Exhibit 10.1
AGREEMENT AND RELEASE
This Agreement and Release ("Agreement") is entered into by and between
Xxxxx X. Xxxxxxx ("Xxxxxxx") and Eagle Pacific Industries, Inc. ("EPII").
RECITALS
X. Xxxxxxx is a member of the Board of Directors of EPII.
X. Xxxxxxx currently owns 398,125 shares of common stock of EPII (the
"Xxxxxxx Shares") of which 18,125 shares are pledged to EPII pursuant to EPII's
Leveraged Equity Purchase Plan (the "XXXX Shares") to secure a loan by EPII to
Xxxxxxx evidenced by one or more promissory notes made by Xxxxxxx which are
payable to EPII (the "Xxxxxxx Notes"). The total amount of principal and accrued
interest owing under the Xxxxxxx Notes is forty eight thousand five hundred
twenty five dollars ($48,525). As a result, Xxxxxxx currently owns 380,000
shares of common stock of EPII, which are not pledged to EPII (the Non-XXXX
Shares"). The Non-XXXX Shares are held by certain brokerage firms for the
benefit of Xxxxxxx (the "Brokers").
X. Xxxxxxx currently has three option agreements covering in the
aggregate 206,000 shares of common stock of EPII (the "Xxxxxxx Options").
X. Xxxxxxx desires to resign from his position as a member or the Board
of Directors of EPII and dispose of his entire equity interest in EPII,
consisting of the Xxxxxxx Shares and Xxxxxxx Options.
AGREEMENT
NOW, THEREFORE, the parties agree as follows:
1. EPII/Eagle Pacific. EPII, as used in this Agreement, shall mean
Eagle Pacific Industries, Inc. only. Eagle Pacific, as used in the Agreement,
shall mean EPII and its subsidiaries, successors and assigns, affiliated,
related and predecessor companies, insurers, and its and their present and
former owners, directors, officers, shareholders, employees, agents, customers,
attorneys, 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 any of the above-listed
entities, in their official and individual capacities.
2. Xxxxxxx. Xxxxxxx, as used in this Agreement, shall mean Xxxxx X.
Xxxxxxx and anyone who has or obtains legal rights or claims through him.
3. Purchase of Non-XXXX Shares.
(a) EPII hereby purchases and Xxxxxxx hereby sells all 380,000 of the
Non-XXXX Shares. Xxxxxxx has delivered instructions to the Brokers to
cause certificates representing the Non-XXXX Shares to be delivered to
EPII, or its assigns.
(b) The purchase price for the Non-XXXX Shares shall be $2.60 per
share. Concurrent with the execution of this Agreement, EPII has paid
to Xxxxxxx (via the Brokers) nine hundred eighty eight thousand dollars
($988,000). In the event that the transaction contemplated by that
certain letter agreement dated July 29, 1999 between EPII and
Mitsubishi Chemical America, Inc. for the purchase of all of the shares
of outstanding capital stock of Pacific Western Extruded Plastics
Company (the "Transaction") is concluded, EPII and its assigns
hereunder shall pay to Xxxxxxx the additional amount of one hundred
fifty two thousand dollars ($152,000) in cash within three business
days after the conclusion of the Transaction. In the event that the
Transaction is concluded and the average closing price for EPII common
stock on all securities exchanges on which EPII common stock trades
equals or exceeds $3.625 per share for the two day period following the
conclusion of the Transaction, EPII and its assigns hereunder shall pay
to Xxxxxxx the additional amount of seventy six thousand dollars
($76,000) in cash within five business days after the conclusion of the
Transaction.
(c) EPII is acquiring some of the Non-XXXX Shares on behalf of certain
individuals and will assign a portion of its rights hereunder to such
individuals. Xxxxxxx acknowledges and consents to such assignment and
to such individuals being third party beneficiaries of this Agreement
including without limitation the representations and releases made by
Xxxxxxx.
4. Purchase of XXXX Shares.
(a) EPII hereby purchases and Xxxxxxx hereby sells all 18,125 of the
XXXX Shares. Xxxxxxx has delivered the certificates representing the
XXXX Shares to EPII.
(b) The purchase price for the XXXX Shares shall be $2.60 per share.
Concurrent with the execution of this Agreement, EPII has paid to
Xxxxxxx forty seven thousand one hundred twenty-five dollars ($47,125)
by reducing the amount owing under the Xxxxxxx Notes by that amount. In
the event that the Transaction is concluded, EPII shall pay to Xxxxxxx
the additional amount of seven thousand two hundred fifty dollars
($7,250) by reducing the amount owing under the Xxxxxxx Notes by one
thousand four hundred dollars ($1,400) as payment in full and paying to
Xxxxxxx five thousand eight hundred fifty dollars ($5,850) within three
business days after the conclusion of the Transaction. In the event
that the Transaction is concluded and the average closing price for
EPII common stock on all securities exchanges on which EPII common
stock trades equals or exceeds $3.625 per share for the two day period
following the conclusion of the Transaction, EPII shall pay to Xxxxxxx
the additional amount of three thousand six hundred twenty five dollars
($3,625) by reducing the amount due under the Xxxxxxx Notes and the
balance in cash within five business days after the conclusion of the
Transaction.
5. Xxxxxxx Options.
(a) As of the date hereof, Xxxxxxx has exercised in full his option to
acquire 150,000 shares of EPII common stock at an exercise price of
$2.00 per share and 7,140 shares of his option to acquire 21,000 shares
of EPII common stock at an exercise price of $1.50 per share (the
"Option Shares") and has delivered a check to EPII in the amount of
three hundred ten thousand seven hundred ten dollars ($310,710).
(b) EPII hereby purchases and Xxxxxxx hereby sells all 157,140 of the
Option Shares.
(c) The purchase price for the Option Shares shall be $2.60 per share.
Concurrent with the execution of this Agreement, EPII has paid to
Xxxxxxx four hundred eight thousand five hundred sixty four dollars
($408,564). In the event that the Transaction is concluded, EPII shall
pay to Xxxxxxx the additional amount of sixty two thousand eight
hundred fifty six dollars ($62,856) in cash within three business days
after the conclusion of the Transaction. In the event that the
Transaction is concluded and the average closing price for EPII common
stock on all securities exchanges on which EPII common stock trades
equals or exceeds $3.625 per share for the two day period following the
conclusion of the Transaction, EPII and its assigns hereunder shall pay
to Xxxxxxx the additional amount of thirty one thousand four hundred
twenty eight dollars ($31,428) in cash within five business days after
the conclusion of the Transaction.
(d) In consideration for surrender of the Xxxxxxx Options which were
not exercised to acquire the Option Shares, in the event that the
Transaction is concluded and the average closing price for EPII common
stock on all securities exchanges on which EPII common stock trades
equals or exceeds $3.625 per share for the two day period immediately
following the conclusion of the Transaction, EPII shall pay to Xxxxxxx
the amount of seven thousand dollars ($7,000) in cash within five
business days after the conclusion of the Transaction.
6. Final Settlement. This Agreement and the payments described above
are in full, final, and complete settlement of Xxxxxxx'x interests in the
Xxxxxxx Shares, the Option Shares and the Xxxxxxx Options and of any and all
Xxxxxxx'x actual or potential claims against Eagle Pacific. Xxxxxxx agrees that
neither he nor his attorneys will make any claim against Eagle Pacific for
damages, attorneys' fees, costs, interest, or any other amounts. Xxxxxxx shall
not be entitled to any other payments or benefits except as expressly set forth
in this Agreement.
7. Mutual Releases.
(a) Xxxxxxx covenants not to xxx and hereby releases and forever
discharges Eagle Pacific of and from any and all actions or causes of
action, suits, debts, claims, complaints, contracts (expressed or
implied), controversies, agreements, promises, damages, judgments, and
demands whatsoever, known or unknown, in law or equity, he ever had,
now has, or shall have as of the date of this Agreement in any
capacity, including but not limited to a director, shareholder, option
holder, consultant or employee. Xxxxxxx releases and discharges Eagle
Pacific not only from any and all claims that he could bring on his own
behalf, but also those that may or could be brought by any other person
or organization on his behalf, and agrees not to become a member of any
class in any proceeding or case in which a claim or claims against
Eagle Pacific arise, in whole or in part, from any event that occurred
before or as of the date of this Agreement. Xxxxxxx affirms that he has
not caused or permitted, and will not cause or permit, to be filed any
charge, complaint, or action of any nature or type against Eagle
Pacific.
(b) Eagle Pacific covenants not to xxx and hereby releases and
forever discharges Xxxxxxx of and from any and all actions or causes of
action, suits, debts, claims, complaints, contracts (expressed or
implied), controversies, agreements, promises, damages, judgments, and
demands whatsoever, known or unknown, in law or equity, it ever had,
now has, or shall have as of the date of this Agreement in any capacity
other than any claim Eagle Pacific may have as a result of Xxxxxxx'x
breach of any of the representations, warranties or covenants contained
in this Agreement. Eagle Pacific releases and discharges Xxxxxxx not
only from any and all claims that it could bring on its behalf, but
also those that may or could be brought by any other person or
organization on its behalf.
8. Resignation from Board of Directors. Effective upon the execution of
this Agreement, Xxxxxxx hereby resigns as a member of the Board of Directors of
EPII, and EPII hereby accepts Xxxxxxx'x resignation.
9. Representations. Xxxxxxx represents and warrants to Eagle Pacific
that the following statements are true and acknowledges that such
representations are a material inducement for Eagle Pacific to enter into this
Agreement:
(a) Xxxxxxx owns the Xxxxxxx Shares, the Option Shares and the Xxxxxxx
Options free and clear from all liens, claims and third party interests
whatsoever except for the pledge of the XXXX Shares to EPII. Xxxxxxx
does not own any securities of EPII other than the Xxxxxxx Shares, the
Option Shares and the Xxxxxxx Options.
(b) Xxxxxxx no longer desires to hold securities of EPII, including the
Xxxxxxx Shares, the Option Shares and the Xxxxxxx Options, and Xxxxxxx
approached EPII to acquire the Xxxxxxx Shares, the Option Shares and
the Xxxxxxx Options.
(c) Xxxxxxx does not want or need any additional information in order
to execute this Agreement to effect the sale of the Xxxxxxx Shares and
the Option Shares and the cancellation of the Xxxxxxx Options, has had
an opportunity to ask questions of and receive answers from individuals
at EPII concerning the terms and conditions of an investment in the
Xxxxxxx Shares, the Option Shares and the Xxxxxxx Options and
concerning all matters respecting EPII's present and proposed
operations and financial condition, including the Transaction, and all
questions have been answered to his full satisfaction.
(d) Xxxxxxx has not at any time filed or had filed against him a
petition in bankruptcy.
(e) Xxxxxxx has not assigned, voluntarily or involuntarily, to any
person or entity whatsoever any rights or claims he has or may have
against Eagle Pacific.
(f) Xxxxxxx is legally able to receive the payments and benefits that
are set forth in this Agreement and he knows of no claims any third
party has or may have against such payments and benefits that he is
receiving from his settlement of claims.
(g) Xxxxxxx has returned to EPII all tangible evidence of EPII's
property and confidential information.
(h) Xxxxxxx has not disclosed any confidential information of EPII to
any person other than to his advisors on a confidential basis.
10. Public Statements. Xxxxxxx shall not issue press releases or make
public statements regarding Eagle Pacific, including without limitation
statements to members of the press and media and statements on the internet.
11. Confidentiality. Xxxxxxx shall not disclose or discuss, directly or
indirectly, in any manner whatsoever, any information concerning EPII and the
operations of its business, except to the extent that such information can be
shown to have been in the public domain through no fault of Xxxxxxx. If Xxxxxxx
breaches the terms of this paragraph, EPII may commence an action at law and
pursue its available legal and equitable remedies, as well as reasonable
attorney fees. If EPII takes steps to seek relief from an alleged breach of this
paragraph, all of the provisions of this Agreement shall remain in full force
and effect.
12. Nondisparagement. Xxxxxxx shall not disparage Eagle Pacific in any
way to any of EPII's employees, manufacturer's representatives, customers,
competitors or distributors or any persons or entities known to Xxxxxxx to be
shareholders, securities holders or lenders of EPII.
13. Quiet Period. Xxxxxxx shall not purchase or sell, for his account
or the account of others, or agree to purchase or sell, shares of common stock
of EPII for a period of 12 months commencing on the date hereof.
14. Remedies. If Xxxxxxx breaches of any of his representations or
covenants hereunder, Eagle Pacific shall have to commence an action at law and
pursue its available legal and equitable remedies as well as reasonable attorney
fees.
15. Governing Law. Any disputes arising under this Agreement shall be
governed by the laws of the State of Minnesota.
16. Assignment. Except as set forth above, this Agreement may not be
assigned by either party unless agreed to in writing by EPII and Xxxxxxx.
17. Full Agreement. Xxxxxxx, by signing this Agreement, acknowledges
and agrees that he has carefully read and understands all provisions of this
Agreement, that he has been advised by counsel regarding the terms and effects
of this Agreement, and that he has entered into this Agreement knowingly and
voluntarily. Xxxxxxx acknowledges and agrees that he has not relied on any
representations or statements by Eagle Pacific, whether oral or written, other
than the express statements of this Agreement, in executing this Agreement. This
Agreement contains the full and binding agreement of the parties and may not be
modified, altered, or changed in any way except by written agreement signed by
both parties. The parties agree that this Agreement supersedes and terminates
any and all oral and written prior agreements, understandings, and negotiations
between the parties; provided, however Xxxxxxx shall remain bound by the
provisions of Sections 2, 4 and 6 of that certain consulting agreement dated as
of January 1, 1997 by and between Xxxxxxx and EPII.
Dated: September 2, 1999
EAGLE PACIFIC INDUSTRIES, INC.
/s/ Xxxxx X. Xxxxxxx By /s/ Xxxxxxx X. Xxxxx
Xxxxx X. Xxxxxxx Its Chief Executive Officer
