EXHIBIT 10.27
EMPLOYMENT AGREEMENT
THIS AGREEMENT effective as of January 1, 1997, between Eagle Pacific
Industries, Inc., a Minnesota corporation (the "Company"), and Xxxxx X. Xxxxxxx,
a resident of Hastings, Nebraska ("Executive").
A. Executive has been and desires to remain employed as Senior Vice
President - Sales 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 Senior Vice
President - Sales of the Company.
C. This Agreement replaces and supersedes any other employment
arrangements that Executive has with the Company or any of its subsidiaries.
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 Xxxxx X. Xxxxxxx, a resident of Hastings,
Nebraska.
(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 Senior Vice
President Sales; (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 (d), 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. 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) No Other Employment. Throughout the time that Executive is employed
by the Company, Executive shall, except as may from time to time be otherwise
agreed in writing by the Company and unless prevented by ill health, devote his
full-time working hours to his duties hereunder and Executive shall not,
directly or indirectly, render services to any other person or organization for
which he receives compensation (excluding volunteer services or outside Board
activities with modest time commitments) without the consent of the Board or
otherwise engage in activities which would interfere significantly with the
performance of his duties hereunder.
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 $125,000 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 thirty five thousand dollars ($35,000) 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.
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
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Xxxxxxx X. Xxxxx, CEO
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Xxxxx X. Xxxxxxx
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.
