EXHIBIT 10.24
CONSULTING AGREEMENT AND RELEASE
EFFECTIVE DATE: January 1, 1997
PARTIES:
Eagle Pacific Industries, Inc. ("EPII")
0000 Xxxxxxxxxxxx Xxxxxx
000 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Eagle Plastics, Inc. ("Eagle")
000 Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Xxxxx X. Xxxxxxx ("Xxxxxxx")
000 Xxxxx Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
RECITALS:
A. Prior to the Effective Date hereof, Xxxxxxx was employed by EPII and
its subsidiaries as an officer. The terms and conditions of Xxxxxxx'x
employment was set forth in that certain Restated Employment Agreement
by and between Xxxxxxx and Eagle effective as of January 1, 1995 (the
"Employment Agreement"). Xxxxxxx and Eagle are also all of the parties
to that certain Deferred Compensation Agreement effective as of
December 17, 1993 (the "Deferred Compensation Agreement").
X. Xxxxxxx is a member of the Boards of Directors of EPII and its
subsidiaries and is not resigning those positions.
X. Xxxxxxx desires to terminate his employment with EPII and EPII
desires to keep Xxxxxxx available to provide consulting services to
EPII and its subsidiaries as specified herein.
AGREEMENT:
The parties, each intending to be legally bound, agree as follows:
1. Resignation as Employee. Xxxxxxx hereby resigns as an officer
and employee of EPII and each of its subsidiaries, including
without limitation Eagle. The parties hereto agree that the
Employment Agreement is terminated and that all obligations of
the parties under the Employment Agreement are void.
Notwithstanding such termination of employment, the stock
option agreements by and between EPII and Xxxxxxx and between
Eagle and Xxxxxxx (the "Stock Option Agreements") and the
Deferred Compensation Agreement are hereby amended to provide
that so long as Xxxxxxx remains a consultant to EPII under the
terms of this Agreement or any successor to this Agreement, he
shall be deemed for the purposes of these Stock Option
Agreements and the Deferred Compensation Agreement to have
been an employee of EPII and Eagle. The Deferred Compensation
Agreement is further amended to provide that the amount of
seventy-five thousand dollars ($75,000) referred to in Article
1 thereof shall be increased at the rate of 7% per annum from
the date hereof to the date that the first payment is made
pursuant to Article 1 of the Deferred Compensation Agreement.
2. Release. For the purposes of this Section 2, EPII shall mean
EPII, its subsidiaries, successors and assigns, its affiliated
and predecessor companies, their successors and assigns, their
affiliated and predecessor companies and the present or former
directors, officers, employees, shareholders and agents of any
of them, whether in their individual or official capacities,
and the current and former trustees or administrators of any
pension or other benefit plan applicable to the employees or
former employees of EPII or its subsidiaries in their official
and individual capacities.
a. Notification of Rights Pursuant to the Federal Age
Discrimination in Employment Act, (29 U.S.C. (beta) 621 et
seq.) Xxxxxxx is hereby notified of his right to rescind the
release of claims with regard to his rights under the federal
Age Discrimination in Employment Act, 29 U.S.C. (beta) 621, et
seq. ("ADEA"), within seven (7) days after the signing of this
Consulting Agreement and Release. In order to be effective,
the rescission must be in writing and delivered to Xxxxxxx X.
Xxxxx at EPII at the address set forth above, by hand or mail.
If delivered by mail, the rescission must be postmarked within
the required period, properly addressed to Xxxxxxx X. Xxxxx,
as set forth above, and sent by certified mail, return receipt
requested. It is further understood that if Xxxxxxx rescinds
the release of claims, in accordance with this Section 2.a.
that this entire Consulting and Release Agreement is null and
void. Xxxxxxx agrees to repay any payments or benefits he
received under this Agreement prior to his rescission.
b. Acknowledgement of Reading and Understanding Consultation
With Counsel: Period to Consider Agreement. Xxxxxxx, by his
signature to this Agreement, acknowledges and agrees that he
has carefully read and understood all provisions of this
Agreement, and that he has entered into this Agreement
knowingly and voluntarily. Xxxxxxx further acknowledges that
EPII has advised him to consult with counsel prior to signing
this Agreement, and Xxxxxxx acknowledges that he has consulted
with or had the opportunity to consult with legal counsel.
c. Time to Consider. Xxxxxxx shall have at least twenty-one
(21) days to consider whether the terms of this Consulting
Agreement and Release are acceptable to him after he has
received a copy of this Consulting Agreement and Release, and
before he must sign this Consulting Agreement and Release.
d. Denial of Liability. EPII specifically denies any liability
to Xxxxxxx for any and all claims which could be or have been
asserted by Xxxxxxx against EPII and neither this Consulting
Agreement and Release, nor anything contained herein, shall be
construed as an admission by EPII of any liability of unlawful
conduct whatsoever.
e. Release. Xxxxxxx, for himself and his heirs, legal
representatives, estates and successors in interest, hereby
releases and forever discharges EPII of and from any and all
actions or causes of action, suits, debts, claims, complaints,
contracts, controversies, agreements, promises, damages,
claims for attorneys fees, judgments, costs, disbursements,
severance benefits, deferred compensation and demands
whatsoever, in law or entity, he ever had, now has, or shall
have as of the date of this Consulting Agreement and Release,
including, but not limited to, any alleged violation of any
federal, state or local law, regulation or ordinance
prohibiting discrimination or other unlawful activity on the
basis of race, color, creed, marital status, sex, age,
religion, national origin, handicap, sexual harassment,
disability or any other basis, or any alleged obligation
created by statute (including but not limited to any claims
under Title VII of the Civil Rights Act of 1964, as amended,
and the Age Discrimination in Employment Act) or by common law
contract or tort theory, that he ever had, now has or shall
have as of the date of this Consulting Agreement and Release;
provided, however, this release shall not include any and all
obligations which EPII has to Xxxxxxx under the Deferred
Compensation Agreement and the Stock Option Agreements.
f. Claims by Others. Xxxxxxx agrees to release and discharge
EPII not only from any and all claims which he could make on
his own behalf, but also those which may or could be brought
by any other person or organization in her behalf, and he
specifically waives any right to become, and promises not to
become, a member of any class in any proceeding or case in
which a claim or claims against EPII arise, in whole or in
part, from any event which occurred as of the date of this
Consulting Agreement and Release.
g. No Charges, Complaints or Actions. Xxxxxxx affirms that he
has not caused or permitted to be filed any charge, complaint
or action against EPII. In the event that there is outstanding
any such charge, complaint, or action, Xxxxxxx agrees to seek
its immediate withdrawal and dismissal with prejudice. In the
event that for any reason said charge, complaint, or action is
not withdrawn, Xxxxxxx agrees not to voluntarily testify,
provide documents, or otherwise participate, or to permit
others to voluntarily participate on his behalf, in any
investigation or litigation arising therefrom or associated
therewith and to execute such other papers or documents as
EPII's counsel determines may be necessary to have said
charge, complaint or action dismissed with prejudice.
h. Confidentiality. Xxxxxxx promises and agrees not to
disclose, either directly or indirectly, in any manner
whatsoever, any information of any kind regarding either (a)
the substance or the existence of any belief he or any other
person may have that EPII engaged in any unlawful or tortious
conduct towards him, or breached any contract, or (b) the
terms of this Consulting Agreement and Release, to any person
or organization, including, but not limited to,
representatives of local, state or federal agencies, members
of the press and media, present and former officers, employees
and agents of EPII, and other members of the public. In the
event of a breach by Xxxxxxx of the terms of this Section
2.h., EPII may commence an action at law for damages to pursue
its available legal or equitable remedies. In the event that
EPII takes steps to seek relief from an alleged breach of this
Section 2.h. all of the remaining provisions of this
Consulting Agreement and Release shall remain in full force
and effect. Notwithstanding anything in this Consulting
Agreement and Release to the contrary, nothing in this
Consulting Agreement and Release shall prohibit Xxxxxxx from
(i) discussing the consideration being provided him pursuant
thereto with his attorneys or tax advisors, (ii) discussing
the underlying dispute or the terms of this Consulting
Agreement and Release with his attorneys, his immediate family
members or his medical doctors, (iii) advising a governmental
taxing authority of the said consideration or of the existence
of this Consulting Agreement and Release, in response to a
question or questions posed by such taxing authority, (iv)
testifying pursuant to a court order or a subpoena issued by a
governmental agency, Court of law or their duly authorized
agent, which appears valid on its face, (v) revealing the
terms of this Consulting Agreement and Release as required by
and in accordance with any law, regulation or ordinance, or
Court order or proceeding, (vi) revealing the terms of this
Consulting Agreement and Release in order to enforce its
terms, or (vii) stating "the matter has been resolved and the
terms of the resolution are confidential" in response to an
inquiry.
3. Term. This Agreement shall commence as of the effective date
set forth above and shall remain in force until December 31,
1998, unless sooner terminated pursuant to the provisions of
Section 11 below.
4. Xxxxxxx'x Duties. Xxxxxxx agrees to perform the following
duties at his own expense:
a. Consulting Services. Xxxxxxx shall consult with and advise
EPII and its subsidiaries as to the operations of the business of EPII
and its subsidiaries from time to time as requested by EPII.
b. Company Policies. Xxxxxxx shall abide by all policies of
EPII as such policies may be amended from time to time by EPII.
c. Use of EPII's Name. Xxxxxxx shall not use the name of EPII
or any of its subsidiaries or any other similar name or any trademark,
tradename or service xxxx of EPII or its subsidiaries which may in any
way result in confusion or lead a third party to believe that EPII and
Xxxxxxx are not separate and distinct entities.
d. Noncompetition. During the term of this Agreement and for
five (5) years thereafter, Xxxxxxx shall refrain from directly or
indirectly developing, selling, promoting or brokering any items which
are in competition with the products of EPII and its subsidiaries.
Without limiting the generality of the foregoing sentence, this
provision shall be deemed to be breached if Xxxxxxx acts as an
employee, agent or consultant of, independent contractor, distributor
or broker for, or shareholder, director, officer or owner of any
capital interest in, any person or entity developing, manufacturing or
selling such competitive items.
e. Laws and Regulations. Xxxxxxx shall conform to all
applicable laws and regulations and to the highest business ethics in
performing his obligations in accordance with the terms of this
Agreement.
5. Xxxxxxx'x Compensation.
a. Monthly Compensation. During the term of this Agreement,
EPII shall pay Xxxxxxx at the rate of ten thousand dollars
($10,000) per month during 1997 and at the rate of eight
thousand three hundred thirty three dollars ($8,333) per month
during 1998. Such payments shall be made monthly in arrears
during the term of this Agreement.
b. EBITDA Bonus. During the term of this Agreement, Consultant
is eligible to earn a maximum EBITDA bonus of thirty thousand
dollars ($30,000) for 1997 and a maximum EBITDA bonus of
thirty thousand dollars ($30,000) for 1998. For 1997, Xxxxxxx
will earn a ten thousand dollar ($10,000) EBITDA bonus if the
earnings before interest, taxes, depreciation and amortization
for EPII ("EBITDA") are at least $6,500,000; an additional ten
thousand dollars ($10,000) if the EBITDA for 1997 is at least
$6,825,000 and the full thirty thousand dollar ($30,000)
EBITDA bonus for 1997 if the EBITDA for 1997 is at least
$7,150,000. The EBITDA levels for Xxxxxxx to earn his EBITDA
bonus for 1998 will be based on the same levels as the
officers of EPII who are eligible to receive EBITDA bonuses.
c. Expense Reimbursement. EPII will reimburse Xxxxxxx for any
reasonable and customary business expenses incurred by Xxxxxxx
in connection with the performance of his duties hereunder at
the request of EPII.
d. Directors' Fees and Options. During the term of this
Agreement, Xxxxxxx waives his rights to any fees or stock
options to which he might be entitled as a result of his being
a nonemployee director of EPII.
e. Life Insurance. Eagle will continue to pay the premiums on
Northwestern Mutual Life Policy #10154964 and Northwestern
Mutual Life Policy #10089934 on the life of Xxxxxxx (the
"Policies") through April 2, 1997. On April 2, 1997, Eagle
will assign and transfer its entire interest in the Policies
to Xxxxxxx solely as additional consideration for the services
rendered by Xxxxxxx hereunder.
f. Office Facilities. During the term of this Agreement, EPII
will provide Xxxxxxx with an office.
g. Health and Dental Insurance. During the term of this
Agreement, EPII will provide health and dental insurance
coverage to Xxxxxxx comparable to the health and dental
insurance coverage provided to the executive officers of EPII.
6. 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 EPII and relates to EPII's
existing or reasonably foreseeable business which is not readily
disclosed by inspection of EPII's products, including, but not limited
to, trade secrets, inventions and information contained in or relating
to EPII's product designs, tolerances, manufacturing methods,
processes, techniques, treatment or chemical composition of material,
plant layout, tooling, marketing plans or proposals, and customer
information. All information which EPII 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 EPII and any information disclosed by a third party under contract
with EPII 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 EPII.
b. Nondisclosure. During the term of this Agreement and at all
times thereafter, Xxxxxxx 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 Xxxxxxx'x own
or another's benefit or permit the same to be used in competition with
EPII, nor will Xxxxxxx accept any employment which would, by the nature
of the position, inherently involve the use or disclosure by Xxxxxxx of
Confidential Information. The term "any person" as used above includes
any individual who does not have written authorization from EPII to
have access to Confidential Information, including EPII employees and
other EPII consultants. Xxxxxxx will refrain from such acts and
omissions which would reduce the value of the Confidential Information
to EPII.
7. Documents and Tangible Property. All tangible evidence of
Confidential Information, including, without limitation,
working models, records, drawings, manuals, books, blank
forms, documents, letters, memoranda, notes, notebooks,
reports, data, tables, calculations or copies thereof shall be
and remain the exclusive property of EPII, and Xxxxxxx agrees
to return all such tangible evidence of Confidential
Information to EPII upon termination of this Agreement or at
such earlier time as EPII may request.
8. Independent Contractor. Xxxxxxx acknowledges that he is an
independent contractor and is not and shall not be deemed to
be an employee, joint venturer, partner, franchisee or legal
representative of EPII for any purpose whatsoever.
Accordingly, Xxxxxxx shall be exclusively responsible for the
manner in which he performs, and for the profitability or lack
thereof of, his activities under this Agreement. Xxxxxxx does
not have, and shall not represent himself as having, any right
or authority to obligate or bind EPII in any manner
whatsoever.
9. Xxxxxxx'x Name. Xxxxxxx consents to the use of Xxxxxxx'x name
in appropriate EPII materials such as, but not limited to,
annual reports, proxy statements and filings with government
agencies.
10. No Conflicts. Xxxxxxx represents and warrants to EPII that
neither the entering into this Agreement nor the performance
of any of the Xxxxxxx'x obligations hereunder will conflict
with or constitute a breach under any obligation of Xxxxxxx
under any agreement or contract to which Xxxxxxx is bound.
Without limiting the foregoing, Xxxxxxx agrees that at no time
will Xxxxxxx utilize any trade secrets of any third party.
11. Termination. This Agreement may be terminated prior to the end
of its term pursuant to any of the following provisions:
a. Mutual Agreement. By mutual agreement.
b. Default. By either party, effective immediately upon
delivery of written notice to the other party, if the other party
breaches any of its obligations under this Agreement; provided that if
such breach is curable, such notice shall not be effective until the
breaching party fails to correct such breach or default within a period
of thirty (30) days after delivery of such written notice. If such
breach is not curable, the Agreement shall terminate immediately upon
delivery of such notice of breach.
c. Adverse Activity. By EPII effective immediately upon
delivery of written notice (i) upon gross misconduct or insubordination
on the part of Xxxxxxx, (ii) if Xxxxxxx is convicted of or enters a
plea of guilty or nolo contendere to any felony or misdemeanor or the
entry of final judgment in connection with any allegation of fraud,
misrepresentation, misappropriation or any other intentional tort or
statute violation, (iii) upon the sexual harassment of any employees of
EPII or any of its subsidiaries, (iv) if Xxxxxxx takes any action which
impairs the goodwill associated with EPII's trademark, trade name or
service xxxx, or (v) if Xxxxxxx makes any unauthorized use or
disclosure of any Confidential Information.
12. Obligations Upon Termination. Following termination of this
Agreement for any reason, the following provisions shall
apply:
a. Payment of Compensation. EPII's sole obligation to Xxxxxxx
upon expiration or proper termination of this Agreement shall be to pay
compensation determined in accordance with the provisions of Section 5
hereof for services rendered prior to the expiration or termination of
this Agreement and pursuant to the Deferred Compensation Agreement.
Xxxxxxx hereby acknowledges that he has no right to and waives any such
implied rights to any reimbursement for lost profits or income or any
other loss, cost or expense resulting from expiration or termination of
this Agreement in accordance with its terms.
b. Continuing Obligations. The provisions of Sections 1, 2,
4.c. and d., 6, 7 and 9 herein shall survive the termination of this
Agreement and shall continue in full force and effect.
13. General Provisions.
a. Severability and Interpretation. In the event that a
provision of this Agreement is held invalid, the remaining provisions
shall nonetheless be enforced in accordance with their terms. Further,
in the event that any provision is held to be overbroad as written,
such provision shall be deemed amended to narrow its application to the
extent necessary to make the provision enforceable according to
applicable law and shall be enforced as amended.
b. Notices. Any notice required or permitted to be given under
this Agreement shall be deemed effective when received if delivered by
hand, telecopy, telex or telegram or three (3) days after depositing if
placed in the U.S. mail for delivery by registered or certified mail,
return receipt requested, postage prepaid and addressed to the
appropriate party at the address set forth on the first page of this
Agreement. Such addresses may be changed by giving written notice to
the other party of such different address pursuant to the provisions of
this section.
c. Nonassignment. Xxxxxxx shall not assign, transfer or sell
all or any part of his rights or obligations hereunder without the
prior written consent of EPII. This Agreement shall be binding upon and
inure to the benefit of any successor or assignee of EPII and Eagle and
of any permitted successors and assigns of Xxxxxxx as provided above.
d. Controlling Law and Arbitration. This Agreement shall be
governed by and construed in accordance with the law of the State of
Minnesota without regard to the conflicts of laws and rules thereof.
All disputes, controversies or differences arising out of or in
connection with this Agreement or the making thereof, including claims
of fraud in the inducement, which cannot be settled by mutual agreement
shall be finally settled by binding arbitration pursuant to the Rules
of Commercial Arbitration of the American Arbitration Association then
in effect, except as specified herein and judgment upon the award
rendered by the arbitrator may be entered in any court having
jurisdiction thereof. Any arbitration hereunder shall be held in
Minneapolis, Minnesota. The arbitration shall be conducted by a single
arbitrator selected by the parties. The arbitrator shall be a retired
state or federal judge or an attorney who has practiced business
litigation for at least 10 years. In the event that the parties are
unable to agree on an arbitrator, the arbitrator shall be selected by
the American Arbitration Association. The hearings shall be conducted
on an expedited schedule. They shall commence no later than 20 days
after initiation of proceedings and shall be completed within 20 days,
and the arbitrator shall make the award within 20 days of the close of
the hearings. The arbitrator shall have the authority to award any
remedy or relief that a court of the State of Minnesota could order or
grant, including, without limitation, equitable remedies, specific
performance of any obligation created under this Agreement, the
awarding of punitive damages, the issuance of an injunction or the
imposition of sanctions for abuse or frustration of the arbitration
process.
e. Entire Agreement. This Agreement constitutes the entire
Agreement between the parties and supersedes any and all prior and
contemporaneous oral or written understandings between the parties
relating to the subject matter hereof, except for the Stock Option
Agreements and Deferred Compensation Agreement referred to herein.
IN WITNESS WHEREOF, the parties have hereunto set their hands as of the date
indicated but effective as of January 1, 1997.
January ___, 1997 ___________________________________
Xxxxx X. Xxxxxxx
STATE OF NEBRASKA )
) ss:
COUNTY OF )
I , a Notary Public, do hereby certify that Xxxxx X. Xxxxxxx,
personally known to me to be the same person whose name is subscribed to the
foregoing instrument, appeared before me this day in person and acknowledged
that he signed and delivered the said instrument as his free and voluntary act,
for the uses and purposes therein set forth.
Given under my hand and official seal this _____ day of January, 1997.
NOTARY PUBLIC
My Commission Expires:
Date
January ___, 1997 Eagle Pacific Industries, Inc.
___________________________________
Xxxxxxx X. Xxxxx, CEO
STATE OF MINNESOTA )
)ss:
COUNTY OF HENNEPIN )
Before me, a notary public for and within the county of Hennepin, State
of Minnesota, this day of January 1997 personally appeared Xxxxxxx X. Xxxxx, to
me known, and, who after being first duly sworn deposed and stated that he is
the Chief Executive Officer of Eagle Pacific Industries, Inc., and that he is
duly authorized by Eagle Pacific Industries, Inc., to execute and acknowledge
the foregoing Consulting Agreement and Release and that said Xxxxxxx X. Xxxxx
did acknowledge to me that he executed the same as his own free act and deed on
behalf of Eagle Pacific Industries, Inc.
Given under my hand and official seal this _____ day of January, 1997.
NOTARY PUBLIC
My Commission Expires:
Date
January ___, 1997 Eagle Plastics, Inc.
___________________________________
Xxxxxxx X. Xxxxx, CEO
STATE OF MINNESOTA )
)ss:
COUNTY OF HENNEPIN )
Before me, a notary public for and within the county of Hennepin, State
of Minnesota, this day of January 1997 personally appeared Xxxxxxx X. Xxxxx, to
me known, and, who after being first duly sworn deposed and stated that he is
the Chief Executive Officer of Eagle Plastics, Inc., and that he is duly
authorized by Eagle Plastics, Inc., to execute and acknowledge the foregoing
Consulting Agreement and Release and that said Xxxxxxx X. Xxxxx did acknowledge
to me that he executed the same as his own free act and deed on behalf of Eagle
Plastics, Inc.
Given under my hand and official seal this _____ day of January, 1997.
NOTARY PUBLIC
My Commission Expires:
Date
