APPLETON PAPERS INC. TERMINATION PROTECTION AGREEMENT AMENDED AND RESTATED
Exhibit
10.15
APPLETON
PAPERS INC.
AMENDED
AND RESTATED
AGREEMENT amended and restated
dated as of December 17, 2008, between Appleton Papers Inc. (the "Corporation")
and M. Xxxxxxxx Xxxxxxx (the "Executive"). Unless otherwise
indicated, terms used herein and defined in Schedule A shall have the meanings
assigned to them in Schedule A.
WHEREAS, the Corporation
desires to continue to attract and retain skilled and dedicated management
employees, by providing post-employment benefits in the event of certain
terminations of employment; and
WHEREAS, the Corporation has
employed the Executive in the capacity of Vice President & General Manager –
Performance Packaging at Appleton, Wisconsin upon the terms and conditions
currently reflected in Executive's personnel file or in various minutes of the
Board of Directors; and
WHEREAS, Executive has
specific duties and unique talents which are of benefit to the
Corporation;
NOW, THEREFORE, it is agreed
as follows:
|
1.
|
Term of
Agreement.
|
This
Agreement shall become effective as of December 17, 2008 (the "Effective Date")
and shall remain in effect from time to time thereafter. The
Corporation may terminate this Agreement by giving the Executive at least
eighteen (18) months advance written notice of termination of the
Agreement. Notwithstanding the foregoing, this Agreement shall, if in
effect on the date of a Change of Control, remain in effect for at least two (2)
years following such Change of Control.
|
2.
|
Notice of Termination
of Employment.
|
The
Executive agrees to give the Corporation at least two (2) months' written
advance notice of Executive's voluntary termination of employment, other than
for Good Reason, if such termination occurs prior to a Change of
Control.
|
3.
|
Benefits Payable Upon
Termination of Employment.
|
|
(a)
|
General
Rule. In the event that, at any time other than within two (2)
years after a Change of Control, the Corporation terminates the employment
of the Executive with the Corporation other than for misconduct or
Permanent Disability, or the Executive terminates employment for Good
Reason, the Executive shall receive from the Corporation, provided the
Executive executes the Release described in Paragraph 3(d)
below:
|
|
|
(i)
|
an
annual amount, equal to the Executive's Base Salary, payable for each of
the eighteen (18) months following termination of employment in equal
installments at the times set forth in the Corporation's payroll policy,
as in effect at the time of
payment;
|
|
|
(ii)
|
reimbursement
of reasonable expenses incurred by the Executive for professional
outplacement services by qualified consultants after termination of
employment; and
|
|
|
(iii)
|
until
the earlier of (A) eighteen (18) months following the date of termination
of employment; or (B) the date on which the Executive is employed by a new
employer, medical and dental benefits at the level provided immediately
prior to the termination of employment date. Any statutory
rights of the Executive to continued health coverage shall be governed by
the Executive's actual date of termination and not by the expiration of
the salary continuation period.
|
|
(b)
|
Termination Within Two
(2) Years After a Change of Control. In the event that
within two (2) years after a Change of Control, the Corporation terminates
the employment of the Executive, other than for misconduct or Permanent
Disability, or the Executive terminates employment for Good Reason, the
Executive shall receive from the Corporation, within two (2) business days
after such termination:
|
|
|
(i)
|
an
amount in cash equal to the product of two (2), multiplied by the sum of
the Executive's Base Salary and Target
Bonus;
|
|
|
(ii)
|
an
amount in cash equal to the product of (A) Executive's Target Bonus and
(B) a fraction, the numerator of which is the number of days in the
Corporation's fiscal year that occurred prior to the Executive's
termination of employment and the denominator of which is 365 representing
a partial bonus for the year of termination, less any partial bonus
related to the same fiscal year previously paid to the
Executive;
|
1
|
|
(iii)
|
if
the bonus amounts for the Corporation's fiscal year ending prior to the
Executive's termination date have not, prior to such termination, been
paid to Corporation executives generally, an amount in cash equal to the
unpaid bonuses under the Corporation's annual executive bonus program,
based on actual Corporation performance during such fiscal
year;
|
|
|
(iv)
|
reimbursement
of reasonable expenses incurred by the Executive for professional
outplacement services by qualified consultants after termination of
employment; and
|
|
|
(v)
|
until
the earlier of twenty-four (24) months following the date of termination
of employment or the date on which the Executive is employed by a new
employer, medical and dental benefits at the level provided immediately
prior to the Change of Control. After Executive is employed by
a new employer these benefits shall remain in effect for the term
established above, but shall become secondary to any such benefits offered
by the new employer (i.e. they will be offset by such new employer's
benefits).
|
|
(c)
|
Termination for
Misconduct.
|
Nothing
in this Agreement shall be construed to prevent the Corporation from terminating
Executive's employment under this Agreement for misconduct. Such
termination shall relieve the Corporation of its obligation to make any other
payments under this Agreement, except those that may be otherwise payable under
then existing employee benefit plans, programs and arrangements of the
Corporation.
|
(d)
|
Release of
Claims.
|
To be
eligible for and receive the benefits described in subparagraphs (a) or (b) of
this Paragraph 3, Executive must, at the time of termination of employment,
irrevocably execute a release form prescribed by the Corporation (“Release”),
file it with the person, and within the time period, the Corporation prescribes,
and the Release must be enforceable in all respects. The purpose of
the Release is to release the Corporation from all claims and liability arising
out of the employment relationship with the Corporation, including without
limitation, claims arising under the Age Discrimination in Employment Act
("ADEA"), Title VII of the Civil Rights Act of 1964, and all other federal,
state, local or other laws, regulations or rules, whether arising from statute
or the common law, or in law or equity. The Release shall be in a
form that complies with regulations promulgated by the Equal Employment
Opportunity Commission (“EEOC”).
|
4.
|
Mitigation;
Non-Compete.
|
|
(a)
|
If
the Executive's termination of employment occurs at any time other than
within two (2) years after a Change of
Control:
|
|
|
(i)
|
the
amount of the payments under Paragraph 3(a)(i) will be reduced by the
amount of any gross compensation the Executive is entitled to receive,
whether or not deferred, during the eighteen (18) month period following
the termination, from any other source of employment, which term, for
purposes of this Agreement, includes self-employment. Provided
the Executive is not in violation of the requirements of Paragraph 5 or
this Paragraph 4, the reduction described in the preceding sentence will
not apply during the twelve (12) month period beginning on the day
following the Executive's termination of employment
hereunder. As a condition to receiving the payments under
Paragraph 3(a)(i), the Corporation may require certification of the
Executive's employment status and the Corporation may require, in the
event of the Executive's other employment, proof, in a form acceptable to
the Corporation, of the Executive's rate of gross compensation from the
Executive's new employer.
|
|
|
(ii)
|
the
Corporation's obligation to make payments under Paragraph 3(a) shall cease
completely and immediately if, without its prior written consent, at any
time before all such payments have been made as scheduled, the Executive
shall directly or indirectly (whether as a shareholder, owner, partner,
consultant, employee, or otherwise), engage in any of the "major
businesses" in which the Corporation or its subsidiaries are
engaged. A "major business" for this purpose is any business
segment of the Corporation or any of its subsidiaries (e.g. carbonless
copy paper, thermal paper, or other business segments) on the date of
termination of employment that produced in the last fiscal year of the
Corporation which ended before the termination occurred, or is projected
to produce in the fiscal year in which the termination occurs or in either
of the two succeeding fiscal years after the date of termination, more
than 5% of the revenues of the Corporation. For this purpose,
the Executive shall be deemed not a shareholder of a company that would
otherwise be a competing entity if the Executive's record and beneficial
ownership of the capital stock of such company amount to not more than one
(1) percent of the outstanding capital stock of any such company subject
to the periodic and other reporting requirements of Section 13 or Section
15(d) of the Securities Exchange Act of 1934, as
amended.
|
|
(b)
|
If
the Executive's termination of employment occurs within two (2) years
after a Change of Control, the Executive shall not be required to mitigate
damages or the amount of any payment hereunder by seeking employment or
otherwise, nor will any payments hereunder be subject to offset or
reduction in respect of any claims which the Corporation may have against
the Executive.
|
2
|
5.
|
Trade
Secrets.
|
Executive
recognizes and acknowledges that the list of the Corporation’s customers and its
subsidiaries’ customers, as well as other confidential information relating to
the Corporation or its subsidiaries, as it may exist from time to time, is a
valuable, special, and unique asset of the Corporation’s
business. The Executive will not, during or after the term of
Executive's employment, disclose any such information or any part thereof to any
person, firm, corporation, association, or other entity for any reason or
purpose whatsoever. In the event of a breach or threatened breach by
the Executive of the provisions of this Paragraph 5, the Corporation shall be
entitled to an injunction restraining the Executive from disclosing, in whole or
in part, this information. The provisions of this Paragraph 5 are in
supplement to, and not in derogation of, any prior agreements between the
Executive and the Corporation concerning rights to inventions and/or
confidential information. The Corporation will be free to pursue any
other remedies as it may in its discretion deem to be appropriate under the
circumstances.
|
6.
|
Effect on Pension,
Severance and Other
Benefits.
|
Benefits
payable under Paragraph 3 hereof shall not be counted towards any pension
benefits to which Executive may otherwise be entitled; these benefits are also
in lieu of, and not in addition to, any severance or similar benefits to which
the Executive may otherwise be entitled under the terms of any policy, plan or
program of the Corporation. Unless expressly otherwise stated, this
Agreement is not intended to deprive and does not have the effect of depriving
Executive of any benefits to which the Executive may be entitled under employee
benefit, disability, insurance, deferred compensation or similar plans or
programs of the Corporation.
|
7.
|
Change of Control Tax
Provisions.
|
If any
payments or benefits provided to Executive under this Agreement (the “Payments”)
will be subject to the tax imposed by Section 4999 of the Code (the “Excise
Tax”), the Corporation shall pay to Executive, at the time the Payments are paid
to Executive, an additional amount (the “Gross-Up Payment”) such that the net
amount retained by Executive, after deduction of any Excise Tax on the Payments
and any federal, state and local income tax and Excise Tax on the Gross-Up
Payment itself, shall be equal to the Payments.
For
purposes of determining whether any of the Payments will be subject to the
Excise Tax and the amount of such Excise Tax, (i) any other payments or benefits
received by Executive in connection with a Change of Control or Executive’s
termination of employment shall be treated as “parachute payments” within the
meaning of section 280G(b)(2) of the Code, and all “excess parachute payments”
within the meaning of section 280G(b)(1) shall be treated as subject to the
Excise Tax, unless in the opinion of tax counsel selected by the Corporation’s
independent auditors and acceptable to Executive such other payments or benefits
(in whole or in part) do not constitute parachute payments, or such excess
parachute payments (in whole or in part) represent reasonable compensation for
services actually rendered within the meaning of Section 280G(b)(4) of the Code,
(ii) the amount of the Payments which shall be treated as subject to the Excise
Tax shall be equal to the lesser of (A) the total amount of the Payments or (B)
the amount of excess parachute payments within the meaning of Sections
280G(b)(1) and (4) (after applying clause (i) above, and after deducting any
excess parachute payments in respect of which payments have been made), and
(iii) the value of any non-cash benefits or any deferred payment or benefit
shall be determined by the Corporation’s independent auditors in accordance with
the principles of Sections 280G(d)(3) and (4) of the Code. For
purposes of determining the amount of the Gross-Up Payment, Executive shall be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment is to be made
and state and local income taxes at the highest marginal rates of taxation in
the state and locality of Executive’s residence on the date of Executive’s
termination of employment, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local
taxes.
If the
Excise Tax is subsequently determined to be less than the amount taken into
account hereunder, Executive shall repay to the Corporation, at the time that
the amount of such reduction in Excise Tax is finally determined, the portion of
the Gross-Up Payment attributable to such reduction. If the Excise
Tax is determined to exceed the amount taken in account hereunder (including by
reason of any payment the existence or amount of which cannot be determined at
the time of the Gross-Up Payment), the Corporation shall make an additional
gross-up payment in respect of such excess to Executive (plus any interest
payable with respect to such excess) at the time that the amount of such excess
is finally determined.
|
8.
|
Assignment.
|
This
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the Corporation and the Executive and their respective heirs, legal
representatives, successors and assigns. If the Corporation shall be
merged into or consolidated with another entity, the provisions of this
Agreement shall be binding upon and inure to the benefit of the entity surviving
such merger or resulting from such consolidation. The Corporation
will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Corporation, by agreement in form and substance satisfactory to
the Executive, to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Corporation would be required to
perform it if no such success had taken place. The provisions of this
Paragraph 8 shall continue to apply to each subsequent employer of the Executive
hereunder in the event of any subsequent merger, consolidation or transfer of
assets of such subsequent employer.
|
9.
|
Separability
Clause.
|
Any
provision of this Agreement which is held to be unenforceable or invalid in any
respect in any jurisdiction shall be ineffective in such jurisdiction to the
extent that it is unenforceable or invalid without affecting the remaining
provisions hereof, which shall continue in full force and effect. The
unenforceability or invalidity of a provision of this Agreement in one
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
10. Withholding.
Notwithstanding
the provisions of Paragraph 4(b) hereof, the Corporation may, to the extent
required by law, withhold applicable federal, state and local income and other
taxes from any payments due to the Executive hereunder.
11. Applicable
Law.
This
Agreement shall be governed by and construed in accordance with the laws of the
State of Wisconsin applicable to contracts made and to be performed
therein.
12. Entire
Agreement.
This
instrument contains the entire agreement of the parties, and supersedes any
earlier agreement between them, relative to the matters described
herein. It may not be changed orally but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification, extension, or discharge is sought.
3
IN
WITNESS WHEREOF, the parties have executed this Agreement, dated as of December
17, 2008.
|
APPLETON
PAPERS INC.
|
||
|
By:
|
/s/
Xxxx X. Xxxxxxxx
|
|
|
Xxxx
X.
Xxxxxxxx
|
|
EXECUTIVE
|
||
|
By:
|
/s/
M. Xxxxxxxx Xxxxxxx
|
|
|
M.
Xxxxxxxx Xxxxxxx
|
4
Schedule
A
CERTAIN DEFINITIONS
As used
in this Agreement, and unless the context requires a different meaning, the
following terms have the meaning indicated:
"Base Salary" means
the Executive's annual rate of base salary in effect on the date on which the
Executive's employment terminates, determined before any deductions for salary
deferrals under a non-qualified deferred compensation plan, or Internal Revenue
Code Sections 125 or 402(g).
"Change of Control"
means a change in ownership or effective control of the Corporation, or in the
ownership of a substantial portion of the assets of the Corporation, as defined
by the occurrence of any one of the following events:
|
(a)
|
the
date upon which any one person (or persons acting as a group) acquires
ownership of Corporation stock constituting more than 50% of the total
fair market value or total voting power of the stock of the
Corporation;
|
|
(b)
|
the
date upon which any one person (or persons acting as a group) acquires
(during a 12-month period ending on the date of the most recent
acquisition) ownership of Corporation stock constituting more than 35% of
the total voting power of the stock of the
Corporation;
|
|
(c)
|
the
date upon which a majority of the Board of Directors are replaced during a
12-month period, and the new appointments are not endorsed by a majority
of the Board prior to the date of appointment;
or
|
|
(d)
|
the
date upon which any one person (or persons acting as a group) acquires
(during a 12-month period ending on the date of the most recent
acquisition) assets of the Corporation having a gross fair market value of
at least 40% of the total gross fair market value of all assets of the
Corporation immediately prior to such
acquisition.
|
|
(e)
|
the
date upon which any one person (or persons acting as a group) acquires
ownership of more than 50% of the total fair market value or total voting
power of the stock or assets of the Performance Packaging division of the
Corporation.
|
5
The
Compensation Committee of the Board of Directors shall certify the occurrence of
a Change of Control event, provided that the occurrence of such event shall be
objectively determinable and the certification decision must be ministerial in
nature and not involve any discretionary authority. The definition of
Change of Control shall in all events be subject to, and interpreted in a manner
consistent with, IRS Notice 2005-1 (and any subsequent applicable
guidance).
"Good Reason"
means:
|
(a)
|
prior
to a Change of Control, without the Executive's express written consent, a
reduction of 25% or more of the Executive's base annual salary;
or
|
|
(b)
|
after
a Change of Control,
|
|
(1)
|
without
the Executive's express written
consent,
|
|
i.
|
A.
a decrease in the Executive's positions, duties, responsibilities or
status from those in effect immediately prior to the Change of Control;
or
|
|
|
B.
|
any
removal of the Executive from, or failure to re-elect the Executive to,
any of the Executive's positions immediately prior to the Effective Date,
except in connection with the termination of the employment of the
Executive for misconduct, as a result of the death or Permanent Disability
of the Executive, or a transfer of the Executive to a comparable position,
with no decrease in salary and that does not require
relocation;
|
|
(2)
|
any
failure to pay Executive's base annual salary, or any material reduction
of the Executive's base annual salary or the Executive's Target Bonus in
effect immediately prior to the Change of
Control;
|
|
(3)
|
without
the Executive's express written consent, the relocation of the principal
place of the Executive's employment;
or
|
|
(4)
|
any
breach of Paragraph 8 hereof (relating to
assignment).
|
Notwithstanding
anything herein to the contrary, the Executive shall provide written notice to
the Corporation of any event constituting Good Reason no later than ninety (90)
days following the occurrence of such event, and the Corporation shall have
thirty (30) days following receipt of written notice to cure any such
event.
"Notice of Disability
Termination" means written notice which sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment for reason of Permanent Disability.
"Permanent Disability"
means that Executive would be entitled to receive benefits under Title II of the
Social Security Act, as amended; provided, however, that any termination of the
Executive on account of the Executive's Permanent Disability shall be
communicated by and shall not be effective without a Notice of Disability
Termination.
"Target Bonus" means
that percentage of Base Salary payable for "target performance" under the
Corporation's annual executive bonus program for the Corporation's fiscal year
in which the Executive's employment terminates or, if no such percentage has
been established, the year prior to such termination.
|
Effective
December 31, 2008
|
|
M.
Xxxxxxxx Xxxxxxx
|
|
Vice
President and General
Manager,
|
|
Performance
Packaging of Appleton
|
|
RE: Amended
and Restated Incentive
Agreement
|
Dear
Xxxxx,
Appleton
is aware that the current economic conditions make it increasingly important for
our leaders to support and execute our strategic business goals. To
encourage your continued productivity and motivation of the Performance
Packaging team, we offer to you:
|
·
|
2009
performance-based incentive paid quarterly for achievement of EBITDA and
cash conversion days performance. Appleton reserves the right
to adjust this quarterly bonus (positively or negatively) if accounting
errors affecting the bonus are identified following
payment.
|
|
·
|
In
the event of a sale of the Performance Packaging segment, a transaction
bonus of $230,700 if you maintain employment with Appleton and the buyer
for 90 days post close. This bonus would be paid 90 days post
close, or sooner if employment is terminated by the buyer. To
qualify for this transaction bonus, you must perform work on a full-time
basis in a manner consistent with your professional
expertise. If you were unable to perform your duties as a
result of a qualifying Family or Medical Leave reason, the bonus would be
reduced and paid on a pro-rata
basis.
|
|
·
|
An
amended and restated Termination Protection Agreement with an expanded
definition of Change of Control and Assignment to include a sale of the
Performance Packaging segment (see attached Termination Protection
Agreement).
|
If this
offer is acceptable to you, please sign in the space provided on page
2.
Sincerely,
/s/ Xxxx
X. Xxxxxxxx
Xxxx
Xxxxxxxx
Chief
Executive Officer
I wish to
receive the benefits described above. I recognize that these payments
are contingent upon performing work on a full-time basis in a manner consistent
with my professional expertise. I acknowledge and agree that, as of
the effective date hereof, this Amended and Restated Incentive Agreement is the
only such agreement between the parties pertaining to the subject matter
contained herein, and that any other such agreements pertaining to the subject
matter contained herein are terminated and superseded by the terms set forth
above.
/s/ M. Xxxxxxxx
Bolhous_______
M.
Xxxxxxxx Xxxxxxx
