EMPLOYMENT AGREEMENT
Between
XXXXXX PACKAGING COMPANY L.P.
And
Chief Financial Officer
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of June 27, 2002 (the "Agreement") between
Xxxxxx Packaging Company, L.P., a Delaware Limited Partnership ("Limited
Partnership", or "L.P." or "Company"), and Xxxx Xxxxxxxx ("Executive").
WHEREAS, the Company desires to continue to employ Executive as its
Chief Financial Officer and Executive desires to remain employed as the Chief
Financial Officer on the terms and subject to the conditions set forth herein:
NOW, THEREFORE, in consideration of the promises and the mutual
agreements contained herein, the Company and Executive hereby agree as follows:
Article I.
DEFINITIONS
The terms set forth below have the following meanings (such meanings to
be applicable to both the singular and plural forms, except where otherwise
expressly indicated): 1.1 "Accounting Firm" - see Exhibit A.
1.2 "Accrued Annual Bonus" means the amount of any Annual Bonus earned but
not yet paid with respect to the Year ended prior to the Date of
Termination. Such bonus is considered earned for a given Year as of
December 31 of that Year.
1.3 "Accrued Base Salary" means the amount of Executive's Base Salary that is
accrued but not yet paid as of the Date of Termination.
1.4 "Affiliate" means any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, the
Company. For the purposes of this definition, the term "control" when
used with respect to any Person means the power to direct or cause the
direction of management or policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by
contract or otherwise.
1.5 "Agreement" - see the recitals to this Agreement
1.6 "Agreement Date" means the date that is specified in the recitals to this
Agreement.
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1.7 "Anniversary Date" means any anniversary of the Agreement Date.
1.8 "Annual Bonus" - see Section 4.2(a).
1.9 "Annualized Total Compensation" means, as of any date, the sum of
Executive's Base Salary as of such date and (i) if the determination is
being made prior to the occurrence of a Change of Control, then the
average of the Annual Bonuses earned by Executive with respect to each of
the previously completed Years occurring during the Employment Period (up
to a maximum of the three most recently completed Years); provided, that
if such Termination of Employment occurs prior to the end of the first
Year ending during the Employment Period, then an amount equal to the
Target Annual Bonus applicable to the Year that includes such date or
(ii) if the determination is being made following a Change of Control,
the Target Annual Bonus applicable to the Year that includes such date.
1.10 "Base Salary" - see Section 4.1.
1.11 "Beneficial Owner" means a "beneficial owner," as such term is defined in
Rule 13d-3 under the Exchange Act (or any successor rule thereto).
1.12 "Beneficiary" - see Section 9.3.
1.13 "Blackstone" means collectively, Blackstone Capital Partners III Merchant
Banking Fund L.P., Blackstone Offshore Capital Partners III L.P. and
their Affiliates (other than the Company and its Subsidiaries).
1.14 "Board" means the Board of Directors of the Company subsequent to the
incorporation of the L.P. and the substitution of it as successor for the
L.P. as a party to this Agreement. Prior thereto, the Board shall mean
the General Partner (as defined in the LP Agreement).
1.15 "Cause" means any of the following:
(a) Executive's continuing refusal to perform his material duties or
to follow a lawful direction of the Company, which duties and
directions are consistent with his position;
(b) Executive's intentional act or acts of dishonesty that Executive
intended to result in his personal, more-than-immaterial
enrichment;
(c) Executive's documented willful malfeasance or willful misconduct
in connection with his employment or Executive's willful and
deliberate insubordination to directions of the Board or any
executive officer to whom he directly reports; or
(d) Executive is convicted of a felony.
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"Cause" excludes:
(x) Any act or omission that Executive reasonably believed in good
faith to have been in or not opposed to the interest of the Company
(without intent of Executive to gain therefrom, directly or indirectly, a
profit to which he was not legally entitled), or
(y) Any act or omission taken or omitted at the direction of a member
of the Board.
1.16 "Change of Control" means any of the following events:
(a) the sale or disposition, in one or a series of transactions, of
all or substantially all, of the assets of the Company to any one
or more "persons" or "groups" (as such terms are defined in
Sections 13(d)(3) or 14(d)(2) of the Exchange Act) other than
Blackstone;
(b) before the effective date of an initial public offering of the
equity securities of the Company (or of its successor after
conversion to a corporation) (the "IPO Date"), representatives of
Blackstone (individually or in the aggregate) cease to comprise a
majority of the Board;
(c) individuals who, as of the IPO Date, constitute the Board (the
"Incumbent Board") cease for any reason to constitute a majority
of the members of the Board; provided that any individual who
becomes a Director after the IPO Date whose election or nomination
for election by the Company's Shareholders was approved by a
majority of the members of the Incumbent Board (other than an
election or nomination of an individual (i) who is not a
representative of Blackstone and (ii) whose initial assumption of
office is in connection with an actual or threatened "election
contest" relating to the election of the Directors of the Company
(as such terms are used in Rule 14a-11 under the Exchange Act),
"tender offer" (as such term is used in Section 14(d) of the
Exchange Act) or a proposed merger) shall be deemed to be members
of the Incumbent Board; or
(d) any person or group, other than Blackstone, is or becomes the
Beneficial Owner, directly or indirectly, of more than 50% of the
total voting power of the voting stock of the Company (or any
entity which controls the Company or which is a successor to all
or substantially all of the assets of the Company), including by
way of merger, consolidation, tender or exchange offer or
otherwise and the representatives of Blackstone (individually or
in the aggregate) cease to comprise a majority of the Board.
Notwithstanding the foregoing, there shall not be Change of Control if,
in advance of such event, Executive agrees in writing that such event
shall not constitute a Change of Control.
1.17 "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
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1.18 "Committee" means the Compensation Committee of the Board.
1.19 "Common Stock" means the common stock of the Company following its
incorporation, and the equivalent L.P. units prior to its incorporation.
1.20 "Company" - see the recitals to this Agreement.
1.21 "Company Inventions" - see Section 8.2(b).
1.22 "Date of Termination" means the effective date of a Termination of
Employment for any reason, including death or Disability, whether by
either the Company or the Executive.
1.23 "Director" means a director of the Company subsequent to its
incorporation or a member of the governing body of the L.P. prior to its
incorporation.
1.24 "Disability" means the inability of Executive to perform in all material
respects his duties and responsibilities of the Company or any
Subsidiary, by reason of a physical or mental disability or infirmity
which inability is reasonably expected to be permanent and has continued
for a period of six consecutive months or for an aggregate of nine (9)
months in any twenty-four (24) consecutive month period.
1.25 "Employment Period" - see Section 3.1.
1.26 "Exchange Act" means the Securities Exchange Act of 1934, as amended or
any successors thereto.
1.27 "Excise Tax" - see Exhibit A.
1.28 "Executive" - see the recitals to this Agreement.
1.29 "Executive Career Transition Services" means full use of a national
outplacement consultant (e.g., Challenger, Xxxx & Christmas, Inc., Right
Associates) or other consultant mutually agreeable to the Company and
Executive; office space, secretarial support; technological support;
equipment and supplies of a quality substantively equal to those provided
during the Employment Period, and continuation of expense reimbursement
for professional and trade association participation on the same terms as
during the Employment Period.
1.30 "Extension Date" - see Section 3.2.
1.31 "Good Reason" means the occurrence of any one or more of the following
events unless Executive specifically agrees in writing that such event
shall not be Good Reason:
(a) The failure of the Company to pay or cause to be paid Executive's
Base Salary or Annual Bonus, when due hereunder;
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(b) Any substantial diminution in Executive's authority or
responsibilities from those described in Section 2.1 hereof;
(c) Requiring Executive to be principally based at any office or
location more than 50 miles from the current offices of the
Company in York, Pennsylvania;
(d) Any failure to nominate, elect, or retain (other than due the
Executive's death, incapacity or resignation) Executive as Chief
Financial Officer of the Company;
(e) Any material reduction in Executive's Target Annual Bonus
opportunity after a Change of Control as compared with the Annual
Bonus earned for the preceding Year; or
(f) The failure of the Company, as the successor to the L.P. at the
time of its incorporation in conjunction with the initial public
offering, or otherwise, to assume and become a party to the
Agreement in substitution for the L.P.;
provided that the events described in this Section 1.31 shall constitute
Good Reason only if the Company fails to cure such event within 30 days
after receipt from Executive of written notice of the event that
constitutes Good Reason; provided, further, that "Good Reason" shall
cease to exist for an event on the 60th day following the later of its
occurrence or Executive's knowledge thereof, unless Executive has given
the Company written notice thereof prior to such date.
1.32 "Gross-Up Payment" - Exhibit A.
1.33 "including" means including without limitation.
1.34 "Inventions" - see Section 8.2(a).
1.35 "LP Agreement" means the Amended and Restated Agreement of Limited
Partnership of Xxxxxx Packaging Company.
1.36 "Option" means an option to purchase shares of Common Stock.
1.37 "Payment" - see Exhibit A.
1.38 "Permitted Transferee" means the spouse of Executive, a lineal descendant
of Executive or a spouse of a lineal descendant of Executive or a trust,
limited partnership or other entity principally benefiting all or a
portion of such individuals.
1.39 "Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity or government
instrumentality, division, agency, body or department.
1.40 "Prior Inventions" - see Section 8.2(a).
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1.41 "Prorata Annual Bonus" means the product of (a) the Annual Bonus
Executive would have been entitled to receive pursuant to Section 4.2
hereof in the Year of the Executive's Termination of Employment
multiplied by (b) a fraction of which the numerator is the numbers of
days that have elapsed in such Year of Termination of Employment through
the Date of Termination and the denominator is 365.
1.42 "Restricted Period" means the eighteen month period immediately following
a Termination of Employment for any reason; provided, however, that the
Restricted Period shall mean the twelve month period immediately
following a Termination of Employment due to the Company's election not
to renew the Employment Period pursuant to Section 3.2 following the
fourth anniversary of the Agreement Date, such that the Employment Period
terminates on or after the fifth anniversary of the Agreement Date.
1.43 "Safe Harbor Amount" - see Exhibit A.
1.44 "Shareholder" or "Stockholder" means an owner of the Company's
securities.
1.45 "Subsidiary" means, with respect to any Person, (a) any corporation of
which more than 50% of the outstanding capital stock having ordinary
voting power to elect a majority of the board of directors of such
corporation (irrespective of whether, at the time, stock of any other
class or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the time,
directly or indirectly, owned by such Person, and (b) any partnership,
limited liability company or other entity in which such Person has a
direct or indirect interest (whether in the form of voting or
participation in profits or capital contribution) of more than 50%.
1.46 "Target Annual Bonus" means the product of Base Salary (at a point in
time) multiplied by 105 percent, as such percentage may be adjusted
upwards from time to time by the Board.
1.47 "Termination For Good Reason" means a Termination of Employment during
the Employment Period by Executive for Good Reason.
1.48 "Termination of Employment" means a termination by the Company or by
Executive (or due to Executive's death) of Executive's employment with
the Company or its Affiliates.
1.49 "Termination Without Cause" means a Termination of Employment during the
Employment Period by the Company for any reason other than Cause or
Executive's death or Disability.
1.50 "Underpayment" - see Exhibit A.
1.51 "Year" means a calendar year period ending on December 31.
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Article II.
DUTIES
2.1 Duties. The Company shall employ Executive during the Employment Period
as its Chief Financial Officer. During the Employment Period, Executive
shall perform the duties assigned to him hereunder by the Board from time
to time, shall devote his full business time, attention and effort to the
affairs of the Company and shall use his reasonable best efforts to
promote the interests of the Company. During the Employment Period, and
excluding any periods of disability, vacation, or sick leave to which
Executive is entitled, Executive agrees to devote his full attention and
time to the business and affairs of the Company. If requested, Executive
shall also serve as a member of the Board without additional
compensation.
2.2 Other Activities. Executive may (i) serve on corporate, civic or
charitable boards or committees, deliver lectures, fulfill speaking
engagements, or teach at educational institutions, subject to the consent
of the Board (which shall not be unreasonably withheld) and/or (ii)
manage personal investments, provided that all such activities do not
individually or in the aggregate significantly interfere with the
performance of his duties under this Agreement or violate Section 8.1 of
this Agreement. Exhibit C to this Agreement sets forth a list of
activities currently engaged in by Executive that are hereby approved by
the Board.
Article III.
EMPLOYMENT PERIOD
3.1 Employment Period. Subject to Section 3.2 and the termination provisions
hereinafter provided, the term of Executive's employment under this
Agreement (the "Employment Period") shall begin on the Agreement Date and
end on the Anniversary Date, or, if applicable at the end of any
extension pursuant to Section 3.2. The employment of Executive by the
Company shall not be terminated other than in accordance with Article
VII.
3.2 Extensions of Employment Period. Commencing on the first Anniversary
Date, and on each Anniversary Date thereafter, (each an "Extension Date")
if at least 90 days before that date the Company has not delivered to
Executive, and Executive has not delivered to Company, a written notice
that the Employment Period will not be extended, the Employment Period
will be automatically extended for one year from its then scheduled
expiration date (i.e., the next occurring Extension Date).
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Article IV.
COMPENSATION
4.1 Salary. The Company shall pay Executive in accordance with its normal
payroll practices (but not less frequently than monthly) an annual salary
at a rate of $228,326 per year ("Base Salary"). During the Employment
Period, the Base Salary shall be reviewed at least annually by the
Committee after consultation with Executive and may from time to time be
increased as determined by the Committee. Effective as of the date of any
such increase, the Base Salary as so increased shall be considered the
new Base Salary for all purposes of this Agreement. Any increase in Base
Salary shall not limit or reduce any other obligation of the Company to
Executive under this Agreement.
4.2 Annual Bonus.
(a) Subject to Section 7, Executive shall be eligible to earn an
annual cash bonus ("Annual Bonus") in accordance with the terms
hereof for the current Year and each subsequent Year that begins
during the Employment Period. Executive shall be eligible for an
Annual Bonus based upon the achievement of the financial budget or
other performance criteria established by the Board on or about
January 15 or as soon thereafter as practicable, but in no event
later than March 31 of such Year. The Annual Bonus shall be equal
to the Target Annual Bonus upon full achievement of the
performance criteria, but may be less than or more than the Target
Annual Bonus upon lesser or greater levels of achievement.
(b) The Company shall pay the entire Annual Bonus that is payable with
respect to a Year in a lump-sum cash payment as soon as
practicable after the Committee can determine whether and the
degree to which the performance criteria has or has not been
achieved following the close of such Year. Any such Annual Bonus
shall in any event be paid no later than the date annual bonuses
are paid to the other qualifying employees of the Company.
Article V.
OTHER BENEFITS
5.1 Incentive, Savings and Retirement Plans. In addition to Base Salary and
the Annual Bonus, Executive shall be entitled to participate during the
Employment Period in all incentive, savings and retirement plans,
practices, policies and programs that are from time to time generally
available to other senior executives of the Company.
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5.2 Welfare Benefits. During the Employment Period, Executive and/or his
eligible dependents, as the case may be, shall be eligible for
participation in all benefits under welfare benefit plans, practices,
policies and programs provided by the Company (including any medical,
prescription, dental disability, salary continuance, employee life, group
life, dependent life, accidental death and travel accident insurance
plans and programs) generally available to other senior executives of the
Company.
5.3 Fringe Benefits. During the Employment Period, Executive shall be
entitled to all fringe benefits that are from time to time generally
available to other senior executives of the Company. The Company will
continue its current automobile expense program as in effect on the
Agreement Date (or establish a comparable replacement program), with such
increases as are consistent with past practices to reflect changes in
expenses.
5.4 Vacation. During the Employment Period, Executive shall be entitled to
paid vacation time in accordance with the plans, practices, policies, and
programs generally available to other senior executives of the Company,
but in no event shall such vacation time be less than four weeks per
calendar year.
5.5 Expenses. During the Employment Period, Executive shall be entitled to
receive prompt reimbursement for all reasonable employment related
expenses incurred by Executive upon the receipt by either of the Company
of accounting in accordance with practices, policies and procedures
generally available to other senior executives of the Company.
5.6 Office; Support Staff. During the Employment Period, Executive shall be
entitled to an office or offices of a size and with furnishings and other
appointments, and to secretarial and other assistance, appropriate to his
position and duties under this Agreement.
5.7 Tax Gross-Up Payment. If it shall be determined that any payment to
Executive pursuant to this Agreement or any other payment or benefit from
the Company, any Affiliate, any shareholder of the Company or any other
person would be subject to the excise tax imposed by section 4999 of the
Code, then Executive shall receive a Gross-Up Payment pursuant to Exhibit
A attached hereto.
Article VI.
OTHER EXECUTIVE BENEFITS
6.1 Supplemental Retirement Benefits. Executive shall be entitled to
participate in any other supplemental defined benefit retirement plans of
the Company that are not qualified under Section 401 (a) of the Code,
generally available to other senior executives of the Company.
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6.2 Non-Qualified Option Agreement. Except as provided in Sections 7.4(b) and
7.6, this Agreement in no way modifies or limits the Non-Qualified Option
Agreements entered into between Executive and Xxxxxx Packaging Holdings
Company on February 2, 1998 and January 1, 1999. The Non-Qualified Option
Agreement conveys consideration separate from and in addition to
consideration conveyed in this Agreement, except to the extent that the
Non-Qualified Option Agreement increases benefits under operation of this
Agreement.
6.3 Equity Incentive Agreement. Except as provided in Sections 7.4(b) and
7.6, this Agreement in no way modifies or limits the Equity Incentive
Agreement entered into between Executive and the Company on February 2,
1998. The Equity Incentive Agreement conveys consideration separate from
and in addition to this Agreement, except to the extent that the Equity
Incentive Agreement increases benefits under operation of this Agreement.
6.4 Indemnification. The Company shall, to the maximum extent permitted by
law, and in addition to any such right granted to or available to the
Executive under the Company's Charter, By-laws or standing or other
resolutions, defend, indemnify and hold harmless the Executive from and
against any and all claims made against the Executive concerning or
relative to his service, actions or omissions on behalf of the Company as
an officer, employee, director or agent thereof; provided, however, that
the obligation to indemnify the Executive shall not apply to any claim
made against the Executive that arises out of the act, omission or
failure to act that would constitute Cause for the Executive's
termination of employment. The Company shall, upon the Executive's
request, promptly advance or pay any amounts for reasonable costs,
charges, or expenses (including any legal fees and expenses incurred by
counsel retained by the Executive) in respect of his right to
indemnification hereunder or in furtherance of such right, subject to a
later determination as to the Executive's ultimate right to receive
indemnification. The Executive's right to indemnification shall survive
until the expiration of all applicable statutes of limitations, without
regard to the earlier termination of the Executive's employment.
Article VII.
TERMINATION BENEFITS
7.1 Termination of Employment. The Employment Period and Executive's
employment hereunder may be terminated by either party at any time and
for any reason; provided that Executive will be required to give the
Company at least 60 days' advance written notice of any resignation of
Executive's employment. Notwithstanding any other provision of this
Agreement, the provisions of this Article VII shall exclusively govern
Executive's rights under this Agreement following the expiration of the
Employment Period or if Executive's employment with the Company or its
Affiliates is terminated during the Employment Period for any reason.
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7.2 Termination for Cause or Other Than for Good Reason, etc.
(a) If the Company terminates Executive's employment during the
Employment Period for Cause or Executive terminates his employment
during the Employment Period other than for Good Reason, death or
Disability, the Company shall pay to Executive immediately after
the Date of Termination an amount equal to Executive's Accrued
Base Salary, accrued but unpaid vacation, unpaid business expenses
properly incurred by Executive in accordance with Company policy
prior to the date of Executive's termination, and, if such
Termination of Employment is by the Executive other than for Good
Reason, death or Disability, the Accrued Annual Bonus, if any.
(b) Before terminating Executive's employment for Cause, the Board
will (i) specify in writing to Executive in detail the nature of
the act, omission, refusal, or failure that it deems to constitute
Cause, (ii) as to clauses (a) and (c) in the definition of
"Cause," provide Executive a reasonable opportunity to correct the
purported problem and avoid termination for Cause, and (iii)
provide Executive with the opportunity (after reasonable notice
and opportunity to prepare) to appear before the Board, with or
without legal representation, at Executive's election, to present
arguments and evidence on his own behalf.
7.3 Termination for Death or Disability. If Executive's employment terminates
during the Employment Period due to his death or Disability, the Company
shall pay to Executive or his Beneficiaries, as the case may be, (i)
immediately after the Date of Termination an amount that is equal to the
sum of Executive's Accrued Base Salary and Accrued Annual Bonus, if any,
accrued but unpaid vacation and unpaid business expenses properly
incurred by Executive in accordance with Company policy prior to the date
of Executive's termination and (ii) at the time the Annual Bonus would
have otherwise been payable had Executive's employment not terminated, a
Prorata Annual Bonus.
7.4 Termination Without Cause or for Good Reason. In the event of a
Termination Without Cause or a Termination for Good Reason, the Executive
shall receive the following:
(a) Immediately after the Date of Termination, a lump-sum amount equal
to the sum of Executive's Accrued Base Salary, Accrued Annual
Bonus, if any, accrued but unpaid vacation and unpaid business
expenses properly incurred by Executive in accordance with Company
policy prior to the date of Executive's termination;
(b) Full vesting of Options and other equity awards granted to the
Executive that remain outstanding immediately prior to the Date of
Termination;
(c) A Prorata Annual Bonus at the time the Annual Bonus would have
otherwise been payable had Executive's employment not terminated;
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(d) Continued monthly payment for a period of twenty-four months
following such Termination of Employment of an amount equal to the
quotient of (i) the Executive's Annualized Total Compensation
divided by (ii) twelve; provided that the aggregate amount
described in this clause (d) shall be reduced (but not below zero)
by the present value of any other cash severance or cash
termination benefits payable to Executive under any generally
available or officer specific severance plans, programs or
arrangements of the Company or its affiliates, other than any (i)
retirement income benefit, (ii) benefits paid under the
Supplemental Income Plan and (iii) equity incentives and/or
options;
(e) The continuation of health and dental benefits to which Executive
is entitled as of the Date of Termination for twenty-four months;
provided that such benefits shall cease upon the Executive's being
eligible for comparable benefits from a new employer;
(f) The continuation of the automobile expense program to which
Executive is entitled as of the Date of Termination for twelve
months; provided that such benefit ceases upon Executive's being
eligible for comparable benefits from a new employer; and
(g) For a period of 12 months from the Date of Termination, but no
later than the point at which the Executive is employed on a
substantively full time basis, Executive Career Transition
Services, not to exceed $30,000 in the aggregate.
7.5 Other Termination Benefits. In addition to any amounts or benefits
payable upon a Termination of Employment hereunder, Executive shall,
except as otherwise specifically provided herein, be entitled to any
payments or benefits provided under the terms of any plan, policy or
program of the Company in which Executive participates or as otherwise
required by applicable law.
7.6 Election Not to Extend the Employment Period. If the Company elects not
to extend the Employment Period pursuant to Section 3.2 such that the
Employment Period terminates prior to the fifth anniversary of the
Agreement Date, the nonextension shall be treated as a Termination
without Cause, for purposes of Section 7.4, as of the next scheduled
Extension Date or such earlier date as determined by Company. For the
avoidance of doubt, an election by the Company not to extend the
Employment Period pursuant to Section 3.2 such that the Employment Period
terminates beyond the fifth anniversary of the Agreement Date shall not
constitute a Termination without Cause and in such event Executive's
termination of employment hereunder (whether or not Executive continues
as an employee of the Company thereafter) shall be deemed to occur on the
close of business on the day immediately preceding the next scheduled
Extension Date or such earlier date as determined by Company. Upon such
Termination of Employment, Executive shall be entitled to receive:
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(a) Immediately after the Date of Termination, a lump-sum amount equal
to the sum of Executive's Accrued Base Salary, Accrued Annual
Bonus, if any, accrued but unpaid vacation and unpaid business
expenses properly incurred by Executive in accordance with Company
policy prior to the date of Executive's termination;
(b) Full vesting of Options and other equity awards granted to the
Executive that remain outstanding immediately prior to the Date of
Termination;
(c) A Prorata Annual Bonus at the time the Annual Bonus would have
otherwise been payable had Executive's employment not terminated;
(d) Continued monthly payment for a period of twelve months following
such Termination of Employment of an amount equal to the quotient
of (i) the Executive's Annualized Total Compensation divided by
(ii) twelve; provided that the aggregate amount described in this
clause (d) shall be reduced (but not below zero) by the present
value of any other cash severance or cash termination benefits
payable to Executive under any generally available or officer
specific severance plans, programs or arrangements of the Company
or its affiliates, other than any (i) retirement income benefit,
(ii) benefits paid under the Supplemental Income Plan and (iii)
equity incentives and/or options;
(e) The continuation of health and dental benefits to which Executive
is entitled as of the Date of Termination for twelve months;
provided that such benefits shall cease upon the Executive's being
eligible for comparable benefits from a new employer;
(f) The continuation of the automobile expense program to which
Executive is entitled as of the Date of Termination for twelve
months; provided that such benefit ceases upon Executive's being
eligible for comparable benefits from a new employer; and
(g) For a period of 12 months from the Date of Termination, but no
later than the point at which the Executive is employed on a
substantively full time basis, Executive Career Transition
Services, not to exceed $30,000 in the aggregate.
7.7 Continued Employment Beyond the Expiration of the Employment Period.
Unless the parties otherwise agree in writing, continuation of
Executive's employment with the Company beyond the expiration of the
Employment Period shall be deemed an employment at-will and shall not be
deemed to extend any of the provisions of this Agreement and Executive's
employment may thereafter be terminated at will by either Executive or
the Company; provided that the provisions of Article VIII of this
Agreement shall survive any termination of this Agreement or Executive's
termination of employment hereunder.
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7.8 Board/Committee Resignation. Upon Executive's Termination of Employment
for any reason, Executive agrees to resign, as of the date of such
termination and to the extent applicable, from the Board (and any
committees thereof) and the Board of Directors (and any committees
thereof) of any of the Company's affiliates.
Article VIII.
RESTRICTIVE COVENANTS
8.1 Non-Solicitation of Employees; Confidentiality; Non-Competition.
(a) Executive covenants and agrees that, at no time during the
Employment Period nor during the Restricted Period, will
Executive:
(i) Directly or indirectly employ or seek to employ any person
(other than his personal assistant) employed as of the date
of Executive's Termination of Employment or who left the
employment of the Company or its Affiliates coincident with,
or within six months prior to or after, the Executive's
Termination of Employment with the Company or otherwise
encourage or entice any such person to leave such employment
(provided that this Section 8.1(a)(i) shall not apply either
to persons who had not become employed by the Company before
the Date of Termination or to persons whose employment ended
at any time as a result of the Company's termination of
those individuals without cause);
(ii) Become employed by, enter into a consulting arrangement with
or otherwise agree to perform personal services for a
Competitor (as defined in section 8.1 (b)).
(iii) Acquire an ownership interest, or an option to purchase an
ownership interest in a Competitor, other than a publicly
traded Competitor provided that ownership or option position
in such publicly traded Competitor does not exceed 5
percent;
(iv) Solicit any business of the Company on behalf of or for the
benefit of a Competitor; or
(v) Interfere with, or attempt to interfere with, business
relationships (whether formed before, on or after the date
of this Agreement) between the Company or any of its
affiliates and customers, clients, suppliers of the Company
or its Affiliates.
14
(b) For purposes of the Section, "Competitor" means any Person that
produces blowmolded plastic containers or produces or provides any
other product or service of the Company that represents, as of the
Date of Termination, at least 10% of the consolidated revenues of
the Company (including, without limitation, products or services
that Executive is aware, as of the Date of Termination, that the
Company had specific plans (as evidenced through the most recent
annual corporate business plan or by resolutions of the Board) to
produce or provide during the twelve month period following the
Date of Termination and such products or services are reasonably
anticipated to represent at least 10% of the consolidated revenues
of the Company within the two years following the Date of
Termination) that are competitive with those sold by a business
that is being conducted by the Company or any Subsidiary at the
time in question and was being conducted at the Date of
Termination. Notwithstanding anything to the contrary in this
Section, goods or services shall not be deemed to be competitive
with those of the Company solely as a result of Executive's being
employed by or otherwise associated with a business of which a
unit is in competition with the Company or any Subsidiary (a
"Competitive Unit") but as to which unit Executive does not have
direct or indirect responsibilities for the products or services
involved; provided, that such Competitive Unit contributes less
than 25% of the consolidated revenues for the most recently
completed fiscal year of such business.
(c) Executive covenants and agrees that at no time during the
Employment Period nor at any time following any Termination of
Employment will Executive communicate, furnish, divulge or
disclose in any manner to any Person any Confidential Information
(as defined in Section 8.1(d)) without the prior express written
consent of the Company other than in the course of Executive's
employment. After a Termination of Employment, Executive shall
not, without the prior written consent of the Company, or as may
otherwise be required by law or legal process, communicate or
divulge such Confidential Information to anyone other than the
Company and its designees.
(d) For purposes of this Section, "Confidential Information" shall
mean financial information about the Company, contract terms with
vendors and suppliers, customer and supplier lists and data,
know-how, software developments, inventions, formulae, technology,
designs and drawings, or any Company property or confidential
information relating to research, operations, finances, current
and proposed products and services, vendors, customers,
advertising, costs, marketing, trading, investment, sales
activities, promotion, manufacturing processes, or the business
and affairs of the Company generally, or of any subsidiary or
affiliate of the Company, trade secrets and such other
competitively-sensitive information, except that Confidential
Information shall not include any information that was or becomes
generally available to the public (i) other than as a result of a
wrongful disclosure by Executive, (ii) as a result of disclosure
by
15
Executive during the Employment Period that he reasonably and in
good faith believes is required by the performance of his duties
under this Agreement, or (iii) any information compelled to be
disclosed by applicable law or administrative regulation; provided
that Executive, to the extent not prohibited from doing so by
applicable law or administrative regulation, shall give the
Company written notice of the information to be so disclosed
pursuant to clause (iii) of this sentence as far in advance of its
disclosure as is practicable.
(e) Executive agrees that upon Executive's Termination of Employment
with the Company for any reason, he will return to the Company
immediately all memoranda, books, papers, plans, information,
letters and other data, and all copies thereof or therefrom, in
any way relating to the business of the Company, its affiliates
and subsidiaries, except that he may retain only those portions of
personal notes, notebooks and diaries that do not contain
Confidential Information of the type described in the preceding
sentence. Executive further agrees that he will not retain or use
for Executive's own benefit, purposes or account or the benefit,
purposes or account of any other person, firm, partnership, joint
venture, association, corporation or other business designation,
entity or enterprise, other than the Company and any of its
Subsidiaries or Affiliates, at any time any trade names,
trademark, service xxxx, other proprietary business designation,
patent, or other intellectual property of the Company or its
Affiliates.
8.2 Inventions.
(a) Prior Inventions. Executive has attached hereto, as Exhibit B, a
list describing all inventions, works of authorship (including
software, related items, databases, documentation, site content,
text or graphics), developments, and improvements that relate to
the Company's proposed or current business, services, products or
research and development ("Inventions") that were created or
contributed to by Executive either solely or jointly with others
prior to Executive's employment with the Company and that relate
to the Company's proposed or current business, services, products
or research and development (collectively referred to as "Prior
Inventions"); or, if no such list is attached, Executive
represents that there are no such Prior Inventions. If in the
course of Executive's employment with the Company, Executive uses
or relies upon a Prior Invention in Executive's creation or
contribution to any work of authorship, invention, product,
service, process, machine or other property of the Company,
Executive will inform the Company promptly and, upon request, use
Executive's best efforts to procure any consents of third parties
necessary for the Company's use of such Prior Invention. To the
fullest extent permissible by law, Executive hereby grants the
Company a non-exclusive royalty-free, irrevocable, perpetual,
worldwide license under all of Executive's Prior Inventions to
make, have made, copy, modify, distribute, use and sell works of
authorship, products, services, processes and machines and to
otherwise operate the Company's current and future business.
16
(b) Ownership of Inventions. Executive agrees that Executive will
promptly make full written disclosure to the Company, and hereby
assign to the Company, or its designee, all of Executive's right,
title, and interest in and to any and all Inventions, whether or
not patentable, that Executive may solely or jointly conceive or
develop or reduce to practice, or cause to be conceived or
developed or reduced to practice, during the period of time
Executive is in the employ of the Company (collectively referred
to as "Company Inventions"). Executive further acknowledges that
all original works of authorship that are created or contributed
to by Executive (solely or jointly with others) within the scope
of and during the period of Executive's employment with the
Company are to be deemed "works made for hire," as that term is
defined in the United States Copyright Act (17 U.S.C. Section
101), and the Company will own all right, title and interest in
such works, including all copyright and all intellectual property
therein shall be the sole property of the Company or its designee
for all territories of the world in perpetuity, including any and
all copyright registrations, copyright applications and all other
copyrightable materials, including any renewals and extensions
thereof, and in and to all works based upon, derived from, or
incorporating the works covered by such copyrights and in and to
all income, royalties, damages, claims, and payments now or
hereinafter due or payable with respect thereto, and in all causes
of action, either in law or in equity for past, present or future
infringement based on said copyrights, and in and to all rights
corresponding to the foregoing throughout the world. To the extent
any of such works are deemed not to be "works made for hire,"
Executive hereby assigns the copyright and all other intellectual
property rights in such works to the Company.
(c) Contracts with the United States. Executive agrees to execute any
licenses or assignments as required by any contract between the
Company and the United States or any of its agencies.
(d) Maintenance of Records. Executive agrees to keep and maintain
adequate and current written records of all Company Inventions
made by Executive (solely or jointly with others) during the term
and within the scope of Executive's employment with the Company.
The records will be in the form of notes, sketches, drawings, and
any other format that may be specified by the Company. The records
will be available to and remain the sole property and intellectual
property of the Company at all times.
(e) Further Assurances. Executive covenants to take all requested
actions and execute all requested documents to assist the Company,
or its designee, at the Company's expense (but without further
remuneration), in every way to secure the Company's above rights
in the Prior Inventions and Company Inventions and any copyrights,
patents, mask work rights or other intellectual property rights
relating thereto in any and all countries, and to pursue any
patents or registrations with respect thereto. This covenant shall
survive the termination of this
17
Agreement. If the Company is unable for any other reason to secure
Executive's signature on any document for this purpose, then
Executive hereby irrevocably designates and appoints the Company
and its duly authorized officers and agents as Executive's agent
and attorney in fact, to act for and in Executive's behalf and
stead to execute any documents and to do all other lawfully
permitted acts in connection with the foregoing.
8.3 Injunction. Executive acknowledges that monetary damages will not be an
adequate remedy for the Company in the event of a breach of this Article
VIII, and that it would be impossible for the Company to measure damages
in the event of such a breach. Therefore, Executive agrees that, in
addition to other rights that the Company may have, the Company is
entitled to (i) in the event of a breach by Executive of this Article VII
that is not cured within 10 days following written notice from the
Company to the Executive detailing such breach, cease making any payments
or providing any benefit otherwise required by this Agreement and/or (ii)
an injunction preventing Executive from any breach of this Article VIII.
Article IX.
MISCELLANEOUS
9.1 Mitigation. In no event shall Executive be obligated to seek other
employment or take any other action to mitigate the amounts payable to
Executive under any of the provisions of this Agreement, nor shall the
amount of any payment hereunder be reduced by any compensation earned as
result of Executive's employment by another employer.
9.2 Legal Fees. If Executive incurs legal or other fees and expenses in an
effort to secure or preserve establish entitlement to compensation and
benefits under this Agreement, the Company shall reimburse Executive for
such fees and expenses to the extent that the Executive substantially
prevails in such dispute.
9.3 Beneficiary. If Executive dies prior to receiving all of the amounts
payable to him in accordance with the terms of this Agreement, such
amounts shall be paid to one or more beneficiaries (each, a
"Beneficiary") designated by Executive in writing to the Company during
his lifetime, or if no such Beneficiary is designated, to Executive's
estate. Such payments shall be made in a lump sum to the extent so
payable and, to the extent not payable in a lump sum, in accordance with
the terms of this Agreement. Executive, without the consent of any prior
Beneficiary may change his designation of Beneficiary or Beneficiaries at
any time or from time by a submitting to the Company a new designation in
writing.
9.4 Assignment; Successors. This Agreement shall not be assignable by
Executive. This Agreement may be assigned by the Company to a person or
entity that is a successor in
18
interest to substantially all of the business operations of the Company.
Upon such assignment, the rights and obligations of the Company hereunder
shall become the rights and obligations of such affiliate or successor
person or entity. This Agreement shall be binding and inure to the
benefit of Executive, his estates and Beneficiaries, the Company and the
successors and permitted assigns of the Company.
9.5 Nonalienation. Benefits payable under this Agreement shall not be subject
in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, charge, garnishment, execution or levy of any kind,
either voluntary or involuntary, prior to actually being received by
Executive or a Beneficiary, as applicable, and any such attempt to
dispose of any right to benefits payable hereunder shall be void.
9.6 Severability. If one or more of this Agreement are declared by any court
or government authority to be unlawful or invalid, such unlawfulness or
invalidity shall not invalidate any part of this Agreement no declared to
be unlawful or invalid. Any part so declared to be unlawful or invalid
shall, if possible, be construed in a manner that will give effect to the
terms of such part to the fullest extent possible while remaining lawful
and valid.
9.7 Withholding Taxes. The Company may withhold from any amounts payable
under this Agreement such Federal, state and local taxes as may be
required to be withheld pursuant to any applicable law or regulation.
9.8 Captions. The names of the Articles and Sections of this Agreement are
for convenience of reference only and do not constitute a part hereof.
9.9 Amendment; Waiver. This Agreement shall not be amended or modified except
by written instrument executed by the Company and Executive. A waiver of
any term, covenant or condition, and any waiver of any default in any
such term, covenant or condition shall not be deemed a waiver of any
later default thereof.
9.10 Notices. All notices hereunder shall be in writing and deliver by hand,
by nationally-recognized delivery service that guarantees overnight
delivery, or by first-class, registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Company, to: Xxxxxx Packaging Company L.P.
0000 Xxxxxxxx Xxxxxx Xxxx
Xxxx, XX 00000
Attention: General Counsel
With a copy to: The Blackstone Group L.P.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxx
19
If to Executive to:
To the most recent address of Executive set forth in the personnel
records of the Company.
Either party may from time to time designate a new address by notice
given in accordance with this Section Notice shall be effective when
actually received by the addressee.
9.11 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together
will constitute one and the same instrument.
9.12 Entire Agreement. This Agreement forms the entire agreement between the
parties hereto with respect to the subject matter contained in this
Agreement.
9.13 Applicable Law. This Agreement shall be interpreted and construed in
accordance with the laws of the Commonwealth of Pennsylvania, without
regard to its choice of law principles.
9.14 Survival of Executive's Rights. All of Executive's rights hereunder,
including his rights to compensation and benefits, and his obligations
under Section 8.1 hereof, shall survive the termination of Executive's
employment and/or the termination of this agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.
Xxxxxx Packaging Company L.P.
----------------------------
name:
title:
Executive
----------------------------
20
EXHIBIT A
GROSS-UP PAYMENT
----------------
(a) In the event it shall be determined that any payment or benefit
under this Agreement or any other payment or benefit from the Company, any
Affiliate, any shareholder of the Company or any other person (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement,
or otherwise) (a "Payment") is subject to the excise tax imposed by Section 4999
of the Code or any interest or penalties are incurred by Executive with respect
to such excise tax (such excise tax, together with any such interest and
penalties, hereinafter collectively referred to as the "Excise Tax"), Executive
shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by Executive of all taxes (including any interest
or penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and the Excise Tax imposed upon the Gross-Up Payment, Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments. Notwithstanding the foregoing provisions of this Exhibit A, if it
shall be determined that Executive is entitled to a Gross-Up Payment, but that
the Payment does not exceed 110% of the greatest amount that could be paid to
Executive without giving rise to any Excise Tax (the "Safe Harbor Amount"), then
no Gross-Up Payment shall be made to Executive and the amounts payable under
this Agreement shall be reduced so that the Payment, in the aggregate, is
reduced to the Safe Harbor Amount. The reduction of the amounts payable
hereunder, if applicable, shall be made by first reducing the payments under
Section 7.4(b), unless an alternative method of reduction is elected by
Executive.
(b) All determinations required to be made under this Exhibit A,
including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by a nationally recognized accounting firm
determined by the Company (the "Accounting Firm"), which shall provide detailed
supporting calculations both to the Company and Executive within ten business
days of the receipt of notice from Executive that there has been a Payment, or
such earlier time as is requested by the Company; provided that for purposes of
determining the amount of any Gross-Up Payment, Executive shall be deemed to pay
federal income tax at the highest marginal rates applicable to individuals in
the calendar year in which any such Gross-Up Payment is to be made and deemed to
pay state and local income taxes at the highest effective rates applicable to
individuals in the state or locality of Executive's residence or place of
employment in the calendar year in which any such Gross-Up Payment is to be
made, net of the reduction in federal income taxes that can be obtained from
deduction of such state and local taxes, taking into account limitations
applicable to individuals subject to federal income tax at the highest marginal
rates. All fees and expenses of the Accounting Firm shall be borne by the
Company. Any Gross-Up Payment, as determined pursuant to this Exhibit A, shall
be paid by the Company to Executive (or to the appropriate taxing authority on
Executive's behalf) when due. If the Accounting Firm determines that no Excise
Tax is payable by Executive, it shall so indicate in a written opinion provided
to the Executive at least 10 days prior to the unextended due date of the
Executive's tax return with respect to the Year for which the Payment is made.
Any determination by the Accounting Firm shall be binding upon the Company and
Executive. As a
result of the uncertainty in the application of Section 4999 of the Code, it is
possible that the amount of the Gross-Up Payment determined by the Accounting
Firm to be due to (or on behalf of) Executive was lower than the amount actually
due ("Underpayment"). In the event that the Company exhausts its remedies
pursuant to Section (c) of this Exhibit A and Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment
(including without limitation any related interest or penalties) shall be
promptly paid by the Company to or for the benefit of Executive.
(c) Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of any Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after Executive is informed in
writing of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid; provided, that the
failure of Executive to give notice within the time frame shall not affect the
Company's obligations hereunder unless the Company is materially prejudiced by
the delayed notice. Executive shall not pay such claim prior to the expiration
of the thirty day period following the date on which it gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies Executive in writing
prior to the expiration of such period that it desires to contest such claim,
Executive shall (i) give the Company any information reasonably requested by the
Company relating to such claim, (ii) take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation with
respect to such claim by an attorney selected by the Company, (iii) cooperate
with the Company in good faith in order to effectively contest such claim and
(iv) permit the Company to participate in any proceedings relating to such
claim; provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold Executive harmless, on
an after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section (c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
Executive to pay the tax claimed and xxx for a refund or contest the claim in
any permissible manner, and Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, further, that if the Company directs Executive to pay such
claim and xxx for a refund, the Company shall advance the amount of such payment
to Executive, on an interest-free basis, and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
(including without limitation with respect to forgiveness of such advance
pursuant to Section (d)) or with respect to any imputed income with respect to
such advance; provided, further, that if Executive is required to extend the
statute of limitations to enable the
1
Company to contest such claim, Executive may limit this extension solely to such
contested amount. The Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by Executive of an amount paid or advanced by
the Company pursuant to this Exhibit A, Executive becomes entitled to receive
any refund with respect to a Gross-Up Payment, Executive shall promptly pay to
the Company the amount of such refund received (together with any interest paid
or credited thereon after taxes applicable thereto). If, after the receipt by
Executive of an amount advanced by the Company pursuant to Section (c), a
determination is made that Executive shall not be entitled to any refund with
respect to such claim and the Company does not notify Executive in writing of
its intent to contest such denial of refund prior to the expiration of thirty
days after such determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of the Gross-Up Payment required to be paid.
2
EXHIBIT C
LIST OF ACTIVITIES
Elegant Reproductions
