Exhibit 10.16

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into effective
as of January 1, 2004 (the “Effective Date”), by and between IESI Corporation, a
Delaware corporation (“IESI” or “Employer”), and Gordon P. Peckham
(“Executive”).

 

WITNESSETH

 

WHEREAS, Employer desires to employ Executive, and Executive desires to be
employed by Employer, upon the terms and subject to the conditions set forth in
this Agreement;

 

NOW, THEREFORE, in consideration of the mutual promises and covenants herein set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Employer and Executive, intending to be legally
bound, agree as follows:

 

1.                                      Employment - IESI hereby employs
Executive as its Vice President and Region Manager upon the terms and conditions
and for the compensation herein provided. Executive hereby agrees to be so
employed and to render the services specified herein for Employer and any
subsidiaries or affiliates of Employer. In his capacity as its Vice President
and Region Manager of Employer, Executive shall devote his full and undivided
business time and attention to his duties and responsibilities.

 

2.                                      Term of Employment - Subject to the
provisions for termination as provided in Section 5 hereof, the term of
Executive's employment hereunder (the “Term”) shall be for a period commencing
as of the Effective Date and terminating December 31, 2005.

 

3.                                      Duties and Powers - During the Term,
Executive agrees as follows: to devote his full and exclusive business time and
attention to the business of Employer and of any subsidiaries or affiliates of
the Company including, but not limited to, IESI Corporation (excluding
reasonable vacations and sick leave in accordance with Employer's policies
consistent with his position); to perform all duties in a professional and
prudent manner, to devote the best of his skill, energy, experience and judgment
to such duties; and to communicate to Employer suggestions, ideas or information
that may be helpful to Employer in its businesses.  Executive shall have all the
powers and agrees to perform all of the duties associated with his position as
Vice President and Region Manager of Employer, subject to all lawful policies
and guidelines as may be established by the Board of Directors of Employer (the
“Board”).  Executive agrees not to engage in any other activity or own any
interest that would conflict with the interests of Employer or would interfere
with his responsibilities to Employer and the performance of his duties
hereunder; provided, however, that: (i) passive investment of less than 5% of
the outstanding securities of any company or any other investment that does not
conflict with Executive's performance of his duties to Employer hereunder shall
be deemed not to violate this provision, it being understood that, except as set
forth below, an investment of more than 5% in a company other than Employer
engaged in the solid waste industry shall be deemed to conflict with Executive's
performance of his duties hereunder; and (ii) Executive may engage in activities

 

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involving charitable, educational, religious and similar types of organizations,
speaking engagements and similar type activities to the extent that such other
activities do not detract from the performance by Executive of his duties and
obligations hereunder.

 

4.                                      Compensation and Benefits - For all
services rendered by Executive pursuant to this Agreement, Employer shall
compensate Executive as follows:

 

(a)           Base Compensation - In consideration of the full and faithful
performance by Executive of his obligations hereunder during the Term and
subject to the terms and conditions set forth herewith, Employer (or any
subsidiary or affiliate of Employer for which Executive also provides services
hereunder) shall pay to Executive $173,000 per annum (such annual compensation
as it may be increased from time to time shall be referred to herein as the
“Base Compensation”).  Executive's Base Compensation will be paid in accordance
with Employer's customary payroll practices (but not less frequently than
monthly) and will be prorated based upon the number of days elapsed in any
partial year. Base Compensation shall be reviewed annually and may be increased
at the sole discretion of the Board.

 

(b)           Bonus - In addition to the Base Compensation payable to Executive,
Executive may be awarded performance bonuses from time to time, in the sole
discretion of the Board.

 

(c)           Benefits - Vacation.  During the Term, Executive shall be entitled
to such benefits (including health, dental and disability coverage, life
insurance, 401K, holiday and sick days) as Employer may, from time to time, make
available to its executive employees. Executive shall be entitled to three (3)
weeks paid vacation during each calendar year of employment, with such vacation
allowance being prorated in respect of any employment period of less than 12
full months.  Notwithstanding the foregoing, Executive shall not be entitled to
take more than two weeks of vacation leave at any one time.  Unused vacation
shall not be carried forward.

 

(d)           Expenses - Executive shall be entitled to reimbursement for his
ordinary and necessary business expenses, incurred in the performance of his
duties under this Agreement if supported by reasonable documentation as required
by Employer in accordance with its usual practices.

 

(e)           Car Allowance - During the Term, Executive shall be entitled to a
car allowance of $800 per month.  Executive shall be responsible for all costs
associated with such car (other than fuel expenses reimbursable under Section
4(d) hereof).

 

(f)            Liability for Taxes - Employer shall have no liability for any
tax obligation of Executive attributable to any payment made under this
Agreement except for customary federal and state withholding taxes (e.g., social
security, Medicare, etc.).  Employer may withhold from any such payment such
amounts as may be required by applicable provisions of the Internal Revenue
Code, other tax laws, and the rules and regulations of the Internal Revenue
Service and other tax agencies, as in effect at the time of any such payment.

 

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5.             Expiration/Termination of Employment

 

(a)           Expiration at End of Term - Unless earlier terminated in
accordance with the terms of this Agreement, Executive's employment shall expire
at the end of the Term.

 

(b)           Termination at Will - The parties acknowledge and agree that
Executive's employment hereunder is an employment at will.  Notwithstanding any
other provision contained in this Agreement, either Executive or Employer may
terminate Executive's employment hereunder at any time with or without Cause (as
defined in subsection 5(e)(i)) or for Good Reason (as defined in subsection
5(e)(ii)) at his election upon prior written notice (a “Termination Notice”) to
the other.  A Termination Notice shall be effective upon delivery to the other
party and the termination shall be effective as of the date set forth in such
Termination Notice (hereinafter, the “Termination Date”).

 

(c)           Effect of Expiration or Termination For Cause or Without Good
Reason - Upon the expiration of this Agreement pursuant to subsection 5(a)
hereof or upon a termination of this Agreement pursuant to subsection 5(b)
hereof by Employer with Cause or by Executive without Good Reason, Executive
shall be entitled to payment of: (i) Base Compensation through the Termination
Date; (ii) amounts accrued under benefit plans in which Executive is a
participant as of the Termination Date.

 

(d)           Effect Of Termination Without Cause or For Good Reason - Upon the
termination of this Agreement pursuant to subsection 5(b) hereof by Employer
without Cause or by Executive for Good Reason, Executive shall be entitled to
payment of: (i) Base Compensation (at the rate in effect on the date of such
termination) and all benefits under Section 4(c) hereof for 18 months; and (ii)
amounts accrued under benefit plans in which Executive is a participant as of
such termination date..

 

(e)           Effect Of Termination Following a Change of Control  -
Notwithstanding any other provision in this Agreement to the contrary, following
a Change in Control as defined in Section 6 hereof, (a) if Executive chooses to
terminate his employment without Good Reason pursuant to Section 5(b) hereof,
such termination shall be treated as termination under Section 5(c) hereof; (b)
if Employer (or its successor) terminates Executive's employment without Cause
pursuant to Section 5(b) hereof, such termination shall be treated as a
termination under Section 5(d) hereof, except that Executive shall receive Base
Compensation and benefits for the “Payout Period” (as defined below).  For the
purposes of this Agreement, “Payout Period” shall mean 18 months and includes
Base Compensation, bonus (equal to 33 % of Base Compensation, times 1 year) and
benefits.  If a Change in Control as defined in Section 6 occurs within 6 months
after Executive has been terminated Without Cause or For Good Reason, then
termination shall be treated as a termination following a Change of Control, and
Executive shall receive Base Compensation, bonus and benefits as defined by the
“Payout Period”.

 

(f)            Definitions of “Cause” and “Good Reason” - For purposes of this
Agreement, the terms “Cause” and “Good Reason” shall have the following
meanings:

 

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(i)            “Cause” shall mean (1) the failure of Executive to perform his
duties with Employer (other than any such failure resulting from death or the
inability of Executive to perform the essential functions of his job, with or
without a reasonable accommodation) or the material breach of this Agreement by
Executive if Employer gives notice of such cause and it remains uncured for ten
(10) days following such notice; (2) any act by Executive of fraud or dishonesty
with respect to any aspect of Employer's business; (3) drug or alcohol abuse or
related behavior that impedes Executive's job performance or brings Executive or
Employer into disrepute in the community; (4) misappropriation of funds or any
corporate opportunity: (5) a conviction or affirmative finding by an appropriate
administrative agency that Executive is guilty of a felony or crime of moral
turpitude (or a plea of nolo contendere thereto); (6) acts by Executive
attempting to secure or securing any personal profit not fully disclosed to and
approved by the Board in connection with any transaction entered into on behalf
of Employer; or (7) gross, willful or wanton negligence or misconduct by
Executive.

 

(ii)           “Good Reason” shall mean (1) a material and adverse change in
Executive's status or position as an officer of Employer or a material reduction
in the duties and responsibilities previously exercised by Executive, or any
removal of Executive from or any failure to reappoint or reelect Executive to
such position, except in connection with the termination of Executive's service
as an officer for Cause, or as a result of Executive's death or inability to
perform the essential functions of his job, with or without a reasonable
accommodation, or (2) a reduction (other than for Cause) by Employer in
Executive's Base Compensation as of the date hereof, or (3) a relocation of
Executive's assigned place of employment outside the Dallas/Fort Worth Standard
Metropolitan Statistical Area without Executive's consent, or (4) a Change of
Control.

 

(f)            Upon the termination of this Agreement by Employer with Cause or
by Executive without Good Reason, Employer shall have the option, exercisable
within ninety (90) days after the termination date, to purchase all stock of
Employer then owned by Executive at fair market value on the date of
termination, which shall be determined in good faith by the Board.  In the event
that Executive disagrees with the Board's determination of fair market value, it
shall be determined by an independent certified public accountant selected by
the Board.  Payment for such stock shall, at Employer's option, be in cash or by
promissory note in the amount of the fair market value, bearing interest at 10%
annum, and payable in no more than three equal annual installments of principal,
together with accrued interest.

 

(g)           Upon the termination of this Agreement by Employer without Cause
or by Executive with Good Reason, Executive shall have the option, exercisable
within ninety (90) days after the termination date, to require Employer to
purchase all stock of Employer then owned by Executive, the valuation and
payment terms to be determined as set out in (f) above.  Executive (or his duly
designated personal representative or executor) shall have the same option to
require Employer to purchase Executive's stock in the event of Executive's death
or permanent disability.  Such option must be exercised by notice to Employer
within ninety (90) days after Executive's death or permanent disability.

 

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(h)           Notwithstanding any provision to the contrary in any of the
Company's stock option plans or agreements, in the event of Executive's
permanent disability or death, any and all stock options that have been granted
to Executive by the Company shall be exercisable by Executive and/or his
successor, assigns, administrators or executors during the ten years (plus any
replacement options and or time extensions to the existing options) that said
stock option(s) are outstanding.

 

6.                                      Change in Control is defined as:

 

For purposes of this Plan, a Change in Control shall be deemed to have occurred
if:

 

(a)           a tender offer (or series of related offers) shall be made and
consummated for the ownership of 50% or more of the outstanding voting
securities of the Employer;

 

(b)           the Employer shall be merged or consolidated with another
corporation and as a result of such merger or consolidation less than 50% of the
outstanding voting securities of the surviving or resulting corporation shall be
owned in the aggregate by the former shareholders of the Company, any employee
benefit plan of the Company or its subsidiaries, and their affiliates;

 

(c)           the Employer shall sell substantially all of its assets to another
corporation that is not wholly owned by the Company; or

 

(d)           a Person (as defined below) shall acquire 50% or more of the
outstanding voting securities of the Company (whether directly, indirectly,
beneficially or of record).

 

For purposes of this Section, ownership of voting securities shall take into
account and shall include ownership as determined by applying the provisions of
Rule 13d-3(d)I)(i) (as in effect on the date hereof) under the Exchange Act. 
Also for purposes of this Section 6(b), Person shall have the meaning given in
Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and
14(d) thereof; however, a Person shall not include (1) the Employer or any of
its subsidiaries; (2) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its subsidiaries; (3) an
underwriter temporarily holding securities pursuant to an offering of such
securities; or (4) a corporation owned, directly or indirectly, by the
shareholders of the Employer in substantially the same proportion as their
ownership of stock of the Company.

 

7.                                      Non-Interference, Non-Solicitation and
Non-Competition Covenants

 

(a)           Pursuant to this Agreement, Executive has agreed to become Vice
President and Region Manager of Employer and to comply with a non-disclosure
provision in Section 8. Executive recognizes and acknowledges that he will be
given access to certain of Employer's Confidential Information (as hereafter
defined in Section 9(a)), and have access

 

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to and authority to develop relationships with customers of Employer because of
his position and status as an Employer's President and Chief Executive Officer,
which he would not otherwise attain.  In consideration of the foregoing,
Executive agrees to comply with the terms of this Section 7.

 

(b)           The restraints imposed by this Section 7 shall apply during any
period that Executive continues to receive payment of Base Compensation
hereunder, and for a period of one year thereafter (the “Restricted Period”).
Notwithstanding any other provision in this Agreement, if Employer terminates
Executive's employment under Section 5(e) following a Change in Control, the
Restricted Period shall extend for a period ending one year after the Payout
Period.  In the event that any Court having jurisdiction should find that the
Restricted Period is so long and/or the scope (distance) (as set forth below) is
so broad as to constitute an undue hardship on Executive, then, in such event
only, the Restricted Period and area limitations shall be valid for the maximum
time and area for which they could be legally made and enforced.

 

(c)           During the Restricted Period, Executive shall not, as an executive
(other than an executive of Employer or an affiliate thereof), employee,
employer, stockholder, officer, director, partner, consultant, advisor,
proprietor, lender, provider of capital or other ownership, operational or
management capacity, directly or indirectly, (i) solicit or hire any employee of
Employer or otherwise interfere with or disrupt the employment relationship
between Employer and any employee, (ii) solicit or do business with (a)
Employer's customers with whom Employer did business while Executive was
employed under this Agreement or (b) individuals or entities whom Executive met
as a result of his position with Employer while Executive was employed under
this Agreement, that results in competition with Employer in any county, parish
or other comparable jurisdiction within a state, province or nation located in
North America in which any of such customers have operations (other than
customers whose business relationship with Employer has terminated for at least
90 days) or in which Employer has conducted business while Executive was
employed under this Agreement (collectively, the “Restricted Area”), or (iii) be
associated with any entity engaged in the business of non-hazardous waste
disposal in the Restricted Area that results in competition with Employer (but
excluding association due to ownership of less than 5% of the outstanding
securities of any such entity).

 

(d)           Executive expressly recognizes and agrees that the restraints
imposed by this Section 7 are (i) reasonable as to time, geographic limitation
and scope of activity to be restrained; (ii) reasonably necessary to the
enjoyment by Employer of the value of its assets and to protect its legitimate
interests; and (iii) not oppressive.  Executive further expressly recognizes and
agrees that the restraints imposed by this Section 7 represent a reasonable and
necessary restriction for the protection of the legitimate interests of
Employer, that the failure by the Executive to observe and comply with the
covenants and agreements in this Section 7 will cause irreparable harm to
Employer, that it is and will continue to be difficult to ascertain the harm and
damages to Employer that such a failure by the Executive would cause, that the
consideration received by the Executive for entering into these covenants and
agreements is fair, that the covenants and agreements and their enforcement will
not deprive Executive of his ability to earn a reasonable living in the waste
disposal field or otherwise,

 

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and that Executive has acquired knowledge and skills in his field that will
allow him to obtain employment without violating these covenants and agreements.
Executive further expressly acknowledges that he has been encouraged to and has
consulted independent counsel, and has reviewed and considered this Agreement
with that counsel before executing this Agreement.

 

8.                                      Memoranda, Notes, Records, Etc. - All
memoranda, notes, records, customer lists or other documents made or compiled by
Executive or otherwise made available to him concerning the business of Employer
or its subsidiaries or affiliates shall be Employer's property and shall be
delivered to Employer upon the expiration or termination of Executive's
employment hereunder or at any other time upon request by Employer, and
Executive shall retain no copies of those documents. Executive shall never at
any time have or claim any right, title or interest in any material or matter of
any sort prepared for or used in connection with the business or promotion of
Employer.

 

9.                                      Nondisclosure

 

(a)           Executive hereby acknowledges that in connection with his
employment by Employer he will be exposed to and may obtain certain information
(including, without limitation, procedures, memoranda, notes, records and
customer and supplier lists whether such information has been or is made,
developed or compiled by Executive or otherwise has been or is made available to
him) regarding the business and operations of Employer and its subsidiaries or
affiliates.  Executive further acknowledges that such information and procedures
are unique, valuable, considered trade secrets and deemed proprietary by
Employer. For purposes of this Agreement, such information and procedures shall
be referred to as “Confidential Information,” except that the following shall
not be considered Confidential Information: (i) information disclosed on a
non-confidential basis to third parties by Employer (but not by Executive in
violation of this Agreement), (ii) information released from confidential
treatment by written consent of Employer, and (iii) information lawfully
available to the general public.

 

(b)           Executive agrees that all Confidential Information is and will
remain the property of Employer.  Executive further agrees, for the duration of
the Term and thereafter, to hold in the strictest confidence all Confidential
Information, and not to, directly or indirectly, duplicate, sell, use, lease,
commercialize, disclose or otherwise divulge to any person or entity any portion
of the Confidential Information or use any Confidential Information for his own
benefit or profit or allow any person, entity or third party, other than
Employer and authorized Executives of the same, to use or otherwise gain access
to any Confidential Information.

 

(c)           It is the intention of the parties that to the extent any
Confidential Information may constitute a “trade secret” as defined by Texas
common law, then, in addition to the remedies set forth in this Agreement,
Employer may elect to bring an action against Executive in the case of any
actual or threatened misappropriation of any such trade secret by Executive.

 

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(d)           Regardless of whether any of the Confidential Information or any
of the items set forth in Section 8 and this Section 9 constitute a trade secret
as defined by Texas common law, Executive expressly recognizes and agrees that
the restrictions contained in Section 8 of this Agreement and this Section 9
represent a reasonable and necessary protection of the legitimate interests of
Employer, that his failure to observe and comply with his covenants and
agreements in those Sections will cause irreparable harm to Employer, that it is
and will continue to be difficult to ascertain the harm and damages to Employer
that such a failure by Executive could cause, and that a remedy at law for such
failure by Executive will be inadequate.

 

10.                               Enforcement - The parties hereto recognize
that the covenants of Executive hereunder are special, unique and of
extraordinary character.  Accordingly, it is the intention of the parties that,
in addition to any other rights and remedies which Employer may have in the
event of any breach of said Sections, Employer shall be entitled, and hereby is
expressly and irrevocably authorized by Executive, inter alia, to demand and
obtain specific performance, including without limitation temporary and
permanent injunctive relief, and all other appropriate equitable relief against
Executive in order to enforce against Executive, or in order to prevent any
breach or any threatened breach by Executive of, the covenants and agreements
contained herein. In case of any breach of this Agreement, nothing herein
contained shall be construed to prevent Employer from seeking such other remedy
in the courts as it may elect or invoke.

 

11.          Delegation of Duties and Assignment of Rights

 

(a)           Executive may not delegate the performance of any of his
obligations or duties hereunder, or assign any rights hereunder, without the
prior written consent of Employer. Any such purported delegation or assignment
in the absence of such written consent shall be null and void with no force or
effect.  Notwithstanding the foregoing, nothing herein shall prevent Executive
from delegating ministerial tasks to assistants of the type that are normally
assigned by executives to assistants.

 

(b)           Employer may not assign this Agreement except with the prior
written consent of Executive, except that Employer may without Executive's
consent assign all of its rights and obligations under this Agreement to the
person or entity acquiring a majority of the assets or outstanding stock of IESI
or pursuant to a merger or consolidation of IESI.  In the event of such an
assignment by Employer, each reference in this Agreement to Employer shall
include the assignee from and after the date of such assignment.

 

(c)           In the event of a valid assignment pursuant to this Section 11,
this Agreement shall be binding on and inure to the benefit of the parties
hereto and their respective heirs, representatives, successors and permitted
assigns and any receiver, trustee in bankruptcy or representative of the
creditors of each such person.

 

12.                               Survival of Covenants - Notwithstanding
anything contained in this Agreement, upon the expiration of the Term or the
Restricted Period, as applicable, or in the event Executive's employment is
terminated for any reason whatsoever, the covenants and agreements of

 

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Executive contained in Sections 7 (to the extent set forth therein), 8, 9, 10
and 12 and the covenants of Employer contained in Section 5 hereof shall survive
any such expiration or termination and shall not lapse except as provided
herein.

 

13.                               Warranty - Executive does hereby warrant that
he has not taken any action, and covenants that during the Term of this
Agreement, or the Restricted Period, as applicable, he shall take no such
action, that constitutes or will constitute a breach of any agreement concerning
confidential information and trade secrets, confidentiality, solicitation or
non-competition to which he is bound as a party.

 

14.                               Severability /Modification - If any term or
provision of this Agreement is held or deemed to be invalid or unenforceable in
whole or in part, by a court of competent jurisdiction, such term or provision
shall be ineffective to the extent of such invalidity or unenforceability
without rendering invalid or unenforceable the remaining terms and provisions of
this Agreement.

 

15.                               Governing Law - This agreement is entered into
in Texas, and the construction, validity and interpretation of this agreement
shall be governed by the laws of the State of Texas without regard to the laws
of conflicts of laws.

 

16.                               Effectiveness; Entire Agreement; Amendment -
This Agreement contains the entire understanding and agreement between the
parties relating to the subject matter hereof, that certain Change of Control
Agreement dated March 7, 2001 between IESI Corporation and Executive is
terminated and cancelled..  Neither this Agreement nor any provision hereof may
be waived, modified, amended, changed, discharged or terminated, except by an
agreement in writing signed by the party against whom enforcement of any waiver,
modification, change, amendment, discharge or termination is sought.

 

17.                               Notices - Any notice required or permitted to
be given under the provisions of this Agreement shall be in writing and shall be
deemed to have been duly given on the date of delivery if delivered personally
to the party to whom notice is to be given (or to the appropriate address
below), or on the third day after mailing if mailed to the party to whom notice
is to be given by certified or registered mail, return receipt requested,
postage prepaid, or by courier, addressed as follows, or to such other person at
such other address as any party may request in writing to the other party to
this Agreement:

 

To Executive:

 

Gordon D. Peckham

 

 

6111 N. Beach, Apt. 1911

 

 

Fort Worth, Texas 76137

 

 

 

To IESI:

 

IESI Corporation

 

 

2301 Eagle Parkway, Suite 200

 

 

Ft. Worth, Texas 76177

 

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Any party may change its address for purposes of this paragraph by giving the
other parties written notice of the new address in the manner set forth above.

 

18.       Headings - The section headings herein are for convenience only and
shall not be used in interpreting or construing this Agreement.

 

IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
to be effective as of the Effective Date.

 

 

EXECUTIVE:

 

 

 

 

 

/s/ Gordon D. Peckham

 

GORDON D. PECKHAM

 

 

 

 

 

EMPLOYER:

 

 

 

IESI CORPORATION

 

 

 

 

 

BY:

/s/ Jeffrey J. Keenan

 

 

JEFFREY J. KEENAN

 

 

CHAIRMAN

 

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