EMPLOYMENT AGREEMENT
AGREEMENT made this 15th day of July 1998, between Elite, Inc., a Texas
corporation, hereinafter sometimes called the "Employer", having its principal
place of business in Duluth, Georgia, and Scott Schuster, hereinafter sometimes
called the "Employee".
WHEREAS, the Employee and Employer desire to set forth in writing their
contract with respect to Employee's employment by Employer;
NOW, THEREFORE, in consideration of their mutual promises set forth
herein, the parties hereby agree as follows:
1. EMPLOYMENT. Employer hereby employs Employee, and Employee hereby accepts
such employment, upon the terms and conditions set forth in this
Agreement.
2. DUTIES AND AUTHORITY.
A. Employee will occupy the position of Chief Executive Officer,
(hereinafter referred to as "Position" or "Assignment") with the
Employer. Employee will also be appointed as a member of the board.
B. In this position, Employee will have the responsibility and
authority associated with said position, subject to the control of
the Board of Directors, and have general supervision, direction and
control, as necessary, over the business and affairs of the
Corporation and its Employees. Employee will be primarily
responsible for carrying out orders and resolutions of the Board of
Directors and such duties as may from time to time be assigned to
Employee by the Board of Directors.
C. Employee agrees to devote his full time attention and best efforts
to the performance of employment hereunder.
3. TERM OF EMPLOYMENT. The term of employment shall begin on the date of this
Agreement, and shall extend for a period of three (3) consecutive years or
until terminated as provided herein.
4. COMPENSATION. Employee will receive compensation during the term of this
Agreement as follows:
A. A base annual salary of two hundred fifty thousand dollars per year
($250,000) payable either bi-monthly, weekly, semi-weekly or monthly
at the discretion of the Employer. The base salary shall be adjusted
at the end of each year of employment as an increase.
B. An incentive salary (Bonus) equal to a maximum of three percent (3)
of the adjusted net profits (hereinafter defined) of the Employer
during each fiscal year beginning or ending during the term of this
Agreement. "Adjusted net profit" shall be the net profit before
federal and state income taxes, determined in accordance with
accepted accounting practices by the independent accounting firm
employed by the Employer as auditors and adjusted to exclude: (i)
any incentive salary payments paid pursuant to this Agreement; (ii)
any contributions to pension and/or profit-sharing plans; (iii) any
extraordinary gains or losses (including, but not limited to, gains
or losses on disposition of assets); (iv) any refund or deficiency
of federal and state income taxes paid in a prior year; and (v) any
provision for federal or state income taxes made in prior years
which is subsequently determined as unnecessary. The determination
of the adjusted net profits made by the independent accounting firm
employed by the Employer shall be final and binding upon Employee
and the Employer. For the first and last fiscal years ending and
beginning, respectively, during the term of this Agreement, the
incentive salary shall be computed for the proportion of the fiscal
year coextensive with this Agreement. The incentive salary shall be
paid within sixty (60) days after the end of each fiscal year. The
maximum incentive salary payable for any one year shall not exceed
two hundred percent of Employee's base salary unless authorized by
the Board of Directors.
5. DEFERRED COMPENSATION. In the event that Employee retires after performing
services for the Employer up until Employee reaches the age of 65 or
retires at an earlier age with the approval of the Employer, Employee will
be entitled to deferred compensation payments after retirement upon the
following terms and conditions:
A. For a period of twenty (20) years ("Retirement Period") Employee
will receive all of the following: (i) Base Payments equal to thirty
percent (30%) of the average total salary (base salary plus
incentive salary) paid to Employee during the last three (3) full
years of employment or based upon his/her total period of
employment, should that period be less that three (3) full years,
prior to the month of retirement ("Retirement Salary Base"); (ii)
Advisor Payments equal to thirty percent (30%) of the Retirement
Salary Base, provided that Employee serves as an advisor and
consultant to the Employer regarding its business. Employee will
hold himself available to perform services at reasonable times at
the request of the Board of Directors of the Employer, consistent
with any business activities Employee may be engaged in at such
time. The Board of Directors of the Employer shall have the right to
require the presence of Employee at any Board of Directors meeting,
not exceeding more than one meeting per month, to act and serve in
the advisory capacity. Attendance at these Board of Directors
meetings shall not be required should Employee's health prevent
attendance; however, Employer shall have the right to demand a
written statement from Employee prepared by a licensed medical
examiner evidencing inability of Employee to attend the meeting or
meetings. Employee will be reimbursed for all reasonable and
necessary travel and incidental expenses incurred by Employee in
connection with the performance of advisory services; and (iii) Non
competition Payments equal to forty percent (40%) of the Retirement
Base Salary provided that Employee will not, directly or indirectly,
perform any business, commercial, or consulting services to any
person, firm, or organization or become associated as a manager,
Employee, director, or owner of any business organization competing
directly or indirectly with the Employer, whether or not compensated
without the prior written consent of Employer. In the event that
Employer and Employee are unable to agree on whether a particular
business in which Employee attempts to engage is directly or
indirectly in competition with the Employer, the matter will be
submitted to arbitration under the provisions of Paragraph 22 of
this agreement.
B. The deferred compensation payments shall be made in equal monthly
installments on the first day of each month, starting in the month
following the month of retirement.
C. In the Event of the death of Employee prior to the expiration of the
"Retirement Period", the Employer will pay all remaining Base
Payments specified in subparagraph A(i), and no other deferred
compensation payments, to any beneficiary of Employee designated by
Employee in a written document filed with the Employer, or in the
absence of such designation, the estate of Employee. The Employer
may elect to pay these remaining Base Payments in a lump sum or in
the equal monthly installments specified in subparagraph B.
D. Employee shall not sell, assign, transfer, or pledge, or in any
other way dispose of or encumber, voluntarily or involuntarily, by
gift, testamentary disposition, inheritance, transfer to any
inter-vivos trust, seizure and sale by legal process, operation of
law, bankruptcy, winding up of a corporation, or otherwise, the
right to receive any deferred compensation pursuant to this
Agreement.
6. RELOCATION. In the event Employee is transferred and assigned to a new
principal place of work located more than fifty (50) miles from Employee's
present residence, Employer will pay for all reasonable relocation
expenses including:
A. Transportation fares, meals, and lodging for Employee, his spouse,
and family from Employee's present residence to any new residence
located near the new principal place of work.
B. Moving of Employee's household goods and the personal effects of
Employee and Employee's family from Employee's present residence to
the new residence.
C. Lodging and meals for Employee and Employee's family for a period of
not more than sixty (60) consecutive days while occupying temporary
living quarters located near the new principal place of work.
D. Round trip travel, meals and lodging expenses for Employee's family
for no more than two (2) house hunting trips to locate a new
residence, each trip not to exceed fourteen (14) days; and
E. Expenses in connection with the sale of the residence of Employee
including Realtor fees, property appraisals, mortgage prepayment
penalties, termite inspector fees, title insurance policy and
revenue stamps, escrow fees, fees for drawing documents, state or
local sales taxes, mortgage discount points (if in lieu of a
prepayment penalty), and seller's attorney's fees (not to exceed one
percent (1%) of the sales price). At the option of Employee and in
lieu of reimbursement for these expenses, Employee may sell the
residence of Employee to the Employer at the fair market value of
the residence determined by an appraiser chosen by the Employer. The
appraisal will be performed within ten (10) days after notice of
transfer and notice of appraised value will be submitted by report
to Employee. Employee will have the right to sell the residence to
the Employer at the appraised price by giving notice of intent to
sell within thirty (30) days from the date of the appraisal report.
The term "residence" shall mean the property occupied by Employee as
the principal residence at the time of transfer and does not include
summer homes, multiple-family dwellings, houseboats, boats, or
airplanes but does include condominium or cooperative apartment
units and duplexes (two family) occupied by Employee.
7. MEDICAL AND GROUP INSURANCE. At the expense of the Employer, Employer
agrees to include Employee in the group medical and hospital plan of
Employer, when such plan is established.
8. STOCK OPTIONS. Options to acquire common stock of two million (2,000,000)
shares of which options to acquire one million (1,000,000) shares of
common stock at a price of Ten Cents ($0.10) fully vest and become
exercisable on August 31, 2000, options to acquire one million (1,000,000)
shares of common stock at a price of Ten Cents ($0.10) fully vest and
become exercisable on August 31, 2001. The options described above expire
one year after fully vesting and must be exercised on or before that date.
Company agrees to provide exemption registration upon written notification
of Employee. Employee shall provide Company written notice not less than
60 days prior to the intent to exercise said option.
9. VACATION. Employee shall be entitled to four (4) weeks of paid vacation
during each year of employment; for the fourth year and each years
thereafter, said vacation time shall increase to five (5) weeks during
each year. The time for the vacation shall be mutually agreed upon by
Employee and Employer. If vacation is not taken, for the benefit of the
Employer, Employee shall be compensated at one and one half (1 1/2) times
his base salary rate for time not taken. Employee shall receive 30 days
Sick/Personal Leave for each year of employment. Unused Sick/Personal
Leave will accrue and be retained by Employee to be used at his
discretion.
10. AUTOMOBILE. Employer will provide to Employee, during the term of this
agreement, the use of a new luxury automobile of the Employee's choice,
said automobile may be leased, rented or purchased by Employer at
Employer's discretion. Value of said automobile shall be determined by the
following guidelines: for the initial automobile; a vehicle that could
normally be purchased with a twenty percent (20%) down payment and total
monthly payments not to exceed $3,500.00 for a period of five (5) years.
The Employer will procure and maintain in force an automobile liability
policy for the automobile with coverage, including Employee, in the
minimum amount of One Million Dollars ($1,000,000) combined single limit
on bodily injury and property damage.
11. EXPENSE REIMBURSEMENT. Employee shall be entitled to reimbursement for all
reasonable expenses, including travel and entertainment, incurred by
Employee in the performance of Employee's duties. Employee will maintain
records and written receipts as required by federal and state tax
authorities to substantiate expenses as an income tax deduction for
Employer and shall submit vouchers for expenses for which reimbursement is
made
12. LOW INTEREST LOAN.
A. From time to time, Employee may borrow sums from Employer up to a
maximum aggregate of $500,000 provided the Employer has excess funds
available for such purposes. The Board of Directors shall establish
the amount of such funds available annually. Each loan shall be
evidenced by a Promissory Note payable in not more than sixty (60)
monthly principal and interest installment payments starting with
the first day of the month following the month in which the loan is
made, with interest at the rate of three percent (3%) per year on
the unpaid balance of the loan or loans outstanding.
B. In the event Employee severs employment with Employer for reasons
other than permanent disability, death, or retirement while a loan
or loans are outstanding, the unpaid principal amount then
outstanding shall be due and payable within thirty (30) days after
the date of termination. In the event severance of employment is due
to permanent disability, death, or retirement, Employee, or the
legal representative of Employee, shall repay any outstanding loan
in accordance with the terms of the promissory note.
C. Should there be a default in the payment of any installment of
principal and interest when due, then the entire sum of principal
and interest, at the option of the Employer, shall immediately
become due and payable without demand or notice. In case this note
shall not be paid when due according to its terms, Employee shall
pay all costs of collection and reasonable attorney's fees whether
or not suit is filed on the note
13. PERMANENT DISABILITY.
A. In the event Employee becomes permanently disabled (hereinafter
defined) during employment with Employer, Employer may terminate
this agreement by giving thirty (30) days notice to Employee of its
intent to terminate, and, unless Employee resumes performance of the
duties set forth in Paragraph 2 within five (5) days of the date of
notice and continues performance for the remainder of the notice
period, this agreement will terminate at the end of the thirty (30)
day period. "Permanently disabled" for the purpose of this agreement
will mean the inability, due to physical or mental ill health, or
any reason beyond the control of Employee to perform Employee's
duties for sixty (60) consecutive days or for an aggregate of ninety
(90) days during any one employment year irrespective of whether
such days are consecutive.
B. Upon termination of employment under the provisions of subparagraph
(12A) above, Employee will be entitled to any deferred compensation
to which the Employee may be entitled under the provisions of
Paragraph 5 herein paid to him upon giving notice to the Employer.
For the purposes of Paragraph 5, termination under subparagraph
(12A) of this agreement shall be considered "retirement"; Employee
will be excused from performing advisory services as required under
Paragraph 5(B)(ii.) but shall nevertheless be entitled to Advisory
Payments except the extent limited by death of Employee as set forth
in Paragraph 5(C) herein.
C. Employer shall maintain, at its expense, a disability Policy
covering Employee for a dollar amount specified by the Board of
Directors of Employer. This amount may not exceed one hundred
percent (100%) of the base salary. Benefits of this policy shall
begin on the date the Employee's Sick/Personal Leave days are
exhausted and shall continue until the Employee's deferred
compensation as outlined in paragraph 5 of this agreement goes into
effect.
14. DEATH. In the event that Employee dies during the term of this agreement,
this agreement shall immediately terminate except as provided in paragraph
5C, herein.
15. TERMINATION.
A. This agreement may be terminated by Employer by giving ten (10) days
notice to Employee if Employee willfully breaches or habitually
neglects the duties to be performed under Paragraph 2, habitually
engages in the use of illegal substances or the excessive use of
alcohol, or engages in any conduct which is illegal or dishonest
resulting in damage to the reputation of Employer, or potential
damage to reputation of Employer.
B. In the event employment is terminated pursuant to subparagraphs (A),
Employee will be entitled to only base salary compensation earned
prior to the date of termination as provided for in Paragraph 3 of
this agreement computed pro rata up to and including the date of
termination, plus one twelfth (1/12) of one years base salary.
Employee shall not receive the incentive salary payments or the
deferred compensation payments provided for in Paragraphs 3(B) and
4, respectively.
C. Should Employer wish to terminate the Employee or change the Duties
and Authority(as defined in 2A), for any reason, other than those
listed in subparagraph 14A of this agreement, Employee shall receive
the compensation due for the remainder of the Term of Employment
(defined in paragraph three (3) of this agreement) plus one year,
said compensation shall be in a lump sum equal to the total amount
of the base salary as defined in subparagraph four "A" (4A) of this
agreement, in this case "cost of living" increases would not be
applicable. Employee would still receive the "Bonus" as defined in
paragraph four "B" (4B) and "C"(4C) of this agreement. Upon
termination as defined in this paragraph, Employee would, regardless
of age, tenure or Employer approval, immediately become eligible to
also receive Deferred Compensation as defined in sub-paragraphs five
"A" through five "D" (5A-5D) of this agreement.
D. In the event Employer is acquired, is a non surviving party in a
merger, or transfers substantially all of its assets, this agreement
shall not be terminated and Employer agrees to take all actions
necessary to ensure that the transferee or surviving company is
bound by the provisions of this agreement.
1. NOTICES. Any notice provided for in this Agreement shall be given in
writing. Notices shall be effective from the date of service, if served
personally on the party to whom notice is to be given, or on the second
day after mailing, if mailed by first class mail, postage prepaid. Notices
shall be properly addressed to the parties at their respective addresses:
Employer:
3700 Crestwood Parkway
Suite 1000
Duluth, GA 30096
Employee:
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or to such other address as either party may later specify by notice to
the other.
2. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
supersedes all prior agreements and understandings., oral or written, with
respect to the subject matter hereof. This Agreement may be changed only
by an agreement in writing signed by the party against whom any waiver,
change, amendment or modification is sought.
3. WAIVER. The waiver by the Employer of a breach of any of the provisions of
this Agreement by the Employee shall not be construed as a waiver of any
subsequent breach by the Employee.
4. GOVERNING LAW; VENUE. This Agreement shall be construed and enforced in
accordance with the laws of the State of Georgia. Gwinnett County,
Georgia, shall be the proper venue for any litigation arising out of this
Agreement.
5. PARAGRAPH HEADINGS. Paragraph headings are for convenience only and are
not intended to expand or restrict the scope or substance of the
provisions of this Agreement.
6. ASSIGNABILITY. The rights and obligations of the Employer under this
Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Employer. This Agreement is a personal
employment agreement and the rights, obligations and interests of the
Employee hereunder may not be sold, assigned, transferred, pledged or
hypothecated.
7. SEVERABILITY. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, the remainder of
the Agreement shall remain in full force and effect and shall in no way be
impaired.
8. ARBITRATION. Any controversy or claim arising out of or relating to this
contract, or breach thereof, shall be settled by arbitration in accordance
with the Rules of the American Arbitration Association and judgment upon
the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof.
Hereby entered into and agreed upon this 15th day of July, 1998, by:
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Scott A. Schuster Elite Technologies, Inc.