PACKAGING CORPORATION OF AMERICA EMPLOYMENT AGREEMENT
Exhibit 10.1
PACKAGING CORPORATION OF AMERICA
EMPLOYMENT AGREEMENT (this “Agreement”) dated as of June 28, 2010, by and
between Packaging Corporation of America, a Delaware corporation (the “Company”), and Xxxx
X. Xxxxxx (the “Executive”).
W I T N E S S E T H
WHEREAS, the Company desires to employ the Executive as the Executive Chairman of the Company;
and
WHEREAS, the Company and the Executive desire to enter into this Agreement as to the terms of
the Executive’s continued employment with the Company.
NOW, THEREFORE, in consideration of the foregoing, of the mutual promises contained herein and
of other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. POSITION AND DUTIES.
(a) GENERAL. During the Employment Term (as defined in Section 2 hereof), the
Executive shall serve as the Executive Chairman of the Company. In this capacity, the Executive
shall have the duties, authorities and responsibilities commensurate with the duties, authorities
and responsibilities of persons in similar capacities in similarly sized companies, and such other
duties, authorities and responsibilities as may reasonably be assigned to the Executive that are
not inconsistent with the Executive’s position, including, without limitation, the following
duties:
(i) Regularly attending and presiding over meetings of the Board of Directors of the Company
(the “Board”);
(ii) Setting Board meeting schedules and agendas;
(iii) Actively participating in all appropriate Board functions;
(iv) Assisting in the transition of duties and responsibilities to a new Chief Executive
Officer of the Company;
(v) Participating with the Company’s new Chief Executive Officer in developing and
implementing a long-term strategic business plan of the Company and its divisions and subsidiaries
and monitoring that strategy on an ongoing basis;
(vi) Overseeing shareholder relations and risk management for the Company; and
(vii) Focusing on such other critical business matters as are necessary to xxxxxx the
continued growth and success of the Company and its business.
(b) LOCATION. The Executive’s principal place of employment with the Company shall be at the
Company’s corporate headquarters in Lake Forest, Illinois, provided that the Executive
understands and agrees that the Executive will be required to travel from time to time for business
purposes.
(c) PERMITTED ACTIVITIES. During the Employment Term, the Executive shall devote Executive’s
business time, energy, business judgment, knowledge and skill and the Executive’s best efforts to
the performance of the Executive’s duties with the Company. Notwithstanding the foregoing, during
the Employment Term, the Executive shall be permitted to (i) with the prior written approval of the
Board, serve on the board of other companies, provided that the Executive is expressly
permitted to continue to serve on any board of directors on which the Executive serves as of the
Effective Date, and (ii) manage the Executive’s passive personal investments so long as such
activities in the aggregate do not conflict with the Executive’s duties hereunder or create a
business or fiduciary conflict.
2. EMPLOYMENT TERM. The Company agrees to employ the Executive pursuant to the terms of this
Agreement, and the Executive agrees to be so employed, for a term of three (3) years commencing on
July 1, 2010 (the “Effective Date”). To the extent that the Executive continues to be
employed by the Company following the expiration of the three (3)-year period described in the
preceding sentence, the Executive shall be employed under the terms of any successor employment
agreement or as an “at-will” employee and, except as specifically stated in this Agreement, none of
the provisions of this Agreement shall apply to the Executive’s continued employment with the
Company. Notwithstanding the foregoing, the Executive’s employment hereunder may be earlier
terminated in accordance with Section 7 hereof. The period of time between the Effective
Date and the termination of the Executive’s employment hereunder shall be referred to herein as the
“Employment Term.”
3. BASE SALARY. The Company agrees to pay the Executive a base salary at an annual rate of
not less than $950,000 (or such other amount as mutually agreed by the parties), payable in
accordance with the regular payroll practices of the Company, but not less frequently than monthly.
4. ANNUAL BONUS. During the Employment Term, the Executive shall be eligible for an annual
cash incentive award (an “Annual Incentive Award”) in respect of each calendar year that
ends during the Employment Term, to the extent earned based on performance against performance
criteria. The performance criteria for any particular calendar year shall be determined in good
faith by the Compensation Committee of the Board in its sole discretion no later than ninety (90)
days after the commencement of such calendar year. The Executive’s targeted Annual Incentive Award
for a calendar year shall equal $800,000 if target levels of
performance for such year are achieved, with greater or lesser amounts (including zero) paid for
performance above and below target (such greater and lesser amounts to be determined by the
Compensation Committee of the Board for such year in its sole discretion when it evaluates
performance for the year against the performance criteria described above). The Executive’s Annual
Incentive Award for a calendar year shall be determined by the
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Compensation Committee of the Board after the end of the applicable calendar year based on the
level of achievement of the applicable performance criteria, and shall be paid to the Executive in
the calendar year following the calendar year to which such Annual Incentive Award relates at the
same time annual bonuses are paid to other senior executives of the Company, subject to continued
employment at the time of payment.
5. EQUITY AWARDS. Upon the Effective Date, the Executive shall be granted by the Company a
restricted stock award under the Company’s Amended and Restated 1999 Long-term Equity Incentive
Plan (i) for 125,000 shares of the Company’s common stock, (ii) to become vested on a cliff basis
on the date that is three (3) years following the Effective Date, subject to the Executive’s
continued employment with the Company through such date (except as otherwise expressly provided in
this Agreement), (iii) to be subject to full accelerated vesting upon the occurrence of a “Change
in Control” of the Company during the Employment Term or upon the Executive’s termination of
employment as a result of death or “Disability” (each, as defined in the Company’s Amended and
Restated 1999 Long-Term Equity Incentive Plan), (iv) to be subject to pro rata vesting on a
termination by the Company without Cause (as defined in the Company’s Amended and Restated 1999
Long-Term Equity Incentive Plan) in accordance with Section 7(a)(ii) prior to the date of full
vesting of the restricted stock, with the number of shares vesting in such case to equal (x)
125,000 multiplied by (y) a fraction, the numerator of which shall equal the number of months
(including such portion of any partial month served) actually served by Executive under this
Agreement between the Effective Date and the date of termination of this Agreement and the
denominator of which shall equal 36, and (iv) with such other terms and conditions as are set forth
in a restricted stock award agreement consistent with the Company’s standard form of restricted
stock award agreement used for other senior executives of the Company under the Company’s Amended
and Restated 1999 Long-Term Equity Incentive Plan (the “Restricted Stock Award”).
6. EMPLOYEE BENEFITS.
(a) BENEFIT PLANS. During the Employment Term, the Executive shall be entitled to participate
in any employee benefit plan that the Company has adopted or may adopt, maintain or contribute to
for the benefit of its senior executives generally (including, without limitation, continued
participation in the Company’s deferred compensation plans on the same basis as in effect
immediately prior to the Effective Date), subject to satisfying the applicable eligibility
requirements, except to the extent such plans are duplicative of the benefits otherwise provided to
hereunder. The Executive’s participation will be subject to the terms of the applicable plan
documents and generally applicable Company policies. Notwithstanding the foregoing, the Company
may modify or terminate any employee benefit plan at any time.
(b) BUSINESS EXPENSES. Upon presentation of reasonable substantiation and documentation as
the Company may specify from time to time, the Executive shall be reimbursed in accordance with the
Company’s expense reimbursement policies as in effect from time to time, for all reasonable
out-of-pocket business expenses incurred and paid by the Executive during the Employment Term and
in connection with the performance of the Executive’s duties hereunder.
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7. TERMINATION OF EMPLOYMENT.
(a) TERMINATION EVENTS. The Executive’s employment and the Employment Term shall terminate on
the first of the following to occur: (i) automatically upon the date of death of the Executive;
(ii) upon thirty (30) calendar days’ prior written notice (or pay in lieu of notice) by the Company
of the Executive’s termination of employment for any reason; provided that a termination
for “Cause” (as defined in the Company’s Amended and Restated 1999 Long-Term Equity Incentive Plan)
by the Company may occur immediately without prior written notice; (iii) upon thirty (30) calendar
days’ prior written notice by the Executive to the Company of the Executive’s voluntary resignation
(which the Company may, in its sole discretion, make effective earlier than any notice date); and
(iv) upon the expiration of the Employment Term on the date that is three (3) years following the
Effective Date as provided in Section 2 hereof.
(b) CONSEQUENCES OF TERMINATION. In the event that the Executive’s employment and the
Employment Term terminates for any reason, the Executive or the Executive’s estate, as the case may
be, shall be entitled to the following (with the amounts due under the following clauses (i)
through (iii) to be paid within thirty (30) calendar days following termination of employment, or
such earlier date as may be required by applicable law): (i) any unpaid base salary through the
date of termination; (ii) any Annual Incentive Award earned but unpaid with respect to the calendar
year ending on or preceding the date of termination; (iii) reimbursement for any unreimbursed
business expenses incurred through the date of termination; and (iv) all other payments, benefits
or fringe benefits to which the Executive shall be entitled under the terms of any applicable
compensation arrangement or benefit, equity or fringe benefit plan or program or grant or this
Agreement. In addition, in the event of a termination of the Executive’s employment with the
Company as a result of the Executive’s death or “Disability” (as defined in the Company’s Amended
and Restated 1999 Long-Term Equity Incentive Plan), the Executive shall be entitled to the
accelerated vesting of the Restricted Stock Award as described in Section 5 hereof. In the
event of a termination by Company of the Executive’s employment by the Company without Cause as
provided in Section 7(a)(ii) hereof, the Executive shall be entitled to pro rata vesting of the
Restricted Stock Award as described in Section 5 hereof. Except for the foregoing and as
otherwise may be required by applicable law, following the Executive’s termination of employment
with the Company for any reason, the Company shall have no further obligations to the Executive
whatsoever.
(c) OTHER OBLIGATIONS. Upon any termination of the Executive’s employment with the Company,
the Executive shall promptly offer to resign from and any other position as an officer, director or
fiduciary of the Company and any of its affiliates
8. COOPERATION. Upon the receipt of reasonable notice from the Company (including through
outside counsel), the Executive agrees that while employed by the Company and thereafter (to the
extent it does not materially interfere with the Executive’s employment or other business
activities after employment by the Company), the Executive will respond and provide information
with regard to matters in which the Executive has knowledge as a result of the Executive’s
employment with the Company, and will provide reasonable assistance to the Company, the affiliates
and their respective representatives in defense of all claims that may be
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made against the Company or the affiliates, and will assist the Company and the affiliates in
the prosecution of all claims that may be made by the Company or the affiliates, to the extent that
such claims may relate to the period of the Executive’s employment with the Company. The Executive
also agrees to promptly inform the Company (to the extent that the Executive is legally permitted
to do so) if the Executive is asked to assist in any investigation of the Company or the affiliates
(or their actions), regardless of whether a lawsuit or other proceeding has then been filed against
the Company or affiliates with respect to such investigation, and shall not do so unless legally
required. Upon presentation of appropriate documentation, the Company shall pay or reimburse the
Executive for all reasonable out-of-pocket travel, duplicating, telephonic, counsel and other
expenses incurred by the Executive in complying with this Section 8.
9. EQUITABLE RELIEF AND OTHER REMEDIES. The Executive acknowledges and agrees that the
Company’s remedies at law for a breach or threatened breach of
any of the provisions of Section 8 hereof would be inadequate and, in recognition of this fact, the
Executive agrees that, in the event of such a breach or threatened breach, in addition to any
remedies at law, the Company, without posting any bond or other security, shall be entitled to
obtain equitable relief in the form of specific performance, a temporary restraining order, a
temporary or permanent injunction or any other equitable remedy which may then be available.
10. NO ASSIGNMENTS. This Agreement is personal to each of the parties hereto. Except as
provided in this Section 10 hereof, no party may assign or delegate any rights or
obligations hereunder without first obtaining the written consent of the other party hereto. The
Company shall assign this Agreement to any successor to all or substantially all of the business
and/or assets of the Company, provided that the Company shall require such successor to
expressly assume 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 and any successor to all or substantially all
of its business and/or assets, which assumes and agrees to perform the duties and obligations of
the Company under this Agreement by operation of law or otherwise.
11. NOTICES. For purposes of this Agreement, notices and all other communications provided
for in this Agreement shall be in writing and shall be deemed to have been duly given (a) on the
date of delivery, if delivered by hand, (b) on the date of transmission, if delivered by confirmed
facsimile or electronic mail, (c) on the first business day following the date of deposit, if
delivered by guaranteed overnight delivery service, or (d) on the fourth business day following the
date delivered or mailed by United States registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive:
To the address shown in the books and records of the Company.
If to the Company:
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Packaging Corporation of America
0000 Xxxx Xxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxx 00000
Attention: General Counsel
0000 Xxxx Xxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxx 00000
Attention: General Counsel
or to such other address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon receipt.
12. SECTION HEADINGS; INCONSISTENCY. The section headings used in this Agreement are included
solely for convenience and shall not affect, or be used in connection with, the interpretation of
this Agreement. In the event of any inconsistency between the terms of this Agreement (including
the Exhibits hereto) and any form, award, plan or policy of the Company, the terms of this
Agreement shall govern and control.
13. SEVERABILITY. The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or enforceability of
the other provisions hereof.
14. 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.
15. INDEMNIFICATION. The Company hereby agrees to indemnify the Executive and hold the
Executive harmless to the extent provided under the organizational documents of the Company against
and in respect of any and all actions, suits, proceedings, claims, demands, judgments, costs,
expenses (including reasonable attorney’s fees), losses, and damages resulting from the Executive’s
good faith performance of the Executive’s duties and obligations with the Company. This obligation
shall survive the termination of the Executive’s employment with the Company.
16. LIABILITY INSURANCE. The Company shall cover the Executive under directors’ and officers’
liability insurance both during and, while potential liability exists, after the Employment Term in
the same amount and to the same extent as the Company covers its other officers and directors.
17. GOVERNING LAW; DISPUTE RESOLUTION. This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto, shall be governed by and construed in
accordance with the laws of the State of Illinois (without regard to its choice of law provisions).
Each of the parties agrees that any dispute between the parties shall be resolved only in the
courts of the State of Illinois or the United States District Court for the Northern District of
Illinois and the appellate courts having jurisdiction of appeals in such courts. In that context,
and without limiting the generality of the foregoing, each of the parties hereto irrevocably and
unconditionally (a) submits in any proceeding relating to this Agreement or the Executive’s
employment by the Company or any affiliate, or for the recognition and enforcement of any judgment
in respect thereof (a “Proceeding”), to the exclusive jurisdiction of the courts of the
State of Illinois, the court of the United States of America for the Northern District of Illinois,
and appellate courts having jurisdiction of appeals from any of the foregoing,
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and agrees that all claims in respect of any such Proceeding shall be heard and determined in
such Illinois State court or, to the extent permitted by law, in such federal court, (b) consents
that any such Proceeding may and shall be brought in such courts and waives any objection that the
Executive or the Company may now or thereafter have to the venue or jurisdiction of any such
Proceeding in any such court or that such Proceeding was brought in an inconvenient court and
agrees not to plead or claim the same, (c) WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
EXECUTIVE’S EMPLOYMENT BY THE COMPANY OR ANY AFFILIATE OF THE COMPANY, OR THE EXECUTIVE’S OR THE
COMPANY’S PERFORMANCE UNDER, OR THE ENFORCEMENT OF, THIS AGREEMENT, (d) agrees that service of
process in any such Proceeding may be effected by mailing a copy of such process by registered or
certified mail (or any substantially similar form of mail), postage prepaid, to such party at the
Executive’s or the Company’s address as provided in Section 11 hereof, and (e) agrees that
nothing in this Agreement shall affect the right to effect service of process in any other manner
permitted by the laws of the State of Illinois. Each party shall be responsible for its own legal
fees incurred in connection with any dispute hereunder.
18. MISCELLANEOUS. No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and signed by the Executive
and such officer or director as may be designated by the Board. No waiver by either party hereto
at any time of any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same or at any prior or subsequent time. This
Agreement together with all exhibits hereto sets forth the entire agreement of the parties hereto
in respect of the subject matter contained herein and supersedes any and all prior agreements or
understandings between the Executive and the Company with respect to the subject matter hereof,
whether written or oral. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which are not expressly
set forth in this Agreement.
19. EXECUTIVE REPRESENTATIONS. The Executive represents and warrants to the Company that (a)
the Executive has the legal right to enter into this Agreement and to perform all of the
obligations on the Executive’s part to be performed hereunder in accordance with its terms, and (b)
the Executive is not a party to any agreement or understanding, written or oral, and is not subject
to any restriction, which, in either case, could prevent the Executive from entering into this
Agreement or performing all of the Executive’s duties and obligations hereunder. The Executive
understands that the foregoing representations are a material inducement to the Company entering
into this Agreement.
20. TAX MATTERS. The Company may withhold from any and all amounts payable under this
Agreement or otherwise such federal, state and local taxes as may be required to be withheld
pursuant to any applicable law or regulation. The intent of the parties is that payments and
benefits under this Agreement comply with Section 409A of the Internal Revenue Code and the
regulations and guidance promulgated thereunder and, accordingly, to the maximum extent permitted,
this Agreement shall be interpreted to be in compliance therewith.
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21. FURTHER ASSURANCES. The Company and the Executive shall cooperate with each other and do,
or procure the doing of, all acts and things, and execute, or procure the execution of, all
documents, as may reasonably be required to give full effect to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.
| PACKAGING CORPORATION OF AMERICA |
||||
| By: | /s/ Xxxxxxx X. Xxxx | |||
| Name: | Xxxxxxx X. Xxxx | |||
| Title: | Senior Vice President and Chief Financial Officer | |||
| EXECUTIVE |
||||
| /s/ Xxxx X. Xxxxxx | ||||
| Xxxx X. Xxxxxx | ||||
Employment Agreement Signature Page
