EXHIBIT 10.5
FORM OF
SEVERANCE AGREEMENT
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This Severance Agreement is dated _____________ __, 199__, and is
between __________ ("Executive") and Xxxxxx Packaging Company, a Pennsylvania
limited partnership ("Xxxxxx").
Executive and Xxxxxx, intending to be legally bound hereby and in
consideration of the provisions contained herein, agree that upon a Termination
Event (as defined below) Xxxxxx shall provide severance benefits (as described
below) to the Executive; provided, that Executive signs a Release (as described
below) upon such Termination Event; as follows:
1. Severance Benefits. Upon a Termination Event (as defined in
Paragraph 2), Xxxxxx or its successor shall pay severance benefits to Executive
as follows:
(a) Severance Allowance. Xxxxxx or its successor shall pay to
Executive a severance allowance equal to Executive's then current annual salary
(less applicable withholding) over a period of one year. Executive's severance
allowance shall be paid to Executive in the normal payroll cycle for similarly
situated employees.
(b) Bonus Payment. Xxxxxx or its successor shall pay to
Executive the targeted bonus, if any, that Executive expected to receive had
Executive been employed by Xxxxxx on the day Executive would have had to be
employed to receive the bonus payment for the period in which the Termination
Event occurred. However, such targeted bonus will be prorated for the portion
of the period occurring prior to Executive's Termination Event. Executive's
bonus payment, if any, shall be paid to Executive in a single sum on the date
the bonus payment would have been paid to Executive had Executive remained
employed by Xxxxxx.
(c) Vacation Days. Xxxxxx or its successor shall pay to
Executive the cash value of Executive's earned, unused vacation days as of the
date of Executive's Termination Event.
(d) Group Health and Group Life Insurance. Xxxxxx or its
successor shall provide Executive with the group health insurance and group
life insurance that Executive was entitled to as of the date of Executive's
Termination Event, for a period of one year. Executive's contributions for such
coverage will be the same as those of similarly situated employees and will be
deducted from Executive's severance allowance.
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2. Termination Event
(a) A Termination Event shall be deemed to have occurred if,
during the three-year period after the date of a Change in Control (as defined
in Paragraph 3 below), Executive ceases to be employed by Xxxxxx or its
successor (referred to jointly as "Xxxxxx") for any of the following reasons:
(1) Executive's death, retirement at or after age 65,
or total disability (entitling him to benefits
under Xxxxxx'x long-term disability plan);
(2) Except as provided in (b) below, Xxxxxx terminates
Executive's employment; or
(3) After Executive gives Xxxxxx written notice of one
or more of the following events and Xxxxxx fails to
cure the event(s) during the 30-day period
following Xxxxxx'x receipt of such notice,
Executive terminates his employment with Xxxxxx as
a result of any of the following events:
(i) Executive's position is materially and
adversely changed (without his consent) from
his position as of the Change in Control;
(ii) Executive is assigned duties and
responsibilities (without his consent) that
are inconsistent in a material respect with
the scope of duties and responsibilities
associated with his position as of the
Change in Control;
(iii) Executive is directly requested by the
person to whom the Executive directly
reports to commit an unethical, dishonest,
or illegal act of a material nature, knowing
that such act is unethical, dishonest, or
illegal (provided that whether the act cited
by Executive is in fact unethical or
dishonest shall be determined by the Chief
Executive Officer of Xxxxxx in his sole
discretion);
(iv) Executive's annual salary rate as in effect
on the day before the Change in Control is
reduced; or
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(v) Xxxxxx requires Executive to be based at an
office which is more than 50 miles further
from Executive's residence than Executive's
office on the day before the Change in
Control (other than travel reasonably
required in the performance of Executive's
responsibilities).
(b) Notwithstanding (a) above, Executive's termination of
employment will not be considered a Termination Event for purposes of this
Agreement if one of the following applies:
(1) Executive's employment with Xxxxxx is involuntarily
terminated due to Executive's continuing refusal to
perform his duties or to follow a lawful direction
of Xxxxxx, provided the performance of such duties
or the following of such lawful direction would not
result in an event described in (a)(3)(i) or (ii)
above;
(2) Executive's employment with Xxxxxx is involuntarily
terminated due to Executive's intentional act or
acts of dishonesty which Executive intended to
result in his personal, more-than-immaterial
enrichment;
(3) prior to the occurrence of an event described in
(a)(3)(i) through (v) above, Executive's employment
with Xxxxxx is involuntarily terminated due to
Executive's documented willful malfeasance or
willful misconduct in connection with his
employment or Executive's documented willful and
deliberate insubordination;
(4) Executive's employment with Xxxxxx is involuntarily
terminated because Executive is convicted of a
felony;
(5) Executive's employment with Xxxxxx is terminated,
but during the seven calendar days after such
termination, Executive is offered (and declines)
employment by the buyer of the entire business (or
substantially all of the business) of Xxxxxx, on
substantially the same terms (including this
Agreement) as Executive's employment on the day
before such termination; or
(6) any other voluntary termination not described in
(a) above.
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3. Change in Control. A Change in Control shall be deemed to have
occurred when the beneficial ownership of 50 percent or more of the GP(LP)
Group (as defined below), or when 50 percent or more of the GP(LP) Group's
business and assets, is sold or otherwise transferred to any person(s) other
than (i) Xxxxxx X. Xxxxxx or his descendants (natural and adopted) or their
spouses or (ii) a business entity controlled by Xxxxxx X. Xxxxxx.
For purposes of this Severance Agreement, the term "GP(LP) Group"
shall mean, in the aggregate, Xxxxxx and any of its subsidiaries, including
those whose principal offices are located in North, Central, and South America,
Europe, and Asia. The term "GP(LP) Group," as of the date of this Severance
Agreement, consists of Xxxxxx, Xxxxxx Packaging Canada Limited, Xxxxxx
Packaging Poland, L.P., Xxxxx Xxxxxx Spolka, z.o.o., Xxxxxx Packaging Holdings
I, Xxxxxx Recycling Company, Xxxxxx Packaging France Partners, Xxxxxx Packaging
France Holding, S.A., Xxxxxx Packaging France, S.A., Xxxxxx Packaging Italy,
Srl, SIP, Srl, Lido Plast-Xxxxxx, Xxxxxx Packaging Latin America, LLC, Xxxxxx
Brasil Paricipacoes Ltda., and Xxxxxx Packaging do Brasil, S.A.
4. Payments After Death. If any portion of Executive's severance
benefits under Paragraph 1(a) and (b) remain unpaid at Executive's death, the
remaining amount shall be paid in a single sum to the beneficiary Executive
most recently designated with respect to this Agreement. In the event no such
beneficiary has been designated or survives Executive, Executive's most recent
beneficiary designation with respect to the group life insurance provided by
Xxxxxx shall govern.
5. Release. Upon a Termination Event, prior to the payment of
Executive's severance benefits and as consideration for such benefits,
Executive, for himself, his executors, administrators, heirs, and assigns,
shall sign a release (the "Release") in which Executive shall:
(a) agree that no charge, complaint, claim, or lawsuit
of any kind will be filed in connection with any
claim released by the Release against Xxxxxx, its
successors, parents, subsidiaries, and affiliates,
incorporated and unincorporated, past and present,
and each of them, as well as its and their
directors, officers, agents, servants, and
employees, past and present, and each of them (all
collectively referred to as "Releasees"); and
(b) acknowledge full and complete satisfaction of, and
release and discharge Releasees from, any and all
claims, demands, and causes of action of whatever
kind or nature, whether known or unknown to, or
suspected or unsuspected by, Executive, which
Executive at the time of the Release owns or holds
or has at any time owned or held against any
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Releasee(s) arising out of or by reason of
Executive's employment or termination of employment
due to a Change in Control.
The Release shall include, but shall not be limited to, claims under the Age
Discrimination in Employment Act of 1967, as amended ("ADEA"). The Release
shall not, however, preclude Executive's right to pursue any claims arising (i)
under this Agreement or (ii) under any benefit programs in which Executive has
accrued any rights which arise on, or after, the date the Release is executed.
6. Noncompetition and Nondisclosure Requirements
(a) Noncompetition. Executive covenants that he will
not (i) directly or indirectly own, manage,
operate, control, advise, participate in, become a
proprietor, partner, director, officer, or employee
of, provide services to, or become financially
interested in, any business (other than solely by
virtue of the ownership of less than five percent
of any class of publicly traded securities)
competitive with the business of Xxxxxx or any of
its affiliates (the "Companies") as of the date
this Agreement is executed, or (ii) engage or
participate in any effort or act to induce any of
the customers or employees of Xxxxxx to take any
action which might be disadvantageous to the
Companies.
(b) Nondisclosure. Executive covenants that he will not
(other than in the good faith performance of his
services to Xxxxxx before Executive's termination
of employment) disclose or make known to anyone
other than employees of the Companies, or use for
the benefit of himself or any other person, firm,
operation, or entity unrelated to the Companies;
any knowledge, information, or materials, whether
tangible or intangible, belonging to the Companies,
about their products, services, know-how,
customers, business plans, or financial, marketing,
pricing, compensation, and other proprietary
matters relating to the Companies. On or before
Executive's termination of employment with Xxxxxx,
Executive shall promptly deliver to Xxxxxx or to
any affiliate designated by Xxxxxx any and all
tangible, confidential information in his
possession.
(c) Remedies for Breach. If Executive breaches the
covenant set forth in (a) above and/or the covenant
set forth in (b) above, Executive's employment with
Xxxxxx and/or Xxxxxx'x obligation to make the
payments described herein shall
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terminate at Xxxxxx'x option. In addition,
Executive expressly acknowledges that damages alone
will be an inadequate remedy for any breach or
violation of (a) and/or (b) above and that Xxxxxx,
in addition to all other remedies, shall be
entitled as a matter of right to equitable relief,
including injunctions and specific performance, in
any court of competent jurisdiction. If any of the
provisions of (a) or (b) above are held to be in
any respect unenforceable, then they shall be
deemed to extend only over the maximum period of
time, geographic area, or range of activities as to
which they may be enforceable against Executive.
7. Severance Benefits Not Funded. Any severance benefits paid pursuant
to this Agreement will be paid out of the general funds of Xxxxxx. Executive
shall not have any secured or preferred interest by way of trust, escrow, lien,
or otherwise in any specific assets. Executive's rights shall be solely those
of an unsecured general creditor of Xxxxxx.
8. Assignment of Benefit Prohibited. No severance benefits under this
Agreement shall be subject in any manner to anticipation, alienation,
assignment (either at law or in equity), encumbrance, garnishment, levy,
execution, or other legal or equitable process.
9. Claims. If Executive believes he may be entitled to benefits under
this Agreement that have not been received, or if he is in disagreement with
any determination that has been made, Executive should follow this procedure:
(a) Making a Claim. Executive must make all claims for severance
benefits under this Agreement in writing to a person (the "Claims Coordinator")
named by Xxxxxx to receive claims under this Agreement. The Claims Coordinator
will approve or disapprove each claim within 90 days following his receipt of
the necessary information, unless special circumstances require more time. If
more time is required, written notice of the extension will be forwarded to
Executive before the extension begins. In no event will the extension exceed
180 days after the Claims Coordinator receives Executive's claim. If the Claims
Coordinator takes no action on a claim within the time periods described above,
the claim will be considered denied.
If the Claims Coordinator denies Executive's claim for severance
benefits, Executive will be notified in writing and told about Executive's
right to a review of the decision by Xxxxxx. The notice will also tell
Executive --
o the specific reason for the denial;
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o the specific provision(s) of this Agreement on which the
denial is based;
o any additional material or information necessary to make
Executive's claim, and why such material or information is
necessary; and
o about this Agreement's claims review procedure.
(b) Requesting Review of a Denied Claim. If Executive's claim for
severance benefits is denied, Executive may ask in writing for a review of the
decision by Xxxxxx. Executive's appeal must be made within 60 days after he
receives written notice of the denial, as described above. Executive's appeal
must be submitted in writing within the 60-day period and must --
o request a review of Executive's claim by Xxxxxx;
o set forth all of the grounds upon which Executive's
request for review is based and any facts in support of
it; and
o set forth any issues or comments which Executive believes
are important for the appeal.
Xxxxxx will act upon Executive's appeal within 60 days
after receiving it, unless special circumstances require more time. If more
time is required, written notice of the extension will be forwarded to
Executive before the extension begins. In no event will the extension exceed
120 days after Xxxxxx receives Executive's appeal.
Xxxxxx will make a full and fair review of Executive's
appeal and will make an independent determination of Executive's eligibility
for severance benefits under this Agreement. The decision of Xxxxxx on any
claim for severance benefits is final and conclusive.
If Xxxxxx denies Executive's appeal, it will give
Executive written notice of the decision setting forth the specific reasons for
the denial and making specific reference to the provision(s) of this Agreement
on which the decision was based.
10. Confidentiality. The terms of this Agreement are confidential.
Executive shall not disclose in any way this Agreement or any of its terms to
any person other than his spouse; his legal counsel, accountant, financial
adviser, or superior to whom he directly reports; Xxxxxxx X. Xxxxxx, Xx.; or
Xxxxxx X. Xxxxxx or a member of Xxxxxx X. Xxxxxx'x family.
11. Governing Law. This Agreement is made and entered into in the
Commonwealth of Pennsylvania, and except as provided in
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Paragraph 5, at all times and for all purposes shall be interpreted, enforced,
and governed under its laws.
12. Entire Agreement; Amendment. This Agreement contains the entire
agreement between Executive and Xxxxxx as to payments to be made to Executive
upon a Termination Event. Any amendment to this Agreement must be in writing,
must be signed by both Xxxxxx and Executive, and must be consented to in
writing by the "Xxxxxx Partners," as such term is defined in the Agreement and
Plan of Recapitalization, Redemption and Purchase entered into by and among
Xxxxxx et al. as of December 18, 1997.
13. Successor Employer. In the event of the dissolution, merger,
consolidation, or reorganization of Xxxxxx, or the sale of the entire (or
substantially all of the) business of Xxxxxx, this Agreement shall be continued
by Xxxxxx'x successor. The successor shall assume all liabilities under this
Agreement and shall have the powers, duties, and responsibilities of Xxxxxx
under this Agreement.
IN WITNESS WHEREOF, the persons named below have signed this Severance
Agreement as of the date first set forth above.
ATTEST: XXXXXX PACKAGING COMPANY
By: Xxxxxx Packaging Corporation,
Its General Partner
By:
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Title:
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WITNESS: EXECUTIVE
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APPENDIX A
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BENEFICIARY DESIGNATION
This Beneficiary Designation is for Executive's use under this
Severance Agreement to name a beneficiary for the amount payable to Executive
under this Agreement. Executive should complete a Beneficiary Designation, sign
and date it, and return it to Xxxxxx Packaging Company.
Beneficiary Election. I understand that in the event of my death
before I receive the entire amount payable under this Agreement (if any), the
remaining amount will be paid in a single sum to the beneficiary designated by
me below or, if none or if my designated beneficiary predeceases me, to my most
recent beneficiary designated with respect to the group life insurance provided
by Xxxxxx Packaging Company. I further understand that the last beneficiary
designation filed by me during my lifetime under this Agreement cancels all
prior beneficiary designations previously filed by me under this Agreement.
I hereby designate _____________ [insert name], residing at __________
[insert address], whose Social Security number is ______________, as my
beneficiary.
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Signature of Participant Date
ATTEST: ACCEPTED:
XXXXXX PACKAGING COMPANY
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By:
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Secretary President
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Date
00
XXXXXXXX X
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ADDITIONAL INFORMATION REQUIRED UNDER THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
Type of Agreement
This Agreement is a severance pay employee welfare benefit plan. This
Agreement is not an employee pension benefit plan.
Sponsor
The name, address, phone number, and federal employer identification
number ("EIN") of the employer sponsoring this Agreement are:
Xxxxxx Packaging Company
000 Xxxx Xxxxxxxx Xxxxxx
Xxxx, XX 00000
Telephone: 000-000-0000
EIN: 00-0000000
Administrator
This Agreement is administered by Xxxxxx Packaging Company.
Communications addressed to the Administrator should be sent to
the above address.
Service of Legal Process
The President of Xxxxxx Packaging Company is designated as the agent
for service of legal process with respect to this Agreement.
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SEVERANCE AGREEMENT PARTIES
Xxxxx Xxxxxx
X. Xxxxxxxx Xxxxxx
Xxxxx Xxxxx
Xxxx Xxxxxxxx
Xxxx Xxxxxxxx
Xxxxxxxx Xx
Xxxx Xxxxx
