EXHIBIT 10.9
EQUITY INCENTIVE AGREEMENT
This Equity Incentive Agreement ('Agreement') is dated ,
199 , and is between ('Executive') and Xxxxxx Packaging
Company, a Pennsylvania limited partnership ('Xxxxxx').
Executive and Xxxxxx, intending to be legally bound hereby and in
consideration of the provisions contained herein, agree that upon a Change in
Control (as defined below) Xxxxxx shall make an incentive payment (as described
below) to Executives and shall grant Executive a restricted equity award (as
described below) (provided that Executive makes a Section 83(b) election--as
described below--upon such grant), as follows:
1. Equity Incentive Benefit. Upon a Change in Control (as defined in
Paragraph 4), Xxxxxx or its successor shall provide Executive with an equity
Incentive benefit in the aggregate amount of $ . Executive's equity
incentive benefit shall be paid in accordance with Paragraphs 2 and 3.
2. Incentive Payment. Upon a Change in Control, Xxxxxx or its successor
shall make one payment to Executive of $ (representing 45 percent of
Executive's equity incentive benefit). Xxxxxx shall reduce the dollar amount
payable to Executive by applicable tax withholding, both with respect to the
provisions of this Paragraph and Paragraph 3. The single-sum payment shall be
made within 30 days after the date of the Change in Control.
3. Restricted Equity Away. Upon a Change in Control, Xxxxxx, or its
successors or affiliates, shall grant to Executive a restricted equity award
(the 'Award') for an aggregate of shares of common stock of
BMP/Xxxxxx Holdings Corporation ('BMP/Holdings') ('Common Stock') and/or award
cash to be used concurrently by Executive only to purchase Common Stock (such
Common Stock and/or cash representing 55 percent of Executive's equity incentive
benefit); provided that Executive makes a Section 83(b) Election (as defined in
subparagraph (f) below) upon such grant. The Award shall be granted as of the
date of the Change in Control.
(a) Vesting. Executive shall become vested in the shares of Common Stock
subject to the Award as follows:
o 1/3 of the shares on the first anniversary of the Change in Control;
o 1/3 of the shares on the second anniversary of the Change in Control; and
o 1/3 of the shares on the third anniversary of the Change in Control.
Notwithstanding the preceding vesting schedule, Executive shall become vested in
all of the shares of Common Stock subject to the Award upon either (i) the
initial public offering of equity securities of Xxxxxx or any of its
subsidiaries under the Securities Act of 1933, as amended, or (ii) a sale of a
controlling interest in Xxxxxx.
(b) Termination of Employment. If Executive experiences Qualifying
Termination Event (as defined in Paragraph 5) offer the Change in Control,
Executive shall become 100 percent vested in all shares of Common Stock subject
to the Award. If Executive's termination of employment is not considered a
Qualifying Termination Event, all of Executive's unvested shares of Common Stock
shall be forfeited.
(c) Stock Certificate. Certificates for Common Stock subject to the Award
shall be registered in Executive's name (or, if Executive so requests, in the
name of Executive and Executive's spouse, jointly with right of survivorship)
and shall be delivered to Executive as soon as practicable With respect to
shares in which Executive is not vested on the date of the Award, Executive
shall, immediately upon receipt thereof, deposit all certificates for such
unvested Common Stock together with a stock power executed in favor of Xxxxxx,
with Xxxxxx. Certificates for such unvested Common Stock shall be held by
(xxxxxx until Executive becomes vested in such Common Stock. The certificates
may include a legend setting forth restrictions on transfer.
(d) Dividends: Rights as Shareholder in Unvested Common Stock. Executive
shall be entitled to receive dividends on unvested Common Stock subject to the
Award (if any), shall have the right to vote such unvested Common Stock and
shall have all other shareholder's rights in such unvested Common Stock, with
the exception that (i) Executive shall not be entitled to delivery of the stock
certificates until he becomes vested in the Common
Stock, (ii) Xxxxxx shall retain custody of the certificates representing the
unvested Common Stock until Executive becomes vested in such Common Stock, at
which time such certificates shall be delivered to Executive, and (iii)
Executive's rights to such unvested Common Stock shall be forfeited upon
Executive's termination of employment with Xxxxxx, if such termination is not
considered a Qualifying Termination Event.
(e) Transferability. Executive may not assign or transfer, in whole or in
part, Common Stock subject to the Award in which Executive is not vested, other
than by will or by the laws of descent and distribution. Executive may not
assign or transfer, in whole or in part, Common Stock subject to the Award in
which Executive is vested other than pursuant to the terms of any shareholders'
agreement to which such Common Stock is subject, and the Certificate(s)
representing such shares of Common Stock shall bear a legend to the effect that
Executive's rights as a shareholder are subject to any such shareholders'
agreement.
(f) Section 83(b) Election. As a condition of Executive's Award, Executive
must make an election under section 83(b) of the Internal Revenue Code of 1986,
as amended, to include in gross income in the year of grant the fair market
value of all shares of Common Stock granted under the Award ('Section 83(b)
Election').
4. Change in Control. A Change in Control shall be deemed to have occurred
when the beneficial ownership of 50 percent or more of the GP(LP) Group, or when
50 percent or more of the GP(LP) Group's business and assets, is sold or
otherwise transferred to any person(s) other than (i) Xxxxxx X. Xxxxxx or his
descendants (natural and adopted) or their spouses or (ii) a business entity
controlled by Xxxxxx X. Xxxxxx.
For purposes of this Agreement, the term 'GP(LP) Group' shall mean, in the
aggregate, Xxxxxx and any of its subsidiaries, including those whose principal
offices are located in North, Central, and South America, Europe, and Asia. The
term 'GP(LP) Group,' as of the date of this Agreement, consists of Xxxxxx,
Xxxxxx Packaging Canada Limited, Xxxxxx Packaging Poland, L.P., Xxxxx Xxxxxx
Spolka, z.o.o., Xxxxxx Packaging Holdings I, Xxxxxx Recycling Company, Xxxxxx
Packaging France Partners, Xxxxxx Packaging France Holding, S.A., Xxxxxx
Packaging France, S.A., Xxxxxx Packaging Italy, Srl, SIP, Srl, Lido
Plast-Xxxxxx, Xxxxxx Packaging Latin America, LLC, Xxxxxx Brasil Paricipacoes
Ltda., and Xxxxxx Packaging do Brasil, S.A.
5. Qualifying Termination Event
(a) A Qualifying Termination Event shall be deemed to have occurred if,
during the three-year period after the date of a Change in Control, Executive
ceases to be employed by Xxxxxx or its successor (referred to jointly as
'Xxxxxx') for any of the following reasons:
(1) Executive's death, retirement at or after age 65, or total
disability (entitling him to benefits under Xxxxxx'x long-term disability
plan);
(2) Except as provided in (b) below, Xxxxxx terminates Executive's
employment; or
(3) After Executive gives Xxxxxx written notice of one or more of the
following events and Xxxxxx fails to cure the event(s) during the 30-day
period following Xxxxxx'x receipt of such notice, Executive terminates his
employment with Xxxxxx as a result of any of the following events:
(i) Executive's position is materially and adversely changed
(without his consent) from his position as of the Change in Control;
(ii) Executive is assigned duties and responsibilities (without his
consent) that are inconsistent in a material respect with the scope of
duties and responsibilities associated with his position as of the
Change in Control;
(iii) Executive is directly requested by the person to whom the
Executive directly reports to commit an unethical, dishonest, or illegal
act of a material nature, knowing that such act is unethical, dishonest,
or illegal (provided that whether the act cited by Executive is in fact
unethical or dishonest shall be determined by the Chief Executive
Officer of Xxxxxx in his sole discretion);
(iv) Executive's annual salary rate as in effect on the day before
the Change in Control is reduced; or
2
(v) Xxxxxx requires Executive to be based at an office which is
more than 50 miles further from Executive's residence than Executive's
office on the day before the Change in Control (other than travel
reasonably required in the performance of Executive's responsibilities)
(b) Notwithstanding (a) above, Executive's termination of employment will
not be considered a Qualifying Termination Event for purposes of this Agreement
if one of the following applies:
(1) Executive's employment with Xxxxxx is involuntarily terminated due
to Executive's continuing refusal to perform his duties or to follow a
lawful direction of Xxxxxx, provided the performance of such duties or the
following of such lawful direction would not result in an event described
in (a)13(iii) or (ii) above;
(2) Executive's employment with Xxxxxx is involuntarily terminated due
to Executive's intentional act or acts of dishonesty which Executive
intended to result in his personal, more-than-immaterial enrichment;
(3) Prior to the occurrence of an event described in (a)(3)(i) through
(v) above, Executive's employment with Xxxxxx is involuntarily terminated
due to Executive's documented willful malfeasance or willful misconduct in
connection with his employment or Executive's willful and deliberate
insubordination;
(4) Executive's employment with Xxxxxx is involuntarily terminated
because Executive is convicted of a felony;
(5) Executive's employment with Xxxxxx is terminated, but during the
seven calendar days after such termination, Executive is offered (and
declines) employment by the buyer of the entire business for substantially
all of the business) of Xxxxxx, on substantially the same terms (including
this Agreement) as Executive's employment on the day before such
termination; or
(6) Any other voluntary termination not described in (a) above.
6. Noncompetition and Disclosure Requirements.
(a) Noncompetition. Executive covenants that he will not (i) directly or
indirectly own, manage, operate, control, advise, participate in, become
proprietor, partner, director, officer, or employee of, provicie services to, or
become financially interested in, any business (other than solely by virtue of
the ownership of less than five percent of any class of publicly traded
securities) competitive with the business of Xxxxxx or any of its affiliates the
'Companies') as of the date this Agreement is executed, or (ii) engage or
participate in any effort or act to induce any of the customers or employees of
Xxxxxx to take any action which might be disadvantageous to the Companies.
(b) Nondisclosure. Executive covenants that he will not (other then in the
good faith performance of his services to Xxxxxx before Executive's termination
of employment) disclose or make known to anyone other than employees of the
Companies, or uses for the benefit of himself or any other person, firm,
operation, or entity unrelated to the Companies, any knowledge, information, or
materials, whether tangible or intangible, belonging to the Companies. about
their products, services, know-how, customers, business plans, or financial,
marketing, pricing, compensation, and other proprietary matters relating to the
Companies on or before Executive's termination of employment with Xxxxxx,
Executive shall promptly deliver to Xxxxxx or to any affiliate designated by
Xxxxxx any and all tangible, confidential information in his possession.
(c) Remedies for Breach. If Executive breaches the covenant set forth in
(a) above and/or the covenant set forth in (b) above, Executive's employment
with Xxxxxx and/or Xxxxxx'x obligation to make the payment and vest the Common
Stock described herein shall terminate at Xxxxxx'x option. In addition,
Executive expressly acknowledges that damages alone will be an inadequate remedy
for any breach or violation of (a) and/or (b) above and that Xxxxxx, in addition
to all other remedies, shall be entitled as a matter of right to equitable
relief, including injunctions and specific performance, in any court of
competent jurisdiction. If any of the provisions of (a) or (b) above are held to
be in any respect unenforceable, then they shall be deemed to extend only over
three maximum period of time, geographic area, or range of activities as to
which they may be enforceable against Executive.
3
7. Beneficiary. If Executive dies before the amount due under the
provisions of Paragraph 2 of this Agreement have been paid, such unpaid amount
shall be paid in a single sum within 90 days of his death to his surviving
spouse or, it she does not survive him, to his estate.
8. Confidentiality. The terms of this Agreement are confidential.
Executive shall not disclose in any way this Agreement or any of its terms to
any person other than his spouse; his legal counsel, accountant, financial
adviser, or superior to whom he directly reports; Xxxxxxx X. Xxxxxx, Xx.; or
Xxxxxx X. Xxxxxx or a member of Xxxxxx X. Xxxxxx'x family.
9. Governing Law. This Agreement is made and entered into in the
Commonwealth of Pennsylvania, and at all times and for all purposes shall be
interpreted, enforced, and governed under its laws.
10. Entire Agreement Amendment. This Agreement contains the they're
agreement between Executive and Xxxxxx as to the payment and Award ascribed
herein. Any amendment to this Agreement must be in writing, must be speed by
both Xxxxxx and Executive, and must be consented to in writing by the 'Xxxxxx
Partners,' as such term is defined in the Agreement and Plan of
Rccepitalization, Redemption and Purchase entered into by and among Xxxxxx et
al, as of December 18, 1997.
11. Successor Employer. In the event of the dissolution, merger,
consolidation, or reorganization of Xxxxxx, or the sale of the entire (or
substantially all of the) business of Xxxxxx, this Agreement shall be continued
by Xxxxxx'x successor. The successor shall assume all liabilities under this
Agreement and shall have the provers, duties, and responsibilities of Xxxxxx
under this Agreement.
12. Termination of Agreement. This Agreement shall terminate unless the
transactions contemplated by the Agreement and Plan of Recapitalization and
Redemption described in Paragraph 10 are consummated.
IN WITNESS WHEREOF, the persons named below have signed this Equity
Incentive Agreement as of the date first set forth above.
ATTEST: XXXXXX PACKAGING COMPANY
By
WITNESS EXECUTIVE
4
