EMPLOYMENT AGREEMENT
Exhibit 10.34
EXECUTION COPY
THIS AGREEMENT is made effective as of December 11, 2007, by and among Pregis Holding I
Corporation, a Delaware Corporation (“Pregis I”), and its wholly owned subsidiaries, Pregis Holding
II Corporation, a Delaware corporation (“Pregis II”), and Pregis Corporation, a Delaware
corporation (“Pregis”) (Pregis I, Pregis II and Pregis, collectively, the “Employers” and
individually an “Employer”), and Xxxxx X. Xxxxxxxx (“Executive”).
RECITALS
WHEREAS, Executive desires to be employed by Employers; and
WHEREAS, Employers desire to employ the Executive and to utilize his management services as
indicated herein, and Executive has agreed to provide such management services to Employers; and
WHEREAS, as a condition precedent and a material inducement for Employers to employ and pay
Executive, Executive has agreed to execute this Agreement and the Noncompetition Agreement, dated
as of December 11, 2007, between Pregis I and Executive (the “Noncompetition Agreement”), and be
bound by the provisions herein and therein.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto
agree as follows:
PROVISIONS
1. Term and Duties. Employers hereby agree to employ Executive as
President-Protective Packaging North America, commencing on December 11, 2007 (the “Start Date”)
and continuing for a period of three (3) years (the “Initial Term”) or until terminated in
accordance with this Section 1 or Section 4. Unless terminated by either Executive or Employers by
written notice delivered at least thirty (30) days prior to the expiration of the Initial Term,
Executive’s employment shall continue for successive one (1) year terms (each one (1) year term
hereinafter referred to as a “Subsequent Term” and, together with the Initial Term, the “Term”)
until terminated by written notice delivered at least thirty (30) days prior to the expiration of
the Subsequent Term. Subject to the provisions of this Agreement, during the Term, Executive shall
devote his best efforts and abilities to the performance of Executive’s duties on behalf of
Employers, and to the promotion of their interests consistent with and subject to the direction and
control of the Board of Directors of each Employer (the “Board”). Executive shall devote
substantially all of his business time, energies, attention and abilities to the operation of
the business of Employers and shall not be actively involved in any other trade or business or
as an employee of any other trade or business.
2. Compensation During Term.
(a) Base Compensation. In consideration of the services to be rendered by Executive
during the Term, Employers shall pay to Executive as base salary $325,000 per year (“Base
Compensation”), payable bi-weekly and prorated for any partial employment period.
(b) Bonus. Subject to the limitations set forth in this Agreement, Executive shall be
entitled to receive an annual incentive bonus (the “Incentive Bonus”) based upon the achievement of
one or more performance goals as determined by the Board in its sole discretion. The amount of the
Incentive Bonus shall be determined in the manner set forth on Schedule A attached hereto.
3. Benefits.
(a) Executive shall be eligible to participate in such benefit programs offered by each
Employer (other than bonus plans), such as health, dental, life insurance, vision, vacations and
pension, as are offered to similarly-situated employees (except in the case of equity-based
incentive plans where awards are subject to Board (or committee thereof) approval) and in each case
no more favorable than the terms of benefits generally available to the employees of Employers
(based on seniority and salary level), subject in each case to the generally applicable terms and
conditions of the plan, benefit or program in question.
(b) Employers shall reimburse Executive for all reasonable expenses incurred by him in the
course of performing his duties under this Agreement which are consistent with the Employers’
policies in effect from time to time with respect to travel, entertainment and other business
expenses, subject to the Employers’ requirements with respect to reporting, documentation and
approval of such expenses.
(c) Employers shall reimburse the Executive for the following reasonable expenses that the
Executive incurs in relocating his primary residence to the Chicago, Illinois metropolitan area:
(a) the cost of any temporary housing in the Chicago, Illinois metropolitan area for 6 months, not
to exceed $5,000 per month; (b) transportation of belongings; (c) two house-hunting trips; (d)
broker and other fees related to sale/acquisition of primary residence; (e) set-up costs of
telephone, cable and broadband; and (f) airfare and lodging for family related to such relocation
and house-hunting trips.
4. Termination. Executive’s employment shall terminate upon the first to occur of the
following (each, a “Termination Date”):
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(a) The expiration of the Term;
(b) Executive’s death or disability (mentally, physically or emotionally), so that Executive
cannot substantially perform his duties hereunder for a period of ninety (90) consecutive days or
for one hundred eighty (180) days during any 365 day period during the Term;
(c) Executive’s voluntary termination of his employment for any reason, upon not less than ten
(10) business days’ written notice to Employers; or
(d) Employers’ termination of Executive’s employment for Cause (as hereinafter defined).
5. Termination Payments.
(a) Except as otherwise provided herein, if Executive’s employment is terminated pursuant to
Section 1 by thirty (30) days’ prior written notice or pursuant to Section 4, Executive’s Base
Compensation and other benefits, if any, shall terminate at the end of the month during which such
termination occurs.
(b) Upon termination of Executive’s employment without Cause, Employers shall be obligated, in
lieu of any other remedies available to Executive, to pay Executive (A) an amount equal to his then
current Base Compensation (the “Termination Payment”); (B) (i) if the Termination Date occurs
during the months of January-June of the fiscal year, a pro rata Incentive Bonus for the fiscal
year in which the termination occurs (the “Target Pro Rata Incentive Payment”), based on
Executive’s target Incentive Bonus for such fiscal year; or (ii) if the Termination Date occurs
during the months of July-December of the fiscal year, a pro rata Incentive Bonus for the fiscal
year in which the termination occurs (the “Actual Pro Rata Incentive Payment”), based on Employers’
actual performance through the end of such fiscal year; and (C) all accrued but unpaid amounts
payable to Executive under this Agreement and under any employee benefit plan (the “Accrued
Payment”). The Target Pro Rata Incentive Payment and the Actual Pro Rata Incentive Payment shall,
in each case, be determined based on the number of days elapsed from the beginning of the fiscal
year in which the termination occurs through and including the Termination Date. For purposes of
clarity, Executive will be eligible to receive only one Termination Payment, one Accrued Payment
and either one Target Pro Rata Incentive Payment or one Actual Pro Rata Incentive Payment
(depending on when the Termination Date occurs) from Employers under this Section 5(b). Employers’
obligation to make the Termination Payment and either the Target Pro Rata Incentive Payment or
Actual Pro Rata Incentive Payment shall be conditioned upon: (i) Executive’s continued compliance
with his obligations under the Noncompetition Agreement; and (ii) Executive’s execution, delivery
and non-revocation of a valid and enforceable general release of claims in a form reasonably
acceptable to Employers (the “Release”). In the event that Executive breaches any of the covenants
set forth in the
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Noncompetition Agreement, Executive shall immediately return to Employers any portion of the
Termination Payment and either the Target Pro Rata Incentive Payment or Actual Pro Rata Incentive
Payment that have been paid to Executive pursuant to this Section 5(b). Subject to this Section
5(b) and Section 5(e), the Termination Payment and the Target Pro Rata Incentive Payment, if
applicable, shall be paid in installments on Employers’ regular payroll dates occurring during the
twelve (12) month period immediately following the effectiveness of the Release. Subject to
Section 5(e), the Actual Pro Rata Incentive Payment, if applicable, shall be paid at the time
Employers ordinarily pay incentive bonuses to its executives with respect to the fiscal year in
which the termination occurs. Subject to Section 5(e), the Accrued Payment shall be paid within
thirty (30) days following the Termination Date.
(c) In the event of a termination of Executive’s employment pursuant to Section 4(b) as a
result of his death or disability, Employers shall pay to Executive, his estate or legal
representative, as the case may be, all amounts accrued to the date of termination and payable to
Executive hereunder and under any other bonus, incentive or other plan.
(d) Any termination of the Term shall not adversely affect or alter Executive’s rights under
any employee benefit plan of any Employer in which Executive, at the date of termination, has a
vested interest, unless otherwise provided in such employee benefit plan or any agreement or other
instrument attendant thereto.
(e) If Executive is a “specified employee” for purposes of Section 409A of the Internal
Revenue Code of 1986, as amended, any payments required to be made pursuant to this Section 5 which
are subject to Section 409A shall not commence until six months from the Termination Date, with the
first payment to be equal to the aggregate amount that would have been paid to Executive under
Section 5 during the first six months immediately following the Termination Date had this Section
5(e) not been applicable.
6. Definitions. “Cause” as used herein shall mean Executive’s: (i) commission of an
act which constitutes common law fraud, embezzlement (other than occasional, customary and de
minimis use of Employers’ property for personal purposes) or a felony, an act of moral turpitude,
or of any tortious or unlawful act causing material harm to any Employer’s business, standing or
reputation; (ii) gross negligence on the part of Executive in the performance of his duties
hereunder; (iii) breach of his duty of loyalty or care to any Employer; (iv) other misconduct that
is materially detrimental to any Employer; (v) ongoing refusal or failure to perform Executive’s
duties or the deliberate and consistent refusal to conform to or follow any reasonable policy
adopted by the Board, in each case after receiving written notice describing his noncompliance and
being given a five (5) business days opportunity to cure (to the extent curable) such
non-compliance; or (vi) material breach by Executive of this Agreement, the Noncompetition
Agreement or any other agreement with or for the benefit of Employers to which
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Executive is a party or by which Executive is bound, which is not cured (to the extent
curable) within five (5) business days following written notice from Employers.
7. Consideration. Executive acknowledges and agrees that the consideration set forth
in the recitals to this Agreement and the rights and benefits hereunder are all and singularly
valuable consideration which are sufficient for any or all of Executive’s covenants set forth
herein or in the Noncompetition Agreement.
8. No Prior Agreements. Executive represents and warrants that his performance of all
the terms of this Agreement does not and shall not breach any fiduciary or other duty or any
covenant, agreement or understanding (including, without limitation, any agreement relating to any
proprietary information, knowledge or data acquired in confidence, trust or otherwise) to which he
is a party or by the terms of which he may be bound. Executive further covenants and agrees not to
enter into any agreement or understanding, either written or oral, in conflict with the provisions
of this Agreement.
9. Miscellaneous.
(a) Notices. All notices, requests, consents and demands by the parties hereto shall
be delivered by hand, by confirmed facsimile transmission, by recognized national overnight courier
service or by deposit in the United States mail, postage prepaid, by registered or certified mail,
return receipt requested, addressed to the party to be notified at the addresses set forth below:
if to Executive:
Xxxxx X. Xxxxxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
if to Employers:
x/x XXX Xxxxxxxxx XXX
Xxxx Xxxxxx Xxxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxx
Xxxx Xxxxxx Xxxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxx
with copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx LLP
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxxxxxxx Xxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxxxxxxx Xxxx
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Notices shall be effective immediately upon personal delivery or facsimile transmission, one (1)
business day after deposit with an overnight courier service or three (3) business days after the
date of mailing thereof. Other notices shall be deemed given on the date of receipt. Any party
hereto may change the address specified herein by written notice to the other parties hereto.
10. Entire Agreement. This Agreement cancels and supersedes any and all prior
agreements and understandings between the parties hereto with respect to the obligations of
Executive, whether oral or written. Executive hereby agrees that, as of the date hereof, this
Agreement shall take effect and no further obligations of any kind whatsoever shall be owed by
Employers. This Agreement constitutes the entire agreement between the parties with respect to the
matters herein provided, and no modifications or waiver of any provision hereof shall be effective
unless in writing and signed by each Employer and Executive.
11. Binding Effect. All of the terms and provisions of this Agreement shall be
binding upon the parties hereto and its or his heirs, executors, administrators, legal
representatives, successors and assigns, and inure to the benefit of and be enforceable by each
Employer and its successors and assigns, except that the duties and responsibilities of Executive
hereunder are of a personal nature and shall not be assignable or delegable in whole or in part.
12. Severability. In the event that any provision of this Agreement or application
thereof to anyone or under any circumstance is found to be invalid or unenforceable in any
jurisdiction to any extent for any reason, such invalidity or unenforceability shall not affect any
other provision or application of this Agreement which can be given effect without the invalid or
unenforceable provision or application and shall not invalidate or render unenforceable such
provision or application in any other jurisdiction.
13. Remedies; Waiver. No remedy conferred upon any Employer by this Agreement is
intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative
and shall be in addition to any other remedy given hereunder or now or hereafter existing at law or
in equity. No delay or omission by any Employer in exercising any right, remedy or power hereunder
or existing at law or in equity shall be construed as a waiver thereof, and any such right, remedy
or power may be exercised by the party possessing the same from time to time and as often as may be
deemed expedient or necessary by such party in its sole discretion.
14. Counterparts. This Agreement may be executed in several counterparts, each of
which is an original and all of which shall constitute one instrument. It shall not
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be necessary in making proof of this Agreement or any counterpart hereof to produce or account
for any of the other counterparts.
15. Governing Law. The validity, interpretation, construction, performance and
enforcement of this Agreement shall be governed by the laws of the State of New York, without
application of conflict of laws principles.
16. Headings. The captions and headings contained in this Agreement are for
convenience only and shall not be construed as a part of the Agreement.
542676
[signature page follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above
written.
| EMPLOYERS:
PREGIS HOLDING I CORPORATION |
||||
| By: | /s/ Xxxxxxx X. XxXxxxxxx | |||
| Name: | Xxxxxxx X. XxXxxxxxx | |||
| Title: | CEO | |||
| PREGIS HOLDING II CORPORATION |
||||
| By: | /s/ Xxxxxxx X. XxXxxxxxx | |||
| Name: | Xxxxxxx X. XxXxxxxxx | |||
| Title: | CEO | |||
| PREGIS CORPORATION |
||||
| By: | /s/ Xxxxxxx X. XxXxxxxxx | |||
| Name: | Xxxxxxx X. XxXxxxxxx | |||
| Title: | CEO | |||
| EXECUTIVE: |
||||
| /s/ Xxxxx X. Xxxxxxxx | ||||
| Name: | Xxxxx X. Xxxxxxxx | |||
