EXHIBIT 10.22
EMPLOYMENT AGREEMENT
THIS AGREEMENT effective as of January 1, 1997, between Eagle Pacific
Industries, Inc., a Minnesota corporation (the "Company"), and Xxxxxxx X. Xxxxx,
a resident of Edina, Minnesota ("Executive").
A. Executive has been and desires to remain employed as Chief
Executive Officer of the Company.
B. The Company desires to continue to retain the benefit of
Executive's experience and loyalty, and to continue to employ
Executive as Chief Executive Officer of the Company.
C. This Agreement replaces and supersedes Executive's restated
employment agreement effective as of January 1, 1995 with the
Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
1. Definitions
The terms used in this Agreement shall be defined as follows:
(a) "Agreement" shall mean this Agreement as amended from time
to time.
(b) "Base Salary" shall mean the annual base salary payable to
Executive pursuant to Section 4(a) hereof.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Cause" shall mean termination of the Executive's
employment with the Company by the Board because of (1) gross
misconduct; (2) material breach of this Agreement by
Executive; (3) conviction or entry of a plea of guilty or nolo
contendere to any felony or misdemeanor or the entry of any
final civil judgment in connection with any allegation of
fraud, misrepresentation, misappropriation or any other
intentional tort or statute violation; (4) insubordination; or
(5) sexual harassment of fellow employees.
(e) "Committee" shall mean the Compensation Committee of the
Board, if one exists and, if not, shall mean the Board.
(f) "Company" shall mean Eagle Pacific Industries, Inc., a
Minnesota corporation, its successors or assigns.
(g) "Executive" shall mean Xxxxxxx X. Xxxxx, a resident of
Edina, Minnesota.
(h) "Executive Benefit Plans" shall mean any plans within the
meaning of Sections 4(c) and (d) of this Agreement.
(i) "Period" shall mean the three year period commencing on
the date hereof. If the parties agree to any extension of the
Period, the term "Period" shall include all such extensions
thereof.
(j) "Permanently Disabled" shall mean permanently prevented
from performing his obligations hereunder as a result of his
physical or mental health, as evaluated by sufficient
documentation including doctors' statements.
(k) "Stock Options" shall mean any options held by Executive
granting him the right to acquire shares of common stock of
the Company.
(l) "Substantial Breach" shall mean (1) a substantial
reduction in the nature or status of Executive's
responsibilities hereunder; provided, that it shall not be
deemed to be a Substantial Breach if Executive's duties are
revised so that he remains an officer but is removed or not
reelected as Chief Executive Officer; (2) a reduction by the
Company in the Base Salary of Executive except to the extent
permitted under Section 4(a) hereof; (3) the failure by the
Company to allow Executive to participate to the full extent
in all plans, programs or benefits in accordance with Sections
4(b) to (e), inclusive, thereof; and (4) the failure by the
Company to pay, distribute or grant any amounts of cash, stock
or other compensation to Executive to which he is entitled. A
Substantial Breach shall be deemed to occur only if such
Substantial Breach has not been corrected by the Company
within two weeks of receipt of notice from Executive of the
occurrence of such Substantial Breach, which notice shall
specifically set forth the nature of the Substantial Breach.
2. Employment and Duties.
(a) General. The Company hereby employs Executive, and
Executive agrees upon the terms and conditions herein set
forth to serve as an officer of the Company and in such
capacity, shall perform duties substantially the same as
normally performed by persons in like positions in similar
companies except to the extent set forth in Section 2(b)
below. Executive may be transferred, promoted or changed to
another position, and any such transfer, promotion or change
shall not affect the enforcement of this Agreement.
(b) Other Employment. The parties hereto acknowledge that
Executive is engaged in other business pursuits in which he
renders services to other organizations for which he receives
compensation. While Executive is expected to devote an
appropriate amount of time to his duties for the Company,
Executive may pursue other business interests during the
Period so long as he does not violate Section 10 below.
3. Term of Employment. Subject to earlier termination of
employment pursuant to Sections 5, 6, 7 or 8 of this
Agreement, the Company shall retain Executive during the
Period; and Executive shall serve in the employ of the Company
for the Period.
4. Compensation and Other Benefits. Subject to the provisions of
this Agreement, the Company shall pay and provide the
following compensation and other benefits to Executive during
the term of his employment as compensation for services
rendered hereunder:
(a) Base Salary. The Company shall pay to Executive a Base
Salary at the rate of $108,000 per annum, payable in
accordance with the Company's standard payroll policies. The
Company shall be entitled to deduct or withhold all taxes and
charges which the Company may be required to deduct or
withhold therefrom. The Base Salary will be reviewed not less
than annually by the Committee.
(b) Incentive Compensation. At all times during the Period,
Executive shall be entitled to participate in all incentive
compensation plans and programs of the Company, existing from
time to time including the EBITDA bonus plan established by
the Committee and described in Exhibit A attached hereto. For
calendar year 1997, Executive's maximum bonus under the EBITDA
bonus plan shall be fifty one thousand dollars ($51,000) and
shall be based entirely on the Company's EBITDA.
(c) Stock Options. Executive shall be entitled to participate
in all stock option plans and programs of the Company existing
from time to time other than plans that exclude executive
employees generally.
(d) Other Executive Benefit Plans. Executive shall be eligible
to participate in all pension and welfare plans and programs
of the Company for executive employees, existing from time to
time, including, without limitation, the following:
(i) All qualified benefit plans and programs (e.g.,
defined contribution, supplemental retirement and Section
401(k) plans, long-term disability and life insurance plans
and programs);
(ii) All hospitalization and medical plans and
programs; and
(iii) All retirement plans and programs.
(e) Annuity. The Company shall continue to pay the premiums on
the annuities that are currently in effect for the benefit of
Executive.
(f) Office Space. The Company shall continue to provide
Executive with office space and support staff consistent with
the past.
(g) Car Allowance. The Company shall pay Executive a car
allowance of six hundred dollars ($600.00) per month.
5. Termination of Employment for Cause.
(a) Compensation and Benefits. If, prior to the expiration of
the Period, (i) Executive's employment is terminated by the
Company for Cause, or (ii) Executive resigns from his
employment hereunder other than under circumstances covered by
Section 6 below, Executive shall not be eligible to receive
any compensation or benefits or to participate in any plans or
programs under Section 4 hereof with respect to the Period
after the date of such termination except for the right to
receive benefits under any plan or program, to the extent
vested, in accordance with the terms of such plan or program
and except for benefits provided in accordance with customary
practices of the Company at Executive's expense (e.g.,
hospitalization and medical insurance).
(b) Date of Termination. The date of termination of
Executive's employment by the Company under this Section 5
shall be two (2) weeks after receipt by Executive of written
notice of termination for Cause or after receipt by the
Company of written notice of Executive's resignation.
6. Termination of Employment Without Cause or Resignation After
Substantial Breach.
(a) Compensation and Benefits. If, prior to the expiration of
the Period, Executive 's employment is terminated by the
Company without Cause, or if, prior to the expiration of the
Period Executive resigns from his employment hereunder
following a Substantial Breach, the Company shall pay
Executive an amount equal to Executive's then current Base
Salary in twenty-four (24) equal monthly installments
beginning one month after Executive's termination of
employment.
(b) Date of Termination. The date of termination of
Executive's employment by the Company under this Section 6
shall be the date specified in the written notice of
termination to Executive, or if no such date is specified
therein, the date on which such notice is given to Executive.
The date of resignation by Executive under this Section 6
shall be two weeks after receipt by the Company of written
notice of resignation, provided that the Substantial Breach
specified in such notice shall not have been corrected by the
Company during such two week period.
7. Termination of Employment by Disability.
(a) Compensation and Benefits. If Executive becomes
Permanently Disabled prior to the expiration of the Period,
the Company shall be entitled to terminate Executive's
employment at the later of (x) six months from the date
Executive becomes Permanently Disabled but not beyond the end
of the Period or (y) the date the Company could terminate
Executive in accordance with the Company's normal policies in
such matters as applied to all other salaried employees. In
the event of such termination of Executive's employment,
Executive shall be entitled to receive from the Company the
following:
(i) Executive shall be entitled to continued
participation in hospital and medical plans and programs of
the Company in accordance with Company policy as it pertains
to disabled salaried employees; that is for the period of said
disability or until normal retirement age subject to the rules
and practice of the plan(s).
(ii) Executive shall be entitled to received benefits
under any other Company plan or program (to the extent
Executive is vested) in accordance with the terms of such plan
or program.
(b) Date of Termination. The date of termination of
Executive's employment under Section 7 shall be the date
determined pursuant to Section 7(a) above.
8. Termination of Employment by Death.
(a) Compensation and Benefits. If Executive dies prior to the
expiration of the Period, the Executive's estate or his
beneficiary as appropriate shall be entitled to receive
benefits under the Company's plan(s) or program(s) in
accordance with the terms of such plan(s) or program(s).
9. Termination of Employment by Nonrenewal of This Agreement. If
Executive is employed by the Company at the end of the Period
(and the Period is not extended by mutual agreement of
Executive and the Company), the Company shall pay Executive an
amount equal to Executive's then current Base Salary in
twenty-four (24) equal monthly installments beginning one
month after Executive's termination of employment.
10. Noncompetition. During the terms of Executive's employment
with the Company and for twenty-four (24) months thereafter,
Executive shall refrain from directly or indirectly, on his
own behalf or on behalf of any other person or entity, compete
with the Company or any of its subsidiaries, anywhere in the
continental United States, including but not limited to
directly or indirectly rendering any services, advice or
counsel in any capacity whatsoever, for any entity or person
that engages in or is in the process of or anticipates
engaging in any business which in any manner competes with the
Company or any of its subsidiaries. At the option of the
Company, the Company may extend the term of this covenant not
to compete for two (2) additional one (1) year periods
provided that the Company exercises its options six (6) months
prior to the first day such option period would take effect
and pays Executive an amount equal to one-twelfth (1/12) of
the Base Salary in effect on the date of Executive's
termination of employment each month during the extended term
of this covenant not to compete. In the event that the Company
does not exercise its final option to extend this covenant not
to compete into the third year after termination, it shall no
longer have the right to exercise its final option for year
four (4). In the event that Executive violates the terms of
this Article 10, the term of this covenant not to compete
shall be extended for a period of time equal to the period of
time that Executive was violating the terms of this Section
10.
11. Nondisclosure of Confidential Information.
a. Definition. For purposes of this Agreement "Confidential
Information" means any information or compilation of
information, not generally known, which is proprietary to the
Company and relates to the Company's existing or reasonably
foreseeable business, including, but not limited to, trade
secrets and information relating to the Company's services,
marketing plans or proposals and customer information. All
information which the Company identifies as being
"confidential" or "trade secret" shall be presumed to be
Confidential Information. Confidential Information shall also
include any confidential information of a parent, subsidiary
or sister corporation of the Company and any information
disclosed by a third party under contract with the Company
which contract requires such disclosed information be kept
confidential. Confidential Information shall not include
information that is in or enters the public domain other than
through a breach of confidentiality owed to the Company.
b. Nondisclosure. During the Period and at all times
thereafter, Executive shall hold in strictest of confidence
and will never disclose, furnish, transfer, communicate, make
assessable to any person or use in any way Confidential
Information for Executive's own or another's benefit or permit
the same to be used in competition with the Company, nor will
Executive accept any employment which would, by the nature of
the position, inherently involve the use or disclosure by
Executive of Confidential Information.
12. Injunctive Relief. The parties acknowledge that the Company
and/or its subsidiaries will suffer irreparable harm if
Executive breaches Sections 10 or 11 of this Agreement.
Accordingly, the Company shall be entitled, in addition to any
other rights and remedies that it may have, at law or at
equity, to an injunction, without the parting of a bond or
other security, enjoining or restraining Executive from any
violation of Sections 10 or 11 of this Agreement. Executive
hereby consents to the Company's right to the issuance of such
injunction.
13. Binding Agreement. This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto, any Successor to
or assigns of the Company, and Executive's heirs and the
personal representative of Executive's estate.
14. Severability. If the final determination of a court of
competent jurisdiction declares, after the expiration of the
time within which judicial review (if permitted) of such
determination may be perfected, that any term of provision
hereof is invalid or unenforceable, (a) the remaining terms
and provisions hereof shall be unimpaired and (b) the invalid
or unenforceable term or provision shall be deemed replaced by
a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or
unenforceable term or provision.
15. Amendment; Waiver. This Agreement may not be modified, amended
or waived in any manner except by an instrument in writing
signed by both parties hereto. The waiver by either party of
compliance with any provision of this Agreement by the other
party shall not operate or be construed as a waiver of any
other provision of this Agreement, or of any subsequent breach
by such party of a provision of this Agreement.
16. Governing Law. All matters affecting this Agreement, including
the validity thereof, are to be governed by, interpreted and
construed in accordance with the laws of the State of
Minnesota.
17. Notices. Any notice hereunder by either party to the other
shall be given in writing by personal delivery or certified
mail, return receipt requested. If addressed to Executive, the
notice shall be delivered or mailed to Executive at the
address specified under Executive's signature hereto or such
other address which Executive has advised the Company to send
notice to, or if addressed to the Company, the notice shall be
delivered or mailed to the Company at its executive offices
and to the attention of each member of the Board of Directors
of the Company at their respective business addresses. A
notice shall be deemed given, if by personal delivery, on the
date of such delivery or, if by certified mail, on the date
shown on the applicable return receipt.
IN WITNESS WHEREOF, the Company has caused the Agreement to be signed
by its officer pursuant to the authority of its Board, and
Executive has executed this Agreement, as of the day and year
first written above.
EAGLE PACIFIC INDUSTRIES, INC.
By___________________________________
G. Xxxxx Xxxxx, President
_____________________________________
Xxxxxxx X. Xxxxx
EXHIBIT A
EAGLE PACIFIC INDUSTRIES, INC.
AND SUBSIDIARIES
EBITDA BONUS PLAN
The following is a summary of the Eagle Pacific Industries, Inc. and
Subsidiaries EBITDA Bonus Plan.
"EBITDA" shall mean the earnings before interest, taxes, depreciation and
amortization for the particular company determined by the auditors for Eagle
Pacific Industries, Inc. ("EPII") in accordance with GAAP for each fiscal year
of EPII.
At or before the beginning of each fiscal year, the Board of Directors of EPII
shall establish three levels of EBITDA for EPII and for each of its
subsidiaries. If the lowest level is achieved, each employee participating in
the EBITDA Bonus Plan will receive one-third of his/her maximum bonus. If the
second highest level of EBITDA is achieved, each employee participating in the
EBITDA Bonus Plan will receive two-thirds of his/her maximum bonus. If the
highest level of EBITDA is achieved, each employee participating in the EBITDA
Bonus Plan will receive his/her maximum bonus. At the same time the Board of
Directors of EPII shall establish the eligible employees, the maximum amount of
their bonuses and the company or companies on which the bonus will be based for
that year.
An employee must be employed by the Company or one of its subsidiaries
on the last day of the fiscal year in order to be entitled to receive any EBITDA
bonus for that year.
