Exhibit 10.14
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement"), made as of July 5, 1999, by and
between CONSOLIDATED CONTAINER COMPANY LLC, a Delaware limited liability company
(the "Company"), and RONALD E. JUSTICE ("Executive").
RECITALS
Executive is willing to accept employment and perform services for the
Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as follows:
1. Employment.
1.1 Subject to the terms and conditions of this Agreement, the Company
agrees to employ Executive during the Term (as hereinafter defined) as one of
its Executive Vice Presidents. In his capacity as a Executive Vice President,
Executive shall report to the Company's Chief Executive Officer (the "Chief
Executive Officer").
1.2 Subject to the terms and conditions of this Agreement, Executive
hereby accepts employment as one of the Company's Executive Vice Presidents,
commencing on the date hereof, and agrees to devote his full working time and
efforts, to the best of his ability, experience and talent, to the performance
of services, duties and responsibilities in connection therewith. Executive
shall perform such duties and exercise such powers, commensurate with his
position, as an Executive Vice President of the Company, as the Chief Executive
Officer shall from time to time delegate to him on such terms and conditions and
subject to such restrictions as such Chief Executive Officer may reasonably from
time to time impose.
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1.3 Nothing in this Agreement shall preclude Executive, so long as in the
reasonable determination of the Company's Management Committee (the "Committee")
such activities do not materially interfere with his duties and responsibilities
hereunder, from engaging in charitable and community affairs or from serving as
a member of the boards of directors of up to two companies which are not
involved in the purchase, sale, lease, management of or other dealing in any
property or the rendering of any service purchased, sold, leased, managed, dealt
in or rendered by the Company or any affiliate.
2. Term of Employment. Executive's term of employment under this Agreement
(the "Term") shall commence on the date hereof and, subject to the terms hereof,
shall terminate on the earlier of (i) the second anniversary of the date hereof
(the "Termination Date") or (ii) the termination of Executive's employment
pursuant to Section 6 of this Agreement; PROVIDED, HOWEVER, that any termination
of employment by Executive (other than for death or Permanent Disability) may
only be made upon 60 days prior written notice to the Company.
3. Compensation.
3.1 Salary. The Company shall pay Executive a salary at the rate of
$230,000 per annum (the "Salary") for the period commencing on the beginning of
Executive's term of employment hereunder and ending on the expiration of the
Term. The Salary shall be payable in accordance with the ordinary payroll
practices of the Company. The Salary shall be reviewed by the Committee annually
beginning in January 2000 and any increase in the Salary shall be in the
discretion of the Committee and, as so increased, shall constitute "Salary"
hereunder. Salary may not be reduced below $230,000 per annum.
3.2 Annual Bonus. In addition to his Salary, Executive shall be eligible
to participate in the Company's annual bonus plan (the "Bonus Plan", and any
award or payment
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under the Bonus Plan, the "Bonus") during the Term and shall have a target bonus
(the "Target Bonus") equal to 40% of the Salary and a maximum bonus (the
"Maximum Bonus") of 80% of Salary, in each case based upon performance criteria
determined by the Committee in its sole discretion.
4. Employee Benefits; Expenses.
4.1 Employee Benefit Programs, Plans and Practices. The Company shall
provide Executive during the Term with coverage under all employee pension and
welfare benefit programs, plans and practices (commensurate with his positions
in the Company and to the extent permitted under any employee benefit plan) in
accordance with the terms thereof, which the Company makes generally available
to its senior executives.
4.2 Vacation. Executive shall be entitled each year to vacation for a
period of four (4) weeks to be taken at mutually convenient times, during which
time Salary shall be paid in full.
4.3 Expenses. Executive is authorized to incur reasonable costs and
expenses in carrying out his duties and responsibilities under this Agreement,
including, without limitation, expenses for travel and similar items related to
such duties and responsibilities. The Company will reimburse Executive for all
such expenses upon presentation by Executive from time to time of appropriately
itemized and approved (consistent with the Company's policy) accounts of such
expenditures.
5. Excise Taxes. (a) Gross-Up Payment. Anything in this Agreement to the
contrary notwithstanding and except as set forth below, if it is determined that
any payment or distribution (a "payment") by the Company to or for the benefit
of the Executive (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, but
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determined without regard to any additional payments required under this Section
5) including, without limitation, vesting of options, would be subject to the
excise tax imposed by Section 4999 of the Code, or if any interest or penalties
are incurred by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, being hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount sufficient to
pay all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment.
(b) Calculation of Gross-Up Payment. Subject to the provisions of
paragraph (c) of this Section 5, all determinations required to be made under
this Section 5, including whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to be used in arriving
at such determination, shall be made by a certified public accounting firm
selected by the Company and reasonably acceptable to the Executive (the
"Accounting Firm"), which shall be retained to provide detailed supporting
calculations both to the Company and the Executive. All fees and expenses of the
Accounting Firm shall be paid solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 5, shall be paid by the Company to the
Executive within five (5) days of the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which should
have been made will not have been made by the Company ("Underpayment"),
consistent with the calculations required to be made hereunder. If the
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Company exhausts its remedies pursuant to paragraph (c) of this Section 5 and
the Executive thereafter is required to pay an Excise Tax in an amount that
exceeds the Gross-Up Payment received by the Executive the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.
(c) Contested Taxes. The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service that, if successful, would result in
an Underpayment. Such notification shall be given as soon as practicable but no
later than ten (10) business days after the Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid or appealed. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(1) give the Company any information reasonably requested by the
Company relating to such claim,
(2) take such action in connection with contesting such claims as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company,
(3) cooperate with the Company in good faith in order to effectively
contest such claim, and
(4) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest
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and shall indemnify and hold the Executive harmless, on an after-tax basis, for
any Excise Tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this paragraph (c),
the Company shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the Executive
to pay the tax claimed and sue for a refund or to contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; PROVIDED, HOWEVER, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis, and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with respect to
such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Executive
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to the amount of the Gross-Up
Payment, and the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) Refunds. If, after the receipt by the Executive of an amount advanced
by the Company pursuant to this Section 5, the Executive becomes entitled to
receive any refund with
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respect to such claim, the Executive shall promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto).
6. Termination of Employment.
6.1 Termination Not for Cause or for Good Reason. (a) The Company may
terminate Executive's employment at any time for any reason. If Executive's
employment is terminated by the Company, other than for Cause (as defined in
Section 6.4(b) hereof) or as a result of Executive's death or Permanent
Disability (as defined in Section 6.2 hereof), or if Executive terminates his
employment for Good Reason (as defined in 6.1(c) hereof), in each case prior to
the expiration of the Term, Executive shall receive such payments, if any, under
applicable plans or programs, including but not limited to those referred to in
Section 4.1 hereof, to which he is entitled pursuant to the terms of such plans
or programs. In addition, if Executive's employment is terminated as provided in
the prior sentence during the Term, Executive shall be entitled to receive an
amount (the "Termination Amount") equal to the sum of the Salary and Target
Bonus otherwise payable over a twelve month period. The Termination Amount, if
any, shall be payable in equal monthly installments over the twenty-four month
period following the termination of the Executive's employment. In addition,
Executive shall be entitled to receive a cash lump sum payment in respect of
accrued but unused vacation days (not to exceed 4 weeks of Salary) (the
"Vacation Payment") and to compensation earned but not yet paid (the
"Compensation Payment") and to continued coverage for twenty-four months
following the termination of the Executive's employment under any employee
medical, dental, life and long-term disability insurance plans in accordance
with the respective terms thereof (unless such coverage is provided by
Executive's subsequent employer).
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(b) The Compensation Payment shall be paid by the Company to Executive
within 30 days after the termination of Executive's employment.
(c) For purposes of this Agreement, "Good Reason" shall mean any of the
following (without Executive's express prior written consent):
(i)(A) any reduction in the amount of the Executive's Salary, (B)
any reduction in Executive's potential Target Bonus or Maximum Bonus, or
(C) any significant reduction in the value of the Executive's benefits in
effect from time (unless in the case of either B or C, such reduction is
pursuant to a general change in the compensation or benefits applicable to
all similarly situated employees of the Company or its affiliates);
(ii) (A) other than in connection with a promotion, the removal of
the Executive from the Executive's position as a Executive Vice President
of the Company (or as a Executive Vice President of any successor to the
operations of the Company) or (B) any other significant reduction in the
nature or status of the Executive's duties or responsibilities; or
(iii) the transfer of the Executive's principal place of employment
to a metropolitan area other than that of the Executive's place of
employment immediately following the date hereof.
6.2 Permanent Disability. If the Executive suffers a "permanent and total
disability" within the meaning of Section 22(e)(3) of the Internal Revenue Code
of 1986, as amended ("Permanent Disability"), the Company or Executive may
terminate Executive's employment on written notice thereof, and Executive shall
receive or commence receiving, as soon as practicable:
(i) amounts payable pursuant to the terms of a disability policy or
similar arrangement, if any;
(ii) the Compensation Payment and the Vacation Payment;
(iii) the Target Bonus in respect of the fiscal year in which his
termination occurs, prorated by a fraction, the numerator of which is the
number of days of the fiscal year until termination and the denominator of
which is 365 (the "Prorated Bonus"); and
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(iv) such payments under applicable plans or programs, including but
not limited to those referred to in Section 4.1 hereof, to which he is
entitled pursuant to the terms of such plans or programs.
6.3 Death. In the event of Executive's death during the Term Executive's
estate or designated beneficiaries shall receive or commence receiving, as soon
as practicable:
(i) amounts payable pursuant to the terms of a life insurance policy
or similar arrangement, if any;
(ii) the Compensation Payment and the Vacation Payment;
(iii) the Prorated Bonus; and
(iv) such payments under applicable plans or programs, including but
not limited to those referred to in Section 4.1 hereof, to which
Executive's estate or designated beneficiaries are entitled pursuant to
the terms of such plans or programs.
6.4 Voluntary Termination by Executive; Discharge for Cause. (a) The
Company shall have the right to terminate the employment of Executive for Cause.
In the event that Executive's employment is terminated by the Company for Cause,
as hereinafter defined, or by Executive other than for Good Reason or other than
as a result of the Executive's Permanent Disability or death, during the Term,
Executive shall only be entitled to receive the Compensation Payment and
Executive shall not be entitled, among other things, to the payment of any Bonus
in respect of all or any portion of the fiscal year in which such termination
occurs. After the termination of Executive's employment under this Section 6.4,
the obligations of the Company under this Agreement to make any further payments
(except for the Compensation Payment and the Vacation Payment), or provide any
benefits specified herein, to Executive shall thereupon cease and terminate.
(b) As used herein, the term "Cause" shall be limited to (i) willful
malfeasance or willful misconduct by Executive in connection with his
employment, (ii) continuing refusal by
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Executive to perform his duties hereunder or any lawful direction of the
Committee as required under Section 1.2, after notice of any such refusal to
perform such duties or direction was given to Executive, (iii) any breach of the
provisions of Section 12 of this Agreement by Executive or (iv) the commission
by Executive of (a) any felony or (b) a misdemeanor involving moral turpitude.
Termination of Executive pursuant to this Section 6.4 shall be made by delivery
to Executive of a copy of a resolution duly adopted in good faith by the
affirmative vote of not less than a majority of the Committee members at a
meeting of the Committee called and held for the purpose (after 30 days prior
written notice to Executive and reasonable opportunity for Executive to be heard
before the Committee prior to such vote), finding that in the reasonable
judgment of such Committee, Executive was guilty of conduct set forth in any of
clauses (i) through (iv) above and specifying the particulars thereof.
7. Mitigation of Damages. Executive shall not be required to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise after the termination of his employment
hereunder.
8. Notices. All notices or communications hereunder shall be in writing,
addressed as follows:
To the Company:
Consolidated Container Company LLC
2515 McKinney Avenue
Suite 855
Dalla, TX 75201
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with copies to:
James P. Kelley, Managing Director
Vestar Capital Partners
1225 Seventeenth Street, Suite 1660
Denver, CO 80202
and
Alvin H. Brown, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
To Executive:
Ron Justice
5808 Southern Hills Drive
Flower Mound, Texas 75022
Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in a
notice duly delivered as described above), and the third business day after the
actual date of mailing shall constitute the time at which notice was given.
9. Separability; Legal Fees. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect. Each party shall bear the costs of any legal
fees and other fees and expenses which may be incurred in respect of enforcing
its respective rights under this Agreement.
10. Assignment. This Agreement shall be binding upon and inure to the
benefit of the heirs and representatives of Executive and the assigns and
successors of the Company, but neither this Agreement nor any rights or
obligations hereunder shall be assignable or otherwise subject to hypothecation
by Executive (except by will or by operation of the laws of intestate
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succession) or by the Company, except that the Company may assign this Agreement
to any successor (whether by merger, purchase or otherwise) to all or
substantially all of the stock, assets or businesses of the Company, if such
successor expressly agrees to assume the obligations of the Company hereunder.
11. Amendment. This Agreement may only be amended by written agreement of
the parties hereto.
12. Nondisclosure of Confidential Information. (a) Executive shall not,
without the prior written consent of the Company, use, divulge, disclose or make
accessible to any other person, firm, partnership, corporation or other entity
any Confidential Information pertaining to the business of the Company, Suiza
Foods Corporation ("Suiza"), Franklin Plastics, Inc. ("Franklin"), Reid Plastics
Holdings, Inc. ("Reid"), Holdings or any of their respective affiliates, except
(i) while employed by the Company, in the business of and for the benefit of the
Company, or (ii) when required to do so by a court of competent jurisdiction, by
any governmental agency having supervisory authority over the business of the
Company, or by any administrative body or legislative body (including a
committee thereof) with jurisdiction to order Executive to divulge, disclose or
make accessible such information. For purposes of this Section 12(a),
"Confidential Information" shall mean non-public information concerning the
financial data, strategic business plans, product development (or other
proprietary product data), customer lists, marketing plans and other non-public,
proprietary and confidential information of the Company, Suiza, Franklin, Reid,
Holdings and all of their respective affiliates (the "Restricted Group") or
customers, that, in any case, is not otherwise available to the public (other
than by Executive's breach of the terms hereof).
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(b) During the period of his employment hereunder and for two years
thereafter, Executive agrees that, without the prior written consent of the
Company, (A) he will not, directly or indirectly, either as principal, manager,
agent, consultant, officer, stockholder, partner, investor, lender or employee
or in any other capacity, carry on, be engaged in or have any financial interest
in, any business which is in competition with the business of the Restricted
Group and (B) he shall not, on his own behalf or on behalf of any person, firm
or company, directly or indirectly, solicit or offer employment to any person
who has been employed by the Restricted Group at any time during the 12 months
immediately preceding such solicitation.
(c) For purposes of this Section 12, a business shall be deemed to be in
competition with the Restricted Group if it is principally involved in the
purchase, sale or other dealing in any property or the rendering of any service
purchased, sold, dealt in or rendered by the Restricted Group as a material part
of the business of the Restricted Group within the same geographic area in which
they effect such purchases, sales or dealings or renders such services. Nothing
in this Section 12 shall be construed so as to preclude Executive from investing
in any publicly or privately held company, provided Executive's beneficial
ownership of any class of such company's securities does not exceed 1% of the
outstanding securities of such class.
(d) Executive and the Company agree that this covenant not to compete is a
reasonable covenant under the circumstances, and further agree that if in the
opinion of any court of competent jurisdiction such restraint is not reasonable
in any respect, such court shall have the right, power and authority to excise
or modify such provision or provisions of this covenant as to the court shall
appear not reasonable and to enforce the remainder of the covenant as so
amended. Executive agrees that any breach of the covenants contained in this
Section 12 would irreparably injure the Company. Accordingly, Executive agrees
that the Company may, in
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addition to pursuing any other remedies it may have in law or in equity, cease
making any payments otherwise required by this Agreement and obtain an
injunction against Executive from any court having jurisdiction over the matter
restraining any further violation of this Agreement by Executive.
(e) As additional consideration for Executive's commitments pursuant to
this Section 12, the Company, shall if Executive's employment is terminated by
the Company without Cause (other than as a result of Permanent Disability or
death) or by the Executive for Good Reason, pay to the Executive an amount equal
to the sum of the Salary and Target Bonus (otherwise payable over a twelve month
period) in twenty-four equal monthly installments commencing during the month
following the month in which Executive's employment was terminated.
13. Beneficiaries; References. Executive shall be entitled to select (and
change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
Executive's death, and may change such election, in either case by giving the
Company written notice thereof. In the event of Executive's death or a judicial
determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative.
14. Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this Section 14 are in addition to the survivorship provisions of
any other section of this Agreement.
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15. Governing Law and Venue. This Agreement shall be construed under and
governed by the laws of the State of Delaware applicable to contracts made and
to be performed therein and the parties hereto agree to submit themselves to the
jurisdiction of the federal and state courts of the State of Delaware for the
purpose of any suit, action or other proceeding arising out of this Agreement;
PROVIDED, HOWEVER, that in the event of the Executive's breach of the provisions
of Section 12 hereof, the Company may bring an action in any jurisdiction in
which the Company believes the Executive has breached those provisions and the
Executive agrees to submit to the courts of such jurisdiction.
16. Effect on Prior Agreements. This Agreement contains the entire
understanding between the parties hereto and supersedes in all respects any
prior or other agreement or understanding between the Company or any affiliate
of the Company and Executive regarding Executive's employment. The Option
Agreement, the Registration Rights Agreement and the LLC Agreement shall remain
in effect.
17. Withholding. The Company shall be entitled to withhold from payment
any amount of withholding required by law.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
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IN WITNESS WHEREOF, the parities hereto have executed this Agreement as of
the date first written above.
CONSOLIDATED CONTAINER
COMPANY LLC
By: /s/ John R. Woodard
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Name: John R. Woodard
Title: Vice President
/s/ Ronald E. Justice
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RONALD E. JUSTICE