Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT, dated as of October 3, 2019 (the “Employment
Agreement”), by and between Gypsum Management and Supply, Inc., a Georgia
corporation (the “Company”), and Scott Deakin (the “Executive”) (each of the
Executive and the Company, a “Party,” and collectively, the “Parties”).

 

WHEREAS, the Company desires to employ the Executive as Chief Financial Officer
of the Company and wishes to be assured of the Executive’s services on the terms
and conditions hereinafter set forth; and

 

WHEREAS, the Executive desires to be employed by the Company as Chief Financial
Officer and to perform and to serve the Company on the terms and conditions
hereinafter set forth.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other valid consideration, the sufficiency of which is acknowledged, the Parties
hereto agree as follows:

 

Section 1.       Employment.

 

1.1.             Subject to Section 3 hereof, the Company agrees to employ the
Executive, and the Executive agrees to be employed by the Company, in each case
pursuant to this Employment Agreement, for a period commencing as of October 21,
2019 (the “Effective Date”), and ending on the first anniversary of the
Effective Date (the “Initial Term”); provided, however, that the period of the
Executive’s employment pursuant to this Employment Agreement shall be
automatically extended for successive one-year periods thereafter (each, a
“Renewal Term”), in each case unless either Party hereto provides the other
Party hereto with written notice that such period shall not be so extended at
least 90 days in advance of the expiration of the Initial Term or the
then-current Renewal Term, as applicable (the Initial Term and any Renewal Term,
collectively, the “Term”). Each additional one-year Renewal Term shall be added
to the end of the next scheduled expiration date of the Initial Term or Renewal
Term, as applicable, as of the first day after the last date on which notice may
be given pursuant to the preceding sentence. The Executive’s period of
employment pursuant to this Employment Agreement shall hereinafter be referred
to as the “Employment Period.”

 

1.2.             Duties. During the Employment Period, the Executive shall serve
as Chief Financial Officer and Vice President of the Company and such other
positions as an officer or director of the Company and such affiliates of the
Company as the Company shall determine from time to time, and shall report
directly to the Chief Executive Officer. In the Executive’s position of Chief
Financial Officer, the Executive shall perform duties customary for the Chief
Financial Officer of a company similar to the Company’s size and nature, plus
such additional duties, consistent with the foregoing, as the Chief Executive
Officer may reasonably assign. The Executive’s principal place of employment
shall be the Company’s headquarters in Tucker, Georgia.

 

1.3.             Exclusivity. During the Employment Period, the Executive shall
devote substantially all of the Executive’s business time and attention to the
business and affairs of the Company, shall faithfully serve the Company, and
shall conform to and comply with the lawful and reasonable directions and
instructions given to the Executive by the Chief Executive Officer consistent
with Section 1.2 hereof. During the Employment Period, the Executive shall use
the Executive’s best efforts to promote and serve the interests of the Company
and shall not engage in any other business activity, whether or not such
activity shall be engaged in for pecuniary profit; provided, that the Executive
may (a) serve any civic, charitable, educational or professional organization,
(b) manage the Executive’s personal investments and (c) act as a director on the
board of directors of another company with prior written consent of the Company,
in each case so long as any such activities do not (x) violate the terms of this
Employment Agreement (including Section 4) or (y) materially interfere with the
Executive’s duties and responsibilities to the Company.

 

 

 

 

Section 2.       Compensation.

 

2.1.             Salary. As compensation for the performance of the Executive’s
services hereunder, during the Employment Period, the Company shall pay to the
Executive a salary at an annual rate of $500,000, payable in accordance with the
Company’s standard payroll policies (the “Base Salary”). The Base Salary will be
reviewed annually and may be adjusted upward (but not downward) by the Chief
Executive Officer or the board of directors of GMS Inc. (“Holdings”) (or a
committee thereof, as the case may be,) in its discretion.

 

2.2.             Annual Bonus. For each fiscal year ending during the Employment
Period, the Executive shall be eligible for potential awards of additional
compensation to be determined based upon the Company’s performance and other
criteria for each such fiscal year as set forth in the annual bonus plan (the
“Corporate Bonus Plan”, with any amount payable under the Corporate Bonus Plan,
the “Annual Bonus”), each as adopted by the Compensation Committee of the Board
(“Compensation Committee”). The Executive’s target Annual Bonus opportunity
under the Corporate Bonus Plan for each fiscal year that ends during the
Employment Period shall equal 60% of the Base Salary, assuming 100% achievement
of the performance target as set forth in the Corporate Bonus Plan (the
“Corporate Target Bonus Opportunity”) (which shall be pro-rated for any fiscal
year not falling entirely within the Employment Period), with the actual Annual
Bonus to be based upon the Company’s performance as determined by the
Compensation Committee. The Annual Bonus shall be paid at such time as annual
bonuses are paid to other similarly situated executives of the Company, but in
no event later than August 31st following the fiscal year in respect of which
such Annual Bonus is earned. The Annual Bonus shall be paid in cash.

 

2.3.             Employee Benefits. During the Employment Period, the Executive
shall be eligible to participate in such health and other group insurance and
other employee benefit plans and programs and any fringe benefit programs of the
Company as in effect from time to time on the same basis as other senior
executives of the Company, and shall receive such perquisites as provided to
other executives of the Company from time to time, including a car allowance in
the amount of $800.00 per month. In addition, during each of the first three (3)
months of the Employment Period, the Company shall pay the Executive $1,500 for
purposes of obtaining COBRA coverage prior to eligibility for the Company’s
group health plans.

 

2.4.             Vacation. During the Employment Period, the Executive shall be
entitled to up to four weeks (20 days) vacation per calendar year. The number of
vacation days is prorated for any partial year of service during the Employment
Period.

 

2.5.             Business Expenses. The Company shall pay or reimburse the
Executive, upon presentation of documentation, for all commercially reasonable
out-of-pocket business expenses that the Executive incurs during the Employment
Period in performing the Executive’s duties under this Employment Agreement and
in accordance with the expense reimbursement policy of the Company as approved
by the Board (or a committee thereof) and in effect from time to time.
Notwithstanding anything herein to the contrary or otherwise, except to the
extent any expense or reimbursement described in this Employment Agreement does
not constitute a “deferral of compensation” within the meaning of Section 409A
of the Internal Revenue Code of 1986, as amended, and the regulations and
guidance thereunder (“Section 409A”), any expense or reimbursement described in
this Employment Agreement shall meet the following requirements: (i) the amount
of expenses eligible for reimbursement provided to the Executive during any
calendar year will not affect the amount of expenses eligible for reimbursement
to the Executive in any other calendar year; (ii) the reimbursements for
expenses for which the Executive is entitled to be reimbursed shall be made on
or before the last day of the calendar year following the calendar year in which
the applicable expense is incurred; (iii) the right to payment or reimbursement
or in-kind benefits hereunder may not be liquidated or exchanged for any other
benefit; and (iv) the reimbursements shall be made pursuant to objectively
determinable and nondiscretionary Company policies and procedures regarding such
reimbursement of expenses.

 

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2.6.             Equity Compensation. Holdings (or its successor, as applicable)
shall grant to the Executive on the Effective Date an equity award having a
grant date value of $600,000 (the “Initial Equity Award”). Fifty percent (50%)
of the grant date value of the Initial Equity Award will be delivered in the
form of restricted stock units (determined by dividing 50% of the Initial Equity
Award amount by the closing price per share of Holdings common stock on the
Effective Date) (the “RSUs”), and fifty percent (50%) of the grant date value of
the Initial Equity Award will be delivered in the form of stock options
(determined based on the Black-Scholes valuation model) (the “Stock Options”).
Each of the RSUs and Stock Options shall vest as to 33.3% on each annual
anniversary of the date of grant if Executive is employed by the Company on such
anniversary date. The RSUs and Stock Options are subject to the terms and
conditions in the Company’s Equity Incentive Plan and the award agreement for
such RSUs and Stock Options, as the case may be. Beginning in August 2020,
Executive will be considered for additional equity grants along with other
similarly situated employees. The expected value for 2020 will be $600,000,
subject to approval of the Compensation Committee of the Board.

 

2.7.             Relocation Expenses. The Company will assist with the expenses
associated with the Executive’s move from Connecticut to Georgia subject to the
terms and conditions of the Company’s Relocation Policy, with any changes as
agreed to by the Company’s Chief Executive Officer. If the Executive voluntarily
terminates employment with the Company during the 12 month period immediately
following the payment of funds for relocation, the Executive shall reimburse the
Company the full amount of any such relocation benefits. If the Executive
voluntarily terminates employment with the Company between 12-24 months
immediately following the payment of funds for relocation, the Executive will be
responsible for reimbursing the Company 50% of any such relocation benefits. The
reimbursement will be due and payable immediately upon voluntary termination.
The Executive also agrees that the Company will be entitled to recover its
reasonable costs and attorneys’ fees incurred in connection with any successful
efforts to recover any portion of the relocation benefits paid to the Executive.

 

2.8.             Outplacement Services. The Company will reimburse Executive for
the cost of up to $10,000 of outplacement services incurred on behalf of
Executive’s spouse.

 

2.9.             Legal Review. The Company will reimburse Executive for the cost
of up to $1,000 of legal services incurred by Executive in connection with the
review of this Agreement and related documents.

 

Section 3.       Employment Termination.

 

3.1.             Termination of Employment. The Company may terminate the
Executive’s employment hereunder for any reason during the Employment Period
upon not less than 30 days’ written notice to the Executive (other than in the
event of a termination by the Company for Cause), and the Executive may
voluntarily terminate the Executive’s employment hereunder for any reason during
the Employment Period upon not less than 30 days’ written notice to the Company
(subject to the longer notice requirements in connection with a termination of
employment by the Executive for Good Reason as set forth in Section 3.2(c)(iii))
(the date on which the Executive’s employment terminates for any reason is
herein referred to as the “Termination Date”). Upon the termination of the
Executive’s employment with the Company for any reason, the Executive shall be
entitled to (i) payment of any Base Salary earned but unpaid through the date of
termination, (ii) earned but unpaid Annual Bonus for any fiscal year completed
prior to the Termination Date (payable in the ordinary course pursuant to
Section 2.2), (iii) unused vacation days (consistent with Section 2.4 hereof)
paid out at the per-business-day Base Salary rate, (iv) benefits in accordance
with the applicable terms of applicable Company plans or arrangements, and (v)
any unreimbursed expenses in accordance with Section 2.5 hereof (collectively,
the “Accrued Amounts”); provided, however, that if the Executive’s employment
hereunder is terminated by the Company for Cause, then any Annual Bonus earned
pursuant to Section 2.2 in respect of a prior fiscal year, but not yet paid or
due to be paid, shall be forfeited.

 

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3.2.             Certain Terminations.

 

(a)    Termination by the Company other than for Cause, Death or Disability;
Termination by the Executive for Good Reason. If the Executive’s employment is
terminated (i) by the Company other than for Cause, death or Disability, (ii) by
the Executive for Good Reason or (iii) if the Company has given the Executive
notice of its intent not to renew this Employment Agreement as of the end of the
Initial Term or any Renewal Term, by the Executive within 15 days following the
end of the Initial Term or any such Renewal Term, as applicable, then in
addition to the Accrued Amounts, the Executive shall be entitled to (A) the
payment of an amount equal to one times the Executive’s Base Salary at the rate
in effect immediately prior to the Termination Date in equal installments on the
Company’s regular payment dates occurring during the 12-month period beginning
on the first payroll date to occur after the 60th day following the Termination
Date; provided that the first such payment shall consist of all amounts payable
to the Executive pursuant to this Section 3.2(a) between the Termination Date
and the first payroll date to occur after the 60th day following the Termination
Date; and (B) a prorated portion of the Executive’s actual Annual Bonus,
determined in accordance with Section 2.2 and payable at the same time as annual
bonuses are paid to other senior executives of the Company, with the prorated
Annual Bonus determined by multiplying the actual Annual Bonus, if any, by a
fraction, the numerator of which is the number of days the Executive is employed
by the Company during the applicable year and the denominator of which is 365
((A) and (B) collectively, the “Severance Amount”). In addition, if the
Executive elects to continue participation in any group medical, dental, vision
and/or prescription drug plan benefits to which the Executive and/or the
Executive’s eligible dependents would be entitled under COBRA, then for a period
of twelve (12) months after the Termination Date (the “Health Benefits
Continuation Period”), the Company shall pay to the Executive an amount in cash
equal to the excess of (A) the COBRA cost of such coverage over (B) the amount
that the Executive would have had to pay for such coverage if Executive had
remained employed during the Health Benefits Continuation Period and paid the
active employee rate for such coverage; provided, however, that (i) if Executive
becomes eligible to receive group health benefits under a program of a
subsequent employer or otherwise (including coverage available to Executive’s
spouse), the Company’s obligation to pay any portion of the cost of health
coverage as described herein shall cease, except as otherwise provided by law;
(ii) the Health Benefits Continuation Period shall run concurrently with any
period for which the Executive is eligible to elect health coverage under COBRA;
and (iii) the Company-paid portion of the monthly premium for such group health
benefits, determined in accordance with Code Section 4980B and the regulations
thereunder, shall be treated as taxable compensation by including such amount in
the Executive’s income in accordance with applicable rules and regulations (the
“Health Benefit”). The Company’s obligations to pay the Severance Amount and the
Health Benefit shall be conditioned upon: (i) the Executive’s continued
compliance with the Executive’s obligations under Section 4 of this Employment
Agreement and (ii) the Executive’s execution, delivery and non-revocation of a
valid and enforceable general release of claims (the “Release”) in the form
provided by the Company, within 45 days after the Executive’s Termination Date.

 

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(b)                Termination for Cause; Termination by Reason of Death or
Disability; Resignation by Executive other than Resignation for Good Reason. If
the Executive’s employment is terminated by the Company for Cause, or by
Executive other than for Good Reason, or in the event of Executive’s death or
Disability, then the Company shall have no further obligations to the Executive
or the Executive’s legal representatives under this Agreement, other than for
payment of the Accrued Amounts.

 

(c)                Definitions. For purposes of Section 3, the following terms
have the following meanings:

 

(i)               “Cause” shall mean a good faith determination by the Chief
Executive Officer that Executive has engaged in any of the following: (A)
willful misconduct or gross negligence in the performance of any of the
Executive’s duties to the Company, which, if capable of being cured, is not
cured to the reasonable satisfaction of the Chief Executive Officer within 30
days after the Executive receives from the Chief Executive Officer written
notice of such willful misconduct or gross negligence, which notice is given to
Executive no later than 30 days after the Chief Executive Officer becomes aware
of such willful misconduct or gross negligence; (B) intentional failure or
refusal to perform reasonably assigned duties by the Chief Executive Officer,
which is not cured to the reasonable satisfaction of the Chief Executive Officer
within 30 days after the Executive receives from the Chief Executive Officer
written notice of such failure or refusal, which notice is given to the
Executive no later than 30 days after the Chief Executive Officer becomes aware
of such failure or refusal; (C) any conviction of, or plea of guilty or nolo
contendere to, (1) any felony (other than motor vehicle offenses) or (2) any
crime (whether or not a felony) involving fraud, theft, or embezzlement, whether
of the United States or any state thereof or any similar foreign law to which
the Executive may be subject; (D) any willful failure to comply with any written
rules, regulations, policies or procedures of the Company which, if not complied
with, would reasonably be expected to have a material adverse effect on the
business or financial condition of the Company, which in the case of a failure
that is capable of being cured, is not cured to the reasonable satisfaction of
the Chief Executive Officer within 30 days after the Executive receives from the
Company written notice of such failure, which notice is given to the Executive
no than later 30 days after the Chief Executive Officer becomes aware of such
failure; or (E) a material breach of this Agreement, which, if capable of being
cured, is not cured to the reasonable satisfaction of the Chief Executive
Officer within 30 days after the Executive receives from the Chief Executive
Officer written notice of such breach, which notice is given to Executive no
later than 30 days after the Chief Executive Officer becomes aware of such
breach. If the Company terminates the Executive’s employment for Cause, the
Company shall provide written notice to the Executive of that fact on or before
the termination of employment.

 

(ii)              “Disability” shall mean the Executive’s inability, due to
physical or mental ill health, to perform the essential functions of the
Executive’s job, with or without a reasonable accommodation, for 180 days out of
any 270-day consecutive day period.

 

(iii)              “Good Reason” shall mean one of the following has occurred
without the Executive’s written consent: (A) a material breach by the Company of
any of the covenants in this Employment Agreement, (B) any material reduction in
the Executive’s Base Salary or bonus opportunity, (C) a material diminution in
Executive’s title, authority, duties, or responsibilities, or a requirement that
Executive report to anyone other than the Chief Executive Officer , or (D) a
relocation of the Executive’s primary work location that would increase the
Executive’s one-way commute by more than 30 miles from the Tucker, Georgia
office. A termination of employment by the Executive for Good Reason shall be
effectuated by giving the Company written notice of the termination, setting
forth the conduct of the Company that constitutes Good Reason, within 30 days of
the first date on which the Executive has knowledge of such conduct. The
Executive shall further provide the Company at least 30 days following the date
on which such notice is provided to cure such conduct, if such conduct is
capable of being cured. Failing such cure, a termination of employment by the
Executive for Good Reason shall be effective on the day following the expiration
of such cure period.

 

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3.3.             Section 409A. The payments contemplated by this Employment
Agreement are intended either not to be subject to Section 409A or, if subject
to Section 409A, to be administered, operated and construed in accordance with
Section 409A and all regulations and other guidance issued thereunder. If the
Executive is a “specified employee” for purposes of Section 409A, any Severance
Amount required to be paid pursuant to Section 3.2 which is non-qualified
deferred compensation that is subject to Section 409A shall commence on the day
after the first to occur of (i) the day which is six months from the Termination
Date and (ii) the date of the Executive’s death. For purposes of this Employment
Agreement, the terms “terminate,” “terminated” and “termination” mean a
termination of the Executive’s employment that constitutes a “separation from
service” within the meaning of the default rules under Section 409A. For
purposes of Section 409A, the right to a series of installment payments under
this Employment Agreement shall be treated as a right to a series of separate
payments.

 

3.4.             Exclusive Remedy. The foregoing payments and benefits
continuation upon termination of the Executive’s employment shall constitute the
exclusive severance payments and benefits continuation due to the Executive upon
a termination of the Executive’s employment.

 

3.5.             Resignation from All Positions. Upon the termination of the
Executive’s employment with the Company for any reason, the Executive shall
resign, as of the date of such termination, from all positions the Executive
then holds as an officer, director, employee and member of the board of
directors (and any committee thereof) of Holdings and its direct and indirect
subsidiaries and affiliates (the “Company Group”). The Executive shall be
required to execute such writings as are required to effectuate the foregoing.

 

3.6.             Cooperation. Following the termination of the Executive’s
employment with the Company for any reason, the Executive shall reasonably
cooperate with the Company upon reasonable request of the Board and be
reasonably available to the Company (taking into account any other full-time
employment of the Executive) with respect to matters arising out of the
Executive’s services to the Company and its subsidiaries.

 

Section 4.       Unauthorized Disclosure; Non-Competition; Non-Solicitation;
Interference with Business Relationships; Proprietary Rights.

 

4.1.             Unauthorized Disclosure. The Executive agrees and understands
that in the Executive’s position with the Company, the Executive has and will be
exposed to and has and will receive information relating to the confidential
affairs of the Company Group, including, without limitation, technical
information, intellectual property, business and marketing plans, strategies,
customer information, software, other information concerning the products,
promotions, development, financing, expansion plans, business policies and
practices of the Company Group and other forms of information considered by the
Company Group to be confidential or in the nature of trade secrets (including,
without limitation, ideas, research and development, know-how, formulas,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information and business and marketing plans and proposals)
(collectively, the “Confidential Information”). Confidential Information shall
not include information that is generally known to the public or within the
relevant trade or industry other than due to the Executive’s violation of this
Section 4.1 or disclosure by a third party who is known by the Executive to owe
the Company an obligation of confidentiality with respect to such information.
The Executive agrees that at all times during the Executive’s employment with
the Company and thereafter, the Executive shall not disclose such Confidential
Information, either directly or indirectly, to any individual, corporation,
partnership, limited liability company, association, trust or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof (each a “Person”) without the prior written consent of
the Company and shall not use or attempt to use any such information in any
manner other than in connection with the Executive’s employment with the
Company, unless required by law to disclose such information, in which case the
Executive shall provide the Company with written notice of such requirement as
far in advance of such anticipated disclosure as possible. This confidentiality
covenant has no temporal, geographical or territorial restriction. The Executive
understands and acknowledges that nothing in this section limits the Executive’s
ability to report possible violations of federal, state, or local law or
regulation to any governmental agency or entity; to communicate with any
government agencies or otherwise participate in any investigation or proceeding
that may be conducted by any government agencies in connection with any charge
or complaint, whether filed by the Executive, on the Executive’s behalf, or by
any other individual; or to make other disclosures that are protected under the
whistleblower provisions of federal, state, or local law or regulation, and the
Executive shall not need the prior authorization of the Company to make any such
reports or disclosures and shall not be required to notify the Company that the
Executive has made such reports or disclosures. In addition, and anything herein
to the contrary notwithstanding, the Executive is hereby given notice that the
Executive shall not be criminally or civilly liable under any federal or state
trade secret law for disclosing a trade secret (as defined by 18 U.S.C. § 1839)
in confidence to a federal, state, or local government official, either directly
or indirectly, or to an attorney, in either event solely for the purpose of
reporting or investigating a suspected violation of law; or disclosing a trade
secret (as defined by 18 U.S.C. § 1839) in a complaint or other document filed
in a lawsuit or other proceeding, if such filing is made under seal.

 

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4.2.             Return of Property. Upon termination of the Executive’s
employment with the Company, the Executive shall promptly supply to the Company
all property, keys, notes, memoranda, writings, lists, files, reports, customer
lists, correspondence, tapes, disks, cards, surveys, maps, logs, machines,
technical data and any other tangible product or document which has been
produced by, received by or otherwise submitted to the Executive during or prior
to the Executive’s employment with the Company, and any copies thereof in the
Executive’s (or reasonably capable of being reduced to the Executive’s)
possession; provided that nothing in this Employment Agreement or elsewhere
shall prevent the Executive from retaining and utilizing: documents relating to
the Executive’s personal benefits, entitlements and obligations; documents
relating to the Executive’s personal tax obligations; the Executive’s desk
calendar, rolodex, and the like; and such other records and documents as may
reasonably be approved by the Company. To the extent that the Executive has
electronic files or information in the Executive’s possession or control that
belong to the Company or contain Confidential Information (specifically
including but not limited to electronic files or information stored on personal
computers, mobile devices, electronic media, or in cloud storage), on or prior
to the Termination Date, or at any other time the Company requests, the
Executive shall (i) provide the Company with an electronic copy of all of such
files or information (in an electronic format that readily accessible by the
Company); (ii) after doing so, delete all such files and information, including
all copies and derivatives thereof, from all non-Company-owned computers, mobile
devices, electronic media, cloud storage, and other media, devices, and
equipment, such that such files and information are permanently deleted and
irretrievable; and (iii) provide a written certification to the Company that the
required deletions have been completed and specifying the files and information
deleted and the media source from which they were deleted.

 

4.3.             Non-Competition. By and in consideration of the Company’s
entering into this Employment Agreement, and in further consideration of the
Executive’s exposure to the Confidential Information of the Company Group, the
Executive agrees that the Executive shall not, during the Employment Period and
for 12 months following the Executive’s Termination Date (the “Restriction
Period”), directly or indirectly, own, manage, operate, join, control, be
employed by, or participate in the ownership, management, operation or control
of, or be connected in any manner with, including, without limitation, holding
any position as a stockholder, director, officer, consultant, independent
contractor, employee, partner, or investor in, any Restricted Enterprise (as
defined below); provided, that in no event shall ownership of one percent or
less of the outstanding securities of any class of any issuer whose securities
are registered under the Securities Exchange Act of 1934, as amended, standing
alone, be prohibited by this Section 4.3, so long as the Executive does not
have, or exercise, any rights to manage or operate the business of such issuer
other than rights as a stockholder thereof. For purposes of this paragraph,
“Restricted Enterprise” shall mean any Person that is actively engaged in any of
the activities, products, and services of the type conducted, authorized, or
provided by any member of the Company Group within two years prior to the
Executive’s termination in any geographic area in which any member of the
Company Group operates or markets.. During the Restriction Period, upon request
of the Company, the Executive shall notify the Company of the Executive’s
then-current employment status.

 

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4.4.             Non-Solicitation of Employees. During the Restriction Period,
the Executive shall not directly or indirectly contact, induce or solicit (or
assist any Person to contact, induce or solicit) for employment any person who
is, or within 12 months prior to the date of such solicitation was, an employee
of any member of the Company Group other than an employee (a) whose employment
was involuntarily terminated by a member of the Company Group after the
Executive’s Termination Date and (b) who has not been an employee of the Company
Group for six months or longer. The foregoing restriction will not apply to the
placement of general advertisements or other notices of employment opportunities
that are not targeted, directly or indirectly, to any current or former employee
of the Company otherwise covered by the scope of such restriction so long as the
Executive is not personally involved in the recruitment or hiring of any such
employee subsequent to such general advertisement or other notice.

 

4.5.             Interference with Business Relationships. During the
Restriction Period (other than in connection with carrying out the Executive’s
responsibilities for the Company Group), the Executive shall not directly or
indirectly induce or solicit (or assist any Person to induce or solicit) any
customer or client of any member of the Company Group to terminate its
relationship or otherwise cease doing business in whole or in part with any
member of the Company Group, or directly or indirectly interfere with (or assist
any Person to interfere with) any material relationship between any member of
the Company Group and any of their customers or clients so as to cause harm to
any member of the Company Group.

 

4.6.             Non-Solicitation of Customers. During the Restriction Period
(other than in connection with carrying out the Executive’s responsibilities for
the Company Group), the Executive shall not directly or indirectly, solicit, or
attempt to solicit, any business from any customer of the Company Group,
including actively seeking prospective customers, with whom the Executive had
material contact with during the Executive’s employment for purposes of
providing products or services that are competitive with those provided by the
Company’s Group within the two years prior to the Executive’s termination.

 

4.7.             Extension of Restriction Period. The Restriction Period shall
be tolled for any period during which the Executive is in breach of any of
Sections 4.2, 4.3, 4.4,4.5 or 4.6 hereof.

 

4.8.             Proprietary Rights. The Executive shall disclose promptly to
the Company any and all inventions, discoveries, and improvements (whether or
not patentable or registrable under copyright or similar statutes), and all
patentable or copyrightable works, initiated, conceived, discovered, reduced to
practice, or made by him, either alone or in conjunction with others, during the
Executive’s employment with the Company and related to the business or
activities of the Company Group (the “Developments”). Except to the extent any
rights in any Developments constitute a work made for hire under the U.S.
Copyright Act, 17 U.S.C. § 101 et seq. that are owned ab initio by a member of
the Company Group, the Executive assigns and agrees to assign all of the
Executive’s right, title and interest in all Developments (including all
intellectual property rights therein) to the Company or its nominee without
further compensation, including all rights or benefits therefor, including
without limitation the right to sue and recover for past and future
infringement. The Executive acknowledges that any rights in any Developments
constituting a work made for hire under the U.S. Copyright Act, 17 U.S.C § 101
et seq. are owned upon creation by the Company as the Executive’s employer.
Whenever requested to do so by the Company, the Executive shall execute any and
all applications, assignments or other instruments which the Company shall deem
necessary to apply for and obtain trademarks, patents or copyrights of the
United States or any foreign country or otherwise protect the interests of the
Company Group. These obligations shall continue beyond the end of the
Executive’s employment with the Company with respect to inventions, discoveries,
improvements or copyrightable works initiated, conceived or made by the
Executive while employed by the Company, and shall be binding upon the
Executive’s employers, assigns, executors, administrators and other legal
representatives. In connection with the Executive’s execution of this Employment
Agreement, the Executive has informed the Company in writing of any interest in
any inventions or intellectual property rights that the Executive holds as of
the date hereof. If the Company is unable for any reason, after reasonable
effort, to obtain the Executive’s signature on any document needed in connection
with the actions described in this Section 4.8, the Executive hereby irrevocably
designates and appoints the Company and its duly authorized officers and agents
as the Executive’s agent and attorney in fact to act for and on the Executive’s
behalf to execute, verify and file any such documents and to do all other
lawfully permitted acts to further the purposes of this Section 4.8 with the
same legal force and effect as if executed by the Executive.

 

8

 

 

4.9.             Confidentiality of Agreement. Other than with respect to
information required to be disclosed by applicable law, the Executive agrees not
to disclose the terms of this Employment Agreement to any Person; provided the
Executive may disclose this Employment Agreement and/or any of its terms to the
Executive’s immediate family, financial advisors and attorneys, so long as the
Executive instructs every such Person to whom the Executive makes such
disclosure not to disclose the terms of this Employment Agreement further. Any
time after this Employment Agreement is filed with the Securities and Exchange
Commission or any other government agency by the Company and becomes a public
record, this provision shall no longer apply.

 

4.10.          Remedies. The Executive agrees that any breach of the terms of
this Section 4 would result in irreparable injury and damage to the Company
Group for which the Company would have no adequate remedy at law; the Executive
therefore also agrees that in the event of said breach or any threat of breach,
the Company shall be entitled to an immediate injunction and restraining order
to prevent such breach and/or threatened breach and/or continued breach by the
Executive and/or any and all Persons acting for and/or with the Executive,
without having to prove damages, in addition to any other remedies to which the
Company may be entitled at law or in equity, including, without limitation, the
obligation of the Executive to return any portion of the Severance Amount paid
by the Company to the Executive as set forth in the last sentence of this
Section 4.10. The terms of this paragraph shall not prevent the Company from
pursuing any other available remedies for any breach or threatened breach
hereof, including, without limitation, the recovery of damages from the
Executive. The Executive and the Company further agree that the provisions of
the covenants contained in this Section 4 are reasonable and necessary to
protect the businesses of the Company Group because of the Executive’s access to
Confidential Information and the Executive’s material participation in the
operation of such businesses. In the event that the Executive willfully and
materially breaches any of the covenants set forth in this Section 4, then in
addition to any injunctive relief, the Executive will promptly return to the
Company any portion of the Severance Amount that the Company has paid to the
Executive.

 

9

 

 

4.11.          Existing Covenants. The Executive represents and warrants that
the Executive’s employment with the Company does not and will not breach any
agreement that the Executive has with any former employer to keep in confidence
proprietary or confidential information or not to compete with any such former
employer. The Executive will not disclose to the Company or use on its behalf
any proprietary or confidential information of any other party required to be
kept confidential by the Executive.

 

Section 5.       Representations. The Executive represents and warrants that (i)
the Executive is not subject to any contract, arrangement, policy or
understanding, or to any statute, governmental rule or regulation, that in any
way limits the Executive’s ability to enter into and fully perform the
Executive’s obligations under this Employment Agreement and (ii) the Executive
is not otherwise unable to enter into and fully perform the Executive’s
obligations under this Employment Agreement.

 

Section 6.       Non-Disparagement. From and after the Effective Date and
following termination of the Executive’s employment with the Company, the
Executive agrees not to make any statement, whether direct or indirect, whether
true or false, that is intended to become public, or that should reasonably be
expected to become public, and that criticizes, ridicules, disparages or is
otherwise derogatory of the Company, any of its subsidiaries, affiliates,
employees, officers, directors or stockholders. This Section 6 shall not in any
way limit any of the protected rights contained in the last two sentences of
Section 4.1 of this Agreement, or Executive’s ability to provide truthful
testimony pursuant to a subpoena, court order or as otherwise required by law.

 

Section 7.       Withholding. All amounts paid to the Executive under this
Employment Agreement during or following the Employment Period shall be subject
to withholding and other employment taxes imposed by applicable law. The
Executive shall be solely responsible for the payment of all taxes imposed on
him relating to the payment or provision of any amounts or benefits hereunder.

 

Section 8.       Miscellaneous.

 

8.1.             Indemnification. To the extent provided in the Company’s
By-Laws and Certificate of Incorporation, the Company shall indemnify the
Executive for losses or damages incurred by the Executive as a result of all
causes of action arising from the Executive’s performance of duties for the
benefit of the Company, whether or not the claim is asserted during the
Employment Period. This indemnity shall not apply to the Executive’s acts of
willful misconduct or gross negligence. The Executive shall be covered under any
directors’ and officers’ insurance that the Company maintains for its directors
and other officers in the same manner and on the same basis as the Company’s
directors and other officers.

 

8.2.             Amendments and Waivers. This Employment Agreement and any of
the provisions hereof may be amended, waived (either generally or in a
particular instance and either retroactively or prospectively), modified or
supplemented, in whole or in part, only by written agreement signed by the
parties hereto; provided, that, the observance of any provision of this
Employment Agreement may be waived in writing by the party that will lose the
benefit of such provision as a result of such waiver. The waiver by any party
hereto of a breach of any provision of this Employment Agreement shall not
operate or be construed as a further or continuing waiver of such breach or as a
waiver of any other or subsequent breach, except as otherwise explicitly
provided for in such waiver. Except as otherwise expressly provided herein, no
failure on the part of any party to exercise, and no delay in exercising, any
right, power or remedy hereunder, or otherwise available in respect hereof at
law or in equity, shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or remedy by such party preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.

 

8.3.             Assignment; Third-Party Beneficiaries. This Employment
Agreement, and the Executive’s rights and obligations hereunder, may not be
assigned by the Executive, and any purported assignment by the Executive in
violation hereof shall be null and void. Nothing in this Employment Agreement
shall confer upon any Person not a party to this Employment Agreement, or the
legal representatives of such Person, any rights or remedies of any nature or
kind whatsoever under or by reason of this Employment Agreement, except (i) the
personal representative of the deceased Executive may enforce the provisions
hereof applicable in the event of the death of the Executive and (ii) any member
of the Company Group may enforce the provisions of Section 4. The Company is
authorized to assign this Employment Agreement to a successor to substantially
all of its assets.

 

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8.4.             Notices. Unless otherwise provided herein, all notices,
requests, demands, claims and other communications provided for under the terms
of this Employment Agreement shall be in writing. Any notice, request, demand,
claim or other communication hereunder shall be sent by (i) personal delivery
(including receipted courier service) or overnight delivery service, with
confirmation of receipt (ii) e-mail (with electronic return receipt), (iii)
reputable commercial overnight delivery service courier, with confirmation of
receipt or (iv) registered or certified mail, return receipt requested, postage
prepaid and addressed to the intended recipient as set forth below:

 

If to the Company: Gypsum Management and Supply, Inc. 100 Crescent Centre
Parkway, Suite 800 Tucker, GA 30084 Attn: General Counsel Email:
craig.apolinsky@gms.com     with a copy to: Gypsum Management and Supply, Inc.
100 Crescent Centre Parkway, Suite 800 Tucker, GA 30084 Attn: Chief Human
Resources officer     If to the Executive: Scott Deakin, at the Executive’s
principal office and e-mail address at the Company (during the Employment
Period), and at all times to the Executive’s principal residence as reflected in
the records of the Company.

 

All such notices, requests, consents and other communications shall be deemed to
have been given when received. Either party may change its contact information
or its address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other parties hereto
notice in the manner then set forth.

 

8.5.             Governing Law. This Employment Agreement shall be construed and
enforced in accordance with, and the laws of the State of Georgia hereto shall
govern the rights and obligations of the parties, without giving effect to the
conflicts of law principles thereof.

 

8.6.             Severability. Whenever possible, each provision or portion of
any provision of this Employment Agreement, including those contained in Section
4 hereof, will be interpreted in such manner as to be effective and valid under
applicable law but the invalidity or unenforceability of any provision or
portion of any provision of this Employment Agreement in any jurisdiction shall
not affect the validity or enforceability of the remainder of this Employment
Agreement in that jurisdiction or the validity or enforceability of this
Employment Agreement, including that provision or portion of any provision, in
any other jurisdiction. In addition, should a court or arbitrator determine that
any provision or portion of any provision of this Employment Agreement,
including those contained in Section 4 hereof, is not reasonable or valid,
either in period of time, geographical area, or otherwise, the parties hereto
agree that such provision should be interpreted and enforced to the maximum
extent which such court or arbitrator deems reasonable or valid.

 

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8.7.             Entire Agreement. From and after the Effective Date, this
Employment Agreement constitutes the entire agreement between the parties
hereto, and supersedes all prior representations, agreements and understandings
(including any prior course of dealings), both written and oral, between the
parties hereto with respect to the subject matter hereof.

 

8.8.             Counterparts. This Employment Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.

 

8.9.             Survivorship. Upon the expiration or other termination of this
Employment Agreement, the respective rights and obligations of the parties
hereto, including, without limitation, with respect to the Executive’s
obligations set forth in Section 4, shall survive such expiration or other
termination to the extent necessary to carry out the intentions of the parties
under this Employment Agreement.

 

8.10.          Binding Effect. This Employment Agreement shall inure to the
benefit of, and be binding on, the successors and assigns of each of the
parties, including, without limitation, the Executive’s heirs and the personal
representatives of the Executive’s estate and any successor to all or
substantially all of the business and/or assets of the Company.

 

8.11.          General Interpretive Principles. The name assigned this
Employment Agreement and headings of the sections, paragraphs, subparagraphs,
clauses and subclauses of this Employment Agreement are for convenience of
reference only and shall not in any way affect the meaning or interpretation of
any of the provisions hereof. Words of inclusion shall not be construed as terms
of limitation herein, so that references to “include,” “includes” and
“including” shall not be limiting and shall be regarded as references to
non-exclusive and non-characterizing illustrations. Any reference to a Section
of the Internal Revenue Code of 1986, as amended, shall be deemed to include any
successor to such Section.

 

[signature page follows]

 

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IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of
the date first written above.

  

  GYPSUM MANAGEMENT AND SUPPLY, INC.       /s/ John C. Turner Jr.   John C.
Turner, Jr.   Title: Chief Executive Officer       EXECUTIVE           /s/ Scott
Deakin      Scott Deakin

 

[Signature Page to Executive’s Employment Agreement]