EXHIBIT 10.8
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of this 1st day of January 2002, between
IPC, Inc. (formerly Ivex Packaging Corporation), a Delaware corporation, (the
"Company") and Xxxxx X. Xxxxxxx (the "Executive").
The Executive is currently employed by the Company under an Employment
Agreement dated as of October 31, 1997 (the "1997 Agreement"), and the Company
and the Executive desire to enter into this Amended and Restated Agreement with
respect to the Executive's continuing employment by the Company on the terms and
conditions set forth herein, amending and restating in its entirety the 1997
Agreement.
Accordingly, the parties agree as follows:
1. Employment, Duties and Acceptance.
1.1 Employment by the Company; Duties. The Company hereby agrees to
continue to employ the Executive for a current term expiring at the end of the
day on December 31, 2004, unless earlier terminated as herein provided.
Beginning on January 1, 2002, the term of this Agreement shall be extended
automatically for one (1) additional day for each day which has then elapsed
since December 31, 2001 unless, at any time after December 31, 2001, either the
Board of Directors of the Company (the "Board"), on behalf of the Company, or
the Executive gives written notice to the other, in accordance with Section
13.2, below, that such automatic extension of the term of this Agreement shall
cease. Any such notice shall be effective immediately upon delivery. The current
term of this Agreement, plus any extension by operation of this Section 1, shall
be hereinafter referred to as the "Term." During the Term, the Executive shall
at all times serve in the capacity of Executive Vice President and Chief
Financial Officer of the Company. During the Term, the Executive shall devote
his best efforts and substantially all his business time and services to the
Company and Ivex, subject to the direction of the Board.
1.2 Acceptance of Employment by the Executive. The Executive hereby
accepts such continuing employment and shall render the services and perform the
duties described above.
2. Compensation and Other Benefits.
2.1 Annual Salary. The Company shall pay to the Executive an annual
salary (the "Annual Salary") of not less than $410,000 per year. The Annual
Salary may be increased from time to time at the sole discretion of the Board.
The Annual Salary shall be payable in accordance with the payroll policies of
the Company as from time to time in effect, but in no event less frequently than
twice each month, less such deductions as shall be required to be withheld by
applicable law and regulations.
2.2 Bonuses. The Company shall pay to the Executive an annual
performance bonus based upon the terms and provisions of the Company's Senior
Management Incentive
Compensation Plan. The Executive may also receive such additional bonuses as
shall, in the discretion of the Board, be awarded to him.
2.3 Vacation Policy. The Executive shall be entitled to paid
vacation in accordance with the vacation policy of the Company; provided,
however, that the Executive shall be entitled to at least four (4) weeks paid
vacation during each year of the Term.
2.4 Benefits. The Company agrees to permit the Executive during the
Term, if and to the extent eligible, to participate in any stock, option or
other equity or long-term incentive compensation plan, group life,
hospitalization or disability insurance plan, health program, pension,
supplemental pension or retirement plan, savings plan, similar benefit plan or
other so-called "fringe benefits" of the Company (collectively "Benefits") which
may be available to other senior executives of the Company, with the Executive's
participation to be on terms no less favorable to the Executive than the terms
provided to such other executives.
2.5 General Business Expenses. The Company shall pay or reimburse
the Executive for all expenses reasonably and necessarily incurred by the
Executive during the Term in the performance of the Executive's services under
this Agreement. Such payment shall be made upon presentation of such
documentation as the Company customarily requires of its senior executive
employees prior to making such payments or reimbursements. In addition, the
Company shall provide the Executive with appropriate office space, office
furniture and supplies and the services of a secretary in the Chicago area.
2.6 Company Car and Country Club Membership. During the Term, the
Company shall provide for the Executive, at the Company's expense, a late model
automobile for the Executive's use in the performance of his services under the
Agreement. In addition, the Company shall reimburse the Executive for any annual
membership fees of a country club to be designated by the Executive during the
Term.
3. Non-Competition.
3.1 Covenants Against Competition. The Executive acknowledges that:
(a) the Company, through its subsidiaries, is currently engaged in the business
of (1) manufacturing and selling coated and laminated papers, films and foil
which are used in a wide range of industrial and commercial applications, (2)
manufacturing, thermoforming and distributing polystyrene, oriented polystyrene
sheet, oriented polystyrene film, high impact polystyrene sheet and related
polystyrene products that have been developed or produced by the Company and its
subsidiaries, (3) manufacturing and selling of thermoformed plastic containers
and parts including, without limitation, food packaging applications, (4)
manufacturing and selling of kraft and crepe papers and (5) manufacturing and
selling of converted paper products including, without limitation, single-faced
corrugated paper products, shipping and mailing envelopes and fluted paper
packaging products, and the Company may, during the Term, enter into other
related types of businesses (collectively, the "Company Business"); (b) the
Company Business is conducted throughout the United States and Canada; (c) his
work for the Company will give him access to trade secrets of and confidential
information concerning the Company and its subsidiaries; (d) the agreements and
covenants contained in this Agreement are essential to protect the business and
goodwill of the Company; and (e) he has means to support himself
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and his dependents other than by engaging in the Company Business and the
provisions of this Agreement will not impair such ability. Accordingly, the
Executive covenants and agrees as follows:
3.1.1 Non-Compete. The Executive shall not during the Restricted
Period (as defined below) in the United States, Canada or any other place where
the Company and its affiliates conduct substantial manufacturing operations
related to the Company Business, directly or indirectly (except in the
Executive's capacity as an officer of the Company or any of its affiliates), (a)
engage or participate in the Company Business; (b) enter the employ of, or
render any other services to, any person engaged in the Company Business; or (c)
become interested in any such person in any capacity, including, without
limitation, as an individual partner, shareholder, lender, officer, director,
principal, agent or trustee; provided, however, that the Executive may own,
directly or indirectly, solely as an investment, securities of any entity traded
on any national securities exchange or listed on the National Association of
Securities Dealers Automated Quotation System if the Executive is not a
controlling person of, or a member of a group which controls, such entity and
the Executive does not, directly or indirectly, own five percent (5%) or more of
any class of equity securities, or securities convertible into or exercisable or
exchangeable for five percent (5%) or more of any class of equity securities, of
such entity. As used herein, the "Restricted Period" shall mean a period
commencing on December 31, 1992 and terminating upon the first to occur of (w)
the date on which the Company terminates the Executive's employment without
Cause, (x) the date on which the Executive terminates his employment for Good
Reason, (y) the date of termination of this Agreement, or (z) the date on which
a Change of Control (as defined in Section 9, below) occurs; provided, however,
that if the Company shall have terminated the Executive's employment with the
Company for Cause or if the Executive shall have terminated his employment with
the Company without Good Reason, the Restricted Period shall end on the first
anniversary of such termination of employment.
3.1.2 Confidential Information; Personal Relationships. The
Executive acknowledges that the Company has a legitimate and continuing
proprietary interest in the protection of its confidential information and that
it has invested substantial sums and will continue to invest substantial sums to
develop, maintain and protect confidential information. The Executive agrees
that, during and after the Restricted Period, the Executive shall keep secret
and retain in strictest confidence, and shall not use for the benefit of himself
or others, all confidential information directly relating to the Company
Business including, without limitation, financial information, trade secrets,
customer lists, details of client or consultant contracts, pricing policies,
operational methods, marketing plans or strategies, product development
techniques or plans, business acquisition plans, new personnel acquisition
plans, methods of manufacture, technical processes, designs and design projects,
inventions and research projects of the Company, its affiliates, or any other
entity which may hereafter become an affiliate thereof, learned by the Executive
heretofore or hereafter unless otherwise in the public domain other than as a
result of disclosure by the Executive.
3.1.3 Property of the Company. All memoranda, notes, lists, records,
engineering drawings, technical specifications and related documents and other
documents or papers (and all copies thereof) relating to the Company, including
such items stored in computer memories, microfiche or by any other means, made
or compiled by or on behalf of the Executive
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since December 31, 1992, or made available to the Executive after that date
relating to the Company, its affiliates or any entity which may hereafter become
an affiliate thereof, shall be the property of the Company, and shall be
delivered to the Company promptly upon the termination of the Executive's
employment with the Company or at any other time upon request.
3.1.4 Original Material. The Executive agrees that any inventions,
discoveries, improvements, ideas, concepts or original works of authorship
relating directly to the Company Business, including without limitation computer
apparatus, programs and manufacturing techniques, whether or not protectable by
patent or copyright, that have been originated, developed or reduced to practice
by the Executive alone or jointly with others during the Executive's employment
with the Company shall be the property of and belong exclusively to the Company.
The Executive shall promptly and fully disclose to the Company the origination
or development by the Executive of any such material and shall provide the
Company with any information that it may reasonably request about such material.
3.1.5 Employees of the Company and its Affiliates. During the
Restricted Period, the Executive shall not, directly or indirectly, (a) hire or
solicit, or cause others to hire or solicit, for employment by any person other
than the Company or any affiliate or successor thereof, any employee of, or
person employed within the two (2) years preceding the Executive's hiring of
such person or solicitation of such person by, the Company and its affiliates or
successors or (b) encourage any such employee to leave his or her employment.
3.1.6 Customers of the Company. During the Restricted Period, the
Executive shall not, except by reason of and in his capacity as an officer of
the Company, directly or indirectly request or advise a customer of the Company
or its subsidiaries to curtail or cancel such customer's business relationship
with the Company.
3.2 Rights and Remedies Upon Breach. If the Executive breaches, or
threatens to commit a breach of, any of the provisions contained in Section 3.1
of this Agreement (the "Restrictive Covenants"), the Company shall have the
following rights and remedies, each of which rights and remedies shall be
independent of the others and severally enforceable, and each of which is in
addition to, and not in lieu of, any other rights and remedies available to the
Company under law or in equity:
3.2.1 Specific Performance. The right and remedy to have the
Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened breach of the
Restrictive Covenants would cause irreparable injury to the Company and that
money damages would not provide an adequate remedy to the Company.
3.2.2 Accounting. The right and remedy to require the Executive to
account for and pay over to the Company all compensation, profits, monies,
accruals, increments or other benefits derived or received by the Executive as
the result of any action constituting a breach of the Restrictive Covenants.
3.3 Severability of Covenants. The Executive acknowledges and agrees
that the Restrictive Covenants are reasonable and valid in duration and
geographical scope and in all other respects. If any court determines that any
of the Restrictive Covenants, or any part thereof,
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is invalid or unenforceable, the remainder of the Restrictive Covenants shall
not thereby be affected and shall be given full effect without regard to the
invalid portions.
3.4 Blue-Pencilling. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographical scope of such provision, such court shall have the
power to reduce the duration or scope of such provision, as the case may be,
and, in its reduced form, such provision shall then be enforceable.
3.5 Enforceability in Jurisdictions. The Company and the Executive
intend to and hereby confer jurisdiction to enforce the Restrictive Covenants
upon the courts of any jurisdiction within the geographical scope of such
Restrictive Covenants. If the courts of any one or more of such jurisdictions
hold the Restrictive Covenants unenforceable by reason of the breadth of such
scope or otherwise, it is the intention of the Company that such determination
not bar or in any way affect the right of the Company to the relief provided
above in the courts of any other jurisdiction within the geographical scope of
such Restrictive Covenants, as to breaches of such Restrictive Covenants in such
other respective jurisdictions, such Restrictive Covenants as they relate to
each jurisdiction being, for this purpose, severable into diverse and
independent covenants.
4. Termination.
4.1 Termination upon Death. If the Executive dies during the Term,
this Employment Agreement shall terminate, except that the Executive's legal
representatives shall be entitled to receive the Annual Salary earned up to the
date of the Executive's death, plus (a) unpaid Benefits accrued up to the date
of Executive's death, (b) an amount equal to the Executive's target annual
performance bonus for the year in which his death occurs, multiplied by a
fraction, the numerator of which is the number of days that the Executive was
employed by the Company during that year and the denominator of which is three
hundred and sixty-five (365), and (c) the benefits described under Section 5.7
hereof. In addition, the Company shall, for the remainder of the Term, continue
to provide the Executive's dependents with Benefits at the levels that were
applicable to the Executive and his dependents on the date immediately prior to
his death, or provide equivalent benefits through separate insurance coverage.
4.2 Termination With Cause. The Company has the right, at any time
during the Term, subject to all of the provisions hereof, exercisable by serving
notice, effective on or after the date of service of such notice as specified
therein, to terminate the Executive's employment under this Agreement and
discharge the Executive for Cause. As used in this Section 4.2, the term "Cause"
shall mean and include (a) chronic alcoholism or drug addition, (b) deliberate
misappropriation of any material amount of money or other assets or properties
of the Company or any affiliate or successor thereof, (c) except where the
nonperformance is caused by the illness or other similar incapacity or
disability of the Executive, gross and continuing neglect in the substantial
performance of duties reasonably assigned to the Executive or the deliberate or
continuing performance of duties that are in contravention of the Board's
directions, that in either case, are not corrected promptly upon receipt by the
Executive of written notice delivered at the direction of the Board specifically
identifying the manner in which it is alleged that the Executive has not
substantially performed his duties and/or continued to perform duties in
contravention of the Board's instructions, (d) any willful and material breach
of any of
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the terms of this Agreement except where the breach is caused by the illness or
other similar incapacity or disability of the Executive or (e) conviction of a
misdemeanor involving moral turpitude or conviction of a felony. If the Company
terminates the Executive's employment for Cause, the Company's obligation to the
Executive shall be limited solely to the payment of unpaid Annual Salary accrued
and Benefits vested up to the effective date specified in the Company's notice
of termination.
4.3 Suspension upon Disability. If during the Term the Executive
becomes physically or mentally disabled and is entitled to receive benefits
under the Executive's supplemental disability insurance program, the Company may
at any time thereafter, by written notice to the Executive, suspend the term of
the Executive's employment hereunder and discontinue payments of the Annual
Salary for the duration of the disability. No action permitted by this Section
4.3 shall be deemed to extend the Term or to constitute a breach of this
Agreement. Any other provision of this Section 4.3 notwithstanding, if the
Executive is permanently disabled to such an extent that he is eligible to
receive benefits under his supplemental disability policy, then the Company
shall, for the remainder of the Term, continue to provide the Executive and his
dependents with Benefits at the levels that were applicable to the Executive and
his dependents immediately prior to his disability, or provide equivalent
benefits through separate insurance coverage and the Executive shall be entitled
to the benefits under Section 5.7 hereof.
4.4 Termination Without Cause. The Company may, at any time during
the Term, terminate the Executive's employment without Cause by giving the
Executive notice of such termination, effective on or after the date of service
of such notice. In the event of such termination, the Executive shall be
entitled to receive the severance benefits described in Section 5, below.
4.5 Termination for Good Reason. The Executive may terminate his
employment hereunder for Good Reason at any time during the Term by giving the
Company notice of such termination, effective on or after the date of service of
such notice. For purposes of this Agreement, "Good Reason" shall mean the
continuation of any of the following (without the Executive's express prior
written consent) after written notice provided by the Executive and the failure
by the Company to remedy such event or condition within thirty (30) days after
receipt of such notice:
(a) A reduction in the Executive's Annual Salary, as in effect
pursuant to Section 2.1;
(b) Failure by the Company to pay to the Executive any bonus
which is payable pursuant to Section 2.2;
(c) A failure by the Company to provide, on terms no less
favorable to the Executive than the terms offered to the other comparable
executives of the Company, any benefit or compensation plan (including any
pension, profit sharing, life insurance, health, accidental death or
dismemberment or disability plan), or any substantially similar benefit or
compensation plan, which has been made available to other comparable executives
of the Company; provided, however, that nothing in this part (c) shall be
construed to mean that the
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Company shall be constrained from amending or eliminating any benefit or
compensation plan as such is applied to the Executive and to other comparable
executives of the Company;
(d) The assignment to the Executive of any duties materially
inconsistent with the Executive's position as Executive Vice President and Chief
Financial Officer of the Company or the substantial diminution of the
Executive's duties or authorities from those which the Executive has on the date
hereof;
(e) A change in the Executive's title or the line of authority
through which the Executive is required to report, it being understood that the
Executive shall report directly to the President and Chief Executive Officer but
shall, on occasion, be expected to perform tasks at the direction of the Board;
(f) Failure by the Company to obtain, in accordance with Section
12, below, the written agreement of any successor in interest to the business of
the Company to assume and perform the obligations of the Company under this
Agreement;
(g) The giving of notice by the Company to stop the automatic
extension of the Term which is provided for by Section 1.1 of this Agreement;
(h) Any other material breach of this Agreement by the Company;
or
(i) Any material breach of any stock option, equity, long-term
incentive compensation or other similar plan; or
(j) Any transfer of the place of employment of the Executive to
a location more than fifty (50) miles from the Chicago "Loop".
Anything in this Agreement to the contrary notwithstanding, a termination by the
Executive for any reason during the period of three (3) months which begins six
(6) months after a Change of Control shall be deemed to be a termination for
Good Reason for all purposes of this Agreement. In the event of any termination
for Good Reason, the Executive shall be entitled to receive the severance
benefits described in Section 5 below.
4.6 Termination without Good Reason. The Executive may, at any time
during the Term, terminate his employment under this Agreement by giving the
Company at least thirty (30) days prior written notice of such termination. In
the event of such termination, the Company shall pay to the Executive all Annual
Salary, annual performance bonuses and Benefits which have accrued as of the
effective date of such termination but may discontinue payment of any
compensation or benefits accruing from and after such date.
5. Severance Benefits. In the event the Executive becomes entitled,
under Section 4.4 or Section 4.5, above, to severance benefits under this
Section 5, he shall receive the following, in addition to payment of his Annual
Salary through the date of termination of his employment:
5.1 A lump sum, payable upon termination of employment, equal to
three (3) times the sum of (a) the Executive's Annual Salary for one (1) year,
at the rate in effect at the
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time of the termination of his employment (or, if the Company has reduced the
Executive's Annual Salary in breach of this Agreement, at the Executive's Annual
Salary rate without regard to such reduction) and (b) the target amount of the
Executive's annual performance bonus for the year in which the termination of
his employment occurs;
5.2 Payment, upon termination of employment, of an annual performance
bonus for the year of termination, calculated by multiplying the target amount
of the Executive's annual performance bonus for the year by a fraction, the
numerator of which is the number of days that the Executive was employed by the
Company during that year and the denominator of which is three hundred and
sixty-five (365); provided, if such termination occurs during the bonus
performance year of, or the year next following, a Change of Control, then such
bonus shall not be less than the target amount in effect immediately prior to
such Change of Control (prorated by the fraction provided in this Section 5.2
above).
5.3 Payment in due course of any Benefits accrued to the date of
termination but previously unpaid;
5.4 Continuation of Benefits for the Executive and his dependents for
three (3) years after the date of termination of the Executive's employment, at
the levels that were applicable to the Executive and such dependents immediately
prior to such termination, or provision of equivalent benefits through separate
insurance coverage (including, without limitation, as a continued Benefit
hereunder, payment of $375,000 per year during such three (3) year period in
full satisfaction of the Executive's rights under the Company's 1999 Long-Term
Incentive Plan, notwithstanding any modification or termination of such Plan);
provided, however, that the medical insurance coverage provided through such
continuation of Benefits shall cease on the date during such three (3) year
Benefit continuation period that the Executive begins to be covered by
comparable medical insurance provided by a new employer. Execution of this
Agreement by the Executive shall not be considered a waiver of any rights or
entitlements he may have under applicable law to continuation of coverage under
any group health plan maintained by the Company or any of its affiliates.
5.5 If such termination occurs on or after (or within close proximity
in time or in anticipation of) a Change of Control, (a) the acceleration to full
vesting under the Company's stock option and restricted stock plans, (b) full
vesting under Packaging Holdings, L.L.C.'s Long-Term Incentive Compensation Plan
and (c) the immediate acceleration and lump sum payment of $375,000 to the
Executive (for the year in which the Change of Control occurs) under the
Company's 1999 Long-Term Incentive Plan. All such stock options shall be
exercisable for the remaining stated term thereof under each applicable stock
option award agreement;
5.6 If such termination occurs on or after (or within close proximity
of) a Change of Control, outplacement services for a period of two (2) years or,
if earlier, until the first acceptance by the Executive of an offer of
employment, in an aggregate amount not to exceed $25,000; and
5.7 The extension of (until the earlier to occur of (x) the sale of the
Company common stock relating thereto, (y) the second anniversary of the date of
the Executive's
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termination or (z) September 30, 2007) the maturity date of the Executive's
promissory note(s) to the Company which were executed in connection with the
Executive's receipt of shares of the Company's common stock at the time of the
Company's initial public offering.
6. No Duty to Mitigate. After a termination of the Executive's
employment under this Agreement, the Executive will not be obligated to mitigate
damages by seeking other comparable employment.
7. Insurance. The Company may, from time to time, apply for and take
out, in its own name and at its own expense, naming itself or others as the
designated beneficiary (which it may change from time to time), policies for
life, health, accident, disability or other insurance upon the Executive in any
amount or amounts that it may deem necessary or appropriate to protect its
interest. The Executive agrees to aid the Company in procuring such insurance by
submitting to medical examinations and by filling out, executing and delivering
such applications and other instruments in writing as may reasonably be required
by an insurance company or companies to which any application or applications
for insurance may be made by or for the Company.
8. Indemnification.
8.1 The Company shall, to the extent not prohibited by law,
indemnify the Executive if he is made, or threatened to be made, a party to any
threatened, pending or completed, action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Company to procure a judgment in its favor (hereinafter a
"Proceeding"), by reason of the fact that the Executive is or was a director,
officer or employee of the Company, or is or was serving in any capacity at the
request of the Company for any other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, against judgments, fines,
penalties, excise taxes, amounts paid in settlement and costs, charges and
expenses (including attorneys' fees and disbursements).
8.2 The Company shall, from time to time, reimburse or advance to
the Executive the funds necessary for payment of expenses, including attorneys'
fees and disbursements, incurred in connection with any Proceeding, in advance
of the final disposition of such Proceeding; provided, however, that, if
required by the Delaware General Corporation Law, such expenses incurred by or
on behalf of the Executive may be paid in advance of the final disposition of a
Proceeding only upon receipt by the Company of an undertaking, by or on behalf
of the Executive, to repay any such amount so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right of
appeal that the Executive is not entitled to be indemnified for such expenses.
8.3 The right to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 8 shall not be deemed
exclusive of any other rights which the Executive may have or hereafter be
entitled to under any law, by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding office.
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8.4 The right to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 8 shall continue as
to the Executive after he has ceased to be a director, officer or employee and
shall inure to the benefit of the heirs, executors and administrators of the
Executive.
8.5 The Company shall have power to purchase and maintain insurance
on behalf of the Executive against any liability asserted against the Executive
or incurred by the Executive in his capacity as a director, officer, employee or
agent of the Company, or arising out of the Executive's status as such, whether
or not the Company would have the power to indemnify the Executive against such
liability under the provisions of this Section 8, the by-laws of the Company or
under Section 145 of the Delaware General Corporation Law or any other provision
of law.
8.6 The right to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 8 shall be
enforceable by the Executive in any court of competent jurisdiction. The burden
of proving that such indemnification or reimbursement or advancement of expenses
is not appropriate shall be on the Company. Neither the failure of the Company
(including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that such indemnification or reimbursement or advancement of expenses is
proper in the circumstances nor an actual determination by the Company
(including its board of directors, independent legal counsel, or its
stockholders) that the Executive is not entitled to such indemnification or
reimbursement or advancement of expenses, shall constitute a defense to the
action or create a presumption that the Executive is not so entitled. The
Executive shall also be indemnified for any expenses incurred in connection with
successfully establishing his right to such indemnification or reimbursement or
advancement of expenses, in whole or in part, in any proceeding.
8.7 If the Executive serves in any capacity (a) any affiliate of the
Company or (b) any employee benefit plan of the Company or any affiliate of the
Company, then he shall be deemed to be doing so at the request of the Company.
8.8 The Executive may elect to have his right to indemnification or
reimbursement or advancement of expenses interpreted on the basis of the
applicable law in effect at the time of the occurrence of the event or events
giving rise to the applicable Proceeding, to the extent permitted by law, or on
the basis of the applicable law in effect at the time such indemnification or
reimbursement or advancement of expenses is sought. Such election shall be made,
by a notice in writing to the Company, at the time indemnification or
reimbursement or advancement of expenses is sought; provided that if no such
notice is given, the right to indemnification or reimbursement or advancement of
expenses shall be determined by the law in effect at the time indemnification or
reimbursement or advancement of expenses is sought.
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9. Change of Control.
(a) A "Change of Control" shall mean:
(i) The acquisition by 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 twenty
percent (20%) or more of either (1) the then outstanding shares of common stock
of Ivex Packaging Corporation, the holding company for the Company, ("Ivex")
(the "Outstanding Ivex Common Stock") or (2) the combined voting power of the
then outstanding voting securities of Ivex entitled to vote generally in the
election of directors (the "Outstanding Ivex Voting Securities"); provided,
however, that for purposes of this subsection (i), the following acquisitions
shall not constitute a Change of Control: (A) any acquisition directly from
Ivex, (B) any acquisition by Ivex, or (C) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by Ivex or any
corporation controlled by Ivex; or
(ii) Individuals who, as of the date hereof, constitute the
board of directors of Ivex (the "Incumbent Ivex Board") cease for any reason to
constitute at least a majority of the board of directors of Ivex; provided,
however, that any individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the shareholders of Ivex, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Ivex Board shall be considered as though such individual were a member
of the Incumbent Ivex 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 Incumbent Ivex Board; or
(iii) 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, (A) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Ivex Common Stock and Outstanding Ivex Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly, at
least sixty percent (60%) of, respectively, 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 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
respective ownership, immediately prior to such Business Combination, of the
Outstanding Ivex Common Stock and Outstanding Ivex Voting Securities; provided,
however, that the provisions of this Section 9(iii) shall be applied, in
connection with and after any such Business Combination, as if all references to
Ivex (except in the definition of, and references to, the Ivex Incumbent Board)
were replaced by references to the corporation resulting from such Business
Combination and shall be applied, with respect to any subsequent Business
Combination, as if the reference in this subsection (iii) to "at least sixty
percent (60%)" were replaced by a reference to "at least ninety-five percent
(95%)"; or
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(iv) Approval by the shareholders of the Company or of Ivex
of a complete liquidation or dissolution of the Company or of Ivex,
respectively; provided, however, that a Change of Control shall not result from
approval by the shareholders of Ivex of a dissolution of Ivex for the purpose of
making a pro rata distribution of shares of the Company to the shareholders of
Ivex; and provided further that, after any such distribution, the provisions of
this Section 10 shall be applied as if all references to Ivex (except in the
definition of, and references to, the Ivex Incumbent Board) were replaced by
references to the Company.
10. Certain Additional Payments by the Company.
10.1 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 10) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, (the
"Code"), or if 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, being hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the 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 Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
10.2 Subject to the provisions of Section 10.3, all determinations
required to be made under this Section 10, 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 certified public accounting firm designated by the Executive (the
"Accounting Firm") which shall provide detailed supporting calculations both to
the Company and the Executive within fifteen (15) 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 a Change
of Control, the Executive may 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). The Accounting Firm shall
assist the Executive with the preparation and filing of any income tax return
required of the Executive which relates to the period or periods in which
Executive received a Payment or a Gross-Up Payment. All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 10, shall be paid by the Company to the
Executive within five (5) days of the receipt of the Accounting Firm's
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 Gross-Up Payments 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
12
Section 10.3 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.
10.3 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 a Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten (10) 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
(30)-day period following the date on which the Executive 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:
(a) Give the Company any information reasonably requested by the
Company relating to such claim,
(b) 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,
(c) Cooperate with the Company in good faith in order
effectively to contest such claim, and
(d) 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 10.3, 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 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
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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 Gross-Up
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.
(e) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 10.3, 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 10.3) 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 10.3, 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 of refund prior to the expiration
of thirty (30) 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 any Gross-Up Payment required
to be paid.
11. Payment of Attorneys' Fees. The Company shall pay promptly upon
receipt of proper invoices:
(a) All reasonable attorneys' fees and related expenses incurred by
the Executive in connection with the negotiation and preparation of this
Agreement; and
(b) 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 or any guarantee of performance
thereof (including as a result of any contest by the Executive about the amount
of any payment due pursuant to this Agreement), plus in each case interest (from
the date of any such disbursement by the Executive) at the applicable federal
rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986,
as amended; provided, however, that the Company shall not be obligated to make
such payment with respect to any contest in which the Company prevails over the
Executive.
12. Successors. 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. For purposes of this Section 12, the term "successor" shall
include any entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act) which has ultimate beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of at least fifty percent
(50%) of any other entity or entities which succeed to all or substantially all
of the business and/or assets of the Company; provided, however, that the term
"successor" shall not include any partner or stockholder who is a natural
person. 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.
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13. Other Provisions.
13.1 Certain Definitions. As used in this Agreement, the following
terms have the following meanings unless the context otherwise requires:
(i) "affiliate" with respect to any person means any other
person controlling, controlled by or under common control with, or the parents,
spouse, lineal descendants or beneficiaries of, such person.
(ii) "person" means any individual, corporation, partnership,
firm, joint venture, association, joint-stock company, trust, unincorporated
organization, governmental or regulatory body or other entity.
13.2 Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage prepaid, or by reputable commercial delivery
service. Any such notice shall be deemed given when delivered as follows:
(a) If to the Company, to:
IPC, Inc.
000 Xxx-Xxxxx Xxxxx Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxx
with a copy to:
IPC, Inc.
000 Xxx-Xxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attention: G. Xxxxxxx Xxxxxxxxx, Esq.
(b) If to the Executive, to:
Xxxxx X. Xxxxxxx
00 Xxxxx Xxxx Xxxx
Xxxx Xxxxx, Xxxxxxxx 00000
with a copy to:
Vedder, Price, Xxxxxxx & Kammholz
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
15
Any party may change its address for notice hereunder by notice to the
other party hereto.
13.3 Entire Agreement. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof and, in amending
and restating the 1992 Agreement, supersedes the 1992 Agreement and (except for
those agreements relating to the Executive's option and equity arrangements) all
other prior agreements, written or oral, with respect thereto. In the case of
any conflict between the terms of this Agreement (the "Terms") and the
provisions of any plan, policy, or practice of the Company, or agreement or
award thereunder, as in effect from time to time (the "Provisions"), Executive's
rights or the Company's obligations shall be established by whichever of the
Terms or Provisions would be more beneficial to Executive. If the choice between
the Terms or the Provisions is unclear at the time such choice must be made, the
Executive may, in his sole discretion, choose to be treated under either the
Terms or the Provisions.
13.4 Waivers and Amendments. This Agreement may be amended,
superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by the parties or, in the
case of a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof. Nor shall any waiver on the part of any party of any such right,
power or privilege hereunder, nor any single or partial exercise of any right,
power or privilege hereunder, preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder.
13.5 Governing Law and Enforcement. This Agreement shall be governed
by and construed in accordance with the laws of the State of Illinois, where the
employment of the Executive shall be deemed, in major part, to be performed, and
enforcement of this Agreement or any other legal action taken with respect to
this Agreement shall be taken in the courts of appropriate jurisdiction in Lake
County, Illinois.
13.6 Assignment. This Agreement, and any rights and obligations
hereunder, may not be assigned by the Executive.
13.7 Counterparts. This Agreement may be executed in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
13.8 Headings. The headings in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
13.9 Confidentiality. The Executive hereby agrees to keep the terms
and provisions of this Agreement confidential.
16
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
IPC, INC.
By:
-----------------------------
Name:
------------------------
Title:
-----------------------
EXECUTIVE
--------------------------------
Xxxxx X. Xxxxxxx
GUARANTEE
Ivex Packaging Corporation, the holding company for the Company, hereby
guarantees the payment of all compensation, payments and/or benefits due to the
Executive or his dependents or beneficiaries under this Agreement or any of the
plans, programs or arrangements referred to herein, if, as and when such
compensation, payments and/or benefits are not timely paid by the Company or are
not otherwise timely paid pursuant to any such plan, program or arrangement.
IVEX PACKAGING CORPORATION
By:
-----------------------------
Name:
------------------------
Title:
-----------------------
17
