EMPLOYMENT AGREEMENT
This employment agreement (this "Agreement") is made and entered into
on this the __ day of October, 1997 by and between JTM Industries, Inc.
("Employer"), a Texas corporation with its principal place of business located
at 0000 Xxxx Xxxxx Xxxx., Xxxx. 000, Xxxxxxxx, Xxxxxxx 00000 and Xxxxxxx X.
Xxxx, Xx. ("Employee"), an individual who resides at 000 Xxxxx Xxxxx Xxxxxxxxx,
#0000, Xxxxxxxx, Xxxxxxx 00000.
WHEREAS, Employer desires to employ Employee and Employee desires to be
employed by Employer on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as set forth
herein.
1. EMPLOYMENT
Employer employs Employee and Employee accepts employment from Employer
pursuant to the terms and conditions of this Agreement.
2. DUTIES.
a. Subject to a change in title or responsibility at the discretion of
Employer, that in no way materially decreases Employee's responsibilities,
Employee is engaged by Employer as Executive Vice President in charge of
Employer's currently existing: operations and sales west of the Mississippi
River; non-traditional sales; and (iii) research and development. Employee shall
perform such duties as are from time to time reasonably assigned to Employee by
Employer consistent with Employee's position.
b. Employee shall devote Employee's entire business time, attention and
energies to the Employer's business and shall not at any time during the term of
this Agreement be engaged in any other business activity which interferes or
competes with Employer's business.
3. TERM, EXTENSION, TERMINATION.
a. Except as hereinafter provided, the term of this Agreement shall
commence on the date first above written and shall terminate on the fifth (5th)
anniversary thereafter.
b. The term of this Agreement shall be automatically extended for one
year periods beginning on the fifth anniversary date of this Agreement and
ending one year therefrom unless either party notifies the other of its desire
to not renew the term of this Agreement by giving written notice of such desire
to the other party in writing at any time within sixty (60) days prior to the
expiration of the then current term.
c. Either party may terminate this Agreement without cause upon thirty
(30) days notice to other party. Provided however, that Employer's termination
of this Agreement, other than as set forth below, shall not terminate Employer's
obligation to make when due all compensation payments set forth in Paragraphs 4
through 6 of this Agreement for the balance of the original term for so long as
Employee does not compete with the business of the Employer.
d. Employer shall have the right to terminate this Agreement for cause
at any time. If Employer terminates this Agreement for cause there shall be no
obligation on the part of Employer to give prior notice to termination. For
purposes of this Agreement, cause shall include:
i. willful and/or unjustified or unexcused violations of
express Employer policies, guidelines, rules or regulations, as set forth
in Employer's Human Resources manual(s) as may be amended from time to
time;
ii. theft, misappropriation or embezzlement of property and/or
funds of Employer and/or its subsidiaries as determined by an independent
third party;
iii. material breach of fiduciary duty owed to Employer for
Employee's material personal benefit;
iv. conviction of any felony;
v. habitual intoxication or drug addiction at work or which
affects work performance, provided, however, that habitual intoxication
and/or drug addiction shall not constitute cause if Employee receives
appropriate, in Employer's discretion, and successful treatment for either
condition.
e. Upon termination for cause, in accordance with this Agreement, and
after the date of such termination, Employer shall have no further obligations
or liability hereunder, or otherwise, to pay or provide salary, incentive
compensation, and employee benefits.
f. If the Employee's employment with Employer is terminated by Employee
voluntarily, after the date of such termination Employer shall have no further
obligation or liability to pay or provide salary, incentive, compensation, and
other employee benefits, except as may be otherwise provided in Section 7,
hereof. Provided however, that in such event, Employee shall abide by the terms
of the Covenant Not To Compete set forth in Section 9, hereof, for so long as
Employer continues to pay Employee the salary and insurance benefits paid, or
provided to him, as of the date of the termination of this Agreement.
g. If Employee is unable to perform his job for a period of six (6)
consecutive months because of physical or mental disability, Employee's rights
under this Agreement shall then terminate, and Employer shall have no further
obligation or liability to pay or provide salary and employee benefits, except
that Employee shall be entitled to such benefits as he may have as a participant
in Employer's disability benefit plan, and except as may be otherwise provided
in Section 7, hereof.
h. In the event that Employee's employment by Employer is terminated
because of Employee's death, after the date of death, Employer shall have no
further obligation or liability to Employee or Employee's heirs for salary,
incentive, compensation or benefits, except as may be otherwise provided in
Section 7, hereof.
4. COMPENSATION.
a. For the services to be rendered by Employee, and for Employee's
covenant not to compete with Employer, as set forth herein, Employer shall pay
Employee and Employee shall accept as full compensation for such services and
agreement the compensation set forth herein.
b. A base salary of $160,000.00 per year, payable in equal installments
on the regular corporate payroll dates of Employer, subject to normal
withholding and other applicable taxes and deductions. On each anniversary date
of this Agreement, or such other time as the parties may agree, Employee shall
receive a merit increase in accordance with existing written Employer policies
and guidelines.
c. An annual performance bonus up to 30% of Employee's current base
salary consistent with Employer's policies. The performance bonus shall be paid
in a lump sum within sixty (60) days of the end of the Employer's fiscal year or
such other time as the parties may agree. The performance bonus will be based on
objective performance (based on EBIT, defined as earnings before interest and
taxes, within Employee's area of responsibility) and personal performance goals
set annually by the Employer prior to each fiscal year. In the event Employer
fails to set new performance goals prior to the sixtieth (60th) day following
the start of a new fiscal year, then the previous fiscal year's performance
goals shall control.
d. Employee shall be entitled to an additional bonus if actual EBIT
within Employee's area of responsibility ("actual EBIT") exceeds budgeted EBIT
within Employee's area of responsibility ("budgeted EBIT"), as set forth below:
i. If actual EBIT exceeds budgeted EBIT by 30% or more in any
fiscal year, then Employee shall receive a bonus equal to 50% of base
salary;
ii. If actual EBIT exceeds budgeted EBIT by 50% or more in any
fiscal year, then Employee shall receive a bonus equal to 100% of base
salary; and
iii. If actual EBIT exceeds budgeted EBIT by 75% or more in
any fiscal year, then Employee shall receive a bonus equal to 200% of base
salary.
e. Employer shall pay Employee a signing bonus of $250,000.00 payable
as follows:
i. $100,000.00 within thirty (30) days of Employee's execution
of this Agreement;
ii. $100,000.00 on January 2, 1998; and
iii. $50,000.00 on January 2, 1999.
iv. If Employee voluntarily terminates his employment with
Employer or is terminated for cause within one (1) year from the date of
this Agreement, Employee shall repay to Employer the signing bonus paid by
Employer.
5. ADDITIONAL BENEFITS.
Employee shall be entitled to such other and further benefits as are
made available to additional full-time employees of Employer in similar
positions as Employee, subject to qualification periods, including, but not
limited to:
i. An automobile, automobile maintenance, medical and dental
insurance, 401(k) or other retirement plan, life insurance, and company
related expense reimbursement. All such benefits shall be in accordance
with the applicable standards or policies in place for officers of
Employer as of September 1, 1997;
ii. Four (4) weeks annual paid vacation;
iii. Twelve (12) days illness/disability leave in any
continuous twelve (12) month period;
iv. Payment by the Employer on behalf of the Employee of
membership dues in such professional, civic or social organizations as the
Employer and Employee may agree; and,
v. Payment by the Employee of all costs incidental to the
annual physical examination of Employee at a facility of Employee's choice.
6. NEW BUSINESS PROCUREMENT.
In the event Employer enters into a contract with an entity after
execution of this Agreement and the contract is a result of the efforts of
Employee, then Employee shall be entitled to a bonus of one-half of one percent
(.5%) of the value of the contract. For the purpose of this Agreement only, the
value of the contract shall be determined as follows: The Employer shall
determine the amount of the Employer's investment in the project within thirty
(30) days of the contract execution and that amount shall be deemed the value of
the contract. A bonus earned under this section shall be due and payable sixty
(60) days after the date the contract is signed by Employer.
7. PHANTOM STOCK.
a. Subject to the conditions and requirements set forth in this
Agreement, Employer hereby grants to Employee a "phantom stock" right relating
to one (1) share of common stock of the Employer which represents one percent
(1%) of the outstanding shares of common stock of Employer as of the date of
this Agreement, subject to adjustment as provided in (e), below. The Employee
shall become vested in fifty percent (50%) of the phantom stock right on the
date that is forty five (45) days after the execution of this Agreement, and
shall become vested in the remaining fifty percent (50%) of the phantom stock
right on the first anniversary of the execution of this Agreement, provided that
Employee remains employed by Employer on each such date. The parties agree and
acknowledge that the grant of the phantom stock right hereunder shall not confer
upon the Employee the right to receive any actual equity of any kind in the
Employer, and the Employee shall not be entitled to any privileges of ownership
of a stockholder of the Employer in connection with the phantom stock right.
Rather, such phantom stock right shall only represent the right of the Employee
to receive a payment should either of the following events occur:
i. the sale of all of the outstanding stock of the Employer,
or its parent company, to a third party or entity not owning
such stock as of the date of this Agreement. In such event,
the Employee shall receive, within thirty (30) days of such
sale, a lump sum cash payment equal to the fair market value
(as determined in accordance with (f), below) of the shares of
common stock to which this phantom stock right then relates,
to the extent vested, determined as of the date of the sale;
or
ii. the completion of a public offering of the stock of the
Employer, or its parent company. In such event, the Employee
shall receive, within thirty (30 days of the completion of the
public offering, a lump sum payment in cash or common stock of
the Employer, as determined by the Employer, equal to the fair
market value (as determined in accordance with (f), below) of
the shares of common stock to which this phantom stock right
then relates, to the extent vested, determined, as of the date
of the public offering.
b. If the Employee voluntarily terminates his employment with Employer,
dies or becomes disabled (as set forth in paragraph 3. g.), his phantom stock
right, to the extent vested, shall be valued as of the date that his employment
is terminated, he dies or he becomes disabled. In any event, no lump sum
distribution shall be made until the occurrence of the earlier of the events
described in paragraph 7. a. i. or ii.
c. The phantom stock right shall be immediately forfeited in the event
that the Employee's employment with Employer is terminated for cause, as set
forth in this Agreement, or if, following any termination of employment, the
Employee violates any of the restrictive covenants contained in this Agreement.
d. The Employee shall not have the power to sell, transfer, pledge,
hypothecate, assign, mortgage, anticipate or otherwise encumber the phantom
stock right.
e. In the event of any reclassification, recapitalization, merger,
consolidation, reorganization, stock dividend, stock split or reverse stock
split, or any other similar change in corporate structure which, in the
judgement of the Board of directors of the Employer (the "Board") affects the
value of the shares of common stock of the Employer, the Board shall make
equitable adjustments to the number and class of shares that relate to this
phantom stock right. However, Employee acknowledges that his interest may be
diluted through future issuances of shares of stock of the Employer.
f. For purposes of this Section 7, fair market value of a share of
common stock of the Employer shall be determined by the Board acting in good
faith in its sole discretion; provided, however, that in the case of Section
7(a)(ii) where the public offering relates to the common stock of the Employer,
the fair market value thereof shall be based on the public offering price.
8. RELOCATION ALLOTMENT.
In the event Employer relocates Employee's work location from Marietta,
Georgia to a location more than fifty (50) miles from Marietta, Georgia, then in
such event Employer shall pay Employee $100,000.00 no later than thirty (30)
days prior to the move, and upon such payment Employer shall have no further
obligation to Employee for relocation expenses.
9. COVENANT NOT TO COMPETE.
a. Employee agrees that during the term of this Agreement and for a
period of one (1) year after the termination of this Agreement, he will not,
either individually or in partnership or in conjunction with any person or
persons, firm, association, syndicate, company, joint venture, corporation or
other entity (of any kind whatsoever), and whether as principal, agent,
shareholder, officer, employee, investor, or in any manner whatsoever, directly
or indirectly carry on or be engaged in or be concerned with or interested in,
or advise, lend money to, guarantee the debts or obligations of, or permit his
name to be used or employed by any person or persons (including, without
limitation, any corporation or other business enterprise) which at any time is
or becomes engaged in or concerned with or interested in any business which is
in any manner competitive with the business of Employer (the "Business") within
North America.
b. Without limiting the foregoing, Employee further agrees that
Employee shall not directly or indirectly, for himself or any other individual
or business entity:
i. solicit Business for or from any person, company, or other
entity which was a customer of Employer or which is now or hereafter
becomes or could become a customer of the Employer or to which the
Employer has submitted a bid, proposal or other offer to do business
during the term of this Agreement and for the twelve (12) months period
immediately preceding the effective date of this Agreement; or
ii. use or release to any third party any trade secrets or
other confidential information such as: customer lists, customer
information, employee lists, employee information, intellectual property,
and/or sensitive operational information that he was or may have been
privileged to during his tenure with Employer, or its predecessors; or
iii. induce or attempt to persuade any person now or hereafter
employed by the Employer or any successor, affiliate or subsidiary thereof
to terminate his employment relationship; or
iv. advise any person or business entity not to do business
with the Employer or any of their respective successors, affiliates, or
subsidiaries; or
v. make any disparaging, defamatory or negative comments,
either orally or in writing, regarding or otherwise about the Employer, its
officers, agents, employees or business operations.
10. INTELLECTUAL PROPERTY.
Any intellectual property rights (i.e. patents, copyrights, trademarks,
etc.), of whatsoever nature related in any manner to the business of Employer,
arising during the term of this Agreement or which result from the efforts of
Employer and/or Employee during the term of this Agreement shall be the sole
property of Employer.
11. MISCELLANEOUS
a. This Agreement may not be modified, changed, amended, or altered
except in writing, signed by the Employee and Employer.
b. All notice given or required to be given shall be in writing, sent
by United States first-class certified or registered mail, postage prepaid, to
Employee (or to Employee's spouse or estate upon Employee's death) at Employee's
last known address, and to Employer at its principal offices. All such notices
shall be effective when deposited in the mail in the manner specified in this
paragraph. Either party by a notice in writing may change or designate the place
for receipt of all such notices.
c. No course of conduct between Employer and Employee and no delay or
omission of Employer or Employee to exercise any right or power given under this
Agreement shall: (i) impair the subsequent exercise of any right or power, or
(ii) be construed to be a waiver of any default or any acquiescence in or
consent to the curing of a default while any other default shall continue to
exist, or be construed to be a waiver of such continuing default or of any other
right or power that shall theretofore have arisen; and, every power and remedy
granted by law and by this Agreement to any party hereto may be exercised from
time to time, and as often as may be deemed expedient. All such rights and
powers shall be cumulative to the fullest extent permitted by law.
d. This Agreement shall be governed in all respects and be interpreted
by and under the laws of the State of Georgia.
e. Any waiver by any party of any provision or condition of this
Agreement shall not be construed or deemed to be a waiver of any other provision
or condition of this Agreement, nor a waiver of a subsequent breach of the same
provision or condition, unless such waiver be expressed in writing by the party
to be bound.
f. Any notice to be given under this Agreement shall be in writing and
addressed or delivered to the following:
For Employee: For Employer:
000 Xxxxx Xxxxx Xxxxxxxxx, #0000 JTM Industries, Inc.
Xxxxxxxx, Xxxxxxx 00000 0000 Xxxx Xxxxx Xxxx., Xxxx. 000
Xxxxxxxx, XX 00000
Attn: President
g. This Agreement constitutes the entire Agreement between Employee and
Employer. All previous negotiations and representations not specifically
incorporated herein are superseded and are rendered null and void upon execution
of this Agreement. No modification of this Agreement shall be binding on
Employee or Employer unless in writing and signed by all parties.
h. Employee agrees that this Agreement is reasonable, that valid
consideration has been received therefor and that each party affected by this
Agreement has been responsible for drafting the same. Employee undertakes not to
contest any action taken by Employer to enforce the same and this clause may be
pleaded in complete estoppel of any defense; provided, however, that it is
agreed between Employee and Employer that notwithstanding the foregoing, in the
event that any court of competent jurisdiction should determine that any portion
of the Covenant Not To Compete contained herein should require modification as
being unreasonable, said Covenant Not To Compete shall be amended in accordance
with the decision of such court of competent jurisdiction. It is acknowledged
and agreed by Employee that the compensation and benefits (the "compensation")
paid by Employer pursuant to this Agreement was based in part upon the entering
into by Employee of the Covenant Not To Compete under the scope set out herein,
and that should a court of competent jurisdiction reduce the scope of the
Covenant Not To Compete contained herein as being unreasonable, it shall be open
to such court to reduce the consideration paid and payable by Employer pursuant
to this Agreement accordingly, and in such case the Employee shall forthwith pay
to Employer the amount by which such consideration is reduced.
i. In the event that Employee violates any of the provisions of this
Agreement, Employer shall be entitled to maintain an action against Employee for
damages, and since an action for damages could not adequately compensate
Employer for any such violation, in addition to Employer's remedy at law,
Employer shall also be entitled to injunctive relief.
j. If any section, subsection, sentence or clause of this Agreement
shall be adjudged illegal, invalid or unenforceable such illegality, invalidity,
or unenforceability shall not affect the legality, validity or enforceability of
the Agreement as a whole or of any section, subsection, sentence or clause
hereof not so adjudged.
IN WITNESS WHEREOF, intending to be legally bound hereby the parties
hereto have duly executed this Agreement as of the day and year above written.
JTM INDUSTRIES, INC. XXXXXXX X. XXXX, XX.
_____________________ _________________________
By:_____________
Its:____________
