first
anniversary of the Effective Date; provided, however, that the maximum amount
payable by the Company under this Section shall be 120% of the premium cost to
Duplex of the current term life insurance.
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Consultant is responsible for the payment of all applicable federal, state and
local taxes arising out of the compensation provided for in this Agreement, and
Consultant shall indemnify and hold harmless Reynolds, its successors and
assigns, from and against any and all taxes and any associated damage, loss,
cost or expense (including reasonable attorney's fees) arising out of, or
related to, such taxes, except for any taxes and related costs that may result
from the negligence or misconduct of Reynolds.
6. BUSINESS EXPENSES. During the Term, Consultant will be reimbursed monthly
for reasonable business expenses incurred for the benefit of Reynolds in the
performance of this Agreement. Consultant will account to Reynolds with enough
detail to entitle Reynolds to a federal income tax deduction for each of those
expenses, if deductible.
7. COVENANT NOT TO COMPETE; AGREEMENT NOT TO DISCLOSE.
7.1 COVENANT NOT TO COMPETE. Consultant covenants and agrees that
Consultant will not Directly or Indirectly Compete with Reynolds.
7.2 AGREEMENT NOT TO DISCLOSE. Consultant agrees to hold in strictest
confidence and not to use or disclose or make accessible to any person or
entity, without the prior written consent of an officer of Reynolds, any Duplex
Intellectual Property. Additionally, Consultant agrees not to make any
disparaging remarks concerning Reynolds, Duplex, or the transactions
contemplated by the Merger Agreement or to make any public statements
concerning the transactions contemplated by the Merger Agreement without
Reynolds prior written consent.
7.3 SEVERABILITY. If any court of competent jurisdiction determines that
any provision of this Section 7 is invalid or unenforceable, that determination
will not affect the other provisions of this Agreement. The invalid or
unenforceable provision will be modified to the minimum degree necessary to
make the affected provision valid and enforceable, and this Agreement will then
be enforced to the fullest extent possible.
7.4 ACKNOWLEDGEMENT. Consultant acknowledges that a breach of any
provision of this Section 7 cannot be compensated adequately by damages in an
action at law, and that a breach would cause Reynolds irreparable harm.
Consultant agrees that Reynolds will be entitled to temporary and permanent
injunctive and other equitable relief, provided that those equitable remedies
will be in addition to and not instead of other remedies available at law or in
equity to Reynolds as a result of a breach of this Section 7. Consultant
agrees that the duration, scope and subject matter of this Section are
reasonable in light of all of the facts and circumstances. To the extent
permitted by law, Consultant waives any defenses or
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objections related to the reasonableness of the duration, geographical scope
and subject matter of this Section 7. In no event shall the total of any and
all monetary damages recoverable from Consultant pursuant to this Agreement or
any breach thereof exceed the total amount paid to Consultant hereunder.
8. OWNERSHIP. Consultant understands that the Duplex Intellectual Property
is owned solely by Duplex (or third parties), and that Consultant may use
Duplex Intellectual Property only for the benefit of Reynolds or Duplex as
directed by an officer of Reynolds.
9. RELATIONSHIP. Consultant acknowledges that Consultant shall not be deemed
to be an employee of Reynolds. Consultant shall at all times be an independent
contractor and not a partner or joint venturer of Reynolds.
10. TERMINATION AND CONSEQUENCES .
10.1 CAUSES OF TERMINATION. The Term may be terminated by the parties as
follows:
(a) by Consultant upon five (5) days' prior written notice;
(b) by Consultant immediately upon written notice if Reynolds commits
a material breach of this Agreement and the breach is not cured within ten (10)
days after written notice from Consultant;
(c) upon the death or disability of Consultant;
(d) by Reynolds upon five (5) days' prior written notice; or
(e) by Reynolds immediately upon written notice if (i) Consultant
commits a material breach of this Agreement and that breach is not cured within
ten (10) days after written notice from Reynolds, or (ii) if Consultant commits
any act or omission involving willful misconduct, gross negligence, fraud,
material misrepresentation, material dishonesty, or deliberate or attempted
injury to Reynolds.
10.2 CONSEQUENCES OF TERMINATION. Upon termination under Section 10.1,
the Term will cease, and the parties' respective obligations under this
Agreement will cease, except: (a) if termination arises out of Sections
10.1(b), (c) or (d), Reynolds shall pay the Second Installment to Consultant on
the effective date of termination; (b) Reynolds will continue to be subject to
the provisions of Sections 6, 10, 11, 12 and 13; and (c) Consultant will
continue to be subject to the provisions of Sections 1, 7, 10, 12 and 13.
Payment by Reynolds of the amount due under clause (a) of the preceding
sentence shall constitute the sole and exclusive remedy of Consultant under
this Agreement or otherwise arising out of the engagement or termination of
Consultant (and will be subject
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to the execution by Consultant of a reasonably satisfactory release of claims
related thereto).
11. PROVISION OF OUTPLACEMENT SERVICES.
11.1 GENERALLY. For a period of twelve (12) months beginning on the
Effective Date, Reynolds shall provide Consultant with outplacement services.
Such services shall be provided by a mutually agreed upon firm. In all other
respects, the terms and conditions of the outplacement services, including
arrangements and amounts expended shall be determined by Reynolds (the parties
agree that the amount expended shall be fifteen percent (15%) of Consultant's
salary in effect prior to this Agreement). Reynolds shall reimburse Consultant
for job search related long distance telephone calls during the outplacement
services.
11.2 PAYMENT OPTION. Consultant shall have the option (which may be
exercised only by written notice to Reynolds prior to the Effective Date) to
receive a cash payment on the Effective Date equal to $37,500 in lieu of the
outplacement services and telephone expense reimbursement contemplated by
Section 11.1. If such option is exercised and payment made, Reynolds shall be
released from any further obligations under this Section 11.
12. GOVERNING LAW. This Agreement will be governed by the laws of the state
of Illinois with respect to contracts entered into and performed entirely
within that state.
13. MISCELLANEOUS.
13.1 NOTICES. All notices and other communications under this Agreement
will be in writing and will be deemed given and received: (a) on the date of
delivery when delivered by hand or when transmitted by a confirmed simultaneous
telecopy, (b) on the following business day when sent by receipted overnight
courier, or (c) three (3) business days after deposit in the United States Mail
when mailed by registered or certified mail, return receipt requested, first
class postage prepaid, if sent to the applicable addresses or telecopy numbers
listed in Schedule 2. Either party may change the address to which notices are
to be sent to it by giving written notice of that change of address to the
other party in the manner provided above for giving notices.
13.2 ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any right of
the parties hereunder may be assigned or delegated, whether voluntarily or
involuntarily, without the prior written consent of the other party provided,
however, that no consent will be required in the event of the sale of
substantially all the assets of or a merger involving Reynolds or the
assignment by Reynolds of this Agreement to any parent, subsidiary or other
entity of which Reynolds (or Reynolds' parent) holds fifty percent (50%) or
more of the voting power. This Agreement will be binding on the parties to
this Agreement and their respective permitted successors, assigns and
transferees.
13.3 HEADINGS; SCHEDULES. The section, subsection and other headings in
this Agreement are inserted only for reference and are not a part of this
Agreement. The Schedules attached to this Agreement are a material part of
this Agreement and are incorporated into this Agreement by this reference.
13.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which will be considered one agreement
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and effective when one counterpart has been signed by each party and delivered
to the other party.
13.5 INTEGRATION OF AGREEMENT. This Agreement supersedes all prior
agreements, oral and written, between the parties or between Consultant and
Duplex about the subject matter of this Agreement (any other oral or written
agreement, policy, plan, commitment or other arrangement between Consultant and
Duplex relating to employment or severance). Neither this Agreement, nor any
provision of this Agreement, may be changed, waived, discharged, supplemented
or terminated orally, but only by a writing signed by the party against which
the enforcement is sought. In the case of Reynolds, the writing must be signed
by an officer of Reynolds.
13.6 WAIVER. Failure of either party to exercise its rights under the
terms of this Agreement on any one occasion will not be construed as a waiver
of any requirement of this Agreement or a waiver of that party's right to take
advantage of any subsequent or continued breach by the other party of any
agreement or covenant contained in this Agreement. Except as expressly
provided in this Agreement, all remedies provided in this Agreement will be in
addition to and not in substitution for any remedies otherwise available to the
aggrieved party.
13.7 CERTAIN TERMS. When used in this Agreement, (a) "including" means
"including, without limitation," whether or not that language is specifically
set forth, and will not be deemed to limit the range of possibilities to those
items specifically enumerated, and (b) "person" will be broadly interpreted to
include, without limitation, any corporation, partnership, association, limited
liability company, other association, trust or individual.
13.8 ARBITRATION. Any dispute or controversy arising out of this Agreement
or its performance shall be resolved by binding arbitration before a panel of
three(3) arbitrators in Dayton, Ohio pursuant to the rules of the American
Arbitration Association. The prevailing party's costs and expenses (including
reasonable attorney's fees) shall be borne by the other party.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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The parties have signed this Agreement as of the 20th day of April, 1996.
REYNOLDS: CONSULTANT:
THE REYNOLDS AND REYNOLDS
COMPANY
By:______________________________ ______________________________
Print Name:______________________ Print Name:___________________
Print Title:_____________________
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SCHEDULE 1
Definitions
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Capitalized terms shall have the meanings given them in the Merger
Agreement, or, if not defined in the Merger Agreement, the meanings set forth
below.
1. "MERGER AGREEMENT" means the Agreement and Plan of Merger dated April 20,
1996 among Reynolds, Delaware Acquisition Co. and Duplex.
2. "BUSINESS" means the manufacture, sale, distribution or marketing of
business forms and/or related services.
3. "COMPETE WITH REYNOLDS" means:
3.1 during the Term or the Post Termination Period, calling on,
soliciting, taking away, or accepting as a client or customer any person that
is presently or becomes a client or customer of Duplex during the Term or the
one-year period prior to the Effective Date;
3.2 during the two (2) month period immediately following the Effective
Date, entering into any business substantially similar to the Business, either
Directly or Indirectly (Reynolds acknowledges that Consultant shall be
permitted to interview for another position in the Business but that the
beginning date of employment or other relationship shall not be during the
Term); or
3.3 during the Term or the Post Termination Period, hiring or attempting
to hire, for Consultant's or another person's behalf, any employee who is then
an employee of Duplex or Reynolds.
4. "DIRECTLY OR INDIRECTLY" means:
4.1 acting as an agent, representative, consultant, officer, director,
independent contractor or employee of any person, or
4.2 participating in any such person as an owner, partner, limited
partner, joint venturer, creditor, stockholder, or member.
Direct or Indirect competition will not include the ownership of voting
securities or other equity interests representing less than 5% of the voting
power of an entity whose securities are traded on a national securities
exchange or in the over-the-counter market.
5. "EFFECTIVE DATE" means the date of closing of the purchase by Reynolds of
common stock of Duplex pursuant to the Offer.
6. "DUPLEX" means Duplex Products Inc.
7. "CONSULTANT" means Andrew A. Campbell.
8. "REYNOLDS" means The Reynolds and Reynolds Company.
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9. "DUPLEX INTELLECTUAL PROPERTY" means all confidential and/or proprietary
information of Duplex, including customer information, trade secrets and
know-how.
10. "SEVERANCE AGREEMENT" means a Severance Agreement dated as of November
14, 1995, an Agreement dated as of January 26, 1996 and a letter agreement
dated as of March 13, 1996 between Consultant and Duplex.
11. "FIRST INSTALLMENT" means a payment in the amount of $500,000.
12. "SECOND INSTALLMENT" means a payment in the amount of $137,000.
13. "POST TERMINATION PERIOD" means the period commencing upon the
termination of the Term and ending on the six (6)-month anniversary of the
Effective Date.
14. "TERM" means the two (2) month period commencing on the Effective Date.
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SCHEDULE 2
1. Notice Address and Telecopy Numbers.
1.1 If to Reynolds:
The Reynolds and Reynolds Company
115 South Ludlow Street
Dayton, Ohio 45402
Attn: Adam M. Lutynski
Telecopy No. (513) 449-4123
1.2 If to Consultant:
Andrew A. Campbell
14 Polo Drive
South Barrington, Illinois 60010
Telecopy number: 847-842-0544