**Exhibit 10.12**

 

 

 

 

October 10, 2001

 

 

Mr. J. John Gelp

1448 Clippership Bay

Woodbury, MN 55125

 

 

Dear John:

 

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

 
| **Position Title:**      |   | Executive Vice  President and Chief Financial Officer                                                                                                                                                                                                      |
|--------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Location:**            |   | Plymouth, MN                                                                                                                                                                                                                                               |
| **Status:**              |   | Regular Full Time,  Exempt                                                                                                                                                                                                                                 |
| **Start Date:**          |   | October 22, 2001                                                                                                                                                                                                                                           |
| **Reporting To:**        |   | Jim Anderson, Chairman  and CEO                                                                                                                                                                                                                            |
| **Pay Rate:**            |   | $200,000.00 Annually                                                                                                                                                                                                                                       |
| **Bonus:**               |   | You will be eligible to  participate in the Zomax executive compensation plan in 2002.                                                                                                                                                                     |
| **Group Insurance:**     |   | You become eligible to  participate in the Zomax medical, dental and life plans effective the first  day of the month following your start date.                                                                                                           |
| **Paid Time Off (PTO):** |   | Initially you will  accrue PTO at the rate of 5.23 hours per pay period. (26 pay periods per  year)                                                                                                                                                        |
| **401 (k):**             |   | You become eligible to  participate in the Zomax 401 (k) plan effective the beginning of the calendar  quarter following the 60th day of employment.                                                                                                       |
| **Stock Options:**       |   | You will receive  Non-Qualified Stock Options of 75,000 shares priced at the market price on  the first trading day of the month following your start date.  Share options vest at 20% annually over 5  years beginning one year from the grant date. |
| **Stock Purchase Plan:** |   | On either January 1 or July  1 following the 60th day of employment you will be eligible to  join the Zomax Stock Purchase Plan which will allow you to purchase Zomax  stock at a discount.                                                               |
| **Introductory Period:** |   | As a new regular  employee you will be subject to an Introductory Period of ninety (90) days.                                                                                                                                                              |

 

 

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| **Change of Control:** |   | If Executive is  terminated from his employment, has a substantial reduction in the nature or  status of his responsibilities, or the company’s principal office is  relocated more than 50 miles from executive’s home for any reason within one  (1) year after a Change of Control, Executive shall be entitled to receive  the following from the Company:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                   |   | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Executive shall receive  from the Company within sixty (60) days after such termination or resignation  an amount equal to 12 months Base Salary, 12 months of bonus paid at the  targeted rate and all accrued PTO time as in effect on the effective date of  such termination.  The Company shall  be entitled to deduct or withhold all taxes and charges which the Company may  be required to deduct or withhold therefrom.  |
|                   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                   |   | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | With respect to any  stock options, SARs, restricted stock awards or performance share awards  granted to Executive and outstanding immediately prior to such termination,  all restrictions on all shares of restricted stock awards shall lapse  immediately, all outstanding options and SARs will become exercisable  immediately, and all performance share objectives shall be deemed to be met.  |
|                   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                   |   | Date of Termination or  Resignation.  The date of termination of Executive’s  employment by the Company under this section shall be one (1) month after  receipt of written notice of termination.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                   |   | Limitation on Change of  Control Compensation.  In the event that Executive  is a “disqualified individual” within the meaning of Section 280G of the  Code, the parties expressly agree that the payments described in this Section  6 shall be considered together with all Change of Control Payments so that,  with respect to Executive, all Change of Control Payments are collectively  subject to an overall maximum limit.   Such maximum limit shall be One Dollar ($1.00) less than the largest  amount under which no portion of the Change of Control Payments is considered  a “parachute payment” within the meaning of Section 280G of the Code.  Accordingly, to the extent that the Change  of Control Payments would be considered a “parachute payment” with respect to  Executive, then the portions of such Change of Control payments shall be  reduced or eliminated in the following order until the remaining Change of  Control Payments with respect to Executive is One Dollar ($1.00) less than  the maximum allowable which would not be considered a “parachute payment”  under the Internal Revenue Code:                                                                                   |
|                   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                   |   | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | First, any cash payment  to Executive; |
|                   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                   |   | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Second, any Change of  Control Payments not described in this Agreement; and |
|                   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                   |   | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Third, any forgiveness  of indebtedness of Executive to the Company. |
|                   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                   |   | Executive expressly and  irrevocably waives any and all rights to receive and Change of Control  payments which would be considered a "parachute payment" under the  Code.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                   |   | A *Change of Control* shall be  deemed to have occurred if (1) any “person” (as such term is used in Section  13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as  defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of  securities of the Company representing 40% or more of the combined voting  power (with respect to the election of directors) of the Company’s then  outstanding securities; (2) the consummation of a merger or consolidation of  the Company with or into any other corporation, other than a merger or  consolidation which would result in the voting securities of the Company  outstanding immediately prior thereto continuing to represent (either by  remaining outstanding or by being converted into voting securities of the  surviving entity) more than 60% of the combined voting power (with respect to  the election of directors) of the securities of the Company or of such  surviving entity outstanding immediately after such merger or consolidation;  or (3) the consummation of a plan of complete liquidation of the Company or  of an agreement for the sale or disposition by the Company of all or  substantially all of the Company’s business or assets. |

 

 

 

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In consideration of andas a condition of your employment, you must sign the enclosedNon-Solicitation/Confidentiality Agreement and a Non Compete Agreement andreturn to Zomax with your acceptance of this offer*.*

 

Thisoffer is contingent based upon the successful completion of a backgroundinvestigation and your ability to comply with federal law requiring you to showproof of your ability to work in the United States on your first day ofemployment.  If you are currently employed, I urge you toawait our call with the investigation results prior to resigning from yourcurrent position.   This typically takes3 to 4 business days from our receipt of your signed acceptance.

 

While we look forward toa mutually beneficial employment relationship with you it is important that youunderstand this letter is not an employment contract.  Employment with our company is at will, with the right for eitherparty to terminate employment at any time, for any reason, with or withoutnotice.  No prior promises,representations, or understandings relative to any terms or conditions of youremployment are to be considered as part of this letter unless expressed inwriting in this letter.  Any future agreements, regarding employment orcompensation are binding only with the prior authorization of the ChiefExecutive Officer of Zomax Incorporated . Compensation and benefit plansreferenced in this letter are offered with the understanding that they operateunder the plan documents as currently stated. These compensation and benefit plans may be changed, amended orcancelled for any reason and/or at any time in the future.

 

 

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

 

 

Pleasesign the original copies of this offer letter and return to us immediatelysignifying your acceptance of this offer. I have enclosed copies for your files.

 

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

 

Ilook forward to working with you and am confident your talents match our needsand will be well utilized.  Should youhave questions please contact me at 763-577-3523.

 

Sincerely,

 

 
| /s/James T. Anderson |   |
|----------------------|--------|
| James  T. Anderson   |   |
| Chairman  and CEO    |   |
| Zomax,  Incorporated |   |

 

 

 

Enclosures:

                  Confidentiality or Non-Solicitation/Confidentiality Agreement

                   Non-CompeteAgreement

 

Iacknowledge, understand, and agree to employment with Zomax under the terms andconditions outlined above.  My startdate will be October 22, 2001.

 
| /s/J.  John Gelp |        Date: October 12, 2001 |
|------------------|-------------------------------------------------------------|
| J.  John Gelp    |                                                        |
|             |                                                        |

 

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