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EXHIBIT 10.21
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into by and between
Inland Paperboard and Packaging, Inc., a Delaware corporation (the "Company")
and Xxxx X. Xxxxx (the "Employee"), effective as of July 1, 2000.
WHEREAS, the Company and the Employee desire to set forth the terms and
conditions of the Employee's employment with the Company in writing;
NOW, THEREFORE, in consideration of the above recitals and the mutual
promises and conditions contained below, the parties hereby agree as follows:
1. EMPLOYMENT: The Employee's employment shall be subject to and
conditioned upon Employee's furnishing documentation required by law
and providing appropriate background information as required of
salaried employees under the Company's normal hiring practices.
Employee's employment with the Company shall commence as of July 1,
2000 ("Employment Date").
2. TITLE AND DUTIES: During the term of this Agreement, the Employee shall
be employed by the Company as its President and Chief Operating
Officer. Employee shall also serve as Group Vice President-Paper of the
Company's parent, Temple-Inland Inc. ("Temple-Inland"). The Employee
agrees to devote his full time, attention, skill and energy to the
business and affairs of the Company and Temple-Inland, and will use his
best efforts to promote the success of the Company and Temple-Inland.
3. NO INCONSISTENT OBLIGATIONS: The Employee affirms that he is not bound
by any contract or agreement with any other person or entity which
would be violated by his employment with the Company under the terms
and conditions of this Agreement.
4. COMPENSATION: During the term of this Agreement, the Company shall pay
the Employee no less than the following amounts:
SALARY MINIMUM BONUS TOTAL CASH
Year 1 $325,000 $275,000 $600,000
Year 2 $350,000 $275,000 $625,000
The Employee's compensation shall be paid according to the Company's
normal pay/bonus cycle for executive officers; provided, however, that
the bonus payable in February 2001 shall be a prorata amount based on
Employee's length of service between the Employment Date and the
initial bonus payment date. All payments shall be subject to all
applicable tax withholding and deductions.
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5. BENEFITS:
a. BENEFIT PLANS: The Employee shall be eligible to participate
in the Company's health and welfare benefit plans, retirement
plan, 401(k) plan and any other benefit plans provided to
other salaried employees from time to time during his
employment according to the terms set forth in such plans.
b. VACATION: The Employee shall be eligible for four weeks paid
vacation and the Company's normal paid holidays, as provided
to other salaried employees from time to time during the term
of employment.
c. STOCK OPTIONS: Effective on July 3, 2000, Employee shall be
granted an option to purchase 25,000 shares of Temple-Inland
Inc. common stock at fair market value on the date of such
grant as determined under the Temple-Inland Inc. Stock Option
Plan. Thereafter, Employee shall be eligible to be considered
for additional stock option grants as a Tier I employee
beginning in 2001. Employee understands and agrees that the
Temple-Inland Inc. Management Development and Executive
Compensation Committee has full and complete discretion to
award options to employees and, other than the initial grant
described above, no subsequent grants are guaranteed to be
awarded or to be awarded in any particular amount.
6. RELOCATION EXPENSES: The Company shall reimburse the Employee for all
reasonable and customary expenses incurred by the Employee in
relocating his principal residence to Indianapolis, Indiana under the
Company's standard relocation policy; provided, that the Employee shall
submit to the Company a normal expense voucher which will be subject to
the approval of the Company. Employee shall complete his relocation no
later than December 31, 2000.
7. CHANGE IN CONTROL: In the event Employee's employment by the Company is
terminated or Employee resigns for Good Reason, as defined below,
within two (2) years following any Change in Control, Employee shall be
paid the Compensation Amount in a lump sum within thirty (30) days of
the date of such termination or resignation. In the event Company or
Temple-Inland adopts a change in control plan or provisions for senior
management, Employee shall receive the benefits of such plan or
provisions if they provide a greater cash payment to Employee, but
shall not receive both the payment under the Agreement and the payment
under such new plan or provisions. This item 7 shall survive the
termination of this Agreement. For purposes of this Agreement:
a. CHANGE IN CONTROL: "Change in Control" means (i) a merger or
consolidation to which the Company or Temple-Inland is a party
and for which the approval of any shareholders of the Company
or Temple-Inland is required; (ii) any "person" (as such term
is used in Sections 13(d) and
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14(d)(2) of the Securities Exchange Act of 1934, as amended)
becoming the beneficial owner, directly or indirectly, of
securities representing 25% or more of the combined voting
power of the Company's or Temple-Inland's then outstanding
securities; (iii) a sale or transfer of substantially all of
the assets of the Company or Temple-Inland; or (iv) a
liquidation or reorganization of the Company or Temple-Inland.
b. COMPENSATION AMOUNT: "Compensation Amount" means the gross
amount of cash required to provide a net payment after
federal, state and local taxes to Employee equal to two (2)
times his annual cash compensation (salary and minimum bonus)
as set forth in item 3 above.
c. GOOD REASON: "Good Reason" means a substantial reduction in
the Employee's duties as set forth in item 2 above, a
reduction in Employee's annual cash compensation as set forth
in item 4 above or a failure to pay such compensation within
seven (7) days of the date such compensation is due, a
substantial reduction in Employee's benefits as set forth in
item 4(a) above, or the relocation of Employee's principal
place of employment to a location more than 15 miles from
Indianapolis, Indiana.
8. TERMINATION OF AGREEMENT:
a. TERM: Except for the covenants set out in sections 7, 9 and
10, which shall survive, this Agreement shall terminate upon
the earliest to occur of the following:
i. 24 months from the Employment Date;
ii. the Employee's death, resignation or retirement;
iii. immediately and without prior notice upon Disability of
the Employee (as defined below); or
iv. immediately and without prior notice upon the
determination of the Company to terminate the Employee's
employment, with or without cause, for any reason.
b. DEFINITION OF DISABILITY: The Employee will be deemed to have
a "disability" if, for physical or mental reasons, the
Employee is unable to perform the essential functions of the
Employee's duties under this Agreement for one-hundred-twenty
(120) consecutive days, or one-hundred-eighty (180) days
during any twelve month period, as determined in accordance
with this Section 8(b). The disability of the Employee will be
determined by a physician selected by written agreement of the
Company and the Employee upon the request of either party by
notice to the other. If the Company and the Employee cannot
agree on the selection of a physician, each of them will
select a physician and the two physicians will select a third
physician who will determine whether the
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Employee has a disability. The determination of the physician
selected under this Section 8(b) will be binding on both
parties. The Employee must submit to a reasonable number of
examinations by the physician making the determination of
disability under this Section 8(b), and the Employee hereby
authorizes the disclosure and release to the Company of such
determination and all supporting medical records. If the
Employee is not legally competent, the Employee's legal
guardian or duly authorized attorney-in-fact will act in the
Employee's stead, under this Section 8(b), for the purposes of
submitting the Employee to the examinations, and providing the
authorization of disclosure, required under this Section 8(b).
c. TERMINATION PAY: In the event that the Employee's employment
with the Company is terminated for any reason other than (i) a
Change in Control, (ii) the Employee's resignation, (iii)
retirement, (iv) disability, or (v) willful misconduct
(including, but not limited to, dishonesty, fraud,
embezzlement, gross insubordination, gross misconduct and the
like), the Employee shall be entitled to receive a severance
payment in a gross amount (less applicable tax withholdings)
equal to the projected two-year cash compensation set forth
above of $1,225,000 reduced by all cash compensation paid to
Employee up to and including the date of termination.
d. EMPLOYMENT-AT-WILL: If the Employee remains employed by the
Company at the termination of this Agreement pursuant to item
8.(a)(i) hereof, his employment shall be at-will and may be
terminated by either the Employee or the Company thereafter
without regard to this Agreement except as set forth in item 7
hereof.
9. NON-DISCLOSURE COVENANT:
a. The Employee acknowledges that:
i. During the Agreement the Employee will be afforded access
to trade secrets and confidential business information,
including but not limited to: corporate planning;
production; distribution or marketing processes;
manufacturing techniques; customer lists or customer
leads; marketing information or procedures; development
or environmental work; work in process; financial
statements or notes, schedules or supporting financial
data; or any other secret or confidential matter relating
to the products, sales or business of the Company or
Temple-Inland, including plans for expansion to new
products, areas and markets; new product development
budgets and forecasts, together with all written and
graphic materials relating thereto (collectively
"Confidential Information");
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ii. Public disclosure of such Confidential Information could
have an adverse effect on the Company and its business or
Temple-Inland and its business;
iii. The Employee's covenants in this Section 9 are a material
inducement for the Company to enter into this Agreement
and to allow the Employee access to the Confidential
Information; and
iv. The provisions of this Section 9 are reasonable and
necessary to prevent improper use of Confidential
Information.
b. At all times during the term of this Agreement and thereafter,
the Employee shall hold in strictest confidence and not
disclose, directly or indirectly, to any person, firm or
corporation, without the express written prior authorization
of the Company or Temple-Inland, any Confidential Information.
10. CONFIDENTIALITY: The parties agree that this Agreement is of a
confidential nature and that neither the existence of this Agreement
nor its terms shall be disclosed except (i) to consultants, advisors
and affiliates (who shall be informed of and be bound by the terms of
this Section 10), (ii) as required by securities laws or other law, or
(iii) to the Internal Revenue Service in connection with an audit of
any of the Company's or the Employee's tax returns.
11. GOVERNING LAW: This Agreement will be governed by the laws of the
United States and the State of Indiana, as applicable, without regard
to conflicts of laws principles.
12. MISCELLANEOUS:
a. The parties agree that the covenants and other terms contained
in this Agreement are reasonable in all respects.
b. The parties agree that each and every paragraph, sentence,
term and provision of this Agreement shall be considered
severable and that, in the event a court or other tribunal
finds any paragraph, sentence, term or provision to be invalid
or unenforceable, the validity, enforceability, operation or
effect of the remaining paragraphs, sentences, terms or
provisions shall not be affected.
c. The failure of either party to insist in any one or more
instances upon performance of any of the provisions of the
Agreement or to pursue their rights thereunder, shall not be
construed as a waiver of any such provisions or the
relinquishment of any rights.
d. Any notices, requests or other communications required
hereunder shall be in writing and shall be personally
delivered or, if mailed, by first class mail
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If to the Company, to:
Inland Paperboard and Packaging, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxxxx
If to the Employee, to:
Xxxx X. Xxxxx
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
e. This Agreement represents the sole and entire agreement among
the Employee and the Company relating to the Employee's
employment and supersedes all prior promises, contracts and
agreements of any kind, whether written or oral, express or
implied, as well as any negotiations and/or discussions
between the parties hereto. Any amendment to this Agreement
must be in writing and signed by duly authorized
representatives of each of the parties hereto and must
expressly state that it is the intention of each of the
parties hereto to amend this Agreement.
f. Except for the rights of the Company or Temple-Inland set
forth in Sections 9 and 10, this Agreement is for the benefit
of, and may be enforced only by, the Company and the Employee
and their respective assignees, heirs and personal
representatives, and is not for the benefit of, and may not be
enforced by, any other person or entity. This Agreement shall
be binding upon the successors and assigns of the Company.
Dated:
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Xxxx X. Xxxxx
Dated: INLAND PAPERBOARD AND PACKAGING,
------------------------ INC.
BY:
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