Sample Business Contracts

Employment Agreement - Zomax Inc. and J. John Gelp

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October 10, 2001



Mr. J. John Gelp

1448 Clippership Bay

Woodbury, MN 55125



Dear John:


Welcome to Zomax!  It is my pleasure to make you the following offer of employment:


Position Title:


Executive Vice President and Chief Financial Officer



Plymouth, MN



Regular Full Time, Exempt

Start Date:


October 22, 2001

Reporting To:


Jim Anderson, Chairman and CEO

Pay Rate:


$200,000.00 Annually



You will be eligible to participate in the Zomax executive compensation plan in 2002.

Group Insurance:


You become eligible to participate in the Zomax medical, dental and life plans effective the first day of the month following your start date.

Paid Time Off (PTO):


Initially you will accrue PTO at the rate of 5.23 hours per pay period. (26 pay periods per year)

401 (k):


You become eligible to participate in the Zomax 401 (k) plan effective the beginning of the calendar quarter following the 60th day of employment.

Stock Options:


You will receive Non-Qualified Stock Options of 75,000 shares priced at the market price on the first trading day of the month following your start date.  Share options vest at 20% annually over 5 years beginning one year from the grant date.

Stock Purchase Plan:


On either January 1 or July 1 following the 60th day of employment you will be eligible to join the Zomax Stock Purchase Plan which will allow you to purchase Zomax stock at a discount.

Introductory Period:


As a new regular employee you will be subject to an Introductory Period of ninety (90) days.





Change of Control:


If Executive is terminated from his employment, has a substantial reduction in the nature or status of his responsibilities, or the company’s principal office is relocated more than 50 miles from executive’s home for any reason within one (1) year after a Change of Control, Executive shall be entitled to receive the following from the Company: 







Executive shall receive from the Company within sixty (60) days after such termination or resignation an amount equal to 12 months Base Salary, 12 months of bonus paid at the targeted rate and all accrued PTO time as in effect on the effective date of such termination.  The Company shall be entitled to deduct or withhold all taxes and charges which the Company may be required to deduct or withhold therefrom. 







With respect to any stock options, SARs, restricted stock awards or performance share awards granted to Executive and outstanding immediately prior to such termination, all restrictions on all shares of restricted stock awards shall lapse immediately, all outstanding options and SARs will become exercisable immediately, and all performance share objectives shall be deemed to be met. 






Date of Termination or Resignation.  The date of termination of Executive’s employment by the Company under this section shall be one (1) month after receipt of written notice of termination. 






Limitation on Change of Control Compensation.  In the event that Executive is a “disqualified individual” within the meaning of Section 280G of the Code, the parties expressly agree that the payments described in this Section 6 shall be considered together with all Change of Control Payments so that, with respect to Executive, all Change of Control Payments are collectively subject to an overall maximum limit.  Such maximum limit shall be One Dollar ($1.00) less than the largest amount under which no portion of the Change of Control Payments is considered a “parachute payment” within the meaning of Section 280G of the Code.  Accordingly, to the extent that the Change of Control Payments would be considered a “parachute payment” with respect to Executive, then the portions of such Change of Control payments shall be reduced or eliminated in the following order until the remaining Change of Control Payments with respect to Executive is One Dollar ($1.00) less than the maximum allowable which would not be considered a “parachute payment” under the Internal Revenue Code:  







First, any cash payment to Executive;







Second, any Change of Control Payments not described in this Agreement; and







Third, any forgiveness of indebtedness of Executive to the Company.






Executive expressly and irrevocably waives any and all rights to receive and Change of Control payments which would be considered a "parachute payment" under the Code.






A Change of Control shall be deemed to have occurred if (1) any “person” (as such term is used in Section 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 40% or more of the combined voting power (with respect to the election of directors) of the Company’s then outstanding securities; (2) the consummation of a merger or consolidation of the Company with or into any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 60% of the combined voting power (with respect to the election of directors) of the securities of the Company or of such surviving entity outstanding immediately after such merger or consolidation; or (3) the consummation of a plan of complete liquidation of the Company or of an agreement for the sale or disposition by the Company of all or substantially all of the Company’s business or assets.






In consideration of and as a condition of your employment, you must sign the enclosed Non-Solicitation/Confidentiality Agreement and a Non Compete Agreement and return to Zomax with your acceptance of this offer.


This offer is contingent based upon the successful completion of a background investigation and your ability to comply with federal law requiring you to show proof of your ability to work in the United States on your first day of employment.  If you are currently employed, I urge you to await our call with the investigation results prior to resigning from your current position.   This typically takes 3 to 4 business days from our receipt of your signed acceptance.


While we look forward to a mutually beneficial employment relationship with you it is important that you understand this letter is not an employment contract.  Employment with our company is at will, with the right for either party to terminate employment at any time, for any reason, with or without notice.  No prior promises, representations, or understandings relative to any terms or conditions of your employment are to be considered as part of this letter unless expressed in writing in this letter.  Any future agreements, regarding employment or compensation are binding only with the prior authorization of the Chief Executive Officer of Zomax Incorporated . Compensation and benefit plans referenced in this letter are offered with the understanding that they operate under the plan documents as currently stated.  These compensation and benefit plans may be changed, amended or cancelled for any reason and/or at any time in the future.





This is to confirm that you have no existing agreements with other parties that prevent you from being hired by us or fully executing your new duties.  If this is not correct, prior to signing this letter, please notify me immediately.



Please sign the original copies of this offer letter and return to us immediately signifying your acceptance of this offer.  I have enclosed copies for your files.


This offer is valid for 2 business days from the date of this letter.


I look forward to working with you and am confident your talents match our needs and will be well utilized.  Should you have questions please contact me at 763-577-3523.





/s/James T. Anderson


James T. Anderson


Chairman and CEO


Zomax, Incorporated






         Confidentiality or Non-Solicitation/Confidentiality Agreement

         Non-Compete Agreement


I acknowledge, understand, and agree to employment with Zomax under the terms and conditions outlined above.  My start date will be October 22, 2001.


/s/J. John Gelp

    Date: October 12, 2001

J. John Gelp