Exhibit 10.1
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SEPARATION AGREEMENT
This SEPARATION AGREEMENT (this "Agreement"), dated as of September 21,
2005, is entered into by and between Packaging Dynamics Corporation, a
Delaware corporation (the "Company") and Xxxxxxx X. Xxxxxx ("Executive").
WHEREAS, Executive has been employed as President and Chief Operating
Officer of the Company;
WHEREAS, Executive has decided to resign from his position as President
and Chief Operating Officer of the Company and from all offices, directorships
and other positions with the Company and any of its affiliates and
subsidiaries; and
WHEREAS, the Company has agreed to accept such resignation.
NOW, THEREFORE, in consideration of the mutual agreements and
understandings set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto, intending to be legally bound, hereby agree as follows:
Section 1. Termination of Service; Benefits.
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(a) Resignation of Position. Effective as of September 21, 2005,
Executive hereby resigns as a director of the Company and any of its
affiliates and subsidiaries. Effective as of September 30, 2005 (the "Position
Resignation Date"), Executive hereby resigns his positions as President and
Chief Operating Officer of the Company, and resigns as officer of the Company
and any of its affiliates and subsidiaries, and shall no longer serve in any
of these capacities. Notwithstanding the provisions of the previous sentence,
Executive shall remain an employee of the Company until the Employment
Resignation Date as defined below. Furthermore, effective as of the date
hereof, that certain Severance and Change of Control Agreement, dated as of
January 23, 2003, by and between the Company and Executive shall be terminated
and Company and Executive agree that Executive's employment is not being
terminated in connection with a Change of Control, as such term is defined in
the Severance and Change of Control Agreement. On the Position Resignation
Date, Executive shall be paid Executive's accrued but unpaid base salary
through the Position Resignation Date, regardless of whether he executes this
Agreement, in accordance with the Company's customary payroll practices.
Executive will also be reimbursed for all unreimbursed expenses in an
aggregate amount not to exceed $10,000 that were incurred by Executive in the
furtherance of Company business through the Position Resignation Date within
three (3) business days of providing reasonable documentation relating to such
expenses. With respect to any benefits or rights that Executive has accrued or
earned under any of the Company's employee benefit plans, Executive shall be
entitled to such benefits pursuant to the terms of such plans.
(b) Employment Continuation. Executive shall remain an employee of
the Company until March 31, 2006 (the "Employment Resignation Date"), unless
extended by mutual agreement of the Company and Executive. During the period
between the Position Resignation Date and the Employment Resignation Date (the
"Employment Continuation Period", Executive's duties shall be focused on
special projects to be agreed upon between the Company and Executive. During
the Employment Continuation Period, Executive shall be compensated at a
semi-monthly salary of $3,750.
(c) Payments and Medical Benefits. Subject to, and in consideration
of, Executive's release of claims as of the Position Resignation Date
contemplated by Section 5 and Executive's other covenants and agreements
contained herein and provided that the Benefit Effective Date (as such term is
defined below) occurs, the Company shall provide Executive with the payments
and benefits set forth in this subsection (c).
(i) Severance Payments. The Company shall pay to the Executive
(A) an amount equal to one (1) times the sum of the Executive's base
salary and target bonus (which shall be deemed to be 60% for purposes of
this paragraph), payable in twenty-four (24) equal bi-monthly payments
starting with the first full pay period of the Company following the
Benefit Effective Date. Executive acknowledges and agrees that the
Executive severance payments provided under this Section 1(c)(i) are, but
for the mutual covenants and agreements set forth in this Agreement, in
addition to any consideration that he would otherwise be entitled to
receive.
(ii) Medical Benefits. In the event that Executive elects
continued medical benefits covering Executive and Employee's qualifying
dependents under the Company's group health plan - pursuant to the
statutory scheme commonly known as "COBRA" - the Company shall pay for
such coverage for the six-month period following the Employment
Resignation Date. Notwithstanding the foregoing, Executive shall
immediately inform the Company in writing if Executive obtains medical
coverage during such six-month period following the Employment
Resignation Date from another source and, upon receipt of such notice,
the Company shall no longer be obligated to pay for such coverage;
provided, that the Executive's coverage with the Company shall be
discontinued upon subsequent employment only to the extent that any
pre-existing medical conditions are covered under the new employer's
medical plan (for purposes of determining the period of continuation
coverage to which the Executive or any of his dependents is entitled
pursuant to Section 4980B of the Code (or any successor provision
thereto) under any group health plan maintained by the Company or its
Affiliates, the Executive shall be considered to have remained employed
until the termination of the above-described coverage). When the
Company's obligation to continue such coverage ends, Executive may pay
for coverage for the remainder of the COBRA period.
(d) Other Benefits. In consideration of Executive's covenants and
agreements contained herein, the Company shall provide Executive with the
benefits set forth in this subsection (d).
(i) Stock Options. All of the shares of common stock, par value
$.01 per share, of the Company (the "Common Stock") subject to stock
options granted to Executive under the Company's applicable stock option
plans which are scheduled to vest on or prior to the Employment
Resignation Date (the "Vesting Date") shall vest in accordance with their
terms. All of the shares of Common Stock subject to stock options granted
to Executive under the Company's applicable stock option plans scheduled
to vest following the Vesting Date shall expire and be forfeited as of
the Employment Resignation Date. All stock options owned by Executive as
of the Employment Resignation Date shall be exercisable in accordance
with the terms thereof.
Section 2. Return of Records and Equipment. Executive agrees to return
prior to the Employment Resignation Date all physical, computerized,
electronic or other types of records, documents, proposals, notes, lists,
files and any and all other materials including, without limitation,
computerized and/or electronic information that refers, relates or otherwise
pertains to the Company and/or its affiliates or subsidiaries, and any and all
business dealings of said persons and entities. Executive shall return prior
to the Employment Resignation Date to the Company all computers that Executive
has been issued during the course of Executive's employment or which Executive
otherwise currently possesses. In addition, by the Employment Resignation
Date, Executive shall return to the Company all other property or equipment
that Executive has been issued during the course of Executive's employment or
which Executive otherwise currently possesses, including, but not limited to,
any cellular phones, Blackberries, Palm Pilots, any other PDA devices and/or
pagers. Executive acknowledges that he is not authorized to retain any
physical, computerized, electronic or other types of copies of any such
physical, computerized, electronic or other types of records, documents,
proposals, notes, lists, files or materials, and is not authorized to retain
any other property or equipment of the Company or its affiliates and
subsidiaries. Executive further agrees that he will immediately forward to the
Company any business information regarding the Company and/or its affiliates
and subsidiaries that has been or is inadvertently directed to Executive
following Executive's last day of employment with the Company. The provisions
of this paragraph are in addition to any other written agreements on this
subject that Executive may have with the Company and/or any of its affiliates
and subsidiaries, and are not meant to and do not excuse any additional
obligations that he may have under such agreements.
Section 3. Non-Competition; Confidentiality; Non-solicitation.
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(a) Non-Competition. Executive agrees that during the remainder of
his employment and for a period of twenty-four (24) months immediately
following the Position Resignation Date, in the United States, Canada or any
other place where the Company and its affiliates conduct substantial
manufacturing operations relating to the Company's businesses, directly or
indirectly (i) engage or participate in any of the Company's principal
businesses; (ii) enter the employ of, or render any other services to, any
person engaged in any of the Company's principal businesses; or (iii) become
interested in any such person in any capacity, including, without limitation,
as an individual, partner, shareholder, lender, officer, director, principal,
agent, consultant, advisor or trustee; provided, however, that Executive may
own, directly or indirectly, solely as an investment, securities of any person
traded on any national securities exchange or listed on the National
Association of Securities Dealers Automated Quotation System if Executive is
not a controlling person of, or a member of a group which controls, such
person and Executive does not, directly or indirectly, own five percent (5.0%)
or more of any class of equity securities, or securities convertible into or
exercisable or exchangeable for five percent (5.0%) or more of any class of
equity securities, of such person. The Company and Executive hereby agree that
the non-compete obligations contained in this Section 3(a) shall supercede and
control over any other similar obligations contained in any other agreements
or documents which such other obligations shall have no force or effect.
(b) Confidentiality. Executive agrees that at all times during or
after his employment by the Company, he will not use, disclose or disseminate
any trade secrets, confidential information or any other information of a
secret, proprietary, confidential or generally undisclosed nature relating to
the Company and/or its affiliates and subsidiaries, or their respective
businesses, contracts, projects, proposed projects, revenues, costs,
operations, methods or procedures. The provisions of this Section 3(b) are in
addition to any other written agreements on this subject that Executive may
have with the Company and/or any of its affiliates and subsidiaries, and are
not meant to and do not excuse any additional obligations that he may have
under such agreements.
(c) Non-solicitation. Executive agrees that during the remainder of
his employment and for a period of twenty-four (24) months immediately
following the Position Resignation Date, Executive shall not either directly
or indirectly solicit, induce, recruit, or encourage to leave the employment
of the Company or its affiliates and subsidiaries for any reason and/or to
perform work for a competitor of the Company or its affiliates and
subsidiaries (as an employee, independent contractor, or otherwise) (such
conduct is collectively referred to as "solicitation") any person who is then
employed by the Company or its affiliates and subsidiaries or who left the
employ of the Company or its affiliates and subsidiaries less than six (6)
months prior to the solicitation.
Section 4. Non-Disparagement Covenant. Executive agrees that he will not
in any way disparage the Company or its current and former officers, directors
and employees, verbally or in writing, or make any statements to the press or
to third parties that may reasonably be derogatory or detrimental to the
Company's good name or business reputation. Nothing in this section shall
preclude Executive from responding truthfully to inquiries made in connection
with any legal or governmental proceeding pursuant to subpoena or from making
such other statements as may be required by applicable law.
Section 5. Release of Claims. Executive hereby agrees and acknowledges
that as a condition to the receipt of any payments and benefits set forth in
Section 1(c) above, Executive shall execute and deliver to the Company the
form of the release attached hereto as Exhibit A (the "Release") on or
following the Position Resignation Date and shall not revoke Executive's
consent to the Release within seven (7) calendar days following Executive's
execution. Provided that Executive does not revoke his consent to the Release
within such seven-day period, the eighth day following execution of the
Release shall be the "Benefit Effective Date."
Section 6. Cooperation. Executive agrees that he will reasonably
cooperate in any claims, litigation or other legal actions in which the
Company or its subsidiaries or affiliates may become involved. Such
cooperation shall include Executive making himself available, upon the request
of the Company and at the Company's expense, for depositions, court
appearances and interviews by Company's counsel. To the maximum extent
permitted by law, Executive agrees that he will notify the Board, in care of
the Chairman of Board, if he is contacted by any government agency or any
other person contemplating or maintaining any claim or legal action against
the Company or its subsidiaries or affiliates or by any agent or attorney of
such person.
Section 7. Miscellaneous Provisions.
(a) Fees and Expenses. Each party hereto agrees to bear its own fees
and expenses relating to each of the matters referred to, contemplated by or
the subject of this Agreement.
(b) Amendment and Modification. This Agreement may be amended,
modified and supplemented only by written agreement of Executive and the
Company. No waiver of any breach of any term or provision of this Agreement
shall be construed to be, nor shall be, a waiver of any other breach of this
Agreement. No waiver shall be binding unless in writing and signed by the
party waiving the breach.
(c) Notices. All notices, requests, demands and other communications
required or permitted shall be made in writing by hand-delivery, telecopier
(with written confirmation) or air courier guaranteeing overnight delivery:
(i) If to the Executive, to:
Xxxxxxx X. Xxxxxx
c/o Packaging Dynamics Corporation
0000 Xxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
or to such other persons or addresses as Executive shall reasonably furnish
to the Company;
(ii) If to the Company, to:
Packaging Dynamics Corporation
0000 Xxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telecopier No.: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois)
000 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopier No.: (000) 000-0000
or to such other persons or addresses as the Company shall reasonably furnish
to Executive in writing.
All such notices, requests, demands and other communications shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; when receipt acknowledged, if telecopied; and on the next business
day, if timely delivered to an air courier guaranteeing overnight delivery.
(d) Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision shall fail to be
in effect only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement or of any such provision.
(e) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without regard to its
conflicts of law doctrine.
(f) Jointly Drafted. Executive understands that this Agreement,
including the Release, is deemed to have been drafted jointly by the parties.
Any uncertainty or ambiguity shall not be construed for or against any party
based on attribution of drafting to any party.
(g) Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
(h) Headings. The headings of the Sections of this Agreement are
inserted for convenience only and shall not constitute a part hereof or affect
in any way the meaning or interpretation of this Agreement.
(i) Entire Agreement. This Agreement, including the Release, sets
forth the entire agreement and understanding of the parties hereto in respect
of the subject matter contained herein, and, except as expressly stated in
this Agreement, supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, relating to the subject matter hereof.
(j) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by a party of any covenants or agreements contained
in this Agreement will cause the other party to sustain injury for which it
would not have an adequate remedy at law for money damages. Therefore, each of
the parties hereto agrees that in the event of any such breach, the aggrieved
party shall be entitled to the remedy of specific performance of such
covenants and agreements and preliminary and permanent injunctive and other
equitable relief in addition to any other remedy to which it may be entitled,
at law or in equity, and the parties hereto further agree to waive any
requirement for the securing or posting of any bond in connection with the
obtaining of any such injunctive or other equitable relief.
(k) Successors; Assignment; Third-Party Beneficiaries. This
Agreement shall be binding upon and shall inure to the benefit of each of the
parties hereto, and their respective heirs, legatees, executors,
administrators, legal representatives, successors and assigns, but except as
otherwise provided for or permitted herein neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any party
hereto without the prior written consent of the other party; provided, that
the provisions of the Release are intended to be for the benefit of, and shall
be enforceable by, each Released Party (as such term is defined in the
Release) and his, her or its heirs, legatees, executors, administrators, legal
representatives, successors and assigns.
(l) Reliance. Executive understands and acknowledges that reliance
is placed wholly upon Executive's own judgment, belief and knowledge as to the
propriety of entering into this Agreement, including the Release. Executive
further acknowledges that he is relying solely upon the contents of this
Agreement, that there have been no other representations or statements made by
the Company and/or its affiliates and subsidiaries, and that Executive is not
relying on any other representations or statements whatsoever of the Company
and/or its affiliates and subsidiaries as an inducement to enter into this
Agreement or the Release, and if any of the facts upon which Executive now
relies in making this Agreement, including the Release, shall hereafter prove
to be otherwise, this Agreement and the Release shall nonetheless remain in
full force and effect.
(m) Counsel. Executive acknowledges that he has personally read this
Agreement and that he has reviewed, or has had the opportunity to review, this
Agreement with legal counsel of his own choosing. Executive further
acknowledges that he has been provided a full and ample opportunity to study
this Agreement that it fully and accurately reflects the content of any and
all understandings and agreements between the parties concerning the matters
referenced herein, that there have been no other representations or statements
made by the Company and/or its affiliates and subsidiaries, and that Executive
is not relying on any other representations whatsoever as an inducement to
execute this Agreement.
(n) Withholding. Any payments provided for under this Agreement
shall be paid net of any applicable withholding required under federal, state
or local law and any additional withholding to which Executive has agreed.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, all as of the day and year first above written.
PACKAGING DYNAMICS CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
Title: Chairman and Chief Executive Officer
EXECUTIVE
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
EXHIBIT A
THIS AGREEMENT MAY NOT BE
SIGNED PRIOR TO SEPTEMBER 30, 2005
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RELEASE AGREEMENT
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For good and valuable consideration, Xxxxxxx X. Xxxxxx (the "Executive")
hereby agrees to the terms of this agreement (this "Release Agreement") on the
date indicated below.
1. Release.
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(a) The Executive, on behalf of himself, his heirs, executors,
administrators, successors and assigns, hereby irrevocably and unconditionally
releases Packaging Dynamics Corporation (the "Company") and its parents,
subsidiaries, divisions and affiliates, together with their respective owners,
assigns, agents, directors, partners, officers, members, employees, insurers,
employee benefit programs (including, but not limited to, trustees,
administrators, fiduciaries, and insurers of such programs), attorneys and
representatives and any of their predecessors and successors and each of their
estates, heirs and assigns (collectively, the "Company Releasees") from any
and all charges, complaints, claims, liabilities, obligations, promises,
agreements, causes of action, rights, costs, losses, debts and expenses of any
nature whatsoever, known or unknown, which the Executive or his heirs,
executors, administrators, successors or assigns ever had, now have or
hereafter can, will or may have (either directly, indirectly, derivatively or
in any other representative capacity) by reason of any matter, fact or cause
whatsoever against the Company or any of the other Company Releasees from the
beginning of time to the date of this Agreement. This release includes,
without limitation, all claims arising out of, or relating to, the Executive's
employment and/or end of his employment with the Company and all claims
arising under any federal, state and local labor, employment and/or
anti-discrimination laws including, without limitation, the Age Discrimination
in Employment Act, the Older Workers Benefit Protection Act, the Employee
Retirement Income Security Act of 1974 ("ERISA"), the Americans with
Disabilities Act, Title VII of the Civil Rights Act of 1964, the Family and
Medical Leave Act, the Civil Rights Act of 1991, the Fair Labor Standards Act,
the Equal Pay Act, the Immigration and Reform Control Act, the Uniform
Services Employment and Re-Employment Act, the Rehabilitation Act of 1973,
Executive Order 11246, the Xxxxxxxx-Xxxxx Act of 2002, and the Illinois Human
Rights Act, each as amended. Nothing in this Paragraph 1(a) shall be deemed to
release (i) the Executive's right to any vested benefits under the Company's
401(k) plan or any other Company "employee benefit plans" within the meaning
of Section 3(3) of ERISA, or (ii) the Executive's right to enforce the terms
of the Separation Agreement, dated September 21, 2005, between the Company and
the Executive (the "Separation Agreement").
(b) The Executive acknowledges and agrees that the Company has fully
satisfied any and all obligations owed to the Executive arising out of the
Executive's employment with Company, and no further sums are owed to the
Executive by Company or by any of the other Company Releasees, except as
expressly provided in the Separation Agreement and under the Company's 401(k)
plan or any other Company "employee benefit plans" within the meaning of
Section 3(3) of ERISA.
(c) The Executive represents that he has no complaints, charges or
lawsuits pending against the Company or any of the other Company Releasees.
The Executive further covenants and agrees that neither he nor his heirs,
executors, administrators, successors or assigns will be entitled to any
personal recovery in any proceeding of any nature whatsoever against the
Company or any of the other Company Releasees arising out of any of the
matters released in this Paragraph 1.
2. Consultation with Attorney/Voluntary Agreement. The Executive
acknowledges that (i) the Company has advised the Executive of his right to
consult with an attorney prior to executing this Release Agreement, (ii) the
Executive has consulted with an attorney regarding the terms of this Release
Agreement prior to executing it, (iii) the Executive has carefully read and
fully understands all of the provisions of this Release Agreement, and (iv)
the Executive is entering into this Release Agreement, including the releases
set forth in Paragraph 1 above, knowingly, freely and voluntarily in exchange
for good and valuable consideration, including the obligations of the Company
under the Separation Agreement.
3. Consideration & Revocation Period.
(a) The Executive acknowledges that he has at least twenty-one (21)
calendar days to consider the terms of this Release Agreement, although he may
sign it sooner, provided that he may not sign this Release Agreement prior to
September 30, 2005.
(b) The Executive will have seven (7) calendar days from the date on
which he signs this Release Agreement to revoke his consent to the terms of
this Release Agreement. Such revocation must be in writing and must be
addressed and sent via facsimile as follows: Packaging Dynamics Corporation,
Attention: Xxxxx X. Xxxxxxx, 0000 Xxxx 00xx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000,
Facsimile No.: (000) 000-0000. Notice of such revocation must be received
within the seven (7) calendar days referenced above. In the event of such
revocation by the Executive, this Release Agreement shall not become effective
and the Executive shall not have any rights under Paragraph 1(c) of the
Separation Agreement.
(c) Provided that the Executive does not revoke this Release Agreement,
this Release Agreement shall become effective on the eighth calendar day after
the date on which the Executive signs this Release Agreement.
4. No Admission of Wrongdoing. Nothing herein or in the Separation
Agreement is to be deemed to constitute an admission of wrongdoing by Company
or any of the other Company Releasees.
5. Assignment. This Release Agreement is personal to the Executive and
may not be assigned by the Executive. This Release Agreement is binding on,
and will inure to the benefit of, Company and the other Company Releasees.
6. Enforceability. In the event that any one or more of the provisions of
this Release Agreement is held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remainder hereof will not in any
way be affected or impaired thereby and any such provision or provisions will
be enforced to the fullest extent permitted by law.
7. Governing Law; Venue. This Release Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without
regard to its conflicts of law doctrine.
8. Entire Agreement. This Release Agreement and the Separation Agreement
set forth the entire understanding between the Executive and the Company, and
supersede all prior agreements, representations, discussions, and
understandings concerning their subject matter. The Executive represents that,
in executing this Release Agreement, the Executive has not relied upon any
representation or statement made by the Company or any other Company
Releasees, other than those set forth herein, with regard to the subject
matter, basis or effect of this Release Agreement or otherwise.
IN WITNESS WHEREOF, the Executive has executed this Release Agreement on
the date indicated below.
EXECUTIVE
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Xxxxxxx X. Xxxxxx Date
