EXHIBIT 10.3
EMPLOYMENT AGREEMENT
AGREEMENT between Graphic Packaging International
Corporation, a Delaware corporation, (the "Company"), and
Xxxx X. Xxxx (the "Executive"), dated as of July 2, 2001.
The Executive is employed by the Company. The Board of
Directors of the Company (the "Board") has determined that it is
in the best interests of the Company and its shareholders to
assure that the Company will have the continued dedication of the
Executive, notwithstanding the threat or occurrence of a Change
of Control (as defined below) of the Company. The Board believes
that it is imperative to diminish the distraction of the
Executive from Company business because of personal
uncertainties and risks created by a pending or threatened Change
of Control and to encourage the Executive's full attention and
dedication to the Company currently and in the event of any
threatened or pending Change of Control. This Agreement is
intended to provide the Executive with compensation and benefits
arrangements upon a Change of Control that will ensure that the
compensation and benefits expectations of the Executive will be
satisfied on terms that are competitive with those of other
corporations.
The parties agree as follows:
1. Certain Definitions. (a) The "Effective Date" shall
mean the first date on which a Change of Control (as defined in
Section 2) occurs during the Change of Control Period (as defined
in Section 1(b)). If a Change of Control occurs and if the
Executive's employment with the Company is terminated prior to
the date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of
employment (i) was at the request of a third party who has taken
steps reasonably calculated to effect a Change of Control or
(ii) otherwise arose in connection with or anticipation of a
Change of Control the public announcement of which was made
within three months following such termination, then for all
purposes of this Agreement the "Effective Date" shall mean the
date immediately prior to the date of such termination of
employment.
(b) The "Change of Control Period" shall mean the
period commencing on the date hereof and ending on the second
anniversary of the date hereof; provided, however, that
commencing on the date one year after the date hereof, and on
each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the
"Renewal Date"), unless previously terminated, the Change of
Control Period shall be automatically extended so as to terminate
two years from such Renewal Date, unless at least 60 days prior
to the Renewal Date the Company shall give notice to the
Executive that the Change of Control Period shall not be so
extended.
2. Change of Control. For the purpose of this Agreement,
a "Change of Control" shall mean:
(a) the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
(a "Person") of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of either (i) 50%
or more of either (A) the then-outstanding shares of common stock
of the Company (the "Outstanding Company Common Stock") or
(B) the combined voting power of the then-outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities") or (ii) a number of shares of Outstanding Company
Common Stock or Outstanding Company Voting Securities which is
greater in number than the number of shares held by the Xxxxxx
Xxxxx, Xx. Trust, any individual who or entity which has been, is
or in the future becomes a trustee thereof, any other trust the
primary beneficiaries of which are descendants of Xxxxxx Xxxxx,
Xx. or spouses of such descendants, and/or any individual who or
entity which has been, is or in the future becomes a trustee of
such trusts and as a result of an acquisition described in (i)
and (ii) above, directors designated by such person at the time
of or subsequent to the acquisition constitute a majority of the
Board; provided, however, that for purposes of this subsection
(a), the following acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, (iv) any
acquisition by the Xxxxxx Xxxxx, Xx. Trust, any individual who or
entity which has been, is or in the future becomes a trustee
thereof, any other trust the primary beneficiaries of which are
descendants of Xxxxxx Xxxxx, Xx. or spouses of such descendants,
and/or any individual who or entity which has been, is or in the
future becomes a trustee of any such trusts, or (v) any
acquisition by any corporation pursuant to a transaction which
complies with clauses (i), (ii) and (iii) of subsection (c) of
this Section 2; or
(b) individuals who, as of the date hereof, constitute
the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the date
hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
(c) consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a "Business
Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding
Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of the then-outstanding
shares of common stock and the combined voting power of the then-
outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding
Company Common Stock and Outstanding Company Voting Securities
(ii) no Person (excluding any corporation resulting from such
Business Combination or any employee benefit plan (or related
trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly,
20% or more of, respectively, the then-outstanding shares of
common stock of the corporation resulting from such Business
Combination, or the combined voting power of the then-outstanding
voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination and
(iii) at least a majority of the members of the board of
directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of
the execution of the initial agreement, or of the action of the
Incumbent Board, providing for such Business Combination; or
(d) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
3. Employment Period. The Company hereby agrees to
continue the Executive in its employ, and the Executive hereby
agrees to remain in the employ of the Company subject to the
terms and conditions of this Agreement, for the period commencing
on the Effective Date as defined in Section 1 and ending on the
second anniversary of such date (the "Employment Period").
4. Terms of Employment. (a) Position and Duties.
(i) During the Employment Period, the Executive's position
(including status, offices, and titles), authority, duties and
responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and
assigned at any time during the 120-day period immediately
preceding the Effective Date.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and
time during normal business hours to the business and affairs of
the Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Employment Period
Executive may (A) serve on boards or committees of other
organizations, (B) teach, and (C) manage personal investments, so
long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of
the Company in accordance with this Agreement. To the extent
that any such activities have been conducted by the Executive and
by other executives of the Company prior to the Effective Date,
the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with
the performance of the Executive's responsibilities to the
Company.
(b) Compensation. (i) Base Salary. During the
Employment Period, the Executive shall receive an annual base
salary ("Annual Base Salary"), which shall be paid at a monthly
rate, at least equal to twelve times the highest monthly base
salary paid or payable, including any base salary which has been
earned but deferred, to the Executive by the Company and its
affiliated companies in respect of the twelve-month period
immediately preceding the month in which the Effective Date
occurs. During the Employment Period, the Annual Base Salary
shall be reviewed no more than twelve months after the last
salary increase awarded to the Executive prior to the Effective
Date and thereafter at least annually. Any increase in Annual
Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base
Salary shall not be reduced after any such increase and the term
Annual Base Salary as utilized in this Agreement shall refer to
Annual Base Salary as so increased. As used in this Agreement,
the term "affiliated companies" shall include any company
controlled by, controlling or under common control with the
Company.
(ii) Annual Bonus. In addition to Annual Base Salary,
the Executive shall be awarded, for each fiscal year ending
during the Employment Period, an annual bonus (the"Annual Bonus")
in cash at least equal to the Executive's highest bonus
(including any bonus deferred by the executive) under the
Company's bonus plan, or any comparable bonus under any
predecessor or successor plan, for the last three full fiscal
years prior to the Effective Date (annualized in the event that
Executive was not employed by the Company for the whole of such
fiscal year) (the "Recent Annual Bonus"). Each such Annual Bonus
shall be paid no later than the end of the third month of the
fiscal year next following the fiscal year for which the Annual
Bonus is awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus.
(iii) Incentive, Savings and Retirement Plans.
During the Employment Period, the Executive shall be entitled to
participate in all incentive, savings and retirement plans,
practices, policies and programs applicable generally to other
peer executives of the Company and its affiliated companies, but
in no event shall such plans, practices, policies and programs
provide the Executive with incentive opportunities (measured with
respect to both regular and special incentive opportunities, to
the extent, if any, that such distinction is applicable), savings
opportunities and retirement benefit opportunities, in each case,
less favorable, in the aggregate, than the most favorable of
those provided by the Company and its affiliated companies for
the Executive under such plans, practices, policies and programs
as in effect at any time during the 120-day period immediately
preceding the Effective Date or if more favorable to the
Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its
affiliated companies.
(iv) Welfare Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family, as the case
may be, shall be eligible for participation in and shall receive
all benefits under welfare benefit plans, practices, policies and
programs provided by the Company and its affiliated companies
(including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and
travel accident insurance plans and programs) to the extent
applicable generally to other peer executives of the Company and
its affiliated companies, but in no event shall such plans,
practices, policies and programs provide the Executive with
benefits which are less favorable, in the aggregate, than the
most favorable of such plans, practices, policies and programs in
effect for the Executive at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to
the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its
affiliated companies.
(v) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Executive in accordance
with the most favorable policies, practices and procedures of the
Company and its affiliated companies in effect for the Executive
at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(vi) Fringe Benefits. During the Employment Period,
the Executive shall be entitled to fringe benefits, including,
without limitation, tax and financial planning services, payment
of club dues, and, if applicable, use of an automobile and
payment of related expenses, (or, lieu thereof, cash payments
paid as a perquisite allowance) in accordance with the most
favorable plans, practices, programs and policies of the Company
and its affiliated companies in effect for the Executive at any
time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(vii) Office and Support Staff. During the
Employment Period, the Executive shall be entitled to an office
or offices of a size and with furnishings and other appointments,
and to secretarial and other assistance, at least equal to the
most favorable of the foregoing provided to the Executive by the
Company and its affiliated companies at any time during the 120-
day period immediately preceding the Effective Date or, if more
favorable to the Executive, as provided generally at any time
thereafter with respect to other peer executives of the Company
and its affiliated companies.
(viii) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with
the most favorable plans, policies, programs and practices of the
Company and its affiliated companies as in effect for the
Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its
affiliated companies.
5. Termination of Employment. (a) Death or Disability.
The Executive's employment shall terminate automatically upon the
Executive's death during the Employment Period. If the Company
determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition
of Disability set forth below), it may give to the Executive
written notice in accordance with Section 12(b) of this Agreement
of its intention to terminate the Executive's employment. In
such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice
by the Executive (the "Disability Effective Date"), provided
that, within the thirty days after such receipt, the Executive
shall not have returned to full-time performance of the
Executive's duties. For purposes of this Agreement, "Disability"
shall mean the absence of the Executive from the Executive's
duties with the Company on a full-time basis for 180 consecutive
days as a result of incapacity due to mental or physical illness
which is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative. Nothing in
this Section 5(a) shall affect the Company's ability to reduce
Executive's salary to the extent such reductions are offset by
disability insurance payments to Executive.
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes
of this Agreement, "Cause" shall mean:
(i) the willful and continued failure of the
Executive to perform substantially the Executive's duties with
the Company or one of its affiliated companies (other than any
such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is
delivered to the Executive by the Board or the Chairman of the
Board or Chief Executive Officer of the Company which
specifically identifies the manner in which the Board or Chief
Executive Officer believes that the Executive has not
substantially performed the Executive's duties, or
(ii) the willful engaging by the Executive in
illegal conduct or gross misconduct which is materially and
demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on the
part of the Executive, shall be considered "willful" unless it is
done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive's action or omission
was in the best interests of the Company. Any act, or failure to
act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief
Executive Officer or a senior officer of the Company or based
upon the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. The
cessation of employment of the Executive shall not be deemed to
be for Cause unless and until there shall have been delivered to
the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three quarters of the entire
membership of the Board at a meeting of the Board called and held
for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together
with counsel, to be heard before the Board), finding that, in the
good faith opinion of the Board, the Executive is guilty of the
conduct described in subparagraph (i) or (ii) above, and
specifying the particulars thereof in detail.
(c) Good Reason. The Executive's employment may be
terminated by the Executive during the Employment Period for Good
Reason. For purposes of this Agreement, "Good Reason" shall
mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, and titles), authority, duties or
responsibilities as contemplated by Section 4(a) of this
Agreement, or any other action by the Company which results in a
material diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of such
notice thereof given by the Executive;
(ii) any failure by the Company to comply with any
of the provisions of Section 4(b) of this Agreement, other than
an isolated, insubstantial and inadvertent failure not occurring
in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iii) any purported termination by the Company
of the Executive's employment otherwise than as expressly
permitted by this Agreement;
(iv) any failure by the Company to comply with and
satisfy Section 11(c) of this Agreement; or
(v) the Company's requiring (A) that Executive
relocate Executive's principal business office from the greater
Denver, Colorado metropolitan area or (B) travel on Company
business to a substantially greater extent than required
immediately prior to the Effective Date.
(d) Notice of Termination. Any termination by the
Company for Cause, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 12(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and
(iii) if the Date of Termination (as defined below) is other than
the date of receipt of such notice, specifies the termination
date (which date shall be not more than thirty days after the
giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or
Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means
(i) if the Executive's employment is terminated by the Company
for Cause, or by the Executive for Good Reason, the date of
receipt of the Notice of Termination or any later date specified
therein, as the case may be, (ii) if the Executive's employment
is terminated by the Company other than for Cause or Disability,
the Date of Termination shall be the date on which the Company
notifies the Executive of such termination and (iii) if the
Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of
the Executive or the Disability Effective Date, as the case may
be.
6. Obligations of the Company upon Termination. (a) Good
Reason; Other Than for Cause. If, during the Employment Period,
the Company shall terminate the Executive's employment other than
for Cause or the Executive shall terminate employment for Good
Reason:
(i) the Company shall pay to the Executive in a
lump sum in cash within thirty days after the Date of Termination
the aggregate of the following amounts:
A. the sum of (1) the Executive's Annual
Base Salary through the Date of Termination to the extent not
theretofore paid, (2) the greater of (A) the Recent Annual Bonus
and (B) the Annual Bonus paid or payable (including any bonus or
portion thereof which has been earned but deferred), pro rated
through the Date of Termination to the extent not theretofore
paid, and (3) any compensation previously deferred by the
Executive (together with any accrued interest or earnings
thereon) and any accrued vacation pay, in each case to the extent
not theretofore paid (the sum of the amounts described in
clauses (1), (2) and (3) shall be hereinafter referred to as the
"Accrued Obligations"); and
B. the amount equal to the product of
(1) two and (2) the Executive's Annual Base Salary, together with
the Recent Annual Bonus, reduced by the amounts paid, if any, to
the Executive under the Company's Severance Pay Plan as a result
of such termination; provided, however, that if the Executive's
benefits under the Company's Severance Pay Plan exceed the
amounts payable under this Section, the Executive shall be
entitled to such benefits and shall not be entitled to the
payments provided for under this Section 6(a)(i).
(ii) for two years after the Executive's Date of
Termination, or such longer period as may be provided by the
terms of the appropriate plan, program, practice or policy, the
Company shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs,
practices and policies described in Section 4(b)(iv) of this
Agreement if the Executive's employment had not been terminated
or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the
Company and its affiliated companies and their families (to the
extent permitted by law, or, if nor permitted by law, provided
under nonqualified arrangements); provided, however, that if the
Executive becomes reemployed with another employer and is
eligible to receive medical or other welfare benefits under
another employer-provided plan, the medical and other welfare
benefits described herein shall be secondary to those provided
under such other plan during such applicable period of
eligibility. For purposes of determining eligibility (but not
the time of commencement of benefits) of the Executive for
retiree benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have remained
employed until one year after the Date of Termination and to have
retired on the last day of such period;
(iii) for twelve months following the Date of
Termination, if the Company has terminated this Agreement for
other than cause, the Company shall, at its sole expense as
incurred to an aggregate of $15,000, provide the Executive with
outplacement services the scope and provider of which shall be
selected by the Executive in his sole discretion;
(iv) with respect to any options, stock or other
stock based awards held by the Executive pursuant to the
Company's Employee Stock Option Plan on the Date of Termination
all restrictions on awards of restricted stock will be canceled,
all outstanding stock options and stock appreciation rights and
other stock based awards that have not fully vested, shall vest
immediately and become fully exercisable and shall not thereafter
be forfeitable. The period for exercising stock options shall be
extended to a date three years from the Date of Termination,
provided, in the event that the Incumbent Board makes a
determination contrary to the provisions of this subparagraph in
the case of a merger of the Company, but in accordance with the
applicable stock option plan or stock option, such determination
shall prevail; and
(v) to the extent not therefore paid or provided
the Company shall timely pay or provide to the Executive any
other amounts or benefits required to be paid or provided or
which the Executive is eligible to receive under any plan,
program, policy or practice or contract or agreement of the
Company and its affiliated companies (such other amounts and
benefits shall be hereinafter referred to as "Other Benefits");
provided, however, Other Benefits shall exclude any benefits
under the Company's Severance Pay Plan.
(b) Death. If the Executive's employment is
terminated by reason of the Executive's death during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives under this
Agreement other than for payment of Accrued Obligations, and the
timely payment or provision of Other Benefits. Accrued
Obligations shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days
of the Date of Termination. With respect to the provision of
Other Benefits, the term "Other Benefits" as utilized in this
Section 6(b) shall include, without limitation, and the
Executive's estate and/or beneficiaries shall be entitled to
receive, benefits at least equal to the most favorable benefits
provided by the Company and affiliated companies to the estates
and beneficiaries of peer executives of the Company and such
affiliated companies under such plans, program, practices and
policies relating to death benefits, if any, as in effect with
respect to other peer executives and their beneficiaries at any
time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive's estate
and/or Executive's beneficiaries, as in effect on the date of the
Executive's death with respect to other peer executives of the
Company and its affiliated companies and their beneficiaries.
(c) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives under this
Agreement other than for payment of Accrued Obligations and the
timely payment or provision of Other Benefits. Accrued
Obligations shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination. With respect to the
provision of Other Benefits, the term "Other Benefits" as
utilized in this Section 6(c) shall include and the Executive
shall be entitled after the Disability Effective Date to receive
disability benefits at least equal to the most favorable benefits
provided by the Company and affiliated companies to disabled
executives and/or their families in accordance with such plans,
programs, practices and policies relating to disability if any,
as in effect with respect to other peer executives and their
families at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive and/or Executives' families, as in effect on the date
of the Executive's Disability with respect to other peer
executives of the Company and its affiliated companies and their
families.
(d) Cause; Other than for Good Reason. If the
Executive's employment shall be terminated for Cause during the
Employment Period or the Executive shall terminate employment
other than for Good Reason, this Agreement shall terminate
without further obligations to the Executive other than the
obligation to pay to the Executive (x) his Annual Base Salary
through the Date of Termination, (y) the amount of any
compensation previously deferred by the Executive, and (z) Other
Benefits, in each case to the extent theretofore unpaid. If the
Executive voluntarily terminates employment during the Employment
Period, excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the Executive
other than the timely payment or provision of Other Benefits.
7. Nonexclusivity of Rights. Nothing in this Agreement
shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided
by the Company or any of its affiliated companies and for which
the Executive may qualify, nor, subject to Section 12(f), shall
anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the
Company or any of its affiliated companies. Amounts which are
vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any
contract or agreement with the Company or any of its affiliated
companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program
or contract or agreement except as explicitly modified by this
Agreement.
8. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action
which the Company may have against the Executive or others. In
no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of
this Agreement and such amounts shall not be reduced whether or
not the Executive obtains other employment. The Company agrees
to pay, to the full extent permitted by law, all legal fees and
expenses which the Executive may reasonably incur as a result of
any contest by the Company, the Executive or others of the
validity or enforceability of, or liability under, any provision
of this Agreement if the Executive shall prevail in such contest.
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding
and except as set forth below, in the event it shall be
determined that any payment or distribution by the Company to or
for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any
additional payments required under this Section 9) (a "Payment")
would be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties are incurred by the Executive
with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Tax Payment") in an
amount equal to the amount of the Excise Tax. Notwithstanding
the foregoing provisions of this Section 9(a), if it shall be
determined that the Executive is entitled to a Tax Payment, but
that the Executive, after taking into account the Payments and
the Tax Payment, would not receive a net after-tax benefit of at
least $25,000 (taking into account both income taxes and any
Excise Tax) as compared to the net after-tax proceeds to the
Executive resulting from an elimination of the Tax Payment and a
reduction of the Payments, in the aggregate, to an amount (the
"Reduced Amount") such that the receipt of Payments would not
give rise to any Excise Tax, then no Tax Payment shall be made to
the Executive and the Payments, in the aggregate, shall be
reduced to the Reduced Amount.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9,
including whether and when a Tax Payment is required and the
amount of such Tax Payment and the assumptions to be utilized in
arriving at such determination, shall be made by Pricewaterhouse
Coopers LLP or such other certified public accounting firm as may
be designated by the Executive (the "Accounting Firm"), which
shall provide detailed supporting calculations both to the
Company and the Executive within fifteen business days of the
receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the Company. In
the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the Change
of Control, the Executive shall appoint another nationally
recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Tax
Payment, as determined pursuant to this Section 9, shall be paid
by the Company to the Executive within five days of the receipt
of the Accounting Firms' determination. Any determination by the
Accounting Firm shall be binding upon the Company and the
Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that a Tax
Payment which will not have been made by the Company should have
been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 9(c) and the 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 shall be promptly
paid by the Company to or for the benefit of the Executive.
(c) The 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 the Tax Payment.
Such notification shall be given as soon as practicable but no
later than ten business days after the 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. The 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 the Executive in writing
prior to the expiration of such period that it desires to contest
such claim, the 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 reasonably selected by the Company,
(iii) cooperate with the Company in good faith
in order effectively to 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 the 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 9(c), the
Company shall control all proceedings taken in connection with
such contest and, at its sole option, may pursue or forgo 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 the Executive to pay the tax
claimed and xxx for a refund or to contest the claim in any
permissible manner, and the 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, however, that
if the Company directs the Executive to pay such claim and xxx
for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall
indemnify and hold the 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 or with respect to any imputed income with respect to
such advance; and further provided that any extension of the
statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a Tax
Payment would be payable hereunder and the 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 the Executive of an
amount advanced by the Company pursuant to Section 9(c), the
Executive becomes entitled to receive any refund with respect to
such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 9(c)) promptly pay to
the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If,
after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 9(c), a determination is made that
the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in
writing of its intent to contest such denial or 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 Tax Payment required to be paid.
10. Confidential Information, Non-competition. (a) The
Executive shall hold in a fiduciary capacity for the benefit of
the Company all secret or confidential information, knowledge or
data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained
by the Executive during the Executive's employment by the Company
or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company,
the 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 any such information, knowledge or data to
anyone other than the Company and those designated by it. In no
event shall an asserted violation of the provisions of this
Section 10 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
(b) Executive agrees that during the period that he is
an employee of the Company or any of its subsidiaries, pursuant
to this Agreement and for one year after the Date of Termination,
he will not without the consent of the Company (i) Participate In
(as defined below) any business or organization in the printing
and packaging business (a "Competitor") in a capacity that
directly assists such Competitor in competing with the Company,
any of its subsidiaries, or any company in which the Company owns
at least 10% of the equity interests (an "Affiliate"), in a
material respect in the printing and packaging business in the
respective specific geographic areas where the Company or any of
its subsidiaries or Affiliates conducted such businesses at the
time Executive ceased to be an employee hereunder, (ii) own a
controlling interest in a business or organization that competes
in a material respect in the printing and packaging business in
the respective specific geographic areas where the Company or any
of its subsidiaries or Affiliates conducted such businesses at
the time Executive ceased to be an employee hereunder, or
(ii) solicit or interfere with, or endeavor to entice away from
the Company or any of its subsidiaries or Affiliates any of their
respective suppliers, customers or employees. The employment by
Executive or a business that Executive Participates In of a
person employed or formerly employed by the Company shall not be
prohibited by the foregoing provision if such person sought out
employment on his own initiative without initial encouragement by
Executive. For purposes of this Section 10(b), the term
"Participate In" shall mean: "directly or indirectly, for his
own benefit or for, with or through any other person, firm or
corporation, own, manage, operate, lend money to or participate
in the ownership, management, operation or control of, or be
connected as a director, officer, employee, partner, consultant,
agent, independent contractor or otherwise with, or acquiesce in
the use of his name in." Notwithstanding the foregoing,
Executive shall not be deemed to Participate In a business merely
because he owns not more than 5% of the outstanding common stock
of a corporation, if, at the time of its acquisition by
Executive, such stock is listed on a national securities
exchange, is reported on Nasdaq or is regularly traded in the
over-the-counter market by a member of a national securities
exchange.
(c) Executive agrees that the provisions of this
Section 10 are necessary and reasonable to protect the Company in
the conduct of its business. If any restriction contained in
this Section 10 shall be deemed to be invalid, illegal or
unenforceable by reason of the extent, duration or geographical
scope hereof, or otherwise, then the court making such
determination shall have the right to reduce such extent,
duration, geographical scope or other provisions hereof, and in
its reduced form such restriction shall then be enforceable in
the manner contemplated hereby.
11. Successors. (a) This Agreement is personal to the
Executive and without the prior written consent of the Company
shall not be assignable by the Executive otherwise than by will
or the laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had
taken place. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
12. Miscellaneous. (a) This Agreement shall be governed by
and construed in accordance with the laws of the State of
Colorado, without reference to principles of conflict of laws.
The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the
other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
Xxxx X. Xxxx
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
If to the Company:
Graphic Packaging International Corporation
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Chairman of the Board
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign taxes
as shall be required to be withheld pursuant to any applicable
law or regulation.
(e) The Executive's or the Company's failure to insist
upon strict compliance with any provision of this Agreement or
the failure to assert any right the Executive or the Company may
have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to
Section 5(c)(i)-(iv) of this Agreement, shall not be deemed to be
a waiver of such provision or right or any other provision or
right of this Agreement.
(f) The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written
agreement between the Executive and the Company, the employment
of the Executive by the Company is "at will" and, subject to
Section 1(a) hereof, prior to the Effective Date, the Executive's
employment and/or this Agreement may be terminated by either the
Executive or the Company at any time prior to the Effective Date,
in which case the Executive shall have no further rights under
this Agreement. From and after the Effective Date this Agreement
shall supersede any other agreement, statement or understanding
between the parties with respect to the subject matter hereof,
except to the extent provided herein.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its
Board of Directors, the Company has caused these presents to be
executed in its name on its behalf, all as of the day and year
first above written.
COMPANY:
GRAPHIC PACKAGING INTERNATIONAL
CORPORATION
By:
-----------------------------------
Name:
Title:
EXECUTIVE:
-----------------------------------
Name:
SCHEDULE OF DEFINITIONS
"Accounting Firm" is defined in Section 9(b).
"Accrued Obligations" is defined in Section 6(a)(i)(A).
"affiliated companies" is defined in Section 4(b)(ii).
"Annual Base Salary" is defined in Section 4(b)(i).
"Annual Bonus" is defined in Section 4(b)(ii).
"Board" means Board of Directors of the Company.
"Business Combination" is defined in Section 2(c).
"Cause" is defined in Section 5(b).
"Change of Control Period" is defined in Section 1(b).
"Company" is defined in Section 11(c).
"Competitor" is defined in Section 10(b).
"Date of Termination" is defined in Section 5(e).
"Disability Effective Date" is defined in Section 5(a).
"Effective Date" is defined in Section 1(a).
"Employment Period" is defined in Section 3.
"Exchange Act" is defined in Section 2(a).
"Excise Tax" is defined in Section 9(a).
"Executive" means Xxxx X. Xxxx.
"Good Reason" is defined in Section 5(c).
"Incumbent Board" is defined in Section 2(b).
"Notice of Termination" is defined in Section 5(d).
"Other Benefits" is defined in Section 6(a)(v).
"Outstanding Company Common Stock" is defined in Section 2(a).
"Outstanding Company Voting Stock" is defined in Section 2(a).
"Participate In" is defined in Section 10(b).
"Payment" is defined in Section 9(a).
"Person" is defined in Section 2(a).
"Recent Annual Bonus" is defined in Section 4(b)(ii).
"Reduced Amount" is defined in Section 9(a).
"Renewal Date" is defined in Section 2.
"Tax Payment" is defined in Section 9(a).
"Underpayment" is defined in Section 9(b).
"willful" is defined in Section 5(b).
